Congratulations! Opening a Registered Retirement Savings Plan (RRSP) is an important step toward building long-term retirement savings. But opening the account is only the beginning.
An RRSP is a registered account designed to help Canadians save and invest for retirement. Contributions may be deductible from your taxable income, and investment income earned inside the RRSP is generally tax-deferred while it remains in the plan. When you eventually withdraw money, the withdrawal is generally included in your taxable income. So, what should you do after opening an RRSP? The answer depends on your retirement goals, time horizon, income, risk tolerance and overall financial situation. Here are some important steps to consider.
Opening an RRSP does not automatically mean your money is invested. An RRSP is a registered account, not a specific investment. The money inside your RRSP can be held in different types of investments depending on the options offered by your financial institution.
Depending on your RRSP and investment provider, options may include:
The right mix depends on your circumstances. For example, someone with many years until retirement may have a different investment strategy from someone who expects to begin withdrawing their retirement savings soon.
Before choosing an investment, consider:
Don't assume that opening an RRSP means your retirement strategy is complete. Review what you own and understand how each investment works.
Different investments carry different levels of risk, potential return and liquidity.
GICs and other term deposits may appeal to investors who prioritize principal protection and predictable returns. YNCU currently offers several RRSP investment options, including fixed-rate RRSPs, RSP variable savings, Step-Up RRSPs and index-linked term deposits. YNCU also offers investment options such as mutual funds through its investment services.
Mutual funds and ETFs can provide exposure to a diversified collection of investments. However, they are not the same as guaranteed investments. Their value can rise or fall with market conditions, and fees and expenses may apply.
Stocks can provide growth potential but can also experience significant price fluctuations. Bonds may provide income and diversification, but they also carry risks, including interest-rate and credit risk. The important question isn't simply which investment has the highest potential return. It's whether the investment is appropriate for your goals, time horizon and ability to tolerate losses.
Opening an RRSP is a great first step, but regular contributions can help you continue building your retirement savings.
You could consider:
Even relatively small contributions can add up over time. The earlier you contribute, the longer your money has the opportunity to grow and potentially benefit from compounding. However, the right contribution amount depends on your overall budget and financial priorities.
One of the most important things to understand after opening an RRSP is how much you can contribute.
Your RRSP deduction limit generally includes unused contribution room carried forward from previous years plus the lesser of:
with adjustments for certain pension-related amounts and other factors. For 2026, the annual RRSP dollar limit is $33,810. Your personal available contribution room may be different. Your personal RRSP deduction limit is available through your CRA information and is also shown on your Notice of Assessment.
Don't contribute based solely on the annual maximum. Your personal contribution room is what matters. Overcontributing to an RRSP can result in tax consequences, so check your available room before making a large contribution.
There is no requirement to wait until the end of the year to contribute to an RRSP. Making contributions earlier can give your money more time to potentially grow within the plan. Regular contributions can also help turn retirement saving into a habit rather than something you have to remember to do each year. However, don't prioritize RRSP contributions at the expense of more immediate financial needs. Depending on your circumstances, paying down high-interest debt, maintaining an emergency fund or using other registered accounts may also be important parts of your financial plan.
One of the major benefits of an RRSP is the potential tax deduction on eligible contributions. Your RRSP contribution can generally be deducted from your taxable income, subject to your available RRSP deduction limit.
Investment income earned within the RRSP is generally not taxed as it is earned while it remains in the plan. Tax is generally paid when you withdraw funds from the RRSP. This is why an RRSP is often described as tax-deferred rather than tax-free. You are generally postponing taxation rather than eliminating it.
If your RRSP is not locked in, you can generally withdraw money at any time. However, regular RRSP withdrawals are generally taxable and must be included in your income for the year of the withdrawal. Your financial institution will generally withhold tax when you make the withdrawal.
