What the Average Canadian TFSA Looks Like at Age 50

Canadians nearing retirement might be surprised to learn what the average balance is in their Tax-Free Savings Accounts (TFSAs) by the age of 50. Based on data released by Statistics Canada last year, in the 2023 contribution year, Canadians between 50 and 54 held an average of $30,190 in their TFSAs. The same age group had an average of $57,855 in unused contribution room.

It is alarming to see that, despite all the benefits a TFSA offers, Canadians in this group have more unused room than contribution room being utilized to get the best a TFSA can offer. The TFSA is the best investment vehicle that Canadians have, and they do not seem to be using it.

As retirement inches closer, maximizing your TFSA contributions can make a significant difference for your financial freedom during your retirement.

Why the unused contribution room matters

Any qualifying investments you hold in a TFSA provide returns that the Canada Revenue Agency (CRA) will not tax. Why? TFSA contributions are made with after-tax dollars. It means that you have already paid taxes on the money going into the account. Any returns generated from interest, dividends, or capital gains are exempt from taxes. It might not save a lot in the short term, but it can lead to substantial long-term savings.

Tax-free growth is accompanied by tax-free withdrawals, making the account seem even more attractive. You can withdraw funds from the account whenever you need, without worrying about contributing to your taxable income for the year. The more you generate through a TFSA, the more you can have for monthly expenses without worrying about moving into a higher tax bracket.

Using the TFSA to hold a self-directed portfolio of high-quality dividend stocks that balance income growth and capital appreciation can be an excellent strategy to consider.

A TSX stock to buy and hold forever

There is no shortage of high-quality blue-chip stocks that fit the bill on the TSX. One stock I would consider as a long-term TFSA holding is Manulife Financial Corp. (TSX:MFC).

Manulife Financial is a $90.12 billion market-cap giant in the insurance and wealth management industries. The stock recently released its first-quarter results for fiscal 2026 and saw a pullback in share prices as a result. Despite the dip in share prices on the stock market, the performance of the underlying business remained solid and painted a better picture of long-term growth potential.

Manulife Financial has built a strong presence worldwide as it continues expanding to key markets. The broader market volatility might not be doing any favours to its share prices, but the company reported an 8% year-over-year increase in its core earnings. Its net profit attributable to shareholders also grew to $1.1 billion. The company’s core return on equity also reached 16.5% in the quarter, showing that the company has solid profitability.

Foolish takeaway

As of this writing, MFC stock trades for $54.00 per share and pays investors $0.485 per share each quarter, translating to a 3.59% annualized dividend yield. Having increased its dividends at a rate of almost 10% over the last 10 years shows that it has the potential to be an investment that TFSA investors seek for long-term compounded growth.

The post What the Average Canadian TFSA Looks Like at Age 50 appeared first on The Motley Fool Canada.

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More reading

• How Much Does a Typical 45-Year-Old Alberta Resident Have Saved in a TFSA?
• Why Chasing High Yields Is the Fastest Way to Lose Money
• The Average TFSA Balance for Canadians at 55
• Rates Aren’t Falling: Here’s What I’d Do With My TFSA
• 2 Canadian Dividend Giants to Buy With Rates on Hold

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.