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TFSA or RRSP? The same pay, side by side

The same pay set aside in a TFSA and in an RRSP: the yearly income each gives after tax at the tax rate you expect in retirement, side by side, and the years before CPP and OAS that either can carry.

Setting aside C$8,000 a year before tax from age 30 to 55, a yearly income after tax from age 55 to 100 of

From a TFSA
C$11,256
No tax on it. C$5,600 a year goes in, because a TFSA is paid from pay that has already been taxed.
From an RRSP, then a RRIF
C$12,060
After C$4,020 a year of tax at the 25% you entered for retirement. C$8,000 a year goes in, because the tax on it is saved.

With these rates the RRSP route pays C$804 a year more. This is an example, in today's dollars: replace the figures with yours. The gap comes from the two tax rates you enter and nothing else; it closes when the rate in retirement equals the rate now.

Side by side

A TFSA against an RRSP for the same pay set aside, in Canadian dollars

Goes in each year

TFSAC$5,600

RRSPC$8,000

Pot at 55

TFSAC$242,546

RRSPC$346,494

Taken each year, before tax

TFSAC$11,256

RRSPC$16,079

Tax each year

TFSAC$0

RRSPC$4,020

Spendable each year

TFSAC$11,256

RRSPC$12,060

Can be taken from age

TFSAany

RRSPany

Tax saved on the RRSP contribution now: C$2,400 a year, 30% of what you set aside. Tax paid on the RRSP and RRIF income later: 25% of it. The TFSA route pays no tax on what comes out and does not add to your income for the OAS recovery tax.

The years before CPP and OAS

You stop at 55, 10 years before 65, the standard age for CPP and OAS. Unlike a UK pension, an RRSP has no minimum age, so either pot can be drawn in those years; the RRSP's withdrawals are taxed as income the year you take them.

TFSA route: paid level over those years
C$28,754
RRSP route: paid level over those years, after tax
C$30,807

Each is that route's own pot at the stop age spread over the bridge years. The same pay cannot be in both, and anything spent in the bridge is not left for later, so the table above, which leaves both pots untouched until the stop age, shows more than you would have afterwards. Paid out this way each pot is empty at the end of the bridge: the years after it would need CPP, OAS and other savings.

Tax taken at source and the OAS recovery tax

From 55 the RRSP's withdrawals are RRSP withdrawals, until the year you turn 71 when it must become a RRIF. Taken as one amount in the year, C$16,079 would have C$4,824 (30%) withheld at source, against C$4,020 owed at the 25% you entered; the difference is settled on your tax return. The CRA's withholding page does not cover a RRIF.

The RRSP and RRIF income plus the other income you entered is C$16,079, under the C$95,323 the OAS recovery tax starts at, so none is shown. It would apply to the RRSP route only, because TFSA withdrawals are not income.

Federal and provincial tax are not worked out: the two rates you enter stand in for both.

Both pots grow at the same return, with each year's amount paid in at the start of the year, and are drawn as one level amount from your stop age to 100. Not modelled: provincial tax, the Home Buyers' Plan and the First Home Savings Account, spousal RRSPs, and a pension adjustment from a workplace plan. The link carries your figures after the #, so you can save or share it. Your figures are not sent to us.

How the two are worked out

  1. You enter the pay you set aside each year, before tax. An RRSP takes all of it, and the tax on it is saved at your marginal rate now.
  2. A TFSA takes the same pay after that tax, up to one year's TFSA limit of C$7,000.
  3. Both pots grow at one return above inflation, the same for both, with each year's amount paid in at the start of the year.
  4. Both are drawn as one level amount a year from your stop age to 100. The TFSA pays it tax-free. The RRSP, and the RRIF it becomes, pays it as income taxed at the rate you enter.
  5. The years from your stop age to 65 are the bridge: the page shows what each pot pays, level, over those years. Neither has a minimum age, so the bridge is about which money you would rather draw, not a lock.

What the page holds fixed

Today's dollars. Earnings, the amount set aside, the limits, the OAS threshold and the other income are held at their 2026 amounts, in today's dollars, which assumes they rise with prices. The limits are reset every year; the page does not guess a later year's.

Where the page can mislead. It counts one year's TFSA limit and knows nothing of unused room from earlier years, which can be large. It knows nothing of your RRSP room carried forward or a pension adjustment. One flat tax rate stands in for the brackets, so a retirement income that uses low brackets first is taxed less on its first dollars than the rate you enter. Each is flagged or named where it applies.

