I'm 55. Retirement Is 10 Years Away. What Does My XEQT Plan Look Like?
The glide path begins here. Not because markets are dangerous, but because the cost of a bad sequence in the next decade is finally real enough to manage deliberately.
What actually changes at 55
The honest answer is: not that much changes in the mechanics of your investment. XEQT is still a well-diversified, low-cost, globally spread equity portfolio. It does not suddenly become the wrong fund at your 55th birthday. What changes is the context around it.
Four things shift in material ways when you reach your mid-fifties. First, the window for recovering from a significant bear market before retirement narrows from "many decades" to "a single decade." That is still meaningful recovery time, but it is no longer so long that sequence risk can be dismissed. Second, the CPP and OAS system starts to demand a decision: when you take government benefits is the single highest-stakes financial choice you will make over the next fifteen years, and it requires modelling now rather than later. Third, the RRSP-to-RRIF conversion at age 71 is close enough that the meltdown window is genuinely open and worth acting on. Fourth, the gap between your current lifestyle spending and your projected retirement income is now specific enough to close deliberately.
None of these four things require panic. A 2023 Statistics Canada study found that Canadians aged 55 to 64 have a median financial wealth of approximately $120,000, excluding defined benefit pension entitlements and home equity. Many people feel further behind than they are. The combination of government benefits, home equity optionality, and a modest but growing portfolio puts more people in a manageable position than the anxiety industry would have you believe. What the data also shows is that the choices made in this decade matter enormously, and making them deliberately puts you in a very different place at 65 than letting them drift.
Before optimizing anything, build a one-page retirement income picture. List every income source: CPP (at 60, 65, and 70), OAS, any workplace pension, rental income, and expected portfolio withdrawals. The gap between that total and your monthly budget is the number your portfolio actually needs to fill. It is almost always smaller than people expect once government income is included.
Sequence of returns risk: now it matters
Sequence of returns risk is the danger that markets fall at exactly the wrong time: in the years immediately before or after you stop earning. It is one of the most misunderstood concepts in retirement planning, and one of the most financially consequential.
Here is the mechanism in plain terms. Suppose you arrive at retirement with a $700,000 portfolio. In your first year, markets fall 35%. Your portfolio is now worth $455,000. You draw $30,000 to live on, leaving $425,000. Over the next three years, markets recover fully and your portfolio earns back those 35 percentage points. But here is the problem: you are earning those percentage points on $425,000, not $700,000. You are not back to $700,000. You are at roughly $573,000. The withdrawals you took during the downturn permanently reduced the base on which the recovery compounded. A lucky investor who retired in a good year and faced the same crash three years later would be in a substantially better position, even with identical average returns over the decade.
This is why sequence risk at 55 is worth taking seriously. You have roughly a decade before retirement. A crash now gives you time to recover before you stop contributing. A crash at 62 is more dangerous. The solution is not to abandon equity. Moving entirely to bonds or GICs at 55 would cost you significantly in expected long-term return and is itself a form of risk: the risk of running out of money slowly rather than quickly. The correct response is structural: a modest glide toward lower volatility, combined with a cash buffer that removes the need to sell equity during a downturn.
The takeaway from this chart is not that you should be scared. It is that building structural protection against the worst-case scenario costs very little if markets are good, and protects a great deal if they are not. A 12 to 18 month cash buffer and a gradual shift from XEQT to XGRO is cheap insurance with meaningful impact in the scenarios that matter most.
The CPP timing decision
If you are 55 and have been contributing to CPP for a full career, the single most financially consequential decision you will make over the next fifteen years is when you start taking CPP. Not asset allocation. Not fund selection. CPP timing.
Here are the approximate numbers as of 2026. You can begin CPP as early as age 60, but it is reduced by 0.6% for every month before age 65. Taking it at 60 means a 36% reduction: roughly $859 per month rather than the maximum $1,433 per month at 65. For every year you defer beyond 65, CPP increases by 8.4%. Deferring from 65 to 70 increases the benefit by 42%: approximately $2,034 per month. This is a fully indexed, government-guaranteed lifetime payment. There is no investment available to Canadians that offers a comparable guaranteed return on deferred capital.
