Updated
The choice between an RRSP and a TFSA is a choice between two tax timings, not between two returns. An RRSP contribution is deducted from income now at your marginal rate and the withdrawal is taxed in full later, so it works where the rate in retirement will be lower. A TFSA gives no deduction but pays out entirely tax free, and its withdrawals do not count as income, which matters because Old Age Security and the Guaranteed Income Supplement are both income-tested. For someone who will rely on those benefits, a TFSA can be worth more than an RRSP even at the same rate. This simulator compares the two on the same contributions and the same assumed return. It does not model contribution room carried forward, which is individual and shown on your notice of assessment.
Simulator Retirement Savings Canada
Project your RRSP and TFSA savings. Compare savings vehicles and optimize your tax strategy.
Your situation & savings
Summary
Net capital at retirement
$936,165
net after taxes
Possible monthly income
$3,589
per month as annuity
You save
$800
per month (RRSP + TFSA)
In practice: By saving $800/mo for 31 years, you will have a capital of $1,038,537. After taxes, you are left with $936,165 net. Your investments earned you $603,565 more than what you contributed.
Your RRSP saves you approximately $1,753/yr in taxes thanks to the tax deduction. Your TFSA saves you $79,977 in taxes on gains that would otherwise be taxable. As an annuity, that amounts to $3,589/mo to supplement your public pensions.
Total capital
$1,038,537
RRSP + TFSA
Monthly annuity
$3,589
If converted to annuity
Tax benefits
$134,326
Cumulative tax savings
Net after tax
$936,165
Net available capital
REER (Rég. enregistré d'épargne-retraite)
Final capital
$638,231
Total contributions
$206,000
Interest earned
$432,231
Tax savings
$54,349
Exit tax
-$102,372
Net after tax
$535,859
CELI (Compte d'épargne libre d'impôt)
Final capital
$400,306
Total contributions
$126,600
Interest earned
$273,706
Tax savings
$79,977
Exit tax
-$0
Net after tax
$400,306
Capital growth
- RRSP
- TFSA
- Total
Cumulative annuity vs Remaining capital
- Cumulative annuity
- Remaining capital
Frequently Asked Questions
What is the RRSP contribution limit for 2026?
RRSP or TFSA: which should I prioritize?
What happens to my RRSP when I turn 71?
How much can I contribute to a TFSA?
Can I use my RRSP to buy a first home?
Simulateurs associés
Understanding Canadian retirement savings
RRSP: Registered Retirement Savings Plan
The RRSP is the primary retirement savings vehicle in Canada. Contributions are deductible from taxable income, providing an immediate tax benefit.
- 2026 contribution limit: 18% of previous year's earned income, up to a maximum of $33,810
- Unused room: Unused contribution room accumulates indefinitely and carries forward to future years
- Tax-sheltered growth: Investment income (interest, dividends, capital gains) is not taxed as long as it remains in the RRSP
- Taxed on withdrawal: Withdrawals are added to taxable income and taxed at the marginal rate. The idea is to withdraw in retirement when the tax rate is lower
- Withholding tax: 10% (up to $5,000), 20% ($5,001 to $15,000), 30% (over $15,000)
TFSA: Tax-Free Savings Account
The TFSA, created in 2009, allows for entirely tax-free growth and withdrawals. Contributions are not deductible, but it is the only vehicle where gains are never taxed.
- 2026 annual limit: $7,000. Cumulative limit since 2009: $95,000 (for a resident since 2009)
- Free withdrawals: Withdraw at any time without tax or penalty. Withdrawn amounts become re-eligible the following year
- No tax impact: Withdrawals do not affect government benefits (GIS, child benefits, etc.)
- Diversified investments: Like the RRSP, the TFSA can hold stocks, bonds, ETFs, GICs, mutual funds...
- Upon death: The TFSA can be transferred to the surviving spouse with no tax impact
RRSP vs TFSA: which vehicle to choose?
| Criteria | RRSP | TFSA |
|---|---|---|
| Deduction on entry | Yes (reduces tax) | No |
| Tax on withdrawal | Yes (taxable income) | No (tax-free) |
| Withdrawal flexibility | Withholding tax | Full, no penalty |
| Impact on benefits | Reduces GIS, benefits | No impact |
| Annual limit | $33,810 (18% income) | $7,000 |
| Ideal for | High income, MTR > retirement rate | Everyone, especially young / modest income |
General rule: If your current tax rate is higher than the one expected in retirement, prioritize the RRSP. If your rate is lower or similar, the TFSA is often preferable. Ideally, combine both.
The HBP: Home Buyers' Plan
The HBP (Home Buyers' Plan) allows you to withdraw up to $35,000 from your RRSP to purchase your first home, without paying tax at the time of withdrawal.
- Maximum amount: $35,000 per person ($70,000 per couple)
- Condition: Be a first-time home buyer (or not have owned a home in the last 4 years)
- Repayment: Must be repaid into the RRSP over 15 years (starting the 2nd year after withdrawal)
- Penalty: Any amount not repaid on time is added to the taxable income for that year
- RRSP funds: The funds must have been in the RRSP for at least 90 days before withdrawal
Tip: Contribute to your RRSP just before using the HBP to get the tax deduction, then withdraw for the purchase. You benefit from the deduction while using the funds for your property.
The RRIF: Registered Retirement Income Fund
The RRIF is the mandatory extension of the RRSP. You must convert your RRSP to a RRIF by December 31 of the year you turn 71.
- Mandatory minimum withdrawals: Each year, you must withdraw a minimum percentage of your RRIF (based on your age)
- Minimum withdrawal rate: 5.28% at age 72, 5.40% at age 73... gradually increases up to 20% at age 95 and over
- No maximum: You can withdraw as much as you want (but tax applies)
- Options at 71: Convert to a RRIF, purchase a life annuity, or withdraw the full amount (taxable)
- Planning: Consider starting RRSP/RRIF withdrawals before age 71 if your income is low, to spread out the tax burden
Caution: Mandatory RRIF withdrawals increase with age and can trigger the OAS clawback or reduce GIS. Plan your withdrawals considering all your income sources.
Tax optimization strategies
- Pension income splitting: Starting at age 65, you can transfer up to 50% of your eligible pension income (RRIF, annuity) to your spouse to reduce the couple's tax
- Pension income credit: The first $2,000 of eligible pension income qualifies for a federal tax credit of 15% ($300)
- RRSP meltdown: If your income is low between early retirement and age 65, withdraw from the RRSP at a low marginal rate before receiving OAS and CPP
- Invest the RRSP tax refund: Put the tax savings from RRSP contributions into your TFSA to maximize tax-free growth
- Spousal RRSP contribution: Contribute to your lower-income spouse's RRSP to balance retirement income and benefit from lower marginal tax rates
- Use the TFSA in retirement: Keep funds in a TFSA to supplement your income without affecting government benefits or increasing your tax