When Canadians plan for retirement, the RRSP (Registered Retirement Savings Plan) is usually the go-to account. But the Tax-Free Savings Account, or TFSA, might be the more powerful tool of the two.
For instance, every dollar you pull out of a TFSA in retirement is completely tax-free, no matter how large your account has grown. So, what is the ideal TFSA balance for retirement?
Let’s walk through the target balance, why so many Canadians are falling short of it, and one way a small-cap growth stock could help close that gap sooner than you think.

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What TFSA balance do you need to retire comfortably?
A TFSA balance of $250,000 to $300,000 is a solid target for a comfortable retirement. Using a conservative 4% withdrawal rate, a $250,000 TFSA allows you to withdraw about $10,000 a year, or roughly $833 a month, completely tax-free. For a couple with a combined $500,000 in TFSA savings, that climbs to $20,000 a year.
On its own, $10,000 a year won’t cover your retirement expenses. But paired with CPP (Canada Pension Plan), OAS (Old Age Security), and any workplace pension or RRSP income, it becomes a useful supplement.
As TFSA withdrawals do not count as taxable income, that money can help you stay below the threshold at which the OAS clawback starts, that is $95,323 in net income for 2026.
As of 2026, the lifetime TFSA contribution room available to anyone who was 18 or older in 2009 has reached $109,000. Yet the average TFSA balance for Canadians aged 60 to 64 is only around $45,109, according to CRA data.
Small-cap growth stocks can help you get there sooner
Maximizing your $7,000 annual TFSA room for 2026 and earning an average 7% annual return would get you past $250,000 in about 18 years. But investors looking to reach that number earlier may want to allocate a slice of their TFSA to small-cap growth names with real commercial momentum, alongside their core holdings.
POET Technologies (TSXV:POET) is one such stock, valued at a market cap of $1.4 billion. The company designs an optical interposer platform for photonics components that move data within AI data centres and telecom networks.
The company’s first-quarter 2026 results show that it signed multiple commercial agreements. The standout contract is a new supply agreement with Lumilens. It establishes a joint development program for a new class of wafer-level photonic integration for frontier AI infrastructure, and includes an initial purchase order of $50 million for EOI-based optical engines.
According to the company’s statement, that order is meant to be the first phase of a relationship that could scale to more than $500 million in cumulative purchases over five years.
Chairman and chief executive officer Suresh Venkatesan called the Lumilens deal “an important commercial milestone” that could become a substantial long-term supplier relationship.
POET also announced a strategic collaboration with LITEON Technology, a major optoelectronic components maker, to co-develop next-generation optical communication modules on POET’s patented interposer platform.
Separately, the company is working with Lessengers on a 1.6T 2xDR4 optical transceiver module built for AI clusters and hyperscale data centre networks.
A single $50 million order with the potential to grow to $500 million over five years is a meaningful vote of confidence from a partner, but it is still early-stage, and none of these agreements guarantee that the full value will materialize on schedule.
Building real wealth inside a TFSA takes time, discipline, and the right mix of holdings. Investors should treat a stock like POET as a smaller, higher-risk position within a diversified TFSA, not a core retirement holding on its own.