Jul 5, 2026
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Having millions in retirement savings is a common dream. And according to BMO Financial Group’s 2026 annual retirement survey, Canadians now believe they need $1.7 million to retire comfortably — up from $1.54 million the year before.
So if you have $2 to $5 million in savings, you’re well above that target. But this level of wealth comes with its own unique challenges. Here are three reasons why being a modest millionaire is difficult to handle.
1. Uncomfortable tax situation
Someone with $30 million probably has access to a team of tax lawyers and investment advisers to handle complex tax issues. Someone with only $300,000 in comparison probably doesn’t have many tax complications to worry about.
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But with $2 million to $5 million in registered and non-registered accounts, you’re in a genuinely difficult place. This level of wealth is high enough to cause real tax complications when taking withdrawals or moving money around — but not high enough to justify the cost of a full team of tax professionals.
For Canadian retirees in this range, one of the most important — and easily overlooked — tax risks is the mandatory Registered Retirement Income Fund (RRIF) withdrawal. Every Canadian must convert their Registered Retirement Savings Plan (RRSP) to a RRIF by December 31 of the year they turn 71.
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Once that RRIF is open, the Canada Revenue Agency (CRA) requires mandatory annual minimum withdrawals. These withdrawals are fully taxable as income, whether you need the money or not. At age 71, the prescribed minimum withdrawal rate is 5.28%, and by age 80, it rises to 6.82%, and by age 90, it reaches 11.92%.
For a retiree with a $2 million RRIF, the minimum first-year withdrawal alone would exceed $105,000 — all of which counts as taxable income. If your 2026 income — combined with Canada Pension Plan (CPP), Old Age Security (OAS) and any other sources — pushes your net income above $93,454, you’ll begin losing 15 cents of OAS for every dollar above that line. This is the OAS clawback threshold, which affects OAS payments from July 2026 to June 2027. Moreover, OAS is completely cut off at $152,062 for those aged 65 to 74.
These problems aren’t what the ultra-wealthy face — their OAS is already gone. And it’s not a problem the middle class faces either — their RRIF balances are modest. It’s the wealthy retiree in the $2M to $5M range who tends to be blindsided by it.
Still, you should have at least one highly experienced, knowledgeable financial adviser to help you navigate everything from RRIF drawdown timing to OAS clawback avoidance. Strategies like drawing down RRSP balances in your 60s before the mandatory conversion age, pension income splitting with a spouse and holding dividend-paying investments inside your Tax-Free Savings Account (TFSA) can each make a meaningful difference.
It’s best to work with a Certified Financial Planner (CFP) who offers fee-only advice — meaning they make their money from you, not from commissions from financial products you may or may not need. This eliminates potential conflicts of interest when building a withdrawal strategy around your specific situation.
To get started, open a no-fee RRSP high-interest savings account with EQ Bank. For a limited time, get up to $200 cash when you add new deposits to your EQ Bank RRSP account.
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2. Too exposed to market swings
A billionaire probably doesn’t lose sleep over a market correction, and a middle-class retiree likely leans more heavily on CPP and OAS. But someone with a portfolio worth between $2 million and $5 million has more to lose — and more to protect.
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Interest, dividends and withdrawals from your investment portfolio are probably a major part of your annual budget. Fluctuations in stocks, bonds and other assets have a noticeable, real-world impact on what you can spend.
One way to mitigate this anxiety is to diversify into hard assets like physical gold. Since 2005, Canadians have been able to hold qualifying investment-grade gold bullion inside a self-directed RRSP or TFSA, provided the gold meets CRA purity standards: at least 99.5% pure and produced by an accredited trustee or custodian, such as the Royal Canadian Mint.
Holding physical gold inside a TFSA is particularly powerful: Any appreciation in value is completely and permanently tax-free. There are no capital gains to track, and withdrawals don’t count toward your net income for OAS clawback purposes — unlike RRIF withdrawals.
Gold-related exchange-traded funds (ETFs), such as those traded on the Toronto Stock Exchange (TSX), offer a more liquid alternative for investors who want to invest in the precious metal without worrying about storing it. Both options can serve as a hedge against inflation, crashes and currency risk.
