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The Worst RRSP Mistake You Can Make

What is the point of an RRSP?

A lot of people think that the point of an RRSP is to save for retirement, and that’s true. I mean it has ‘retirement savings right in the name!

Despite these registered accounts having cute little acronyms, they create a lot of misunderstanding.

In case you don’t already know, a registered account gives special tax-free or tax-deferred features. Sometimes, there are even free government dollars that get paid into the some of these accounts. Registered accounts include Registered Retirement Savings Plans (RRSP), Registered Retirement Income Fund (RRIF), Tax-Free Savings Accounts (TFSA), Registered Education Savings Plans (RESP) and Registered Disability Savings Plans (RDSP).

However, don’t be misled by the term ‘registered accounts’. Even if your account is not registered (for example, a regular trading or bank account), your trades and income are still reported to Canada Revenue Agency (CRA). This is done to prevent people from not reporting investment income on their tax return and pay tax on it. The CRA wants their cut of every dollar you make, and not just what you’ve earned with your own two hands!

When you put money into an RRSP, the CRA won’t charge income tax on the amount you added. For employees, this can result in a tax refund because your employer withheld tax on money the CRA says you don’t have to pay tax on. So, the CRA gives it back and that’s where your tax refund comes from.

It’s not that easy, of course. Like I said, the CRA will want their share of every dollar you make, but the RRSP is their way of letting you defer the tax to later in life.

Note that the key term here is defer, not prevent, reduce, avoid or waive. Deferring is probably good, right? Why pay now when you can pay later?

Did you know, though, that if you’re in the same tax bracket before retirement and after retirement, then deferring the tax makes no difference at all compared to using a TFSA?

If you can get the same after-tax return with a TFSA instead of an RRSP, then TFSAs are objectively better. They offer more flexibility of depositing and withdrawing funds without losing contribution room, and there is no tax consequence to doing so.

So why does anyone choose RRSP contributions over TFSA?

Well, high earners will be maxing out their TFSAs quickly as the current total contribution limit in 2023 is only $88,000. With the current RRSP limit at $30,780 per year, most people have much more RRSP room than they do TFSA, so they are using both.

Back to the point about deferring the tax, though. Most people are thinking short-term with their money and are thinking of getting a tax refund now. If they’re farther along in their financial education, they know that they’re trying to bring their income down to the next tax bracket by contributing to their RRSP.

But those with an advanced education are thinking ahead to when they plan to withdraw the funds, and they’re thinking of all the possibilities – they’ve practiced values-based spending for years to know what really matters to them and what their goals are.

The Worst RRSP Mistake You Can Make was made by someone whose earnings were accelerating rapidly. They were contributing to their RRSP throughout their career – a level, steady drip into the group plan. They’d used the Homebuyers Plan at one point to draw out $25,000 from their RRSP for their starter home, but they wanted to upgrade to a bigger home after a few years. The family was growing, and the kids needed a yard.

In the early part of their career, they’d been in 30-40% tax brackets as their income increased.

By the time they wanted to upgrade their home, they were well above the highest marginal tax rate because they were so successful in their career. That rate is 53.50%.

They didn’t have any TFSA’s – all portfolio contributions had been to RRSP’s. The starter home had appreciated in value, but not enough to afford the new home with the yard without some other source of funds.

Can you see yet what happened? What the mistake is?

They withdrew the RRSP money for the new downpayment at a higher marginal tax rate than when they contributed to the plan. That means they would have gotten 30-40% tax refunds on the money when they contributed, and then when they pulled the money out, they were taxed at 53.5%. On a $100,000 withdrawal at that tax rate, you’re giving $53,500 to CRA in income tax.

The question asked at the beginning of this article was, “what is the point of an RRSP”?

I’ll give you the answer. The point is to make saving for retirement easier by providing the potential to reduce your overall income tax rate over your life. It’s easier to save for retirement if you’re paying less income tax.

So, you need to be cautious about making sure that’s actually the way it’s going to work.

Was the Mistake catastrophic? No, of course not. Very few financial mistakes are hard to recover from (except disability or an untimely death). The family faced a big tax bill, but they were okay in the end.

How could they have avoided it?

They could have built up their TFSA savings over time as well, or deferred the purchase of the property.

And, they could have met with a financial planner before making the decision. That way, if they decide to go ahead with it anyway, they’re doing it fully aware of how it meets their goals and aligns with their values.

The information contained herein has been provided for information purposes only.  The information has been drawn from sources believed to be reliable.  The information does not provide financial, legal, tax or investment advice.  Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.  This does not constitute a recommendation or solicitation to buy or sell securities of any kind.  Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  Before acting on any of the above, please contact your financial advisor.  WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Please note that while current at the time of publication, tax rates are subject to change.


The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. 

