A Registered Retirement Savings Plan (RRSP) is a tax-advantaged savings account that allows you to save for retirement. When you contribute to your RRSP, you can deduct the amount from your taxable income, which can lower your income tax for that year. The investments within your RRSP can grow tax-free until you withdraw them in retirement.
Table of Contents
What’s an RRSP?
Let’s start with the basics. An RRSP (Registered Retirement Savings Plan) is a super-smart way for Canadians to save for retirement. It’s backed by the government and comes with a big bonus: whatever you put in reduces your taxable income, which can mean major tax savings.
Think of it as a win-win—you’re setting yourself up for the future while keeping more money in your pocket today.
How Much Can You Contribute in 2025?
One of the first things to know about RRSPs is how much you’re allowed to contribute. Every year, the Canada Revenue Agency (CRA) sets a limit, and for 2025, the maximum is $32,030. This amount is based on 18% of your earned income from the previous year, up to that maximum cap.
Your personal limit might be different if you have unused contribution room carried over from previous years or if you’re part of a workplace pension plan (this is called a “pension adjustment”). Don’t worry—it’s easy to find your exact number.
Figuring Out Your Contribution Room
Here’s how to check how much you can contribute:
- Look at Your Notice of Assessment: The CRA sends you this after you file your taxes, and it shows your contribution room.
- Log Into CRA’s “My Account” Online: It’s quick and gives you all the details.
- Don’t Forget About Unused Room: If you didn’t max out your contributions in previous years, you can carry that space forward. For example, if you’ve got $15,000 in unused room from past years and $32,030 for 2025, you could contribute up to $47,030 this year.
Why Contributing Saves You Money
The big perk of an RRSP is the tax savings. Contributions reduce your taxable income, which means you’ll pay less in taxes for the year. You might even get a refund! Let’s break it down:
- If you’re in a 40% tax bracket and contribute $10,000, you could save $4,000 in taxes.
- What’s better? You can reinvest that refund or put it back into your RRSP to grow your savings even more.
Tips to Maximize Your RRSP Contributions
Ready to get the most out of your RRSP? Here are some easy strategies:
- Start Early and Go Monthly: Instead of waiting until the deadline, spread your contributions throughout the year. For example, contributing $2,670 a month means you’ll hit the $32,030 limit by December. Plus, your money starts growing sooner.
- Take Free Money from Your Employer: If your workplace offers a matching program, don’t miss out. Say your employer matches 50% of what you contribute, up to $5,000—that’s an extra $2,500 in your RRSP, free of charge.
- Spousal RRSPs for Couples: If one spouse earns more, contributing to a Spousal RRSP can save your household money. Down the road, the lower-earning spouse withdraws the money at their lower tax rate.
- Catch Up with Carry-Forward Room: Got unused contribution room? Use it! It’s especially handy if you get a year-end bonus or tax refund and want to boost your savings.
- Put Windfalls to Work: Tax refunds, bonuses, or even gifts can be great for topping up your RRSP without cutting into your regular budget.
- Be Smart About Investments: Some investments, like bonds or rental income, are better inside an RRSP since the earnings are tax-sheltered until withdrawal.
- Diversify Your Portfolio: Don’t put all your money in one type of investment. Mix it up with stocks, bonds, or mutual funds to spread out risk and keep your long-term growth on track.
Mark Your Calendar
The deadline to contribute for the 2025 tax year is March 2, 2026. Don’t wait until the last minute—planning ahead can save you a lot of stress and help you make the most of your RRSP.
Our Opinion
Saving for retirement doesn’t have to be overwhelming. By contributing regularly, taking advantage of employer programs, and using strategies like spousal RRSPs, you’ll set yourself up for a brighter financial future—and score some tax savings along the way.
Remember, the earlier you start, the bigger the payoff. Your future self will thank you!
Join and learn secret tips to save more and earn more