Decide between a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA). Compare tax refunds, HBP limits, and growth potential.
| Immediate 2026 Tax Refund | $0 |
| Accessibility | Tax-free at any time |
| Long-term Tax Impact | Growth is never taxed |
Wizard Logic: Since your income is in the middle tax bracket, we prioritize the Tax-Free Savings Account to ensure your growth remains protected and accessible.
"In my 30 years of helping families, I've seen how the choice between RRSP and TFSA can impact a home purchase. If you're saving for a down payment, the $60,000 Home Buyers' Plan (HBP) makes the RRSP very attractive for the tax refund, but don't overlook the TFSA for its absolute flexibility. A balanced approach often helps you avoid being 'house rich but cash poor' when closing costs arrive."
Generally, if your 2026 income is below $55,000, the TFSA is often better as your current tax savings are lower. If you earn over $100,000, the RRSP provides a much larger immediate tax refund, effectively lowering your cost of investing.
The annual contribution limit for the Tax-Free Savings Account in 2026 is $7,000, plus any unused room carried forward from previous years (back to 2009).
Yes. Under the Home Buyers' Plan (HBP), you can withdraw up to $60,000 from your RRSP tax-free to buy your first home. You have 15 years to repay the amount, with repayments typically starting the fifth year after withdrawal for those participating in 2026.
When you withdraw from an RRSP in retirement, it counts as taxable income. This can sometimes lead to a 'clawback' of your Old Age Security (OAS) benefits if your total 2026 retirement income exceeds approximately $95,000.