For Canadian residents outside Quebec, the federal withholding rates are currently:
Quebec has different withholding rates. Importantly, the amount withheld is not necessarily the same as the total tax you will ultimately owe. Your final tax liability depends on your overall income and tax situation for the year. This is one reason it is important to consider the tax implications before making a significant RRSP withdrawal.
The Home Buyers’ Plan (HBP) allows eligible individuals to withdraw money from their RRSP to purchase or build a qualifying home without the withdrawal being treated as taxable income, provided the applicable conditions are met. The current HBP withdrawal limit is $60,000. HBP withdrawals must be repaid to your RRSP according to the applicable repayment schedule. If you do not repay the required amount when due, the amount may have to be included in your income for tax purposes. The HBP has specific eligibility, withdrawal and repayment requirements, so review the current CRA rules before making a withdrawal.
The Lifelong Learning Plan (LLP) allows eligible individuals to withdraw money from their RRSP to finance qualifying full-time education or training for themselves or their spouse or common-law partner. Currently, you can withdraw up to $10,000 in a calendar year, with a total LLP participation limit of $20,000. Eligible withdrawals are generally not included in income, provided the applicable conditions are met. LLP withdrawals must generally be repaid over a 10-year period. Amounts that are not repaid as required may become taxable. The LLP has specific eligibility and repayment rules, so check the current CRA requirements before using your RRSP for education expenses.
Your financial situation can change significantly over time.
You may:
Your investment strategy may need to change along with your circumstances. Consider reviewing your RRSP at least annually—or more frequently when there is a significant change in your financial situation. A review doesn't necessarily mean you need to make changes. Sometimes the right decision is to stay with your existing strategy.
Over time, different investments can grow at different rates. Suppose your target portfolio was 60% equities and 40% fixed-income investments. If equities perform particularly well, your portfolio could eventually become more heavily weighted toward equities.
Rebalancing means adjusting your investments to bring your portfolio back toward your intended asset allocation. Rebalancing can help ensure that your portfolio continues to reflect your risk tolerance and investment strategy. However, rebalancing isn't something you necessarily need to do every time the market moves. Consider reviewing your asset allocation periodically and discussing appropriate rebalancing with an investment professional.
Your RRSP is only one part of your retirement strategy.
Depending on your situation, your future retirement income may also come from:
Looking at all your retirement resources together can help you make better decisions about how much to save, where to save it and when to draw on different sources of income.
An RRSP is designed primarily for retirement savings, so eventually you'll need to consider how and when to convert those savings into retirement income. An RRSP generally cannot remain an RRSP indefinitely. By the end of the year you turn 71, you generally need to convert your RRSP to a retirement income option, such as a Registered Retirement Income Fund (RRIF), or use another permitted option. YNCU offers RRIF solutions designed to help turn retirement savings into income.
Planning ahead can help you consider:
The right withdrawal strategy is personal and can be worth discussing with a qualified financial professional.
If you're married or have a common-law partner, a spousal RRSP may be worth discussing as part of your retirement strategy. With a spousal RRSP, one spouse or partner makes the contribution while the RRSP belongs to the other spouse or partner. Depending on your circumstances, this can help with retirement-income planning and potentially income splitting in retirement. YNCU offers spousal RRSP options and information to help members understand how they may fit into a broader retirement strategy. Because spousal RRSPs have specific attribution rules, withdrawal timing and tax implications should be considered before making a withdrawal.
Retirement savings are typically a long-term investment. That means short-term market movements shouldn't automatically lead to major changes in your strategy. Markets rise and fall. The appropriate response depends on your investment objectives, risk tolerance and time horizon—not simply what the market did last week or last month.
Instead of trying to predict every market movement, focus on the things you can control:
If you've recently opened an RRSP, here's a simple checklist to get started:
1. Check your contribution room.
Confirm your personal RRSP deduction limit before contributing.
2. Understand your investments.
Know what your RRSP actually holds and how those investments work.
3. Set a contribution strategy.
Consider automatic monthly or pay-period contributions.
4. Review your risk tolerance.
Make sure your investment mix is appropriate for your goals and timeline.
