Account types
TFSA
Tax-Free Savings Account: Introduced in 2009 for Canadian residents. Contributions grow tax-free, and withdrawals are not taxed. The 2025 annual limit is $7,000.
RRSP
Registered Retirement Savings Plan: A tax-deferred retirement account. Contributions reduce taxable income, and withdrawals are taxed as income—ideally at a lower rate in retirement. Individuals can open personal RRSPs, or participate in employer-sponsored group RRSPs with possible company matching. Funds can be transferred between group and individual RRSPs. The RRSP must be closed by December 31 of the year the holder turns 71. At this point, no more contributions are allowed. Typically, it is converted to a RRIF, but other options exist.
DCPP/LIRA
Defined Contribution Pension Plan: Employer-sponsored plan with fixed contribution percentages. Contributions are tax-deferred and reduce RRSP contribution room. When employment ends, the plan typically becomes a Locked-In Retirement Account (LIRA). It can also be used to purchase an annuity so that it behaves like a traditional defined benefit pension. No further contributions are allowed. Withdrawal rules vary by province. Similar to RRSP's, LIRAs must convert to a LIF by age 71.
RRIF/LIF
Registered Retirement Income Fund and Life Income Fund: These accounts receive funds from RRSPs and LIRAs, respectively, for retirement withdrawals. Set minimum annual withdrawals increase with age, designed to deplete the retirement funds as the retiree ages. LIFs also have a maximum withdrawal limit. Withdrawals are taxable pension income. Conversion from RRSP/LIRA is required by the end of the year the account holder tuns 71. Withdrawals must begin in the year the retiree turns 72, however if they have a younger spouse, the minimum % required to be withdrawn can be based on their age.
FHSA
First Home Savings Account: A registered plan for first-time homebuyers. Contributions are tax-deductible like an RRSP, and withdrawals (if used for a qualifying home) are tax-free like a TFSA.
RESP
Registered Education Savings Plans (RESP) are accounts used to save for a child's post-secondary education. Key features include:
The Government of Canada provides a 20% grant (CESG) on contributions, up to $500 per year, with a lifetime maximum of $7,200 per child.
Low-income families may qualify for the Canada Learning Bond (CLB).
The balance in the RESP is categorized into two types:
Original contributions: What is contributed, usually by a parent or guardian.
Grants and Gains: what is contributed by the government (CESG and CLB) and any investment gains on these and the original contributions.
Accordingly, withdrawals are categorized into two types:
Post-Secondary Education (PSE) payments: Withdrawals from original contributions. These are tax-free.
Education Assistance Payments (EAP): Withdrawals from government grants and investment gains. These are taxed at the student's income tax rate, which is typically lower than the contributor's/parent's.
Additional notes:
There is a limit on how much EAP can be withdrawn in the first semester of studies.
RESP accounts can remain open for up to 36 years, or 40 years for a beneficiary with a disability.
At account closure, if there are remaining funds, contributions are returned (to the parent and the government) and the investment gains can be taxed and withdrawn or rolled into a contributor's RRSP up to a limit, if there is contribution room.
What information do I need to gather for planning my retirement (Retirement Calculator)?
Annual Expenses
Estimate expenses during retirement—e.g., less childcare or mortgage, more travel or dining.
Length of your retirement
Define when withdrawals will start and end.
Spouse's age: A retiree can opt to set their minimum RRIF withdrawals at the rate their younger spouse would withdraw at. Set to same age as main person if not applicable.
Inflation & Investment Returns
These significantly affect projections. Check out FP Canada's Assumption Guidelines for standardized inputs.
FP Canada Projection Assumption Guidelines
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Expected pension benefits
This includes Canada Pension Plan, Old Age Security, workplace pensions or other expected sources of income such as a rental property or a foreign pension.
Current Account balances
Used as a starting point. No future contributions are assumed. Data is not stored by myfincal.com.
Non-Registered Taxable % on Withdrawal
To simplify, a flat tax rate is applied. Example: $100 grows to $150 → $50 gain → 50% of gain ($25) is taxable → $25/$150 = 17% taxable portion.
Target tax bracket
Used to limit RRIF withdrawals or other taxable income sources before drawing from other non-taxable sources of income.
Withdrawal Priority Order
The retirement accounts have different tax implications. By changing the priority order of accounts and the Target tax bracket, a user can see how their withdrawal strategy will help or hinder their retirement finances.
Retirement Calculator Results
The results from the Retirement Calculator display the inflation-adjusted withdrawals required from each account, to help visualize cash flow or organize a retirement bucket strategy.
