I have had many people say to me, “I don’t take my money out of my RRSP because I don’t want to pay tax on it.” There was never another choice.
When you put money into an RRSP you get a tax deduction, when you take it out you pay tax on it. This is how it works! And generally you will pay tax on more money than you got a deduction for – since the plan always was for your RRSP to grow. In recent years we have had the choice to put money in a TFSA rather than an RRSP to save for retirement. The TFSA is not a tax deduction when you contribute so there is no tax when you take it out. Your RRSP and TFSA accounts are merely baskets that you put investments in – you still have to choose what to invest in stocks, bonds, bank accounts etc.
If you don’t take your RRSP money out when you are alive then you will pay tax on all of it when you die, unless you leave the money to your spouse.
Remember what you saved this money for. If you are retired then you should be spending the money in your RRSP – that was what it was for. If you are not retired then the amount you have saved in your RRSP is all going to be taxed when you take it out. There are no other options.
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