Fifty-five is a crucial age. Your financial status at this point will determine the ideal age for collecting the Canadian Pension Plan (CPP) payout. The Canada Revenue Agency (CRA) will take the best 39 years of CPP contributions between ages 18 and 65 to calculate your CPP payout. So if you have no active income from business or employment at 55, it makes sense to collect the CPP payout at age 60. A sizeable Tax-Free Savings Account (TFSA) balance can also help you retire early at 55.
Yet many Canadians don’t use their TFSA optimally. Canadians in the 55–60 age group have an average TFSA balance of $37,600 for the 2023 tax year, according to data from Statistics Canada.
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Unlocking your TFSA’s value for early retirement
Despite its potential, many Canadians undervalue the TFSA’s capacity for tax-free withdrawals, which don’t appear in personal tax returns and won’t affect CPP and Old Age Security (OAS) benefits.
The average balance may not be the right benchmark. The total contributions of $9.9 billion were more than double the withdrawals of $4.9 billion. Whereas the average contributions and withdrawals were almost similar, at $12,302 and $12,350, respectively. This stark difference between the average and the total shows the spread and how the average is not the ideal benchmark.
Is a $37,600 TFSA balance good at age 55–60?
If you have $37,600 in TFSA balance in 2023, it means you have been underusing your cumulative contribution room of $88,000. If you had consistently contributed the maximum annually, today’s cumulative room totals $109,000 (2026). Even with modest investment returns of 6%, this could yield $6,540 annually free of taxes.
At 55, you still have 10 years to retire. That is a good enough time to build a sizeable portfolio, provided you max out on the TFSA contribution limit every year.
| Year | TFSA Contribution Limit | TFSA Balance | 6% Return |
| 2022 | $6,000.00 | $360.00 | |
| 2023 | $6,500.00 | $6,860.00 | $411.60 |
| 2024 | $7,000.00 | $14,271.60 | $856.30 |
| 2025 | $7,000.00 | $22,127.90 | $1,327.67 |
| 2026 | $7,000.00 | $30,455.57 | $1,827.33 |
| 2027 | $32,282.90 |
For instance, if you had been maxing out on TFSA contributions in the last five years, your TFSA balance at the end of the year would be $32,283 at a 6% return. Even no-brainer dividend stocks like SmartCentres REIT (TSX:SRT.UN) give a dividend yield of over 6%.
Boost your TFSA with reliable TSX stocks at age 55
At 55, you may not be willing to make risky investments. Certain TSX stocks offer consistent dividends without excessive risk.
SmartCentres REIT is a good option for a stable monthly income. Being a landlord for Walmart since 1999 gives it the edge among other REITs. SmartCentres is now upgrading and converting shopping centres into city centres by constructing commercial and residential spaces, and industrial and storage solutions, thereby diversifying revenue streams and intensifying the value of the land.
While the REIT comes with a risk of high leverage, its 22-year history of paying dividends shows resilience. Walmart-anchored stores help it maintain a high occupancy rate of essential retailers. Unlike bank deposits, where interest rate fluctuations impact your interest income, SmartCentres REIT’s dividends remain stable in every economic situation. It provides a 6.89% annual dividend yield, notably higher than the 3.60% to 3.85% you’d get from a Guaranteed Investment Certificate (GIC).
Investing in stocks like SmartCentres REIT enhances your TFSA with a reliable income source that’s less vulnerable to interest rate fluctuations. This approach helps secure a robust retirement foundation, ensuring your quality of life remains intact even in economic turbulence.
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