5. Diversify.
Avoid relying too heavily on a single investment, company, sector or asset class.
6. Understand the tax rules.
Know how contributions, withdrawals, HBP and LLP participation can affect your taxes.
7. Review your plan regularly.
At least once a year, consider whether your investment strategy and retirement goals are still aligned.
8. Think beyond the RRSP.
Consider how your RRSP fits alongside your TFSA, pension, CPP, OAS and other retirement resources.
An RRSP can hold a range of qualified investments, including:
The exact investments available depend on the type of RRSP and financial institution you use. A self-directed RRSP generally gives you more investment choices. The important point is that opening an RRSP does not automatically mean your money is invested. In many accounts, contributions initially sit in cash until you select an investment.
There is no single amount that is right for everyone. A good starting point is to contribute an amount you can maintain consistently while still covering your essential expenses, emergency savings, and high-interest debt. Your maximum deductible contribution is generally based on your available RRSP contribution room. New room is generally based on 18% of your previous year's earned income, up to the annual limit, with adjustments for items such as a pension adjustment and unused room from previous years. For 2025, the annual RRSP dollar limit is $32,490. For many people, a practical approach is to contribute enough to take advantage of an employer matching program if one is available, then increase contributions as income rises.
The easiest way is through your CRA My Account. Your RRSP deduction limit is available online, and it is also shown on your most recent Notice of Assessment or Notice of Reassessment. Before making a large contribution, check your available room carefully. Generally, contributions exceeding your RRSP deduction limit by more than $2,000 can be subject to a 1% tax per month on the excess. You should also keep your own records of contributions and compare them with CRA's information.
For most people, regular contributions are easier to maintain than occasional large contributions.
You could contribute:
Automating contributions can help make retirement saving a habit and reduce the temptation to spend the money elsewhere. The most important factor is consistency. A smaller contribution made regularly can be easier to sustain than a large contribution you struggle to make every year.
Generally, yes—if you already have the money available and the contribution fits your financial plan. Contributing earlier gives the money more time to potentially earn investment returns on a tax-deferred basis. For example, investing $5,000 in January gives it more time in the market than investing the same $5,000 in December. However, don't delay paying down expensive debt or building an emergency fund just to make an early RRSP contribution. The best timing depends on your overall financial situation. Remember that RRSP contributions made during the first 60 days of the following year can generally be used for the previous year's tax return.
If your RRSP is not locked in, you can generally withdraw money at any time. You do not have to wait until retirement. However, regular RRSP withdrawals are generally taxable income in the year you make the withdrawal. There are two important programs that can allow qualifying withdrawals without immediate tax:
Withdrawals under these programs have specific eligibility, repayment, and reporting requirements.
Regular RRSP withdrawals are generally included in your taxable income for the year.
For Canadian residents outside Quebec, your financial institution generally withholds:
Quebec has different withholding rates.
These are withholding amounts, not necessarily your final tax bill. Your actual tax owing depends on your total income and marginal tax rate for the year. You may owe additional tax—or potentially receive some of the withholding back—when you file your tax return. This is one reason large RRSP withdrawals can be more tax-efficient when planned for a year in which your taxable income is relatively low.
Yes. If you qualify, the Home Buyers' Plan (HBP) allows you to withdraw money from your RRSP to buy or build a qualifying home without having the withdrawal treated as taxable income at the time of withdrawal. The HBP is subject to eligibility rules, including rules concerning whether you qualify as a first-time home buyer. For example, CRA generally looks at whether you lived in a home that you or your spouse or common-law partner owned during the current year or the previous four calendar years. You can also potentially use an RRSP withdrawal under the HBP alongside a qualifying withdrawal from an FHSA for the same home, provided you meet the requirements for both programs.
The current HBP withdrawal limit is $60,000. You can withdraw from more than one RRSP as long as you are the annuitant of each account. Eligible HBP withdrawals of up to $60,000 are not subject to the normal withholding tax. HBP withdrawals generally have to be repaid to an RRSP over a 15-year repayment period. If you do not make required repayments, the required amount can generally be included in your taxable income.
