We recently received a comment on one of our videos asking whether it’s possible to retire at age 55 with a $2 million portfolio. The short answer is yes. But as always, the real answer depends on how much you plan to spend and how you structure your withdrawals.
Let me walk you through a real case study of someone in that exact position.
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Heather’s Situation
Heather came to us a few months ago with a clear goal: retire at age 55. She was recently widowed and wanted to enjoy the next chapter of her life, traveling, spending time with her kids, and having the freedom to slow down.
Here is what her financial picture looked like:
- $1.1 million in RRSPs
- $260,000 in her TFSA
- $640,000 in a non-registered account
- $1,000 per month from the CPP survivor benefit
- Plans to start her own CPP and OAS at age 65
- A home worth $900,000, which she planned to sell at age 60
In terms of spending, Heather estimated:
- $4,500 per month in living expenses (same when renting)
- $3,000 per month in travel, from age 55 to 75
- $40,000 for a new vehicle every five years
The First Retirement Projection
When we first ran Heather’s numbers, her plan was 91 percent funded. That means her current portfolio could sustain most but not all of her planned retirement. She had a shortfall starting around age 85, assuming a 6 percent return. She was also facing an old age security clawback of $244,000 due to large required RRIF withdrawals in later years.
Why? The default strategy pulled from her TFSA and non-registered accounts first, letting her RRSPs grow untouched. That made sense from a short-term tax perspective, but it caused big issues later. Her RRSPs became so large that once RRIF withdrawals began at age 72, they pushed her income higher than necessary, triggering taxes and OAS clawbacks.
She also ended up going into a theoretical debt position at the end of her plan, with a projected estate of negative $586,000.
A Smarter Withdrawal Strategy
Instead of letting the RRSP grow unchecked, we tested a new approach. The software we use helped us determine the optimal strategy: targeting a consistent taxable income of $94,000 per year.
By drawing earlier from her RRSP, Heather avoided ballooning account balances. This helped reduce forced RRIF withdrawals and brought her total OAS clawback down from $244,000 to just $39,000.
We still used the non-registered account as needed to supplement the gap between her after-tax income and monthly needs, which averaged over $10,000. The TFSA was drawn down gradually and topped up each year when possible.
The Results
This one change made a big difference.
- Her plan became 101 percent funded
- She now had enough to last to age 88
- Her OAS clawback dropped by over $200,000
- She ended retirement with a small estate of $141,000 instead of a projected debt
While there is still not a large buffer in the event she lives well beyond 88, she was happy to know her plan was viable with the right adjustments.
Final Thoughts
So, can you retire at 55 with $2 million? Yes, but only if your withdrawal plan matches your spending goals.
Heather’s case shows how a small adjustment, timing withdrawals for tax efficiency, can mean the difference between going into debt and retiring with confidence.
If you are thinking about retiring early and want to make sure your numbers add up, visit our website and book an appointment with us.
