5 things you can do with a TFSA you may not have thought of
How much do you know about tax-free savings accounts (TFSAs)? You might be thinking about using one to save for things like a wedding or even a down payment on a home. But here are a few other things you can do that you might not know about.
1. Save even more for your kids’ education
Have you maxed the government grants on your registered education savings plan (RESP)? You can use your TFSA to save even more. And while there’s no government matching like there is in an RESP, you won’t pay taxes on the growth within your TFSA.
2. Double down on your retirement savings
Have you reached your registered retirement savings plan (RRSP) contribution limit? You can use your TFSA to keep saving for retirement (but remember, TFSAs have a contribution limit too).
3. Save even after you retire
Did you know? A TFSA’s great if you want to keep saving after age 71. Here’s the thing with an RRSP: you can’t own one past the year you turn 71. You have to convert it to a registered retirement income fund (RRIF) or a payout annuity by December 31 of that year. Or you have to take the RRSP money in cash (and pay tax on it). But a TFSA works differently. You can keep your TFSA open. And you can keep contributing to it as long as you wish.
4. Build a reserve to help your aging parents
It’s no fun to think of our parents getting older. But being prepared can make it easier when they do. Building up savings in your TFSA can help cover their health-care costs. And if you end up not needing the money for them, you’ll find yourself with extra savings, which feels like a double win.
5. Build your emergency fund
You never know what unexpected expenses might come your way. A TFSA is ideal for building an emergency fund to help you be prepared for whatever you might face. It can help cover those new gutters, those new brakes, or any other financial emergency. Looking for a number to aim for? Generally, it’s a good idea to have enough to cover you for up to six months of living expenses. And don’t forget, any investment growth in your TFSA is tax-free.
So, ready to get started?
Need more info on what a TFSA is, how to open one and what your contribution limit is? Connect with a Prospr advisor to see how a TFSA can fit into your financial roadmap. We’re here to help!