Posted by Tim Stobbs on February 23, 2009
So it’s time again. The ads are full of people buying RRSP’s, have you got yours yet? Gods I dislike this season for pushing people to invest. I mean why can’t people just do it all year long? Yet the ads did give me an idea.
So the idea is based on if you intend to work a bit in retirement. Would it be useful to contribute a lot of money to an RRSP just prior to shifting to part time work? The idea would be to not actually claim some of the deductions in the year you made it but rather carry it forward to reduce your taxable income once you are semi retired to hopefully reduce your tax bill during your first few years while you are adjusting.
In some respects the idea is not a bad one, especially depending if you are going to be doing retirement work which has a highly variable income and you have tax concerns. On the other hand the deductions might be worth more to you to claim on your high income years and just pay your lower income tax rate once you go to part time.
So in general my thoughts are this could be a useful idea depending on your particular situation and concerns. On the other hand it might just be easier to claim the deduction prior to going part time and then if you have extra cash from work you can contribute at that time.
So what are your thoughts? Is this a half baked idea and not worth the complication or could it be useful?