The Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP) are two of Canada’s most popular tax beneficial registered accounts.
Source: Getty Images
The TFSA and RRSP are essential tools in a wealth-building tool bag
The TFSA is entirely tax-free. All income you earn inside the account is free from tax and there is no tax on withdrawals. It is the simplest account to use.
The RRSP offers you a tax deduction upon contribution. During your peak income years, this can provide huge tax savings. Inside the account, all income remains tax-free. However, when you withdraw from the account, it will be treated like income and you will have to pay withholding tax.
The whole point of the RRSP is to contribute in your peak income years and withdraw during retirement when your income is considerably less. If you use the strategy smartly, the RRSP is also essentially tax-free.
How much does the average 45-year-old Canadian have saved in the TFSA and RRSP?
Clearly, Canadians are smart to take advantage of both of these plans. In fact, as of 2024, the average Canadian between the ages of 45 and 49 has accumulated $28,084 of wealth inside their TFSA.
While this is a modest sum, Canadians at that age could contribute as much as $109,000 to the TFSA. This suggests that many Canadians are simply forgetting to use the account at all.
For the RRSP, Canadians between 45 and 54 are doing a little better with an average balance around $86,500. That puts a combined registered savings amount of around $115,304 per person. Certainly, it is a respectable amount. However, many wealth planners suggest that to hit a comfortable retirement, an amount three to four times larger is necessary.
The good news is that it is never too late to start saving and investing in the TFSA and RRSP. You may have to be a bit more disciplined with your spending and plan for regular savings and contribution. Likewise, having a smart investment strategy can help accelerate your wealth in these accounts.
At 45, it is still not too late to have a little more aggressive investment strategy. One area that looks appealing right now is software.
Descartes Systems: A perfect long-term stock
Descartes Systems Group (TSX: DSG) is down 36% in the past year. This is largely due to the broader sector decline from worries about AI disruption. Yet, Descartes has continued to deliver strong results.
In 2025 (fiscal 2026), revenue increased 12% to $729 million, cash from operations increased 21% to $266 million, and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) rose 16% to $284 million.
Descartes is major global provider of logistics networking and software. A significant amount of the global supply chain runs through its network. In fact, its network is a major differentiator. It really protects its moat because it holds all the crucial data.
Descartes is not sitting on its hands. It is using this data to create agentic solutions that are useful for customers. With geopolitical and trade uncertainty, customers are running to Descartes.
This TFSA stock has over $350 million in net cash. With a history of serial acquiring logistics-related software companies, Descartes is primed to continue consolidating the space.
Descartes stock is trading for its cheapest valuation in years. It could fit perfectly in a broader TFSA or RRSP portfolio. If you have a 5-or-10-year investment horizon, this is the perfect stock to own.
