Where should working retirees put extra income: A TFSA or an RRSP? Jan 11th

Retirement planning getting you down? There are always smart ways to plan the financial aspects of your retirement.

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Where should working retirees put extra income: A TFSA or an RRSP?

– moneysense.ca

Ask MoneySense
I will be receiving CPP and OAS as of June 2024. I intend on working one more year until I reach 66. My question is: Should I put all my CPP money into an RRSP to shelter it from tax? Or should I pay the tax on it and invest in a tax-free savings account?

–Gary

Where to put retirement income: RRSP or TFSA

Gary, believe it or not, it doesn’t matter if you contribute to a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). You get the same (after-tax) results. Well, almost.

But, before we go there, are you aware that you don’t have to start your Canada Pension Plan (CPP) benefits and Old Age Security (OAS) at age 65? Let’s do a quick recap on delaying CPP and OAS, and then tackle your RRSP versus TFSA question.

Should you delay CPP and OAS to after 65?

CPP benefits increase by 0.7% for every month delayed past your 65th birthday, working out to an annual increase of 8.4%. Plus, the CPP benefit is based on the average yearly maximum pension earnings (AYMPE)—the maximum salary amount on which you need to contribute to the CPP—over the last five years…

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