Turning 45 can feel like a major retirement checkpoint. At that point, most investors may still have about two decades before retirement, but that milestone is close enough to make savings a little more urgent. This brings up the question of what a typical 45-year-old TFSA and RRSP balance should be.
Comparing account balances can provide some perspective, but it’s hardly the measure that investors should focus on. Instead, investors should focus on growing those accounts over the two decades they still have.
Investors planning for retirement at age 65 still have a solid two decades of compounding at age 45. This means that the typical 45-year-old TFSA and RRSP balance still has plenty of time to grow during that period.
The TFSA offers tax-free growth and withdrawals on after-tax contributions. The RRSP offers an upfront tax deduction, while growth inside the account is tax-deferred. Both have a purpose that ultimately comes down to contributions, goals, and tax rates.
Equally important is selecting the right investments to generate that growth. Fortunately, there are plenty of great stocks that can boost the typical 45-year-old TFSA and RRSP balance over the longer term.
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Three investments for long-term growth
Fortis (TSX: FTS) is always near the top of any long-term compounding list. Fortis is one of the largest regulated utility stocks on the continent, with operations in Canada, the U.S. and the Caribbean.
The company’s regulated nature means that it generates a recurring, predictable revenue stream that allows the company to invest in growth and pay a handsome dividend.
The company’s current $28.8 billion capital plan is expected to increase its rate base from $42.4 billion in 2025 to $57.9 billion by 2030. Management expects that growth to support annual dividend increases of between 4% and 6% through 2030.
As of the time of writing, Fortis offers a yield of 3.1%. The company also has a lengthy history of annual dividend increases that stretches back over five consecutive decades.
Another option for investors looking at how to increase their TFSA and RRSP balances is Waste Connections (TSX: WCN). Waste collection and disposal are essential services that remain necessary across different market cycles.
This gives Waste Connections a defensive moat based on necessity, similar to Fortis.
Waste Connections does offer investors a quarterly dividend, but the 0.83% yield isn’t what attracts investors to this stock.
Instead, investors focus on the company’s long-term growth potential and steadily improving results.
Finally, investors looking to grow their TFSA and RRSP balances should consider BMO S&P 500 Index ETF (TSX: ZSP) as a diversified option. This ETF provides exposure to the largest 500 U.S. companies across industries such as technology, healthcare, consumer goods, and financial services.
This provides investors with an entire basket of U.S. holdings under a single ticker. Not only does this offer some diversification appeal, but it also means investors don’t need to pick individual winners.
How much does a typical 45-year-old have saved in their TFSA and RRSP?
The latest Canada Revenue Agency data show an average TFSA balance for investors aged 45 to 49 of just over $24,000. The average RRSP balance for investors aged 45 to 54 is approximately $150,000.
Investors should view those numbers as benchmarks rather than targets that need to be hit. Income, pensions, home equity, debt, and contributions can impact what the real number is for everyone.
Fortunately, even if the balance is below those benchmarks, there’s still time to improve. Regular contributions and reinvested dividends can provide the compounding needed to bolster both balances.
