The spousal RRSP is a beneficial way for couples to save for their retirement, while also reducing the tax impacts due to their income. A spousal RRSP can operate separately from your own and your partner’s individual RRSP accounts. This spousal RRSP is ideal for couples who don’t make the same income annually. This helps the couple make contributions while reducing the amount of tax liability and evening out the amounts in their RRSPs, but remember that individuals are still only allowed a total contribution room of 18% of their income or the amount specified by the CRA, this amount does not change even if you contributed to your spouse’s RRSP.
For example: Partner A makes $100,000 per year and partner B makes $50,000 a year. Partner A can contribute up to $18,000 to their RRSP yearly, and Partner B can contribute up to $9,000 yearly. Partner A contributes $14,000 to their personal RRSP, and $4000 to Partner B’s RRSP, and Partner B puts in the $9,000 to their own account, then Partner A can still claim a total of $18,000 in tax-deductions, while it also levels it out for both partners so they have a similar amount in their RRSPs for when they retire. This levelling of account contributions is crucial once they retire, as the disparities can be large when receiving payments from their retirement savings. The way this works is simple, but it is strongly recommended to talk to a financial advisor to figure out how to best manage a spousal RRSP.