What Does the Average Canadian’s TFSA Look Like at 55?

When investors hit the age of 55, retirement is no longer some distant idea, but a firm date just a decade out. That can change how investors look at their savings. For most Canadians, that savings plan includes a Tax-Free Savings Account (TFSA). But what is the average Canadian TFSA balance at 55?

What the average Canadian TFSA looks like at 55

For most investors, that balance is in the low- to mid-five-figure range. That’s not too bad, but it still leaves room and, more importantly, time to improve.

One reason that the balance may seem small is that the TFSA is still a newer account, especially compared to the Registered Retirement Savings Plan (RRSP). The TFSA launched in 2009. The TFSA launched in 2009. This means that older investors haven’t had a full working lifetime to build the account.

Adding to that, not every investor has contributed to the account every year. And then there are investors who use the TFSA for short-term savings rather than the income-compounding machine it can become.

In other words, the average Canadian TFSA balance is dependent on income, contribution history, and a whole host of other obligations that can limit contributions.

Why 55 is not too late to improve a TFSA

At 55, it’s easy to think that the investment window has closed. Fortunately, that’s not the case.

Canadians who are 55 still have 10 years before they fully retire. Those years are likely the highest-earning career years for many and usually come with reduced obligations in the form of older children and fewer mortgages. Some people also continue working part-time beyond 65.

That gives the account more time to grow, especially when investors steer those TFSA contributions toward the right investments. Remember that within a TFSA, investors can withdraw both income and gains tax-free.

That makes the account especially useful for investors looking to build retirement income without adding more taxable withdrawals later.

Three TSX investments to grow a TFSA

One simple option for Canadian investors is iShares S&P/TSX 60 Index ETF (TSX:XIU). The exchange-traded fund (ETF) provides exposure to 60 of the largest companies in Canada. That includes a broad mix of companies across major sectors of the economy, including the big bank stocks, energy stocks, utility stocks, and telecoms.

This ETF works best as a core portfolio holding. It reduces the need to pick individual stocks and gives exposure to the Canadian market. It also pays a 2.21% distribution, which can be reinvested or used as income later.

Next, there’s Canadian Natural Resources (TSX:CNQ), which offers a slightly different role. Canadian Natural Resources is one of the largest energy companies in Canada.

The company offers exposure to natural gas, oil, and long-life assets that can support recurring cash flow. The importance of the oil and gas sector makes the company one of the more established energy options to consider.

That stable and predictable cash flow allows Canadian Natural Resources to offer an attractive quarterly dividend. As of the time of writing, the dividend yields 4.45%.

And that’s not even the best part.

Canadian Natural has provided annual upticks to its dividend for 26 consecutive years. This makes it a hard-to-ignore investment when looking to bolster the average Canadian TFSA balance.

A final pick for investors to consider is Canadian Utilities (TSX:CU), which offers a more defensive pivot.

Canadian Utilities provides regulated utility services across Canada, the U.S., and the Caribbean. Utility assets are backed by long-term contracts that span decades.

This results in predictable cash flows that allow Canadian Utilities to invest in growth and pay out a stable, growing dividend. Canadian Utilities has provided 54 consecutive years of increases.

This makes it an ideal buy-and-forget option for investors looking to increase their average Canadian TFSA balance.

The bottom line

The average Canadian TFSA balance at 55 is a snapshot that differs for every investor. At 55, there’s still time to grow that balance further.

Using unused contribution room, investing consistently, and choosing the right holdings can turn that TFSA into a source of tax-free flexibility.