Taxes
RRSP vs TFSA Comparison
Compare RRSP and TFSA after-tax values using your tax-rate and return assumptions.
The RRSP vs TFSA decision depends almost entirely on your tax rate now versus your expected tax rate in retirement. This calculator models both scenarios so you can see which account wins for your situation.
Advantage: RRSP
$54046
- tfsa Final Value
- $329187
- rrsp Final Value
- $383233
- recommendation
- Prioritize RRSP (lower retirement bracket)
Formula and method
RRSP After-Tax = [Contrib/(1-CurrentRate)] × FV_Factor × (1-RetirementRate); TFSA = Contrib × FV_Factor
Compares equal after-tax contribution costs. The RRSP contribution is grossed up by dividing the annual after-tax budget by (1 − current marginal rate), assuming the full refund is reinvested and sufficient contribution room. Contributions occur at year end. Growth is constant; withdrawals are taxed at the entered retirement rate.
Worked examples
High earner near retirement
- Annual after-tax savings budget ($):
- 10000
- Current Marginal Tax Rate (%):
- 43
- Retirement Marginal Rate (%):
- 22
- Years Until Retirement:
- 10
- Annual Return (%):
- 6
Advantage: RRSP: $48561
Young low earner
- Annual after-tax savings budget ($):
- 5000
- Current Marginal Tax Rate (%):
- 20
- Retirement Marginal Rate (%):
- 22
- Years Until Retirement:
- 35
- Annual Return (%):
- 7
Advantage: TFSA: $17280
Assumptions and limits
- Equal after-tax annual cost, with the full RRSP refund reinvested
- Sufficient RRSP and TFSA contribution room; limits are not checked
- Constant return and year-end contributions
- No OAS clawback, income-tested benefits or fees
This tool provides an educational estimate. Rules, rates and personal circumstances can change the answer. Review the assumptions before relying on a result. Report a correction.
Common mistakes to avoid
- Thinking TFSA is always better — it depends entirely on marginal rate now vs. at withdrawal.
- Not reinvesting the RRSP tax refund — the full benefit of RRSP only materializes if the refund is also invested.
- Forgetting OAS clawback at high retirement incomes — large RRSP withdrawals can reduce OAS payments.
Frequently asked questions
Which account is better?
This model depends on your current and withdrawal tax rates and assumes the RRSP refund is fully reinvested. Contribution room, benefits and access to cash can change the practical decision.
What happens at a zero return?
The balances equal the annual contributions multiplied by years before the modelled withdrawal tax.
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