Case 2: Refund to RRSP as well
So, if we now say, hey, this whole idea of putting money away for my retirement over the next 20 years, would even be better, if I took my refund and put it in my RRSP as well, let’s see what might happen with our RRSP. Note that since you are doing this, your RRSP refund gets bigger each year because you put more in your RRSP (clever eh):
| Savings Rate | 1.00% | ||
| Yearly Input | $1,000.00 | ||
| RRSP Return | 5.00% | ||
| Tax Rate | 30.00% | ||
| Year | To RRSP | Refund to RRSP | Total RRSP |
| 1 | $1,000.00 | $300.00 | $1,300.00 |
| 2 | $1,000.00 | $390.00 | $2,755.00 |
| 3 | $1,000.00 | $417.00 | $4,309.75 |
| 4 | $1,000.00 | $425.10 | $5,950.34 |
| 5 | $1,000.00 | $427.53 | $7,675.38 |
| 6 | $1,000.00 | $428.26 | $9,487.41 |
| 7 | $1,000.00 | $428.48 | $11,390.26 |
| 8 | $1,000.00 | $428.54 | $13,388.32 |
| 9 | $1,000.00 | $428.56 | $15,486.30 |
| 10 | $1,000.00 | $428.57 | $17,689.18 |
| 11 | $1,000.00 | $428.57 | $20,002.21 |
| 12 | $1,000.00 | $428.57 | $22,430.89 |
| 13 | $1,000.00 | $428.57 | $24,981.01 |
| 14 | $1,000.00 | $428.57 | $27,658.63 |
| 15 | $1,000.00 | $428.57 | $30,470.13 |
| 16 | $1,000.00 | $428.57 | $33,422.21 |
| 17 | $1,000.00 | $428.57 | $36,521.89 |
| 18 | $1,000.00 | $428.57 | $39,776.56 |
| 19 | $1,000.00 | $428.57 | $43,193.96 |
| 20 | $1,000.00 | $428.57 | $46,782.23 |
So in Case 1 we had about $39000.00 put away in savings and RRSP, now we have $47,000 in RRSPs, not bad. So if you can, it would be good to take your Income Tax Refund and bash that back into your RRSP.
Interesting mathematical progression there, since your refund only increases up to $429.00 or so, far out.
Next what about Debt reduction here? –C8j
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July 22nd, 2008 at 1:39 pm
[...] data I mention are in the following posts: Case 1: Put It In The Bank , Case 2: Refund to RRSP, Case 3: Refund to [...]