Is retirement only 5 years away? Take these 5 steps now to help you enjoy your sunset years without outliving your savings

The final five years before you retire is when your financial journey really ramps up. According to Statistics Canada, the average retirement age as of 2024 is 65.3 (1). Once you reach your late 50s or early 60s, your top priority should be boosting your nest egg as much as possible.

For many people, this life stage also means their earnings have peaked, their children are self-sufficient and their mortgage is close to being paid off. Unfortunately, many older Canadians aren’t as fully prepared for retirement as they’d like to be. A 2025 survey by the Healthcare of Ontario Pension Plan (HOOPP) found 36% of adults aged 55 to 64 have $5,000 or less saved for their retirement, with only 21% having over $100,000 in savings (2).

If you’re approaching retirement and find yourself in a similar situation, here are five steps you can take to build your safety net over the next five years.

1. Max out your tax-advantaged accounts

If you’re close to retirement age and have a Registered Retirement Savings Plan (RRSP), you could take advantage of any carry-over room you may have from previous years. Any Canadian with an RRSP can accumulate unused contribution room year after year and carry it forward indefinitely — creating a significant opportunity for you to “catch up” and build your savings over the last five years of your career.

The 2025 RRSP contribution limit is 18% of your income up to $32,490, but many Canadians have far more room available because of unused carry-over from previous years. Check your Canada Revenue Agency (CRA) account for a detailed breakdown of how much contribution room you have. You may be in a better position than you realize to add significant savings to your RRSP, improving your chances to retire comfortably.

Sponsored

Smart investing starts here

Build your own investment portfolio with CIBC Investor’s Edge online and mobile trading platform. Enjoy low commissions on trades and special pricing for active traders, students and young investors.

Get started today

2. Maximize your government benefit plans before you collect

Only focusing on the size of your nest egg can make it easy to forget that you also need to plan for withdrawals. Many Canadians can use a simple rule of thumb, such as Bill Bengen’s 4% rule, to plan their retirement.

But as you approach this new phase of life where you’re withdrawing from a fixed amount, it’s critical to plan for how and when you withdraw your money. For example, if you wait until you turn 70 to collect Canada Pension Plan (CPP) benefits, you could significantly increase the monthly amount you receive. Even though you’re eligible to start collecting CPP at 60, the maximum monthly amount you could receive at that age is $880.45. However, if you can wait another 10 years, that amount more than doubles, up to $1,775.

The same principle applies to collecting Old Age Security (OAS). All Canadians are eligible to start collecting OAS at age 65, but if you wait to claim at age 70, your pension amount will increase 7.2% for every year you delay. This means by age 70, your monthly benefit will be 36% higher than if you started collecting at age 65. For context, $691 is the maximum monthly OAS amount you could receive at age 65, whereas if you wait until 70, that amount jumps to a maximum of $940 (4).

But only delay claiming CPP and OAS if you can comfortably cover your expenses in the meantime. According to the Government of Canada website, waiting past 70 won’t increase your benefits — and may even cause you to lose out on benefits you could have earned earlier — so make sure delaying won’t break the bank (5).

3. Stress-test your portfolio against market volatility and fluctuations

Many Canadians build their retirement plans around their investment portfolio — like how much their investments might grow each year and how much they can safely withdraw.

For example, some investors use ~8% as a long-term average return for the stock market, since major market indexes like the S&P/TSX Composite have shown similar average long-term returns (6).

At the same time, financial planners might suggest using a 4% withdrawal rate as a starting point when estimating your annual withdrawal amounts in retirement. However, keep in mind that these are long-term averages rather than guarantees, and it’s a good idea to stress-test your portfolio.

Actual market returns fluctuate annually, and your personal situation may require you to adjust your withdrawals based on other factors such as meeting the demands of inflation and cost of living increases. In addition, if you create a back-up budget or emergency fund, they can help you prepare for such market downturns and unexpected volatility to ensure your retirement savings last you through your sunset years.

Sponsored

Take control of your money with Monarch

Simplify your finances with Monarch, the all-in-one app designed to help you budget, track spending, and hit your goals faster. For a limited time, get 50% off your first year with code WISE50.

Start your free trial today

4. Ensure your assets are invested for optimal tax benefits

Five years before retirement is an ideal time to review how your savings are invested across different accounts and ensure your money is working for you as efficiently as possible. If you reach your late 50s or early 60s with the bulk of your savings in a single type of account — like a High-Interest Savings Account (HISA), for example — you could end up paying higher taxes later on, as the interest you earn in these accounts is considered income.

If you’ve saved a large amount in a HISA, you might instead choose to maximize your Tax-Free Savings Account (TFSA) contributions in the years leading up to retirement to boost tax-sheltered growth. TFSAs are super valuable in retirement, since you can withdraw any time without penalty and interest isn’t taxable, allowing you to build your savings tax-free. Switching over early can give you more room to grow your retirement savings.

5. Create a sustainable lifestyle plan

Remember that all your financial plans are ultimately dependent on your lifestyle. That means you need a lifestyle plan just as much as a withdrawal or tax plan. If you want to continue working side gigs or part-time hours, include that in your plan. If you want to spend more time travelling, remember to add that to your annual budget.

If you’re five years away from retirement, take a short break to test the retirement lifestyle and see what you enjoy doing with your leisure time. Breaking to adjust sets you up for retirement success without the stress so you can build a lifestyle plan to sustain you throughout your retirement.

Bottom line

The last five years before retirement present the best opportunity to strengthen your finances — from maximizing tax-advantaged accounts to optimizing how and when you start collecting your government benefits. With many Canadians approaching retirement less prepared than they’d hoped, taking the time to plan, stress-test and rebalance your finances can dramatically change how comfortably your savings can support you through your final decades. Applying thoughtful strategies today will ensure your savings will last you well past retirement.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Statistics Canada (1); Healthcare of Ontario Pension Plan (2); Government of Canada (3, 4, 5); S&P Global (6)