Bruce has $15,000 in unused RRSP contribution room and wonders if it makes sense to top up his RRSP. Making an RRSP contribution is a useful way for Canadians to defer taxes and reduce their income to get into a lower bracket. It is also an excellent way of saving for retirement. Up to 18% of gross income can be contributed into an RRSP. However, it is only worthwhile to contribute if it will lower your tax bracket. So, if you are retired and your contribution and withdrawal years will be in the same tax bracket, then contributing to a RRSP is not necessary.

Key Takeaways:

• Continuing to contribute to your RRSP works in your favour if you are taxed in a higher-income bracket than when you are withdrawing the taxable RRSP/RRIF for income.
• If you do not use up the 18% annually, the remainder accumulates as unused RRSP contribution room and can be used in future years when you can contribute.
• It’s most effective if there is a difference in the tax bracket between contribution year and withdrawal year.

“I’m 70 years old, retired on a fixed income, and my tax bracket is not forecasted to change going forward. My question is, I have $15,000 in unused RRSP room. Should I contribute prior to converting to a RRIF?”

Read more: Should I contribute to an RRSP even though I’m retired?