Here’s the Average TFSA And RRSP for a 40-Year-Old in Canada

Let’s put some numbers to the debate around how much Canadians actually have saved for retirement at age 40, and what that number should be.

Key Points
  • At age 40, the average Canadian has a TFSA balance of around $20,000 and an RRSP balance of over $82,000, indicating many are behind on retirement savings.
  • Experts recommend having three to five times one’s annual salary saved by age 40, equating to $225,000 to $375,000, highlighting a significant gap in current savings levels.

Benchmarks can be helpful for all of us. Whether we’re talking about stock market benchmarks to compare our individual performance against that of the entire market, or average/median targets of net worth or account balances by age (to judge where we are on our own individual personal finance journeys), knowing where one stacks up can be helpful when playing the long game.

The reality is that at age 40, most Canadians are behind the ball when it comes to what they should have saved for retirement. Here’s what the average Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) balance for the average Canadian is at age 40, and what that number should realistically be.

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Source: Getty Images

Average TFSA and RRSP balance at age 40

A range of surveys and government data point to the fact that Canadian 40-year-olds generally have TFSA balances of around $20,000 per year. One data set I reviewed showed an average balance of around $17,600, and another showed a figure of $21,000.

In terms of RRSP data, the age range for most surveys and government data is wider (35-44), with an average balance of a little more than $82,000, the most recent figure I came across. Notably, the median is much lower (at around $33,000), so it may be time to review which benchmark one wants to compare oneself to (and time to brush off that dusty statistics textbook).

Of course, even using the higher end of both numbers, and using the average, most Canadians would be correct in assuming this is simply not enough put aside.

What should these balances realistically be?

Most personal finance experts suggest that at age 40, most Canadians should have roughly three to five times their annual salary saved for retirement.

Given the median employment income of around $75,000 for most Canadians, this works out to a range of between $225,000 and $375,000 for each Canadian at this age. So, even using the lower end of this metric (and the higher end of the current average actual savings rates for most Canadians), there’s a gap of around $125,000 for most Canadians to make up in retirement.

Now, given Canada’s more robust social security net than many other countries (outside of some European nations), there’s the possibility for many investors that they may be able to weather retirement just fine. That goes double for those with private pensions over and above the government benefits all Canadians are allotted.

But for those looking to live their absolute best retirement, see the world, or pass down something to their kids and grandkids — those are the numbers.

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