What not to buy with your RRSP?
RSSP is the registered retirement savings plan. The registered retirement savings plan is a type of an account in Canada which is used for savings and holding investment assets. This plan is introduced to encourage savings by the retired employees of the organization.
RRSP plan was first introduced in the year 1957 and is levied in accordance with multiple rules and regulation as per the Canadian Income Tax Act. However, it is not only about saving; the people are required to spend the amount wisely on the required plans other than spending them on holidays and luxuries.
As one knows, the retirement requires savings of money and investment assets for future use and spare due to the absence of a fix salaried amount every month. In that case, spending the registered retirement savings plan wisely is much better than spending it uselessly.
It is not recommended to take money out of the registered retirement savings plan and spend it on trips and holidays. It is just frivolous and useless. However, it has been observed that much of the Canadians end up taking their money out of the savings plan and uses it on retirement trips and holidays.
A registered retirement savings plan is a long term saving plan and a strategy for long term savings for the retired employees. However, in contrast to saving it wisely, the amount of Canadians withdrawing money from the plan has risen up over the past few years. This is surely a bad news for them as their savings will all be lost in sometime and they will having nothing left for future.
In contrast, there are people who have taken out the money to invest in something better and good. According to survey, about 15% of the Canadians withdrew their money from the retirement savings plan to further invest it into a retirement income fund. This is much better and wise for people of retirement age group.
Certain people even have taken out money to pay for debts and expenses. However, according to the survey, the most prominent and most common reason for taking out money is to invest it further in a house. In this regard, according to the Home buyer’s Plan the retired individuals can withdraw about $25,000 out of the registered retirement savings plan (RRSP) for buy their first home as long as it is repaid over a span of 15 years.
Thereby it is definite and wise for every retiring individual to take their money in time and store it for a later time to withdraw it really during need instead of spending on holidays and trips.