This is a very common question because the two programs have many similarities, but also a few key differences.

Here are the primary differences between the accounts:

As for which one is best for you, here are the three major factors and their impacts on the decision.

  1. Income today vs. in the future
    • Expect to have higher income in the future? TFSA is relatively more attractive right now.
  2. Amount of savings room available
    • The TFSA has substantially lower lifetime contribution room for most people, so it is maxed out more quickly.
  3. Whether flexibility is important
    • If the funds might be required for something other than retirement, the TFSA is more appropriate.