Here’s the Average TFSA Balance at Age 64 in Canada

This highly diversified Vanguard retirement income ETF is perfect for passive income.

Tony Dong, MSc, CETF® ❯

Tony started investing during the 2017 marijuana stock bubble. After incurring some hilarious losses on various poor stock picks, he now adheres to Bogleheads-style passive investing strategies using index ETFs. Tony graduated in 2023 from Columbia University with a Master's degree in risk management. He holds the Certified ETF Advisor (CETF®) designation from The ETF Institute. Tony's work has also appeared in U.S. News & World Report, USA Today, NYSE ETF Central, NASDAQ Fundinsight, Cboe ETF Market, TheStreet, and Benzinga. He is the founder of ETF Portfolio Blueprint (https://etfportfolioblueprint.com)

Published November 26, 2024 10:00 am EST

According to a 2023 study by the Canadian Institute of Chartered Accountants (CICA), the average Tax-Free Savings Account (TFSA) balance for Canadians aged 64 was approximately $150,000.

While this amount alone might not carry you through retirement, it’s an excellent way to supplement your Registered Retirement Income Fund (RRIF) withdrawals, Canada Pension Plan (CPP), and Old Age Security (OAS) payments with tax-free income.

To make the most of this balance, you’ll need the right exchange-traded fund (ETF)—one that provides steady monthly income without excessive volatility. At age 64, with a shorter time horizon and lower risk tolerance, stability becomes even more important.

Fortunately, Vanguard offers an ETF that fits the bill perfectly. Here’s how it works and how much monthly passive income you could generate tax-free with a $150,000 TFSA.

Vanguard Retirement Income ETF Portfolio

Vanguard Retirement Income ETF Portfolio (TSX:VRIF) is designed for Canadian retirees seeking a simple, low-cost, one-ticket solution for their investment needs.

VRIF holds a mix of Vanguard stock and bond funds, providing global diversification. Its allocation is roughly 35/65 between equities and fixed income, striking a balance between capital preservation, growth, and income generation.

This fund targets an annual 4% distribution. It aims to deliver this income through a mix of dividends from stocks, interest from bonds, and capital gains from selling assets within the fund. In bear markets, it may also include a small amount of return of capital to maintain its payout target.

With VRIF, there’s no need to worry about selling shares to generate income. Every month, the fund distributes an amount that, over the course of a year, totals 4% of the fund’s value. Best of all, it does this with an affordable management expense ratio (MER) of just 0.32%, which is much lower than most income-focused funds.

How much you could earn with a $150,000 TFSA

As of writing, VRIF trades at $24.79 per share. A $150,000 TFSA can, therefore, purchase 6,050 whole shares. Assuming its last distribution per share of $0.0816 stays consistent, that works out to $493.68 monthly, or $5,924.16 annually in tax-free passive income via a TFSA, along with the potential for modest share price growth.