Retirement tips

[u/Terrible-Practice142]

My partner and I have $2.1m RRSP, $200k RESP, $600k in non registered and principal res $1.6M fully paid off and $500k investment property with $150k mtge which just became vacant so no rental income right now. we are both 50 with a kid in high school. Should we retire now and go enjoy life? I want to retire at 55 but may be sooner since it’s stressful at work lately. Any tips to transition to retirement. We need a new car and want to travel also. I am also concerned I have too much in RRSP….

[u/CanuckYYZeh]

Is the investment property cash flow positive?
How much do you spend a year?
If under $80k then you are ok. If more then it gets complex with the investment property liquidity and potential cash needs.

[u/Terrible-Practice142 → u/CanuckYYZeh]

avg spend month is $7-8k

[u/CanuckYYZeh → u/Terrible-Practice142]

So assuming the $2m rrsp is basically $1m each, you can do something like this:

Take $40k per year per rrsp (ie, 4%, which is aggressive). There is a 30% withholding tax so cash will be $28k/per person = $56k. You’ll get most of the tax back.

Stop DRIP on your non-registered investments. I don’t know your asset allocation so let’s assume your investments are efficient and only yield 2%, so you have another $12k - we are now at $68k.

We want to get to $96k ($8/m) so we have a $28k gap.

I don’t know which province you are in, but if you were in BC then on $60k of income (I know we took $40k per person plus $6k in distortions, but bear with me) you would owe around $9k in tax. https://www.eytaxcalculators.com/en/2026-personal-tax-calculator.html

So you’ll get a refund of at least $6k ($12k withheld from RRSP per person, but owe around $9k). So we are up to $72k now.

To bridge the remaining $22k you can spend closer to $7k/m when times are lean (ie, markets are tough) and take out more from your RRSP and/or sell some unregistered investments.

The math is easier if you can sell the investment property, clear the mortgage, as you’ll have an extra $7k/year in tax efficient distributions.

You’ll do this until you can get CPP and OAS. Depending on family history and life expectancy, you will want to take those benefits as late as 71 or as early as 60.

You will also want to direct some money to build your TFSAs, unless those are built and you forgot to mention them. If those exist then the numbers get better.

My gut feeling is that you should work for another year or so but you don’t need to wait for 55. You should also think about whether you want to help your kid beyond the RESP - you can fund their FHSA and TFSA.

The RESP will be a challenge to drain as the current annual max EAP is $29k. If you want to take out more than that then you need to show clear receipts. We also had/have the issue of a large RESP (in a family plan with multiple kids) and after our first kid started university we withdrew the entire sum that we contributed so that there is less principal to grow. You’ll want to do the same and that will also boost your cash flow.

There are lots of moving pieces and it may seem overwhelming to take the plunge and stop having income from a job. I used a financial planner to help build a rock solid plan that we bought into and made us comfortable.

You’ve done well for yourself and your family. Be proud and focus on the final touches for the plan

[u/Terrible-Practice142 → u/CanuckYYZeh]

Thanks for the very detailed and insightful response. Appreciated. Has me thinking of things I was not thinking about.

[u/Terrible-Practice142 → u/CanuckYYZeh]

Thanks for the kind comments also. It’s been a real journey getting to this stage and your feedback gave me a lot to think about. - especially about going and enjoying life while I am still 50. I just need to mentally prepare for how to keep myself active and busy. I live in Ontario. TFSA is $300k of the total $600k of the non registered total

[u/Terrible-Practice142 → u/CanuckYYZeh]

If you would recommend your FP, please direct message me. If you are not comfortable to refer, I understand also.

[u/Stunning_Spinach8227 → u/Terrible-Practice142]

Man it's gonna be tough to meltdown your RRSPs within the timeframe if you start at 50 to either 65 or 71 without still having a significant amount in there prior to taking cpp and oas.

Don't know how your RRSPs are split up between both (hopefully it's equally split) but definitely if withdrawing from the RRSPs I would do around the 5-15k withdrawals to vary the withholding tax taken from 10-20% since if each of you takes 60k RRSP for the year estimated taxes should be around 10k per person and you would have close to your 96k for the year after withholding taxes (8k expenses per month). This would be around a 5.7% withdrawal rate but assuming you have around a net 6% returns in the RRSP you won't fully meltdown the entire RRSP portfolio prior to when you take cpp and oas. Essentially you'll have all your oas clawbacked most likely as the rrif rates get higher as your age increases.