Only 10 years from retirement? Here are 5 investments every Canadian with $500K or less saved should reconsider right now

For Canadians, that balancing act comes with its own layer of complexity. You're juggling Registered Retirement Savings Plan (RRSP) withdrawals, Canada Pension Plan (CPP) benefits, Old Age Security (OAS) income and personal savings — all while trying to manage market risk. Getting that balance wrong in the final decade before retirement is more than just a short-term setback. It can have lasting consequences well into retirement (1).

Why the last decade before retirement matters so much

The years leading up to retirement are sometimes considered one of the most financially delicate periods of your life.

At this stage, many people have accumulated the majority of their retirement savings. But with fewer working years ahead, there's also less time to recover from a major market downturn.

Financial planners in Canada warn about what's known as "sequence of returns risk,” which occurs when a steep market drop happens shortly before or just after retirement begins. If retirees start withdrawing money from their registered accounts while their portfolio is down, those losses can permanently reduce how long their savings last (2).

As retirement approaches, Canadian investors often begin adjusting their portfolios to include a mix of growth and lower-risk assets — a shift that can be tailored within both RRSPs and Tax-Free Savings Accounts (TFSAs), depending on your tax situation and timeline.

Here are five investment categories experts say to reconsider as you approach retirement:

Diversified equity funds

Even close to retirement, most portfolios still include stocks.

Diversified equity funds — like total market index funds or broad exchange-traded funds (ETFs) — let you stay invested in long-term market growth without putting all your eggs in one basket, spreading your risk across hundreds or thousands of companies.

Historically, stocks have grown faster than most other types of investments over the long term, which makes them an important part of keeping retirement savings ahead of inflation. However, many advisors suggest slowly dialling back your stock exposure as you get older — especially as you approach age 71, when you're required to convert your RRSP to a Registered Retirement Income Fund (RRIF) and start making mandatory withdrawals (3).

Dividend-paying stocks

Dividend stocks offer something many near-retirees begin prioritizing: income.

Companies that pay regular dividends share a portion of their profits with shareholders. This creates a steady stream of cash to help cover your retirement expenses while still benefiting when the market goes up.

There's also a tax advantage here: Eligible dividends from Canadian corporations qualify for the federal dividend tax credit, which can significantly lower the tax rate you pay on that income. That makes Canadian dividend-paying stocks especially efficient when held outside a registered account (4).

Reinvesting dividends over time has also been one of the biggest contributors to long-term stock market returns. That said, dividends aren't a sure thing — companies can and do cut them during economic downturns.

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Bonds and bond funds

Bonds tend to play a bigger role as retirement nears. Because they're generally less volatile than stocks, they can help smooth out the bumps during market swings while bringing in fairly predictable income through interest.

Many financial advisors suggest gradually shifting more of your portfolio into bonds in the decade before your retirement as a cushion against stock market drops. Canadian government bonds, as well as provincial and investment-grade corporate bonds, are commonly used for this purpose (5).

One thing to keep in mind: Bond prices and interest rates move in opposite directions — something Canadian investors have felt firsthand since 2022. As rate conditions continue to shift, bond fund performance can vary quite a lot, so it's worth looking at the duration and credit quality of what you're holding.

Annuities

Some Canadians also look into annuities — insurance products designed to provide guaranteed income for a set period, or even for life.

If the idea of outliving your retirement savings keeps you up at night, a life annuity purchased through a licensed carrier can act as a financial safety net — giving you a predictable income stream that works a lot like a defined benefit (DB) pension (6). Annuity income in Canada is also partially taxable, with only the interest portion counted as income, which can make them a tax-efficient option in the right situation (7).

However, annuities can come with fees and complicated terms, and once you sign on, you generally can't undo it. Most experts recommend taking a closer look before making the commitment — ideally with the help of a Certified Financial Planner (CFP).

Cash and capital-preservation investments

Cash alternatives — such as high-interest savings accounts (HISAs), money market funds and Guaranteed Investment Certificates (GICs) — can be a handy way to cover short-term expenses while keeping your money within reach.

In Canada, GICs held at Canada Deposit Insurance Corporation (CDIC) member institutions are protected up to $100,000 per depositor category (8). This makes them a solid option for preserving capital in the years leading up to retirement.