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At what age should I begin contributing to my RRSP?

Start your RRSP now as long as you have earned income and file a tax return. Contribute as much as you can afford, as soon as you can. Even modest regular contributions can build over the years into a significant retirement nest egg. Canada Revenue Agency makes it easy to know how much you can contribute to your RRSPs each year. For your current year's limit, simply refer to your Notice of Assessment. This Notice sets out the maximum amount you may contribute in the current year, including any unused contribution room carried forward from previous years.

If you invest $500 a year for 40 years starting today, you can accumulate more than twice as much as the person who waits 20 years, and then invests $1,000 a year for 20 years. The total amount invested is the same, but look at the difference in results.

Total RRSP balance after 40 years of $500 annual contributions equals $77,381.

Total RRSP balance after 20 years of $1,000 annual contributions equals $36,786.

This example is based on a constant 6% rate of return in order to illustrate the advantages of tax-deferred savings and compounded returns. Because actual interest rates fluctuate, the amounts shown do not necessarily represent the value you would actually accumulate in a RRSP.

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