Sep 12, 2026
Retiring in 5 Years or Less? Your Pre-Retirement Countdown Checklist
Retirement can feel like something that is always years away—until suddenly, it isn’t. if you expect to retire within the next five years, you’re entering one of the most important stages of your financial life. The decisions you make now can influence how much income you have in retirement, how long your savings last, and how confidently you can enjoy the lifestyle you’ve worked toward. the final five years before retirement aren’t simply about saving as much as possible. They’re about turning your accumulated savings, pensions and other assets into a sustainable retirement strategy. here are five important areas to review before you leave the workforce.
1. Build a clear picture of your retirement income
During your working years, your paycheque is usually your primary source of income. Retirement is different. instead of relying on one regular salary, you may receive income from several sources, including:
- Canada Pension Plan (CPP)
- Old Age Security (OAS)
- Employer-sponsored pension plans
- Registered Retirement Savings Plans (RRSPs)
- Registered Retirement Income Funds (RRIFs)
- Tax-Free Savings Accounts (TFSAs)
- Non-registered investments
- Other sources of passive or employment income
The first step is to understand how these sources will work together. if you’re eligible for CPP, review your contribution history and estimated benefits through your My Service Canada Account. This can give you a better idea of what your government pension income could look like. you should also review your employer pension, if you have one, and determine whether it will provide a defined benefit or whether you will need to manage an accumulated retirement balance. once you know approximately how much guaranteed and investment-based income you can expect, you can start identifying the gap between your expected income and your anticipated expenses. that gap is one of the most important numbers in your retirement plan.
2. Don’t assume you have to start every pension when you retire
Your retirement date and your pension-start dates don’t necessarily have to be the same. for example, CPP can generally be started as early as age 60, although starting before age 65 results in a permanent reduction. On the other hand, delaying CPP beyond age 65 can increase your monthly benefit, up to age 70. the same principle applies to OAS, which can also be delayed in exchange for a higher monthly payment. that means you have an important decision to make:
Do you need the income immediately, or could delaying certain government benefits provide more income later?
There isn’t a universal answer. your decision may depend on factors such as:
- Your health and life expectancy
- Your spouse or partner’s income
- Your other retirement assets
- Your expected spending
- Your tax situation
- Whether you continue working
- Your desire for higher guaranteed income later in life
The five years before retirement are an excellent time to model different scenarios rather than making pension decisions based solely on your retirement date.
3. Prepare your portfolio for the first years of retirement
Investment risk doesn’t disappear when you retire. In fact, the timing of investment losses can become particularly important. imagine the market falls significantly shortly after you retire. If you need to sell investments to cover your living expenses while markets are down, you may be locking in losses and leaving fewer assets available for future growth. this is known as sequence-of-returns risk. one way to manage this risk is to create a short-term liquidity reserve. depending on your circumstances, you might consider keeping a portion of your retirement assets in relatively stable and accessible investments that can cover near-term expenses. These could include cash, high-interest savings accounts or short-term GICs. the goal isn’t necessarily to move your entire portfolio into conservative investments. instead, your investment strategy should reflect the fact that you now have a shorter time horizon for money you’ll need soon, while funds intended for later retirement may still have a longer investment horizon. a well-structured retirement portfolio should balance three priorities: Income, stability and long-term growth.
4. Plan your taxes before retirement—not after
Retirement income can have significant tax implications. one common misconception is that your tax bill automatically becomes much smaller as soon as you stop working. In reality, the way you withdraw your retirement savings can have a major impact on your taxable income. RRSP withdrawals are generally taxable. Eventually, your RRSP must be converted to a RRIF, and minimum withdrawals are required once you reach the applicable age. if you have accumulated a substantial RRSP balance, waiting until mandatory RRIF withdrawals begin may not always be the most tax-efficient approach. depending on your circumstances, you may want to consider a strategy that gradually draws down registered retirement assets during lower-income years. your TFSA can also play an important role because qualifying withdrawals are generally tax-free and don’t increase your taxable income. the objective isn’t simply to minimize taxes in one particular year. It’s to manage your taxable income over the course of retirement. this can become particularly important when considering government benefits and income-tested programs. before making significant withdrawals, consider working with a qualified financial or tax professional to understand the long-term consequences.
5. Separate your essential retirement expenses from your lifestyle goals
One of the easiest ways to determine whether you’re financially ready for retirement is to divide your expected expenses into two categories:
Essential expenses
These are the costs you need to cover regardless of market conditions, such as:
- Housing
- Groceries
- Utilities
- Property taxes
- Insurance
- Transportation
- Healthcare and other essential costs
Lifestyle expenses
These are the things that make retirement enjoyable, such as:
- Travel
- Restaurants
- Hobbies
- Entertainment
- Gifts
- Recreational activities
- Major purchases
This distinction can make your retirement plan considerably more resilient. for example, if your CPP, OAS and workplace pension cover most of your essential expenses, your investment portfolio may only need to provide additional income for discretionary spending. if markets perform poorly in a particular year, you may be able to reduce optional spending without compromising your basic standard of living. that’s an important form of financial flexibility.
Your five-year retirement countdown
Five years can pass surprisingly quickly. If retirement is approaching, now is the time to move from general preparation to specific planning. a useful pre-retirement checklist might look like this:
Five years out:
Review your retirement income sources, savings, investment strategy and expected expenses.
Three to four years out:
Start modelling different CPP, OAS and retirement-date scenarios. Review your pension options and debt.
One to two years out:
Refine your investment and withdrawal strategy. Build an appropriate emergency and short-term retirement reserve.
Within one year:
Confirm your retirement budget, pension decisions, insurance coverage, tax strategy and sources of monthly income.
Before your final day at work:
Make sure you understand exactly where your retirement income will come from and how you will access it.
Don’t overlook insurance in your retirement plan
Retirement planning isn’t only about investments and government benefits. insurance can also become an important part of protecting your retirement strategy. as you approach retirement, your financial priorities may change. You may need to review your life insurance, critical illness coverage, long-term care considerations, health coverage and other forms of protection. for example, if your spouse or family would face financial difficulty without your income or assets, life insurance may still have an important role—even after you stop working. similarly, unexpected health-related or care expenses can put pressure on a retirement portfolio if they haven’t been considered in advance. the right approach depends on your family situation, assets, income sources and long-term goals.
Retirement isn’t a finish line—it’s a transition
Being five years away from retirement doesn’t mean you need to have every detail figured out today. it does mean that the time for broad assumptions is coming to an end. your retirement plan should answer some fundamental questions:
- How much income will I have each month?
- How much will I realistically spend?
- When should I start CPP and OAS?
- How should I withdraw from my RRSP, RRIF and TFSA?
- How much investment risk can I reasonably take?
- What happens if markets fall shortly after I retire?
- How will taxes affect my retirement income?
- What happens financially if I or my spouse experiences a major health event?
- Will my insurance coverage still make sense after I stop working?
The earlier you answer these questions, the more options you have. retirement should be a transition you plan for—not a financial cliff you step off. with a clear income strategy, thoughtful tax planning, an appropriate investment approach and the right protection in place, you can enter retirement with greater confidence and a clearer picture of the years ahead.
Ready to review your retirement strategy?
A personalized conversation can help you identify potential gaps in your income, savings and insurance protection before retirement arrives. At Bonjour Assurance, we can help you look at the bigger picture and explore strategies designed around your goals, your family and your future.
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