saving money

Clients in their 30s and early 40s are well positioned to benefit from TFSAs. Yet new data shows this cohort has the most unused contribution room.

TFSA holders aged 30–34 have an average of $55,304 in unused contribution room, the highest such figure among all age groups, according to statistics released by the Canada Revenue Agency (CRA) Thursday.

The data covers the 2021 contribution year.

The TFSA was first introduced in 2009, meaning a person who was the age of eligibility at the time — 18 — is now 33. If that person never opened or contributed to a plan, they would have $95,000 in TFSA contribution room today.

Next year, when contribution room of at least $7,000 is added, the cumulative TFSA room available to someone who has been eligible for the account since 2009 and never contributed will be at least $102,000.

“When you’ve got to the point where you’ve got your mortgage under control, you’ve got some excess cash, and you’re [building] retirement savings, you’ve got this other tax-sheltered way — in addition to the RRSP and the new FHSA — to do it,” said Doug Carroll, tax and estate specialist with Aviso Wealth in Toronto.

Millennials tend to have the most unused room. TFSA holders aged 35–39 had $54,430 in unused TFSA contribution room, while TFSA holders aged 40–45 had $54,090 in room.

Across all TFSA holders, the average unused contribution room was $43,024.

With so much room available, “a lot of people will never know much about, or need to know much, about non-registered investing because they will have tax-sheltered investing as the core of their retirement savings,” Carroll said. “They may never get to the point where they have to be concerned about capital gains [in a taxable account].”

TFSA holders aged 30–34 held property with an average fair market value (FMV) of $15,347 in their TFSAs. That figure was $17,154 for holders aged 35–39 and $19,338 for those aged 40–44.

Carroll suggested people in their early 20s might consider holding their savings in TFSAs during their low-earning years, and then withdrawing amounts to contribute to the new FHSA as they begin considering a home purchase.

FHSAs can remain open only for a maximum of 15 years, so favouring TFSA savings first might make sense.

“You’ve had the benefit of having your TFSA room being ballooned up, because you’ve used it to accumulate savings before contributing to an FHSA,” Carroll said. There, “you’ll be able to use the deduction [for contributions], whether it be that year or in anticipation of starting to take it in a few years’ time.”

Other key TFSA statistics

  • The total FMV of all property held in TFSAs as of the 2021 contribution year was $523.7 billion.
  • TFSA holders contributed $103.4 billion into their TFSA that year, while withdrawing $47.7 billion.
  • There were 17.2 million TFSA holders who had 27.2 million accounts (individuals can open multiple TFSAs, but their total contribution room for the plan remains the same) in 2021.
  • 4.6 million TFSAs were opened that year and 2.0 million closed.