Not everyone can use the same number But there is a formula and a simple ETF (exchange-traded fund) that can help you get a lot closer to the answer.
To be honest most Canadians can’t afford to retire just on their Tax-Free Savings Account (TFSA) balance.
But a TFSA with a lot of money in it can be one of the best parts of your retirement plan. Your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits won’t be affected.
TFSA withdrawals don’t count as income and all the money it makes, like interest, dividends, and capital gains, stays in your pocket.
The question isn’t whether or not to use it It’s how big it has to be before it really makes a difference.
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Look at the stocks Returns as of March 24 2026
man takes money out of an ATM The amount you can put into your TFSA is going up.
The maximum total amount you can put into a TFSA is $109,000 as of 2026. A growth-oriented portfolio that compounds at 7–10% a year could have grown to between $200,000 and $265,000 today for someone who has been maxing it out every year since the program started in 2009.
It tells you that investing wisely over many years can make you real money. If you follow the common 4% withdrawal rule, the middle of that range, which is about $232,000, could give you about $9,300 a year in tax-free retirement income.
That won’t be enough to pay for a full retirement. But when you combine it with CPP and OAS, it can significantly lower the amount you need to take out of taxable accounts.
That matters because taking out even one extra dollar from a Registered Retirement Income Fund (RRIF) or a non-registered account can put you in a higher tax bracket or cause an OAS clawback.
The main point is that a TFSA with $500,000 could let you spend $20,000 a year without paying taxes. If you have $1 million, you can expect to make $40,000 a year. Neither number replaces every dollar that most Canadians spend, but both make retirement much more flexible.
Most Canadians aren’t using the TFSA to its full potential, even though it has clear benefits. Statistics Canada data shows that the average TFSA balance is always below $70,000, even for older people. That’s a big difference from where the numbers should be.
The TFSA’s strength comes from being in the market for a long time, not from timing the market. Real wealth comes from making regular contributions, reinvesting every distribution, and not moving during corrections.
Most people don’t realise how much it costs to try to pick the next big winner or sit in cash while “waiting for the right moment.” If you’re behind, the way forward is clear. Give as much as you can each year and put all of your gains and income back into the business.
VGRO could be a main holding in a TFSA
It doesn’t have to be hard to set up a TFSA for retirement. Building around a low-cost, widely diversified exchange-traded fund (ETF) is one of the most useful ways to do things. The Vanguard Growth ETF Portfolio (TSX:VGRO) is a good choice.
VGRO has about 13,667 stocks and 17,194 bonds spread out over seven index funds. Its mix of assets aims for about 80% stocks and 20% bonds.
- You don’t have to rebalance the fund yourself
- The cost is very low because VGRO only charges 0.24% of its assets under management, which is about $2.40 for every $1,000 invested each year.
- The management fee was also lowered from 0.22% to 0.17% in November 2025.
The record of performance speaks for itself VGRO has given investors a 9.75% annualised return since it started in January 2018. That number has been 11.09% over the last five years. The Vanguard Growth ETF Portfolio Factsheet data shows that calendar-year returns were 20.24% in 2024 and 16.86% in 2025.
The ETF lost more than 11% in 2022 which was the only bad year in that time period. This is a good reminder that stocks can change quickly. VGRO is a great choice for a TFSA that will last for decades. It gives you a lot of global exposure, automatically rebalances, and has a fee structure that won’t slowly eat away at your returns. It’s hard to beat that mix.
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