The Average TFSA Balance for Canadians at 55

Retirement is a long-term financial goal, but as one of life’s milestones approaches, serious planning for it becomes a top priority. The mid-50s are highly relevant because the sunset years are on the horizon, and time is of the essence. Building a nest egg to ensure financial security requires money and real work.  

Wealth-building tools like the Tax-Free Savings Account (TFSA) are available to supplement government pensions. However, they haven’t been used to their full potential, particularly by Canadians at 55. Based on the Canada Revenue Agency’s (CRA) latest TFSA report, the average balance for the 2024 contribution year is $38,566.

For the 50–59 age bracket, the amount is between $35,000 and $43,000. While it looks okay on the surface, it is far from ideal. Given that the maximum lifetime contribution room is $109,000, a massive $66,000 of tax-free space is unused. If you put that to work, you can turn it into substantial wealth in 10 years.

The TFSA has risen in popularity, although CRA data show that younger Canadians rarely maximize their contribution limits or available room. However, TFSA balances increase or accelerate starting in the 60s, and every five years thereafter.

The average TFSA balances for the age groups 60–64 and 65–69 are $52,381 and $58,000, respectively. This upward trend is highly noticeable as Canadians age. It peaks at $76,305 for those 80 and older.

Actionable plan

Closing the gap is possible with an actionable plan and a systematic approach. Remember that the power of compounding works best in a TFSA, where all interest, capital gains, and dividend income earned inside the account grow completely tax-free.

Over a 10-year period, assuming you invest in dividend-paying stocks, a $66,000 lump sum investment today will grow to almost $130,000. It assumes an average annual return of 7%. Also, if you maximize your annual contribution limit during the same period, your TFSA could exceed $230,000.

Capital preservation plus recurring dividend income for reinvestment is the key to success. Capital loss in a TFSA, as well as tax deduction, is not an option at this juncture for 55-year-olds. Limit your holdings to Canadian domestic stocks. Avoid U.S. stocks as their dividends are subject to a 15% foreign withholding tax.

Compelling candidate

Nexus Industrial (TSX:NXR.UN) is a compelling candidate in a catch-up strategy. You can hold this real estate investment trust (REIT) for at least 10 years to maximize your TFSA. At $8.21 per share, the dividend yield is 7.8%. The payout is monthly, so you can reinvest dividends 12 times a year to accelerate compounding.

For illustration purposes, a $50,000 position will grow to $109,230.40 in 10 years, including dividend reinvestment. NXR.UN has consistently paid monthly dividends since January 2018.

The $793.2 million REIT is a powerhouse in the industrial real estate sector. It owns around 87 industrial assets in major Canadian markets. Its tenants sign lease contracts with built-in yearly rent escalation clauses. As of Q1 2026, the in-place and committed occupancy rate is 95%. The weighted average lease term (WALT) is 6.9 years.

Seize the moment  

The average TFSA balance for Canadians at 55 is modest, but a good starting line in the catch-up phase. Their unused contribution room consists of assets that can be converted into substantial returns through cash-generating REITs like Nexus Industrial.

The post The Average TFSA Balance for Canadians at 55 appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Nexus Industrial REIT. The Motley Fool has a disclosure policy.