I'm 45. Should I Still Be 100% in XEQT?
With 15 to 20 years before a typical retirement, the honest answer is almost certainly yes. Here is the full framework for your specific situation.
The direct answer at 45
Yes. For the majority of 45-year-old Canadians, staying 100% in XEQT remains the correct allocation. The math supports it. The structure of Canadian retirement income supports it. The emotional pull toward de-risking, while understandable, is largely premature at this stage.
The caveat is the word "majority." There are situations where a 45-year-old should start thinking about their eventual glide path: if retirement is planned before 60, if the portfolio is very large relative to retirement income needs, if there is a specific upcoming large expense (a defined near-term goal, a child's education, a business purchase) that depends on the portfolio holding its value over a short window. For the investor with a standard retirement horizon of 60 to 65, planning to live into their mid-to-late eighties, the answer is still 100% equity.
This article walks through the complete framework: why 20 years is still a long runway, what sequence of returns risk actually is and when it begins to matter, how CPP and OAS change the analysis in ways that most investors miss, and what the cost of de-risking too early actually looks like in dollar terms. The goal is not to tell you what to feel about volatility. It is to give you the information to make the call with clear eyes.
Your actual investment horizon at 45
The framing of "I am 45, I have 20 years until retirement" treats the retirement date as the end of the investing story. It is not. For most Canadians at 45, the portfolio that is built over the next 20 years will need to fund another 20 to 30 years of retirement withdrawals. The total time horizon for money invested today may be 40 to 45 years.
According to Statistics Canada data, a Canadian woman who reaches age 65 today has a median life expectancy of approximately 88. A Canadian man has a median life expectancy to approximately 85. For a couple both currently aged 45, the statistical probability that at least one partner lives past 90 is better than 50%. These are not pessimistic projections. They are the median outcome, meaning half of people live even longer.
Money invested today at 45 may be supporting retirement withdrawals in 2060 and beyond. That is not a 20-year investment. It is a 35-to-40-year investment. And over any 35-to-40-year window in modern financial history, a diversified equity portfolio has substantially outperformed bonds, by margins that cannot be bridged by the incremental safety of a mixed allocation during the accumulation years.
The practical implication is this: de-risking at 45 does not just affect the 20 years until retirement. It affects the entire 40-year span over which the portfolio operates. A 45-year-old who moves to a 60/40 portfolio is accepting bond-like returns on 40% of their assets for a period that extends well into their eighties. That is not a conservative choice. It is a choice with real long-term costs that are easy to underestimate because they compound quietly in the background.
Sequence of returns risk: when does it become your problem?
Sequence of returns risk is the specific risk that poor investment returns in the years immediately surrounding your retirement date cause permanent damage to your portfolio's ability to support withdrawals. It is real, it is well-documented, and it is also specifically relevant within a window of approximately 5 to 10 years before and after retirement. At 45, you are not in that window yet.
Here is why it matters: once you begin drawing down a portfolio, a bad market early in retirement forces you to sell more units at depressed prices to fund the same income. Those units are gone. When the market recovers, you have fewer units to participate in the recovery. This is mathematically different from holding through a bear market during accumulation, when you are still buying units at depressed prices. The asymmetry between accumulation and distribution phases is the core of why sequence risk matters in retirement and does not matter in the same way before it.
The 2008-2009 financial crisis is the canonical stress test. A broad equity index fell approximately 45% from peak to trough. An investor who retired at the beginning of 2008 with a 100% equity portfolio and started withdrawing 4% of the initial portfolio in year one faced a genuinely damaging sequence: their portfolio fell to roughly half its value in the first 18 months while withdrawals continued. Recovery took five to six years, and some investors in that exact window exhausted their portfolios prematurely.
A 45-year-old in 2008 faced the same 45% decline and then watched their portfolio recover fully by 2013 and reach new highs shortly after. By 2026 it had roughly quadrupled from the 2009 trough. For the 45-year-old, 2008 was painful and ultimately irrelevant to their retirement outcome. For the 65-year-old who retired in January 2008, it was catastrophic. Same market. Entirely different impact. The difference is the withdrawal phase.
The XEQT drawdown in 2020, during the COVID crash, was approximately 30%. Recovery to pre-crash levels took under six months. For a 45-year-old holding through that period, the experience was a temporary paper loss. Investors who held saw no lasting damage. For context on how XEQT behaves in downturns and what to do when they happen, see what to do when XEQT drops 20%.
CPP and OAS are your built-in bond allocation
The most important insight in this entire article, and the one most investors at 45 have not fully internalized: CPP and OAS are not supplements to your investment portfolio. They are the inflation-indexed, government-guaranteed, longevity-protected component of your retirement income. They function, economically, as an enormous bond position that you do not hold inside your brokerage account.
