This table illustrates the after tax return of $36,500 of income earned by an individual who invests for a 25 year period, assuming a 5% rate of return. This example depicts the result of taxation at the same rate, at a lower rate, and at a higher rate during an individual’s retirement years versus their working years.
Same tax rate: RRSP and TFSA are identical and no preference should be given to one over the other
Lower tax rate in retirement: RRSP is preferable
Higher tax rate in retirement: TFSA is preferable
Still not sure which option is best for you? Please contact Tradex to discuss in greater detail which option is best for your individual needs.