Join us for our RRSP and TFSA Considerations & 2025 Market Update Webinar on February 5th by clicking here.
Kickstart your financial growth this year by contributing to your Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP). Discover how prioritizing these contributions can enhance your financial strategy and set you on the path to a secure future.
Contributing to your TFSA and RRSP early in the year can significantly enhance your financial growth. One of the primary advantages of making early contributions to your TFSA and RRSP is the potential for earlier compounding. The power of compounding means that the earlier you invest, the more your money can grow over time. Making contributions early in the year encourages better financial planning and discipline. It ensures that you prioritize your savings and investments before other expenses.
The TFSA was introduced in 2009 to help Canadians save money tax-free. Any income earned within a TFSA, whether from investments or interest, is not taxed, making it an attractive option for both short-term and long-term savings. The RRSP was introduced in 1957 to encourage Canadians to save for retirement. Contributions to an RRSP are tax-deductible, and the investments grow tax-deferred until withdrawal. This makes RRSPs a powerful tool for retirement planning.
The annual contribution limit for TFSA’s in 2025 is $7,000, and unused contribution room carries forward indefinitely. For example, if you have been eligible to contribute since 2009, your total contribution room by 2025 would be $102,000. Amounts withdrawn can be re-contributed in the following year, but over-contributions are subject to a penalty.
For the RRSP, you can contribute up to 18% of your previous year’s earned income, to a maximum of $32,490 for 2025. Unused contribution room carries forward indefinitely, and your contribution room includes pension adjustments. Withdrawals from your retirement savings are taxed as income. Additionally, you are required to convert your RRSP into a Registered Retirement Income Fund (RRIF) by the end of the year you turn 71.
It’s important to regularly review and adjust your financial plan. Our team of Tradex Advisors are here to assist by keeping you informed about market trends, economic shifts, and helping you adjust to personal events that may affect your financial well-being. For assistance, call us at (613)-233-3394 or email info@tradex.ca. We offer complimentary portfolio reviews and retirement projections for both current and prospective members.