One matter that every Canadian has in common: it's never too early to start thinking about, and planning for retirement. One of the most significant parts of the planning process is figuring out how you finance your retirement years.

Many Canadians begin saving for their retirement years long before they reach this age. To help them, the government offers Registered Retirement Savings Plans (RRSPs). These savings plans offer great flexibility in terms of how much you can save and how it can be invested.

The money you deposit into an RRSP helps reduce your taxable income and tax that you pay. The actual tax savings will depend on your marginal tax rate. Furthermore, investment income earned in the RRSP grows tax-free until it is withdrawn. Because your income at retirement will likely be lower than during your working years, the tax you will pay should be lower as well.