RRSP and Taxes. How does it work?

You want to retire someday, so how do we get you there? One tool available to you is called an RRSP (registered retirement savings plan). How does it work, and how do taxes work? You go to work and earn a paycheck, split that paycheck into two parts. A part goes into your bank account, and the part goes towards taxes. You can then decide to take some of your income and move it into your RRSP account. When you do that, you pretty much tell the government, "I haven't made this money yet." Then the government says, "oh, you paid taxes on that money; let me give you some back. Then you can put that in your account or in the RRSP. Now your RRSP over the years is growing, and then you can make the decision when you retire to take that money out and pay the taxes then. Take the money out, pay the taxes, and then you're making more money here than you are here. That's the goal of the rsp, and you can save a lot of money by taking the money out at a lower tax rate than a higher tax rate.