The five years before retirement are the most consequential of your financial life. The decisions you make in this window determine whether you retire with confidence or spend your first decade managing damage you could have prevented.
The frustrating part is that most of the mistakes made in this period are not caused by ignorance or recklessness. They are caused by busyness, assumptions, and a belief that there will be time to sort it all out later.
There often is not. Here are the ones that cost Ontarians the most.
Mistake 1: Carrying too much debt into day one
Nearly three in ten Canadians planning to retire in 2025 or 2026 expect to still be making mortgage payments after they leave work, according to a Royal LePage survey conducted by Leger. That number has almost doubled since 2016, when only 14 percent of senior-led households carried mortgage debt.
Retiring with a mortgage is not automatically a crisis. But it fundamentally changes your retirement math. Fixed debt payments on a fixed income create very little room for the unexpected, whether that is a health event, a home repair, a market downturn, or simply a year when spending runs higher than expected.
The five years before retirement are the prime window to aggressively eliminate high-interest debt, accelerate mortgage paydown, and arrive at your retirement date with the lightest possible financial load. Every dollar of monthly debt payment you eliminate before retiring is a dollar that stays in your pocket forever.
Mistake 2: Not knowing your actual retirement income number
A CPP Investments survey found that 53 percent of Canadians do not know how much money they will need to retire. Over half. And fewer than half have a financial plan in place.
This matters most in the final five years because these are the years when the number becomes real and actionable. If you discover at 63 that your projected income falls $15,000 short of your spending needs, you still have time to adjust. You can work an extra year or two, redirect savings, optimize CPP timing, restructure withdrawals, and close the gap. If you discover it at 67, your options are far more limited.
The number you need is specific: not a rough guess, but a projection that includes CPP at your intended start age, OAS and its clawback implications, any pension income, RRIF drawdown modelling, TFSA withdrawals, and your actual spending by category. The people who do this exercise early are the ones who retire on time. The ones who skip it are the ones who are still working at 68 wondering where the plan went.
Mistake 3: Keeping the wrong investment mix for too long
The portfolio that built your wealth over 30 years is not necessarily the portfolio that should carry you through retirement. In the accumulation phase, volatility is your ally. In the income phase, a poorly timed market downturn can permanently damage your retirement outcome.
The technical term is sequence of returns risk. If the market drops 30 percent in your first two years of retirement and you are drawing $60,000 per year from a $900,000 portfolio, you may never fully recover, even if the market eventually rebounds. You are selling units at depressed prices to fund your income, and those units are gone permanently.
The five years before retirement are the time to transition deliberately, not panic-driven. That means building a cash or short-term income buffer so you can avoid forced selling during a downturn, reviewing your asset mix in the context of how long your money needs to last, and separating money you need in the first five years from money you will not touch for 20.
This is not a reason to move everything into GICs. It is a reason to have a plan that distinguishes between your short, medium, and long-term money.
Mistake 4: Ignoring the tax structure of retirement income
Most Canadians spend 30 years focused on accumulating as much as possible. Very few spend any time thinking about how they will draw that money down in a tax-efficient way.
The five years before retirement are when that conversation becomes urgent because the decisions made now lock in patterns that last for decades.
Specifically: if you retire at 60 and do not yet need CPP or OAS, those years between 60 and 65 are a rare low-income window. Drawing down your RRSP at a modest rate during those years, while rates are lower, reduces the eventual RRIF balance and its mandatory withdrawals after age 72. Left untouched, a large RRSP can produce forced withdrawals in your 70s and 80s that push you well over the $95,323 OAS clawback threshold every year.
The TFSA is the other side of this equation. Growing your TFSA contribution room now and using it strategically in retirement provides income that never appears on Line 23400, which means it never triggers clawbacks, never attracts income tax, and never pushes you into a higher bracket.
Couples also need to look seriously at pension income splitting and CPP sharing before retirement, not after. These are not complicated strategies. They are elections you file with the CRA. But the planning behind them, knowing which income to draw when and in whose hands, is what separates a well-structured retirement from one that pays far more tax than necessary.
Mistake 5: Not having a written plan at all
The HOOPP 2025 Canadian Retirement Survey found that 57 percent of unretired Canadians feel unprepared for retirement. The same research found that those with an actual plan feel meaningfully less stressed and more confident about their financial future.
A written retirement income plan is not a document that predicts the future. It is a framework that shows you your projected income sources year by year, your expected tax position, your CPP and OAS start dates and the rationale behind them, your drawdown sequence across RRSP, TFSA, and non-registered accounts, and what happens if something goes wrong.
The reason most people do not have one is not that it is too difficult. It is that they keep planning to plan, and the five years pass quickly.
The gap between Canadians who retire well and those who spend their retirement managing shortfalls is rarely savings. It is almost always planning.