Someone recently asked me, “I’m 55 with $2 million saved. Can I retire?”
At first glance, it seems like a simple question. But after working with hundreds of Canadians retiring with between $1 million and $5 million saved, I can tell you this is about much more than just a number.
It’s about your lifestyle, withdrawal strategy, taxes, government benefits, and how well your plan can handle unexpected events.
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What Does Retirement Actually Mean to You?
Before asking if $2 million is enough, ask yourself what retirement looks like for you.
Most people think retirement is either full-time work or no work at all. But there is a middle ground. Part-time roles, consulting, or seasonal jobs can help stretch your savings while giving you more freedom.
And lifestyle is the most important piece. Someone who is mortgage-free and happy living on $6,000 per month is in a completely different situation than someone who wants $12,000 per month to travel and support family.
Both have $2 million, but their outcomes will be very different.
So don’t focus on what your neighbour is doing or what an online calculator says. Start by understanding your own lifestyle needs. That spending will determine how long your money lasts.
Don’t Rely on Averages
Many people build their retirement plan around average returns, average inflation, and average life expectancy. But life is not average.
What if the markets drop in your first two years of retirement? What if inflation stays high for a decade? What if you live longer than expected?
A good plan needs to hold up in tough years too. Run scenarios, model worst-case outcomes, and have a plan that gives you confidence when things do not go perfectly.
Your Withdrawal Strategy is Critical
A common mistake is leaving RRSPs untouched until age 71 to delay taxes.
But deferring RRSP withdrawals can lead to larger forced withdrawals later, pushing you into higher tax brackets and triggering Old Age Security clawbacks.
Instead, consider making small RRSP withdrawals earlier, especially in years when your income is low. Use your TFSA to top up income without adding to your tax bill.
The order of withdrawals really matters. You want a coordinated plan that takes into account tax brackets, account types, and government benefits.
Timing CPP and OAS Matters More Than You Think
Most people default to taking CPP and OAS at 60, but that is not always the best choice.
Delaying your benefits gives you more guaranteed income for life. That means less pressure on your investment portfolio, especially in years when the market is down.
This only works if you have other income sources to bridge the gap. Planning ahead helps you model out different timing scenarios and make a decision that brings peace of mind.
Get the Right Mix in Your Investments
Some retirees get too aggressive and chase returns. Others get too conservative and miss out on the growth they need.
Your investments need to last another 30 years. That means you need some growth to keep up with inflation, but also some stability for regular withdrawals.
Retirement spending is not flat. Most people spend more in the early years and less later on. Your investment plan needs to reflect that.
Final Thoughts
So, can you retire at 55 with $2 million?
It depends on your plan. But here are the key questions to ask:
Are your withdrawals sustainable for the next 30 years
Is your plan coordinated across taxes, account types, and benefits
Have you built in room for unexpected changes in health, markets, or family needs
At Trans Canada Wealth, we help Canadians create tax-efficient retirement income with clarity and confidence. If you’re planning to retire soon, book a free planning call with our team. We’ll walk you through how to make your savings last.
