What the Typical 40-Year-Old Canadian Has in Their TFSA and RRSP

A Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) are the most used registered savings accounts among Canadians. Those who are good at calculating tax benefits make the most of the two accounts, and it is visible in the typical balance of these accounts. The latest RRSP and TFSA data available on Statistics Canada is only for the 2023 tax year.

There is a remarkable difference in the average ($88,600) and median ($30,000) RRSP balance of a Canadian in the 35–44 age group. The same is the case with the TFSA average ($32,300) and median ($12,000) balance.

Age Group	Average Value of RRSP, RRIF, and LIRA	Median Value of RRSP, RRIF, and LIRA	Average TFSA value	Median TFSA Value
35 to 44 years	$88,600	$30,000	$32,300	$12,000

What the Typical 40-Year-Old Canadian Has in Their TFSA and RRSP

Looking at such a stark difference in numbers, how does one determine what a typical 40-year-old Canadian has in their RRSP and TFSA? The median shows the midpoint of the range, while the average can be skewed by a handful of accounts holding significant balances.

The gap between the two shows that some Canadians are using these accounts extensively, and some are underusing them.

RRSP vs. TFSA

In a TFSA, your contribution starts accumulating the day you turn 18 and remains the same for all income groups. In an RRSP, contributions depend on your taxable income. The Canada Revenue Agency (CRA) sets the RRSP contribution limit as 18% of your previous year’s income or the maximum amount, whichever is lower.

For 2026, the income tax slab is:

• 14% on income up to $58,523
• 20.5% on income over $58,523 up to $117,045
• 26% on income over $117,045 up to $181,440
• 29% on income over $181,440 up to $258,482
• 33% on income over $258,482

If you earned $115,000 in 2025, your 2026 RRSP contribution is 18% of your 2025 income, which comes to $20,700. You can reduce this amount from your 2026 taxable income and save $4,243 in taxes at a 20.5% tax rate. You pay tax later when you withdraw from an RRSP.

If you invest the same amount in a TFSA, provided you have the contribution room, you pay the $4,243 in tax in 2026. Any amount withdrawn later is not added to taxable income.

While an RRSP defers tax, the TFSA makes you pay tax upfront as you contribute after-tax income. Thus, a TFSA is more beneficial for those in the low-income bracket and an RRSP for those in the high-income bracket. At age 40, you are gradually moving into the higher income bracket, accumulating more RRSP contribution room.

How to use the RRSP efficiently

If you are planning a major capital asset sale, which could push you into the higher tax bracket, you could invest small amounts in an RRSP over the years. All RRSP contributions that you didn’t claim can be carried forward to the time you receive the big capital gain and claim all at once.

Suppose your total taxable income comes to $300,000 in 2026 due to the sale of a property. Around $42,000 of your income will fall in the 33% tax bracket. You could use the accumulated RRSP to remove the $42,000 from your taxable income and defer it to the year when you are in the 14% or 20.5% tax bracket.

Tax Rate	Tax Amount on $42,000
14%	$5,880
20.50%	$8,610
33%	$13,860

You can see the significant tax savings when tax rates change. That same $42,000 RRSP investment can either bring you $5,880 or $13,860 in tax savings. The RRSP is not just about reducing your current tax bill, but strategically using your RRSP contributions to reduce the biggest tax bill.

While building your RRSP contributions, consider investing that money in core stocks that give assured returns in the long term. Loblaw (TSX:L), the supermarket chain that also runs pharmacies, banking, and apparel, has a defensive investment appeal. Its revenue growth is steady in the 4–4.5% range. The grocer is expanding sales by adding new stores, not aggressively but strategically.

Although Loblaw is also a dividend payer, its less than 1% yield makes dividends unattractive. Instead, Loblaw has been doubling investors’ money every five years since 2012, after the economy recovered from the 2008 Global Financial Crisis.

Loblaw’s resilience and assured growth make it a stock worthy of an RRSP.

The post What the Typical 40-Year-Old Canadian Has in Their TFSA and RRSP appeared first on The Motley Fool Canada.

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More reading

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• The Best Canadian Stocks to Own During a Trade War
• TFSA Investors: 1 Set-it-and-Forget-it Stock for 2026

Fool contributor Puja Tayal 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.