Here's the Average TFSA and RRSP at Age 65 for Canadians

Here’s the Average TFSA and RRSP at Age 65 for Canadians

The TFSA and RRSP together make an ideal pairing for retirees, but is the average even enough?

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 21, 2024 3:30 pm EST

As Canadians approach their golden years, many start taking a closer look at their savings. For those aged 65 and older, the average Registered Retirement Savings Plan (RRSP) balance is around $129,000, while the average Tax-Free Savings Account (TFSA) balance is about $41,000. Combined, these accounts offer a total of approximately $170,000 in retirement savings.

While this may sound like a decent sum, it often pales compared to what’s needed for a comfortable retirement. Financial experts suggest retirees should aim for $500,000 to $1 million in savings to maintain their lifestyle, especially with rising costs of living and healthcare. So, how do you catch up?

customer uses bank ATM — Source: Getty Images

Closing the gap

This gap between savings and retirement needs is a growing concern. Retirement income from government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS) can help. But these alone rarely provide enough to support a comfortable life. For Canadians hoping to bridge this gap, investing wisely becomes critical. One option that’s been catching attention is Fairfax Financial Holdings (TSX: FFH), a company with a strong history of performance and a promising outlook.

Fairfax Financial is a Toronto-based holding company with a focus on property and casualty insurance, reinsurance, and investment management. Known for its disciplined investment strategy under the leadership of Prem Watsa, Fairfax has a reputation for delivering solid returns. In the third quarter of 2024, FFH reported net earnings of $1.03 billion. A significant increase attributed to strong adjusted operating income and net gains on investments. The book value per basic share also rose to $1.033 billion, an 11.7% jump from the prior year-end, reflecting the company’s strong financial foundation.

Performance

Looking at past performance, Fairfax stock has been a consistent performer. In 2023, the company posted net earnings of $4.38 billion, up from $3.37 billion in 2022. This steady growth highlights Fairfax stock’s ability to navigate changing market conditions while continuing to create shareholder value. It’s not just about the numbers, either. Fairfax is known for a balanced approach that blends underwriting expertise with a diversified investment portfolio.

So, what’s ahead for Fairfax stock? The company’s future outlook remains optimistic, with plans to leverage its strong capital position for further growth. Fairfax stock is focused on disciplined underwriting and strategic acquisitions. This could provide stability and opportunities for expansion. The emphasis is on long-term investments, even in volatile markets. Thus, Fairfax is an attractive choice for investors seeking growth alongside reliability.

The retirement benefit

For Canadians nearing or in retirement, Fairfax stock can be a valuable addition to a diversified investment portfolio. By investing in a strong company like Fairfax stock, individuals can potentially benefit from capital appreciation and dividend income. This can help stretch their retirement savings further. Of course, it’s important to remember that investing always carries some risk. So, conducting thorough research and consulting with financial professionals is essential.

Catching up on retirement savings is not just about picking the right stocks. It’s also about maximizing what you already have. Canadians should make full use of their RRSP and TFSA contribution limits. For example, contributions to an RRSP can lower taxable income, providing immediate tax benefits — all while investments grow tax-deferred until withdrawal. Meanwhile, the TFSA allows for tax-free growth, making it a great tool for compounding wealth.

Bottom line

Cutting back on non-essential expenses can also free up funds for investing. Every dollar saved and invested wisely today can have a compounding impact over the years. Combining disciplined saving habits with strategic investments in companies like Fairfax stock could significantly enhance your retirement nest egg.

The average retirement savings for Canadians aged 65 may not be enough to sustain the life many envision. However, it’s never too late to take action. Investing in well-performing, stable companies like Fairfax stock, coupled with maximizing contributions to RRSPs and TFSAs, can help Canadians close the gap and build a more secure financial future. With a proactive approach, even those playing catch-up can look forward to a retirement that’s both comfortable and financially secure.