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In this article, we share some considerations regarding this common dilemma to help you decide which option is better for you: investing for retirement or paying down your mortgage.

Contributing to an RRSP and paying off your mortgage are choices that can seem equally important. After all, both address really important aspects of your financial life: your retirement and your estate. The right answer for will depend on your individual circumstances. Let’s take a look at each of these options.

Contributing to your RRSP

Contributing to an RRSP can have both short-term and long-term benefits. Contributions to an RRSP are made on a pre-tax basis, offering a tax benefit in the year the money is contributed. The maximum contribution to a RRSP for 2025 is 18% of your earned income, up to a maximum of $32,490. Any unused portion (also known as contribution room) of this limit can be carried forward to a subsequent year.

Additionally, money invested in an RRSP grows on a tax-deferred basis until withdrawn. Investment options typically include mutual funds, guaranteed investment certificates (GICs), ETFs plus individual stocks and bonds.

Besides the tax benefit of pre-tax contributions to an RRSP, the benefit of compound tax-deferred growth within the account may be the biggest benefit of investing in an RRSP.

Paying off your mortgage

Paying off your mortgage can eliminate one of the biggest monthly expenses in a homeowner’s budget. The issue for most people is where will the money to pay off the mortgage come from?

One strategy is to pay an extra amount towards your mortgage on a monthly basis. This will add to the amount of principal that you are paying down each month. Depending on your mortgage balance and the interest rate, this can help you pay off your mortgage several years earlier than if you made only the required payments each month.

Certainly if your mortgage carries a high interest rate it can make sense to pay it off as quickly as possible.

Issue to consider

Age. One issue to consider is your age. If you are older and closing in on retirement, then working to pay off your mortgage early can make sense. It can be very helpful to your retirement budget to eliminate this monthly payment from your budget prior to retiring.

For someone who is younger, it is often better to focus on maximizing contributions to your RRSP as the tax-deferred growth can then accumulate a large sum for retirement. While the returns will depend upon how you allocate your funds among various investments, the power of tax-deferred compounding of investment returns over time can be incredible.

Rates. When weighing an RRSP contribution versus a mortgage paydown, a huge consideration is also the rate you are paying on your mortgage versus the anticipated rate of return on savings in your RRSP. If your mortgage is locked in at 2.5% and you can get a higher rate of investment, an RRSP may be the route to go.

While it is always better to start contributing as much as possible as soon as possible, the power of compounding can still be a major advantage for workers further along in their careers.

Tax liability. Additionally, contributing to an RRSP offers an excellent tax break each year. This tax benefit can be the single largest tax break many people receive each year.

Liquidity. Another consideration is that money tied up inside of a home that is fully paid off is largely illiquid. While you could take out a home equity loan if needed to tap into some of that equity, this puts you right back in the same position as you were before with having a mortgage payment.

Why not do both?

Perhaps the best strategy is to do both.

Contribute as much as you can to your RRSP to take advantage of the opportunity for tax-deferred investment growth over the longer term. In an RRSP, if invested properly, your investments can help you build a solid nest egg for retirement. In the process, look at your monthly budget and determine if there is an amount that you can put towards paying down the mortgage balance each month.

Everyone’s situation is different of course. A good approach to this situation is to look at your monthly cash flow and determine how much you can contribute to your RRSP and how much you can comfortably allocate towards paying down your mortgage more quickly.

An alternative is to determine how much you are saving in taxes from making your pre-tax contributions to the RRSP and allocate some or all of that money towards paying down your mortgage balance early.

A major consideration here is what the interest rate on your mortgage is versus your expected return on your RRSP investments. For most people the RRSP return over time will likely be higher, but not in all cases.

Conclusion

The decision as to whether to focus on saving in an RRSP or paying down your mortgage will vary among people based on their unique circumstances. Talk with one of our advisors to develop a strategy that makes the most sense based on your situation and your goals.

With flowers blooming and sunlight lasting longer, spring is the perfect time to refresh not just your home, but also your finances. Just like your closet or garage, your finances can accumulate clutter—outdated strategies, neglected accounts, and missed opportunities. A financial spring cleaning can help you regain clarity on your goals, optimize your wealth, and set the stage for the rest of the year.

Here are some suggestions on how you can tidy up your finances:

1. Declutter Old Accounts
   Do you have un-used bank accounts, forgotten credit cards, or overlapping investment accounts? Consolidating can reduce fees, simplify management, and improve performance tracking.
2. Review Your Budget and Spending Habits
   Inflation and lifestyle changes can quietly dig into your savings. A seasonal review of your budget helps you identify areas where costs have increased, or even decreased, and redirect funds toward your priorities. Budgeting apps or spreadsheets are great tools to help with a monthly budget.
3. Refresh Your Emergency Fund
   With economic uncertainty still lingering, a well-stocked emergency fund is more important than ever. Determine how much you would need in your account to get you through 3-6 months. This should be in an accessible account where you can have easy access to cash. If you dipped into your emergency fund recently, create a plan to replenish it.
4. Shred Financial Clutter
   Go paperless where possible and securely dispose of outdated documents. Organize digital records for easy access during tax season or estate planning. Keep only essential documents and shred the rest.
5. Connect with your Rothenberg advisor
   We’re always here to support you! Questions about investments? Want to discuss your portfolio? We are always available to answer any questions, review your investments and discuss your goals.

Spring cleaning your finances isn’t just about tidying up – it’s about creating space for growth, clarity, and confidence.

Source: Concordia University | May 22, 2025

Supporting the Campaign for Concordia: Next-Gen Now, the Rothenberg Wealth Management Scholarship will provide an annual award of $4,000 to a full-time student who self-identifies as Black, Indigenous or as a person of colour. The goal is to level the playing field in finance and commerce — industries that have historically lacked diversity.

Read the article: Rothenberg Wealth Management – Harbourfront Wealth Management helps build a more diverse future with new scholarship at the John Molson School – Concordia University

Earth Day is a time to reflect on our planet’s health and the actions we can take to protect it. The 2025 Earth Day theme is “Our Power, Our Planet” and calls to promote renewable energy and energy efficiency. Here are some tips to help you save energy and lower your utility bills.

1. Upgrade to Energy-Efficient Appliances
   • Replacing old appliances with energy-efficient models can make a big difference by using less electricity and water. You can also Invest in renewable energy sources like solar panels which can lead to long-term savings on your electricity bills.
2. Install a Programmable Thermostat
   • A programmable thermostat allows you to set your heating and cooling systems to operate only when needed. For example, you can program the thermostat to lower the temperature when you’re asleep or away from home.
3. Seal Windows and Doors
   • Drafty windows and doors can lead to significant heat loss in the winter and heat gain in the summer. Sealing gaps with weatherstripping can improve your home’s insulation.
4. Use Cold Water for Laundry
   • Many detergents are designed to work effectively in cold water. Washing clothes in cold water can save a considerable amount of energy, as heating water accounts for a large portion of the energy used in laundry.
5. Take Advantage of Natural Light
   • Maximize the use of natural light during the day to reduce the need for artificial lighting. Open curtains and blinds to let in sunlight instead of turning on the light switch.
6. Perform Regular Maintenance
   • Regular maintenance of your heating and cooling systems ensures they operate efficiently. Replace air filters regularly, clean vents and ducts, and schedule annual inspections to keep your systems running smoothly.

Implementing these energy-saving tips can help you reduce your environmental impact and save money on your utility bills. By making small changes and investing in energy-efficient technologies, you can contribute to a more sustainable future while enjoying the financial benefits of lower energy costs.