www.taxpayerbehaviour.com
Tax-Sheltered Savings
In Canada, the two primary tax-sheltered savings plans are …
RRSP
Registered Retirement Savings Plan
Contributions to a Registered Retirement Savings Plan are tax deductible and lower the amount of income tax you have to pay.
TFSA
Tax-Free Savings Account
Investment earnings are tax-exempt, which means you don’t pay any taxes on interest or investment earnings on the money in your TFSA.
The RRSP (Registered Retirement Saving Plan)
was founded in
1957
The TFSA (Tax-Free Savings Account)
was founded in
2009
Is the TFSA really beneficial?
When the TFSA was introduced, people who were contributing to their RRSP tended to divert some of their savings away from the RRSP and into the TFSA.
The Predicament
The problem with this trend is that most Canadians use their TFSA much like a bank account and do not accumulate long-term savings.
Outcome
Thus, the retirement savings of many Canadians will be less with a TFSA than without a TFSA.
Promoting Long-Term Savings
"I research why this phenomenon occurs and how best to encourage long-term savings"
