RRSPs and TFSAs: Which is Best for You?

RRSPs and TFSAs: Which is Best for You?

Registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) are tax-advantaged accounts that can help you boost your retirement savings. Both accounts are designed for long-term growth, but they differ in how your contributions are taxed and when you can withdraw funds. Here is a breakdown of the differences between an RRSP and a TFSA and how to choose the best one for you.

Registered retirement savings plans

An RRSP is designed specifically for retirement savings. Anyone with an earned income who files a tax return can contribute to an RRSP. Contributions are tax-deductible and your earnings grow tax-deferred. There is no age requirement for when you can make withdrawals from your RRSP, but when you do withdraw funds, you will pay income taxes on both your contributions and earnings. You will need to claim your withdrawal as income when you file your taxes.

You can contribute up to 18% of your earned income in the previous year to an RRSP, with a maximum contribution amount of $27,830 for tax year 2021. There are no requirements for minimum distributions, but you can no longer make contributions to an RRSP once you turn 71. At that point, you must close your account and either convert it to a registered retirement income fund (RRIF) or buy an annuity.

Tax-free savings accounts

Unlike an RRSP, a TFSA can be used for any kind of savings goal, not just retirement. Anyone age 18 and older can contribute to a TFSA, and you don’t need earned income to qualify.

Contributions to a TFSA are made with after-tax dollars and your earnings grow tax-free. Withdrawals are tax-free and you can take money out at any time for any reason without paying a penalty. And if you do take money out, you can recontribute the same amount the following year in addition to the annual maximum of $6,000.

How to choose which account is best for you

Both RRSPs and TFSAs allow you to grow savings through investments, but how they can be used and how and when they are taxed may have an impact on which account you choose.

An RRSP can only be used for retirement savings. You must have an earned income and file a tax return to qualify. A TFSA, on the other hand, can be used for any savings goal, and anyone age 18 and older can contribute regardless of earned income. RRSPs offer much higher contribution limits, and contributions are tax-deductible, lowering your tax bill the year you contribute. You defer paying taxes until you withdraw funds. TFSAs offer smaller contribution limits; contributions are made with after-tax dollars; and withdrawals are tax-free.

You can make contributions to both accounts at the same time, and if you can afford it, maxing out contributions for each is a great strategy for saving. However, if you can only choose one, first consider your savings goals. If you are saving for something other than retirement, a TFSA may be right for you. You may also want to consider your future tax rate. If you anticipate a higher tax rate in the future, a TFSA may be the better choice, since withdrawals are tax-free. And if you expect a lower tax rate in retirement, an RRSP can offer you more tax advantages since you can lower your taxable income now and pay a lower tax rate on future withdrawals.

Whether you choose to fund an RRSP, TFSA or both, you’ll be taking advantage of tax benefits that can supercharge your savings and bring you closer to achieving your financial goals.

We can help put together a solid long-term plan that suits your financial goals and needs and answer any questions you may have about TFSAs and RRSPs. Contact us at 647-349-7070 or at info@rubachwealth.com to get the conversation started.










Automated Investing vs. Human Guidance

Automated Investing vs. Human Guidance

When you’re looking for help managing your investment portfolio, you have a decision to make: Should you work with a financial advisor or a robo-advisor? A financial advisor is a professional specializing in financial planning, wealth management and other personal finance services. On the other hand, a robo-advisor is a digital platform that uses algorithms to invest with very little human supervision.

Since the launch of the first robo-advisors during the Great Recession, they’ve become popular as cheaper alternatives to financial advisors. They typically work best for people who have very simple investment needs, while they can be a poor option for individuals who want to tackle complex issues, such as estate planning. No matter your financial situation, there are benefits to working with a financial advisor that the robo-advising process can’t easily replace.

  1. Setting and planning for goals

Financial advisors can help you establish financial goals and implement strategies to help you achieve them. At the outset of working together, a financial advisor will typically go through a discovery process where they ask you questions about what you hope to accomplish with your money. Some goals may be relatively simple like saving for a down payment on a house or a child’s college education. Others may be more complicated, such as leaving a legacy or ensuring a dependent child will be taken care of after you’re gone.

Once your advisor understands your goals, they can help you choose the right strategies to accomplish them, from maximizing savings in retirement accounts to helping you implement an estate plan or trust.

As you age, changes in career, marriage or the birth of children may lead to shifts in your financial goals. Regular meetings with an advisor can help you keep tabs on your changing needs, and your advisor can help you make adjustments to your financial plan as necessary.

  1. Keeping you on track

Financial advisors don’t just set up a plan with you; they help you stick to it along the way. No matter how rational you think you are, emotions can influence your personal financial decisions, often to a surprising degree. Letting emotions get in the way can lead to counterproductive investment choices, such as panic selling — selling assets after they’ve dropped in value, rather than staying in the market and taking advantage of an eventual recovery.

