August 18, 2019

TFSAs have been a disappointment in getting Canadians to save more – The Globe and Mail

Canadians saving money for retirement can choose from two tax-free investment account options: a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA). Recently, a study found that TFSAs may not be helping Canadians meet their savings goals. One issue is that Canadians seem to be taking money from retirement savings accounts to fund TFSAs. Since TFSAs are more flexible accounts, they more easily allow for withdrawals for current spending needs like a home down payment or renovation project. While no one is arguing against tax-free saving accounts, the type of account Canadians choose may – or may not – really increase their savings for critical retirement years.

“Everyone loves tax-free savings accounts – this is not in dispute. But how good are TFSAs for the country? A study recently published in the Canadian Tax Journal raises some doubts.”

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