Amy Sweeney



Amy was born and raised in Squamish, is David’s oldest daughter and now the newest member of the Sweeney Bride team. Many may recognize her as she has worked periodically for the team for over 20 years. For the past five years, she has gained administrative experience and more running her own business as a Kinesiologist after completing a bachelor’s degree in Kinesiology at the University of British Columbia in 2016. Now, Amy is officially ready to join the finance industry. Currently residing in North Vancouver, Amy spends all her “free” time raising Dave’s two wonderful grandchildren.
Liam Hill


Associate Investment Advisor

Originally from Sydney, Australia, Liam moved to the Sea to Sky region in 2013, leaving the beaches behind to embrace the mountains. He hasn’t looked back since and enjoys exploring the wilderness by both land and sea.

Liam’s unique strength lies in his capacity to adapt and fine-tune strategies to match the ever-changing financial world. He’s a passionate advocate for adaptability and flexibility, believing these traits are crucial for securing financial well-being.

Liam holds the Canadian Securities Course qualification and is currently pursuing the Chartered Investment Manager (CIM) designation.

He shares his industry knowledge and business skills to empower individuals, families, and businesses on their path to financial success.

Liam is committed to educating our clients about the financial services industry and helping them make the most of available resources to achieve prosperity.


Administrative Assistant

Sharon worked for Sweeney Bride from 2014 to 2016 and recently rejoined the team as an Administrative Assistant in 2021. She has years of administrative experience in a variety of industries including working in legal and accounting firms. She enjoys being detailed, organized and efficient. When not hard at work, she enjoys exploring the great outdoors with her dogs, playing co-operative strategy board games and relaxing while sipping a nice Craft beer.

Carrie Freitag


Administrative Assistant

Carrie is the newest member of our team and is our Administrative Assistant. She has previous industry and administrative experience and her fascination with the finance industry is rapidly growing. Carrie moved to BC in 1994 from Ontario and never looked back. While not working she loves hanging out with her two kids, awesome cat Leo, and enjoys a competitive game of 21, and her gardens.

Katie Norton



Katie is a Business Administration graduate who joined the Sweeney Bride team in 2016. She takes care of on-boarding as well as managing account administration for our existing clients. She works hard to ensure the clients feel supported throughout the on-boarding process and is always available to answer questions.

A BC resident since 1997, Katie and her husband moved to Squamish to raise their two girls. They enjoy all of the outdoor activities and natural beauty that Squamish has to offer.

Liz Woodsworth


Office Manager

Liz joined the Sweeney Bride team in 2015 as office manager. She is the gatekeeper in the office and is the face that greets you as you come through the door. If she can’t help you, she will ensure you speak with someone who can. Liz is a long-time Squamish local; when not in the office she spends her days soaking up all that this town has to offer while chasing her two active boys. Liz brings her valuable organizational skills and enthusiastic attitude to the team. 

Janet Bride


CFP®, CIM® | Senior Wealth Advisor

Janet Bride is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 15 years’ experience in the Industry Janet holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Janet grew up in Ontario and moved out to beautiful British Columbia in 1995 with her husband, Paul, who is an adventure travel photographer. Her passion is to travel the world. Always interested in exploring different cultures and landscapes, she is grateful to have traveled to over 50 countries across 6 continents. She also enjoys continuous learning, spontaneous adventures with family and friends, and an active lifestyle in the Sea to Sky. Janet is proud to be a Big Brothers Big Sisters Alumni member since 2004.

She is highly motivated by helping people reach their financial dreams by creating comprehensive financial plans for individuals & families. While using a holistic approach to wealth management, she specializes in tax strategies and her goal is to encourage savings and help build our client’s wealth for a healthy and prosperous future.



CFP®, CIM® | Senior Wealth Advisor

Dave Sweeney is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 31 years’ experience in the Industry Dave holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Dave has lived in Squamish for most of his life. Married to his wife Donna, since 1987, they proudly have 3 lovely daughters, Amy, Danielle and Jamie. With his time in Squamish, it has allowed him an opportunity to become involved in many valuable groups.

Dave is a retired Captain of Squamish Fire Rescue after 35 years of service. Another passion was sports and he has been a coach for Squamish Youth Soccer Association where he dedicated 10 years to coaching girls Rep teams. Additionally, he is a former member and Treasurer of the Sea to Sky Community Services Board. Dave is a frequent contributor to Mountain FM’s Mountain Monitor, providing general advice and financial commentary.

Dave continues his volunteer work as Treasurer for both the Squamish Hospital Foundation and the Squamish Downtown Business Improvement Association. He is also a sitting Board member of the Squamish Community Foundation.

Professionally, Dave started his Financial Planning practice in 1994. After living through both his parents’ demise and witnessing what a lack of understanding they had, he realized what sound planning techniques could do to ensure that an untimely death did not destroy one’s lifetime work. For over 20 years, he has made it his passion to assist others in not facing the same plight.