What is not modelled. Provincial tax, the Home Buyers' Plan and the First Home Savings Account, spousal RRSPs, and a pension adjustment from a workplace plan. Each can change your answer. This is a planning aid and not financial advice: a registered adviser or the CRA can help with your own case.

CPP and OAS income is not added into the pots here. For what they pay, see the CPP calculator.

Questions people ask

Should I put money in a TFSA or an RRSP?
This page shows what each gives; it does not pick one for you. For the same pay set aside, an RRSP takes all of it and the tax on it is saved now, but what it pays later is taxed as income and counts towards the OAS recovery tax. A TFSA takes what is left after tax, pays out tax-free, and its withdrawals do not count as income. Which gives more comes down to the rate you pay now against the rate you expect in retirement, whether an employer matches into an RRSP, and what room you have in each.
Is the tax saved now worth more than the tax paid later?
That is the question the two numbers answer. The tax saved is at the marginal rate on the next dollar you earn now; the tax paid later is at the rate you enter for RRSP and RRIF withdrawals. With the same return on both, the RRSP route pays more when the later rate is lower than the rate now, the TFSA route pays more when it is higher, and they pay the same when the two rates are equal. The rate you enter for retirement is a guess, and it is the only thing that decides the comparison here.
How much can I put in a TFSA?
The Canada Revenue Agency (CRA) says the TFSA dollar limit for 2026 is C$7,000. Unused contribution room from previous years is added to the room you have, and an amount you withdraw is regained as new room on 1 January of the following year, not the same year. The calculator counts one year's limit as the most that goes in each year and says when your pay after tax is above it; it does not know your accumulated room, so check it with the CRA.
How much can I put in an RRSP?
Your RRSP deduction limit for a year is the lesser of 18% of your earned income in the previous year and the annual RRSP dollar limit, plus unused room from the year before, the CRA says. The CRA's limits table lists C$33,810 for 2026. The calculator uses the lesser of 18% of the earnings you enter and that limit to flag an amount above it. A pension adjustment from a workplace plan takes from your room, and is not modelled.
How are RRSP withdrawals taxed?
An amount you withdraw from an RRSP is income in the year you take it, and your financial institution withholds tax on it: the CRA's page lists 10% on amounts up to C$5,000, 20% on amounts over C$5,000 up to and including C$15,000, and 30% on amounts over C$15,000 (outside Quebec, where the rates differ). Withholding is a prepayment, not the tax you owe: the tax is settled on your return at your own rates. The CRA's page does not cover a RRIF. The calculator taxes every withdrawal at the single rate you enter.
What happens to an RRSP at 71?
An RRSP has to be closed or turned into a RRIF by the end of the year you turn 71. A RRIF pays at least a minimum each year, which is taxed as income. The calculator draws the RRSP and the RRIF as one level yearly amount to 100 and does not work out the minimum: the RRSP to RRIF calculator does.
What is the OAS recovery tax and does it matter here?
If your net income is above C$95,323 the Old Age Security pension is partly taken back: 15% of the income above that, up to the whole pension, the CRA says. RRSP and RRIF withdrawals are income, so a large RRSP can push income over the threshold; TFSA withdrawals are not income and do not. The calculator shows the effect for your figures as a separate line and does not subtract it from the income.
Can I retire early on a TFSA or an RRSP?
Both can be drawn at any age: Canada has no minimum age for either, unlike a UK pension. An RRSP withdrawal is taxed as income in the year, and a TFSA withdrawal is not taxed. The calculator shows what each pot pays level over the years from your stop age to 65, the standard age for CPP and OAS. It is a way to see the size of the gap, not a plan: your own spending in those years and other savings change it.
What about the Home Buyers' Plan, the FHSA or a spousal RRSP?
Not modelled. The Home Buyers' Plan and the First Home Savings Account let RRSP or home-purchase savings be used for a first home on their own rules, and a spousal RRSP splits retirement income between two people. Each can change the answer; the calculator treats one person with one RRSP and one TFSA.
Does this include provincial tax?
No. Provincial tax is not worked out and the provinces are not named one by one. The two tax rates you enter are your own: enter the combined federal and provincial rate on your next dollar now, and the combined rate you expect on withdrawals.

Sources: Canada Revenue Agency, Calculate your TFSA contribution room, the limits table for the MP, RRSP, DPSP and TFSA, tax rates on RRSP withdrawals, What is a TFSA and Service Canada, the OAS recovery tax.