Tax & Debt Strategy

TFSA or RRSP First?

Both accounts shelter growth from tax. Which one leaves you with more depends on your tax rate today compared with your tax rate when you take the money out.

Your situation

Province

Gross income this year

Before tax and deductions.

Amount you can save

This year, from take home pay.

Years until needed

Assumed return

Before fees. Not guaranteed.

Expected income in retirementPer year, before tax, in today's buying power. Rough estimates are fine.

Total$54,750 per year

Workplace pension

From an employer plan. Enter 0 if none.CPP

As of 2026, the highest CPP at 65 is $18,100 a year. Most people get less.Old Age Security

As of 2026, the highest OAS at 65 is about $8,900 a year.Other taxable income

Existing RRSP withdrawals, rent, part time work.

Know your contribution room? Optional

Room does not change which account comes out ahead. It tells you whether the amount fits. Going over your room can trigger a penalty tax of 1% a month.

Where to find your RRSP room

On your latest Notice of Assessment, in the RRSP section, look for "Your RRSP deduction limit for 2026".
Or sign in to CRA My Account and open "RRSP and TFSA".
CRA guide: where to find your RRSP deduction limit

Where to find your TFSA room

In CRA My Account, under "RRSP and TFSA". The figure is as of January 1, so subtract anything you have deposited since then.
CRA guide: calculate your TFSA contribution room

Available RRSP room

Available TFSA room

For these numbers, in today's buying power

The RRSP comes out ahead by about $1,050

An RRSP contribution saves you tax at 30.5% today. Taking it out in retirement would cost about 25.3%. The RRSP wins when the second number is lower than the first.

The answer changes if your retirement income is above about $58,500 a year.

Tax saved going in30.5%

Tax paid coming out25.3%

TFSA

Tax paid now

You deposit$7,000

Tax refund$0

Value in 25 years$14,099

Tax on withdrawal$0

You keep$14,099

RRSP

Ahead here

You deposit$10,071

Tax refund, reinvested$3,071

Value in 25 years$20,284

Tax on withdrawal (25.3%)−$5,140

You keep$15,144

What this assumes

The RRSP refund is put back into the RRSP. If you spend it, the RRSP loses most of its edge.
Results are in today's buying power, using 2.1% inflation.
Withdrawals are spread over 20 years at age 65 or older, on top of your other retirement income.
2026 federal and Alberta tax rules, with no fees.

New room for 2026

TFSA$7,000

RRSP (18% of income, to the yearly maximum)$17,100

RRSP room is based on last year's earned income and is lower if you have a workplace pension. Unused room carries forward. Your exact figures are on your CRA Notice of Assessment or in CRA My Account.

Want this run on your real numbers?

Your Notice of Assessment, pension and benefits change the answer. A licensed advisor can walk through it with you.

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This tool is for education only and is not tax, investment or financial advice. It compares two accounts using simplified assumptions and 2026 tax rules, which can change. Rates of return are not guaranteed and actual results will differ. Speak with a licensed advisor or tax professional before acting. Five Ridge Financial Ltd. provides insurance and segregated fund products. Securities, mutual funds and direct investment advice require separate licensing.

Related Resources

TFSA vs RRSP Guide Tax Strategy Guide Financial Snapshot