RRSP Loans - RRSP vs. Mortgage
You want to save for retirement. But you also want to pay down your mortgage.
How do you balance being prepared for retirement and taking advantage of tax-sheltering provided by RRSPs but not paying a mortgage for what seemsto be a lifetime?
- Some factors to consider:
- Mortgage interest rate
- Mortgage term
- Principal balance on your mortgage
- Investment time horizon
- Expected return on your investment
- Your marginal tax rate
- Contributing to an RRSP makes sense when:
- The mortgage interest rate is low
- The principal balance on your mortgage is low
- Your marginal tax rate is higher
- You want to reduce current taxes
- You want to increase your retirement savings
Don’t forget, mortgage interest is normally not tax deductible. This means that to pay down each dollar on your mortgage, you need to earn more than a dollar in income.
- What to do for the best of both worlds?
- Maximize your RRSP contribution
- Use the refund to reduce your mortgage It’s a win-win situation
Talk to your financial advisor to find out how to pay down your mortgage and save for your retirement.
Weekly Tips
- Do I contribute to my RRSP or pay down the mortgage? - Feburary 25, 2008
- Tax refunds mean you've paid too much tax -what might you do? - Feburary 11, 2008
- Increase your RRSP deposit and use the refund to pay off your RRSP loan - January 31, 2008
- Look outside Canada for your global investing - January 28, 2008
- Using RRSP loans to help you be retirement ready - January 21, 2008
- Reasons why an RRSP loan might make sense for you - January 14, 2007
- Are you saving enough for your retirement? - January 10, 2008
- Do you know how long it will take for your money to double? - January 7, 2008
- The sooner you start contributing to your RRSP the better - January 3, 2008
- Don't pay the high cost of waiting delaying your financial plan - December 31, 2007
- Would you rather clean the garage than plan for your retirement? - December 27, 2007
- Let Equitable Life help you with the answers to be retirement ready. - December 24, 2007
- Facts and stats to know for this year's RRSP season - December 20, 2007
- What's your excuse to ignore the benefits of RRSP's? - December 14, 2007
NOTE: You will need Adobe Acrobat Reader to view these documentsThis information is provided with the understanding that it does not render legal, accounting or other professional advice. Readers are advised to seek professional counsel from a financial advisor. ® denotes a trademark of The Equitable Life Insurance Company of Canada.
