Canadians: How Much Money Should Be in a TFSA to Retire?

How much do you think might be a good enough amount for you to retire? I feel that a Tax-Free Savings Account (TFSA) worth around $300,000 to $500,000 might be right in the sweet spot to enjoy your golden years with a good amount of breathing room.

Since its launch in 2009, the TFSA has quickly become more than a mere savings account. Due to the tax-sheltered nature of the account, it is simply the best investment vehicle for Canadians. It can be part of an excellent retirement plan that lets you enjoy your retirement with plenty of financial freedom.

After the January 2026 update, the maximum cumulative lifetime contribution room for a TFSA sits at $109,000. Yet, data from the Canada Revenue Agency shows that the average TFSA user holds around $40,000 in the account. That is a lot of tax-free growth that Canadians are leaving behind.

The Old Age Security (OAS) benefits and Canada Pension Plan (CPP) programs can help Canadian retirees partially cover their living expenses. However, withdrawals from these pensions are considered taxable income. TFSA withdrawals are tax-free, letting you enjoy the additional passive income without worrying about moving to a higher tax bracket.

Investors can reach their target amount with steady contributions and by reinvesting dividends. Building a portfolio of the right TSX stocks to hold for the long run can help you fund a comfortable retirement. Today, I will discuss two stocks that can be mainstays in a solid TFSA portfolio.

Bank of Montreal

Bank of Montreal (TSX:BMO) is one of the Big Six Canadian Bank stocks, and while any of the biggest names can be good long-term picks, BMO stock stands out. The $170.89 billion market-cap Canadian bank is the oldest Canadian bank stock and has been paying its investors their shareholder dividends since 1829. An almost two-century-long dividend streak means it has distributed quarterly dividends through world wars and several economic crises.

BMO has recently expanded operations significantly south of the border, where it has a presence in 32 states in the US. As of this writing, BMO stock trades for $242.43 per share and pays $1.71 per share each quarter, translating to a 2.8% dividend yield. While it might not offer high-yielding dividends, its long-term returns through dividends and slow capital appreciation can make it an excellent TFSA holding to consider.

RioCan Real Estate

RioCan Real Estate Investment Trust (TSX:REI.UN) is a Real Estate Investment Trust (REIT) boasting high-yielding monthly distributions that can be excellent for a TFSA retirement portfolio. RioCan is one of Canada’s largest REITs, boasting a portfolio of necessity-based and mixed-use properties in densely populated communities. Its high-quality tenants and strong occupancy levels across its portfolio make it more attractive as a long-term holding.

RioCan REIT pays investors $0.10 per unit each month, translating to a roughly 5.1% annualized dividend yield. Besides dividend income, it provides exposure to real estate markets that can result in long-term wealth growth through capital appreciation. As of this writing, it trades for $22.75 per share and can be a good holding to consider.

Foolish takeaway

The two investments above can provide a steady stream of dividend income. Until you retire, reinvesting the dividends to purchase more shares of the stock can help you unlock the power of compounding and accelerate your wealth growth. This way, your TFSA portfolio can grow significantly by the time you retire. Eventually, the returns from dividends alone can be significant enough to supplement your retirement income.

Against this backdrop, BMO stock and RioCan REIT can be excellent foundations for a retirement-focused TFSA portfolio.

The post Canadians: How Much Money Should Be in a TFSA to Retire? appeared first on The Motley Fool Canada.

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More reading

• A Practical Way to Use Your TFSA Contribution Room to Build Monthly Cash Flow
• 5 Habits That TFSA Millionaires Have in Common
• 3 Stocks I’d Use to Build a Smart TFSA Portfolio in 2026
• Canadians: Here’s How Much You Need in Your TFSA to Retire
• How Much a Typical 45-Year-Old Has in TFSA and RRSP Accounts

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.