XEQT for Retirement: Complete Planning Guide for Canadians

Can you retire comfortably with just XEQT? The short answer: Yes, but your strategy needs to evolve as you age.

XEQT is an excellent retirement investment for young and middle-aged investors, but it may be too aggressive for those close to or in retirement.

This guide covers everything you need to know about using XEQT for retirement planning at every age.

Quick Retirement Calculator: How Much XEQT Do You Need?

The 4% Rule:

Traditional retirement planning suggests you can withdraw 4% annually from your portfolio without running out of money.

To retire, you need:

• 25x your annual expenses saved
• Example: $40,000/year expenses = $1,000,000 needed

XEQT Retirement Targets by Lifestyle:

Note: This assumes you also receive CPP/OAS (~$20,000/year combined).

Age-Based XEQT Retirement Strategy

Ages 20-35: 100% XEQT (Maximum Growth)

Strategy:

• Invest aggressively in XEQT
• Max out TFSA or RRSP ($7,000/year for TFSA)
• Start RRSP contributions
• Ignore market volatility

Monthly contribution needed to retire at 65:

Starting at age 25, $500/month in XEQT:

• By age 65: ~$1,490,000
• Retire comfortably on $60,000/year

Why 100% XEQT?

• 40 years to recover from crashes
• Maximize compound growth
• Volatility is your friend (buy the dips)

Ages 35-45: 100% XEQT (Continued Growth)

Strategy:

• Continue aggressive XEQT accumulation
• Increase contributions with raises
• Still decades until retirement
• Don’t shift to bonds yet

Monthly contribution needed to retire at 65:

Starting at age 35, $800/month in XEQT:

• By age 65: ~$1,263,000
• Retire on $50,000/year

Why still 100% XEQT?

• 30 years until retirement
• Plenty of time to recover
• Don’t sacrifice growth too early

Ages 45-55: Consider Transition to XBAL

Strategy:

• Evaluate risk tolerance
• Consider gradual shift to XBAL (60/40)
• Or stay in XEQT if comfortable
• Focus on maximizing contributions

Monthly contribution needed to retire at 65:

Starting at age 45, $1,500/month in XEQT:

• By age 65: ~$848,000
• Retire on $35,000/year + CPP/OAS

Decision point:

• High risk tolerance: Stay 100% XEQT
• Moderate risk tolerance: Switch to XBAL
• Low risk tolerance: Switch to XCON (40/60)

Ages 55-65: Transition Away from XEQT

Strategy:

• Shift to XBAL or more conservative
• Protect accumulated wealth
• Reduce volatility before retirement
• Ensure you can weather crashes

Recommended allocation at 55:

• Aggressive: 100% XBAL (60/40)
• Moderate: 50% XBAL, 50% XCON (50/50 overall)
• Conservative: 100% XCON (40/60)

Why shift away from XEQT?

• Can’t afford a 40% crash right before retirement
• Limited time to recover
• Focus on preservation over growth

Ages 65+: XEQT Usually Too Aggressive

Strategy:

• Move to income-focused ETFs
• Consider XINC, XCON, or XSAB
• Preserve capital while generating income
• Minimize sequence-of-returns risk

Recommended allocation at 65:

• Still working/healthy: 100% XBAL (60/40)
• Retired, moderate: 100% XCON (40/60)
• Retired, conservative: 50% XCON, 50% XCNS (30/70 overall)

Why not XEQT in retirement?

• Can’t recover from 40-50% drops
• Need stable income
• Sequence-of-returns risk too high

Real Retirement Scenarios with XEQT

Scenario 1: Sarah, Age 28

Current situation:

• Age: 28
• Current savings: $25,000
• Monthly contribution: $600
• Retirement age: 65 (37 years away)

XEQT Strategy:

• Invest 100% in XEQT
• Increase contributions 3% annually with raises

Projected at age 65:

• Portfolio value: $1,653,000
• Safe withdrawal: $66,000/year
• Result: Comfortable retirement

Scenario 2: Mike, Age 42

Current situation:

• Age: 42
• Current savings: $180,000
• Monthly contribution: $1,000
• Retirement age: 60 (18 years away)

XEQT Strategy:

• Keep 100% XEQT until age 50
• Transition to XBAL at age 50
• Switch to XCON at age 55

Projected at age 60:

• Portfolio value: $862,000
• Safe withdrawal: $34,500/year
• Add CPP/OAS: ~$20,000
• Total income: $54,500/year
• Result: Comfortable early retirement

Scenario 3: Lisa, Age 52

Current situation:

• Age: 52
• Current savings: $620,000
• Monthly contribution: $2,000
• Retirement age: 65 (13 years away)

XEQT Strategy:

• Too risky at this age
• Immediate shift to XBAL
• Consider XCON at age 60

Projected at age 65:

• Portfolio value (XBAL 6% returns): $1,248,000
• Safe withdrawal: $50,000/year
• Add CPP/OAS: ~$22,000
• Total income: $72,000/year
• Result: Very comfortable retirement

The Biggest Risk: Sequence of Returns

What is Sequence-of-Returns Risk?

The order of investment returns matters significantly in retirement.

Bad scenario with XEQT:

1. You retire at 65 with $1,000,000 in XEQT
2. Market crashes -40% in year 1
3. Portfolio drops to $600,000
4. You need to withdraw $40,000 for living expenses
5. Portfolio now $560,000
6. Even if market recovers, you’ve locked in losses

Solution: Shift to bonds before retirement to reduce this risk.

