When you retire, many financial tools take on a completely different role in your life. Instead of contributing to a Registered Retirement Savings Plan (RRSP), you may be withdrawing from a Registered Retirement Income Fund (RRIF). Instead of paying into a workplace pension plan and the Canada Pension Plan (CPP), you can start drawing from your well-earned pension. And instead of investing for growth, many retirees shift toward protecting capital and investing for income.

Tax-Free Savings Accounts (TFSAs), however, play much the same role in retirement as they did while you were working. They continue to be a place to grow your money tax free, take it out when you need it and replace it the next calendar year if you wish. Here are three ways you can use your TFSA after you retire.

3 Ways to Use Your TFSA in Retirement

#1:

#2:

#3:

#1: Keep contributing

Maybe you’re still earning more income than you need because you’re working part-time, consulting or running your own business. If you have extra money from any source, or if you don’t need to spend the minimum amount you have to withdraw from your RRIF every year, a TFSA is a great place to keep building your savings tax free.

There’s no upper age limit for TFSA contributions, but always check your personal contribution limit on your Notice of Assessment to make sure you have enough room to contribute.

#2: Supplement income

On the other hand, perhaps you need a little more to supplement your living expenses in retirement, or pay for a necessity like a roof repair or a splurge like travel. Instead of withdrawing extra money from your RRIF (taxed as income), consider withdrawing from your TFSA (tax free). Also, because TFSA withdrawals don’t count as income, they won’t reduce what you get from income-tested benefits such as Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).

Keep in mind that whenever you take money out of your TFSA, that same amount is added back to your contribution room in the following calendar year. So, you can use that new room if you have more than enough income next year.

#3: Leave a tax-free bequest

The fair market value of any money left in your TFSA when you die transfers tax free to your heirs. You can streamline the transfer between spouses by naming each other as “successor holders.” But any heir designated as your TFSA beneficiary will receive that gift from you tax free.

Have questions about using your TFSA in retirement? Drop by your local Prospera branch and let’s talk.

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