Contribute $10,000 a year to an RRSP at a 33 percent marginal tax rate, earning 6 percent, for 30 years. Each year the contribution is deducted from taxable income, so $10,000 at 33 percent generates an immediate tax refund of about $3,300. Over the contribution period you put in $300,000 of your own money (30 years at $10,000). Treated as an annuity earning 6 percent, that stream of deposits compounds to roughly $790,582 by year 30. The deferral is the key benefit: you invest pre-tax dollars and pay no tax on the growth along the way. Tax only applies when you withdraw, at your marginal rate at that time, which is often lower in retirement than during your working years.
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Amount (CAD)
How it is calculated
The tool computes two things. The refund is simply the contribution multiplied by your marginal tax rate, because the deduction reduces income taxed at that top rate. The future value uses the future-value-of-an-annuity formula, contribution times ((1 plus r) to the power n, minus 1) divided by r, with r as the annual return and n as the number of years. RRSP room for 2026 is 18 percent of prior-year earned income up to a $32,490 ceiling, minus any pension adjustment, and unused room carries forward. The model assumes a level contribution each year and reinvested growth, all tax-sheltered until withdrawal. Because RRSP withdrawals are fully taxable as income, the real comparison against a TFSA depends on your marginal rate now versus in retirement.
Frequently asked questions
What is RRSP contribution room?
18% of prior-year earned income, capped at $32,490 for 2026, minus any pension adjustment. Unused room carries forward indefinitely.
When is the RRSP contribution deadline for 2025?
Contributions made in the first 60 days of 2026 (up to March 2, 2026) can be deducted on your 2025 tax return. Contributions after that date count toward your 2026 deduction limit. The CRA confirms the exact deadline each year on its website.
What happens to my RRSP when I turn 71?
You must convert your RRSP to a RRIF or annuity by December 31 of the year you turn 71. After conversion, minimum annual withdrawals are required each year based on your age and the account balance. Those withdrawals are fully taxable as income in the year received.
Can I contribute to a spousal RRSP?
Yes. You can contribute to a spousal RRSP using your own contribution room, and your spouse or common-law partner becomes the annuitant. This strategy can split retirement income between spouses, potentially reducing the combined tax bill. Withdrawals are taxed in the hands of the lower-income spouse, subject to the three-year attribution rule.