The Tax-Free Savings Account (TFSA) contribution limit has increased to $7,000 (from $6,500) for 2024. This new limit means that a taxpayer who has never contributed to a TFSA and has been eligible for one since its inception will have a cumulative contribution room of $95,000. TFSAs are now a serious portfolio and investment planning alternative to making RRSP contributions. So, which is better you ask? Well, it depends…

If you are a Canadian with significant assets and savings, then maximizing your TFSA makes sense as a retirement income planning strategy. The income from it during your retirement years is non-taxable and will not trigger any Old Age Security claw back which in 2024 starts at $93,208 (up from $86,912 in 2023)¹.