Wealth creation is the common objective of the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP). Both investment accounts offer tax-free growth but differ in mechanics and tax treatments. Their effective utilization could depend on strategic contributions based on earning years.
Financial experts suggest contributing more to the TFSA in early career stages when the marginal tax rate is low. Conversely, prioritize RRSP contributions in your peak earnings when you are in the high-income bracket to maximize tax savings. The key question now is whether the average 45-year-old Canadian has used both accounts efficiently.
Source: Getty Images
Midpoint of working life
Age 45 is considered the halfway mark of a typical working life, from age 25 to 65. The peak earning window is open now, and finances are stabilizing. This stage will allow you to maximize RRSP contributions with some allocation for the TFSA.
TFSA savings gap
The cumulative lifetime contribution limit of the TFSA reached $109,000 on January 1, 2026. Yet, according to the Canada Revenue Agency (CRA) data, the average TFSA for Canadians aged 40 to 49 is between $24,000 and $28,000 compared to the national average of $38,566. The gap between what this demographic can actually have in their TFSAs and the maximum potential room is enormous.
RRSP reality
RRSP contributions are tax-deductible, but it seems average users miss out on maximizing their tax refunds. This could be due to irregular contributions. The median RRSP balance for the age group 45 to 54 is $70,000.
This data would tell you that half of all Canadians in their peak earning years have less than the amount in their RRSPs. The average balance of $150,300 is misleading. High-income earning taxpayers pull up the number.
Retirement pillars
Canadians will not retire penniless as the Old Age Security (OAS) kicks in at 65. If you contribute to the Canada Pension Plan (CPP), the pension is available to withdraw as early as 60. The OAS and CPP are public retirement pillars. However, they are partial replacements for the average working income.
If you are 65 and retiring today, the combined average CPP ($877.01) and maximum OAS ($751.97) per month is $1,628.98 or $19,547.97 annually. This baseline might not allow you to maintain your pre-retirement lifestyle or cover living costs.
Top buy-and-hold candidate
Bank of Montreal (TSX:BMO) is the top buy-and-hold candidate if the criteria are dividend longevity and safety. Canada’s fourth-largest public company by market capitalization is TSX’s dividend pioneer. The $178.7 billion bank has paid dividends for 197 years.
While the 2.6% dividend yield is relatively modest, BMO’s current share price of $250.25 represents a 42.8% year-to-date gain. The trailing one-year price return is +65.5%. In Q2 fiscal 2026 (three months ending April 30, 2026), net income rose 34% to $2.63 billion versus Q2 fiscal 2025.
The strong quarterly and half-year financial results prompted the board of directors to approve a 5% year-over-year dividend increase. BMO continues to review its plan to elevate returns and accelerate growth.
Powerful assets
The unused TFSA and RRSP contribution rooms of Canadians at 45 are powerful assets. The concrete step is to use their peak earning power and maximize the tax-free space. A two-decade compound runway should be enough to build long-term retirement wealth.
