Two ways your RRSP isn’t just for retirement

In case you missed it, February 29—aka the RRSP contribution deadline—is upon us. And while retirement might seem like a distant concept now, you can use your RRSP for more things than just enjoying your golden years.

Your RRSP contribution limit is 18% of your annual income up to a max of $30,780* every year. You can find your contribution limit on your Notice of Assessment you receive from the Canada Revenue Agency (CRA).

The main benefit of a Registered Retirement Savings Account (RRSP) is that you don’t pay taxes on your savings until you withdraw your money. Because this typically happens when you retire and you’re not making as much money, it means you fall into a lower tax bracket and therefore don’t have to pay as much tax.

But retirement isn’t the only thing RRSPs can be used for. Enter the Homebuyers Plan and the Lifelong Learning Plan.

The Homebuyers Plan
The Homebuyers Plan lets you make a one-time withdrawal of up to $25,000 to put toward buying your first home. In order to qualify, you need to be a Canadian citizen and a first-time homebuyer, and there are some rules around the kind of home you can buy or build.

The deal is, you can withdraw money from your RRSP with no tax penalties, as long as you pay back the money you take out within 15 years. If you’re struggling to save extra money to purchase a home, but have money sitting in an RRSP, the Homebuyers Plan could be the perfect solution.

The Lifelong Learning Plan
Going back to school can be a big decision, not to mention an expensive one. If you’re heading back to class full-time and have been saving in an RRSP, the Lifelong Learning Plan might be a better option than taking out a loan.

The plan lets you withdraw $10,000 in one calendar year and up to $20,000 in total to help cover the cost of going back to school. As long as you pay back what you take out within 10 years, you avoid paying the taxes on your withdrawal.

It’s never too late or too early to get started saving for your future—whatever it looks like. Get in touch with your local credit union today for the refreshingly honest financial advice you need to make retirement, home ownership, or your education happen.

*$30,780 is the maximum RRSP contribution amount for 2023.