Can you retire at 60 with $1 million in savings? For many Canadians, the answer is yes, but how much you can spend depends on more than just the size of your portfolio.
Your retirement age, CPP and OAS benefits, investment strategy, taxes, and the order in which you withdraw your savings can all have a significant impact on how long your money lasts.
To illustrate this, let’s look at a couple who came to us at age 60 with $1 million saved for retirement. They wanted to know how much they could comfortably spend, whether their savings would last until age 90, and if they could afford to enjoy more of their money while they were still healthy.
By making three adjustments to their retirement plan, we improved their projected retirement outlook from 89% funded to 100% funded, while increasing their projected estate value by $370,000.
Here’s how we approached their retirement plan.
How Much Can You Spend in Retirement With $1 Million?
Having $1 million invested doesn’t automatically tell you how much you can afford to spend each month.
Some retirees may need to rely almost entirely on their investments for income, while others have workplace pensions, CPP, OAS, or additional assets to support their retirement.
The amount you can spend also depends on when you retire and how your expenses change over time.
For example, someone retiring at 60 may need their savings to last 30 years or longer. But that doesn’t mean they’ll spend the same amount every year.
Many retirees want to spend more during their early retirement years on travel, hobbies, and experiences, with expenses gradually decreasing as they get older.
That’s exactly what the couple in our example wanted to do.
Meet a Couple Retiring at 60 With $1 Million
Mr. and Mrs. Smith were both 60 years old and planning to retire at the end of the year. Their names have been changed for privacy.
They had accumulated $1 million in retirement savings across several different accounts.
| Account | Mr. Smith | Mrs. Smith |
|---|---|---|
| RRSP | $450,000 | $200,000 |
| TFSA | $100,000 | $100,000 |
| Non-registered investments | — | $150,000 |
| Total | $550,000 | $450,000 |
In addition to their investments, they owned a home valued at $650,000.
They also expected to receive CPP and OAS during retirement.
Their original plan was to begin collecting CPP at age 61, with each spouse receiving approximately $10,000 annually. They planned to start OAS at age 65.
Their Retirement Spending Goals
The Smiths wanted to enjoy retirement without constantly worrying about their finances.
They estimated they would need:
- $5,700 per month for regular living expenses throughout retirement.
- An additional $1,500 per month for travel during their first 15 years of retirement.
That meant they wanted to spend $7,200 per month during their early retirement years, before their travel budget eventually decreased.
When we averaged these expenses over a 30-year retirement, their spending goal worked out to approximately $6,450 per month, or $77,400 annually.
The question was whether their $1 million portfolio, combined with future government benefits, could support that lifestyle.
Would Their $1 Million Last Until Age 90?
We started by modelling their retirement using their existing assumptions and withdrawal strategy.
Unfortunately, the initial results weren’t quite what they hoped for.
Their plan was only 89% funded, meaning their projected resources weren’t sufficient to cover all their desired spending through age 90.
Based on the assumptions used, they were on track to support average spending of just over $5,900 per month, compared with their goal of approximately $6,450.
Their investments were projected to run short in 2047, approximately six years before their assumed life expectancy.
This didn’t necessarily mean they couldn’t retire. It meant their existing strategy needed some attention.
Why Their Original Withdrawal Strategy Wasn’t Ideal
Their previous advisor had recommended withdrawing money in the following order:
- TFSA
- Non-registered investments
- RRSPs
The reasoning was straightforward: withdrawing from their TFSA first would help keep their income taxes low during the early years of retirement.
However, minimizing taxes today doesn’t necessarily mean minimizing taxes throughout retirement.
By leaving their RRSPs untouched for as long as possible, they could end up with larger registered account balances later in life, potentially creating higher taxable withdrawals when they were older.
We wanted to see whether coordinating their withdrawals differently could improve their overall retirement outlook.
Three Strategies That Improved Their Retirement Plan
Rather than immediately recommending that the Smiths spend less or work longer, we explored three adjustments to their existing retirement plan.
