The new Tax-Free Savings Account is most popular among Canadians 65 and older, according to a recent survey by BMO Bank of Montreal.

The poll of more than 1,500 Canadians, conducted in early February, found that one-third of people 65 and older have opened a TFSA, compared to just 15% of people under the age of 45. One-quarter of those 55 to 64 said they have opened an account.

Of the respondents, 40% said retirement was their savings goal for their TFSA.

“There is no age limit for people who want to open a TFSA, so it’s a great vehicle for seniors who are required to begin converting their savings from an RSP starting at 71,” said Tina Di Vito, director of retirement strategies at BMO Financial Group. “With more Canadians working beyond the traditional retirement years, many seniors want a range of choices of when and how they use their retirement savings.”

The TFSA is also attractive to seniors since withdrawals from the accounts do not affect federal income-tested government benefits such as Old Age Security, the Guaranteed Income Supplement and the age amount credit, according to BMO. As a result, investing in TFSAs can help avoid or minimize clawbacks of their benefits.

In addition, individuals who are facing required RIF withdrawals that exceed their income needs could use TFSAs to shelter some of the money withdrawn from future tax on income.

The TFSA is also something for all Canadians to keep in mind during tax-planning season, Di Vito added. “Whether you’re getting back $100 or $1,000, consider taking your tax refund and putting it in a TFSA so it grows tax free,” she said.

BMO also announced that Bryan Badger, 70, of Senneville, Quebec, is the grand prize-winner of its $5,000-a-year-for-life contest. The contest, which closed Jan. 31, received more than 260,000 entries from across Canada.

“I’m looking forward to taking the money and contributing to my TFSA and using some of it for travel to visit my grandchildren,” said Badger upon accepting his prize. “I will also be giving some to local charities who have pressing needs.”

IE