By Mike Howe

RazorPlan’s RRSP calculator estimates the future value of an RRSP investment given various assumptions. Advisors can use the RRSP calculator to compare 2 scenarios and see the impact changes in saving and return assumptions may have on their clients’ RRSPs.

This calculator is great for comparing different RRSP scenarios and strategies, including the power of contributing early to an RRSP. For example, assume a client that is 30 years old is trying to determine the impact of delaying investing into their RRSP for 3 years. This client could invest $500 monthly and wants to know the impact of waiting until age 33 to start making the deposits.  Assume the $500 is deposited monthly at the start of each month and the portfolio generates a 6.00% rate of return.

The RRSP calculator shows the client they will accumulate $497,729 by their planned retirement age of 60 if they start depositing the $500 monthly at age 30. If they wait to start the deposit until age 33 the RRSP account will accumulate $400,300 which is $97,429 less than if they started depositing at age 30.

Using this calculator an advisor can show that to have the same account balance at retirement the client would need to increase the planned deposits of $500 if they wait until age 33 to start depositing. In this case the client would have to save $622 a month to make their RRSP account balance essentially equivalent to their balance if they save $500 per month starting at age 30.

Using this calculator allows an advisor to build multiple scenarios and help the clients make the best decision for their situation.