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RRSP Line of Credit
RRSP Line of Credit

By using your tax refund to pay off part of your line of credit, you increase your RRSP contributions while keeping the same monthly payments.

Features and Advantages

How an RRSP Line of Credit Maximizes Your Retirement Capital



Features and Advantages


You maximize your retirement savings immediately.



You receive a higher tax refund.



You benefit from your unused contributions.



You reach your savings objectives more quickly.



You increase your retirement income.



How an RRSP Line of Credit Maximizes Your Retirement Capital

The example below illustrates how you can double your RRSP contribution and keep the same monthly payments. All you need to do is use your tax refund to pay off part of your RRSP line of credit.

 

Tax Refund Not Used
Particulars

Tax Refund Used to Pay Off Line of Credit
Particulars

Loan/RRSP contribution


Interest rate on loan


Monthly payments


Tax savings

$3,000


6%1



$258


$1,4403

$5,750


4.5%2



$258


$2,7603

Long-Term Accumulated Value

Value after 15 years
4


Value after 20 years44




$8,277



$11,609




$15,864



$22,251


1

Current rate applicable on a loan of less than $5,000. Amortization period of 12 months.

2

Current rate applicable (without the reduction of ½ of 1%) on a loan of $5,000 or more. Amortization period of 12 months.

3

On the basis of a marginal tax rate of 48% that can vary according to your financial situation.

4

On the basis of an annualized return of 7%.
*The interest rate is subject to change without notice.

 
 



 
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