RRSP versus TFSA is one of those Canadian personal-finance questions that seems to have acquired a standard answer: use the RRSP when your income is high and the TFSA when your income is low. That is basically correct, but it is not especially useful until we define what high and low actually mean.

I have thought about this more as my own income has risen. The RRSP contribution I made earlier in my career is fundamentally the same product as the RRSP contribution I make today, but the tax value of the deduction can be dramatically different. That immediately raises another question. If someone earns $80,000 today and reasonably expects to earn $160,000 five years from now, should they use all of their available RRSP room now simply because they have it? What about someone already earning $250,000? What changes if there is a pension waiting in retirement, or if the plan is to retire at 55 and deliberately spend down the RRSP before CPP and OAS arrive?