Canadians: Here’s How Much You Need in Your TFSA to Retire

Leverage the tax-sheltered status of your TFSA to create a self-directed retirement fund to enjoy your golden years in comfort and ease.

Key Points
  • Use the TFSA’s tax‑free compounding and max out contribution room (cumulative $95,000 after the 2026 update) to build a long‑term retirement nest egg.
  • Combine a diversified core of blue‑chip holdings with growth adds like Topicus (TSXV:TOI)—a Constellation spin‑off focused on acquisitive, steady European vertical‑software expansion—to boost returns while managing risk.
  • 5 stocks our experts like better than [ Topicus] >

Are you planning for your retirement yet? A solid retirement plan isn’t one that you come up with when you’re 10 years away from leaving the workforce. The earlier you start it, the better prepared you will be when the time comes to hang up your work boots to coast through the best years of your life.

Using the tax-sheltered status of retirement accounts like the Tax-Free Savings Account (TFSA) can be part of an excellent retirement plan. A well-padded, self-directed TFSA portfolio, combined with smart and disciplined long-term investing, can help you turn your dreams of being a millionaire retiree a reality.

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution.

Source: Getty Images

Rome wasn’t built in a day

You cannot save everything you need for your retirement right away or figure out an exact formula for that. You must first consider how much you’ll actually need to be financially comfortable during retirement. Experts often say that you should try to have a retirement income that totals around 70% of your pre-retirement income.

Suppose you earn around $100,000 per year. In that case, you should have around $70,000 per year in retirement. Assuming that you retire at 60 and live till you’re 90, that’s 30 years of living your best life. With 5% annual returns, you’ll have to save more and accumulate around $1 million to be comfortable.

This is where the TFSA can come in. Unlike the Registered Retirement Savings Plan (RRSP), the TFSA has tax-free withdrawals. After the 2026 update, the cumulative contribution room is $95,000 for those eligible for the account since its inception in 2009.

If you max out your TFSA contributions and invest wisely, you can grow your savings significantly to build your retirement nest egg.

Topicus.com

To this end, Topicus.com (TSXV: TOI) comes to mind as an excellent growth stock to consider. Topicus is a spin-off of Constellation Software, a major tech firm that specializes in acquiring vertical market software and IT service companies and furthers their success under its belt to contribute to its own.

Constellation has been a successful investment for many Canadians over the years, and Topicus comes in as its operating arm in Europe. Topicus also works in a high-demand industry by helping businesses streamline operations with solutions customized to their needs. Like Constellation, Topicus doesn’t bet on high-risk and speculative startups. Instead, it acquires proven companies that have a track record for steady revenue growth and profitability.

Looking ahead, the company is well-positioned to continue expanding. One of its recent acquisitions was an IT service provider based in Belgium that strengthens its presence in the European markets.

Foolish takeaway

Remember, putting all your eggs in one basket isn’t the wisest decision. I would advise building a well-balanced portfolio of high-quality blue-chip stocks and injecting growth with investments like Topicus stock. This way, you can offset potential losses from high-risk investments with the stability of the stock of well-established companies. Diversifying your portfolio helps you manage the risk to your investment capital while ensuring steady growth. While Topicus is an attractive opportunity for long-term investors, combining it with other mid-cap stocks across different industries can be the wisest way to use it to contribute to your self-directed retirement fund.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Topicus.com. The Motley Fool has a disclosure policy.

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