If you’re wondering whether you can retire at 60 with $1.2M, you’re not alone. In fact, many Canadians ask this exact question. The answer depends on more than just the number in your account. To truly retire at 60 with $1.2M, you need to consider your spending, tax strategy, and government benefits. Ultimately, retiring is not just about stopping work, it’s about making your money last for the lifestyle you want over the next 25 to 30 years. Therefore, planning strategically is essential to avoid shortfalls and maximize your retirement years.
Understanding What It Means to Retire at 60 with $1.2M
On paper, $1.2 million sounds like more than enough. However, structure matters. In reality, two retirees can both have $1.2 million and experience very different outcomes depending on:
- Account types
- Tax exposure
- Government benefits
- Withdrawal strategy
In our example, Wayne is 60 years old with:
- $900,000 in RRSPs
- $175,000 in TFSA
- $125,000 in a non-registered account
- A $600,000 home he does not want to sell
That account mix changes everything. RRSP withdrawals are fully taxable, TFSA withdrawals are tax-free, and non-registered accounts create capital gains and dividend income. The order you withdraw from these accounts can determine whether you run out of money or build a buffer.
How to Make $1.2M Last in Retirement at 60
Wayne wants:
- $5,000 per month for living expenses
- $10,000 per year for travel
- Travel for the first 10 years of retirement
- No reliance on home equity
That equals $70,000 per year before tax. With a 5 percent average return, you might assume this works. However, the first projection shows something concerning. At age 90, his investments are depleted. Therefore, he is only 89 percent funded. This means he would need to reduce spending by about 11 percent to avoid running out of money. Clearly, strategy matters, and small adjustments can make a significant difference.
Retire at 60 with $1.2M: CPP and OAS Timing Tips
Wayne is eligible for approximately:
- $875 per month from CPP at age 60
- $828 per month from OAS at age 65
You can verify CPP and OAS details directly through the Government of Canada website.
Most people take CPP early. However, deferring CPP increases payments by 8.4 percent per year until age 70. When Wayne delays CPP to 70, his plan improves dramatically. Funding jumps from 89 percent to 97 percent. When he also delays OAS to 70, his guaranteed lifetime income rises further. Higher guaranteed income later in life reduces portfolio pressure in his 70s and 80s. That alone almost solves the shortfall.
The Hidden Risk: Withdrawal Order
The original plan withdrew: TFSA first, non-registered next, and RRSP last. At first glance, this seems logical. However, it is not always optimal. In fact, adjusting the withdrawal order can save taxes and preserve TFSA growth.
If Wayne passes away with a large RRSP balance, the full amount is added to his final tax return, which can push his estate into a tax rate above 50 percent. Instead, he targets $70,000 of taxable income annually and intentionally draws about $66,000 from his RRSP each year. This strategy:
- Smooths lifetime taxes
- Reduces estate tax risk
- Preserves TFSA growth
- Creates better long-term balance
Now the plan improves again.
Making Your $1.2M Last: TFSA, RRSP, and Non-Registered Accounts
The next adjustment is to shift more growth into the TFSA. The TFSA is projected to earn 6 percent, while the RRSP is slightly more conservative. Overall, the portfolio still averages a 5 percent return. As a result, this improves the final funding level to 106 percent.
Now Wayne:
- Maintains full spending
- Extends travel to age 77
- Avoids touching home equity
- Leaves an estimated $1.4 million estate
Same $1.2 million, very different outcome.
Can You Retire at 60 with $1.2M?
Yes, but only if:
- Spending aligns with assets
- CPP and OAS are timed properly
- Withdrawals are tax efficient
- Investments are positioned strategically
If spending rises to $7,000 per month plus $20,000 travel, then no. The number alone does not decide your retirement, the plan does
What This Means for You
If you want to retire at 60 with $1.2M, focus on:
- Sustainable income planning
- Tax smoothing
- Government benefit timing
- Long-term cash flow projections
- Estate impact
Small adjustments can create hundreds of thousands of dollars in difference over 30 years.
Final Thoughts
Retiring at 60 with $1.2M is possible. However, the difference between running out at 88 and thriving to 90 often comes down to strategy. Key factors include CPP timing, OAS timing, withdrawal order, and asset location.
The goal is not just to retire. The goal is to make your money last. To help you plan effectively, book a free consultation with our team for personalized guidance tailored to your retirement goals.
Planning to retire soon? Our blog post on avoiding tax mistakes in your 50s can provide practical insights and help you make informed decisions.
For additional tips, real-life examples, and strategies you can start using today, visit the Trans Canada Wealth Management YouTube channel and subscribe for regular retirement insights.
