What type of savings account should I use?

You are able to grow your savings tax-free in both a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP). The plan will suggest a contribution split between the two accounts based on your annual income.

For those who earn $50,000 a year or less, the plan defaults by putting the maximum allowable amount into a TFSA and shifts any remaining amount to an RRSP account. This is done because making a TFSA withdrawal in retirement will not negatively impact GIS and other government benefits that are affected by your income, whereas a RRSP withdrawal will result in a clawback in benefits.