3. Lifestyle inflation can quickly spiral
If you’re a multi-millionaire, you’re probably tempted to live like one. And this temptation could be the biggest financial risk you face in retirement.
Moving up to a bigger home, carrying a larger mortgage into retirement and scheduling multiple international vacations each year can quickly eat away at your nest egg — even one that’s $5 million — faster than most people expect. This is especially true if you face a sequence-of-returns risk: retiring just before a market downturn that reduces your portfolio early in retirement, exactly when you start making withdrawals.
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However, even those with a million-dollar-plus net worth don’t feel the freedom that may be associated with such a status. A 2025 report from The Globe and Mail profiled Canadian retirees who technically qualify as millionaires but don’t feel like it — stating they still hunted for bargains and worried about outliving their money. According to the UBS 2025 Global Wealth Report, about 5% of Canadians have a net worth over US$1 million, or roughly C$1.4 million at current exchange rates.
The antidote isn’t to live like a monk — it’s to build guardrails. A written retirement income plan, created with a CFP, helps define what you can sustainably spend each year while staying on track for the long run. According to Fidelity Canada’s 2025 Retirement Report, 90% of Canadians with a written financial plan feel prepared for retirement, compared to just 55% of those without one.
The instant move: Build a ‘sleep-at-night’ cash bucket
An emergency savings fund may seem redundant when you’re sitting on a portfolio worth $2 million or more. But the peace of mind that comes from locking away one or two years of living expenses in a safe, accessible account can be invaluable — particularly in a down market when drawing from investments feels like selling at the worst time.
In Canada, two practical options for this cash bucket are Government of Canada bonds and Guaranteed Investment Certificates (GICs). Government of Canada 2-year bond yields currently sit at 2.75%. Meanwhile, GIC rates hover at or below 4% at major Canadian financial institutions after the Bank of Canada held its overnight rate at 2.25% in April 2026, though smaller credit unions and online banks offer slightly higher rates. This depends on the duration the GIC is held, whether from 90 days to five years.
Neither rate is spectacular — but that’s the point. It isn’t a growth bucket — it’s a shock absorber. Letting $150,000 to $250,000 sit in short-term GICs or Government of Canada bonds means you can cover 12 to 24 months of living expenses without touching your equity portfolio during a downturn. It also gives your investments time to recover before you need to draw from them.
If you hold GICs inside a TFSA, the interest earned is completely tax-free — making it an even more efficient emergency buffer for retirees who have available TFSA contribution room. The 2026 TFSA annual contribution limit is $7,000, with a cumulative limit of up to $109,000 for eligible Canadians.
What Canadian retirees in the $2M to $5M range should do next
The size of your portfolio isn’t the problem. The plan — or the absence of one — is. Here are practical steps for Canadians in this wealth bracket.
Run an RRIF drawdown scenario before age 71
If you expect a large RRSP balance at 71, consider drawing it down deliberately in your 60s when your income may be lower. This keeps future mandatory RRIF withdrawals smaller and reduces the risk of triggering OAS clawback.
Use pension income splitting
If you have a spouse with lower income, splitting eligible pension income — including RRIF withdrawals — can meaningfully reduce the household tax bill and keep each spouse below the OAS clawback threshold.
Maximize your TFSA every year
TFSA withdrawals don’t count as taxable income and are set apart from the OAS clawback calculation. Shifting dividend-paying investments or interest-earning GICs into your TFSA is one of the most effective tax strategies available to Canadian retirees.
Diversify beyond equities
Consider a mix of equities, fixed income, real estate investment trusts (REITs) and alternative assets — including qualifying physical gold inside a self-directed RRSP or TFSA — to protect against inflation and sequence-of-returns risk.
Build your sleep-at-night cash bucket
Set aside one to two years of living expenses in a GIC ladder or short-term Government of Canada bonds. This removes the pressure to sell equities in a down market and protects your long-term portfolio.
Get a written financial plan — and update it annually
Work with a fee-only CFP to stress-test your withdrawal strategy across multiple scenarios: a prolonged bear market, a health-care shock and the possibility you live into your 90s. Your plan is only as good as its most recent update.
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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.
