Certified Financial Planner (CFP) Practice Exam · Question
Consider a client who expects a significant increase in income in the coming years. Which retirement savings strategy might be most tax-effective for them initially?
By delaying RRSP contributions until their income is higher, the client can benefit from a larger tax deduction when they are in a higher tax bracket, maximizin
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Question: Consider a client who expects a significant increase in income in the coming years. Which retirement savings strategy might be most tax-effective for them initially?
Answer options:
- Maximizing TFSA contributions first
- Prioritizing non-registered investments ✅ Delaying RRSP contributions until income is higher
- Investing heavily in a Registered Education Savings Plan (RESP)
Correct answer: Delaying RRSP contributions until income is higher
Explanation: By delaying RRSP contributions until their income is higher, the client can benefit from a larger tax deduction when they are in a higher tax bracket, maximizing the tax deferral benefit.
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