Your financial advisor is your sounding board, and when you get worried about changes in the market, you can voice your concerns. Your advisor can provide an objective point of view and information on how short-term volatility might affect your long-term financial plan.

A financial advisor can also provide a sense of accountability that can help you stay on track, making you less likely to do things like put off saving or empty your investment accounts on a whim.

  1. Building a team of experts

The benefits of a financial advisor go beyond wealth management. Your financial advisor can assemble a team of professionals around you to deliver expertise and services in other fields. Access to CPAs, attorneys and insurance brokers can help you address all your financial needs in a coordinated, holistic way.

Whether a financial advisor or robo-advisor best fits your needs will depend on your individual circumstances. Making an informed decision requires an understanding of the range of benefits unique to financial advisors. It’s important to bear in mind, too, that when it comes to access to new machine learning technology, it’s not an either-or proposition. Financial advisors use advanced digital tools to analyze portfolios and market data, so you can enjoy the advantages of a personal touch without forgoing the benefits of technology.

Trying to do your own financial planning can be overwhelming.  Rely on a team of experts to help you make smart decisions.

Contact us today at info@rubachwealth.com or 647. 349.7070 to get the conversation started.





It’s Time to Talk Openly About Family Finances and Addiction

It’s Time to Talk Openly About Family Finances and Addiction

Addiction is a huge problem in Canada. How big? Between January 2016 and June  2020, there were more than 17,602 apparent opioid-related deaths in Canada, and this represents only a fraction of the overall problem of opioid addiction.

When you add an addiction to other drugs, as well as other types of addiction (e.g. gambling), the pervasiveness of this problem starts to become painfully clear.

Amid this enormously complex social dilemma, one of the heartbreaking challenges that families face is how to manage their finances when a family member is suffering from an addiction.

In this article, we shed light on this sensitive topic and highlight some strategies that may help with managing this situation.

Starting with open and honest communication

One of the biggest challenges related to addiction is that it tends to live in the shadows. The stigma surrounding addiction often silences the very people who are most in need of help, whether that’s the person with the addiction or their family and friends.

A key to overcoming this stigma is the creation of safe spaces for honest discussions. No judgment, no shame – just open conversations.

Some grandparents are becoming parents again. They have taken on the responsibility because the kids are no longer around ― they have overdosed, they have run away, or they are not fit. Their retirement plan is all of a sudden destroyed.  All of a sudden, they have to pay for college, and the cost of college is a pretty big shock compared to when their kids were growing up. When we look at increased withdrawals or spending habits, or unexplained lifestyle changes, one can see they are not thinking clearly, that their judgment is cloudy. They’ve got a lot of other things going on.

Given the financial implications that addiction can have on a family, financial advisors can play a role in having these difficult conversations. Sometimes there are financial red flags such as unusual withdrawals that can alert us to a possible problem; other times it might be just a feeling that something in the family dynamic is a bit off.

Either way, we can help by gently probing for answers and offering thoughtful support. Although addressing the actual addiction goes well beyond our scope of training or licensing, we may be able to recommend appropriate professionals and resources.

Mitigating harm with practical solutions

One area where we can provide direct assistance is in helping families manage their finances in a way that can mitigate the harmful impact of addiction.

For example, consider a family with a teenager who is struggling with addiction. If this teenager is set to receive a large inheritance upon reaching the age of majority, there can be serious concerns about what may happen if they suddenly have access to a large sum of money.

In this case, there are ways for the family to manage the disbursement of this money in a controlled way, including but not limited to:

  • Trusts – Trusts can be useful as a means of managing assets on behalf of an individual with an addiction and controlling the flow of money to them. While a family member can serve as the trustee who manages the trust, this can lead to tension in the family if the trustee has to make contentious decisions. Appointing a corporate trustee is sometimes a better alternative as this can help to separate family relationships from trust business.

  • Annuities – Annuities are another option for controlling the disbursement of money to a family member with an addiction by setting up fixed annual payments. Although they are less versatile than trusts, annuities can be more cost-effective.


As every family has unique circumstances and financial needs, we can work with them to understand the challenges they are facing and propose a customized strategy to protect their financial well-being while minimizing harm.

Getting help from a trusted advisor

Across Canada, hundreds of thousands of families grapple every day with the stress and anguish of seeing a family member suffering from addiction.

What’s crucial for these families to understand is that they are not alone and that help is available. Updating a trusted advisor about addiction in the family may involve uncomfortable conversations, but it can also be the catalyst that leads to positive changes and eventual solutions.

InvestmentNews did a survey in which 36% of the advisors who were polled said that their clients have been impacted by the opioid epidemic. Let me tell you why that number is very low and underreported: Clients are not telling their advisors that they are going through an issue. Going through addiction and substance abuse is so full of shame from the stigma. The only way to tackle a problem as pervasive as addiction is to work together. So let’s start the conversation.

