A recent study by the Retirement and Savings Institute at business school HEC Montréal found that while some demographics are making smart use of TFSAs, more education is needed
It’s a testament to the appeal of TFSAs that we can expect their total value to soon exceed the amount in RRSPs.
But let’s not lose sight of the big picture, which is that TFSAs are a massive success when it comes to helping people save in a tax-friendly way. “We find that TFSAs have enjoyed tremendous growth since their inception,” the Retirement and Savings Institute study says. “The pace of growth is such that annual median contributions into TFSAs already outstrip RRSPs, and the total value of savings in them may end up surpassing those in RRSPs in the foreseeable future.
Saving money in an RRSP or TFSA is a net positive, but there are consequences if you don’t get the choice right. For retirees, TFSAs were said to offer a tax-efficient way to draw income and a home for funds they must withdraw from a registered retirement income fund but don’t immediately need for living costs. For low-income Canadians, TFSA were described as a way to accumulate money they can withdraw in retirement without affecting eligibility for the Guaranteed Income Supplement.
Young people are another group leaning into TFSAs but could still be overusing RRSPs. “If they’re planning on using RRSPs as a long-term savings vehicle, that’s anecdotal evidence of money misplaced,” said Colin Busby, a co-author of the study along with Tessa LoRiggio.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
A baby, a new home, a breakup: These Thanksgiving 'firsts' created new traditions for CanadiansSometimes a life change comes along and upends long-held traditions. Readers share stories about their first time celebrating Thanksgiving in a new way.
Read more »
Canadians demand privacy, transparency, and personal data control to build trustThe Hill Times
Read more »
‘Nerve-wracking’: Canadians in Israel describe efforts to flee, and plans to stayIn the wake of Saturday's attack, multiple major airlines including Air Canada have suspended flights out of Israel due to the conflict.
Read more »
As Canadians react to Israel-Hamas conflict, deeply held beliefs expose an emotional divideRockets are launched by Palestinian militants from the Gaza Strip towards Israel, in Gaza, Saturday, Oct. 7, 2023. The militant Hamas rulers of the Gaza Strip carried out an unprecedented, multi-front attack on Israel at daybreak Saturday, firing thousands of rockets as dozens of Hamas fighters infiltrated the heavily fortified border in several locations by air, land, and sea and catching the country off-guard on a major holiday.
Read more »
Trudeau condemns rallies in support of Hamas as Ottawa probes reports of three missing CanadiansForeign Affairs Minister Mélanie Joly asks Canadians in Israel to ‘shelter in place’ as Canada works with allies to determine how to protect its citizens
Read more »
More than three-quarters of Canadians worry AI will take their job, poll showsJob security is a concern for 80 per cent of Canadians in the lowest household income bracket
Read more »