Last updated: 2026 assumptions reviewed. Assumptions & sources
Tools & Resources

RRSP vs TFSA: Which Is Right for You?

Four questions. One clear recommendation. Built on Canadian financial planning logic, not generic advice.

RRSP or TFSA: which one (or something else entirely)?

This tool asks you four questions and gives you a personalised recommendation. It takes about 90 seconds. No email required.

Note: This is educational guidance, not financial advice. Every situation is different; a fee-only financial planner can help with specifics.

Quick Definitions

TFSA
Tax-Free Savings Account. Contributions from after-tax income. Growth and withdrawals are completely tax-free. 2026 limit: $7,000. Cumulative room since 2009: $102,000.
RRSP
Registered Retirement Savings Plan. Contributions reduce taxable income now. Growth is tax-sheltered. Withdrawals in retirement are taxed as income. 2026 limit: 18% of prior year earned income up to $33,810.
FHSA
First Home Savings Account. Best of both worlds for first-time buyers: contributions are tax-deductible (like RRSP) and qualifying home-purchase withdrawals are tax-free (like TFSA). $8,000/year, $40,000 lifetime.

General rule of thumb: If your income is below ~$55,000, the TFSA is usually the better starting point. Above $100,000, the RRSP deduction is worth more. The FHSA is the first account to open if you're a first-time buyer. It beats both.

Frequently Asked Questions

Should I put money in my RRSP or TFSA?

Your current income is the most important variable. If you earn over $100,000, the RRSP usually wins because the tax deduction is worth more at higher rates. Under $50,000, the TFSA often wins because your marginal rate is lower. Between $50,000 and $100,000, it depends on what you expect your retirement income to be.

Can I contribute to both RRSP and TFSA in the same year?

Yes. They are completely separate accounts with separate room. Many Canadians contribute to both. A common approach is to use the RRSP refund to fund the TFSA each spring.

Does RRSP income affect my OAS or GIS in retirement?

Yes. RRSP withdrawals in retirement are taxable income. High RRSP balances can trigger the OAS clawback (which begins at around $93,000 of net income in 2026) and reduce GIS eligibility. The TFSA does not count as income for these purposes, which gives it a significant advantage for lower-income retirees.

What is RRSP contribution room?

Your RRSP room is 18% of your prior year's earned income, up to the annual limit ($32,490 for the 2025 tax year). Unused room carries forward indefinitely. Check your Notice of Assessment or CRA My Account for your exact available room.

What happens to my RRSP at age 71?

You must convert your RRSP to a RRIF (Registered Retirement Income Fund) by December 31 of the year you turn 71. The RRIF then requires minimum annual withdrawals based on your age. Planning for this conversion is part of retirement income planning.