How Much XEQT Do I Need to Retire?
The answer is not a single number. It depends on how much income you want in retirement, what CPP and OAS will provide, and what withdrawal rate you plan to use. This guide walks through the calculation step by step for Canadian investors.
The framework
Your retirement number is the portfolio balance at which you can withdraw enough to cover your annual expenses indefinitely, without running out of money. There is no universal Canadian retirement number. There is only your number, based on your desired income, your government benefits, and your withdrawal strategy.
The calculation has three steps. First, determine how much annual income you need in retirement in today's dollars. Second, subtract the government benefits you will receive (CPP and OAS), which you do not need to fund from your portfolio. Third, determine how large a portfolio you need to generate the remaining income at a sustainable withdrawal rate. The result is your retirement number.
The most common retirement planning mistake is not saving too little. It is saving toward the wrong number because government benefits were not properly accounted for.
The 4% rule
The 4% rule is a guideline stating that a diversified portfolio can sustain annual withdrawals of 4% of its initial value, adjusted for inflation, for at least 30 years with high historical probability. A portfolio of 25 times your annual withdrawal amount (the inverse of 4%) is the target under this rule.
The rule originated from the Trinity Study, a 1998 analysis of US portfolio data from 1926 through 1995. It has been updated and debated extensively since. The key finding that survives scrutiny: a globally diversified equity portfolio (like XEQT) combined with some fixed income has historically sustained 30-year withdrawals at the 4% rate in the large majority of historical scenarios.
The 4% rule is a starting point, not a law. It was developed using historical US market data. Canada's CPP and OAS system meaningfully changes the calculation for Canadian retirees, typically in a favourable direction because those benefits reduce how much portfolio income is needed. For the full analysis of how the 4% rule applies specifically to Canadian investors, see our dedicated guide on the 4% rule and XEQT in Canada.
CPP and OAS: your built-in income
Most Canadian retirees receive two government benefits that dramatically reduce the portfolio size they need: the Canada Pension Plan (CPP) and Old Age Security (OAS). These are inflation-indexed lifetime income streams that reduce the pressure on your XEQT portfolio.
CPP is based on your working history and contributions. The maximum CPP monthly benefit at age 65 in 2026 is approximately $1,364 per month, or $16,375 per year. Most Canadians receive significantly less than the maximum because they did not contribute at maximum levels throughout their career. The average CPP recipient receives approximately $800 to $900 per month. Your personal estimated CPP amount is available in your My Service Canada Account.
OAS is available to most Canadians at age 65 who have lived in Canada for at least 10 years. The maximum OAS monthly benefit in 2026 is approximately $718 per month, or $8,618 per year. OAS is subject to a clawback (repayment) above a certain income threshold, currently approximately $90,997 for the 2026 tax year. Most retirees are not affected by the clawback.
| Scenario | Annual Target | CPP + OAS | From Portfolio | Portfolio Needed |
|---|---|---|---|---|
| Modest lifestyle | $45,000 | $14,000 | $31,000 | $775,000 |
| Comfortable | $65,000 | $14,000 | $51,000 | $1,275,000 |
| Comfortable (max CPP) | $65,000 | $25,000 | $40,000 | $1,000,000 |
| High income | $90,000 | $14,000 | $76,000 | $1,900,000 |
Real examples
Abstract frameworks become clearer with concrete examples. Here are three Canadian retirement scenarios using the 4% rule with realistic CPP and OAS assumptions.
Variables that change the number
The 4% rule at 25x is a starting point. Several factors can push your actual number higher or lower.
Retirement age. Retiring at 55 means a 35-plus-year withdrawal period. The 4% rule was developed for 30-year retirements. A longer withdrawal period calls for a more conservative withdrawal rate, perhaps 3.5%, which means a 28.6x portfolio target. Retiring at 70 allows a more aggressive rate because the remaining withdrawal period is shorter.
CPP deferral. Delaying CPP from 65 to 70 increases the monthly benefit by 42%. A Canadian who defers CPP to 70 receives substantially higher lifetime income from the government, which significantly reduces the portfolio required to fund the gap. This is one of the most powerful levers available to Canadian retirees and is often underutilized.
Spending variability. Most retirees spend more in early retirement (travel, activity) and less in later retirement (reduced mobility). Spending is not constant in retirement, which means the straight-line 4% withdrawal assumption is an approximation. A more conservative initial withdrawal that adjusts over time is often appropriate.
Asset allocation. The 4% rule was tested on portfolios with a meaningful bond component. A 100% equity portfolio like XEQT has higher expected returns but higher volatility and deeper drawdowns. Some research suggests 100% equity may actually be more sustainable than the classic 60/40 over long periods, but with higher psychological difficulty during downturns. For the full discussion, see the 4% rule guide.
Portfolio vs income thinking
Many Canadians think about retirement as a portfolio balance target. An equally useful frame is annual income: what income does your portfolio need to generate, and how does that compare to what you actually need to spend? The income frame makes CPP and OAS central rather than peripheral, which is where they belong for most Canadian retirees.
For the drawdown mechanics of how to actually generate income from an XEQT portfolio in retirement, which accounts to draw from and in which order, see the XEQT withdrawal strategy guide and the drawdown sequence article.
Sequence of returns risk
The order in which investment returns arrive matters enormously in the drawdown phase. Two portfolios with identical average annual returns can produce radically different outcomes depending on whether poor returns come early or late in retirement.
A retiree who experiences a 30% portfolio decline in the first two years of retirement is in a much worse position than one who experiences the same decline in year 15. The early decline forces the retiree to sell more shares at lower prices to fund the same level of income, depleting the portfolio faster than the math suggests.
This is one of the strongest arguments for holding some bonds or cash in early retirement, despite their lower expected return. The bond allocation reduces the depth of early-retirement drawdowns, which is precisely when sequence risk is most dangerous. Transitioning from XEQT toward XGRO or XBAL in the years approaching retirement is one practical response to this risk.
Calculate your personal number
The framework in this guide gives you the structure. The XEQT Retirement Calculator on this site lets you enter your specific numbers: current savings, monthly contribution, target income, current age, and retirement age. It applies the 4% rule adjusted for approximate CPP and OAS offsets and shows your projected portfolio versus your target at retirement, with a 5-year interval timeline.
For a more complete retirement income picture once you know your target portfolio, see the drawdown sequence guide, which covers which accounts to use first, how RRIF minimums affect the plan, and how to minimize lifetime tax in the withdrawal phase.
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