Maximize Your RRSP: Expert Tips To Avoid Costly Mistakes

With the RRSP deadline fast approaching on March 3rd, now is the time to get your finances in check. Whether you’re a seasoned investor or just starting out, making the right moves can mean the difference between a bigger tax return and missed opportunities. Financial expert Celine Mathews-Negash, CFP, CIM, Advisor at Wealthsimple, shares her insights on the most common RRSP mistakes—and how Canadians can optimize their contributions before the deadline. —Noa Nichol

The Biggest RRSP Mistakes and How to Avoid Them

Many Canadians assume that RRSPs aren’t worth contributing to because they’ll eventually have to pay tax when withdrawing funds. According to Mathews-Negash, this is a common misconception that can cost investors valuable tax savings and long-term growth.

“The upfront tax savings you get from an RRSP contribution can be reinvested, which makes it an advantageous strategy,” she explains. “Some people also delay contributions, thinking they’ll wait for a higher income year, but the benefits of delaying are often minimal, and early contributions allow for tax-deferred growth.”

Another mistake is assuming RRSPs are too restrictive, when in reality, they offer tax-free withdrawal options for major life expenses. “A lot of people don’t realize that you can make tax-free RRSP withdrawals through the First-Time Home Buyers Plan or the Lifelong Learning Plan,” she adds. “And while withdrawals are taxable in other cases, they’re still an option if needed.”

Couples also tend to overlook the benefits of maximizing the higher-income earner’s RRSP room first, which can lead to missed tax savings. “Using a spousal RRSP is another tax-saving strategy that allows the higher-earning spouse to contribute to an RRSP in the lower-income spouse’s name, while still claiming the tax deduction,” she explains. “This can help equalize income in retirement and reduce overall taxation.”

The Risk of Delaying Contributions

Many Canadians assume they’ll contribute to an RRSP when they earn more, but waiting can be a risky financial move. “Delaying means missing out on compound growth, where even small early contributions can outperform larger ones made later,” says Mathews-Negash. “You also miss out on immediate tax savings, which could be reinvested for further growth.”

She also warns that waiting assumes financial stability in the future, which isn’t always guaranteed. “Life is unpredictable—job changes, economic downturns, or unexpected expenses can make it harder to contribute later,” she notes. “By postponing contributions, you might end up putting pressure on yourself to save much more in a shorter period to catch up.”

Her advice? Start as early as possible. “Even if you’re not in a high-income year, you can carry forward your RRSP deduction to a future year while still allowing your investments to grow tax-free.”

Balancing RRSPs and TFSAs for Short- and Long-Term Goals

Both RRSPs and TFSAs offer significant benefits, and knowing how to use them strategically can help balance both short-term and long-term savings.

“RRSPs are ideal for retirement savings because they offer tax deductions and tax-deferred growth,” says Mathews-Negash. “They’re especially beneficial for high earners who can contribute during peak income years and withdraw in lower-tax retirement years.”

On the other hand, TFSAs provide tax-free growth and withdrawals, making them a great option for general savings, major purchases, and even supplemental retirement income.

“By balancing contributions between the two, you can reduce your tax burden, maintain financial flexibility, and grow your wealth more effectively,” she adds.

How RRSPs Can Boost Your Canada Child Benefit (CCB)

A lesser-known perk of RRSP contributions is their potential to increase Canada Child Benefit (CCB) payments. “Since RRSP contributions reduce your taxable income, they can actually result in higher tax-free CCB payments,” explains Mathews-Negash.

“This strategy is especially useful for families near an income threshold. By contributing to an RRSP, parents can save for retirement while boosting their child benefits, making it a smart move for both the present and the future.”

Wealthsimple’s RRSP Match Program—How to Maximize Your Contributions

For those looking to make the most of their RRSP before the deadline, Wealthsimple’s latest RRSP match program offers a valuable opportunity.

“Many Canadians contribute to their RRSP but leave their money in low-interest savings or default investment options without reviewing what may be best for their risk tolerance and goals,” Mathews-Negash says.

Wealthsimple offers low-cost, well-diversified portfolios that help investors maximize their returns. “Right now, we’re offering our largest-ever RRSP match program,” she adds. “Investors can earn a 2 percent match on qualifying RRSP transfers. On a $50,000 RRSP account transfer, that’s an extra $1,000 in their pocket.”

The program also includes a 1 percent match on other qualifying account transfers (FHSA, TFSA, and more), plus the opportunity to earn up to five Canadian Lift Passes valid at over 50 mountains across the country.

Final Advice: Know Your Contribution Room

One of the biggest mistakes Canadians make with their RRSPs is not knowing their contribution room, which can lead to undercontributing or overcontributing—both costly errors.

“Many people undercontribute because they’re unsure of their limit, while others overcontribute and end up with penalties of 1 percent per month on the excess amount,” says Mathews-Negash.

Her advice? Check your CRA account or last Notice of Assessment to confirm your contribution room.

“If you have extra contribution room from previous years, consider making a larger contribution to maximize the tax advantage,” she suggests. “If you’re close to the limit, be mindful of how much you deposit. This isn’t just about avoiding penalties—it’s about ensuring you get the best tax benefits possible.”

At the end of the day, understanding your RRSP contribution room is the foundation of any successful retirement savings strategy. “With the March 3rd deadline coming up, now is the perfect time to take control of your RRSP and set yourself up for financial success.”