By the Sun Life team
It is better not to withdraw your RRSPs before retirement. But in some cases, it might be appropriate to do so.
As its name suggests, a Registered Retirement Savings Plan (RRSP) is designed for retirement. But it can be tempting to withdraw funds to take advantage of them sooner. It’s your money, after all!
There are many reasons not to touch your RRSPs. (Hint: the hidden cost of early withdrawals!) But are there good reasons to do so?
Withdrawing from an RRSP before retirement: when is it relevant?
The two most common reasons for making an early withdrawal from an RRSP are:
Buy or build your first home (with the Home Buyers’ Plan or RAP)
Go back to school (with the Lifelong Learning Plan or LLP)
Two other reasons to dip into an RRSP
There are two other valid reasons to withdraw savings from your RRSPs. We don’t encourage these options, but we think you can discuss them with your advisor if needed.
Reason 2: You care about your health
Tell your loved ones what you want. And talk about your RRSPs with your advisor if you are in the following situation:
you do not expect to reach retirement age
you do not have a spouse designated as the beneficiary of your RRSPs*
- A designated spouse beneficiary of an RRSP receives the total amount without paying tax. To do this, they must transfer the money directly into their RRSP or RRIF.
Talk to a professional before dipping into your RRSPs
Choosing to withdraw money from your RRSPs is an important…and complex decision. Before you act, talk to your advisor. Do you not have any? Find an advisor, Sun Life, now.