Using Your Bonus to Supercharge Your RRSP

Using Your Bonus to Supercharge Your RRSP

If you are fortunate enough to have kept your job throughout the pandemic and even received a bonus for 2020, count yourself lucky.

After a year of being told all the things you can’t do, the impulse to take your bonus on a spending spree would be completely understandable.

Yet before you whip out your credit card, take a moment to consider embracing your good fortune as an opportunity to top up your registered retirement savings plan (RRSP).

Contributing your bonus to your RRSP will help supercharge your retirement savings, setting the stage for much bigger rewards in the years ahead. And just as importantly, it will help you create something positive out of such a horrible year.

The 60-second RRSP refresher

What is it?

An RRSP is a powerful investment tool that delays the timing of when you pay income tax. This may not sound significant, but the impact on your finances can be huge.

How does it work?

Directing your bonus to your RRSP allows you to invest pre-tax income, separating it from your taxable income before the government takes a big bite out of it. As the investments within your RRSP account grow over the years, any dividends, interest, and capital gains that they accumulate are not taxed.

How does this help me?

By starting with a larger pre-tax amount and avoiding tax deductions as it grows, your RRSP has the potential to grow much larger compared with investments made over the same period that are not tax-protected.

Reap the rewards of a tax-protected investment

The graph below illustrates the difference between contributing a bonus of $10,000 towards your RRSP vs. getting your bonus in cash (taxed at 47%). In both cases, we assume a growth rate of 5% per year.


As the graph shows, putting your bonus into your RRSP can help you reap significant rewards over the long term.

Follow the rules or pay a price

To take advantage of the great benefits offered by RRSPs, you need to play by the rules. This means staying within the contribution limits.

For the 2021 RRSP season, individuals are allowed to contribute up to 18% of their income or $27,830 – whichever is lower.

Keep in mind:

  • Some factors can reduce your contribution limit (e.g. contributions made to your employer’s pension fund)

  • Some factors can increase your contribution limit (e.g. unused contribution room from a previous year)

  • You can find your contribution room for 2021 on your latest notice of assessment from CRA.  If you can’t find your NOA, you can call your accountant and/or CRA.

In general, withdrawing funds from your RRSP before you retire will result in a considerable penalty, so this is something to avoid unless absolutely or strategically necessary.

There are exceptions when early withdrawals are allowed – such as to pay for education or buy a house – but these withdrawals must meet specific criteria. To ensure you don’t accidentally break the rules, it’s always a good idea to consult your financial advisor before withdrawing.

Don’t miss the deadline

Timing is also critical when it comes to your RRSP. To be counted by CRA as an RRSP contribution for the 2020 tax year, it must be made by 1 March 2021. If you miss this deadline, you’re out of luck.

This means that if you want to put your 2020 bonus to work in your RRSP, you need to take action now:

  • Speak with your financial advisor about how to use your bonus to maximize the value of your RRSP

  • Determine your RRSP contribution room

  • Check with your employer for any internal deadlines for directing your bonus towards your RRSP (this may be earlier than the CRA deadline)

Today’s opportunity, tomorrow’s windfall

If you’re a working professional with a high income, maxing out your RRSP contribution is almost always the right decision. And if you are among the lucky ones to come away from 2020 with a bonus, now is your chance to move forward with some lasting good from a year to forget.

If you would like help optimizing your RRSP or would like to discuss other complementary strategies within an overall financial plan, Rubach Wealth can help. We invite you to contact us at info@rubachwealth or 647.808.7700 to discuss how acting now can give you so much more to be thankful for in the future.

Tips for a Successful RRSP Season in 2021

Tips for a Successful RRSP Season in 2021

Tips for a Successful RRSP Season in 2021

With RRSP season here once again, now is the time to give some extra thought to your retirement.

Arguably, retirement planning can be stressful – especially as you draw closer to your retirement day – and the uncertainty of the past year certainly hasn’t helped.  Outliving your savings is, rest assured, a lot more stressful.  If you want to enjoy your retirement years in comfort, what should you be doing now?


Contributing to a registered retirement savings plan (RRSP), and ideally maxing out your annual contribution limit, is one of the fundamentals of sound retirement planning.

If you’ve been doing this diligently over the years, well done! However, it’s also important to review the investments in your RRSP to ensure they continue to align with your investment objectives and risk tolerance.

Here’s an overview of key information and some helpful tips to ensure you have a successful RRSP season in 2021.

  • Contribution deadline: March 1, 2021
  • 2021 contribution limit: 18% of earned income (less any pension adjustment) to a maximum of $27,830


How to maximize the value of your RRSP will depend on your specific needs and situation. However, here are some general tips to consider.

