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. Younger account holders made more withdrawals, while older ones took out the biggest amounts.

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Roughly one-third of TFSA holders aged 25 through 45 made withdrawals on average in 2024, compared with the overall average of 29 per cent. An average of roughly 7.5 withdrawals were made by TFSA holders aged 25 to 35, compared with the overall average of 5.6.

Your late 20s to early 40s are a period of heavy expenses in the form of home down payments and then mortgage costs, plus daycare and other child costs. TFSAs are clearly being tapped to help with these costs, and that’s fine as long as the foundational rule of saving and investing is followed.

If you need money in five years or less, keep it safely housed in a high interest savings account. The stock market is for money you won’t need for at least five and preferably 10 years. If the stock market crashes, the stocks or equity funds you bought at age 30 could still be underwater in three and even five years.

The overall average TFSA withdrawal amount per individual in 2024 was $12,292, which compares with an average contribution of $11,251. Younger TFSA holders typically have smaller accounts, which explains why their average withdrawal amounts were well below average. TFSA holders between 65 and 75 withdrew about $14,600 on average, while those aged 75 to 79 averaged about $16,000 and people aged 80 and up averaged $31,000.

These withdrawal numbers confirm the extreme value of TFSAs for retirees. One of the big complaints in retirement is paying tax on withdrawals from registered retirement savings plans and registered retirement income funds. Contributions made to RRSPs in your working years are tax-deductible, but this detail is often overlooked because it happened in the distant past.

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With TFSAs, every dollar withdrawn by a retiree or anyone else is a dollar of non-taxable income. You will not find many retirees saying they regret using TFSAs, whereas anti-RRSP sentiment is a thing.

Notable in the data on withdrawals by seniors is how infrequent they are. TFSA holders aged 65 and up averaged between 2.8 and four withdrawals per year, suggesting more stability in their finances than younger generations and less need to resort to TFSAs for emergencies.

Gen Z and millennials do deserve some credit for their commitment to TFSAs. They averaged 20 or so contributions in 2024, which is excellent. It’s much better to make small regular contributions than sit around waiting and hoping to add a big lump sum.

As for contributing the maximum to TFSAs, just 8.9 per cent of account holders managed this in 2024. Between 14 and 15 per cent of retirees maxed out, which is far from the best showing among all age groups.

That honour goes to the almost 20 per cent of TFSA holders aged 18 to 19 who contributed the maximum to their TFSAs. Kudos to them – and any parents who helped them out.

Rob Carrick is a personal finance expert and former Globe and Mail staff columnist.