Canadians: Here’s How Much You Need Saved in Your TFSA to Retire

Canadians may need roughly $500,000 in a TFSA to generate sufficient retirement income. Here’s how to reach that goal.

Key Points
  • A TFSA balance of $500,000, generating approximately $20,000 annually at a 4% withdrawal rate, can supplement retirement funds from other sources like CPP and OAS.
  • Consistent contributions, reinvested dividends, and strategic long-term growth investments are key to achieving a substantial TFSA balance.
  • Stocks like Fortis, Canadian National Railway, and Bank of Nova Scotia offer stability, growth, and income to aid in building towards a TFSA retirement savings target.

The TFSA is one of the best savings accounts available. One of the most frequent questions is: How much do I need saved in my TFSA to retire?

The answer to that question is different for every investor. Retirement spending, housing costs, pensions, and other factors all affect that final number.

Still, there are some useful benchmarks investors can consider.

A TFSA balance of roughly $500,000 is a decent target for investors who want an eventual income-producing account with decades still to invest.

On its own, that may not fund an entire retirement, but it can supplement Canada Pension Plan (CPP), Old Age Security (OAS), an employer pension, or Registered Retirement Savings Plan (RRSP) withdrawals.

woman gazes forward out window to future

Source: Getty Images

How much do you need saved in your TFSA to retire?

A $500,000 TFSA generates approximately $20,000 per year using a 4% withdrawal rate. That works out to about $1,667 per month in tax-free income.

The tax-free part is an important point. Remember that TFSA withdrawals are not considered income. This makes the account important during retirement, and even more important for investors still building that balance.

The 2026 annual contribution limit for the TFSA is $7,000. A Canadian who has been eligible since the TFSA launched in 2009 and has never contributed could have as much as $109,000 in available contribution room.

Hitting that target requires consistent contributions, reinvested dividends to compound, and some long-term growth.

Fortunately, some stocks on the market can help meet that goal.

Fortis can provide stability and income

Fortis (TSX: FTS) is one of the largest utility stocks in North America. It’s also an ideal defensive foundation for a retirement portfolio. Fortis owns regulated utility operations that provide electricity and natural gas to customers across North America.

Fortis generates predictable revenue because its services remain essential regardless of the economy. Consumers can reduce discretionary spending during a downturn, but they still need electricity and heating for their homes.

That stability means Fortis won’t provide explosive growth, but that’s not the primary role of this stock. Fortis is there to provide stability and dividend growth.

Speaking of income, as of the time of writing, Fortis offers a 3.1% yield. The company has also provided steady annual increases to that dividend for 52 consecutive years without fail.

This makes it a strong portfolio option for investors building toward a long-term TFSA target.

Canadian National Railway can support long-term growth

Canadian National Railway (TSX: CNR) adds a different element to the portfolio. Railways are among the most critical yet often dismissed infrastructure on the continent.

Each year, Canadian National hauls over $250 billion worth of goods across its vast network. Those goods comprise everything from staples and raw materials to precious metals, finished products, and crude oil.

Canadian National’s network connects major markets, ports, and warehouses across three coastlines. This gives it an essential role in the continental economy.

The company offers a quarterly dividend with a yield of 2% as of the time of writing. But the real appeal of Canadian National is the growth it can offer.

The company has increased its dividend annually for three decades, making this a solid compounder for any portfolio.

Bank of Nova Scotia can boost retirement income

Rounding out the list of stocks that can help build that TFSA balance is Bank of Nova Scotia (TSX: BNS). Scotiabank is one of Canada’s big bank stocks and serves as the income booster in this portfolio.

Scotiabank generates recurring earnings from mortgages, loans, deposits, and wealth management. The bank has both a stable domestic arm and a growth-focused international segment.

Both support revenue growth and the bank’s generous quarterly dividend.

As of the time of writing, that dividend carries a yield of 3.6%.

Building a stronger retirement portfolio

No stock is without risk, and that includes stocks that have defensive moats like the trio mentioned above.

Fortunately, this trio also offers investors steady growth, well-established businesses, and growing dividends to offset some of that risk.

How much you need saved in your TFSA to retire will vary, but reaching a target of $500,000 or more takes time and the right investments.

In my opinion, the three stocks mentioned above can help to reach that target given time in a larger, well-diversified portfolio.

Fool contributor Demetris Afxentiou has positions in Bank of Nova Scotia, Canadian National Railway, and Fortis. The Motley Fool recommends Bank of Nova Scotia, Canadian National Railway, and Fortis. The Motley Fool has a disclosure policy.

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