{"id":608621,"date":"2026-05-28T14:42:09","date_gmt":"2026-05-28T14:42:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/608621\/"},"modified":"2026-05-28T14:42:09","modified_gmt":"2026-05-28T14:42:09","slug":"when-should-i-switch-from-investing-in-my-rrsp-to-my-tfsa","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/608621\/","title":{"rendered":"When should I switch from investing in my RRSP to my TFSA?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Q: I\u2019ve spent years investing in my RRSP, with a minimal amount going to my TFSA. When is it time to switch to investing more in my TFSA? I\u2019m 62 and plan to retire at 65.<\/p>\n

We asked Leslie Logan, senior financial planner at TD Wealth, to answer this one. <\/p>\n

Let\u2019s start by looking at the difference between a tax-free savings account and a registered retirement savings plan. According to Ms. Logan, both can play an important role in a well\u2011rounded plan.<\/p>\n

A TFSA is funded with after\u2011tax dollars and grows completely tax free, she said. \u201cThis means there are no annual tax slips, and withdrawals can be made at any time without triggering tax. However, because contributions are made with after\u2011tax money, a TFSA does not reduce your income or generate a lovely tax refund.\u201d<\/p>\n

An RRSP, on the other hand, allows you to deduct contributions from your income today, reducing your current tax bill. \u201cThose funds then grow on a tax\u2011deferred basis until withdrawn, at which point the entire amount is taxed as income \u2013 much like a paycheque,\u201d Ms. Logan said.<\/p>\n

She also advised that, for higher earners, contributing to an RRSP often works very well. The general idea is to contribute while your tax rate is high during your working years, and withdraw later when your income \u2013 and tax rate \u2013 are lower, creating a tax savings from entry to exit.<\/p>\n

How will the life insurance on our corporation be distributed among our children?<\/a><\/p>\n

\u201cWhere this strategy can fall short (and when RRSP sentiment can sour), is when income doesn\u2019t actually decrease in retirement,\u201d Ms. Logan said. \u201cStrong personal savings, a solid pension or multiple income sources can result in a similar \u2013 or even higher \u2013 tax rate later in life.\u201d In those cases, she noted that the tax benefit initially received may largely be given back upon withdrawal.<\/p>\n

When this is a concern, Ms. Logan works with her clients to identify an appropriate minimum RRSP level during working years and direct additional savings into a TFSA instead. <\/p>\n

\u201cIf you haven\u2019t maximized your TFSA or your balance is still relatively modest, it can be worthwhile to focus on building that up,\u201d she said. \u201cThis helps ensure that not all of your retirement income is taxable. It\u2019s easy to overlook how much of our future income will be subject to tax.\u201d <\/p>\n

I\u2019m 67 and plan to delay CPP. Would I lose all spousal benefits once I opt in?<\/a><\/p>\n

Government benefits, employer pensions and RRSP withdrawals are all taxable, which makes it important to factor in the after-tax amount when planning. \u201cUltimately, what matters most is the net income that actually reaches your bank account,\u201d Ms. Logan said.<\/p>\n

Having too much concentrated in an RRSP can also create challenges, particularly when large, unexpected expenses arise. Maintaining funds within a TFSA can help manage any lump\u2011sum needs more efficiently, provide flexibility and support a more tax\u2011efficient income strategy throughout retirement. Ms. Logan cited this example: If a home repair or vehicle replacement requires $35,000 after tax, with a marginal rate of 40 per cent, the actual RRSP withdrawal necessary to cover it could be closer to $55,000 \u2013 all of which is added to your income for that year.<\/p>\n

Having a portion of your savings invested in a tax-free vehicle \u2013 such as a TFSA \u2013 can provide valuable flexibility and help create a more balanced, tax-efficient retirement income plan.<\/p>\n

Do you want advice on a financial planning or retirement issue that\u2019s affecting you? Send us an e-mail<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Q: I\u2019ve spent years investing in my RRSP, with a minimal amount going…\n","protected":false},"author":2,"featured_media":175390,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,11749,56,54,55],"class_list":["post-608621","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-personal-finance","tag-personalfinance","tag-r-fp","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/608621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=608621"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/608621\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/175390"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=608621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=608621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=608621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}