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Transcript: Saving for retirement with Jamie Golombek
- Jamie: RRSP, TFSA—saving for retirement with retirement just a few years away.
- What do you choose?
- There’s nervousness about the stock market.
- Does RRSPs equal stock market? Of course not.
- After all, you get to choose what goes into your particular investment account.
- An RRSP allows you to get a tax deduction now, but when you take the money out later, the withdrawals are taxable.
- A Tax-Free Savings Account on the other hand, you contribute to with after-tax dollars, which means that when you take the money out later on, the money is not taxed.
- How do you choose which one is the right? Especially for someone nearing retirement?
- It all depends on your tax rate. If your tax rate is high right now but it’s going to be lower upon retirement, I would go with an RRSP.
- If on the other hand, you’re in a low tax bracket right now, and by going into a situation like an RRSP and taking the money out later upon retirement, that will put you at a higher effective rate because you may lose some of the income-tax and government benefits, then I think a TFSA is the right thing for you.
- But to really determine your best option, make sure to speak with a financial advisor who will tell you what the best option is for your retirement.