As a Canadian approaching retirement, one of the most important decisions you will have to make is how to wisely invest your savings. With the uncertainties surrounding government pension plans, it is crucial to explore other options to secure a comfortable retirement. Here are four investment options specifically tailored for Canadians:
1. Registered Retirement Savings Plan (RRSP)
The RRSP is a popular choice for retirement savings among Canadians due to its tax-deferred nature. Contributions made to an RRSP are deducted from taxable income, reducing the amount owed to the government. The earnings within the plan are also tax-sheltered until withdrawal during retirement when the individual is likely to be in a lower tax bracket. It is important to note that there is a contribution limit each year and any unused room is carried forward.
2. Tax-Free Savings Account (TFSA)
Introduced in 2009, the TFSA has become a popular investment option for many Canadians. Unlike an RRSP, contributions are made with after-tax income, but any earnings within the plan are tax-free. This makes it a great option for those who expect to be in a higher tax bracket during retirement. The contribution room for TFSAs is also carried forward and any withdrawals can be re-contributed in future years without reducing the contribution room.
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