What is the RRSP?
A Registered Retirement Savings Plan gives an immediate tax deduction on contributions and grows tax-deferred. You pay income tax on withdrawals, so it works best when your marginal rate today is higher than in retirement.
Your contribution room is 18% of prior-year earned income, capped at $33,810 for 2026, with unused room carrying forward indefinitely. The RRSP must convert to a RRIF by the end of the year you turn 71.
Formula & worked example
Annual refund = Contribution × marginal tax rate
After-tax value = Balance × (1 − retirement rate)
Worked example: $12,000 a year from 35 to 65 at 6%, starting from $40,000 → about $1.24 million. Along the way you received roughly $144,000 in tax refunds at a 40% rate. At a 28% retirement rate the withdrawal tax is around $346,000, leaving about $889,000 after tax.
How to use this rrsp calculator
- Enter your annual contribution, within your available RRSP room.
- Use your marginal rate, not average — it determines the refund.
- Estimate your retirement rate; most Canadians drop meaningfully.
- Check your Notice of Assessment for your exact contribution room.
Smart tips
- Reinvest your tax refund back into the RRSP or a TFSA — spending it wastes most of the benefit.
- RRSP beats TFSA when your current rate exceeds your retirement rate; TFSA wins when the reverse is true.
- The Home Buyers' Plan lets you withdraw up to $60,000 tax-free for a first home, repayable over 15 years.
- Contribution room carries forward, so a low-income year is a good time to skip and contribute later at a higher rate.
- Spousal RRSPs allow income splitting in retirement, which can cut the household tax bill considerably.
Frequently asked questions
How much can I contribute to an RRSP?
18% of your prior-year earned income up to $33,810 for 2026, less any pension adjustment. Unused room carries forward indefinitely.
RRSP or TFSA — which is better?
RRSP if your current marginal rate is higher than your expected retirement rate. TFSA if it is lower, or if you want tax-free flexibility.
When must I convert my RRSP?
By 31 December of the year you turn 71, into a RRIF or an annuity. Minimum withdrawals then begin the following year.
Can I withdraw from an RRSP early?
Yes, but withdrawals are taxed as income and the contribution room is lost permanently. The Home Buyers' Plan and Lifelong Learning Plan are the exceptions.
Want the theory behind the numbers? Read our Canada retirement guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 8 Sep 2026. How we check these numbers.