3 ways Canadians save for retirement


✔ All Canadian residents qualify for government-supported retirement plans.   

✔ Government programs that can help you plan for retirement include a Registered Retirement Plan (RSP), a Tax-free Savings Account, and the Canadian Pension Plan.  

✔ Starting early gives your money time to grow and that’s a big advantage in retirement planning. 

The Canadian government offers three ways for residents to plan and save for their retirement. Each one provides a unique way to lower your income tax today, keep more of the money you earn, and retire with a more stable income.  This is a brief guide to help you understand how each one works. It covers:

  • Registered Retirement Savings Plans (RRSPs)
  • Tax-free Savings Accounts (TFSAs) 
  • The Canada Pension Plan (CPP)


An RRSP is a retirement savings plan that you contribute money to and it gets registered with the government for special tax benefits. The money you put into the plan can be used to reduce the amount of income tax you owe in any given year. Once inside the plan, your money becomes ‘exempt’ from tax on the additional money it earns. You only pay tax when you start to withdraw money from your RRSP in the future. 

How much money can you put into an RRSP?

The rules on how much you can contribute to your RRSP (called ‘contribution room’) get adjusted each year. As of 2023, you can contribute up to 18% of your previous year's earned income, up to a maximum of $30,780. Most people are not able to make the maximum contribution to their RRSP every year. Don’t let that discourage you. Unused contribution room carries forward from year to year so you can use it later. 

Every dollar that you contribute to your RRSP lowers the amount of tax that you have to pay. At the end of the year, you could receive a tax refund from the government. That’s money you can use any way you want to pay down debt or put back into savings.  

If you’ve started to file income tax in Canada, you can find your contribution limit on your most recent Notice of Assessment (NOA) from the Canada Revenue Agency by logging in to MyCRA. Here’s how. 

How an RRSP works when you retire

You can continue to contribute to your RRSP until December 31 the year you turn 71. Then, you must begin to withdraw the money and it will get taxed as though it was regular income from a job. 


A TFSA is a unique opportunity for Canadians to earn interest and profit from investments without having to pay any tax—ever.  It’s a great way to save for your long- or short-term goals because: 

  1. Investment income earned through interest, dividends or capital gains is tax-free, even when you withdraw it. 
  2. The money you withdraw during the year can be put back in future years. 
  3. You can hold a variety of investment types (for example, cash, GICs, and mutual funds). 

How much you can save in a TFSA

Since 2009, the government has been changing the limit on how much you can contribute to a TFSA. Here are the limits up to the 2023 tax year. As a new Canadian, your eligibility starts in the year that you became a permanent resident. 

For example, if you became a permanent resident in 2019, you could contribute:

2019 to 2022 (4 times $6,000) = $24,000 
2023 (1 times $6,500) = $6,500
Total contribution room = $30,500

Just like RRSP contribution limits, you can find your TFSA contribution limit on your most recent Notice of Assessment (NOA) from the Canada Revenue Agency. You can also view your NOA by creating a “MY CRA” account. 

Canada Pension Plan (CPP) and Old Age Security (OAS) Benefits

All Canadian residents are allowed to participate in the national pension plan and become eligible for Old Age Security benefits later in life. 

If you’re working in Canada, your employer is expected to contribute to the pension plan on your behalf and you can also contribute through payroll deductions. If you are self-employed, you have the option of contributing directly to the plan. If your income in retirement is relatively low, you will also qualify for a monthly allowance from OAS. 

As a new Canadian, here are the most important things to know: 

  • How much you contribute to the CPP and for how long will determine how much money you may qualify for starting at age 60.
  • Your employer is legally obligated to make a contribution to the CPP on behalf of employees. 
  • The Canada Revenue Agency provides information about the CPP and OAS for new Canadians on its website. 

Where to begin

Retirement planning is a lifelong activity. RRSPs, TFSAs, and CPP/OAS benefits are all ways that can help you build a solid financial foundation. But, how you start saving depends on your income, needs and long-term financial goals. To better understand your all options consider getting advice from a qualified retirement planning professional. 

Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.

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