Advertisement
Lowering taxable income is rule No. 1
Q: I earn $30,000 per year at a part-time job and collect $48,000 in pension. My husband still works and earns $85,000 annually, but has no pension. Should I contribute to a spousal RRSP to lower his income and improve his retirement portfolio?
— AnnMarie Wolf, Toronto
A: Spousal RRSPs are a great tool to spread out a retirement nest egg and reduce income tax. But in your case, a regular RRSP for your husband works best. “Even after the additional income, his marginal tax rate is at least a few percentage points higher than hers, so he’d benefit more by making his own RRSP contributions,” says Noel D’Souza, a Toronto CFP with Money Coaches Canada. Another reason not to contribute to a spousal RRSP: Any investment you make uses up your RRSP contribution room, not your husband’s, and lowers your taxable income, not his. Instead, you should take on more household expenses, freeing up your husband’s income to maximize his RRSP contributions. In retirement, you want your incomes to be as close as possible, to minimize the tax you pay as a couple.
Ask MoneySense: Leave your question for Bruce Sellery »
Read more:
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Practical advice on how to build your retirement savings for employees at mid-career, the self-employed, single parents and more.
The Trump effect and Trumponomics, Shopify’s huge earnings beat, it’s sunny days for Suncor shareholders and more.
Here’s how to get your free ticket to attend two MoneyShow virtual expos.
You started investing in your 20s, and you feel pretty good about doing it. But now what? Consider impact...
Here are the best accounts to hold your savings and investments.
Want an idea of how much tax you paid—or will be paying—for 2024? Here are the federal and provincial...
The U.S. election made the market go up—for now. Is volatility keeping you up at night? Here are some...
Apple and Nvidia vie for global market cap crown; Google, Microsoft and Meta crush earnings; Amazon’s Bezos takes WaPo...
While not guaranteed like an annuity, MyRetirementIncome is a flexible and simple financial product for those needing to convert...
