As younger Canadians struggle with the heightened cost of living and a difficult job market, a new survey from TD Bank suggests Gen Z and millennials who use a tax-free savings account (TFSA) aren’t investing in that account because they want the money readily available.
That comes as young Canadians continue to face an unemployment rate that is more than double the national average as of last month, according to recent Statistics Canada data.
Forty-one per cent of Gen Z and millennials who currently hold a tax-free savings account are not investing the money inside it, the TD survey found.
And while that number is higher, they aren’t the only ones.
The survey also says 65 per cent of all Canadians hold a TFSA, but 39 per cent of them are not investing the money inside.
What is a tax-free savings account?
Introduced during the Great Recession, the tax-free savings account was launched in 2009 and acted as a way to encourage Canadians to invest for retirement and other milestones.
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A TFSA acts as a tax shelter, allowing Canadians to put a certain amount of money into their account and, if they want, use that to invest in things like stocks, bonds, GICs and mutual funds.
All of the money earned through those investments is free from taxes like capital gains as long as the money used to invest came from the TFSA.
Most Canadians are able to contribute up to $7,000 in 2025 towards their TFSA, according to the Canada Revenue Agency, and that money can be used for investing — tax-free.
What’s stopping young Canadians right now?
In October, youth unemployment was at just over 14 per cent compared to the same month in 2024.
Although that’s down from 14.7 per cent in September, it was still more than double the national average.
A report from Desjardins in September noted how youth unemployment being at about 14 per cent was consistent with the level seen “during a recession.”
Recent Ipsos polling for Global News has found that the cost of living was the biggest concern for Canadians ahead of the federal budget earlier this month.
That poll suggested 69 per cent of Canadians are “worried” the government won’t do enough to help them in the years ahead. That number rose to more than 70 per cent among younger demographics.
Nearly half of respondents (46 per cent) to an Angus Reid survey conducted by Willful in October said they had to dip into their savings to keep up with daily expenses.
But if younger Canadians are leaving TFSA money uninvested out of similar concerns, it could come with penalties.
“Simply parking cash in a TFSA limits its potential and, in some cases, could lead to contribution penalties if used like a regular savings account,” said Pat Giles, vice-president of saving and investing journey at TD in a statement.
However, many say they still want to invest.
According to the TD survey, 22 per cent of Gen Z and millennials who said they were not investing money in TFSAs said it was because they felt they didn’t have enough money saved to invest.
Separately, 22 per cent of those younger Canadians not investing money in their TFSAs said it was because they didn’t know what investment products to choose, and 19 per cent said they weren’t confident in their investment knowledge.
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