The more time you have until retirement, the more opportunity for your investment to grow. Your advisor can calculate whether investment growth in a TFSA, which is tax-free, will outweigh an investment in an RRSP, which is tax-deductible today, but taxable down the road.
Regular RRSP contribution amounts
Are you maximizing your RRSP contribution? Depending on your tax situation and your goals, it may even be advisable to reduce your RRSP contributions and direct some of your savings to a TFSA.
If you are in a low tax bracket now, you may not be making the most of the tax savings from an RRSP. You might be better off contributing to a TFSA now. If your income rises in future years, you could still withdraw money from your TFSA and contribute it to an RRSP, provided you don't exceed your maximum contribution room.
Current RRSP savings
Do you already have a large RRSP or a generous pension plan? If so, you may want to direct more of your savings to a TFSA, since the tax on these savings is effectively pre-paid. That means withdrawals from your TFSA will not count as taxable income, and you may be able to avoid claw-backs to your Old Age Security pension and Guaranteed Income Supplement during retirement.
1 The 2.00% annual interest rate will be applied from December 3, 2012 to March 31, 2013 to the excess of the daily balance in the Investment Cash portion of a Canadian dollar RRSP over the closing balance in that account on December 2, 2012. For amounts not eligible for this offer, an interest rate of 0.15% will apply on Canadian dollar cash balances less than $5,000 and 0.25% on Canadian dollar cash balances $5,000 or greater. Read more
2 The 2.00% annual interest rate will be applied from November 1, 2012 to February 28, 2013 to the excess of the daily balance in the Investment Cash portion of a Canadian dollar TFSA over the closing balance in that account on October 31, 2012. For amounts not eligible for this offer, an interest rate of 1.15% will apply.
1, 2 Other conditions apply. Visit your branch for the full Terms and Conditions of this offer. Interest will be calculated daily and paid monthly. All rates are subject to change without notice.