Pre-Retirement Financial Planning in Ontario: What to Do in the 5-10 Years Before You Retire

Most people think of retirement planning as something you do when you are young — contribute to your RRSP, invest consistently, and trust that it will work out. That is not wrong, but the 5-10 years immediately before retirement are a different category of planning entirely. The decisions you make in this window are some of the most consequential of your financial life, and many of them cannot be undone once you cross into retirement.

Here is what Ontario residents approaching retirement should be focused on.

Your RRSP Strategy Needs to Shift

In your accumulation years, the goal with your RRSP is simple: contribute as much as you can and let it grow. In the pre-retirement window, the calculus changes. You need to start thinking about what your RRSP balance will become as a mandatory RRIF drawdown and how that income will interact with your tax bracket, OAS clawback thresholds, and any pension income you will receive.

For some Ontario residents, it makes sense to begin drawing down RRSP assets before retirement — particularly in years when employment income is lower than usual or if you expect significant pension income in retirement that will push you into a higher bracket. This is a nuanced calculation, not a blanket recommendation, but the point is that RRSP optimization in the pre-retirement years is about more than just contributing.

Get Accurate Pension and CPP Estimates

If you have a workplace pension — defined benefit or defined contribution — now is the time to request a formal pension estimate from your plan administrator. Understand your bridge benefit, if you have one, and when it terminates. Defined benefit pensions often come with early retirement reduction factors that can permanently reduce your monthly income, so knowing your numbers at least five years out gives you time to adjust your target retirement date if needed.

For CPP, log into your My Service Canada account and review your statement of contributions. Your CPP entitlement is based on your contribution history and the age at which you start collecting. Taking CPP at 60 versus 65 versus 70 represents a difference of roughly 7.2% per year — the decision about when to take CPP is one of the most significant income planning choices in retirement and should be modeled carefully based on your health, other income sources, and expected longevity.

The Healthcare Coverage Gap

Many Ontario employees have group benefits through their employer: extended health, dental, vision, and potentially long-term care or critical illness coverage. When you retire, most of that coverage disappears. Ontario's OHIP covers physician visits and hospital stays, but not dental, vision, prescription drugs (beyond the Ontario Drug Benefit program for seniors 65+), or paramedical services.

The 5-10 year window before retirement is the time to review what you have, understand what you will lose access to, and explore individual health and dental coverage or top-up plans. In many cases, your insurability is easier to secure while you are still healthy and employed. Waiting until you retire can mean higher premiums or coverage exclusions.

Insurance Review and Debt Elimination

Your insurance needs change dramatically as you approach retirement. Life insurance that was originally designed to replace your income or cover a mortgage may no longer be necessary — or it may need to be restructured. At the same time, your need for critical illness insurance or long-term care coverage may increase as the financial consequence of a health event becomes more significant without employment income as a safety net.

Debt elimination is equally important. Carrying a mortgage or significant consumer debt into retirement increases the income you need to draw from your savings, which can accelerate RRIF depletion and create tax inefficiency. A concrete plan to become debt-free before your target retirement date should be part of any pre-retirement financial plan.

How Marc Pineault Helps Clients Approaching Retirement

At Pineault Wealth Management, Marc works with southwestern Ontario clients in the critical pre-retirement window to build retirement income projections, model CPP and OAS timing scenarios, review insurance coverage, and create a tax-efficient drawdown strategy tailored to their situation. If you are within 5-10 years of your planned retirement date and want to make sure you are using this window well, reach out to Marc at pineaultwealthmanagement.com to schedule a conversation.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.