RRSP season is the only time of year I ever recommend stampeding to the bank to set up an RRSP account or make a contribution.

With 2012 being a leap year, you have until Feb. 29* to contribute to your RRSP and have it count for the previous tax year.

The RRSP is the single most powerful tool Canadians have to save money for retirement.

Contributions are fully tax deductible and they grow tax-deferred until withdrawal; typically when you retire.

The greater the amount you contribute, the more income you get to deduct from your tax return.

Rather than forking over thousands of dollars in taxes to Revenue Canada, you can invest these saved dollars within your RRSP. 

The law of reinvested returns states that more money grows larger and faster than less money; when invested in a portfolio that is properly allocated based on your personal needs. Thus, keeping more of your money, rather than paying it out in taxes, significantly increases your nest egg.

When you’re starting out, perhaps a new career, buying a home, or raising a family, tax deferral is very valuable. It allows you to maximize your savings opportunities even though your budget might be tight.

Nearly anyone can have an RRSP. Individuals can contribute up to 18 per cent of their income, up to $22,450 for tax year 2011, and the limit can sometimes vary depending on your pension program at work.

If you can’t maximize your RRSP limit, you can carry-forward the contribution room indefinitely.

Start contributing regularly on pay day and increase your contributions annually until you reach your maximum limits. Check whether your employer has an RRSP or pension plan you can participate in.

Correction, Feb. 27 – An earlier version of this article gave an incorrect deadline to contribute to RRSPs. Metro regrets the error.