The RRSP mistake I wish I could undo Here’s one of my retirement regrets. No, I didn’t buy Bitcoin at $100. I did something much more boring… I put too much of my RRSP money into my own RRSP. Back when I was working, I thought I was being smart. Make money. Max out the RRSP. Get the tax deduction. Invest it. Repeat. What could possibly go wrong? Well… apparently I forgot about RETIREMENT. Fast-forward to today and I’m sitting here looking at a fairly large pile of registered money with my name plastered all over it. And guess who gets to pay the tax when it comes out? Looking back, I wish I had put a lot more of my RRSP contributions into a spousal RRSP. I still would have received the tax deduction, but the money would have been building up in my wife’s name. Eventually, assuming the attribution rules were properly managed, we’d have had a much more balanced distribution of retirement income. Instead, I apparently decided that future retired me would enjoy dealing with the taxman. Past me was very generous to future me. Of course, there are rules. The big one is the three-year attribution rule. You can’t just dump $50,000 into a spousal RRSP today and have your spouse pull it out tomorrow while magically making your tax bill disappear. CRA isn’t quite that easily impressed. But over a working career, spousal RRSP contributions can be a very useful way to balance retirement income between spouses. And that’s something I didn’t appreciate enough when I was younger. When you’re 35, you’re thinking: “How much can I put into my RRSP?” When you’re retired, you’re thinking: “Why the hell did I put so much of it in MY RRSP?” 😂 The lesson? Don’t just think about accumulating your retirement money. Think about whose name it’s in and how you’re eventually going to get it back out. Because retirement isn’t just about making money. It’s also about figuring out how to keep the taxman from becoming your biggest beneficiary. Retirement Rant over 😁
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25 Comments
Heath
@incomewealthinvestor · 19d
No income splitting till 65 🤷♂️
Phil @diversifiedfill · 15d
How does a spousal RRSP work in a divorce situation?
Catherine
@ffcatherine · 15d
Thanks for sharing this USEFUL information to younger couples! On the positive side at least you did put this $ away although the tax planning was lacking a bit (I think that’s normal for most ppl ) .. As a single person I’ve got much less tax benefits but I also never built up a large RRSP Anyhow these are the type of post that actually benefit & teach so thank you 🙏🏻
Mike L
@noviceadvisor · 17d
I regret participating in my work pension plan as it's fully locked in. Should have stuck with my employee stock plan instead. It 10x in 13 years
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