Mar 5, 2026
Sabrina, 54, thought she was making a smart move. Encouraged by her ex-partner, the single mom withdrew US$85,000 (C$116,000) from her retirement savings to invest in what he described as a promising stock opportunity. Instead, she says, the money disappeared into a murky mix of failed ventures.
With a teenage son who has special needs, and just over a decade before typical retirement age, Sabrina’s back at square one. She recently called into The Ramsey Show to ask what to do next (1).
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“I’m basically starting from scratch,” she said. “I just want to make the right decisions going forward.”
However, the cohosts had blunt words for Sabrina, with George Kamel noting how “this is a lost cause,” and encouraged her to focus on rebuilding instead of chasing what has since been lost.
While her story may have unfolded in the U.S., the lessons just as salient to Canadians, too.
The real cost of draining $85K at 54
In Canada, you can withdraw from a Registered Retirement Savings Plan (RRSP) at any age, but it can be costly.
RRSP withdrawals are fully taxable as income in the year they’re taken (2). So if you’re still in the height of your take-home pay, adding an extra $85K to your yearly earnings can trigger some hefty tax implications.
Additionally, Canada Revenue Agency (CRA) rules require your financial institution to withhold a portion of an RRSP withdrawal and remit it to the CRA (3).
These rates are:
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- 10% (5% in Quebec) on amounts up to $5,000
- 20% (10% in Quebec) on amounts exceeding $5,000, up to and including $15,000
- 30% (15% in Quebec) on amounts over $15,000
Once RRSP contribution room is used, it’s gone for good, meaning, you won’t be able to make back what you’ve withdrawn, only build on whatever balance currently sits in the account.
But the higher cost may be invisible: lost compounding.
If $85,000 in an RRSP had remained invested, it could have earned around 2% to 7% annually (4). A 7% rate of return could grow to roughly $167,000 in 10 years — and nearly $190,000 in 12 years.
For Canadians in their 50s, that final decade of growth can make the difference between retiring comfortably and working longer than planned.
Sabrina, however, is now at zero, so each move going forward has to be extremely deliberate.
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What rebuilding could look like
The first step is stabilizing the foundation.
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Sabrina has about US$45,000 (C$61,500) in liquid savings from selling her home and roughly US$30,000 (C$41,000) in debt, including credit card debt, a car loan and legal bills. The hosts recommended eliminating consumer debt quickly to free up monthly cash flow — advice that applies just as strongly in Canada, where credit card rates often exceed 20% (5).
Once debt-free, the next step is an emergency fund. For a single parent with a child who has special needs, three to six months of expenses can provide critical stability.
Afterwards, Sabrina should focus her attention on saving for retirement.
Sabrina earns US$80,000 (C$109,000) annually from employment income and her small business.
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The Ramsey framework recommends investing 15% of gross income toward retirement (6). In Canada, that could mean:
- Maximizing RRSP contributions
- Invest in a Tax-Free Savings Account (TFSA) for additional long-term growth
- Explore a Registered Disability Savings Plan (RDSP) if eligible for her child (7)
It’s also important to note that if you haven’t fully used your RRSP or TFSA contribution room in previous years, you may have a significant unused room available. In fact, TFSA room accumulates every year after age 18.
Starting a new chapter at 54
Instead of chasing lost money, Sabrina can do the following:
- Stop speculative investing
- Eliminate high-interest debt
- Build a strong emergency cushion
- Maximize RRSP and TFSA contributions
- Increase income during the remaining working years
For Canadians, retirement also includes CPP and OAS, which provide a baseline income.
At 54, there’s still time for compounding income, just less room for mistakes. The best move now is making sure the next 10 to 15 years count.
— with files from Melanie Huddart
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Youtube (1); Government of Canada (2, 3, 7); Spring (4); BDO Debt Solutions (5); Ramsey (6)
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Monique Danao is a highly-experienced journalist, editor and copywriter with an extensive background in finance and technology. Her work has been published in Forbes, Decential, 99Designs, Fast Capital 360, Social Media Today and the South China Morning Post. She leverages her industry expertise to produce well-researched and insightful articles. She has an MA in Design Research from York University and a BA in Communication Research from the University of the Philippines - Diliman.
