How Much Canadians Typically Have in a TFSA by Age 50

Long-term investing is often spoken about in terms of decades. Canadian investors who turn 50 years old often come to the realization that they don’t have decades of runway. A TFSA by age 50 should be a funded account growing largely from compounding. Right?

There’s no hard rule. Canadians who turn 50 years of age still have 15 years or more to contribute to their Tax-Free Savings Account (TFSA). That’s plenty of time to let reinvested dividends, compounding, and growth work some magic on your account.

Unfortunately, investors often disregard that important point. The reason for that is that when comparing the balance of a TFSA by age 50 to a younger investor, the balance can sometimes feel a little underwhelming.

Why account balances look different

The TFSA has only existed since 2009. Therefore, a Canadian turning 50 today would have been in their early 30s when the account was introduced. This means the 50-year-old has only had access to the TFSA for approximately 17 years, rather than their entire adult life.

More importantly, it’s not a reflection of someone’s ability to save.

And remember that within a TFSA, more of those compounded returns can remain invested thanks to the tax-free nature of the account.

Fortunately, a TFSA by age 50 is still a long way off from a TFSA at age 65. Picking the right investments today can still provide ample time to build that portfolio into a much larger nest egg.

Three stocks that could help grow a TFSA at age 50

There are plenty of great stocks on the market to build a TFSA. These three offer a mix of defensive appeal, growth and income-earning potential.

First is Toronto-Dominion Bank (TSX: TD). TD is one of the big bank stocks, providing a TFSA with a balance of income and growth.

TD has operations in both Canada and the United States, giving it exposure to consumer lending, business banking, and wealth management.

As an income investment, TD has paid dividends for over 160 years and has provided investors with annual bumps for over a decade. As of the time of writing, TD offers a yield of 2.58%.

The next option to hold in a TFSA portfolio by age 50 is Fortis (TSX: FTS). Fortis is one of the largest utility stocks in North America with operations across Canada, the U.S., and the Caribbean.

The essential nature of electricity and natural gas service allows Fortis’s infrastructure to generate a reliable, recurring revenue stream. This allows Fortis to predictably invest in growth initiatives and pay its quarterly dividend.

As of the time of writing, Fortis offers a yield of 3.08%. Fortis has also provided investors with annual bumps to that payout for 52 consecutive years.

That combination of stability and dividend growth makes Fortis a key option for TFSA investors.

Finally, there’s Canadian National Railway (TSX: CNR). Canadian National transports goods across Canada and into the United States, connecting ports, manufacturers, farms, and consumers.

Railroads are incredibly defensive. Building a competing network would require massive amounts of capital and take decades. This creates a competitive advantage for Canadian National and a wide defensive moat for investors.

In terms of income, Canadian National offers a yield of 2.02% and three consecutive decades of annual increases.

This makes Canadian National a solid addition to any well-diversified TFSA portfolio.

How much Canadians typically have in a TFSA by age 50

The CRA doesn’t publish specific figures for 50-year-olds. Instead, it reports five-year age groups. The latest available statistics show that Canadians between 45 and  49 years old had an average TFSA market value of just over $24,000.

Canadians aged 50 to 54 years old had an average balance of just over $30,000.

Age 50 may feel late to accelerate retirement savings, but there’s still plenty of time for investors. It’s also worth noting that investors in their 50s are usually in their highest-earning years.

For example, investing $7,000 annually for 15 years and earning a conservative return of 5% produces approximately $145,000. Keep in mind that’s without factoring in any existing TFSA balance.

In other words, a TFSA by age 50 still has plenty of room to grow.