RRSP Essentials: Everything You Need to Know in One Place

We all want to enjoy a comfortable retirement, and planning is key to making that dream a reality. However, according to a recent survey conducted by H&R Block, not everyone feels confident in their ability to get there. Almost three-quarters (74%) of Canadians reported that they feel they’re not putting enough money into their retirement savings.

The good news is no matter where you are in your savings journey, Registered Retirement Savings Plans (RRSPs) can be a great tool to help you reach your goals. With their tax advantages and other benefits, RRSPs offer solid savings potential—but before investing in RRSPs, there are important rules and guidelines to keep in mind to make sure you make the most of them.

What is an RRSP?

First introduced in 1957, an RRSP is a savings plan registered with the Canadian federal government that allows Canadians to save for retirement over the course of their working lives. It is different from an average savings account in that any revenue generated within the account is tax-deferred until the money is taken out, and whatever you contribute over the course of the year is tax deductible from your income.

RRSPs can be set up through any financial institution. They will advise you on the types of RRSPs available and what investments they contain. Some financial institutions may also offer the option for a self-directed RRSP, where you can control the assets within the RRSP and make investment decisions yourself.

Overall, there are three different types of RRSPs:

• Individual RRSP: An account that is registered in your name.
• Spousal RRSP: An account that is registered in the name of your spouse, but that you can contribute to.
• Group RRSPs: Plans that employers can offer employees to save for retirement as part of their benefits package.

While RRSPs were designed as a way for Canadians to save for retirement, they can also be leveraged for other goals, such as saving for your first home through the Home Buyers’ Plan or for continuing education through the Lifelong Learning Plan.

What are the benefits of an RRSP?

RRSPs can be great for anyone looking to build wealth and secure their financial future. While they are not the only investment option for Canadians saving for retirement, RRSPs offer some unique advantages that make them the first choice for many. For example:

• RRSPs allow you to pay less income tax. Each year, the amount that you contribute to your RRSP can be deducted from your taxable income, which is why your annual RRSP contribution limit is also known as an RRSP deduction limit. This reduces the amount of income that you are required to pay taxes on and in some cases, would even lower your tax bracket.
• RRSPs offer tax-deferred investment growth. You do not have to pay taxes on funds until they are withdrawn from your RRSP, which means that if you hold investment products in your RRSP, you can enjoy the advantage of compounded interest and growth over the course of your prime earning years.
• RRSPs have a higher annual contribution limit than some other registered accounts, such as Tax-Free Savings Accounts (TFSAs), and you can carry over any unused contribution room.
• RRSPs offer flexibility. RRSPs offer a wide range of investment options that can be held in the account, including mutual funds, Guaranteed Investment Certificates (GICs), savings bonds, and some alternative investments, including real estate investment trusts (REITs) . These allow you to customize your portfolio based on your risk tolerance and financial goals.

How do I open an RRSP and what are the contribution rules?

Any Canadian resident who has earned income and files a tax return is eligible to set up and contribute to an RRSP. While you can open an RRSP at any age over 18, the consensus is that the earlier you can do so, the better, in order to take advantage of tax-deferred compound interest for as long as possible.

You can contribute to your RRSP up to the end of the year you turn 71. After that, any funds in an RRSP must be withdrawn, transferred into a plan that provides income, such as a Registered Retirement Income Fund (RRIF), or used to purchase a life annuity.

How much you can contribute annually is subject to an RRSP contribution limit, also known as an RRSP deduction limit. For 2025, the RRSP contribution limit is 18% of your previous year’s earned income, up to a maximum of $32,490; for 2026, the RRSP contribution limit is 18% of your previous year’s earned income, up to a maximum of $33,810 in 2026. The RRSP contribution deadline is always 60 days past December 31 of each tax year.

Any unused contribution amounts can be carried over indefinitely. For example, if your contribution room was $10,000 in 2025, but you only contributed $7,000, the $3,000 you didn’t use will be added to your limit for 2026. To find out your RRSP contribution limit, check your most recent Notice of Assessment from the Canada Revenue Agency (CRA) or check your CRA My Account in the RRSP and TFSA section.

How does a spousal RRSP work?

For couples in which one spouse makes significantly more money than the other, spousal RRSPs can be a helpful way to fully leverage the tax benefits and savings opportunities of RRSPs. Essentially, a spousal RRSP lets the higher-earning spouse contribute to the lower-earning spouse’s RRSP. This is beneficial for two main reasons:

1. Higher annual contribution limits. The lower-earning spouse will have a smaller contribution limit than the higher-earning spouse and will max out their amount sooner. Having the higher-earning spouse boost their spouse’s RRSP contributions will ensure both RRSPs are reaping all savings opportunities without going over any limits.
2. Lower tax implications upon withdrawal as retirement income. Spousal RRSPs can be used as part of an advanced tax-splitting strategy, where the couple can use the anticipated value of their RRSPs to ensure that the total retirement income they expect to receive, including any work pensions, government pensions, and income from other sources, (e.g. rental property), is split 50/50 between each spouse. This will help keep both spouses in the lowest income tax brackets possible.

Optimizing spousal RRSPs can require complex calculations and planning, so it’s important to discuss this option with a professional financial advisor.

Can I make withdrawals from an RRSP?

While RRSPs are designed for long-term investments, it is possible to make an RRSP withdrawal at any time, so long as your funds are not in a locked-in plan, like a LIRA. Before you make an early RRSP withdrawal, however, it is very important to understand withdrawal rules and the potential tax implications, which may include:

• Paying a withholding tax. Depending on where you live in Canada and how much you withdraw, this could be anywhere from 5-30%.
• Being taxed on withdrawals at your current income tax rate. When you make a withdrawal, it is considered income, and you will be taxed at your current income tax bracket instead of your retirement income bracket.
• Losing out on tax-deferred compounding.
• Losing contribution room. Once you make a withdrawal, you cannot add it back to your overall contribution room.

There are a few exceptions where making an early RRSP withdrawal will not result in being taxed immediately—most notably, if the funds are being used to buy your first home (via the Home Buyers’ Plan) or to finance your education (via the Lifelong Learning Plan). Before you make an early RRSP withdrawal, it is important to get professional financial advice so you understand the full implications.

Enhancing RRSP growth with private alternative investments

One of the benefits of RRSPs is that they allow for a range of qualified investments, including some private alternative investments. For example, RRSPs can be a channel for investing in REITs.

Investing in REITs through your RRSP can be a smart option if you’re looking to diversify your portfolio and mitigate volatility through exposure to real estate. As private alternative investments, REITs do not fall into the conventional categories of stocks, bonds, or cash assets. They offer you the ability to allocate your funds into multiple real estate assets, spread out geographically and diversified by property type. Their value is tied to the underlying value of these real estate assets as well as their respective cash flows, which can create a more stable foundation for your RRSP to grow.

Investing in a private alternative investment through your RRSP can allow for further potential tax savings. When held in an RRSP, investment funds are tax-sheltered so long as the investment remains within the account. You can benefit from tax deferral and tax-free reinvestment until retirement.

Skyline currently offers three private REITs that are registered account eligible:

• Skyline Apartment REIT is a portfolio of professionally managed multi-residential properties in secondary Canadian markets.
• Skyline Industrial REIT is comprised of professionally managed light industrial properties along major Canadian transportation corridors, with a focus on logistics and warehousing.
• Skyline Retail REIT is a portfolio of professionally managed retail properties in secondary and tertiary Canadian markets, with a focus on “everyday essential” brands.

Skyline also offers Skyline Clean Energy Fund, a portfolio of professionally maintained renewable-energy-producing assets across Canada. Skyline Clean Energy Fund is also registered account eligible.

Skyline’s private alternative investments have been providing investors with stable returns since their respective inception dates.¹ By investing in one of Skyline’s private alternative investments, you can take advantage of portfolio diversification, historical stability, and tax advantages. Boost your potential earnings with tax efficiencies in 2025/2026, so your money not only has the opportunity to grow, but to also go further.

When it comes to retirement planning, there is no one-size-fits-all approach. Everyone’s plan will depend on their personal financial goals, risk tolerance, and time horizon. With the potential for tax advantages and long-term growth, RRSPs can be a powerful tool in your retirement planning journey—especially when combined with other investment options, such as private alternatives.

As with any investment, it is important to speak with your financial advisor to determine the right plan for you.

¹ The performance quoted represents since inception. Full annualized return performance is as follows: Skyline Apartment REIT, 7.48% 1-year, 8.12% 3-year, 11.38% 5-year, 14.18% 10-year, 13.40% inception (June 1, 2006); Skyline Industrial REIT, 4.60% 1-year, 5.20% 3-year, 16.23% 5-year, 15.79% 10-year, 14.03% inception (January 10, 2012); Skyline Retail REIT, 8.26% 1-year, 7.76% 3-year, 10.18% 5-year, 12.34% 10-year, 11.68% inception (October 8, 2013); Skyline Clean Energy Fund, 9.01% 1-year, 9.16% 3-year, 9.26% 5-year, and 8.94% inception (May 3, 2018). Performance is for Class A of the funds and does not guarantee future results for Class F. All Skyline REIT’s figures as at September 30, 2025. Skyline Clean Energy Fund’s figures as at October 1, 2025.