While it may be cliché to say this out loud, but we can agree that 2020 had more plot twists and turns than a high-grossing blockbuster. There have been so many unknowns and sources of anxiety:
- Will my project restart allowing me to work again?
- Will my government support be enough so that I can meet my living expenses?
- Do I have enough to contribute more to my RRSP or should I focus on reducing my debt instead?
- What if I owe taxes?
We can also agree that this RRSP and Tax season will also be unlike any we’ve experienced before. So, here are some strategies to think about that might also help you to set a financial action plan for 2021, 2022 and onward.
- If you already file your taxes online using software, you can create a mock tax return to take a tax snapshot. This is a useful tool even though you’re using last year’s CRA platform. With this information, you’ll be able to predict whether you can top up your RSP contribution if you have room. If the results show that you could expect a refund, consider paying off debt, adding more to your retirement savings or putting it into an emergency fund. (Or do all three!)
- Another tool that is available that can help you plan your retirement savings is the GRSaccess website. Once you sign into your account, you can access free articles, videos and calculators. The calculators can help you make decisions by playing around with different scenarios so you can visualize what your financial needs may be at retirement.
- Remember also that it’s never too late to seek professional financial advice, whether it be for your RRSP, your taxes or to reduce your debt — or all three. The adjustments that you make now do have the potential to make a positive difference in your financial future.