The break-even analysis is straightforward. If you take CPP at 65 instead of 60, you give up approximately five years of payments ($86,000 in total) in exchange for receiving $574 per month more for the rest of your life. The break-even age is approximately 77. If you defer from 65 to 70, the break-even versus 65 is approximately 83. Any Canadian who lives past 83 and deferred to 70 comes out ahead, sometimes by $100,000 or more in lifetime benefits. Given that life expectancy at 65 in Canada is currently 21 years for men and 24 years for women (Statistics Canada, 2023), deferring to 70 is the mathematically dominant strategy for most people in reasonable health.
| CPP Start Age | Monthly Benefit (approx.) | Annual Benefit | Break-even vs. Age 65 |
|---|---|---|---|
| Age 60 | $859 | $10,308 | N/A (always worse if living past 77) |
| Age 65 | $1,433 | $17,196 | Baseline |
| Age 70 | $2,034 | $24,408 | Age ~83 |
What does this mean in practical terms at 55? It means that the planning question for CPP is not just "when do I take it" but "how do I fund the gap." If you want to defer CPP to 70, you need income from somewhere between retirement and age 70. That somewhere is almost always a combination of RRSP withdrawals, TFSA withdrawals, and investment income. Planning for this bridge is the work of the next decade, and it starts by modelling your numbers now, not at 64. Service Canada's My Account provides a personalized CPP statement of contributions and projected benefit amounts at various ages.
Deferring CPP from 65 to 70 increases the benefit by 42% and that increase is permanent, inflation-indexed, and guaranteed by the federal government. There is no ETF, no GIC, and no annuity that offers a comparable guaranteed return on the deferred amount for those who live into their mid-80s and beyond.
The glide path: XEQT to XGRO
XEQT is 100% global equity, roughly 45% Canadian, 55% international (with significant US weight). It is an excellent fund. But for someone retiring in ten years, a gradual reduction in equity volatility is sensible, and the question is how to do it without surrendering too much long-term return.
The answer for most 55-year-olds is XGRO, not XBAL and certainly not bonds. Here is why the distinction matters. XGRO holds 80% equity and 20% fixed income. XBAL holds 60% equity and 40% fixed income. The difference in expected return between these two funds over ten years is material. BlackRock's own historical data shows XGRO outperforming XBAL by approximately 1 to 1.5 percentage points annually over long periods. On a $600,000 portfolio over ten years, that gap compounds to a meaningful six-figure difference in retirement assets. Moving to XBAL at 55 trades real expected return for incremental volatility reduction at a stage when you still have a full decade of compounding left.
The right glide path for most 55-year-olds looks like this. Between 55 and 57, continue directing new contributions to XEQT. At 57, begin redirecting new contributions to XGRO instead. As XGRO grows to represent 20 to 30 percent of your total equity holdings, do one deliberate rebalancing event: sell some XEQT and buy XGRO to bring the overall portfolio to roughly 80/20. At 60 to 62, evaluate whether a further shift toward XBAL is warranted based on your income picture, health, and anxiety tolerance. There is no single right answer, but the process should be deliberate, not reactive.
One practical note on execution. Selling XEQT to buy XGRO is a taxable event in a non-registered account. Do this kind of rebalancing preferentially inside your RRSP or TFSA where the switch is tax-free. In a non-registered account, coordinate with your accountant to ensure the timing minimizes capital gains impact. The fund companies make this simple: XEQT and XGRO are both iShares products trading on the TSX, and the switch is a straightforward sell/buy.
For a fuller comparison of what distinguishes XEQT from XGRO, including historical performance and the exact fixed income composition of XGRO, see the XEQT vs XGRO comparison guide.
The RRSP meltdown strategy
Here is a problem many 55-year-olds do not see coming. By age 71, every Canadian must convert their RRSP into a RRIF. At that point, mandatory minimum withdrawals begin and cannot be stopped. For those who have saved diligently, these forced withdrawals can push income into bracket territory that claws back OAS benefits.
The mandatory RRIF minimum withdrawal at age 71 is 5.28% of the RRIF balance. It increases each year. On a $600,000 RRIF, that is approximately $31,680 in year one. On top of CPP at $24,408 per year (if deferred to 70) and OAS at $8,724 per year (at 65), total income is already $64,812 before any additional drawdown. With RRIF minimums growing year over year, it does not take long before income crosses $86,912, which is the 2026 OAS clawback threshold. Once past that threshold, OAS is reduced by 15 cents per dollar, and the effective marginal tax rate on that income is severe.
