Quote:
Originally Posted by DoubleK
I have no debt and/or liabilities outside of my mortgage.
I am maxing TFSA contributions annually. I do not maximize my RRSP contributions, I am increasing them year over year, but have significant headroom to the limit and that will take a few years to narrow.
My question is to increase RRSP contribution or increase mortgage payments. My tax refund goes back to RRSPs.
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That would depend on a few factors.
If your marginal tax rate upon retirement is expected to be lower than your current rate, it would make sense to max your RRSP now.
With that being said it also depends on your mortgage interest rate.
Basically you'd want to
calculate the total interest savings by contributing towards your mortgage versus the tax savings of contributing towards your RRSP.
Don't forget to include the monthly cash flow savings (ie. lower monthly payment) for the mortgage paydown.
If the interest savings on the mortgage paydown is greater than the tax savings on the RRSP - put the money towards the mortgage.