TFSA vs. RRSP
How to Use This TFSA vs RRSP Calculator
This calculator compares the after-tax retirement value of contributing to a TFSA versus an RRSP based on your current marginal tax rate and expected marginal rate in retirement.
How It’s Calculated
An RRSP contribution grows tax-deferred and the withdrawal is taxed at your retirement-year marginal rate. A TFSA contribution is made with after-tax dollars, grows completely tax-free, and is not taxed on withdrawal. The optimizer compares the final after-tax value under each based on the ratio between your current and expected future marginal rate.
Example
If your current marginal rate of 35% is higher than your expected retirement rate of 25%, the RRSP generally wins. If the reverse is true — low income now, higher expected income later — the TFSA usually comes out ahead.
Frequently Asked Questions
Which is better, TFSA or RRSP?
Neither is universally better — it comes down to whether your marginal tax rate today is higher or lower than your expected marginal rate when you’ll withdraw the money.
Does a TFSA affect government benefits like OAS?
No — TFSA withdrawals aren’t counted as income, so unlike RRSP withdrawals, they don’t affect income-tested benefits like Old Age Security.
Can I use both?
Yes, and for many people the optimal strategy is maxing both over time. The comparison matters most when contribution room is limited and you have to prioritize one.