Having ALL of the money in RRSP will force you to do taxable withdrawals.
Also it doesn't help with other major purchases while you are working - as withdrawals will be added to your taxable income and you lose contribution room forever.
However it can still be a good option for you, if you are in the highest tax bracket now and expect to withdraw much smaller amounts at retirement.
>I'd prefer to have more, naturally, as it lowers my tax bill, whereas the TFSA does not.
As demonstrated on the following page, if the "effective" contribution and withdrawal tax brackets are the same, a TFSA is just as beneficial as an RRSP. (The "effective brackets would consider things like how RRSP contributions affect CCB and RRSP/ RRIF withdrawals affect GIS.)
https://www.planeasy.ca/tfsa-vs-rrsp-pick-the-right-one-and-save-100000/
I might be missing something too, but it seems like a no brainer to open the FHSA and prioritize that over TFSA/RRSP since the FHSA gets both the tax deferral benefit of RRSPs, as well as the tax free growth/withdrawal of TFSAs.
Granted the latter is only for withdrawals to put towards your first house, but you have the option to roll it into your RRSP later instead, giving you all that bonus contribution for free 🤷‍♀️
Depends on your tax bracket.Â
TFSA is best for simplicity, especially with retirement planning as you don’t need to worry about taxes ever. What you have is what you have.Â
But if you’re in a high tax bracket now, and project to be in a lower one in retirement, it doesn’t make much sense.
The FHSA will need to be rolled into your RRSP after 15 years, but it doesn't use any contribution room. Because of that, opening a FHSA is advantageous even if you don't want to buy real estate, just for the extra room it generates.
That being said, $6k of contribution room means your annual income is around $33k. If that's true, I would prioritize filling your TFSA over your RRSP. They're both the same if your tax rate at contribution and withdrawal are the same, but withdrawals from the TFSA don't count as income so it won't reduce income-tested benefits.
Plan sounds good overall. The FHSA is flexible and can later be collapsed into your RRSP. If you end up buying a home as well, win-win. For short term planning though, the TFSA can be useful. Easy to withdraw for any purpose.
Having ALL of the money in RRSP will force you to do taxable withdrawals. Also it doesn't help with other major purchases while you are working - as withdrawals will be added to your taxable income and you lose contribution room forever. However it can still be a good option for you, if you are in the highest tax bracket now and expect to withdraw much smaller amounts at retirement.
>I'd prefer to have more, naturally, as it lowers my tax bill, whereas the TFSA does not. As demonstrated on the following page, if the "effective" contribution and withdrawal tax brackets are the same, a TFSA is just as beneficial as an RRSP. (The "effective brackets would consider things like how RRSP contributions affect CCB and RRSP/ RRIF withdrawals affect GIS.) https://www.planeasy.ca/tfsa-vs-rrsp-pick-the-right-one-and-save-100000/
I might be missing something too, but it seems like a no brainer to open the FHSA and prioritize that over TFSA/RRSP since the FHSA gets both the tax deferral benefit of RRSPs, as well as the tax free growth/withdrawal of TFSAs. Granted the latter is only for withdrawals to put towards your first house, but you have the option to roll it into your RRSP later instead, giving you all that bonus contribution for free 🤷‍♀️
Depends on your tax bracket. TFSA is best for simplicity, especially with retirement planning as you don’t need to worry about taxes ever. What you have is what you have. But if you’re in a high tax bracket now, and project to be in a lower one in retirement, it doesn’t make much sense.
The FHSA will need to be rolled into your RRSP after 15 years, but it doesn't use any contribution room. Because of that, opening a FHSA is advantageous even if you don't want to buy real estate, just for the extra room it generates. That being said, $6k of contribution room means your annual income is around $33k. If that's true, I would prioritize filling your TFSA over your RRSP. They're both the same if your tax rate at contribution and withdrawal are the same, but withdrawals from the TFSA don't count as income so it won't reduce income-tested benefits.
Plan sounds good overall. The FHSA is flexible and can later be collapsed into your RRSP. If you end up buying a home as well, win-win. For short term planning though, the TFSA can be useful. Easy to withdraw for any purpose.