RRSP Calculator

What is an RRSP and how does it work?

An RRSP (Registered Retirement Savings Plan) is Canada's primary tax-deferred retirement account. Contributions reduce your taxable income now; the account grows tax-free; withdrawals are taxed as income. It's most beneficial when your income (and tax rate) is higher during working years than in retirement. Contributions must be in cash or in-kind assets, and the annual limit is 18% of prior-year earned income up to $31,560.

When must I convert my RRSP?

You must convert your RRSP to a RRIF (Registered Retirement Income Fund) or an annuity by December 31 of the year you turn 71. After conversion, you must withdraw a minimum percentage each year (starting at 5.28% at age 71, increasing annually). Many Canadians begin drawing down their RRSP strategically between retirement and age 65 to level their income and reduce lifetime taxes.

What is the RRSP Home Buyers' Plan (HBP)?

First-time home buyers can withdraw up to $35,000 from their RRSP tax-free to purchase a qualifying home. Couples can each withdraw $35,000 — up to $70,000 combined. The withdrawn amount must be repaid to the RRSP over 15 years starting 2 years after the withdrawal. If not repaid, the outstanding amount is added to your income each year.

RRSP or TFSA — which should I prioritize?

General rule: if your marginal tax rate now is higher than your expected retirement rate, prioritize RRSP (tax deduction now, taxed later at lower rate). If you expect your retirement tax rate to be similar or higher, prioritize TFSA (no deduction now, but growth and withdrawals are tax-free). Both should be maximized if possible. RRSP is typically better for higher earners; TFSA better for lower-income years and retirees.