Are you 64 years old and wondering whether you have enough money in your tax-free savings account (TFSA) to retire on? If so, it helps to check and see if your balance measures up compared to others your age. While this information does not tell you whether your TFSA gains can pay for your retirement expenses, it does give you a sense of how much relative progress you’ve made in the world of saving and investing. With that in mind, here’s the average TFSA balance at age 64 in Canada.
A little over $40,000
While no official Canadian government data sources report average TFSA balances at specific ages, StatCan does occasionally provide estimates for age brackets. 64 years old perfectly straddles two age brackets that StatCan reports in its surveys: 60–64 and 65–69. Here is the data for those two age brackets for the 2022 tax year:
- 60–64: $39,756.
- 65–69: $45,156.
As you can see, the averages for these two brackets – which age 64 straddles – range from $39,756 to $45,156. The amount tends to increase with age, so the exact amount for a typical 64-year-old Canadian is probably above $40,000 and below $45,156. I can’t just take the average of these, because trends in data are sometimes non-linear. But I’d expect the exact number for 64-year-olds to be something like $42,000 or $43,000.
What this information means
StatCan’s 2022 survey data indicate that, if you had more than $42,000 in your TFSA that year, you were above average. If you had $50,000, you were well above average. In that case, if you ever felt bad about a low TFSA balance, you can congratulate yourself on beating the averages. However, you’re still a far cry from being able to live off of your TFSA money in retirement. In the ensuing section, I’ll share some suggestions on how you can increase your TFSA balance safely and without continuing to work into your 70s.
Invest in index funds
A safe strategy for increasing your TFSA balance is to invest the money into stock index funds and treasury-like investments such as GICs and money market funds. Index funds are the lowest risk investments you can realistically find in the world of stocks, yet they outperform many riskier investments. GICs and money market funds are basically low risk investments based on government bonds. They are there to add some truly extreme resilience to your portfolio, to mitigate the potential effects of a 1929-like scenario.
A Canadian index fund that I personally hold is the iShares S&P/TSX 60 Index Fund (TSX:XIU). It’s an index fund based on S&P Global’s TSX 60 Index, the most respected index of Canadian large caps. The TSX 60 is the 60 largest publicly traded Canadian companies. XIU actually holds all 60 of those stocks, making it one of the most representative funds I’ve ever looked at.
XIU has a pretty adequate amount of diversification, with its 60 stock positions plus cash and index derivatives. It also has a very low management expense ratio of 0.18%. Finally, as the most popular Canadian fund in the world, it’s very liquid and widely traded, which reduces trading expenses. Overall, it’s a good TFSA asset to hold.