When to Sell XEQT Before Retirement

5-Year Glide Path Strategy:

Age 60: Start transitioning from XEQT

Benefit: Gradual shift reduces risk while maintaining some growth.

How Much to Withdraw from XEQT in Retirement

The 4% Rule (Conservative):

Example: $1,000,000 portfolio

• Year 1: Withdraw $40,000 (4%)
• Year 2: Withdraw $40,800 (adjusted for 2% inflation)
• Continue adjusting for inflation

Success rate: ~95% chance your money lasts 30+ years

The 3.5% Rule (Safer for XEQT):

Since XEQT is more volatile:

• Use 3.5% withdrawal rate
• Example: $1,000,000 = $35,000/year
• Higher success rate during market crashes

Dynamic Withdrawal Strategy (Best):

Good market years: Withdraw 4.5-5% Bad market years: Withdraw 3-3.5% Average: ~4% over time

Benefit: Reduces sequence-of-returns risk

Tax-Efficient Retirement Withdrawal Strategy

Withdrawal Order (Most to Least Tax-Efficient):

1. Non-registered accounts first (capital gains)
2. TFSA last (emergency fund)
3. RRSP/RRIF as needed (taxed as income)

Example: $60,000 Annual Need

Optimal withdrawal:

• $20,000 from non-registered (XEQT sales)
• $25,000 from RRSP/RRIF
• $15,000 from TFSA (if needed)

Tax impact: ~$5,000 (much lower than taking all from RRSP)

CPP, OAS, and XEQT: The Complete Picture

Government Benefits (Average):

CPP (age 65): ~$12,000/year OAS (age 65): ~$8,000/year Total: ~$20,000/year

Combined with XEQT:

Scenario: Need $60,000/year to retire

Required XEQT portfolio:

• Need from XEQT: $40,000/year
• Portfolio needed: $1,000,000 (4% rule)

With government benefits:

• Total income: $60,000/year
• Comfortable retirement achieved

Early Retirement with XEQT

FIRE Movement (Financial Independence, Retire Early):

Target: Retire by age 45-50

Strategy:

• Save 50-70% of income
• Invest aggressively in XEQT
• Build to 25-30x annual expenses
• Use 3-3.5% withdrawal rate

Example: Retire at 45 on $50,000/year

XEQT needed: $1,500,000 (3.33% withdrawal)

How to get there by 45:

• Start at age 25
• Invest $2,500/month in XEQT
• 20 years of 8% returns
• Result: $1,500,000 at age 45

Challenge: No CPP/OAS until 65, must rely entirely on XEQT

Common Retirement Questions About XEQT

“Can I retire on 100% XEQT?”

Ages 65+: Not recommended - too risky

Better: Transition to XBAL or XCON for stability

“Should I keep XEQT in retirement for growth?”

Partial allocation is okay:

• 20-40% XEQT for growth
• 60-80% bonds/conservative for stability

“What if XEQT crashes right before I retire?”

This is the biggest risk. Solutions:

1. Start transitioning 5 years before retirement
2. Have 2 years of expenses in cash/bonds
3. Be flexible with retirement date
4. Consider part-time work if crash happens

“How long will my XEQT last in retirement?”

4% withdrawal rate: 30+ years (95% success rate) 3.5% withdrawal rate: 40+ years (98% success rate)

XEQT Retirement Checklist

Age 30-45:

✅ Invest 100% in XEQT ✅ Max TFSA contributions ✅ Contribute to RRSP ✅ Ignore market volatility ✅ Focus on maximizing contributions

Age 45-55:

✅ Evaluate risk tolerance ✅ Consider transition to XBAL ✅ Calculate retirement needs ✅ Project retirement portfolio value ✅ Increase contributions if needed

Age 55-65:

✅ Transition away from XEQT ✅ Move to XBAL or XCON ✅ Build cash reserves (2 years expenses) ✅ Create withdrawal strategy ✅ Plan for CPP/OAS timing

Age 65+:

✅ Conservative allocation (40/60 or 30/70) ✅ Implement 3.5-4% withdrawal strategy ✅ Monitor portfolio quarterly ✅ Adjust withdrawals based on market ✅ Maintain emergency fund in TFSA

The Bottom Line: XEQT for Retirement

XEQT is excellent for:

• Building retirement wealth (ages 20-55)
• Aggressive accumulation phase
• Maximizing long-term growth

XEQT is NOT ideal for:

• Near-retirees (ages 60+)
• Current retirees (ages 65+)
• Risk-averse investors

Best strategy:

1. Use XEQT to build wealth (ages 20-50)
2. Transition to XBAL (ages 50-60)
3. Move to XCON (ages 60-70)
4. Focus on income (ages 70+)

The key to successful retirement: Start early with XEQT, but don’t stay in XEQT forever.

Ready to Start Building Your Retirement Portfolio?

Start investing in XEQT today and build the retirement portfolio of your dreams. The earlier you start, the more comfortable your retirement will be.

Remember: The best time to start saving for retirement was 20 years ago. The second best time is today.

Related Reading

• XEQT in TFSA vs RRSP: Where Should You Hold It?
• XEQT vs XBAL: Which iShares ETF is Right for You?
• How Does XEQT Perform During Recessions?
• XEQT Tax Implications for Canadian Investors
• Get started with Wealthsimple and earn a $25 bonus

Disclosure: This post contains referral links. Retirement projections assume 8% returns, which are not guaranteed. Consult with a financial advisor for personalized retirement planning.