Average TFSA and RRSP Balances at Age 45: Are You on Par?

The numbers out there around average retirement savings for Canadians are shocking. Here’s what the data tell us.

Key Points
  • At age 45, the average Canadian has $20,670 in a TFSA and $82,100 in an RRSP, highlighting a significant gap from the ideal retirement savings, which experts suggest should be over $200,000 by this age.
  • Strategies to catch up on retirement savings include automatic contributions, increasing savings rates aligned with salary increases, using tax refunds for contributions, and taking advantage of employer matching benefits to leverage compound growth.

Age 45 is a tough period for many. I’ve heard the mid-30s-to-mid-40s era of life called the “messy middle” in the past, and I think that accurately depicts most Canadians’ reality at this point.

Indeed, between mortgages, kids, aging parents, and other key factors pulling at folks’ purse strings from every direction, saving for retirement a couple decades out may not seem like the top priority for many in this age group. Makes sense.

That said, the power of compound interest can’t be ignored. Let’s dive into what the average Canadian has saved in their tax-free savings accounts (TFSAs) and registered retirement savings accounts (RRSPs) at this point in time.

man in bowtie poses with abacus

Source: Getty Images

What are the numbers?

According to Statistics Canada data, the average Canadian at age 45 has $20,670 saved in a TFSA and approximately $82,100 in an RRSP. That’s not nothing, but it is a reminder that plenty of Canadians are playing catch up to save an amount close to what most personal finance experts believe should be the actual number.

It’s also worth pointing out that because we’re talking about the average with both the TFSA and RRSP, it’s also true that this number is pulled higher by wealthier savers. In other words, the median number is much lower for both buckets, and tells an even more depressing story.

A range of personal finance experts, from the likes of Fidelity and MoneySense have highlighted a basic framework of having around two-times one’s salary saved at age 40, and around four-times one’s salary saved at age 50. Splitting the difference, a rough metric of around three-times the average salary in Canada (which currently sits at around $68,700 according to Statistics Canada) would mean that the average Canadian at age 45 should have a little more than $200,000 saved for retirement at this juncture.

How to catch up?

I think one of the more pertinent questions readers may have when seeing the raw data is that there’s a lot of work to be done for the average household to bring their retirement savings up to where it needs to be.

Of course, automatic contributions and increasing savings rates as one’s salary increases over time are perhaps the two easiest strategies to get one’s retirement savings goals on the right track. Additionally, using one’s tax refunds as direct contributions to their retirement savings for the current year is another strategy I’ve long thought is a somewhat “painless” way to go to bridge the retirement savings gap over the long-term (while not impacting one’s day to day budget).

Cutting discretionary spending and attacking debt can be more painful, but also more fruitful, for those bogged down by their own personal financial situation. As it’s often said, personal finance is very personal, so every Canadian’s situation is different. That said, taking advantage of any employer matching benefits (and at least capturing the full match percentage) is an obvious step in the right direction in allowing for compound growth to start working today.

More on Investing

Tractor spraying a field of wheat with fertilizer
Energy Stocks

Don’t Want to Wait a Year for a GIC Payout? This 6.3% Dividend Stock Pays You Monthly

Here’s why this Canadian dividend stock is worth considering if you want monthly income and long-term growth without locking your…

Read more »

ways to boost income
Investing

Retirees! Don’t Want to Wait a Year for That GIC to Mature? This 9.8% Dividend Play Pays Monthly

The Hamilton Enhanced Canadian Covered Call ETF (TSX:HDIV) looks like a stellar passive income booster for those who can handle…

Read more »

Senior uses a laptop computer
Energy Stocks

Could You Retire on Less Than $1.7 Million? It’s More Common Than You Think

The $1.7 retirement target based on a survey has become a perception and not an official benchmark.

Read more »

concept of growth
Dividend Stocks

TFSA Passive Income: Should You Buy This Dividend-Growth Stock for the 6% Yield?

This stock has delivered annual dividend increases for more than 30 years.

Read more »

people sit in two wooden beach chairs facing the Caribbean ocean holding drinks and making a toast
Dividend Stocks

Can You Really Live Off Dividends? A Realistic Look at the Numbers

Can you live off dividends? See how much you would need to invest, what BNS, CU, and ZWC could pay,…

Read more »

Aerial view of a wind farm
Energy Stocks

The Perfect TFSA Stock: A 3.3% Yield With Monthly Paycheques

Northland Power stock is a clean energy producer that's well-positioned as electricity demand soars and new projects come online.

Read more »

ETFs can contain investments such as stocks
Dividend Stocks

This Monthly Income ETF Yields 6% and I Think Retirees Should Give it a Closer Look

The Purpose Global Bond Fund offers Canadian retirees a steady 6% yield and monthly payouts. Discover how the ETF can…

Read more »

dividends can compound over time
Dividend Stocks

I’d Rather Own SmartCentres at 98.1% Occupancy Than Chase a Bigger Yield

Before you chase a bigger yield, consider SmartCentres’ 98.1% occupancy, 6.9% yield, and the cash flow supporting its monthly distribution.

Read more »