What’s so special about age 45? It’s the age when you are growing rapidly in your career. You may have cleared your student loan and now have a mortgage. Many start a family or have children at this age. Some move to pursue their dream project. Each person is at a different stage of their life. But one thing common among all human beings at age 45 is that they are in the middle of their working life. They have worked for 20 years and may retire after 20 years, plus or minus five years.
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Retirement planning at age 45
If you don’t start thinking about retirement now, you may not be able to catch up on retirement planning. A Registered Retirement Savings Plan (RRSP) is a crucial investment account because it can provide significant tax savings that you can convert into passive income.
RRSP allows you to contribute 18% of your previous year’s taxable income up to a maximum threshold (2026: $33,810). These contributions are tax-deductible.
For instance, you earn $200,000 in 2026. Your tax bill will be $42,315. You can save $9,347 in taxation by contributing the maximum amount of $33,810 to an RRSP.
| from | up to | Taxable Amount | is taxed at | Tax Amount |
| $0 | $58,523 | $58,523 | 14% | $8,193.22 |
| $58,523.01 | $117,045 | $58,521.99 | 20.50% | $11,997.01 |
| $117,045.01 | $181,440 | $64,394.99 | 26% | $16,742.70 |
| $181,440.01 | $200,000 | $18,559.99 | 29% | $5,382.40 |
| Total | $200,000 | $42,315.32 |
Here’s how.
$33,810 RRSP contribution = $18,560 income (29% tax bracket) + $15,250 income (26% tax bracket)
Tax savings = $5,382.40 + $3,965
If you invest this $33,810 in dividend stocks and compound them by reinvesting dividends, you can grow your passive income pool tax-free.
About RRSP withdrawals
RRSP withdrawals are taxable at source. So, if you withdraw $5,000, your financial institution will pay you $4,500. The minimum federal tax rate is 14%. This doesn’t mean you won’t pay the balance tax. You will pay by adding the RRSP withdrawal to your taxable income and deducting withholding tax from your tax liability.
| RRSP Withdrawal | Tax Rate |
| $0 to $5,000 | 10% |
| $5,001 to $15,000 | 20% |
| $15,001 and above | 30% |
You can start withdrawing from your RRSP even at age 50 if you pay tax on it. It saves you from a 26% and 29% tax bracket and defers that money to the years when you are in the 20.5% or 14% tax bracket. So, if you have taken a career break or fallen sick, because of which your taxable income will be low, you could rely on your RRSP for passive income. You will pay tax, but at a lower rate.
Canadians’ RRSP balance by age 45
Statistics Canada’s 2023 RRSP data shows that Canadians in the 35-44 age group accumulated an average RRSP balance of $88,600. The average balance is much higher than the median of $33,000, hinting at unequal contributions.
A handful of Canadians are contributing way more than the majority, probably because they enjoy a higher tax benefit than the rest. The $33,810 RRSP contribution limit for 2026 can bring tax savings of up to $10,143 if you fall in the 30% tax bracket. These tax savings could be considered as an instant return on investment, and the dividend payouts as a bonus.
What should your retirement savings be?
What is the perfect RRSP balance for you is a strategic decision. When to invest, how much to invest, and when to withdraw from an RRSP should be planned strategically. Professional tax advisors use RRSPs to navigate taxes and maximize after-tax returns.
Do not take your RRSP balance lightly. The average balance should not be your benchmark for your RRSP balance. Your personal tax and finance situation will determine your ideal RRSP balance. Thus, stable dividend stocks like Enbridge (TSX: ENB) and Royal Bank of Canada are suitable for RRSPs. Enbridge has a low-risk business model and a less volatile stock. However, its stock price has been rising aggressively in the past six months as the company brings significant projects online in 2026 and 2027. That doesn’t affect its dividend growth as Enbridge maintains its payout ratio at 60–75%.
