Registered retirement savings plans (RRSPs) are types of financial accounts that are used to store savings for retirement. A spousal RRSP is the same idea; the difference is that your contributions are filed under spouses name, which allows money to be saved for your spouse and for you to claim deductions on your income taxes.

The main benefit of spousal RRSPs is that of receiving tax deductions. However, before assuming that tax deductions will provide net benefit for you and your spouse, it is important to consider your current situation. If you are in a higher tax bracket than your spouse, it may be logical for you to contribute to your spouse’s RRSP with money that would normally be taxed at a higher rate.

Before you begin to set up this account, it is also important to consider several other factors. First, it is important to remember that there are maximum contribution limits for spousal RRSPs, which means that there is a limit on potential savings. Additionally, remember that there are fees for removing money prematurely; this means that spousal RRSPs are good idea for long term plans, but not necessarily in th short term.

Even though pensions can now be split, there are still reasons to consider this method of savings. Due to potential tax deductions, considerations of future politics, and potential changes in laws on pension splitting, this system is likely to be an effective method of saving money in both the short term and the long term.