The maximum CPP retirement benefit at age 65 in 2026 is approximately $1,433 per month, or $17,196 per year. This payment is indexed to the Consumer Price Index and paid for life. Old Age Security, for a Canadian resident who qualifies for the full benefit at 65, pays approximately $727 per month, or $8,724 per year. Combined, maximum CPP and OAS provide $2,160 per month, or $25,920 per year, of inflation-indexed guaranteed income for life.
To appreciate what this represents in portfolio terms, consider the capitalization approach: if you needed to generate $25,920 per year of inflation-adjusted income from a portfolio using a 4% safe withdrawal rate, you would need approximately $648,000 in bonds or bond-equivalent assets. A 45-year-old with a solid CPP contribution history, who will eventually receive something close to the maximum benefit, effectively has a $600,000-plus bond position embedded in the Canadian pension system that does not appear on their brokerage statement.
The conclusion is significant: a 45-year-old who holds 100% XEQT in their TFSA and RRSP is not actually holding 100% equity in their total retirement picture. Their combined retirement assets, including the net present value of CPP and OAS, are meaningfully more balanced than the brokerage account alone suggests. This is one of the strongest arguments for maintaining a high equity allocation in the investment portfolio itself: the "bond allocation" is already there, through the pension system, whether you want it or not.
Most Canadians receive less than the maximum CPP. A 45-year-old who has contributed at average levels might realistically project 60% to 75% of the maximum benefit: roughly $860 to $1,075 per month. Even at 70% of maximum, CPP plus OAS still provides approximately $1,730 to $1,800 per month of guaranteed income, equivalent in capitalized terms to a $500,000 to $550,000 bond portfolio. The investment portfolio can afford to be 100% equity against this foundation.
You can check your projected CPP benefit at any time through My Service Canada Account. The projected amount shown assumes you continue working and contributing at your current level until age 65. If you plan to retire early, the actual benefit will be lower. Factor this into your retirement income planning, not as a reason to de-risk at 45, but as an input to your target portfolio size.
RRSP meltdown: start thinking about it now
At 45, RRSP-to-RRIF conversion at age 71 is 26 years away. That is far enough off that it does not require urgent action, but close enough that the broad shape of the problem should be on your radar. The reason: a large RRSP, left to grow untouched until age 71 and then forced into mandatory minimum withdrawals, can create a tax outcome that is worse than if the RRSP had been managed more gradually along the way.
The mechanics are straightforward. At age 71, a RRSP must be converted to a RRIF. The RRIF then requires minimum annual withdrawals calculated as a percentage of the account balance, starting at approximately 5.28% at age 72 and rising with age. For an investor who has grown a $600,000 RRSP to $1.5 million by age 71, the mandatory first-year RRIF withdrawal is approximately $79,200. Added to CPP and OAS income, total income in the first year of RRIF withdrawals might be $110,000 or more, pushing a significant portion into the 43% bracket and triggering partial OAS clawback above the $90,997 threshold (2026 levels).
The strategy for managing this is called "RRSP meltdown": making intentional RRSP withdrawals in years when your income is low, typically in the gap between early retirement and age 65 when CPP and OAS begin. The idea is to draw down the RRSP in smaller increments, paying tax at the lower marginal rates available during lower-income years, rather than paying at the higher rates forced by mandatory RRIF minimums after 71.
At 45, you do not need to implement this strategy. You need to be aware of it so that your RRSP contribution decisions over the next two decades are made with the eventual drawdown in mind. For investors with very large RRSP balances, the TFSA may become the preferred vehicle for new contributions sooner than income-based analysis alone would suggest. For a complete treatment of withdrawal sequencing, see XEQT withdrawal order and drawdown sequencing.
The case for staying 100% equity at 45
The financial case for maintaining 100% equity at 45 is built on three pillars: time, structure, and cost. Each one independently supports the decision. Together they make it close to compelling for most investors in this situation.
Time: twenty years is a long runway. No bear market in the history of developed equity markets has taken longer than a decade to recover. The 2000-2003 dot-com collapse, the deepest and most prolonged decline in modern Canadian investing history, saw the S&P/TSX Composite lose approximately 50% over three years and take roughly five to six years to fully recover. An investor at 45 in 2000 had recovered all losses before turning 55 and went on to significant new highs well before retirement. The time horizon is the single most important variable, and at 45, it is still comfortably long.
Structure: as described above, the Canadian pension system provides a large, guaranteed, inflation-indexed bond equivalent. An investor at 45 who holds 100% XEQT in their registered accounts is not holding 100% equity in their total retirement picture. They are supplementing a substantial guaranteed income floor with a high-growth equity component. This is not reckless. It is, structurally, a reasonable allocation for their actual total financial position.
