Jul 13, 2026
Having $2 million saved doesn’t automatically mean smooth-sailing into retirement — because once you’re done saving, the risk shifts from not having enough to slowly losing what you’ve built.
Canadians who have already crossed this financial threshold face a clear set of pitfalls governed by different accounts, Canada’s tax rules and government benefits. Here are five traps to watch for that could shrink your nest egg before you know it.
‘Knowing your number’ matters more than having one
According to BMO Financial Group’s 2026 Annual Retirement Survey, Canadians believe they need an average of $1.7 million to retire comfortably — up from $1.54 million only 1 year earlier. More than 1 in 3 respondents say they doubt they’ll ever reach that target.
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If you follow the 4% rule, $2 million in savings would produce roughly $80,000 a year, adjusted for inflation. Add in Canada Pension Plan (CPP) and Old Age Security (OAS) payments, and that income grows even higher. But whether $80,000 a year feels comfortable or tight depends entirely on where you live and your spending habits — not on the size of the number itself.
Lifestyle inflation — where spending grows at the same pace as your portfolio — is a real risk once a saver hits a comfortable savings target. According to Fidelity Investments Canada’s 2025 Retirement Report, 90% of Canadians with a written financial plan feel prepared for retirement, compared with only 55% of those without one.
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In other words, the number matters less than the plan behind it. A financial adviser — someone who holds a recognized professional designation such as a Certified Financial Planner (CFP) — can help build a realistic retirement budget instead of leaning on a single savings target as a finish line.
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Forgetting the tax time bomb in your RRSP or RRIF
If a large share of your $2 million sits inside a tax-sheltered account like a Registered Retirement Savings Plan (RRSP), the tax bill will eventually come due.
Once an RRSP converts into a Registered Retirement Income Fund (RRIF) — which must happen by December 31 of the year you turn 71 — the Canada Revenue Agency (CRA) requires a minimum annual withdrawal, and that withdrawal is fully taxable. The minimum withdrawal starts at 5.28% at age 71 and goes up every year after that.
Here’s an example: On a $2-million RRIF, the first-year minimum withdrawal would be more than $105,000 — all of it counted as taxable income. That alone would push a retiree well into the Old Age Security (OAS) clawback threshold without factoring in OAS and Canada Pension Plan (CPP) benefits. For the 2025 income year, that number was $93,454. Once your net income is higher than that, the government claws back 15 cents for every additional dollar you earn. That threshold rises with inflation every year.
Without a clear tax forecast, a $2-million nest egg can dwindle faster than expected once mandatory withdrawals begin. Strategies worth discussing with an adviser or accountant include drawing from your RRSP earlier and more gradually in your 60s, splitting pension income with a spouse and making strategic withdrawals from a Tax-Free Savings Account (TFSA) to keep your taxable income steady from year to year.
Focusing on the wrong asset allocation
With $2 million in savings, there’s more room to take on investment risk than the average saver has. However, that doesn’t necessarily mean you should.
The right mix of stocks, bonds and cash depends on age, how much risk you’re willing to take and how much income the portfolio needs to generate. Canada’s securities regulators require that every registered adviser match a client’s investments to their personal situation — a process known as a “Know Your Client” (KYC) review. A joint notice from the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) has flagged ongoing gaps in how well this review is actually being done across the industry. That matters because a portfolio built to grow wealth in your 40s can be a poor fit for drawing down income in your 60s and 70s.
Spreading your money across different types of investments, sectors and countries can help steady a large portfolio so a downturn in any one market doesn’t throw your entire retirement plan off track.
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Getting distracted by exotic assets
As someone with $2 million in savings, you may eventually be pitched investments beyond the usual stocks and bonds — things like private equity funds, private loans or even products that invest in lawsuits, all typically marketed to wealthier clients.
These pitches usually focus on returns — but the real risk often comes down to having easy access to your money. The Ontario Securities Commission (OSC) has raised concerns that many of these products only let you take your money out on a fixed, limited schedule — this can be a serious problem for a retiree who depends on predictable annual withdrawals. If the money you need isn’t available when you need it, you may be forced to sell other investments instead, which can be especially costly if it happens during a market downturn.
You don’t need complicated strategies to retire well. A simple, low-cost, diversified portfolio of index or bond funds — something that can be sold quickly if needed — will usually serve a retiree better than a complex product that locks up your money.
Neglecting to think about your legacy
If a $2-million portfolio outlasts your own retirement needs, some of that money will eventually pass on to family or charity. However, many Canadians never get around to putting that wish into writing.
A 2026 poll from CIBC found that 94% of Canadians believe everyone should have a will — yet only 52% actually have one. Among those without a will, the most common reasons cited were procrastination and the mistaken belief that they don’t have enough assets to need one.
Dying without a will — known as dying intestate — means the law decides how your estate is divided, not you. Those rules differ among provinces and territories. A signed will, an up-to-date power of attorney and clear beneficiary designations on registered accounts are the minimum steps needed to keep that decision in your own hands.
What Canadians with a growing nest egg can do next
Reaching $2 million is a milestone worth celebrating — but protecting it takes a different set of habits than building it. Here’s where to start:
- Write down a retirement budget and revisit it every year — rather than relying on a single savings number as your finish line
- Ask a financial adviser or accountant to map out RRSP-to-RRIF withdrawals before age 71 to avoid a surprise tax bill
- Check projected income against the annual OAS clawback threshold before making large withdrawals or selling investments at a gain
- Review your asset mix against your actual retirement timeline, not just your risk appetite
- Treat any investment pitch that emphasizes returns over liquidity with skepticism
- Get a signed will, an up-to-date power of attorney and current account beneficiary designations in place this year
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He is the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms His work has appeared in Money.ca, Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine, National Post, Financial Post and Piggybank. He frequently covers subjects ranging from retirement planning and stock market strategy to private credit and real estate, blending data-driven insights with practical advice for individuals and families.
