Question 1

What is the 2025 RRSP contribution limit?

Accepted Answer

The 2025 limit is the lesser of 18% of your previous year's earned income or $32,490 (rises annually with average wage growth). Unused contribution room carries forward indefinitely.

Question 2

How does the RRSP tax refund work?

Accepted Answer

RRSP contributions are deducted from your taxable income in the year contributed. At a 31% marginal tax rate, a $10,000 contribution gives you a $3,100 tax refund — effectively making your $10,000 investment cost only $6,900 out of pocket.

Question 3

RRSP vs TFSA — which is better?

Accepted Answer

RRSP wins if your retirement tax bracket will be LOWER than your contribution year bracket. TFSA wins if higher. Many Canadians use both — RRSP for tax-deferral on high-income years, TFSA for emergency-accessible tax-free growth.

Question 4

When do I pay tax on RRSP money?

Accepted Answer

When you withdraw. RRSP is tax-deferred — you get a refund now, but withdrawals (including all growth) are taxed as regular income later. After age 71, RRSP must be converted to a RRIF with mandatory annual withdrawals.

Question 5

What return rate should I assume?

Accepted Answer

Be realistic. Canadian balanced portfolios historically return 5–7% inflation-adjusted long-term. Equity-only might be 7-8%. Bond-heavy might be 3-5%. The default 6% is a reasonable middle-ground assumption for projections.

Year	Contribution	Tax refund	Balance
1	$8,500	$2,635	$24,910
6	$8,500	$2,635	$84,125
11	$8,500	$2,635	$163,369
16	$8,500	$2,635	$269,415
21	$8,500	$2,635	$411,328
26	$8,500	$2,635	$601,240
30	$8,500	$2,635	$798,467

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