1. Reconsidering When to Start CPP and OAS
The Smiths originally intended to begin receiving CPP at age 61.
However, Canadians can choose to delay CPP until age 70 in exchange for larger monthly payments.
We wanted to see what would happen if both spouses delayed their CPP benefits.
When we modelled starting CPP at age 70, something interesting happened.
Their investment portfolio declined more quickly during the first several years of retirement because they needed to withdraw more money to replace the CPP income they weren’t yet receiving.
But once their larger CPP payments began at age 70, they needed to withdraw less from their investments to cover their expenses.
Over the full retirement period, this improved their projected retirement outlook from 89% funded to 96% funded.
It also increased their projected estate value by approximately $224,000.
That’s a significant improvement without changing their retirement date or reducing their spending goals.
But delaying CPP until 70 isn’t automatically the best decision.
The Smiths also needed to consider longevity, survivor benefits, and how comfortable they felt drawing more heavily from their investments during their sixties.
After reviewing the trade-offs, they decided that starting CPP at age 67 was a better fit for their situation.
We also explored delaying OAS until age 70. Although this improved their projected retirement outlook slightly, they preferred to begin collecting OAS at 65.
The important takeaway is that CPP and OAS timing should be evaluated as part of your entire retirement plan, rather than making those decisions in isolation.
2. Changing the Order of Their Retirement Withdrawals
Next, we looked at how the Smiths planned to withdraw money from their investments.
Their original strategy prioritized withdrawing from their TFSAs and non-registered investments while leaving their RRSPs untouched.
We explored reversing that approach.
Under the revised strategy, they would:
- Begin drawing from their RRSPs earlier in retirement.
- Use their non-registered investments after their registered savings were depleted.
- Preserve their TFSAs for later in retirement.
Why would someone voluntarily withdraw from an RRSP and pay taxes earlier than necessary?
Because the goal isn’t necessarily to pay the least amount of tax this year. It’s to manage taxes over your entire retirement.
Withdrawing from RRSPs during lower-income years may allow retirees to take advantage of lower tax brackets before CPP, OAS, and mandatory RRIF withdrawals increase their taxable income.
Meanwhile, leaving money in a TFSA allows investments to continue growing tax-free.
TFSA withdrawals also don’t increase taxable income, which can provide valuable flexibility later in retirement.
For the Smiths, this revised withdrawal strategy improved their projected retirement outlook and increased the amount they could potentially leave behind.
Of course, withdrawing from RRSPs first isn’t always the right approach. The ideal strategy depends on your income, account balances, tax situation, and long-term goals.
3. Matching Their Investments to When They Needed the Money
The third adjustment involved how their investments were allocated across their accounts.
Not every dollar in a retirement portfolio needs to be invested the same way.
Consider the difference between money you expect to spend next year and money you may not need for another 20 years.
Money needed in the near future generally requires more protection against market volatility. Money invested for a longer period may have more time to recover from market declines.
For the Smiths, their revised withdrawal strategy meant they would use their RRSPs first and preserve their TFSAs for later.
That created an opportunity to adjust their investments accordingly.
We modelled a more conservative investment approach for the registered accounts they planned to draw from earlier, while taking a more growth-oriented approach with the TFSAs they expected to use much later.
This helped align their investment risk with their expected withdrawal timing.
Under the assumptions used in their plan, this adjustment improved their projected retirement outlook to 100% funded and added approximately $130,000 to their projected estate value.
The Results: A Fully Funded Retirement Plan
After combining the three strategies, the Smiths’ projected retirement outlook improved substantially.
| Retirement Planning Measure | Original Plan | Revised Plan |
|---|---|---|
| Retirement age | 60 | 60 |
| Starting investments | $1 million | $1 million |
| CPP starting age | 61 | 67 |
| OAS starting age | 65 | 65 |
| Withdrawal approach | TFSA first | RRSP first |
| Investment allocation | Original portfolio | Aligned with withdrawal timing |
| Projected retirement funding | 89% | 100% |
Their revised plan was projected to cover their desired retirement spending through age 90, with approximately six months of additional funding capacity.
