RRSP vs TFSA: What LGBTQI+ refugees in Canada should know

The reflections and insights shared in this post are for educational purposes only and do not constitute professional financial advice.

Starting over in Canada as LGBTQI+ refugees means rebuilding our livelihoods and sense of home and belonging. And, as we do that, we are expected to understand an entirely new financial system.

Figuring out RRSPs, TFSAs, taxes, and credit scores, can feel overwhelming. When we’re focused on finding housing, securing permanent legal status, and surviving in a job market that may not recognize our past professional experience, it can feel out of reach to invest in our futures.

But here’s the truth:

With support and the right tools—used with care—we can build financial stability in Canada.

In this reflection, I’ll break down two of Canada’s most talked about savings tools: the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA).

RRSP vs TFSA: What’s the difference?

RRSP (Registered Retirement Savings Plan)

Can help you save for retirement
Contributions reduce your taxable income in the year you contribute
Investment income earned in the account is not taxed while it grows
Withdrawals are taxed later as income
Withdrawals may affect government benefits like the Guaranteed Income Supplement (GIS)
Commonly used by higher income earners (e.g. >$50,000) who expect a lower income in retirement

TFSA (Tax-Free Savings Account)

Can be used to save for many different goals
No income tax deduction when you contribute
Investment income earned in the account is not taxed
Withdrawals are tax-free
Commonly used by people at all income levels
Withdrawals don’t reduce eligibility for government benefits like Old Age Security

RRSP and TFSA considerations for LGBTQI+ refugees new to Canada

For many LGBTQI+ refugees starting out in Canada, TFSA flexibility can be more valuable than the long-term savings benefits of an RRSP.

In the first few months or years of working in Canada, if you earn under $50,000 per year, the advantages of an RRSP may be less significant compared to other options like a TFSA.

Here’s why:

If your income is lower, the tax break from contributing to an RRSP may be modest (around 20%), which means it may only slightly reduce your taxable income. For lower-income newcomers, a TFSA may offer more flexibility and tax-free access.
Your RRSP contribution room depends on your income from the previous year. Typically, you can contribute up to 18% of your earned income, up to a yearly government limit. If your employer has a pension plan, your limit might be lower because of something called a Pension Adjustment. This means the government counts some of the pension benefits you earn through work when deciding how much you can contribute.
Unlike an RRSP, your TFSA contribution limit is not based on your income. Instead, the government sets a fixed amount each year that you can contribute. For example:
- from 2020 to 2022 the limit was $6,000 per year
- in 2023 it increased to $6,500
- for 2024 and 2025, it’s $7,000 per year
RRSP withdrawals may reduce government benefits like Old Age Security. They can also affect eligibility for the Guaranteed Income Supplement (GIS), which could impact your financial situation in retirement. TFSA withdrawals typically do not affect your eligibility for these benefits.
The TFSA is known for its flexibility. Funds can be accessed tax-free when needed, which may be helpful during emergencies or life changes.

A Simple starting strategy

Let’s say you’re in your 30s or 40s, earning under $50,000, and just getting familiar with Canada’s financial system. You haven’t opened a TFSA or an RRSP yet.

Here’s one possible path you might explore: Consider opening a TFSA. Choose a bank or credit union you trust and feel safe with. Some people start with as little as $25/month—it’s about building the habit over time. And, if possible, set up automatic contributions to build consistency.

Depending on your income and priorities, an RRSP might not be the first account you explore. For lower income levels, RRSP tax advantages might be limited.

Some refugee newcomers wait until their income increases (e.g., above $50,000) to open an RRSP to maximize the potential tax benefits.

Keep learning as you go. You don’t need to figure out everything at once. As life becomes more stable, you might look into an RRSP, basic investing, or tax planning options.

Navigating barriers without shame

It’s okay if you’re learning all this in your 30s, 40s, or 50s.

Financial systems in Canada are often built around people with some generational wealth, native English or French fluency, and strong networks. That may not be your story—and that’s okay.

Explore what’s available, ask questions, and take the time to understand what fits your situation.

Financial independence is about having options. It’s about rest, stability, and the ability to say yes to the things that matter to you, without fear.

Whether you’re:

Sending money abroad
Supporting chosen family
Or trying to breathe after years of survival

Know this:

You deserve tools that reflect your reality
You deserve information that respects your experience
And you deserve a future that feels safe, possible, and affirming

Every step toward financial clarity is a step toward freedom.

Common questions

1. Can I open both a TFSA and an RRSP?

Yes, many people do. Some people start with a TFSA—especially if their income is low or unpredictable.

2. Where can I open these accounts?

Banks
Credit unions
Online platforms

Ask about fees and newcomer support. Some financial institutions offer services in multiple languages.

3. How much can I put into a TFSA?

In 2025, the annual contribution limit is $7,000.

If you’ve never contributed to a TFSA before, you may have unused contribution room carried forward from previous years. This may depend on when you became a Canadian resident for tax purposes and met eligibility requirements.

You can check your limit through CRA My Account or by calling the CRA.

4. Do I need to be a permanent resident or citizen?

No. You need to:

Be 18 or older
Have a valid SIN (Social Insurance Number)
Be considered a resident for tax purposes

Many refugee claimants and temporary workers qualify. If a bank says otherwise, it may help to ask for a supervisor or get assistance from a settlement support worker.

5. What if I’m sending money abroad?

Many LGBTQI+ refugees support (chosen) family abroad while still putting aside small amounts in Canada. Having flexible savings here can offer some peace of mind. A TFSA offers the flexibility to help manage both goals.

6. What if I only have $25 or $50 a month?

Many people begin with amounts like $25 or $50. Saving regularly, even in small amounts, can help build long-term financial habits.

7. Is my money safe?

If your TFSA or RRSP is held at a Canada Deposit Insurance Corporation (CDIC) member institution, your eligible deposits are protected—up to $100,000 per account type or category. This includes savings accounts, Guaranteed Investment Certificates (GICs), and term deposits.

Mutual funds, Exchange Traded Funds (ETFs), stocks, bonds, and cryptocurrencies are not protected by the Canada Deposit Insurance Corporation.

8. Can I invest through a TFSA or RRSP?

Yes. The TFSA and the RRSP are account types, not investments themselves.

Many refugees start with simple options and learn slowly. It’s okay to ask questions and take your time.

Final thoughts

Let’s give ourselves permission to learn at our own pace. Building financial stability—especially after displacement— takes time.

We each carry different histories, responsibilities, and starting points.

But with informed choices and a clear sense of our needs and values, we can take steady steps toward financial security.

Together, we can challenge the systems that weren’t built with us in mind, support each other, and shape a future where our financial decisions reflect who we are, not just what we’ve been through.