How young is too young for an RRSP? - MoneySense

How young is too young for an RRSP?

Even teenagers can sock away their summer job wages in an RRSP. Here’s why it’s a good idea.


Lorettos_322Q: Can our kids start an RRSP even though they are still in school with only part-time jobs?

—Ernie Haller, Loretto, Ont.

A: Yes, your kids can start an RRSP. And more important, they should. Their part-time jobs will give them the earned income they need to build contribution room. And once they start kicking in money to the plan, they will start reaping the benefits of compound interest: $100 socked away at age 15 will grow much larger than $100 deposited at age 30. But the biggest benefit of starting an RRSP so young is your kids will develop a useful habit: saving for retirement. Sure, the amount they contribute will fluctuate over the years because of school expenses, family or a mortgage, but your kids will get used to putting some money aside every year. While your children aren’t likely to get a tax deduction from their RRSP contributions, they can contribute today and claim the deduction in the future when they are making more money. Plus, if they need to, they’ll be able to borrow from their RRSPs under the Home Buyers’ Plan or the Lifelong Learning Plan.

Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal question? Write to Bruce at [email protected].