Planning with a Spouse
Pension income from a defined benefit plan, RRIF or LIF is usually able to be split between spouses in order to equalize the taxable income between spouses, resulting in less tax being paid by the couple. In most situations, the person who is "transferring" pension income (for tax purposes) to their spouse must be 65 or older. Up to 50% of the pension income may be splittable. Other non-pension income and CPP benefits are not splittable.
With this information, one can use the calculator with adjusted inputs to run a scenario for each spouse and sum them together with the reduced tax burden.
For example: Partner 1 has a higher RRIF balance than Partner 2. They also have a higher CPP benefit. Add up all sources of taxable income and divide by 2. Adjust the balances in the accounts that are splittable by no more than 50% of their balance to get as close to each partner having 50% of the taxable income. Partner 1 would reduce the balance of their RRIF and Partner 2 would increase by the same amount before running the calculator. Don't forget to also split the annual expenses.
Monte Carlo simulation
Model different outcomes for the retirement accounts based on historical market returns
Historical returns for global equities, canadian 5-year bonds, 3-month bonds and gold from 1970 are de-rated for inflation and converted to CAD. These are used to simulate the success of the retirement withdrawal plan. Once the retirement withdrawal information is entered, a Monte Carlo simulation can be run with a few other inputs needed.
Sequence of returns: The simulation can select random historical returns for each year of retirement or it can select the first year randomly and then each year after will follow the historical sequence of that initial year. Once the last year in the dataset is reached, it will continue from the start of the dataset, year 1970.
A percent allocation or a set $ bucket strategy can be used in the simulations.
Percent Allocation: Every year, the accounts are rebalanced to the percent allocation and the historical return for that allocation is calculated. Different allocations can be set for the front and back halves of the withdrawal period.
Buckets: Instead of a %, set $ amounts for Cash, bonds, gold and equities can be set. Enter the target and minimum thresholds. It is assumed that each bucket is at target for the start of the withdrawal period. As withdrawals are made year by year, the bucket amounts will stay between their target and minimum thresholds. Since bucket 4 (equities) has no minimum threshold, it will be used to refill the other buckets up to the minimum threshold, or up to target level if the previous year's returns more than cover the withdrawal needed in the current year.
Sources: Bank of Canada, https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html, https://novelinvestor.com/historical-returns/
Mortgage Calculator
Term remaining
Refers to the current mortgage term (e.g., 1-5 years), not the full amortization period.
Fixed Rate
Payments remain constant during the term, ie Fixed Payment. The principal-to-interest ratio shifts over time. New terms may have different rates and payments.
Variable Rate
Variable rate mortgages can come with fixed payments or a fixed principal portion. With fixed payments, the total payment will not change. As the interest rates fluctuate, the principal to interest ratio will change. If less principal is being paid (higher interest) the amortization period will lengthen to make up for the lower principal being paid.
Fixed Payment: Total payment (interest + principal) stays the same; interest/principal ratio varies. Higher interest = less principal = longer amortization.
Fixed Principal: Interest varies, so total payments fluctuate, but amortization stays on track.
This calculator assumes 5 year terms. At term renewal, new interest rates can be entered in the table. The original amortization period is carried through, reducing payments. To shorten the amortization period, additional payments can be added to simulate higher monthly payments.
CPP Calculator
Estimated benefit amount
Based on user-entered earnings history. CPP now includes:
Base CPP: Replaces up to 25% of average earnings up to the Year's Maximum Pensionable Earnings (YMPE).
First Additional CPP: (2019-2023) Transition period to increase contributions to start covering 33% of average earnings up to YMPE. Canadians working after 2019 will have made increased contributions so that they can have increased benefits.
2nd Additional CPP: (2024+) A higher earnings band, called the YAMPE (Year's Additional Maximum Pensionable Earnings) is introduced. This benefit adds 33.33% replacement on earnings between YMPE and YAMPE.
Child rearing provision
Years of lower income that coincide with child rearing years can be excluded from the CPP benefit calculation to increase the amount of the benefit.
Access your CPP Statement of Contributions via your My Service Canada account.
When to start CPP benefits?
Upon calculating the estimated benefits, a chart with the estimated cumulative CPP benefit over time is displayed. Use this with your longevity and income needs to decide the optimal start time.
Return on Investment Calculator
Compare across Canadian account types
This calculator assumes the contributed amount and its gain is withdrawn at the end of the Time Horizon. The final return of the investment is the post-tax return. For the RRSP, the marginal tax rate savings upon contribution are not assumed to be re-invested, but they do reduce the cost of the investment.
When was the last update to these calculators?