The average Tax-Free Savings Account (TFSA) holder entering their 60s isn’t sitting on a miniature pension empire. The latest Canada Revenue Agency (CRA) data puts the average balance for Canadians aged 60 to 64 at $45,109. That’s a useful cushion, although it won’t fund twenty years of retirement and an annual migration to somewhere with palm trees.
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The numbers
This figure also requires some careful labelling. It’s an average among TFSA holders, not the median balance for every Canadian turning 60. Larger accounts can pull an average higher, while Canadians without TFSAs aren’t included.
| AGE GROUP | AVERAGE TFSA BALANCE |
|---|---|
| 55 to 59 | $37,600 |
| 60 to 64 | $45,109 |
| 65 to 69 | $51,244 |
Perhaps the more encouraging number is $47,631. That was the average unused contribution room among holders aged 60 to 64, suggesting many Canadians still had considerable space available to strengthen the account.
What the balance means
The TFSA works particularly well near retirement because investments can grow tax-free, while withdrawals generally won’t increase taxable income or reduce federal income-tested benefits. Unused room carries forward, and amounts withdrawn return as new contribution room the following calendar year.
The 2026 annual limit is $7,000. Someone eligible every year since the TFSA began in 2009 could have as much as $109,000 of cumulative room before accounting for previous contributions and withdrawals. Investors should check their own records before adding money because excess contributions face a 1% monthly tax.
Someone starting with $45,109 and contributing $7,000 at the end of each year could reach approximately $103,500 after five years at an average 7% annual return. Markets won’t provide that return on command, unfortunately. Still, the calculation shows why age 60 isn’t too late for a TFSA to enjoy a productive final sprint before traditional retirement age.
A stellar starter stock
Bank of Montreal (TSX: BMO) could provide part of that growth-and-income strategy. The bank earns money through Canadian and U.S. banking, wealth management, insurance, and capital markets, giving it several ways to generate profits rather than relying entirely on Canadian mortgages.
Second-quarter adjusted earnings per share (EPS) jumped 40% year over year as fee revenue improved and credit provisions declined. Management also raised the quarterly dividend by 2% to $1.71, or $6.84 annually.
At a recent price of $252.17, BMO offers a yield of approximately 2.7%. That won’t produce the loudest TFSA paycheque, but dividend growth can become more valuable than chasing an enormous payout that eventually requires an awkward apology. What’s more, don’t count out returns. In fact, here is what $7,000 invested each year while reinvesting dividend income could create, with the same compound annual growth rate (CAGR) from the last five years.
| AGE | ANNUAL CONTRIBUTION | CUMULATIVE CONTRIBUTIONS | PROJECTED YEAR-END SHARE PRICE | PROJECTED ANNUAL DIVIDEND PER SHARE | SHARES BOUGHT | DIVIDEND INCOME | SHARES BOUGHT WITH DIVIDENDS | TOTAL SHARES | CASH CARRIED FORWARD | PROJECTED TOTAL VALUE |
|---|---|---|---|---|---|---|---|---|---|---|
| 60 | $7,000.00 | $7,000.00 | $290.14 | $6.84 | 27 | $184.68 | 0 | 27 | $371.50 | $8,205.38 |
| 61 | $7,000.00 | $14,000.00 | $333.61 | $7.53 | 24 | $383.85 | 1 | 52 | $458.29 | $17,806.05 |
| 62 | $7,000.00 | $21,000.00 | $383.59 | $8.28 | 21 | $604.58 | 2 | 75 | $289.87 | $29,059.10 |
| 63 | $7,000.00 | $28,000.00 | $441.06 | $9.11 | 18 | $847.53 | 2 | 95 | $350.67 | $42,251.01 |
| 64 | $7,000.00 | $35,000.00 | $507.13 | $10.03 | 16 | $1,113.09 | 2 | 113 | $392.60 | $57,698.50 |
| 65 | $7,000.00 | $42,000.00 | $583.11 | $11.03 | 14 | $1,401.36 | 2 | 129 | $527.90 | $75,748.63 |
| TOTAL | $42,000.00 | $42,000.00 | — | — | 120 | $4,535.09 | 9 | 129 | $527.90 | $75,748.63 |
Considerations
The bank’s 13% common equity tier-one ratio provides a healthy capital cushion. Meanwhile, improving Canadian banking margins, stronger wealth-management results, and recovering U.S. profitability could support further earnings growth.
The shares trade around 18 times annualized first-half adjusted earnings after a powerful rally. That looks expensive beside BMO stock’s historical valuation, so gradual purchases would make more sense than treating today as the final boarding call.
A recession could increase loan losses and reduce banking, wealth-management, and capital-markets revenue. BMO stock also faces execution risk in its U.S. operations, while its premium valuation leaves room for a pullback. Dividends aren’t guaranteed, and one bank shouldn’t consume an entire TFSA.
Bottom line
A diversified mix of cash, fixed income, and Canadian dividend stocks may be more appropriate as retirement approaches. Yet regular contributions and five more years of compounding could push the typical balance considerably higher, giving age 65 a much more comfortable opening scene.
