Due to successive annual limit increases, the cumulative Tax-Free Savings Account (TFSA) contribution room has grown to $109,000 as of 2026. However, for many Canadians aged 50, the actual average balance remains significantly lower than this maximum allowed ceiling.
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Staggering gap
Published data show substantial unused room in the approach to the final pre-retirement decade. If the reported average TFSA balance for the age group 50–54 is $26,479, the gap is $82,521. The reasons for the shortfall could be inflation, high cost of living, and financial priorities.
Some users could have fallen into the savings trap. Instead of investing, they stored cash and lost the tax-free advantage. Even if you contribute the maximum amount every year, but in cash, the tax-free money growth is negligible, if not close to zero.
TFSAs could be underfunded because others prioritize their Registered Retirement Savings Plans (RRSPs) for immediate tax breaks. You can own a TFSA and an RRSP, but maintaining both can be difficult. Note, however, that RRSP withdrawals are taxable and TFSA withdrawals are tax-free. Since the TFSA has no age limit, you have a tax-free savings vehicle for life.
Use your available contribution room and future annual limits to invest in income-producing assets. Dividend stocks can fuel reinvestment, while growth stocks accelerate capital buildup. You won’t worry about taxes, as there are none provided you don’t over-contribute.
Income stock
Canadian Utilities (TSX: CU) is the ultimate income stock and compounding engine. This utility stock is the TSX’s first dividend king. In early January, management announced a Board-approved 1% dividend hike, marking 54 consecutive years of dividend increases.
The $13.3 billion company has built a ‘moat’ around dividend consistency. Most of the earnings come from highly regulated utilities (electricity and natural gas). Also, the regulated utilities finance infrastructure investments. Canadian Utilities expects its five-year (2026–2030) capital expenditure plan of $12 billion to grow the mid-year rate base from $16.6 billion in 2025 to $23.2 billion in 2023 (a 6.9% compound annual growth rate).
At $48.76 per share, you can partake in the 3.8% dividend. Performance-wise, current investors enjoy a market-beating 15.3% year-to-date gain. A $20,000 investment will compound to $29,171.46, including dividend reinvestment, in 10 years.
Growth stock
Shopify (TSX: SHOP) is a powerful capital accelerator and a compelling opportunity in 2026. At $175.14 per share (-20.8% year-to-date), you can buy Canada’s tech darling at a discount. The $228 billion global commerce champion had a standout year.
In the 12 months ended December 31, 2025, revenue and free cash flow (FCF) rose 30% and 26% year-over-year to US$11.5 billion and US$1.6 billion, respectively. TFSA investors get ready. Its President, Harley Finkelstein, said Shopify laid the rails for the new era of AI commerce last year. “2026 will be the year of the builders, and we’ll be powering them, from first sale to full scale,” he added.
Significant information
Interestingly, data also show that TFSA balances jump significantly for those in the 55–59 ($33,242) and 60–64 ($39,756) age brackets. This trend suggests that Canadians get serious about preparing for retirement as they age. With this information, there’s enough time to play catch-up and bridge the gap before taking the retirement exit.
