The Critical 10 Years Before Retirement: What Most People Miss

Most Canadians spend decades saving for retirement without a real plan. Then, somewhere around age 55, a quiet alarm goes off. The finish line is visible. And suddenly the questions that were easy to defer become urgent.

How much do I actually need? Can I afford to stop working at 60? What order do I draw down my accounts? What happens to my taxes when I retire?

The decade between 55 and 65 is the most financially consequential of your life. The decisions you make — or fail to make — in this window will shape your retirement for 20 or 30 years. Getting them right matters enormously. Getting them wrong is expensive and often irreversible.

Mistake #1: Focusing on the Number Instead of the Income

Ask most people what they need to retire and they will give you a lump sum. "I need $1.5 million." But retirement does not run on a lump sum — it runs on monthly income. The real question is: what will your monthly after-tax income be, and is it enough to cover your life?

A $1.5 million RRSP sounds solid. But RRSP withdrawals are fully taxable. Depending on your province and other income, you could lose 30–45% to tax. The number that matters is what lands in your chequing account after CRA takes its share.

In the final decade before retirement, the work is to build a complete income map: CPP, OAS, pension (if any), RRSP/RRIF, TFSA, non-registered investments, rental income, part-time work. Every source, every amount, every tax treatment. That map tells you your real retirement income — and whether it is enough.

Mistake #2: Ignoring the RRSP Meltdown Opportunity

If you retire at 62 with a large RRSP and no other income, you have a small window — before CPP and OAS begin — where your taxable income is low. This is the ideal time to strategically draw down your RRSP at a lower tax rate.

This strategy, sometimes called the RRSP meltdown, can save tens of thousands in lifetime tax. But it requires planning. Most people simply leave the RRSP untouched until the government forces mandatory RRIF withdrawals at 71 — and then face a much higher tax bill because CPP and OAS are also flowing in.

The 10-year window before retirement is when you need to model this. Once CPP and OAS start, the opportunity shrinks dramatically.

Mistake #3: Not Planning for the Tax Hit on the RRIF Conversion

At age 71, your RRSP must convert to a RRIF, and mandatory minimum withdrawals begin. Those withdrawals are fully taxable income. If your RRIF is large, the mandatory withdrawals can push you into a high tax bracket — and potentially trigger OAS clawback if your income exceeds the threshold (approximately $93,000 in 2026).

The fix is to start drawing down the RRSP earlier, in lower-income years, so the balance at 71 is manageable. But this only works if you plan it — it does not happen by accident.

Mistake #4: Underestimating Healthcare and Longevity Costs

Canadian healthcare covers the basics, but retirement brings costs that provincial health plans do not: dental, vision, hearing aids, prescription drugs, private care, mobility aids, home modifications. These costs typically increase significantly in your late 70s and 80s.

Most retirement projections assume flat spending. In reality, spending tends to decline in the early retirement years (the "go-go" years), then increase sharply in later years as health costs rise. Plan for it explicitly.

Longevity is also underestimated. A healthy 65-year-old couple has roughly a 50% chance that at least one partner will live to 90. Your retirement plan needs to work to 90 or beyond — not just to 80.

Mistake #5: Carrying Too Much Risk (or Too Little)

In the years just before retirement — what planners call the "sequence of returns risk zone" — a major market downturn can permanently damage your retirement. If your portfolio drops 30% in year one of retirement and you are drawing income from it, you sell units at depressed prices and they never fully recover. This is different from a downturn at age 40, when you are still contributing and can ride it out.

But the opposite error — moving entirely to GICs and bonds because you are "almost retired" — is also dangerous. With retirements lasting 25–30 years, you need growth assets in your portfolio to keep pace with inflation. A portfolio that is too conservative will be eroded by inflation over time.

The answer is a thoughtful asset allocation that reflects both your risk tolerance and your income timeline — typically a bucket strategy or a glide path approach. This is not something to leave to a robo-advisor in the final decade.

What to Actually Do in the 10 Years Before Retirement

• Build a retirement income projection — every source, after tax, by year
• Model CPP timing scenarios — 60, 65, and 70 — and choose deliberately
• Plan your RRSP drawdown strategy before CPP and OAS kick in
• Maximize TFSA contributions every year — tax-free income in retirement is extremely valuable
• Review your asset allocation — adjust for sequence of returns risk without going too conservative
• Get a handle on your actual retirement expenses — not a guess, a real budget
• Understand your pension — if you have a defined benefit pension, model the commuted value vs. monthly income options carefully
• Review your insurance needs — life, disability, and critical illness coverage often needs adjustment as you approach retirement

The Alberta Context

Alberta professionals — particularly those in energy, engineering, and trades — often have irregular income histories, significant RRSP balances accumulated during high-earning years, and no provincial pension to fall back on. That combination makes pre-retirement planning both more complex and more valuable than in other provinces.

If you have spent years earning well and saving into an RRSP, the 10 years before retirement are when all of that effort either pays off or leaks away through poor tax planning. Do not leave it to chance.