Here's the Average Canadian TFSA and RRSP at Age 45

Here’s the Average Canadian TFSA and RRSP at Age 45

Are you not ready for retirement at 45? Don’t worry about it. Instead, remember it’s never too late to start. This stock is a perfect jumping-off point.

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 February 21, 2025 4:30 pm EST

At 45, many Canadians find themselves at a crossroads in their financial journey. Retirement may still seem a couple of decades away, but it’s creeping closer. And the choices made now will determine the comfort of those golden years. One of the biggest questions is whether savings in registered accounts like the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) are on track. While there’s no universal answer, looking at national averages can provide a benchmark.

Piggy bank and Canadian coins — Source: Getty Images

Averaging it out

The average RRSP balance for Canadians between 45 and 54 sits around $150,300. However, the median balance is much lower at about $70,000. This significant gap suggests that while some savers are well ahead, many others may be lagging behind. A similar trend appears in TFSA balances. For Canadians aged 45 to 49, the average balance is roughly $21,177. Given that the TFSA offers tax-free growth and flexible withdrawals, it’s a crucial tool for those who want additional income in retirement without triggering taxes. However, many Canadians aren’t fully utilizing it, which could mean missed opportunities for wealth accumulation.

Financial experts often recommend having at least three times your annual salary saved by 40, which would mean around $197,400 based on the average Canadian income in the 35-44 age bracket. For those who haven’t hit that milestone, now is the time to take action. This is where strong, reliable dividend stocks come into play, and one name that stands out is Great-West Lifeco (TSX:GWO).

Why GWO?

As of writing, Great-West Lifeco’s stock was trading at $52.03, reflecting a solid 1.72% increase on the day. The company boasts a market capitalization of $48.50 billion and a trailing price-to-earnings ratio of 12.13. Thus suggesting that it remains fairly valued compared to its earnings. Over the last year, GWO has demonstrated resilience in a challenging economic environment, positioning itself as a solid investment for those looking to generate steady income.

In its most recent earnings report, GWO delivered record base earnings of $1.061 billion in the third quarter of 2024, representing a 12% increase year over year. This growth was largely driven by its U.S. operations under Empower, which has been a significant source of expansion. The company’s profitability remains strong, with a return on equity of 12.63%, reinforcing its ability to generate shareholder value.

Get income now

For dividend investors, GWO has been particularly rewarding. The company recently announced a 10% dividend increase, bringing its forward annual dividend rate to $2.22 per share. At its current share price, that translates to a yield of approximately 4.68%, making it a compelling choice for those looking to supplement their income.

Looking ahead, GWO’s future appears bright. The company continues to focus on its core insurance and wealth management businesses while strategically expanding into high-growth markets. Its ability to generate a strong operating cash flow of $4.84 billion over the trailing 12 months gives it the flexibility to reinvest in its business, fund dividend growth, and pursue strategic acquisitions. While there has been some volatility in quarterly earnings, GWO’s long-term trajectory suggests it will remain a strong player in the financial sector.

Bottom line

For those approaching 50 and beyond, the importance of maximizing both RRSP and TFSA contributions cannot be overstated. While government pensions like Canada Pension Plan (CPP) and Old Age Security (OAS) provide some level of security, these often aren’t enough to maintain a comfortable standard of living in retirement. That’s why building a diversified portfolio with strong dividend-paying stocks like GWO can be a game-changer. A company that delivers steady earnings, solid dividend growth, and financial stability can help bridge the gap between personal savings and long-term retirement needs.

As Canadians evaluate their financial health at 45, it’s clear that some may be ahead of the curve while others have catching up to do. Regardless of where you stand, the key takeaway is that it’s not too late to take control. By making smart investment choices now, such as adding a stock like GWO to a TFSA or RRSP, Canadians can enhance their retirement savings strategy. With the right approach, financial security in later years becomes much more achievable.