How Much Should Canadians Actually Have in a TFSA Before They Retire?

Here are two top picks to consider for your self-directed TFSA portfolio as you prepare for a comfortable retirement.

Key Points
  • Many Canadians underuse TFSAs heading into retirement: 2023 averages were about $45.1K (ages 60–64), $51.2K (65–69) and $56.1K (70+), well below the $88K cumulative contribution room.
  • Consider quality dividend anchors for TFSA growth—Intact Financial (TSX:IFC) offers stable underwriting and ~1.96% yield, while Toronto‑Dominion (TSX:TD) provides North American banking exposure and ~2.61% yield.
  • Foolish takeaway: prioritize using available TFSA room, invest regularly in high‑quality, income‑generating stocks, and rely on tax‑free compounding over the long term.

Many Canadians approach their retirement age without having maximized their Tax-Free Savings Accounts (TFSAs). According to the Canada Revenue Agency’s numbers for the 2023 contribution year, Canadians between 60 and 64 had a $45,100 average TFSA balance. Canadians in the 65 to 69 age band averaged $51,200, and those above that averaged $56,100.

In the 2023 contribution year, the cumulative contribution room available to Canadians eligible to invest in a TFSA since the account’s introduction was $88,000. There was a significant gap between the available and actually used contribution room. While every Canadian’s retirement plan might be different, these figures highlight the unused potential that TFSAs have. It can take years of investing in the right long-term holdings to make the most of it.

The TFSA lets you enjoy tax-free returns on your investments. For investors looking to use their TFSA to create a retirement-focused portfolio, high-quality dividend stocks can be excellent picks to consider. To this end, I will discuss two TSX dividend stocks that warrant being on your radar for TFSA investments to cover the gap.

senior couple looks at investing statements

Source: Getty Images

Intact Financial

Intact Financial Corp. (TSX: IFC) is a $53.5 billion market-capitalization firm providing insurance products in Canada and the broader North American region. It is Canada’s largest insurer for property and casualty, with operations across Canada, the US, Europe, the UK, and Ireland. The latest quarter shows why the stock can be a good long-term holding.

The last quarter saw Intact Financial report an 8% year-over-year increase in its net operating income, supported by sustained underwriting margins and solid investment income. The stock has a combined ratio of 91.3%, which is quite strong. The stock also reported a 16.4% debt-to-capital ratio, providing a clearer picture of its financial flexibility.

As of this writing, IFC stock trades for $299.69 per share and pays investors $1.47 per share each quarter, translating to a 2% annualized dividend yield.

Toronto-Dominion Bank

Toronto-Dominion Bank (TSX: TD) is a staple in many investment portfolios. The $286.3 billion market-cap Canadian bank is among the Big Six Canadian Banks. It has also rapidly become one of the biggest banks in North America, through its personal and commercial operations in Canada; and retail, wealth management, insurance, and wholesale banking operations in the US. TD Bank provides investors exposure to the US banking sector, which can give it an edge over some of its peers.

In the April-ending second quarter of fiscal 2026, TD Bank stock reported a 21% year-over-year increase in its adjusted diluted earnings per share. The bank is also investing in Artificial Intelligence (AI) tools to improve client experiences and improve its growth prospects.

As of this writing, TD Bank stock trades for $171.32 per share and pays $1.12 per share each quarter, translating to a 2.6% annualized dividend yield.

Foolish takeaway

A TFSA retirement strategy doesn’t depend on how much you should have in a TFSA or how much you invest in one stock or industry. Rather, it requires a disciplined approach to investing and making the best of the potential that tax-free compounded growth can offer in a TFSA. To this end, consistently investing in high-quality stocks and remaining invested can prove helpful.

If you want to use your TFSA to start an alternative retirement fund, start by focusing on quality holdings, contribute regularly, and let time do the heavy lifting. Over the years, the tax-free compounding can accelerate your wealth growth to far more than you might expect to have in your nest egg when you retire.

To this end, IFC stock and TD Bank stock can be excellent foundations for your TFSA portfolio.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Intact Financial. The Motley Fool has a disclosure policy.

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