问一个RRSP的问题

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http://retirehappy.ca/making-the-decision-to-borrow-for-rrsps/

Making the Decision to Borrow for RRSPs
Written by Jim Yih • 0 Comments
According to many surveys, Canadians feel they will not have enough money for retirement. Some studies suggest that as much as 73% of Canadians worry about not having enough money saved to live in their retirement.

Last year, Canadians put away $27.6 billion into RRSPs, up 2% from the year before. While that may sound impressive, you may be surprised to know that that only represents 9% of all the RRSP room available to Canadians. In other words, there is still a lot of Canadians that are not utilizing one of the best tax savings vehicles available to them.

With so much unused RRSP contribution room, should Canadians go out and borrow to buy RRSPs? With interest rates still at low levels, does this make it the right time to catch up on RRSPs with RRSP loans? It’s a multi-billion dollar question that needs a more detailed discussion.

The simple calculation
If you borrow $10,000 to buy your RRSP, it will cost you about $270 in interest over the course of a year (at 5%). Even though you cannot deduct the interest on loans for RRSP contributions, this is a relatively small price to pay considering the tax benefit you will get. Depending on your marginal tax rate, you are likely to get somewhere between $2300 to $4900 in tax savings. Add in the tax-deferred growth inside the RRSP and you’ve got a pretty solid investment.

What rate can you expect on a RRSP loan?
Every institution is different. The bottom line is just like you would shop around for mortgage rates or GIC rates, you can shop and negotiate for RRSP loan rates. In most instances, you can borrow at prime, which is currently 4.25%. In some cases financial institutions are offering incentives during RRSP season at rates below prime.

In most cases, RRSP loans are straight forward 1-year loans. If you deviate or try to extend the term, typically the rates will go up.

Does it make sense to borrow on lines of credit for the RRSP?
The main difference is that a line of credit is more flexible and you do not have to pay off the loan within one year.

Does it make sense to extend the term of the loan for longer than 1 year?
If you extend the term for longer than a year, the biggest advantage is your payments are a lot smaller. The bad news, however, is you will pay more interest over the longer term. In the same example as above, the payments on a $10,000 RRSP loan at 5% for 1 year would be $855.84 per month. If you spread that out over 2 years, your payments would drop to $438.48 per month but the total cost of interest goes up to $524 instead of $270. The benefit of the tax deduction still out weighs the cost of the loan. If you extend the loan to 5 years, you wind up paying about $1300 in interest and borrowing is less attractive.

Does it make sense to borrow larger amounts if you have unused RRSP contribution room?
As an example, I have a client Jack who has $30,000 of unused RRSP contribution room. His income is $85,000 per year. If we contributed the entire $30,000 of unused RRSP contribution room, he would get a tax deduction of about $10,200 (Based on Alberta Tax Rates). However, rather than make the entire contribution today, he may use some this year and some next year. Why would he do that? The tax bracket cut-off is $70,000. Thus, he will get the maximum deduction if he uses $15,000 this year to bring his $85,000 income down to $70,000. Then do the same thing next year. In Alberta, this strategy would get him a tax savings of $10,800 instead of $10,200 (that’s an extra 5% on his money). The key is to know the marginal tax rates that apply. Each Province is different.

The other advantage of splitting the contribution is it makes it more affordable to borrow $15,000 now than $30,000. The payments on a $30,000 loan would be almost $2600 per month. That’s a lot of money!

Is the interest on RRSP loans tax deductible?
At one time you could deduct the interest on loans made for buying RRSPs. Unfortunately, the government closed that deduction a long time ago. Today, you cannot deduct the interest on RRSP loans.

So there you have some common questions and answers to help you make the right decision for borrowing to buy RRSPs this year. Good Luck.

 

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http://www.cbc.ca/news/business/taxes/retirement-savings-in-canada-by-the-numbers-1.1303371

Saving for retirement is a lengthy process and often involves utilizing contributions to both a registered retirement savings plan (RRSP) and a tax-free savings account (TFSA) as well as other types of investment vehicles.


However, statistics show Canadians are saving only four per cent of their disposable income and, despite the billions of dollars invested in RRSPs and TFSAs, have plenty of room to add more to their retirement nest eggs.

CBC News has compiled a number of important figures on retirement and financial planning in Canada. All figures are from Statistics Canada unless otherwise indicated.

Saving with RRSPs...
5,953,370 — number of Canadians who contributed to an RRSP in 2011 (down slightly from5,956,010 in 2010).

24% — percentage of eligible tax filers who contributed to an RRSP in 2011 (down from 26% in 2010).

$34.4 billion — total RRSP contributions in 2011 (up from $33.9 billion in 2010).

$772.5 billion — total amount Canadians were entitled to contribute to RRSPs as of 2011.

$683.6 billion — total unused RRSP contribution room as of 2011 (accumulating since 1991).

Your view
Tell us how you are saving for retirement.

22.7 million — number of Canadians with RRSP contribution room in 2011.

$2,830 — median RRSP contribution in Canada in 2011 (up from $2,790 in 2010).

$4,750 — highest median RRSP contribution in 2011 (Nunavut).

$2,310 — lowest median RRSP contribution in 2011 (Manitoba).

$775 billion — the total value of assets in Canadian RRSPs in 2011 (down from in $782 billion in 2010), according to Investor Economics.

$22,970 — maximum allowable RRSP contribution per person for the 2012 tax year.

$301,478 — amount in an RRSP at age 65 if a person started contributing $2,000 every year from age 25 (assuming five per cent compound annual growth and 1.5 per cent inflation), according to the Fiscal Agents investment calculator.

$158,888 — amount in an RRSP at age 65 if a person started contributing $2,000 every year from age 35 (assuming five per cent compound annual growth and 1.5 per cent inflation), according to Fiscal Agents.

$75,080 — amount in an RRSP at age 65 if a person started contributing $2,000 every year from age 45 (assuming five per cent compound annual growth and 1.5 per cent inflation), according to Fiscal Agents.

...or TFSAs
$73.9 billion — value of tax-free savings accounts in Canada as of June 2012 (up from $54.4 billion the year earlier), according to to data from the consulting firm Investor Economics.

10 million — number of TFSAs in Canada as of June 2012 (up from 8.56 million the year earlier), according to Investor Economics.

$7,400 — average account holding for TFSA as of June 2012 (up from $6,354 the year earlier), according to Investor Economics.

$5,500 — annual contribution limit for 2013, an increase from the $5,000 annual limit that has been in place since the accounts were created in 2009.

$25,500 — The maximum amount you can put into a TFSA during 2013 if you've never contributed before and were 18 or older in 2009.