Contributions made in the first 60 days of the year can be applied against the previous taxation year or carried forward for any subsequent year. The deadline for RRSP 2020 deposits is March 2nd.
For the 2019 tax year, you can contribute up to 18% of your 2018 earned income, or $26,500—whichever is less. See your Notice of Assessment or go online with CRA to view your account and see exactly what your contribution level is.
If you are turning 71, this is the last year in which you can contribute to your RRSP, and you must convert your RRSP/LIRA to a RIF/LIF by December 31 in the year you turn 71.
Why invest in an RRSP and/or an employer sponsored pension?
That is a good question and one that I am asked often. My response comes in the way of examples of two of my clients who left their employer about the same time and transferred their pension funds into the same Canadian Equity segregated fund. The first one, deposited $25,750. Over the years, she left those funds untouched (with no additional deposits), through all the economic highs and lows. That policy is today worth $327,652. Compare this to another client who over the same time horizon “chased” the previous years rates of return. He moved his investments form one investment vehicle to another quite regularly. His deposit that I used to establish his LIRA 36 years ago was $32,306 and about a year ago he asked me to become his agent of record again, to once more manage his portfolio. Today, his account has a value of $107,893. Sadly, he never enrolled into another work-related pension.
So, why use those examples in answering your question? Most psychologist will say that your decision to invest in an RRSP is influenced more by the negative results of the second example above, then by the positive results of the first. All to often, investors get too caught up in listening to the day-to-day noise through our electronic devices; from headlines designed to sell news; from family, friends, relatives, co-workers; from the slick advertising with promises of instant riches. The major part of my work with clients is to manage their expectations and encourage them to have their experience be more in line with the first example above.
What the market is doing day-to-day, only emphasizes the volatility of the market and we know that the downward trend always sells more news. Every investment has short-term volatility, including GIC’s. But by taking a longer point of view by informed ongoing decision making about how the markets work, is a much healthier way of approaching the return on your investments. Yes, there are going to be ups and downs, and yes, some years are going to be negative but overtime and by using a disciplined approach instead of reacting to the news and the armchair quarterbacks you will be financially sound. Even those who got into the market in early 2008 and saw their investments decline by 20+ percent have seen their investments heal and are doing well today. #RRSP, #thelivingbenefitsgroup, #segregated funds
For more information contact me at jim.corrigan@thelivingbenefitsgroup or 1-866-235-1754.