Canadians need $1.7 million, on average, to live comfortably in retirement. The figure is based on BMO’s Annual Retirement Survey results released in February 2026. Around 36% of poll respondents see it as a hard-to-reach goal. However, younger folks have the edge in an important ally: time.
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Popular retirement account: The TFSA weapon
Many Canadians looked to the Registered Retirement Savings Plan (RRSP) as the best tool for saving and investing. The Tax-Free Savings Account (TFSA) was introduced 2009 and has since become more popular. This investment account is uniquely powerful.
All capital gains, dividends, and interest earned inside a TFSA grow entirely tax-free. Furthermore, withdrawals, before and after retirement, are tax-exempt. If time is a young investor’s greatest ally, the TFSA is the weapon for achieving long-term financial goals, particularly retirement.
Accumulated room vs. actual TFSA balance
Canadians begin accumulating TFSA contribution room on January 1st of the year they turn 18. For a 20-year-old Canadian, the maximum TFSA cumulative limit is $21,000. Based on data from the Canada Revenue Agency (CRA), the average TFSA balance for the age group 20 to 29 is between $9,000 and $14,000, well below the ideal. Nevertheless, the timeframe towards a typical retirement exit is extra long, spanning 40 to 45 years.
Prime time for the TFSA
Financial experts suggest prioritizing the TFSA over the RRSP in the early years of your career when your salary is low. Contribute to the RRSP in your peak earning years to maximize tax deductions when it matters most. Withdraw later on in retirement when you’re likely in a much lower tax bracket. Meanwhile, allow your TFSA to accumulate tax-free.
Supplement to retirement pillars
Hitting a $1.7 million nest egg is daunting, and you shouldn’t expect the TFSA to do the task alone. The Canada Pension Plan (CPP) and Old Age Security (OAS) serve as the foundation, or retirement pillars. However, these government pensions are partial replacements for the pre-retirement income. You use the TFSA and RRSP to fill the income gap and live a comfortable lifestyle in retirement.
Suggested action plan and investment
The suggested action plan is for a 20-year-old TFSA investor to max out the current baseline of $21,000 and commit to maximizing the annual limits moving forward ($7,000 in 2026). Assuming a 5% average annual return, the TFSA could grow to approximately $1.3 million, including dividend reinvestment, by the time they reach retirement in 2071.
CT Real Estate Investment Trust (TSX: CRT.UN) is an eligible investment in a TFSA. The $4.4 billion REIT pays a hefty 5.3% dividend. This stock providing compounding passive income trades at $17.99 per share (+13.2% year-to-date), and pays monthly dividends.
In Q1 2026, property revenue, net operating income, and net income increased 4.8%, 4.7%, and 9.5% year-over-year, respectively, to $157.5 million, $124.3 million, and $115.7 million. Canadian Tire Corporation has long been the REIT’S anchor tenant. CT REIT has been paying monthly dividends since its IPO in 2013.
Start early, start now
A 20-year-old Canadian has a clear path to a secure retirement. Consistent TFSA contributions, combined with a 45-year runway, could result in a seven-figure wealth. The advice is simple: start early, start now.
