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When Should You Start an RRSP? Age, Income, and the TFSA Question Answered (2026)
Start saving for retirement as early as you can; time does most of the work. $300 a month from age 25 grows to about $597,000 by 65 at 6%; starting at 35 gives about $301,000. But the RRSP isn't always the best first account. A rough rule: if your income is under about $55,000, a TFSA usually comes first, because the RRSP deduction saves less tax at low rates. Your RRSP room still builds from your first job (18% of earned income, up to $33,810 in 2026) and carries forward, so you can use it later when your tax rate is higher. Always grab an employer RRSP match first: it's an instant 50%–100% return.
The real question: when to start saving, and where
People often ask "when should I open an RRSP?" when what they really need to know is two things:
- When should I start saving for retirement? As soon as possible.
- Which account should that money go in first? It depends on your income.
Let's take them in order.
Why starting early matters so much
Here's what $300 a month grows to by age 65, assuming a 6% average annual return:
| Start at age | Total you put in | Value at 65 |
|---|---|---|
| 25 | $144,000 | about $597,000 |
| 30 | $126,000 | about $427,000 |
| 35 | $108,000 | about $301,000 |
| 40 | $90,000 | about $208,000 |
| 45 | $72,000 | about $139,000 |
Starting at 25 instead of 35 means contributing just $36,000 more, but ending with almost $300,000 more. The extra decade of compounding does the heavy lifting. More on that in compound interest explained.
The lesson isn't "if you're 45 it's hopeless" (see starting at 50 or 60). It's that every year you start sooner is worth a lot.
Your RRSP room builds even before you open one
From your first job, every year you file a tax return the CRA adds RRSP room:
- 18% of last year's earned income,
- up to an annual maximum: $33,810 for 2026 ($35,390 for 2027),
- minus any pension adjustment if you're in a workplace pension.
Unused room carries forward forever. Someone who earned $50,000 a year through their 20s and never contributed could have $50,000+ of room waiting by 30.
So waiting to use the RRSP doesn't waste the room. What it can waste is time in the market, which is why the TFSA matters.
RRSP or TFSA first? The tax-rate test
An RRSP gives you a deduction now and taxes withdrawals later. A TFSA gives no deduction but withdrawals are tax-free. So the question is: is your tax rate higher now or in retirement?
| Your situation | Usually better first |
|---|---|
| Income under ~$55,000 | TFSA (deduction saves little; may also protect future GIS benefits) |
| Income ~$55,000–$115,000 | Both; lean RRSP as income rises |
| Income over ~$115,000 | RRSP (deduction saves 40%+ in most provinces) |
| Employer matches RRSP contributions | RRSP up to the match, always |
| Saving for a first home | Consider an FHSA first |
The income figures are rough; they're based on where federal and provincial brackets step up in most provinces. Our full TFSA vs RRSP comparison has worked examples.
A useful trick: contribute now, deduct later
You can put money in your RRSP when you're young and save the deduction for a future year when you're in a higher bracket. The money grows tax-sheltered right away, and the deduction is worth more later.
The employer match: never skip it
If your employer matches group RRSP or pension contributions, for example 50 cents per dollar up to 5% of salary, that's an instant 50% to 100% return before any investment growth. Contribute at least enough to get the full match, no matter your age or income.
If you later leave that job, the money is still yours. See what to do with a group RRSP after leaving a job.
A simple order of operations
For most young Canadians:
- Build a starter emergency fund (see how much and where).
- Contribute enough to get any employer match.
- Pay off high-interest debt.
- If buying a first home is a goal, fund an FHSA.
- Lower income: TFSA. Higher income: RRSP. Many people end up using both.
- Invest it in low-cost, diversified funds, not a savings account.
The bottom line
Start saving for retirement with your first real paycheque, even if it's small. Whether it goes in an RRSP or TFSA first matters less than starting. Grab any employer match, use a TFSA while your income is modest, and shift toward the RRSP as your tax rate rises. Your RRSP room will be waiting.
This article is educational and not personalized financial or tax advice.
Frequently asked questions
What is the best age to start an RRSP?
There's no single age. You can open one as soon as you have earned income and have filed a tax return to create room. Many people start in their 20s with a TFSA and switch most new savings to the RRSP once their income, and tax rate, rises. The best age to start saving for retirement in some account is as early as possible.
Is it worth opening an RRSP at 20?
It can be, especially if your employer matches contributions. Otherwise, at a low income the tax deduction is small, so a TFSA is often better. Either way, file a tax return every year so your RRSP room builds up for later.
Do I lose RRSP room if I don't use it?
No. Unused RRSP room carries forward indefinitely. You can see your total available room on your Notice of Assessment or in CRA My Account.
Can I contribute to my RRSP now and claim the deduction later?
Yes. You can contribute now and carry the deduction forward to a future year when your income, and tax bracket, is higher. The money grows tax-sheltered in the meantime.
Should I invest in an RRSP or pay off debt first?
Pay off high-interest debt such as credit cards first; a guaranteed 20% saving beats any expected investment return. For low-interest debt like a mortgage, many people do both, and an RRSP refund can be put toward the debt.
How much should I put in my RRSP each year?
A common target is 10% to 15% of gross income toward retirement across all accounts, including any employer match. If that's not possible yet, start smaller and raise it with each pay increase.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Oct 25, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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