As we approach retirement, it's crucial to understand how we can make the most of our financial resources. The latest Statistics Canada data reveals that Canadians aged 55 to 59 have an average TFSA balance of $43,519 and an unused contribution room of $57,618. This presents a significant opportunity for those nearing retirement to boost their savings. But how should we approach this?
One key strategy is to strike a balance between growth and stability. As retirement draws closer, it's natural to become more cautious, but a portfolio too heavily invested in low-return assets may struggle to keep pace with inflation and the income needs of a long retirement. The solution? Diversification. Dividing your portfolio into different buckets, with money needed within the next one to two years in cash or low-risk investments, and funds for longer-term goals in bonds and stocks, can help weather market downturns while maintaining growth potential.
For those looking for a simple solution, the iShares Core Balanced ETF Portfolio is a great option. With a target allocation of 60% equities and 40% fixed income, it offers a diversified approach with a low management expense ratio of 0.19% and a distribution yield of 3.1%. Over the past decade, it has generated an annualized return of 8%, demonstrating the benefits of staying invested through market cycles.
However, for those who prefer a more hands-on approach, building a portfolio of high-quality Canadian companies with durable competitive advantages can be rewarding. Toronto-Dominion Bank, for example, is a leading financial institution, but its valuation matters. After a strong rally since 2025, its stock price has reached a blended P/E ratio of 18.5, suggesting a premium. Waiting for a more attractive entry point could improve long-term return potential.
In my opinion, the key takeaway is that Canadians approaching retirement have a valuable opportunity to strengthen their finances. Rather than becoming overly conservative, maintaining a balanced portfolio that combines stability with long-term growth is essential. 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.
