3 weird mistakes Canadians make with their RRSPs — and how to avoid them #CanadaFinance

A Registered Retirement Savings Plan (or RRSP) is one of the most powerful tools Canadians have for saving for retirement, buying a home or even funding education while also lowering their annual taxable income in the short-term. But many people may not know the best way to get the most out of their RRSP, which can result in some… questionable choices that leave easy money on the table.

Together with Wealthsimple, here’s a closer look at some of the weird RRSP choices Canadians make, along with tips on how to avoid these all-too-common mistakes to get more out of your hard-earned money.

It’s tempting to delay contributing to your RRSP until you make more money, assuming you’ll be in line for a bigger tax break when your income is higher. But here’s the catch: waiting til tomorrow to contribute means losing out on tax-deferred growth today. Even if you don’t claim your full deduction right away, your investments will start compounding sooner, which can make a big impact in the long run. Compound interest is one of the most powerful forces you can use to grow your wealth, and the sooner you start, the better off you’ll be.

How to avoid: Instead of waiting, contribute to your RRSP as soon as you’re able. And don’t make the mistake of thinking you have to use the corresponding deduction immediately — you can carry it forward to a higher-income year while still letting your investments grow tax-free in the meantime.

One particularly head-scratching mistake is leaving money on the table by not utilizing RRSP matching. If you don’t have access to a matching program, or are simply looking for additional ways to plus up your contributions… Good news: Wealthsimple has you covered.

How to avoid: Wealthsimple is currently offering its biggest RRSP matching program to date with The Big Winter Bundle: when you transfer a qualifying RRSP of $15,000 or more, you’ll receive a 2% match¹, plus up to five free lift tickets to one of 50+ ski resorts across Canada². No RRSP to transfer? No problem — you can still get a 1% match when you transfer any other eligible accounts, such as a TFSA or FHSA.

What’s more, you can also earn additional lift tickets for simple things like setting up direct deposit and referring a friend, so you can get out and hit the slopes knowing your savings are growing back home. After all, just because growing your wealth takes time doesn’t mean you shouldn’t be getting rewarded while you wait!

Many couples contribute to their RRSPs separately without realizing they could further optimize their tax situation by prioritizing the higher-income earner’s contribution room first. Since RRSP deductions lower taxable income, maximizing the higher earner’s RRSP space can result in a bigger immediate tax refund.

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How to avoid: If your spouse earns significantly more than you do, consider contributing to their RRSP first to maximize tax savings. Another option is to open a spousal RRSP, so the higher income earner can contribute, while the lower-earning spouse can make the withdrawals in retirement at a lower tax rate — helping you both make the most of your tax benefits while growing your nest egg.

Your RRSP is one of the best tools available for balancing tax savings while building long-term wealth — but only if you use it wisely. By avoiding these common mistakes, you can maximize your savings, minimize your taxes and set yourself up for a better future. And thanks to Wealthsimple’s Big Winter Bundle RRSP matching program, there’s never been a better time to take your savings to the next level and get more out of your RRSP.

Learn more about Wealthsimple’s Big Winter Bundle and how to use it to get more out of your RRSP when you register by March 15, 2025.

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¹ Match Bonus: From January 20 to March 15, 2025, new or existing Wealthsimple account user who registers for the promotion then initiates an institutional transfer of an existing account from a qualifying third party to a Wealthsimple Self-directed Investing, Crypto or Managed Investing account within 30 days of registration will receive a 1% cash bonus on the cumulative transferred amount (less withdrawal) of at least $15,000 during the promotion period, up to a maximum of $5,000,000 transferred amount. An additional 1% cash bonus will be applied if the eligible transfers are from an RRSP or LIRA account. Maximum one (1) cash bonus per client, to be applied in the span of twenty-four (24) months. Minimum fund holding period required. Full eligibility and T&Cs at wsim.co/bundle.

² Lift Ticket: From January 20 to March 15, 2025, new or existing Wealthsimple account user who registers for the promotion then complete one of the following within 30 days (the “Qualification Period”) will receive one (1) Canadian Lift Pass for the 2024/2025 ski season: (i) set up their first direct deposit with Wealthsimple Cash (“Cash”) account and have at least $2,000 deposited into their Cash account monthly for at least six (6) months; (ii) initiate a qualified institutional transfer(s) of at least $15,000 from a qualifying third party to a Wealthsimple Self-directed Investing and Managed Investing account, with at least one (1) transfer being a RRSP or LIRA account transfer, or (iii) successfully refer a new client who opens a Wealthsimple Account and funds at least $1 within 30 days of account opening. Limit one (1) lift ticket via method (i), one (1) lift ticket via method (ii), and three (3) lift tickets via method (iii) per qualified client. Full eligibility and T&Cs at wsim.co/bundle.