As we approach retirement age, it's crucial to consider how we can make the most of our financial resources. For many Canadians, the Tax-Free Savings Account (TFSA) is a powerful tool that can significantly boost retirement savings. According to the latest Statistics Canada data, the average TFSA balance for Canadians aged 55 to 59 is $43,519, with an average unused contribution room of $57,618. This highlights a missed opportunity for many to take full advantage of this tax-free investing tool.
One of the key considerations for retirees is finding the right balance between growth and stability. As retirement draws closer, it's natural to become more cautious with investments, often increasing exposure to lower-risk assets like guaranteed investment certificates (GICs). However, retirement can last two decades or more, and a portfolio heavily invested in low-return assets may struggle to keep pace with inflation and the income needed throughout retirement.
Instead, many investors benefit from dividing their portfolio into different buckets. Money needed within the next one or two years can remain in cash or other low-risk investments, while funds that won't be required for at least three to five years can stay invested in bonds and stocks. This approach allows investors to better weather market downturns while maintaining long-term growth potential.
A simple, diversified option for investors nearing retirement is the iShares Core Balanced ETF Portfolio (TSX:XBAL). This exchange-traded fund maintains a target allocation of approximately 60% equities and 40% fixed income, and it automatically rebalances to maintain its target mix, removing the need for investors to make regular adjustments themselves. Its management expense ratio is relatively low at 0.19%, and it recently offered a distribution yield of about 3.1%, paid quarterly. Over the past decade, the fund has generated an annualized return of roughly 8%, demonstrating the long-term benefits of staying invested through different market cycles.
For investors who prefer building their own portfolios, exploring opportunities in high-quality Canadian companies with durable competitive advantages is key. Toronto-Dominion Bank (TSX:TD) remains one of Canada's leading financial institutions and deserves a place on Canadians' watchlists. However, valuation matters. After a strong rally since 2025, the TD stock price has reached around $171, representing a blended price-to-earnings (P/E) ratio of about 18.5, which is well above the bank's historical average. This suggests that the stock may be trading at a hefty premium, and waiting for a more attractive entry point could improve long-term return potential.
In my opinion, the average Canadian approaching age 60 still has substantial unused TFSA contribution room, creating an excellent opportunity to strengthen retirement finances before leaving the workforce. Rather than becoming overly conservative, maintaining a balanced portfolio that combines stability with long-term growth would probably help your savings last throughout retirement. Whether you prefer an all-in-one balanced ETF or carefully selected individual stocks, making thoughtful investment decisions today can improve your financial security for years to come. If you're uncertain about the right strategy, consulting a qualified financial planner can help you build a retirement plan tailored to your goals.
