As your income goes up, so should your RRSP contributions. Find out how a small increase can make a huge difference.
If you’re a younger worker with a large mortgage and small children, it may be a stretch to contribute even $100 a month to your registered retirement savings plan (RRSP). But as your income goes up, increasing your monthly contributions each year by only a small amount can make a huge difference.
For example, let’s assume that you start an RRSP at age 35 and plan to retire at age 65. Initially, you contribute $100 a month ($1,200 a year) at an assumed 4% growth rate.
According to our RRSP contributions calculator, if you continue to save at this rate, after 30 years you would have $69,994 in your plan. However, if you increase your monthly RRSP contributions by $50 each year, by age 64 you would be contributing $1,550 a month ($18,600 a year). As a result, you would accumulate $476,924 in your RRSP account by your planned retirement date — nearly 7 times as much!
Here are 3 ways to boost your RRSP contributions: