The Tax-Free Savings Account (TFSA) is one of the best wealth-building tools available to Canadians. It allows investments to grow completely tax-free, and withdrawals can be made at any time without triggering taxes or penalties. In theory, it’s the perfect vehicle for building long-term financial security. In practice, however, many Canadians are barely scratching the surface of its potential.
That reality becomes especially striking when we look at the average TFSA balance for Canadians around age 50 — a stage of life when peak earning years are often well underway, and retirement planning should be accelerating.
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A surprising snapshot of TFSA balances at 50
According to Statistics Canada data released in 2024 (covering the 2022 contribution year), Canadians aged 50 to 54 had an average TFSA fair market value of just $26,479. At the same time, they had an average of $53,490 in unused TFSA contribution room.
In other words, roughly two-thirds of their available TFSA space was sitting idle. That’s a significant amount of tax-free real estate going unused during some of the most important compounding years.
Even if that unused contribution room were invested conservatively — say, in a Guaranteed Investment Certificate (GIC) earning 3% — it could generate about $1,605 in tax-free income annually. That may not sound life-changing, but it’s income that would never be shared with the Canada Revenue Agency. Over time, those missed returns can add up to tens of thousands of dollars.
The TFSA is more than a savings account
One common misconception is that the TFSA is just a place for cash or low-yield savings. In reality, it can hold a wide range of investments, including exchange-traded funds (ETFs), bonds, and individual stocks.
History shows why that flexibility matters. The Canadian stock market, using iShares S&P/TSX 60 Index ETF as a proxy, delivered a compound annual growth rate of roughly 13.4% over the past decade. At that pace, a $10,000 investment would have grown to about $35,200 — a solid 3.5-bagger — entirely tax-free inside a TFSA.
That said, markets don’t move in straight lines. With the TSX returning roughly 32% over the past year — well above its long-term average — investors need to be selective about what they add to their TFSA today.
A TFSA-worthy stock after a pullback
One stock that has recently cooled off and may be worth considering is Thomson Reuters (TSX: TRI). This Canadian Dividend Knight has declined nearly 40% from its 52-week high, largely due to valuation concerns and expectations of slower growth.
At under $180 per share and trading at a price-to-earnings ratio of about 33, the stock may still appear expensive. However, analyst consensus price targets suggest meaningful upside, with shares trading at roughly a 32% discount to those targets.
Thomson Reuters benefits from a highly recurring subscription-based business, providing essential digital information and software to legal, tax, accounting, and corporate professionals. Its growing focus on artificial intelligence (AI) further strengthens its long-term competitive position.
The company has increased its dividend for more than 30 consecutive years and boasts a five-year dividend-growth rate of 9.4%. At current prices, the yield sits around 1.8%, making this primarily a growth-oriented TFSA holding.
Investor takeaway
The average Canadian TFSA balance at age 50 reveals a major missed opportunity. With tens of thousands of dollars in unused contribution room, many Canadians are leaving tax-free growth on the table. By moving beyond simple savings and selectively investing in quality assets — such as diversified ETFs or durable dividend-growth stocks like Thomson Reuters — investors can dramatically improve their long-term financial outcomes using the TFSA to its full potential.
