By age 35, many Canadians start wondering if they’re “on track” financially. Careers are more established, incomes are higher, and retirement no longer feels abstract.
One benchmark often cited is total savings, but a more revealing number may be how much is sitting inside their Tax-Free Savings Account (TFSA), which can allow you to build some serious wealth. The reality might surprise you — and it also highlights a major opportunity most Canadians are missing.
How much should you have saved by 35?
Financial experts commonly suggest that by age 35, you should have saved one to two times your annual salary. According to Statistics Canada, the median and average salaries for Canadians aged 35 to 44 in 2023 were $62,100 and $74,200. Adjusted for inflation, that implies total savings targets of roughly $130,000 to $156,000.
If you’re nowhere near those figures, don’t panic. Retirement planning isn’t one-size-fits-all. A widely used guideline is that retirees need about 70% of their pre-retirement income to maintain their lifestyle, and how you get there depends on pensions, housing costs, and personal goals. Still, tax-sheltered accounts like the TFSA play a crucial role in making those numbers achievable.
The real TFSA numbers — and the cost of inaction
Despite its flexibility and tax advantages, the TFSA remains underused. Based on 2024 Statistics Canada data (using the 2022 contribution year), Canadians aged 35 to 39 had an average TFSA balance of just $15,594. Even more striking is the unused contribution room: $58,732 on average.
That unused room represents lost tax-free growth. If that $58,732 had been invested in the Canadian stock market using iShares S&P/TSX 60 Index ETF (TSX:XIU) as a benchmark, it would be worth roughly $103,016 today. Eligible Canadians also receive new TFSA contribution room every year, and as of January 1, 2026, that annual increase will be $7,000.
Rather than waiting to invest a large lump sum, it’s often easier — and more effective — to build a habit. Many experts recommend saving 10% to 15% of pre-tax income annually for retirement, including employer pension contributions. A $7,000 TFSA limit works out to about $583 per month or $132 per week, making it far more manageable when broken down.
Letting compounding do the heavy lifting
Time is the most valuable asset an investor has. Over the past decade, iShares S&P/TSX 60 Index ETF delivered a compound annual growth rate (CAGR) of about 12.4%, turning $10,000 into roughly $32,240. The U.S. market performed even better, with the SPDR S&P 500 ETF posting a CAGR near 14.8% and growing $10,000 to approximately $39,630.
For passive investors, broad-market exchange-traded funds (ETFs) are a solid foundation. Dollar-cost averaging — investing regularly regardless of market conditions — reduces timing risk and builds discipline. Market pullbacks could even be opportunities to buy more at lower prices.
Investors seeking income may also consider dividend-focused ETFs such as iShares Core MSCI Canadian Quality Dividend Index ETF. Since launching in 2017, XDIV has delivered a CAGR north of 12%, recently yielded just under 4%, and charges a low 0.11% management fee. Its focus on financially strong Canadian companies makes it a dependable core holding.
At 35, the average TFSA balance may be low — but the runway for tax-free growth is still long. Start maximizing your yearly limit this year.
