WHEN TFSAs ARE BETTER

WHEN TFSAs ARE BETTER

Here are a few circumstances when it makes sense to avoid RRSPs.

  • You expect to be in a higher tax bracket in retirement. If you expect to earn a generous pension, the combined income from your pensions and your RRSP or RRIF withdrawals in retirement could drive you into a higher tax bracket than when you were working.
  • You earn a low income. If you earn less than $35,000 annually you should forgo RRSPs altogether. In retirement, withdrawals from RRSPs and RRIFs can lead to claw backs of Old Age Security and other government programs like the Guaranteed Income Supplement. “The lower your income, the more likely you’ll be a recipient of these government income-tested benefits in retirement. You don’t want to mess with that.”

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