RRSPs getting started: Answers to common questions
Starting to save for retirement can feel overwhelming, especially when you’re not sure where to begin.
RRSPs are one of the most common ways Canadians save for the future and understanding how they work is the first step to using them with confidence.
Here are answers to some of the most common RRSP questions for members who are just getting started and may have questions. Remember, when you have questions, we're here to help.
What is an RRSP?
A Registered Retirement Savings Plan (RRSP) is a tax-deferred savings plan designed to help you save for retirement. Within an RRSP, you can hold a variety of savings and investment options, including variable savings, GICs, mutual funds, stocks, or bonds.
How does an RRSP help with taxes?
An RRSP helps you save on taxes in two key ways:
1. Your contributions reduce your taxable income.
When you put money into an RRSP, that amount is deducted from your income for the year. This can lower the income tax you owe or increase your tax refund.
2. Your investments grow tax deferred.
Any growth inside your RRSP—whether it’s interest, dividends, or investment gains—isn’t taxed while it stays in the plan. You’ll only pay tax when you withdraw the money later, often in retirement when your income (and tax rate) may be lower.
Are RRSPs savings tax-free?
No. RRSPs are tax-deferred, not tax-free. You receive the tax benefit when you contribute, and you pay tax when you withdraw the money. For many people, this works well because withdrawals often happen later in life when your income is lower, resulting in less tax paid overall.
How much can I contribute to my RRSP each year?
You can contribute up to 18% of your gross income each year, up to a government‑set maximum. If you participate in a workplace pension, those contributions reduce the amount you can put into your RRSP.
If you haven’t used all your contribution room in past years, it doesn’t disappear, it carries forward indefinitely. This means you can catch up by making larger contributions in future years, which can be especially helpful if your income increases over time or if you receive a lump sum, such as a bonus or an inheritance.
How do I know how much contribution room I have?
Your total available contribution room is shown on your CRA Notice of Assessment or in your CRA online account in CRA’s secure online portal.
When is the RRSP contribution deadline?
The RRSP contribution deadline is in early March each year for the previous tax year. Contributions made before the deadline can be claimed on your tax return for that year. This year, it’s March 2, 2026.
Can I still contribute in January and February?
Yes. Contributions made in January and February can be applied to either the previous tax year or the current one, giving you flexibility when planning your savings.
How do I make RRSP contributions?
You can set up regular, pre-authorized transfers to your RRSP through digital banking. Automating your savings is a simple “set it and forget it” way to build your retirement savings over time. To get started, simply give us a call at 1.800.728.6440.
What is RRSP matching?
This is a company-sponsored means for employees to save for their retirement. Contributions are made via payroll deduction, and the company matches the employee’s contribution up to some predetermined level, say two per cent of the employee’s income doubling the total amount that gets deposited. Employees can also make contributions above and beyond what is matched by their employer.
What are the Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP)?
The Home Buyers’ Plan (HBP) gives qualifying first‑time buyers the ability to take up to $60,000 from their RRSP to put toward the purchase or construction of a home. The withdrawal isn’t taxed as long as it’s repaid over time. Repayments begin two years after your initial withdrawal, and you have 15 years to return the full amount to your RRSP.
The Lifelong Learning Plan (LLP) lets you use your RRSP to help cover the cost of full‑time education or training for yourself or your spouse. You can withdraw up to $10,000 per year, to a maximum of $20,000, and you won’t pay tax on that withdrawal as long as you follow the repayment rules. Under the LLP, you have 10 years to repay what you borrowed. Both the HBP and LLP can be valuable options when they fit into a well‑considered financial plan.
Is an RRSP the right place to start saving?
An RRSP can be a strong choice for long term retirement savings, particularly as your income increases and the tax advantages become more meaningful. If you’re just beginning your career or saving for goals you hope to reach sooner, exploring a TFSA may also be a good fit. In many cases, using both accounts together can provide even more flexibility and tax efficiency. An SCU wealth advisor can help you understand how each option supports your financial goals and where it makes the most sense to begin.
Start building your financial future with confidence.
Connect with an SCU wealth advisor today to explore your options, get personalized guidance, and create a savings plan that supports your goals today and for the long term.
