The Briton, who represented birth country Canada until 1995, also believes the Swiss ace would have been the world number one had he not suffered a back injury during the final of the Montreal Masters.
Federer and Nadal have won two Grand Slams apiece in 2017 to take their tally to 19 and 16 men's singles major titles respectively and they have been backed to win again next season owing to their current form.
Rusedski is confident that Federer can make it 21 major titles in 2018; while Nadal has been backed to win the French Open at least a couple more times before he calls time on his career.
The former world number four, however, has made it clear that fitness will be the key issue facing the two legends of the current era, owing to both being over 30 years old. Federer is 36, while is long-term rival Nadal is five years his junior.
"Had Federer not been injured, we might be talking about a different story for world No. 1 right now," Rusedski said, as quoted by the Metro.
"He [Nadal] has a winning head-to-head against Roger, even though he's lost all four this year and if Roger stays healthy, I think Roger will just pip it.
"I can see Roger getting to 20, 21 by the end of next year possibly and Rafa is going to win a few more French's so it will be very, very close.
"I think he's got one or two more left in him, Roger, if he can stay healthy – that's the big question. Also Rafa as well, how many years can he take this physical punishment? At any time their careers could stop because 30+ is all extra time."