At 50, you continue to have 15 years earlier than you flip 65, the official retirement age of Canada. These 15 years is usually a game-changer in retirement planning in case you hearth all cylinders.
Retirement planning at age 50
At 50, you might be most likely on the peak of your profession and have your personal home. The precedence needs to be to not retire with debt. However does it imply you must channel your cash into repaying debt? Not precisely. Maintain these month-to-month installments going and improve your investments in development and high-yield shares.
Sure, you aren’t getting any youthful. However you’ve got the monetary capability to take dangers as a result of you aren’t dependent in your funding revenue as you’d be after retirement.
Maxing out on a Registered Retirement Financial savings Plan (RRSP) would possibly appear to be the most suitable choice. Nonetheless, solely contribute what you want for tax financial savings. Max out in your Tax-Free Financial savings Account (TFSA), as that is the account that may protect your authorities pensions and prevent from the taxman. TFSA withdrawals are usually not included in your taxable revenue and are due to this fact excluded from income-dependent authorities advantages just like the Outdated Age Safety (OAS).
Right here’s how a lot 50-year-old Canadians have to retire at 65
There isn’t a commonplace determine for everybody on how a lot cash you have to retire comfortably. Nonetheless, there are some standard guidelines that you need to use as a benchmark to set a goal:
- Change 70% of your pre-retirement revenue with funding revenue to take care of your present way of life. If a serious portion of your present bills entails mortgage and different debt, guarantee to pay them off earlier than retirement.
- The 4% withdrawal rule says you must withdraw 4% of your financial savings within the first yr and alter for inflation for about 25 years.
So, in case you are presently incomes $100,000/yr, you want annual funding revenue of $70,000/yr, for which you want a retirement portfolio of $1.75 million, whose 4% is $70,000.
Now, Canada Pension Plan (CPP), OAS, and Assured Earnings Complement (GIS) offer you near $17,196 in annual revenue in 2025 in case you contemplate the utmost CPP.
In 2023, folks within the 45-54 age group had a median RRSP and TFSA stability of $58,374 ($48,374 + $10,048), as per Statistics Canada knowledge. Assuming this stability has elevated to $75,000, you will have to take a position $4,500 per 30 days to have a $1.75 million portfolio. That is assuming your portfolio grows at a median annual fee of 8%.
So, to reply the query, you want $75,000 in your RRSP and TFSA and a $4,500 month-to-month funding at age 50 to retire comfortably at 65.
Which shares to take a position wherein account
You can’t management the CPP and OAS payout, however you may management RRSP and TFSA payout. Think about investing in Kinross Gold (TSX:Okay) and Constellation Software program by your TFSA. Gold costs are surging amidst warfare and geopolitical tensions. The gold worth will proceed to rise all year long if geopolitical tensions escalate, and Kinross Gold will profit from it.
It has an all-in sustaining price (AISC) of $1,622 per gold equal ounce, and gold is buying and selling at $4,583 on the time of writing this text. The miner has used this cyclical rally to repay debt and obtain a internet money place of $485 million. Its third-quarter 2025 revenue per ounce elevated by 54% yr over yr, quicker than the 40% improve in common realized gold worth. The fourth quarter was stronger than the third, which implies greater free money circulate, dividends, and a rising share worth.
Nonetheless, Kinross Gold is a cyclical inventory and never one thing to carry for 15 years. Which means you might need to e-book earnings and reinvest the cash elsewhere when the financial system stabilizes. Till then, the inventory can develop your cash approach greater than 8% and speed up your retirement portfolio.
In your RRSP, you may contemplate investing in dividend shares with a yield of 8% or above, like Telus. Think about reinvesting this dividend to profit from the ability of compounding.
Investor takeaway
Low-yield RRSP dividend shares will be balanced with high-growth TFSA shares, making certain an 8% common yield in your portfolio.
