TFSA VS RRSP Calculator

TFSA VS RRSP Calculator

The choice between a Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) and non-registered investments will depend on personal financial circumstances, goals, investment timelines and other factors. It’s important to understand the benefits and limitations of each of these savings options so that you can choose the one that best suits your needs.

TFSA VS RRSP Calculator compares the benefits of investing in a TFSA versus an RRSP, taking into account various tax rates. The calculator allows you to see the impact of different growth rates and withdrawal scenarios on your TFSA or RRSP balance, with the difference in withdrawal amount shown in terms of dollars and percentages, before and after applying the selected marginal tax rate for the year in question.

TFSA vs. RRSP: A Complete Guide for Canadian Investors

The TFSA is a great option for those who believe that their marginal tax rate will be lower in retirement, making it a good choice for short-term savings goals. It’s also an effective tool for those who earn a high income, as the contributions can be deducted from taxable income.

On the other hand, if you are likely to be in a higher tax bracket during retirement, an RRSP may be a better option. The advantage is that the accumulated tax-deductible contribution will result in tax-deferred compounding, which can help you achieve a comfortable retirement income. Once you reach age 71, however, the contributions must be withdrawn and any resulting tax paid.