The $0 Retirement Plan Most Canadians Overlook (It’s Boring and It Works)

The most effective retirement plan most​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ Canadians have access to costs $0 to set up, requires no annual decisions, and fits inside a single brokerage account. It is not exciting. Your advisor will probably not recommend it. Your brother-in-law has never mentioned it at a dinner party. It is XEQT, held consistently across registered accounts, withdrawn in a sensible order. That is the whole plan. And the reason it works is precisely because there is nothing to tinker with.

Why Canadians Overcomplicate Retirement (And What It Costs Them)

There is a deeply embedded belief in​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ Canadian financial culture that complexity signals competence. If your retirement strategy can be explained in one sentence, it must be naive. If you are not splitting holdings across account types, tilting toward value, building a GIC ladder for your fixed income, and adjusting your equity allocation as you approach retirement, you must be leaving something on the table. This belief is expensive.

Behavioural research consistently shows​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ that the gap between what an investment earns and what an investor earns is not caused by bad products. It is caused by bad behaviour driven by complexity. Investors with multi-fund portfolios face a recurring sequence of decisions: when to rebalance, which fund to sell first, whether to switch from bond ETFs to GICs when rates rise, how to adjust the mix as they near 65. Each decision is an opportunity to make a mistake. Each market downturn is an invitation to second-guess the allocation. Research covered at the Canadian Portfolio Manager blog has documented how investors who manually rebalance frequently underperform those who leave their allocations alone, not because the strategy is wrong, but because they execute it emotionally rather than mechanically.

The drag from this kind of tinkering​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ is real. Research on Canadian DIY investors suggests that behavioural errors, including delayed rebalancing, panic selling, chasing allocation changes after bad quarters, and over-trading inside RRSPs and TFSAs, cost investors meaningfully more each year than the MER difference between a simple all-in-one ETF and a complex multi-fund portfolio. You are not losing to fees. You are losing to yourself.

The retirement planning industry sells​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ complexity because complexity is billable. Simplicity is not. But the data keeps pointing in the same direction: fewer decisions, held over longer periods, produce better outcomes for most investors than sophisticated strategies that require ongoing maintenance.

What XEQT Actually Does (And Why It Is Enough)

XEQT is a fund of funds. It holds four​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ underlying iShares ETFs: XUU for US equities, XIC for Canadian equities, XEF for international developed markets, and XEC for emerging markets. The current target allocation sits at roughly 45% US, 25% Canadian, 25% international developed, and 5% emerging markets. The management expense ratio is 0.20% per year. That fee covers everything, including the internal rebalancing that happens continuously without you doing anything.

That last part is worth pausing on.​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ When you hold XEQT, BlackRock’s portfolio team manages the drift between those four underlying funds on your behalf. When US equities surge and push the weighting out of alignment, the fund is corrected at the institutional level. You never see a transaction in your brokerage account. You never have to decide whether to sell your winners to top up your laggards. You never face the rebalancing question at all, because it has already been answered before you open the app.

For retirement planning specifically, this matters because it removes an entire class of decision-making from your life. A Canadian retiree with a three or four-fund portfolio needs to decide not just how to withdraw, but how to rebalance as withdrawals pull the allocation off course. With XEQT, that problem does not exist. You sell units. The fund takes care of everything else. If you want a deeper look at how XEQT is constructed and what is inside it, the complete XEQT guide covers the mechanics in detail.

The Math on Simplicity: Fewer Decisions, Better Outcomes

The 4% withdrawal rule, originating​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ from William Bengen’s 1994 research on 30-year retirement periods, assumes you do not sabotage your portfolio during a downturn. That assumption is harder to satisfy than it sounds. Safe withdrawal rate research covering Canadian retirees has shown that sequence-of-returns risk, the danger of a bad early market period depleting your portfolio before it recovers, is frequently made worse by active management decisions. A retiree who shifts to a more conservative allocation after a sharp early drop locks in losses and misses the recovery. A retiree who holds XEQT and keeps withdrawing a consistent amount does not face that temptation, because there is no allocation to change.

Safe withdrawal rate research for Canadians​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ suggests that most retirees can sustain a 4% initial withdrawal rate on a broadly diversified, low-cost equity portfolio without needing buffer buckets, bond tents, or multi-asset complexity. A Canadian couple who both have CPP and OAS coming in their mid-to-late 60s needs their investment portfolio to cover a smaller income gap than US-centric retirement research assumes, because CPP and OAS together provide a meaningful government income floor depending on contribution history and deferral age. That reduces the portfolio withdrawal burden considerably, which is exactly the kind of Canadian context that makes the 4% withdrawal rate more achievable here than US studies alone would suggest.

