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Spousal RRSP in Canada:
Maximizing Retirement Savings and Tax Benefits


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A spousal Registered Retirement Savings Plan (RRSP) is a valuable financial tool for couples in Canada, offering a strategic approach to retirement savings and tax planning.


What is Spousal RRSP?

A RRSP is a type of retirement savings account for married or common law couples. It allows them to balance their retirement savings and income.

Balancing Retirement Savings: With a spousal RRSP, one partner can contribute money to other partner’s RRSP account. This helps even out their retirement savings especially if one partner earns more than other partner.

Income Splitting After Retirement: After retiring, couple can withdraw money from spousal RRSP. This allows them to split their retirement income more evenly, potentially results in reducing their overall tax liability.


What are the Tax Advantages of Spousal RRSP:

Contributions to a spousal RRSP is considered income of receiving spouse. During retirement, when withdrawals are made from the spousal RRSP, they are taxed in hands of the lower income spouse which results in lower tax rates.

This can lead to considerable tax savings during retirement compared to a situation where both partners have separate RRSPs with similar contributions.


How RRSP helps in Income Splitting for Retirement?

One of main benefit of a spousal RRSP is ability to split retirement income between partners. 

By distributing income more evenly during retirement, couples can potentially stay in lower tax brackets, reducing overall tax burden and allowing their retirement savings to stretch further.


How to Maximize Spousal RRSP Benefits?

To maximize benefits of a Spousal RRSP, consider following tips:

  • Equalizing Retirement Savings :

Aim to balance contributions between partners to ensure both can enjoy a comfortable retirement.

  • Diversification :

Diversify investments within spousal RRSP to reduce risk and enhance potential returns.

  • Consult a Financial Advisor

: Seeking advice from a qualified tax consultant can help tailor a strategy that aligns with your specific financial goals and circumstances.