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The Canada Pension Plan (CPP) is the retirement pension of most working Canadians and one of two foundations of retirement planning in Canada. While the Old Age Security (OAS) is the cornerstone or the first level, the CPP is closer to would-be retirees’ hearts.
All your contributions throughout your working life return to you in the form of a monthly taxable benefit. The CPP partially replaces the average pre-retirement income, up to the extent of 25%. Payments typically start at 65, the standard retirement age, although you can take it as early as 60 when it becomes available.
This year, it’s the third time that employers and employee contribution rates are increasing in as many years. For self-employed individuals, the rate is two times that of the employee contribution. In 2021, CPP users must be aware of an important change in the pension. You should pay attention, because it affects the pension, particularly the computation
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Which Is a Better Investment Account: TFSA versus RRSP?
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Are you considering investing and searching for the top stocks to buy? Before doing so, you should know that whatever money you earn from investing entails a tax. You get a T5 slip which gives you a summary of your investment income. The Canada Revenue Agency (CRA) encourages Canadians to save money by offering many registered savings accounts with tax benefits. Two popular accounts are Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs).
TFSA versus RRSP
The purpose of TFSA and RRSP is different, and the CRA designed them accordingly. If you use them optimally, you can make the most of them.
For many Canadians, saving for important life goals can feel like an uphill struggle. But it doesn't have to be. There are tax-efficient structures in place to give Canadians of all ages.
TFSA and RRSP users can resume their contributions following the CRA’s updates on the contribution limits for 2021. Royal Bank of Canada stock is the common anchor asset in both accounts.