What the Average Canadian TFSA Looks Like at 50

Wondering how you match up to the average 50-year olds TFSA balance? Here is how you can create above average retirement wealth.

Robin Brown

Author Bio

Robin Brown has been a regular contributor to The Motley Fool Canada since January 2020. He began investing in 2009, during the depths of the global financial crisis, and has continued to refine his approach over the years. His investment philosophy emphasizes patience, quality, and identifying businesses with the potential to create lasting value. Robin currently lives in St. Albert, Alberta, where he manages a portfolio of Western Canadian industrial properties and private investments. Having lived in Canada, Norway, and Australia, he brings a broad perspective to his work and investing. Outside of work, Robin enjoys traveling, hiking, hunting, fishing, biking, and cooking for his wife, two daughters, and son.

Education

Bachelor's degree in Theology
Advanced Diploma in Business Management

Areas of Expertise

Dividend investing, value investing, quality stocks, small-cap stocks, long-term investing, business fundamentals, balance sheet analysis, capital allocation, industrial real estate, and private investments.

Social Media Profiles

Favorite Investment Quote

"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down." — Warren Buffett

Published July 29, 3:45 pm EDT

Given that the TFSA (Tax-Free Savings Account) preserves all your income and gains from tax, it is a crucial instrument for building retirement wealth. As Canadians enter their 50s, retirement starts to hit their radar. Many people start shifting their focus from wealth creation to wealth preservation and income.

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The average Canadian at 50 years old has $30,190 saved in their TFSA

The average Canadian between the ages of 50 to 54 has a TFSA portfolio value of $30,190. Certainly, that is no small sum. However, Canadians at that age who have been residents of Canada since 2009 should have $109,000 of accumulated TFSA contribution space. It simply means that many Canadians are not maximizing the full benefit of the TFSA.

The great news is that it is never too late to start saving and investing in your TFSA. Most Canadians plan to retire around 65. That gives you a good 15 years to keep contributing, investing, and growing your TFSA portfolio.

How to grow your TFSA over time

Say your TFSA portfolio balance is $30,190 today. If you were to contribute $500 per month and invest in a market index (at a modest 7% annual total return) for the next 15 years, your TFSA portfolio value could be as much as $234,069 by 65.

At retirement, you could convert that portfolio to a lower-risk, income-focused portfolio. If you earned a modest 3% average dividend yield, you could earn as much as $585 of monthly dividend income (or $7,022 annually) for retirement.

All this to say that even at the age of 50, you still have incredible optionality for creating retirement wealth. Simply using your TFSA will save you a tonne of tax dollars and enable you to compound your retirement wealth much faster.

A solid stock to hold into retirement

If I were in my 50s, I would be looking for a nice mix of value, growth, and income. Chartwell Retirement Residences (TSX: CSH.UN) is an interesting TFSA stock to play on the retirement theme. If you are thinking about retirement, why not invest in a company that will benefit from a massive retirement tailwind?

Chartwell is the largest provider of retirement communities in Canada. It has a portfolio that spans across the country. Its scale gives it brand strength, reputation, and operational leverage across its portfolio.

A massive wave of Baby Boomers is set to retire. They will require a mix of care, community, and downsized living space. These are all things that Chartwell can provide.

Unfortunately, the supply of retirement communities is not keeping up with demand. Chartwell already has over 95% occupancy. New retirement communities cannot be built fast enough to match the demand. That will put upward pressure on Chartwell rents and overall returns.

Chartwell is not the cheapest real estate investment trust (REIT). However, it does trade at a significant discount to other retirement community peers in the United States. Over time, as it continues to prove the quality of its platform, it could enjoy a stock re-rating.

Chartwell yields 2.7% today. It has a history of increasing its dividend, so you might see your income stream rise over time. This is just one of many stocks that you could buy and hold for long-term retirement returns inside a TFSA.