The solution is to melt down the RRSP deliberately before age 71, in the lower-income years between 55 and 71. The strategy works like this: in any year where your income is below roughly $100,000, make a voluntary RRSP withdrawal to fill up the tax bracket. Pay income tax at the current marginal rate, which is almost certainly lower than the rate you would face at 71 when government income is also flowing. The withdrawn funds can be reinvested in a TFSA or non-registered account where they grow and are later withdrawn with no, or reduced, tax impact.
For someone who takes an early retirement at 60 and defers CPP to 70, the decade from 60 to 70 is a golden window for RRSP meltdown. Income in those years may be quite low, making the effective tax rate on RRSP withdrawals modest. The tax savings over a lifetime can be substantial. For a full walkthrough of the RRSP-to-RRIF mechanics and optimal withdrawal sequencing, see the RRSP to RRIF conversion guide.
If you arrive at 71 with a $700,000+ RRSP, you may have very limited options to avoid OAS clawback. The time to prevent this is now, not at 70. A $50,000 voluntary RRSP withdrawal at age 58 in a low-income year costs roughly $12,500 in federal and provincial tax in Ontario. The same withdrawal at 72, layered on top of CPP and OAS, could be taxed at an effective marginal rate of 40% or higher. The math overwhelmingly favours acting early.
Building the cash buffer
The cash buffer is not an emergency fund. It is a structural tool that prevents you from being forced to sell equity at the worst possible moment. At 55, building it is a priority that belongs in the plan, not as an afterthought.
The target is 12 to 18 months of expected retirement spending in a liquid, safe account: a high-interest savings account (HISA) or a short GIC ladder. If your expected retirement monthly spending is $5,000, the buffer is $60,000 to $90,000. It sits outside the investment portfolio and is not counted as part of your retirement net worth for planning purposes.
Here is how it functions. Suppose you retire at 65 and markets fall 30% in the following six months. Without a buffer, you either sell XGRO at a 30% discount to fund living expenses, or you cut spending significantly. With a 12-month buffer, you draw from cash for a full year. In most bear markets, 12 months is enough to see meaningful recovery. In 2008 to 2009, the market bottomed after 17 months. In 2020, recovery was rapid. A 12-month buffer catches the majority of bear market scenarios; an 18-month buffer handles the historically severe ones.
Start building the buffer at 55 by setting aside a modest amount each month in addition to investment contributions. It does not need to be built overnight. Arriving at retirement with 12 months of cash in place is the goal. The buffer is not "sitting out" of the market in a meaningful way. It represents less than 15% of a typical retirement portfolio and provides enormous psychological and structural protection for the remaining 85%.
What the numbers look like at 55
Let us work through a concrete scenario. A 55-year-old with a $600,000 portfolio and the ability to contribute $700 per month for the next decade, transitioning from XEQT to XGRO around age 57.
The critical insight from this projection is what happens at age 70. Once CPP ($24,408/year at the deferred rate) and OAS ($8,724/year at 65) are flowing, the total government income is approximately $33,132. If the retirement budget is $44,000 per year, the portfolio only needs to provide approximately $11,000 per year in withdrawals. That is a withdrawal rate of roughly 1.1% on a $1,000,000 portfolio. The SPIVA Canada Scorecard (2024) confirms that globally diversified equity portfolios held over 15-year periods have essentially never failed to maintain real value at that withdrawal rate. This portfolio is not in danger of running out. The glide path and the CPP deferral together are doing the work.
This is why the CPP timing decision is so important. It does not just improve your income in your 70s. It fundamentally reduces the withdrawal burden on your portfolio for the rest of your life, which in turn dramatically reduces the probability of running out of money in your 80s or 90s.
The OAS bridge strategy
OAS eligibility begins at 65. If you are planning to retire before 65, you need a bridge strategy for the gap years. If you are also deferring CPP to 70, the gap strategy is even more important.
For someone retiring at 60, the income picture before CPP and OAS begin is entirely dependent on the investment portfolio and any other income sources. This is not a problem; it is a planning exercise. The question is which accounts to draw from in those early years to fund spending efficiently.
