TFSA vs RRSP Calculator

Question 1

When should I choose a TFSA over an RRSP?

Accepted Answer

Choose a TFSA if: you're in a low tax bracket now but expect higher income in retirement, you need flexibility to withdraw funds, you've maxed out your RRSP, or you want to save for non-retirement goals. TFSAs are ideal for younger Canadians early in their careers.

Question 2

When should I choose an RRSP over a TFSA?

Accepted Answer

Choose an RRSP if: you're in a high tax bracket now and expect lower income in retirement, you want to reduce your current taxable income, you're saving specifically for retirement, or your employer offers RRSP matching. The tax deduction can be reinvested for compound growth.

Question 3

Can I have both a TFSA and an RRSP?

Accepted Answer

Absolutely! Most Canadians benefit from having both. A common strategy is to maximize RRSP contributions while in your peak earning years to get the tax deduction, then use TFSAs for additional tax-free growth and flexible access to funds.

Question 4

What if I withdraw from my RRSP before retirement?

Accepted Answer

Early RRSP withdrawals are taxed as income in the year you withdraw, and you permanently lose that contribution room. There are exceptions for the Home Buyers' Plan (HBP) and Lifelong Learning Plan (LLP) which allow tax-free withdrawals if you repay them on schedule.

Question 5

How does the RRSP tax refund reinvestment work?

Accepted Answer

When you contribute to an RRSP, you get a tax deduction that often results in a refund. If you reinvest this refund back into your RRSP or other investments, you can significantly boost your long-term returns. Our calculator shows the impact of reinvesting vs spending your tax refund.

Question 6

Are these calculators free to use?

Accepted Answer

Yes! All our calculators are completely free to use. No registration or payment required. We believe financial planning tools should be accessible to all Canadians.

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