Many Canadians approaching retirement may be surprised to learn how modest the average Tax-Free Savings Account (TFSA) balance actually is. According to the latest Statistics Canada data available in 2026 for the 2024 contribution year, Canadians aged 50 to 54 held an average TFSA balance of $35,235. Even more striking, this same group had an average of $62,659 in unused TFSA contribution room.
That means many Canadians are missing out on one of the most powerful tax-advantaged savings tools available. If you have been consistently maximizing your TFSA contributi ons, you are already ahead of many of your peers when it comes to building long-term wealth and preparing for retirement.
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Why many Canadians fall behind
The large amount of unused contribution room suggests that a significant number of Canadians either cannot afford to maximize their TFSA or have not made it a financial priority. The good news is that the contribution room carries forward indefinitely, giving investors plenty of opportunities to catch up.
One of the simplest ways to close the gap is to automate your savings. By setting up monthly contributions immediately after receiving your paycheque, you can steadily build your TFSA balance without relying on willpower alone. For example, contributing about $583 per month throughout the year would allow you to reach a $7,000 annual contribution limit. Waiting until mid-year means the required monthly savings amount rises significantly, making the goal harder to achieve.
The earlier you start contributing consistently, the more time your money has to compound tax-free.
Put your TFSA to work
Saving is only part of the equation. To maximize the benefits of a TFSA, investors should also consider investing their contributions rather than leaving cash idle. Historically, stocks have generated some of the strongest long-term returns among major asset classes, making them a compelling choice for investors who still have years before retirement.
One example is Brookfield Renewable Partners L.P. (TSX:BEP.UN). The company owns and operates a diversified global portfolio of renewable energy assets, including hydroelectric, wind, solar, and battery storage facilities. Its business benefits from long-term contracts and revenue streams that are largely linked to inflation, helping support stable cash flows.
Brookfield Renewable also follows a capital recycling strategy, acquiring assets with improvement potential, enhancing their performance, and then selling stakes at attractive valuations. This approach can create additional value for investors while supporting future growth and cash distributions.
A simpler option for income investors
Not everyone wants to research and manage individual stocks. Investors seeking a more hands-off approach may prefer an income-focused exchange-traded fund (ETF) such as the BMO Canadian High Dividend Covered Call ETF (TSX:ZWC).
Managed by BMO Global Asset Management, the covered call ETF provides exposure to a diversified portfolio of Canadian dividend-paying companies, with significant allocations to financials (40% of the fund), energy (23%), and materials (12%). The fund also employs a covered-call strategy, which generates additional income and can help reduce volatility.
As a result, ZWC typically offers a higher cash yield than many broad-market ETFs. The trade-off is that covered calls can limit upside potential during strong market rallies. Investors should also note the fund’s higher management expense ratio of 0.72%, reflecting its active management approach.
Investor takeaway
The average Canadian nearing age 50 has accumulated a TFSA balance of just over $35,000 while leaving more than $62,600 of contribution room unused. That presents a significant opportunity for investors willing to save consistently and put their money to work. Whether you choose individual stocks such as Brookfield Renewable, a diversified income ETF like ZWC, or even guaranteed investment certificates (GICs), maximizing your TFSA can help you build substantially more tax-free wealth and strengthen your retirement outlook.
