To clarify for Americans:
RRSP stands for Registered Retirement Savings Plan.
RRSPs are a tax-defering shelter with lots of requirements on what kind of investments can be in it.
Your RRSP contributions are capped at 18% of your income, with a hardcap of something around 20k/year. RRSP contributions reduce your income for the purposes of taxation during the year you put money in, and count as income in the year you take the money out.
RRSP contribution room can be carried over from year to year, indefinately. Taking money out of an RRSP, however, does not generate more contribution room. I believe some pension plans consume RRSP room.
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The professional sequence typed:
2. If I understand this correctly, it's only good if you're making less money per year than you do now (when you put your money into it) because you pay a lower tax on your lower income. So isn't htis a plan to be broke?
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RRSPs have other advantages.
First, there is the first-home-buyer trick: if you haven't owned a home in something like 5 years, you can use up to 20 k of RRSP money on your downpayment, and repay it according to a schedual (without consuming any more contribution room). This is untaxed money you are getting utility from.
Second, RRSPs cannot be used as collateral, and are bankrupcy shelters, if I recall correctly. So, 10 years from now, when everything goes bad, your retirement savings aren't smooched.
Third, I'm sure there are other advantages. I think there is something with education?
Forth, you are partially right. =)