Should I save my RRSP Contribution Room?

Most of us like the idea of saving on tax, so if you have the money to save in a RRSP and you have determined the tax savings are large enough to make it worthwhile, there are still a few situations where you might want to wait to make that contribution.  Below I discuss a couple of situations where even if RRSP’s make sense for you, you may want to hold off investing in an RRSP.

Expecting a buyout?  Many companies offer significant buyouts to long time employees a few years before retirement when trying to cut back staff, labor costs or shift the direction of the company.  Although a large cheque can be exciting it can also create a significant tax issue.  One simple solution to this is to take the buyout and put it in a RRSP.  With this option the deduction the RRSP creates offsets the taxes on the buyout.  As a lump sum like this will often push you into a much higher tax bracket than usual, this is often a great time to use your RRSP room to save tax, that is if you have enough RRSP room.

High income year.  If you get a bonus, or sell an asset (such as a rental house) that sends your income into a higher tax bracket than you normally would be in, this could be worth saving your RRSP room for.

Skip a low income year.  If you happen to make less one year than normal, then skipping the deduction that year may make long term sense.

When planning your finances it is important to look into the future and plan for low income years, high income years and any future financial transactions that may impact your tax situation.



This post has been kept general, to find out if an RRSP is right for you, and how to best use this tool to move forward you should discuss it with a professional.  Details can be found on the government of Canada website. This information is assumed correct, but is for information purposes only and it is up to the reader to verify it’s accuracy before acting on anything written on this site.


This website is focused on rules as they impact residence of British Columbia.  My business is focused on Greater Vancouver, Langley and Surrey and I am happy to discuss these options with people residing in this area.