TORONTO, ONTARIO--(Marketwire -02/27/12)- As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement...And How To Rescue It.

Tip Number 50:

Make the most of any available lump sums of cash

If you are fortunate enough to have a lump sum of cash available, there are a few good ways it can be used to help build your retirement nest egg. These include:

1. The RRSP option - An RRSP contribution increases your net worth
because of the tax refund you receive. For example, a $10,000 RRSP
contribution could mean a $4,000 refund if you are in a 40 per cent
tax bracket. This refund could be used by putting it towards your RRSP
for next year, or to pay down your mortgage.
- If you only have limited room left in your RRSP to contribute, you
could top up the RRSP to your limit and invest the balance in a
TFSA.
2. The TFSA option - If you do not need to pay down your mortgage and
have already maximized your RRSP contribution, a TFSA is a great
option.
- If you are in a low tax bracket, contributing to a TFSA might be
the best option; you would not benefit greatly from an RRSP tax
refund, and you have more flexibility and no tax impact should you
need to access the funds in your TFSA.

Ask your financial planner or investment advisor to help you make the best choices.

For more information on retirement: http://www.bmo.com/retirement.

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BMO Retirement Tip of the Day: Use a Cash Windfall Wisely