The bond ETF question is also worth​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ addressing directly. Between 2022 and 2024, Canadian bond ETFs delivered painful losses as interest rates rose sharply. GIC ladders outperformed broadly during this period. As the Canadian Portfolio Manager blog documented in detail, bond ETFs lost over 10% of their value in the first four months of 2022 alone as yields rose, while GICs with comparable maturities held their value. Investors holding balanced ETFs watched what they thought was their safe allocation drop in value alongside equities. XEQT holders did not have a bond allocation to worry about. The fund is 100% equities by design, which means no one holding XEQT had to make the stressful decision to rotate from bond ETFs into GICs at the worst possible moment. That choice was simply not available, and the absence of that choice was, for most investors, a feature rather than a flaw.

How XEQT Works Across RRSP, TFSA, and Non-Registered Accounts

A common advisor talking point is that​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ a sophisticated retirement portfolio requires different holdings in different accounts: bonds in the RRSP for tax efficiency, Canadian equities in the non-registered account for the dividend tax credit, US equities in the RRSP for withholding tax treatment. This is technically true for someone optimizing their marginal dollars at very large balances. It is practically irrelevant for most Canadians, and it comes with a serious hidden cost: the complexity of maintaining multiple separate fund positions across several accounts.

XEQT works well in all three account​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ types. There is a meaningful withholding tax difference worth understanding: in an RRSP, US dividends flow through to XEQT without the 15% withholding tax that applies in a TFSA or non-registered account, thanks to the Canada-US tax treaty. Over long periods and large balances, this is a real but modest drag in the TFSA. CRA-confirmed rules place RRSP as the most tax-efficient home for US-heavy funds, followed by TFSA, followed by non-registered accounts. But the difference in total return between holding XEQT in a TFSA versus an RRSP is far smaller than the difference between holding XEQT and holding a typical bank mutual fund with a 2% MER. Do not let the pursuit of marginal account-level optimization distract you from the much larger decisions.

For most Canadians building toward retirement,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ a sound approach is to maximize RRSP contributions, maximize TFSA contributions, hold XEQT in both, and if savings exceed registered room, hold XEQT in a non-registered account. You do not need different securities in different accounts to have a well-structured retirement portfolio. You need adequate savings and low fees, and XEQT handles the latter.

The OAS Clawback and Why a Simple Plan Helps You Hit Your Number

OAS begins to be clawed back when your​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ individual net income exceeds approximately $91,000 (the exact threshold adjusts upward each year for inflation). For a Canadian couple targeting a comfortable retirement, the practical goal becomes keeping each spouse’s taxable income below this threshold, coordinating withdrawals so neither spouse triggers the reduction. This is the kind of planning that sounds complicated but is actually simplified by a single-ETF approach.

When your entire portfolio is XEQT held​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ across a small number of accounts, the withdrawal math is straightforward. You decide how much income you need. You subtract CPP and OAS. The remainder comes from portfolio withdrawals, drawn from whichever account makes the most tax sense that year. Withdrawal sequencing research covering Canadian retirees consistently points to drawing down RRSP balances strategically before age 71, when mandatory conversion to a RRIF forces minimum withdrawals that can push income above the OAS clawback threshold. The RRSP meltdown strategy, where you make deliberate RRSP withdrawals in your 60s to avoid large forced RRIF withdrawals later, is far easier to execute when you have one fund across two or three accounts than when you have eight funds with different tax characters spread across the same accounts.

The spouse with the larger RRSP should consider drawing it down deliberately in lower-income years before full pension income begins. Pension income splitting, available on RRIF withdrawals once you convert, gives couples additional flexibility. None of this requires a different investment product. It just requires knowing what you own, which is one fund, and managing when you sell it. For a detailed look at turning a single-ETF portfolio into a retirement income stream, the article on what XEQT fees actually cost you over a retirement puts the fee math into sharp relief.

A boring withdrawal plan from a boring​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ portfolio beats an optimized withdrawal plan from a complicated portfolio that you are too confused to execute correctly. The value of simplicity is not just theoretical. It shows up in what you actually do when the market drops sharply in October of your first year of retirement.

What Boring and It Works Actually Means in Canadian Retirement Math

XEQT does not need to beat the market​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ to fund your retirement. It needs to deliver the market return, minus 0.20% in fees, which is essentially what a passively managed index ETF does by design. That is the entire value proposition, and it is more than sufficient for most Canadians.

