Saving for a comfortable retirement — there’s nothing particularly exciting or glamorous about it, but it’s something that should be on every Canadian’s to-do list. That’s where a registered retirement savings plan (RRSP) is a wise choice. This article covers everything you need to know, including how the savings plan works, what its limits and rules are and its benefits, so you can start saving for your retirement today.
An RRSP is a savings plan that’s registered with the Canadian federal government. It provides tax benefits to help you save for your retirement.
There’s no minimum age requirement to open an RRSP, and you can make contributions to an RRSP up until the age of 71. The contributions are tax-deductible, so they can be used to reduce your annual income at tax time.
You also won’t pay any tax on the income you earn from the investments and savings in your RRSP until you make a withdrawal. And when you withdraw funds once you’ve retired, you’ll likely be in a lower income bracket at that time — which will again reduce your tax bill.
Although an RRSP is a “savings” plan, it’s not just used to hold cash like a regular savings account. The money you contribute to an RRSP can be used to invest in cash, GICs, stocks, ETFs, mutual funds, bonds and more.
There’s a limit to how much you can contribute to RRSPs each year, but this amount can be rolled over to future years if you can’t make your maximum contributions right from the beginning. You can choose a managed RRSP, with investments chosen by a real-life or robo-advisor, or opt for a self-directed RRSP that you manage on your own.
When you retire, you can withdraw your savings all at once, or transfer the money to a registered retirement income fund (RRIF) or an annuity if you want a more sustainable stream of income.
There’s a limit to how much you can contribute to an RRSP each year (your own or your spouse’s), which is known as your RRSP deduction limit. Here’s what you need to know about this limit:
Let’s look at an example of how RRSP deduction limits work. In 2025, you contribute $20,000 to your RRSP out of a possible $32,490. As a result, the unused contribution room of $12,490 is rolled over to the following year.
The 2026 contribution limit is $33,810, so the maximum amount you can contribute is $46,300 ($33,810 + $12,490). You can check your contribution limit on your most recent Notice of Assessment from the CRA or by logging in to your CRA online account.
Let’s look at some FAQs about RRSP withdrawals to help you understand how and when you can access your savings.
You can generally withdraw funds from an RRSP whenever you want. But unless you’re making a withdrawal to pay for your education (under the Lifelong Learning Plan) or your first home (under the Home Buyers’ Plan), early withdrawals are taxed. You’ll have to pay withholding tax of 10% to 30% on any amount you take out of your RRSP early.
When you turn 65, you can start making withdrawals from your RRSP without paying withholding tax. However, you’ll still need to pay income tax on the money you withdraw.
You can make an RRSP withdrawal in one of three ways:
If you want to withdraw from your RRSP early, any withdrawal you make will be immediately subject to a withdrawal tax (also known as a “withholding tax”) proportional to how much you took out. RRSP withholding tax rates are outlined in the table below:
| Amount of withdrawal | Tax rate (across Canada) | Tax rate (in Quebec) |
|---|---|---|
| Up to $5,000 | 10% | 5% |
| Between $5,000 and $15,000 | 20% | 10% |
| Over $15,000 | 30% | 15% |
If your marginal tax rate is higher than the RRSP withholding tax rate, expect to pay additional income tax at the end of the year.
Source: “Tax rates on withdrawals” by Government of Canada
There are plans that are offered by the government that allow you to withdraw from your RRSP early without paying withdrawal tax. The HBP is one of them.
Under the Home Buyers’ Plan, you can take money out of your RRSP to buy or build a first-time home for yourself or a family member with a disability.
The withdrawal limit under this plan in 2024 is $60,000. You’ll have up to 15 years to repay this money back into your RRSP without being taxed.
The LLP is another plan offered by the government that allows you to withdraw money from your RRSP to pay for full-time postsecondary education for yourself or your partner. This money can’t be used to pay for your children’s schooling.
In 2025, the maximum yearly withdrawal limit is set at $10,000 per calendar year until January of the fourth calendar year after the year you made your first withdrawal, up to a total limit of $20,000. You’ll have 10 years to repay this money into your plan without being taxed.
The contribution period for each tax year is March 1 to December 31, plus the first 60 days of the following year. However, the deadline for the 2024 tax year was March 3, 2025, as March 1 fell on a Saturday.
You can still contribute to your RRSP after this deadline, but the contributions will be included in the following year’s tax return instead.
Another important deadline to remember is December 31 of the year you turn 71, as it’s the last day you can contribute to your own RRSP.
There are two investment options that you can take advantage of in an RRSP: fixed-income assets and equities.
Fixed-income assets are bonds, guaranteed investment certificates (GICs) and cash held in an investment savings account.
Examples of equity investments are publicly traded stocks and exchange-traded funds (ETFs).
The following assets and equities are RRSP-eligible investments:
Fees vary depending on the provider you choose. Some charges to watch out for include:
Check the terms and conditions closely for full details of the RRSP fees you’ll need to pay.
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According to our latest Finder: Consumer Sentiment Survey March 2026, 38.23% of Canadians hold one RRSP account, making it one of the most widely used savings vehicles after normal savings accounts and TFSAs.
Interestingly, 6.70% of Canadians have two RRSPs, while 2.66% have three or more—a move that may be beneficial for investment diversification.
If you’re looking for a tax efficient way to save for the future, you’re not alone, with nearly one in ten respondents indicating that they plan to open an RRSP within 12 months.
RRSPs offer one of the best ways to save for retirement in Canada. They let you earn tax-free interest on your savings, and you can take advantage of tax breaks for every dollar you invest. The main downside of these funds is that it can be difficult to access the money you save until you retire without paying hefty penalties.
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