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The billions being drained from TFSAs tell a story about retirement, and the cost of raising a family
Canadians are draining billions from TFSAs, with the withdrawals tied to retirement income and the costs of raising a family.
Key points
- About $123.5-billion went into TFSAs in 2024, and close to $70-billion came out.
- Roughly one-third of TFSA holders aged 25 through 45 made withdrawals in 2024, against an overall average of 29 per cent.
- The contribution limit is expected to rise from $7,000 to $7,500 in 2027 to reflect inflation.
Why it matters. The column suggests that heavy withdrawals by younger households point to financial strain, while older holders' withdrawals show the value of TFSAs as tax-free retirement income.
Canadians withdrew close to $70-billion from tax-free savings accounts (TFSAs) in 2024, while about $123.5-billion went in, a personal finance column reports. The average withdrawal was $12,292, while holders aged 80 and up averaged $31,000. Roughly one-third of holders aged 25 to 45 made withdrawals in 2024, against an overall average of 29 per cent. The column says the contribution limit is expected to rise to $7,500 in 2027 to reflect inflation.
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The billions being drained from TFSAs tell a story about retirement, and the cost of raising a family
Ability to withdraw money with ease is used by young and old, but with some generational differences An odd fall phenomenon in personal finance is the hyping of news about the contribution limit for tax-free savings accounts in the year ahead. Not even one in 10 TFSA holders contributed the maximum $7,000 in 2024, the most recent year for which Canada Revenue Agency has data. That ceiling is expected to rise to $7,500 in 2027 to reflect the impact of inflation. We should get confirmation of that in a few weeks. Meantime, let’s zero in on the flip side of TFSAs – withdrawals. About $123.5-billion went into TFSAs in 2024, and close to $70-billion came out. Nearly 175 million contributions were made, compared with almost 32 million withdrawals. Dig further into the withdrawal data and you see two big personal finance themes of our time – the financial struggles of young households and the value of TFSAs as a source of retirement income. The appeal of TFSAs is that taxes are a non-factor once you add money, assuming you don’t overcontribute. Your gains from investments and savings are tax-free, as are withdrawals. TFSA accounts can generally be accessed via online banking or mobile apps, which means a couple of clicks or swipes is all that’s required to make a withdrawal. This ease of withdrawing money was used by young and old in 2024, but with some generational differences. Young.