The most attractive investment instrument for Canadian retirees is the Tax-Free Savings Account (TFSA), as it allows you to make tax-free withdrawals, something no other registered account offers. You contribute from your after-tax income and can withdraw any amount from your TFSA without reporting it on your tax return. If your $10,000 becomes $100,000, a $90,000 investment gain can be withdrawn tax-free with no restriction on withdrawal limit or withdrawal usage. These withdrawals don’t affect your Old Age Security (OAS) pension as they are not a part of your taxable income. Where else will you get such a tax-efficient instrument?
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Average TFSA balance for Canadians aged 65
Despite its tax benefits, Canadians aged 65 have an average TFSA balance of $51,244, as per Statistics Canada’s data for the 2023 contribution year. A survey by other banks suggests the average TFSA balance of baby boomers is between $60,000 and $70,000.
The $51,000 average balance is still low, considering the cumulative TFSA contribution room was $88,000 between 2023 and 2009. It is probably because TFSA contributions are not tax-deductible, and those in their 60s were in the high-income bracket when TFSA was introduced.
If we compare the Registered Retirement Savings Plan (RRSP) and the TFSA, the RRSP has a maximum age limit of 70, but the TFSA doesn’t. However, the RRSP allows you to deduct the contributions made from your taxable income. The benefit of getting a tax deduction when you are at the peak of your income makes the RRSP an attractive option. You can always come back after age 65 or 70 and maximize your TFSA.
How can boomer Canadians make the most of their TFSA?
At age 65, the most common investment advice you hear is to start investing in fixed income and safer dividend stocks. There are some resilient growth stocks and exchange-traded funds that can deliver 20-30% annual returns over the next two to three years.
You can buy growth stocks at the dip now and hold them till the share price grows 20-30%. Keep withdrawing the profit while keeping the principal invested. Booking gains on growth stock can act like a bonus to your income.
Descartes Systems
Descartes Systems (TSX:DSG) has slipped 25% this year as the tariff war created trade volume uncertainty and a shift in the supply chain. Most businesses paused their exports and imports and reviewed their supply chains. Then came uncertainty from the Russia-Ukraine peace talks. If the war ends, sanctions on Russian oil could ease, leading to an oil oversupply.
The complexity of geopolitical trade relations will revamp the global supply chain. This could lead to sharp cyclical share price momentum for supply chain management solutions provider Descartes Systems. The company continued to grow its revenue and profits by double-digit percentages because of the acquisitions. The 25% dip was a valuation correction after the stock became overvalued in 2024 on the back of a cyclical upturn driven by rising trade volumes in automotive and natural gas.
This year saw a downturn, which could continue in the first half of 2026 as the global trade adjusts to U.S. tariffs. However, when the cyclicality kicks in, the stock could surge 50-70% in a year and make up for the downturn. In the meantime, its net cash position and demand for global trade intelligence could keep it profitable and limit the downside in share price.
Constellation Software
Constellation Software (TSX:CSU) is another resilient growth stock to consider for retirees. The vertical-specific software holding company has been acquiring companies across more than 100 verticals and several geographies. Constellation brings the fragmented mission-critical software market under one umbrella, creating multiple sources of stable cash flow.
Since its portfolio is diversified, Constellation is not significantly affected by any changes in regulations of a particular industry or province. The stock has dipped due to a broader tech industry correction and a management change. The founder’s exit and the chief operating officer’s subsequent takeover led to a selloff this year.
The stock could continue its downturn in the first half of 2026 until the new CEO earns shareholders’ trust by delivering results. So far, revenue and free cash flow have continued to grow at double-digit rates.
The company’s share price will surge as the power of compounding increases enterprise value with every new acquisition. You can depend on this stock for a 20% average annual return in the next five years.