The comparison to bank mutual funds​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ is worth making explicit. The average Canadian equity mutual fund charges between 1.5% and 2.5% in management fees annually. On a $500,000 retirement portfolio, that is $7,500 to $12,500 per year in fees before your portfolio earns a dollar of real return for you. XEQT at 0.20% costs $1,000 on the same balance. Over a long retirement, at a modest portfolio return, the compounding difference between a 2% fee product and a 0.20% fee product is significant enough that most Canadian fee research leads with it as the single most impactful variable in retirement outcomes, ahead of asset allocation, withdrawal sequencing, and virtually every other factor investors spend time optimizing.

None of this requires market timing,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ sector rotation, or the ability to identify the next great stock. It requires buying XEQT regularly, holding it in registered accounts, and withdrawing it sensibly when you retire. That is not a dumbed-down strategy. It is a strategy that removes the primary source of portfolio damage, which is the investor’s own behaviour under stress.

When Boring Stops Working (And It Is Rarer Than You Think)

There are situations where XEQT alone​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ is genuinely insufficient as a retirement strategy. Defined benefit pension holders may need to think carefully about their overall equity exposure, since a guaranteed pension income already functions like a bond-heavy allocation on the income side. A federal government employee receiving a DB pension that covers a large portion of pre-retirement income does not need 100% equity exposure in their personal portfolio in the same way a self-employed person with no pension does.

Annuity purchases can also make sense​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ in specific circumstances, particularly for retirees who want to ensure a base level of income regardless of what markets do in their 80s and 90s. Estate planning situations involving substantial inherited wealth, business assets, or trust structures may require more nuanced portfolio design. These cases are real, but they describe a relatively small proportion of Canadian retirees. For everyone with a standard employment history, TFSA and RRSP savings, and no unusual estate complexity, a single-fund approach covers the investment side of retirement planning entirely.

For everyone else, the decision to build​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ a complex multi-fund portfolio usually comes from a desire to feel like you are doing something, not from a genuine analysis showing that complexity adds return. Research consistently shows the opposite. The question worth asking before you build a four-account, six-fund retirement structure is whether you will actually execute it correctly over 30 years, or quietly drift away from the plan the first time markets get difficult. Most people answer honestly when they think it through.

Simplicity is not a consolation prize​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌‌​‌‌‌‌​​‍‌‌​‌​‌​​​‌​‌​‌‌​‌​‌‌‌‌​​‌​‌‌​‌​ for people who do not want to do the work. It is the destination that rigorous research keeps pointing toward. The most sophisticated retirement plans are the ones you actually follow.

Frequently Asked Questions

Can XEQT really work as a complete retirement portfolio? For the majority of Canadian retirees, yes. XEQT provides global equity diversification across roughly 4,000 underlying holdings at a 0.20% MER, with automatic internal rebalancing handled by BlackRock. Combined with CPP, OAS, and a sensible withdrawal sequence from registered accounts, it covers everything most retirement strategies require without the complexity that causes investors to make costly behavioural mistakes. Those with defined benefit pensions or complex estate situations may need additional planning.

Should I hold different investments in my RRSP and TFSA? The tax-optimal answer is technically yes in specific high-balance situations, because XEQT’s US dividend withholding tax is eliminated in an RRSP but not in a TFSA. In practice, for most Canadians, holding XEQT in both accounts is far better than maintaining a more complex allocation across both that gets executed poorly. The withholding tax drag in a TFSA is real but modest, and it does not approach the cost of behavioural errors from managing a more complicated structure.

What is the OAS clawback and how does a single-fund portfolio help manage it? OAS begins to be reduced when individual net income exceeds approximately $91,000, with the threshold adjusted upward each year for inflation. A single-fund portfolio makes withdrawal planning more straightforward because you are always selling the same thing, making it easier to project annual taxable income and coordinate withdrawals between spouses to keep each person below the clawback threshold. Strategic RRSP drawdowns in your early 60s, before CPP and OAS kick in fully, can reduce the RRIF balance that later generates large forced withdrawals.

Is the 4% withdrawal rate safe with a 100% equity fund like XEQT? Research on Canadian safe withdrawal rates suggests that a 4% initial withdrawal rate, adjusted for inflation annually, is sustainable over a 30-year retirement period with a broadly diversified equity portfolio. Canadian retirees have an additional structural advantage: CPP and OAS create a government income floor that reduces the portfolio withdrawal burden relative to what US-based studies assume. For early retirees planning a 40 to 50-year retirement, a more conservative initial rate in the range of 3.0% to 3.5% is worth considering, as extended timelines increase exposure to a damaging early sequence of returns.