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The strategy can be useful, but what you should know is that it is largely circumstantial.

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The main rationale behind this concept is based on income tax arbitrage. In short, RRSP deductions are worth more (in terms of the money refunded) when your income is enough to put you into a higher tax bracket. There is a legitimate case to be made for pursuing this strategy if your income starts relatively low and rises relatively quickly.

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But it requires the discipline of diverting a substantial portion of income increases toward savings rather than lifestyle enhancements.

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Here’s how this might work for, say, someone who embarks on a career in consulting, the professions or sales — where income can be relatively modest as you begin to build your roster of clients but can grow quickly and to a substantial number within four or five years. In that instance, it might make sense to put money into a TFSA while your income is relatively low and then slowly repurpose that money to supplement RRSP contributions as income rises.

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For instance, let’s say your income is $70,000 and growing by $10,000 a year for the next three years. Then, in year four, income starts growing by $25,000 a year.

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Here is how it could play out in a two-stage strategy.

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Most people know that the RRSP contribution limit is 18 per cent of the previous year’s earned income and that TFSA contribution room is now more than $109,000 over a person’s lifetime over the age of 18, growing by $7,000 a year up to 2026, and could be set at $7,500 a year starting in 2027.

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If you were to put $7,000 out of $70,000 into a TFSA starting this year, and $7,500 for each of the next three years as income inched to $100,000, you would have $29,500 contributed at the end of year four. With luck, that amount would have also grown along the way. That’s the first four years in stage one.

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Then comes the next stage. In year one of stage two, our intrepid saver could simply contribute $8,000 to an RRSP instead of a TFSA, bringing taxable income down to $117,000 — the cusp of the two lower brackets.

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Starting the following year, money could be slowly withdrawn from the TFSA to top up RRSP contributions. Here comes the arbitrage. That’s where we turn the corner and begin re-purposing our TFSA money. With annual income mushrooming to $125,000, annual contributions should now go toward an RRSP.

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Although provincial taxes also come into play, let’s just look at the federal side to keep things simple. Income between $58,523 and $117,045 is taxed at 20.5 per cent. The next marginal tax bracket on income exceeding $117,045, is 26 per cent. These numbers are indexed to inflation, so the threshold is a bit higher every year.