Yes. The Lifelong Learning Plan (LLP) can allow eligible RRSP holders to withdraw money to finance qualifying full-time education or training for themselves or their spouse or common-law partner.
Under the LLP, you can currently withdraw up to:
Eligible LLP withdrawals are generally not included in income at the time of withdrawal, provided the program's requirements are met. The amounts generally have to be repaid to your RRSP over the required repayment period. The LLP cannot be used to finance your children's education.
You cannot continue contributing to your own RRSP after December 31 of the year you turn 71.
Before then, you generally need to decide what to do with the RRSP. Common options include:
A RRIF allows you to continue holding investments while receiving income from the account. Once a RRIF is established, minimum annual withdrawals generally apply beginning the following year.
You may want to rebalance periodically, particularly if your investments have moved significantly away from your intended asset mix.
For example, suppose your target allocation is:
If strong stock-market performance causes your portfolio to become 70% stocks and 30% bonds, you may decide to rebalance back toward your target. There is no universal rule for how often to rebalance. Some investors review their portfolio annually, while others rebalance when an asset class moves beyond a predetermined percentage from its target. You can sometimes rebalance simply by directing new contributions toward underweighted investments instead of selling investments. Your investment mix should reflect your time horizon, risk tolerance and financial goals, rather than short-term market movements.
It isn't necessarily a choice between a GIC and a mutual fund. They serve different purposes. A GIC can provide predictable returns and protection of principal according to the terms of the GIC. It may be appropriate for money you expect to need on a relatively specific timeline or for investors who prioritize stability.
A mutual fund pools money from many investors and can invest in stocks, bonds, or a combination of assets. Its risk and potential return depend on what the fund owns. ETFs, individual securities, bonds and other qualified investments may also be appropriate inside an RRSP. The better question is: What investment mix is appropriate for your goals, timeline and risk tolerance? The fact that an investment is held inside an RRSP does not make it automatically suitable.
The biggest difference is when you receive the tax benefit.
| Feature | RRSP | TFSA |
|---|---|---|
| Contributions | Generally tax-deductible | Not tax-deductible |
| Investment growth | Generally tax-deferred while inside the plan | Generally tax-free |
| Withdrawals | Generally taxable income | Generally tax-free |
| Contribution room | Based largely on earned income and previous unused room | Based on annual TFSA limits and unused room |
| Withdrawn money | Does not normally restore RRSP contribution room | Withdrawal amount is generally added back as contribution room the following calendar year |
| Main purpose | Often used for retirement and tax-efficient long-term investing | Flexible tax-free saving and investing for many goals |
For example, an RRSP contribution can reduce your taxable income for the year in which you claim the deduction. In contrast, you contribute after-tax money to a TFSA, but qualifying withdrawals are not taxable. TFSA withdrawals also generally create new contribution room beginning the following calendar year.
Which one is better? Neither is universally better. An RRSP can be particularly attractive when you are in a relatively high tax bracket while working and expect to be in a lower tax bracket when withdrawing the money. A TFSA can be especially useful when you want tax-free withdrawals and greater flexibility. For many Canadians, the best strategy is to use both accounts as part of an overall savings and investment plan.
Opening an RRSP is an important first step, but the real value comes from how you manage it over time. Make contributions when appropriate, understand what you're invested in, review your portfolio periodically, keep your strategy aligned with your goals and understand the tax implications of accessing your money.
You don't have to manage your RRSP alone. YNCU offers a range of RRSP investment options, including fixed-rate RRSPs, variable savings, Step-Up RRSPs, index-linked term deposits and investment options through its wealth services. Product availability, rates and terms can change, so review YNCU's current information before making an investment decision.
If you're unsure which RRSP investment strategy is right for you, consider speaking with a qualified YNCU advisor about your goals, time horizon and financial situation.