Compare RRSP vs TFSA outcomes head-to-head.
RRSP net
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TFSA net
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Your breakdown
Updates live as you type| Account | Grows from | Net after tax |
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Worked example
Take the default inputs: $10,000 of pre-tax income to invest, a 43 percent marginal rate today, a 33 percent rate expected in retirement, a 25-year horizon, and 6 percent annual growth. The RRSP route shelters the whole $10,000 because the contribution is deductible, so it grows to about $42,919 over 25 years. Withdrawn in retirement at 33 percent, that leaves about $28,756 net. The TFSA route uses after-tax money, so the $10,000 of pre-tax income becomes $5,700 after paying 43 percent tax now, and that smaller amount grows tax-free to about $24,464, all of it yours on withdrawal. The RRSP wins by about $4,292 here, purely because the money is taxed at a lower rate later than the rate it dodged today. Flip the brackets so retirement is higher than today and the TFSA pulls ahead. When the two rates are equal, the outcomes are mathematically identical, provided the RRSP refund is itself reinvested rather than spent.
How it is calculated
The comparison is built to be mathematically fair, which means it starts from the same pre-tax dollars for both accounts rather than the same deposit. The RRSP path invests the full pre-tax amount, grows it at the chosen return over the chosen years, and taxes the entire balance at your expected retirement marginal rate on withdrawal. The TFSA path first taxes the pre-tax amount at your current marginal rate, because TFSA contributions are not deductible, then grows that smaller amount at the same return and withdraws it tax-free. The only thing that decides the winner is the gap between your current and retirement marginal rates. A lower rate in retirement favours the RRSP, a higher rate favours the TFSA, and equal rates produce identical results. The model assumes one lump contribution, a constant return, and that you actually reinvest the RRSP tax refund. It ignores contribution-room limits, government benefit clawbacks tied to RRSP income, and the flexibility advantages of the TFSA, all of which can matter in a real decision.