Quote:
Originally Posted by mr_chin
Each year where you don't contribute, you are literally giving money to the government.
Each year that you missed, you cannot get back that year's tax paid, even if you decide to contribute to the maximum several years later.
Isn't that how it works?
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No, not really.
Either way, taxes will be paid to the government.
Say this year you make 50K. Well, you pay taxes on that $50K at whatever this year's tax rates are.
Say you put in $5K of RRSPs, then you will be taxed on $45K.
Say you quit your job for a year and have 0 income that tax year. You withdraw $40K from RRSP's, well you will be taxed on $40K.
So say you are at the lowest tax bracket. Don't buy RRSP's and save the room for future years where you are making more $$$ and will be taxes at higher tax brackets.
RRSP's is a way to defer taxes, not as a way to get around paying taxes.
There are only 2 guarantees in life. Death and taxes.