Their projected estate value also increased by $370,000.
What makes this example interesting is that the Smiths didn’t need to save another $200,000 or delay retirement for several years.
They were working with the same $1 million portfolio.
The difference came from coordinating their government benefits, investment accounts, withdrawal strategy, and taxes.
These results were based on financial planning projections, not guaranteed outcomes. Actual investment returns, inflation, taxes, longevity, and spending decisions can all affect the results.
Could They Actually Spend More in Retirement?
Once we showed the Smiths how their retirement outlook had improved, another question came up.
Did they really need to leave such a large estate to their children?
Their children were already doing well financially, and the Smiths wanted to explore whether they could spend more money enjoying their own retirement.
So we modelled another scenario.
This time, we increased their regular monthly retirement spending by 10%.
That meant increasing their $5,700 monthly living budget by $570, bringing it to $6,270 per month, in addition to their planned travel spending during the first 15 years.
Naturally, spending more money meant their investment portfolio would decline more quickly.
Under this scenario, their portfolio alone would no longer support all their planned spending through age 90.
But the Smiths had another significant asset: their home.
We explored what would happen if they sold their house later in retirement and began renting for approximately $4,000 per month.
Under those assumptions, they could increase their retirement spending and still fund their projected expenses through age 90.
Their projected estate would be substantially smaller, at just under $98,000, but they would have the opportunity to enjoy more of their savings during retirement.
Neither scenario was inherently better.
One allowed them to preserve more wealth for their children. The other allowed them to spend more during their own retirement.
The purpose of retirement planning is to help people understand those choices and decide which outcome matters most to them.
How Long Will $1 Million Last in Retirement?
One of the most common questions Canadians ask is whether $1 million is enough to last 25 or 30 years in retirement.
A common starting point is the 4% withdrawal rule, which suggests withdrawing approximately 4% of a portfolio in the first year of retirement and adjusting that dollar amount for inflation in subsequent years.
On a $1 million portfolio, that would mean an initial withdrawal of $40,000 per year, or approximately $3,333 per month, before taxes.
But that doesn’t necessarily represent your total retirement spending.
You may also receive CPP, OAS, a workplace pension, or other sources of income.
And as the Smiths’ example demonstrates, your withdrawals don’t necessarily need to remain the same throughout retirement.
You might withdraw more from your investments during your sixties, before CPP and OAS begin, and less once those benefits start.
You may also choose to spend more during your early retirement years and gradually reduce discretionary expenses as you get older.
That’s why a fixed withdrawal percentage can be a useful starting point, but it isn’t a substitute for a retirement plan that accounts for your actual circumstances.
Is $1 Million Enough to Retire in Canada?
For some Canadians, $1 million may be more than enough to fund the retirement they want.
For others, it may not be sufficient.
The answer depends on several factors, including your retirement age, lifestyle, government benefits, taxes, housing costs, investment returns, and how long your money needs to last.
The Smiths’ situation illustrates why looking at your portfolio balance alone doesn’t tell the whole story.
They started with $1 million and a retirement plan that fell short of their goals.
By making adjustments to their CPP timing, withdrawal strategy, and investments, they improved their projected retirement outlook without needing to work longer or save more.
And once they understood their options, they were able to explore spending more during retirement rather than simply accumulating the largest possible estate.
Final Thoughts
If you’re approaching retirement with $1 million saved, the question shouldn’t just be whether that amount is enough.
A better question is: How much can I comfortably spend, and what decisions can help me make the most of what I’ve saved?
Retirement planning involves more than choosing investments or deciding when to start CPP.
It’s about coordinating your income, taxes, withdrawals, and long-term goals so you can make informed decisions about how to enjoy your money.
At Trans Canada Wealth Management, we help Canadians build retirement plans that bring these decisions together.
If you’re wondering how much you can spend in retirement, we’d be happy to help you explore your options.
Book a complimentary retirement planning call with our team.
Watch the full video: How Much Can You Spend in Retirement? 60 With $1 Million.
