When the talk is about retirement readiness in Canada, the measure is often the Tax-Free Savings Account (TFSA) balance rather than the Registered Retirement Savings Plan (RRSP). An RRSP defers taxes, but they are collected on future withdrawals. The TFSA is 100% tax-free, including withdrawals, and can deliver growing income throughout the sunset years.
How much do you actually need in a TFSA to retire? There’s no set target, though a realistic investment portfolio could be from $250,000 to $500,000. This amount can easily produce $10,000 to $25,000 in tax-free income annually. Moreover, TFSA withdrawals won’t trigger Old Age Security (OAS) clawbacks. You’d have an income stream in addition to the Canada Pension Plan (CPP) and OAS.
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True power of the TFSA
The Canada Revenue Agency (CRA) sets the annual limit ($7,000 this year). As of January 2026, the maximum cumulative contribution limit reached $109,000 for an eligible Canadian (aged 18 and above) who has never contributed since 2009. Building retirement wealth appears daunting if you are behind. However, tax-free capital growth and dividend compounding through the TFSA make it possible.
Generate tax-free income
A dividend growth stock like TC Energy (TSX:TRP) can help achieve at least $10,000 in tax-free income. The $92.3 billion pipeline and power company operates a massive network of natural gas pipelines (93,000 km) across Canada, the U.S., and Mexico. Long-term contracts and rate-regulated assets account for approximately 95% of its earnings.
TRP’s 26 consecutive years of dividend increases indicate a cash flow engine with proven resiliency against commodity price volatility. At $87.96 per share, the dividend yield is 4%. The 18.6% year-to-date gain increases the overall return and shows you can earn in two ways: dividend income and price appreciation.
Given the current price and yield, a lump-sum investment of $252,533, roughly 2,871 shares, will generate $10,000 in annual tax-free dividends. If an upfront cash outlay isn’t possible and you’re starting from scratch, it will take 17 to 18 years with $7,000 yearly contributions to reach a $252,500-plus TFSA portfolio.
A shorter time frame has an available contribution room of $109,000 (2026 maximum limit) and $7,000 in annual contributions. The estimated period to build the desired TFSA is 8 to 9 years, when including dividend hikes, reinvestment of dividends (four times a year), and share price growth.
Strong financial momentum
François Poirier, President and CEO of TC Energy, said, “Driven by safe and reliable operations, we delivered strong financial results in the first half of 2026.” In the six months ending June 30, 2026, net income increased 3% year-over-year to $1.89 billion following the sanctioning of $3 billion in new growth projects.
The differentiated natural gas and power footprint, as well as the low-risk business model, are the core competitive advantages of TC Energy. According to Poirier, two projects supported by 20-year take-or-pay contracts expanded its U.S. natural gas footprint.
TC Energy believes that the underlying market fundamentals in North America will translate into tangible growth opportunities across its U.S. natural gas pipelines business.
Best vehicle
The TFSA is an exceptional tool for building retirement wealth. If you feel behind on your retirement savings, it is the best vehicle for a catch-up investment strategy. Your unused contribution room and fresh annual limits can turn into pension-like income, giving you a worry-free retirement.
