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Advantages of a Spousal RRSP

Spousal RRSPs make a lot of sense if there will be a significant difference between you and your spouse’s income in retirement. Here’s why:
  • Spousal RRSPs allow for income splitting in retirement.

  • Income splitting can reduce the total income tax you and your spouse pay by allowing you to have more equal incomes in retirement.

  • With a lower taxable income, you may be able to avoid or at least minimize the clawback of Old Age Security benefits (worth approximately $5,580 annually in 2004).

  • For example, a couple each earning $35,000 in retirement income will pay significantly less income tax and retain more of the OAS benefit than when one partner earns $70,000.

  • How a Spousal RRSP works

    With a Spousal RRSP, the spouse who anticipates a higher retirement income uses his or her RRSP contribution room to make a contribution for the spouse with the lower expected retirement income. A Spousal RRSP is just like a regular RRSP except:
  • The plan is registered in your spouse's or common-law partner’s name.

  • You, as the contributing spouse, get a full tax deduction for contributions to the Spousal RRSP.
  • As with an RRSP, your contributions can’t exceed your personal RRSP contribution limit. You can use your RRSP contribution room to make a contribution to a Spousal RRSP, your own RRSP or split your contribution between the two plans.

    A Spousal RRSP is an ideal way to make sure you and your partner have more equal incomes in retirement, lowering overall income tax and possibly retaining more of government benefits.

    Contact me to make your RRSP contribution, or to discuss how we can help you achieve your retirement goals.