Quote:
Originally Posted by flamefan74
Why can't these people contribute to TFSA first before putting money into RRSP's? And how much more expensive would the TFSA be for the government over the RRSP deduction?
Most of my friends throw money at an RRSP in Feb so that they can get a tax refund. And then blow said refund on junk. They could take that refund and put it into a TFSA if they so wanted to, but I think the problem is a mental one. They see it as found money and are willing to spend it as such. And then complain that TFSA's only benefit the 10%. TFSA's benefit everyone, but the majority aren't forward thinkers, only living in the present.
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You're right on the immediate cost of the RRSP vs. TFSA I think, but then when you consider that all that money coming out of the RRSP is fully taxable down the road (growth as well), and there are stipulations so that the government begins collecting that tax when you turn 71 and at increasing amounts, it makes up for that. So while you might feel an RRSP contribution today gives you a tax saving, its really a deferral for however many years until that eventual withdrawal.