On May 19, Canadians were gifted an extremely valuable treasure trove of information from Statistics Canada:
The official tax-free savings account (TFSA) data for 2024!
Every year, Statistics Canada (StatCan) releases TFSA data for the fiscal year ended two years prior. In the case of this year’s data dump, the period surveyed was 2024. So, we have some pretty fresh figures to look at pertaining to matters like TFSA contributions, balances, and age/gender differences in the aforementioned.
If you’ve ever read articles about the “typical TFSA balance at age X,” you should find this year’s data dump significant. Most such articles written over the last year were based on 2023 data. With the May 19 release, we have much more current data.
Now, it’s normal for people to wonder how their TFSA stacks up at at 40, 50, or 60. After all, people in these age cohorts have retirement on the horizon – for 60-year-olds, right around the corner! But it’s just as important to know how your TFSA stacks up at age 25 as at age 60, especially since the TFSA can be used to finance shorter-term savings (e.g., stashing GICs tax-free to fund a car purchase). In this article, I’ll explore how much a typical 25-year-old Canadian has in a TFSA, and what you can glean from this information.
Source: Getty Images
The average TFSA balance of Canadians around age 25
The rough average TFSA balance of a 25-year-old Canadian can be gleaned from StatCan’s TFSA data tables. The relevant data (all genders by age group) is shown in the table below:
Now, the full StatCan table shows age groups all the way up to 80-plus, but I decided to cut this image off about halfway through to make it easier to read.
Now, you’ll notice that StatCan does not publish TFSA balances for every individual age. However, it does publish TFSA balances for age brackets. The two brackets that age 25 straddles are 20 to 24 and 25 to 29. The average for the former is $8,652, and the average for the latter is $13,967. So the average TFSA balance for a 25-year-old Canadian is probably a little over $10,000.
How to boost your TFSA
If you are 25 years old and holding a TFSA typical for your age group, worth around $10,000, you might be wondering how to increase its size.
Regular contributions are, of course, the main option you have. But unless you invest them wisely, they make no use of the TFSA’s main benefits: tax-free compounding and withdrawals. For those, you need to invest.
Here, you might want to consider a diversified Canadian index ETF, such as the iShares S&P/TSX Capped Composite Index Fund (TSX: XIC). It’s a Canadian fund built on an index of the largest 240 Canadian stocks by market cap, of which it actually owns 220. 220 out of 240 is 91.7%, so XIC represents its underlying index pretty well. So, there should be very little tracking error here. Additionally, 220 stocks is a good amount of diversification; XIC owns stocks in many uncorrelated sectors; and the fund’s total expense ratio is just 0.06%. Overall, XIC is a worthy ETF to consider.
