According to the latest Statistics Canada data for the 2023 contribution year, Canadians aged 50 to 59 held an average Tax-Free Savings Account (TFSA) balance of $33,242. While that figure may seem respectable at first glance, another statistic jumps out even more: the average unused TFSA contribution room for this age group was $48,801.
In other words, many Canadians approaching retirement have contributed less than half of the TFSA room available to them. This presents both a challenge and an opportunity. If you have been maximizing your TFSA contributions, you are already ahead of many of your peers. If not, there is still time to build a larger tax-free nest egg before retirement.
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Why consistent TFSA contributions matter
One of the biggest mistakes investors make is delaying contributions. Every year of unused TFSA room represents lost opportunities for tax-free growth.
For 2026, Canadians can contribute up to $7,000 to their TFSA (unless they have unused room from previous years). To reach the $7,000 limit, an investor would need to set aside roughly $583 per month throughout the year. However, if you are only starting in June, you would need to contribute $1,000 per month for the remainder of the year to maximize your contribution.
Developing the habit of paying yourself first can make a significant difference over time. Even modest monthly contributions can compound into substantial wealth when investment gains remain sheltered from taxes year after year.
The power of tax-free income
The TFSA is one of the most valuable investment tools available to Canadians because all income and capital gains earned within the account are tax-free.
Conservative investors can use their TFSA to hold guaranteed investment certificates (GICs) or other fixed-income investments. For example, earning 3% annually on $48,801 would generate about $1,464 in tax-free income each year. On a balance of $82,043 — the combined total of the average balance plus the average unused contribution room — that same return would produce approximately $2,461 annually, completely tax-free.
However, investors with longer time horizons could generate significantly greater wealth by holding quality dividend stocks that offer both income and capital appreciation.
A dividend stock worth considering
For Canadians approaching retirement, blue-chip dividend stocks can play an important role in growing their TFSAs. One example is TC Energy (TSX:TRP).
TC Energy operates one of North America’s largest networks of natural gas pipelines and energy infrastructure assets. Its business is supported primarily by long-term contracts, which help generate relatively predictable cash flows regardless of short-term commodity price fluctuations.
That stability has allowed the company to establish a strong dividend-paying track record – one that has increased dividends for about 25 consecutive years. Today, the stock offers a yield of about 3.7%, which is above the broader market average of about 2.1%, making it potentially appealing for investors seeking income. At the same time, TC Energy continues to invest in natural gas infrastructure and nuclear power projects that could support future earnings and cash-flow growth.
Importantly, dividend income earned within a TFSA is completely tax-free. As a result, investors can reinvest those distributions to accelerate compounding or use the income to supplement retirement cash flow without creating a tax burden.
Other popular Canadian dividend stocks that Canadians approaching 60 can consider on market dips include Fortis and Toronto-Dominion Bank.
Investor takeaway
The typical Canadian approaching age 60 has accumulated a TFSA balance of about $33,242 while leaving roughly $48,801 of contribution room unused. That gap highlights the importance of contributing consistently and maximizing available room whenever possible. Whether you prefer conservative investments or dividend-paying blue chips such as TC Energy, putting your TFSA to work can help generate meaningful tax-free income and strengthen your financial position heading into retirement.
