TFSA Investors: Here’s How Much You Need in a TFSA to Retire in 2026

Most Canadians won’t retire on a TFSA alone, but investing it well can still build serious tax-free retirement income.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

Social Media

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 10, 10:00 am EDT

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Key Points

A $40,000 TFSA income target likely needs about $1.03 million invested using a 3.9% withdrawal rate.
Average TFSA balances are far below that, so most retirees will need RRSPs plus CPP and OAS too.
Sprott offers TFSA growth tied to gold and uranium investing demand, but the stock looks expensive and cyclical.

A Tax-Free Savings Account (TFSA) is a great place to start planning for retirement. The TFSA gives you something every future retiree loves: tax-free growth and tax-free withdrawals. That means the money you earn from dividends, capital gains, and long-term compounding stays yours. It also gives you flexibility, since you can withdraw funds without triggering tax. For Canadians trying to build retirement income step by step, that makes the TFSA one of the most useful accounts on the table.

woman considering the future — Source: Getty Images

How much is enough

So how much do Canadians need in a TFSA to retire? The honest answer is: probably more than most people think, and it depends on how much of your retirement you want the TFSA to fund. BMO‘s latest retirement survey found Canadians now believe they need about $1.7 million to retire comfortably. Morningstar’s latest retirement-income research suggests a 3.9% starting withdrawal rate for 2026, which means a $1 million portfolio would support about $39,000 in first-year income. Put differently, if you wanted roughly $40,000 a year from a TFSA alone, you would likely need around $1 million invested.

Are Canadians there on average? Not even close, at least not with the TFSA alone. CRA data for the 2023 contribution year showed the average TFSA fair market value was $33,534 overall. Even older Canadians, who have had much longer to build balances, were far below that seven-figure mark on average: ages 65 to 69 held about $51,244, while ages 70 to 74 held about $56,106. That does not mean retirement is impossible. It just means most Canadians will likely need a mix of TFSA savings, Registered Retirement Savings Plans (RRSP), CPP, OAS, and maybe a workplace pension.

The good news is that catching up is still possible. The TFSA does not need to reach $1 million overnight to matter. Maxing contributions over time, keeping money invested instead of parked in cash, and focusing on strong long-term compounders can move the needle far more than people expect. That is especially true if you start thinking of the TFSA not as a savings bucket, but as a tax-free retirement machine.

SII

That brings us to Sprott (TSX:SII). Sprott is not a typical retirement stock, but it is a very interesting one. The company is a global asset manager focused on precious metals, critical materials, and real assets. In short, it gives investors exposure to gold, silver, uranium, and other resource-linked investment products through funds and exchange-listed products. That niche has looked especially appealing over the last year as investors hunted for inflation hedges, safe havens, and commodity exposure.

The recent numbers were huge. Sprott reported 2025 revenue of US$285.1 million, up nearly 60%, and net income of US$67.4 million, up about 37%. Assets under management (AUM) hit US$59.6 billion at the end of 2025, up 89% from a year earlier, and then climbed again to US$70.1 billion by Feb. 13, 2026. Net sales for 2025 reached US$3.9 billion, driven mainly by exchange-listed products. That’s a lot of momentum for one year.

Valuation is where things get a little less cosy. Sprott recently traded around $205 at writing on the TSX, with a market cap around $5.3 billion depending on the source and a trailing P/E above 58. That is not cheap. But this is also a business with powerful exposure to rising investor demand for gold, silver, and uranium products, plus a quarterly dividend of US$0.40 per share. The risk is obvious: if commodity enthusiasm cools, the stock could cool too. Still, for Canadians who want a TFSA stock with long-term upside and a different kind of growth engine, Sprott makes a compelling case.

Bottom line

The big takeaway is simple. Most Canadians are nowhere near having enough in a TFSA to retire on that account alone, but that does not make the TFSA any less valuable. It just means the account works best when it is invested well and given time. A stock like Sprott will not be for everyone, but it shows how the TFSA can hold more than just safe and sleepy names. Done right, it can help you build real retirement power.