“I Don’t Believe in RRSPs” (You Should!)

RRSPs aren’t about belief—they’re about math. In our latest podcast, Jamie Golombek explains why you are almost always better off with an RRSP than without one.

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He says, Jamie, you got anything else for me? And I said, well, I got lots of ideas for you, but you know, I assume you guys have done the basics right?

Done RRSPs, done TFSAs. He goes, you know what, Jamie, I’ll be honest with you. I actually don’t believe in RRSPs. Sorry. You don’t believe in them. This is a high income individual, high tax bracket for his whole career. You don’t believe in RRSPs. It’s like, it’s not like a religion, like you don’t believe in it.

It’s math.

I have six reports I’ve written on RRSPs. I can guarantee you hands down, you’re better off with an RRSP than RRSP than not RRSP. Even if you’re always in the top bracket. Like people don’t understand. If you’re in Ontario where we live, right? And you’re in a top bracket, let’s call it 50% to make it easy.

If I have $10,000 of employment income and I put that into my RSP, I have $10,000 invested for me for the rest of my life until I take the money out of my riff or until I die, right? If I choose, I don’t believe in RRSPs, which means I’m just gonna invest the money in the stock market. Let’s say instead I take the 10,000 right away, I lose half of it

It’s now five. So I take that five and I invest it in the best strategic non-registered account, right? You still have only half the money working for you. So at the end of the day, even if you’re in the same tech, you’re always gonna be worse off with a non-registered account than an RRSP. So again, there are scenarios where, you know, if your time horizon’s short and you’re in a low bracket now you’re gonna be higher bracket, you know, in five years time when you take the money out.

Yes, we have seen outlier scenarios, but for the, certainly for high income clients that we talk to, you’re absolutely always better with the RRSP.