The value of an RRSP Loan is that it allows you to take advantage of an RRSP's tax benefits even if you don't have the full contribution amount. In other words, you can save money NOW by deferring taxes and then save money LATER when you pay less tax on your funds when they're withdrawn.
So don't worry if your cash flow doesn’t allow for a robust contribution. If you borrow your contribution amount, you won't have to lose out on this tax opportunity.
With an RRSP Loan, you can:
- Defer a tax amount greater than the interest charged.
- Save for retirement.
- Grow your contributions over time.
For many people, monthly loan payments over the course of a year are more manageable than a large lump sum payment.
Remember: The earlier in the year you start contributing to your RRSP, the more interest you can earn. So why wait 'til "RRSP Season" next February? Contact your branch to start saving and deferring taxes.
Want to visualize the savings and earnings? Here's an easy-to-read chart that sets out just how much interest you might have to pay for a loan in relation to the savings you can earn.