# Use of tfsa in retirement



## latebuyer (Nov 15, 2015)

It seems like most articles i read say at 60,000 i should invest in the rrsp. However i've also read articles that say you should have a balance between rrsp and tfsa as the tfsa is more flexible in retirement. The example given was if you wanted to make a large purchase you would take it out of the tfsa rather than incurring additional tax withdrawing from rrsp. Do people find this is the case and having the tfsa is useful in retirement? Just a note i can't max out tfsa and rssp if you are thinking that and i am just interested in hearing peoples experience.


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## cainvest (May 1, 2013)

Sure TFSA is helpful due to it's lack of paying taxes or registering as income on withdrawals. RRSP is helpful in that (hopefully) you'll extract the money from it in retirement at a lower tax rate than when you put it in. Even at the same income tax levels going in/out RRSP and TFSA provide the same (1) growth benefits but TFSA can surely be better when considering large withdrawals when income tax is concerned. 

(1) RRSP has some special tax treaty treatments for foriegn investments.


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## Eclectic12 (Oct 20, 2010)

The first question IMO is whether one anticipates that retirement income is going to be lower than today's income.

If it makes sense to make an RRSP contribution, keep in mind it doesn't have to be "RRSP versus TFSA". Some will make their RRSP contribution/deduction to get a refund that is then put into the TFSA for a bit of both worlds.


Similarly, some that anticipate a higher income in a year or two will make the TFSA contribution to withdraw as part of funding an RRSP contribution/deduction that generates a larger refund (that helps restock the TFSA).


I'm not in retirement but have found having both RRSP and TFSA useful.


Cheers


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## latebuyer (Nov 15, 2015)

Thanks for the replies. The writer of the article who recommends some tfsa in retirement is a cfp who deals with high networth individuals so i wondered if the advice was geared toward those with higher income. However, in thinking about it if you needed to make a withdrawal for some reason above your minimum rrsp withdrawal, then it would be useful to have some tfsa money for that purpose so you didn't need to withdraw more from rrsp.


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## james4beach (Nov 15, 2012)

I think it's hard to generalize the answers because there are so many factors here. I think the TFSA is really nice, with tremendous flexibility. I am trying to fund *both* my RRSP and TFSA, but absolutely am max'ing out the TFSA.

Imagine a year where you have moderate income and still want to pull some $ from investments. This can be done using the TFSA; any withdrawals are tax free. _And_ you can put the money back later! You could also withdraw from the RRSP, but the withdrawal is taxable income and you lose that contribution room forever.


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## newfoundlander61 (Feb 6, 2011)

I my case I am currently 58 and am drawing a monthly DBPP from my time in the army. So my route was to skip the RRSP due to having a DBPP (Defined Benefit Pension Plan) which is indexed in about 1.5 years and focus on a TFSA for me and my wife including a joint non-reg investment account. There are different routes and ways to to do it but it really depends on your specific situation.


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## latebuyer (Nov 15, 2015)

Thanks. Yes, i have a pension too so that is a factor. One thing i'm thinking is i invest more in my tfsa now, then once my mortgage is paid off i can make use of the rrsp contribution room. That way the rrsp won't grow so much. I actually talked to 2 financial planners and one said to invest in tfsa, other in rrsp so maybe there isn't one correct answe r.


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## cainvest (May 1, 2013)

latebuyer said:


> I actually talked to 2 financial planners and one said to invest in tfsa, other in rrsp so maybe there isn't one correct answe r.


It's not a one rule for all that is for sure.

Having some level of split will "most likely" give you best of both worlds. If your income is likely to rise when you get your mortgage paid off then maybe saving some extra RRSP contribution room for later and using TFSA isn't a bad idea, this also depends on how much you're saving away right now. The pension amounts can also be a big factor in the future.


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