I have a pension. Do I need an RRSP too?

Unless you are a public servant, chances are you’ll need an RRSP.

  12

by

Online only.

  12

classroom_322For most people the answer is yes—although if you have a good pension at work, you can certainly contribute less to your RRSP than someone without one. With no pension, you can contribute up to 18% of your income to an RRSP each year. If you have a private pension, then the amount you are allowed to contribute to your RRSP will be reduced, to reflect the fact that you are also contributing to your retirement income through your pension at work.

There is one group that doesn’t need RRSPs at all: government workers. Teachers, police officers and other civil servants have among the best pension plans available and won’t need help from RRSPs to retire comfortably. For instance, a couple who are both government workers can expect to enjoy a combined annual pension income of at least $50,000, which is roughly the kind of income that a million-dollar portfolio would generate.

12 comments on “I have a pension. Do I need an RRSP too?

  1. Besides Govt workers, police and teachers there are also military, firefighters, nurses, etc. People however excuse themselves from those jobs because they might get killed or injured, suffer a sickness, have to do shift work, get edjucated to get ahead, etc. My wife and I are both retired comfortably after raising six children and having to move many times. We worked at difficult jobs for over 35 years and lived within our means. We had to buy five houses over the years but live in the final one for the past 30+. There are some legitimate excuses but many are just that, excuses. Many in manufacturing or industrial jobs lived high off the hog for years, never looking ahead or upgrading for the future, then when the ax fell, well???

    Reply

    • I am not sure what government workers you are refering to BUT as a retired government employee I can tell you that my pension is not excessive. My wife and I raised three children and had to make do without many things as well. My government pension was a defined contribution plan, the defined pension plans went out in the 1980's. As a result my contributions basically went into an RRSP, so I do not have a monthly guaranteed pension amount.

      Reply

  2. this is dumd u save all the way through your working life and you die at 95 (ya right) with 500 k still in your rrsp. when do you get to spend that money in heaven

    Reply

    • Then suggest don't save anything if you have it all figured out.

      Reply

  3. I'm not sure one can say teachers, govermnent works, etc don't have to contribute to RRSPs. You never know what can happen with a pension. Better to be safe than sorry, I say.

    Reply

    • I agree with Colleen, even with a gov. job, employment is not gauranteed for life.
      Save in RRSP and if you also get a good pension you can help family or friends or charities.

      Reply

  4. RRSP seems for me like a govermental control of your money. You are taxed on both Pension Plan and on your RRSP. Say, instead of a $500,000 in RRSP you saved after taxes $250,000. If you have that cash in your mattress or the gold bars in your sfety deposit box in the bank, then your Pension Plan is taxed much less, as if you haven't got any other income. Besides, nobody puts nose in your financial status.

    Reply

  5. Interesting article. With the government introduction of TFSA, those occupations that have great pensions should look at this as an invesment tool. When retirement does come, the income from these account is tax free. As those have laready commented, job security is not 100% so with the TFSA, any money that is required can easily be withdrawn without tax problems. The whole point of this article however is the importance to save. People need to start this ASAP and doing so in your 20;s will seem hard intiitally but will pay off in years to come. Seriously, for most people they spend 100/month on things that are probably net needed. Its all about priorities…..

    Reply

  6. Two government workers that collect a 30 pension will collect alot more than $50,000 net per year._So Maybe two postal workers will collect $50,000 in total.

    Reply

  7. As a teacher it is a good pension, but I also contribute about 500.00 of my paycheque each month into it…I hope people don't assume it's free money from the gov't…it is money teachers put into their own pensions over their careers…just a thought (and I'm young and I have been saving for my retirement since I was 16…and not factoring a pension from my teaching career…you just never know!)

    Reply

  8. When we are almost near by our end of job date we need to be careful about our pension. because it is most important to all of us for our future. Your RRSP conception is also another one most valuable lettering to me. Thanks :)

    Reply

Leave a comment

Your email address will not be published. Required fields are marked *