  • Consider recent market developments. Historically, annual returns on equities following downturn years have yielded higher than average returns. Whatever you do, don’t try to time the market. Given the upheaval seen in financial markets in 2020, you may want to discuss with us an RRSP strategy that makes sense based on your needs.
  • Use an RRSP catch-up loan. An RRSP catch-up loan can help you utilize any unused RRSP contribution room. Depending on your personal income tax situation, this may result in a tax refund that could be used to help pay down the RRSP loan. This is not a strategy for everyone.  Let’s talk before you do it!
  • Invest your tax refund or bonus. If you’re banking on getting a tax refund this year or expecting a bonus from work, what are your plans for this money? Rather than spending it on nice-to-have things, consider putting some or all of it into your RRSP. You may have to forego a bit of fun in the short term, but it can help give your retirement lifestyle a big boost in the long term. We can show you what that looks like for you.
  • Plan for taxes. As you put money into your RRSP, always remember that what you’re doing is deferring taxes today, not avoiding them forever. When you start withdrawing RRSP funds during retirement, you’ll have to pay tax on this money. The key to remember (and the big benefit of an RRSP) is that the tax rate will be based on your tax bracket at the time of withdrawal rather than your current tax bracket. In theory, you will be at a lower marginal tax rate… but what if you’re still at the highest? By simply looking at your RRSP account statements and not thinking of future taxes, you may think you will have access to more money than what you will actually have.


If the events of 2020 have left you stressed out and mentally exhausted, we get it. Yet an open conversation with your financial advisor to check in on your retirement plans might be just what you need to shift your focus to brighter days ahead.

Investing a small amount of time into retirement planning now to ensure you get the most out of this RRSP season will pay dividends many times over in terms of peace of mind and financial stability going forward.

Have you already maxed out your RRSP contribution room? This is a good problem to have! If you’re now looking for other investment alternatives to help you shelter additional growth from taxes, we can help.

Whatever your situation, we invite you to contact us at info@rubachwealth or 647.808.7700 to discuss your options. The RRSP deadline is approaching, so now is the time to act.

Things business owners should think about when going throw a divorce

Things business owners should think about when going throw a divorce

No one gets married planning on an unhappy ending, yet the reality is that approximately 40 percent of marriages in Canada end in divorce.

For small business owners, this can pose a challenge: how can you protect your business if you end up getting divorced?

Despite how common it is, many small business owners are unprepared for the possibility of a divorce. Whatever your current situation, here are some things to keep in mind to help mitigate the impact of a divorce on your business.

Protect your business early

If you own a business, there’s a good chance it’s your most important and most valuable asset. And like any big asset, it should be protected.

A divorce can have a major impact on a business if it’s included in a settlement. The overall divorce process can also make it difficult for you to focus on the day-to-day running of your business.

The importance of protecting your small business before initiating (or even considering) divorce cannot be overstated – and the earlier, the better.

Ideally, protective measures should be in place well before marriage. Once divorce is on the table, if your business isn’t protected, it’s probably on the table, too.

Prenuptial agreements

The most common way to protect your business is with a prenuptial agreement, often called a prenup.

A prenup is a binding contract signed by each partner before their wedding outlining what happens to all assets, property, and income in the event of divorce, separation, or death.

A prenup is the fastest, easiest, and least expensive way to protect your small business in the event of a divorce. If one or both partners in your marriage are small business owners (either together or with different businesses), the complexity is multiplied, so a prenup is strongly advised.

Business-specific agreements

Shareholder, partnership, LLC, and buy/sell agreements offer different types of protective measures. Each of these agreements can include provisions that protect the interests of the business owners – including you and any co-owners – if one of you ends up getting a divorce.

For example, your agreement can require that unmarried shareholders implement a prenup if they plan to marry. Your agreement can also require a waiver from an owner’s fiancé that removes them from any future interest in the business.

Another option is to impose restrictions on the transfer of shares. For example, your agreement can prohibit the transfer of shares without approval from other partners or shareholders.

Alternatively, the other owners(s) can be given the right to purchase the shares or interest of any divorcing parties, which gives the existing owners the option to maintain control of the business.

Mitigate risk with holistic financial planning

Whether you’re running a business or building a loving, enduring marriage, real life is hard work, and it doesn’t always go as planned. With divorce, being a fact of life for many Canadian couples, planning for this possibility is an important step for any small business owner.

At Rubach Wealth, we help business owners plan for an uncertain future and mitigate risk as part of a holistic approach to wealth management. This means looking at your life in its entirety and bringing everyone to the table – including lawyers, accountants, and investment specialists – to help you make the best decisions given your unique needs.

Divorce is not an easy topic to address. However, by having frank conversations and asking tough questions now, we can help you minimize the financial harm that sometimes accompanies the heartbreak of a divorce.

If you have questions about protecting your small business in the event of a divorce, please contact us at 647.349.7070 or info@rubachwealth.com. for a confidential conversation.