Cost: de-risking has a price. Consider a 45-year-old with a $400,000 portfolio. If that portfolio earns 7% per year for 20 years, it reaches approximately $1.55 million at retirement. If it earns 5% per year, the result is approximately $1.06 million. The cost of moving from 100% equity to a more conservative allocation that reduces expected returns from 7% to 5% is approximately $490,000 over 20 years. That is not a rounding error. It is a difference between a fully funded comfortable retirement and a constrained one. The 2 percentage point reduction in expected return is a reasonable estimate of the cost of a material shift from XEQT to a balanced allocation.
The academic literature is consistent on this point. Research by William Bernstein, Wade Pfau, and others on long-term optimal equity allocations consistently finds that investors with long time horizons incur real costs from premature de-risking that are rarely offset by the volatility reduction achieved. The SPIVA Canada scorecard, which tracks active fund performance against benchmarks, consistently finds that diversified equity strategies outperform more conservative allocations over long periods after fees: another argument for letting XEQT run.
What the numbers look like at 45
The projections below are illustrative. They use a 7% net annual return for 100% XEQT and a 5.5% net return for a transition to XGRO at 45 (XGRO is 80/20 equity/bond with an MER of 0.20%). Neither is a forecast. Both are reasonable long-run assumptions for planning purposes.
| Scenario | Allocation from age 45 | Portfolio at 65 | Income funded at 4% SWR |
|---|---|---|---|
| Stay in XEQT (100% equity) | 7% assumed return | $430,000 new contributions only | $17,200/yr from portfolio |
| Add starting balance of $300K | 7% assumed return | $1,590,000 at 65 | $63,600/yr from portfolio |
| Transition to XGRO at 45 | 5.5% assumed return | $382,000 new contributions only | $15,280/yr from portfolio |
| XGRO with $300K starting balance | 5.5% assumed return | $1,370,000 at 65 | $54,800/yr from portfolio |
The table illustrates the cost of de-risking in plain terms. With a $300,000 starting balance, the XEQT scenario produces approximately $220,000 more at retirement than the XGRO scenario. That difference funds an additional $8,800 per year in retirement income. It is the cost of early de-risking made concrete.
When to start the glide path
The glide path is the gradual reduction in equity allocation as retirement approaches. It exists to protect against sequence of returns risk in the critical years immediately before and after you stop working. The question at 45 is not whether to do it. It is when to start it.
For an investor planning to retire at 65, the conventional guidance from academic research on retirement income (including work by Wade Pfau and Michael Kitces) suggests beginning to de-risk meaningfully around 5 to 10 years before the target retirement date. For a 65-year-old retirement target, that means beginning the glide path between ages 55 and 60. At 45, you are still 10 to 15 years from that window.
A practical approach for a 45-year-old: stay in 100% XEQT until 52 or 53. At that point, begin to think about building a 1-to-2-year cash and short-term bond buffer that can fund withdrawals in the first years of retirement without needing to sell equity. Between 55 and 60, consider a gradual shift: perhaps 80% XEQT and 20% XGRO (which is itself 80% equity), or a direct allocation to XGRO for new contributions while existing XEQT continues to compound. By 60 to 62, a more deliberate transition begins.
The key insight is that this glide path does not start at 45. Starting it now, in response to a general feeling that "I should be getting more conservative," is a behaviour driven by emotion rather than financial logic. The appropriate response to feeling anxious about market volatility at 45 is not to de-risk. It is to understand the actual numbers, which this article has attempted to provide, and to confirm that the long-term plan remains sound. Then hold XEQT.
The wrong reasons to de-risk at 45
Every investor who de-risks too early has a reason that felt compelling at the time. Most of those reasons, examined carefully, do not hold up.
Every year a 45-year-old holds bonds instead of equities, they pay approximately 1.5 to 2.5 percentage points of expected annual return for the privilege of reduced volatility they will not need to act on for another 20 years.
A practical plan for the next decade
The decade from 45 to 55 is, for many Canadians, the highest-income decade of their careers. It is also the decade in which the most consequential investment decisions are made. Getting the framework right now produces better outcomes than any tactical adjustment made later.
The next article in this series covers investing at 50, where the conversation materially shifts. At 50, the retirement window is 15 years away, sequence risk enters the planning horizon in a real way, and the glide path from XEQT begins to be a concrete question rather than a future consideration. The framework for that transition, the timing, the mechanics, and the tax implications, is covered in full in that article.
Fifteen to twenty years of compounding still ahead. Stay the course.
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