TFSA vs RRSP Calculator
There is no universal winner. The honest answer depends on your tax rate today versus in retirement. Enter your numbers and see both outcomes side by side, with the math laid out.
How this is calculated
The comparison starts from the same pre tax amount, because that is the fair way to compare the two accounts. An RRSP contribution is made with pre tax dollars, and a TFSA contribution with after tax dollars.
The RRSP grows the full amount and is taxed once when you withdraw: amount × growth × (1 minus your retirement rate). The TFSA only ever holds the after tax portion, but nothing is owed later: amount × (1 minus your current rate) × growth. Growth is the same for both, so the whole contest comes down to your tax rate now versus at withdrawal.
- Retirement rate lower than today: RRSP wins.
- Retirement rate higher than today: TFSA wins.
- Rates equal: the after tax result is identical.
What the numbers do not capture
The math above is the clean version. A few real world points can tip the decision:
- Spending the refund. An RRSP contribution creates a tax refund. The math above assumes that benefit is captured. If you would spend the refund rather than invest or save it, the TFSA is effectively better for you.
- Flexibility. TFSA withdrawals are tax free, do not count as income, and can be recontributed the following year. RRSP withdrawals are taxable and permanent, apart from the Home Buyers and Lifelong Learning plans.
- Benefit clawbacks. RRSP or RRIF withdrawals count as income and can reduce Old Age Security and other income tested benefits. TFSA withdrawals do not.
- Many people should use both. A common approach is the RRSP for high income years and the TFSA for flexibility and for income you expect to need before or early in retirement.
Next steps
Bremo is an independent Canadian personal finance resource, not a tax adviser. This tool is a simplified model for general education and assumes a single tax rate and a steady return. Real tax brackets, benefit clawbacks and provincial rules are more nuanced. Confirm your situation with a qualified professional.
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