Hi:
I'm not the biggest fan of RSP's. Much of it has to do with our tax situation.
When you take money out when you retire, you pay tax at your marginal tax rate - obviously. But there are few tax deductions you can claim as you get older.
If you have pensions or work a bit it's not hard to go over the $53,000 or so clawback limit. At that point you are working for the government.
Although it seems like a savings on the front end, sometimes a better way to go is to put your money in your house and pay down the mortgage.
As our principal home is tax free, the faster that is paid down the richer you are.
If you sell your paid-for home for $500,000, it's your $500,000 to do with as you wish.
If you sell out some of your RSP's and let's say you sold $500,000, you would pay tax on that at current tax rates, which are in the 40% range. That is, $200,000 to the government!
Not a hard choice when you look at it that way. The trouble is, we are bombarded by RSP ads at this time of year, and not bombarded by ads telling us to pay off our mortgage. Every financial institution has their vested interests, and it's up to us to take care of our financial interests.
M.
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