By Couples can have a strong combined retirement balance and still pay more tax than expected. The problem often appears when most of the savings, and therefore most taxable withdrawals, sit in one person’s name.
A spousal Registered Retirement Savings Plan (RRSP) can help spread future retirement income. It works best when the couple understands who receives the deduction, who owns the account, and when withdrawals can be taxed back to the contributor.
Who gets what
The contributing partner uses their own RRSP deduction room and can claim the eligible deduction. The other partner owns the spousal RRSP. For a simple illustration, suppose a higher-income partner contributes $10,000 and deducts it at a 40% marginal rate. The immediate tax saving is $4,000. If that $10,000 is eventually withdrawn by the account owner at an assumed 20% rate, it leaves $8,000 after tax.
The contribution cost $6,000 after the original deduction. The later withdrawal leaves $8,000, before considering investment returns or the time between those events. This example shows the benefit of deducting at a higher rate and withdrawing at a lower one.
It doesn’t guarantee savings for every couple. Future income, tax brackets, deductions, benefits, and pension splitting can change the comparison. If both partners face similar rates, a spousal RRSP may provide less additional value.
POW
Power Corporation of Canada (TSX: POW) offers an income holding connected to insurance and wealth management. Its interests include Great-West Lifeco and IGM Financial. The business gives investors exposure to retirement and financial services through a holding company.
Power reported second-quarter adjusted earnings of $1.55 per share. Its $0.67 quarterly dividend represented about 43% of that adjusted amount. At a recent price of $89.01, the annualized $2.67 dividend yielded about 3%. What’s more, Power reported an adjusted net asset value of $112.94 per share as of June 30. The recent stock price was about 21.2% below that dated value.
That discount is a reason to consider the stock, not a guaranteed gain. Asset values can change, holding-company costs reduce what reaches shareholders, and discounts can persist. Still, it is a more concrete purchase argument than simply saying the company operates in retirement services.
A $10,000 budget at $89.01 bought 112 shares for $9,969.12. Those shares produced $299.04 annually at an unchanged dividend. Inside the RRSP, those dividends can be reinvested without immediate Canadian income tax, while ordinary withdrawals are taxed later. Dividend investing and account planning need to work together.
Considerations
A withdrawal from a spousal RRSP can generally be attributed to the contributing partner if they made spousal contributions in the withdrawal year or either of the two previous calendar years, up to the relevant contribution amount.
For example, a contribution in December 2026 can affect withdrawals in 2026, 2027, and 2028. A withdrawal in 2029 falls outside that contribution’s usual window, provided there are no later spousal contributions that restart the issue. This makes a spousal RRSP a longer-term planning tool. A couple needing money soon may prefer keeping that amount accessible elsewhere, including an eligible Tax-Free Savings Account (TFSA). Power’s share price can also fall before a withdrawal date, so short-term cash shouldn’t depend on selling the stock.
A spousal account also doesn’t require holding different securities from the contributor’s own plan. The tax ownership is the important distinction. The household can still diversify across investments, while the spousal structure changes whose return may eventually report the income when the rules are satisfied.
Bottom line
A spousal RRSP can help when one partner gets a larger deduction today and the other expects lower-tax withdrawals later. Power offers a covered dividend and a measurable discount to its dated asset value. The account strategy earns its benefit through contribution and withdrawal timing, while the stock still needs to justify its own risks.
