Knowing how the average Canadian is making use of the best Canadian retirement accounts can be helpful for any Canadian, young or old. Knowing how people are using their Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA), can give you a good reality check of where you are with it.
If you are below the average line, you have the opportunity to adjust your contributions to cover the gaps before it is too late. If you are above average, you can make sure that the power of compounding keeps benefiting you in the long run, provided you can avoid being lazy about managing your investments.
Overall, knowing the average gives you a kind of a marker to help you identify what you must do with your financial plans to fit your goals.
Source: Getty Images
A look at the numbers
In 2023, according to the Canada Revenue Agency (CRA), Canadians aged 40 and 44 had an average fair market value of around $19,270 for the year. This was the average amount that Canadians in that age range held in their TFSAs in that contribution year. It does not mean that this was the maximum room or the most they could have invested.
Among RRSPs, the situation is largely similar, but there seems to be a bigger gap between typical and average. One figure being touted is that the average RRSP balance for people in the 35-44 age group is $82,100. However, the median RRSP amount for people in this age range is $33,000.
This goes to show that the typical Canadian in this age range has far less than the average at the top. Medians tend to keep you grounded, even if the average seems quite motivating.
Consider investing in this
Identifying high-quality blue-chip stocks that can grow your balance in the long run can be a good way to utilize the contribution room in your retirement accounts. Manulife Financial (TSX: MFC) is an $85.97 billion market-cap TSX stock that can be excellent to buy and hold for the long run to boost your retirement funds. The company runs a massive insurance and wealth, and asset management business. It has operations in Canada, the U.S., and Asia.
Manulife Financial stock has had an excellent year on the stock market. As of this writing, it trades for $51.24 per share, up by 19.41% in the last 12 months. However, it has not posted market-beating returns. In the same period, the S&P/TSX Composite Index, which is the benchmark for the Canadian market, is up by over 25%.
Financial stocks like Manulife move with market sentiment and rate expectations. The overall trend in the last year seems positive, but there are temporary pullbacks quite often.
Foolish takeaway
All the talk about sentiments and rate expectations impacting its performance aside, here’s a quick look at its latest numbers. In Q3 of fiscal 202, Manulife stock reported $2 billion in core earnings and $1.8 billion in net income attributed to shareholders. These figures show that the company can remain profitable even when segments of its business contend with market swings.
Manulife Financial has the financial strength to power through market cycles and deliver substantial long-term wealth growth. The dividend stock also pays investors quarterly distributions at a 3.43% dividend yield that you can lock into your self-directed portfolio today.
