5 RRSP blunders that could drain your retirement savings

With days left before the RRSP deadline on March 1, many Canadians are struggling to contribute to their retirement savings to lower their 2020 tax bills. According to BMO’s annual RRSP survey, the pandemic has forced registered retirement savings plan holders to sit out this year. Yet, as BNN Bloomberg Personal Finance Columnist Dale Jackson points out, our understanding of RRSPs is lagging. He laid out five common blunders and oversights that could be draining your savings.

Emergency savings can give peace of mind for surviving 'worst-case scenario'

Many Canadians have experienced income uncertainty or unforeseen health complications amid the COVID-19 pandemic. Robyn Thompson, founder of Castlemark Wealth Management, laid out some tips for how Canadians can start putting away money for an emergency savings fund so that they're protected for future curveballs. It’s not just getting into the habit of socking cash away, but also figuring out how to stretch each dollar as far as you can, Thompson said.

Investors are taking on more risk for higher yields

With interest rates at a near-decade-low, investors are looking to get into riskier assets on the hope of gaining higher returns. CTV's Chief Financial Commentator Pattie Lovett-Reid explains that people are ignoring basic investment fundamentals and are forgetting the importance of quality in your portfolio as well as balance.

Plan ahead if you have to repay CERB, experts say

Many Canadians were caught off guard when the federal government announced CERB applicants who didn’t meet the minimum requirement of having a $5,000 net income, rather than gross income, would have to repay what they received. Ottawa has since backtracked slightly, allowing those who had a gross income of $5,000 to keep the amount collected. However, some may still be asked by the CRA for the money back. Experts say it’s a good idea to file your taxes early to see if you owe anything and be able to plan ahead to pay it back.

Is investing in an RRSP right for you?

Deciding between investing in an RRSP or a TFSA is no easy task, especially if you’re not aware of what each option has to offer. CTV’s Chief Financial Commentator Pattie Lovett-Reid said investing in an RRSP is not for everyone. She looks at the most overlooked elements, explaining which of the two savings methods is better for low income individuals, first time home buyers and those who are in higher tax brackets.

 
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“There’s never a guarantee that you’re not going to need emergency savings account because emergencies usually happen at the most inopportune time. ”

- Robyn Thompson on the importance of always being braced for a worst-case scenario.