Posted by Tim Stobbs on January 21, 2011
Well yesterday’s post had an interesting debate in regards should you use an RRSP. Some comments were saying you should never use them while others thought they made an excellent choice. So who is right? Why both of them of course!
I’ve said this before, but it is worth repeating. Personal finance is personal. You will do want works for your giving talents and way of thinking. It doesn’t mean people are wrong or right but rather the situation will drive the decision just as much as any data set you present.
So what I was finding missing from the debate yesterday was some numbers, at what point of income would you not contribute to an RRSP? Also what is your marginal tax rate if you do contribute? For me, my marginal rate is 39% so it’s for me an RRSP is a obvious choice for some of my cash to get that refund since I know my tax rate will be lower in retirement. I would personally stop contributing to an RRSP around $41,000 in income. Why? At that point the marginal rate is significantly less (26%) and dividend income and TFSA are a better bet. So where is your threshold for contributing to an RRSP?