According to Statistics Canada data for 2025, reflecting the 2023 contribution year, Canadians aged 55 to 59 hold an average Tax-Free Savings Account (TFSA) balance of just $37,600. For a group with only six to 10 years before the typical retirement age of 65, that’s surprisingly low. Even more striking is the unused TFSA contribution room, which averages $52,972 — a significant tax-free opportunity left on the table.
Even a conservative investment, such as a 3% Guaranteed Investment Certificate (GIC), could generate an extra $1,589 in tax-free income each year. That’s money you could use to supplement retirement savings, reinvest, or cushion unexpected expenses.
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Maximize your contribution room
Many Canadians juggle multiple financial obligations, from mortgages to family expenses. However, paying yourself first by maximizing your TFSA contribution room can have a huge long-term impact. Since the TFSA’s inception in 2009, total cumulative contribution room has reached $109,000 — an opportunity that grows every year. Even small annual contributions can compound into a meaningful nest egg tax-free.
For those 55 and older, the strategy is simple: maximize your contributions and invest wisely. Don’t let unused room go idle — your future self will thank you.
Invest for long-term growth
Historically, as an asset class, equities have delivered the highest long-term returns. For capital you won’t need for at least five years, consider a passive, diversified approach through exchange-traded funds (ETFs) or reliable dividend stocks. Dollar-cost averaging — investing a fixed amount regularly — can smooth out market volatility and reduce timing risk.
Many Canadians are heavily invested in domestic stocks by this stage. To diversify globally, ETFs like iShares Core MSCI All Country World ex Canada Index ETF (TSX:XAW) offer low-cost exposure to U.S., international, and emerging market equities. XAW is designed as a long-term core holding, with sector diversification across technology (25%), financials (16%), industrials (12%), health care (9%), and more. Geographically, it’s 63% U.S., 6% Japan, 3.5% U.K., 2.9% China, and other markets. With a management expense ratio of just 0.22% and a distribution yield of around 1.3%, XAW is an efficient way to build global exposure in your TFSA.
Explore high-quality dividend stocks
For Canadians seeking both growth and income, renewable energy utilities can be compelling. Brookfield Renewable Partners (TSX:BEP.UN), for instance, offers exposure to hydro (44%), wind (20%), solar (16%), distributed energy (11%), and sustainable solutions (9%). The utility is also diversified across major energy markets with an increasing focus on developed markets that offer greater stability from strong regulatory frameworks and predictable cash flows.
Brookfield Renewable currently yields about 4.8%, with analysts considering it fairly valued. Management targets funds-from-operations-per-unit growth exceeding 10% annually and cash distribution growth of 5–9%. Averaging in stocks like this on market dips can further enhance long-term returns for TFSA investors.
By combining consistent TFSA contributions with a balanced mix of diversified ETFs and high-quality dividend stocks, Canadians can significantly improve their tax-free retirement savings, even in the years leading up to retirement.
Investor takeaway
At age 55, many Canadians have significant unused TFSA room and limited balances. By maximizing contributions, focusing on long-term equity growth, and diversifying globally with ETFs or quality dividend stocks like Brookfield Renewable, it’s possible to boost tax-free wealth substantially. The key is taking action now: every dollar contributed today grows tax-free for tomorrow.