The most common bridge strategy for a 60-year-old deferring CPP and OAS works as follows. In the early retirement years from 60 to 65, draw from RRSP first. Income in those years is likely lower than it will ever be again, so the marginal tax rate on RRSP withdrawals is lower than at any future point. This doubles as the RRSP meltdown strategy: you are reducing the balance that will eventually become a mandatory RRIF withdrawal at higher rates. From 65 to 70, if OAS has started (at 65), the combination of OAS and RRSP drawdown fills the income gap while CPP is still being deferred. At 70, CPP starts at the maximum rate. RRIF is already smaller from the deliberate drawdown. Total income is higher, but more of it comes from government sources which are indexed to inflation.
For those who cannot bridge from 60 to 70 entirely from RRSP, the TFSA becomes the secondary source. Withdrawals from a TFSA create no taxable income and do not affect OAS clawback calculations. Drawing from TFSA in years where RRSP withdrawals alone would push into a higher bracket is an efficient way to keep the effective tax rate low throughout the bridge period.
Just as CPP can be deferred past 65 for a higher benefit, so can OAS. Deferring OAS from 65 to 70 increases the payment by 36%, from approximately $727 per month to approximately $989 per month. The break-even is around age 83. For those in good health who expect to live into their mid-80s or beyond, deferring both CPP and OAS to 70 and bridging with RRSP withdrawals is the highest-income-producing retirement strategy available to a Canadian without a defined benefit pension.
When staying in XEQT at 55 is still right
The glide path described in this guide is appropriate for most people at 55. But "most people" is not everyone, and there are genuine circumstances where staying 100% in XEQT well into the late 50s is the correct and defensible choice.
The first circumstance is a defined benefit pension. If you are a public sector employee with a DB pension that will provide 60 to 70% of your pre-retirement income indexed to inflation, your portfolio is not your primary retirement income vehicle. It is supplemental. The sequence risk that justifies a glide path for someone without a pension simply does not apply in the same way when the bulk of retirement income is guaranteed. In this situation, staying in XEQT at 55, 60, or even 65 is entirely rational. Your pension functions as the bond portion of your overall wealth picture.
The second circumstance is a very large portfolio relative to spending. If your portfolio is large enough that even a 40% crash followed by a decade of poor returns could not threaten your retirement, sequence risk is mathematically contained. A $3,000,000 portfolio funding $60,000 per year in spending (a 2% withdrawal rate) with CPP and OAS also flowing has very little meaningful sequence risk regardless of allocation. Staying in XEQT at that scale is fine.
The third circumstance is a significantly extended time horizon. If you are 55 and not planning to retire until 68, your time horizon is 13 years. That is long enough that the argument for a full glide path is weaker. You might begin the transition at 62 rather than 57 and arrive at retirement with the same 80/20 destination.
The fourth circumstance is exceptional risk tolerance combined with a solid cash buffer. Some 55-year-olds genuinely understand market volatility, have lived through multiple bear markets without panic-selling, and have 18 months of expenses in cash outside the portfolio. For this group, the psychological and financial cost of holding XEQT through a bear market is low. The glide path is still sensible, but the urgency is reduced.
For a deeper look at whether and when to transition out of pure XEQT, the when to sell XEQT guide covers every scenario in detail.
A practical plan for the next decade
Good retirement planning does not require complexity. It requires clarity on a small number of high-leverage decisions. Here is what that looks like in practice for a 55-year-old with a solid investment foundation.
The decade from 55 to 65 is not an emergency. It is an opportunity. The decisions made now: CPP timing, RRSP drawdown sequencing, the glide path transition, and the cash buffer, collectively shape whether retirement is financially comfortable or financially fragile. XEQT has already done its job in the accumulation years. The next decade is about the elegant, deliberate handoff from growth to income, and nothing about that process requires panic or complexity.
When you are ready to go deeper on what retirement actually looks like from an investment perspective, the next guide covers the age-60 picture in full detail: I'm 60 and retiring in five years. What is my XEQT plan?
For the full withdrawal strategy covering account sequencing, tax efficiency, and annual portfolio management in retirement, see the XEQT retirement withdrawal strategy guide.
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