XEQT for Canadian Retirees: The Case for Holding 100% Equities After 65

When my dad retired at 63, the first thing his bank advisor told him was to move everything into bonds and GICs. “You need to protect your capital now,” the advisor said, sliding a glossy brochure across the desk. “You’re in the distribution phase. It’s time to get conservative.” My dad nodded along because it sounded like the responsible thing to do. Everyone says that, right? Shift to bonds as you age. Protect the nest egg. Don’t be reckless.

He moved about 60% of his portfolio into bond funds and a GIC ladder. Then inflation ran at 4-6% for three years straight. His “safe” bonds returned 1-2%. His GICs locked in rates that barely beat a savings account. Meanwhile, global equities – the stuff he sold – returned over 10% annualized during the same period. The “safe” move cost him tens of thousands of dollars in real purchasing power.

That experience planted a seed in my mind. What if the conventional wisdom about retirement investing is not just outdated, but actively harmful for many Canadians? What if the safest thing a retiree can do is not retreat to bonds – but stay invested in equities?

I know this sounds contrarian. It is. But the data backs it up, and the logic is sound – especially for Canadians, who have structural advantages that most retirement research (which is overwhelmingly American) completely ignores.

Let me make the case for holding XEQT – a 100% global equity ETF – throughout your retirement. Not for everyone. Not blindly. But for a surprisingly large number of Canadian retirees who are being steered toward bond-heavy portfolios they don’t actually need.

1. The Traditional Rule and Why It Exists

You’ve probably heard some version of the “age in bonds” rule. The most common formulation: subtract your age from 100, and that’s the percentage of your portfolio that should be in stocks. If you’re 65, you should be 35% stocks and 65% bonds. If you’re 70, you should be 30/70. By 80, you’re barely holding any equities at all.

This rule has been around since at least the 1980s, and it exists for legitimate reasons:

• Sequence of returns risk. If the market crashes 40% in your first year of retirement and you’re withdrawing from that diminished portfolio, you can permanently impair your long-term wealth. Bonds cushion that blow. (I wrote a whole deep dive on sequence risk here.)
• Volatility smoothing. Bonds historically move in a different direction than stocks (or at least move less). A 60/40 portfolio has smaller drawdowns than a 100% equity portfolio, which means less stomach-churning declines in retirement.
• Psychological comfort. Retirees don’t have future paycheques to fall back on. Watching your portfolio drop 30% when you’re 72 and drawing income from it feels fundamentally different than watching it drop when you’re 42 and still contributing.
• Time horizon. A 30-year-old has decades for the market to recover. A 70-year-old might not. Or so the argument goes.

These are real considerations. I’m not dismissing them. But I am going to argue that for many Canadian retirees, the traditional rule creates a bigger problem than it solves: the risk of running out of money because your portfolio didn’t grow enough to keep pace with inflation over a 30-year retirement.

That’s right. The “safe” approach might be the most dangerous one.

2. Why the Traditional Rule Is Outdated for Many Canadians

The age-in-bonds rule was developed in a different era. When it was popularized, the average retirement lasted about 15 years. Bond yields were 6-8%. Life expectancy was shorter. And most of the research was American, meaning it didn’t account for Canada’s unique retirement infrastructure.

Here’s what has changed:

Canadians live much longer now

The average Canadian who reaches age 65 will live to approximately 86-87 years old, according to Statistics Canada. Many will live into their 90s. If you retire at 63 like my dad, you could easily be looking at a 30-year retirement – or longer. That’s not a short time horizon. That’s the same length as a full working career. A 30-year time horizon is plenty long enough for equities to outperform bonds by a wide margin.

CPP and OAS provide a bond-like income floor

This is the single most important point in this entire article, and I’m going to give it a full section below. But the short version: if you receive CPP and OAS, you already have the equivalent of a significant bond allocation. Those government benefits are inflation-indexed, guaranteed income – exactly what bonds are supposed to provide. Layering more bonds on top is doubling up on “safety” you already have.

Low real bond yields change the math

For most of the 2010s and early 2020s, bond yields were historically low. Even after the rate hikes of 2022-2024, real returns on Canadian bonds (after inflation) have been modest. A 60/40 portfolio in this environment drags down your overall returns significantly. When bonds return 2-3% and inflation is 2-3%, your “safe” allocation is generating zero real growth. Over 30 years, that’s devastating.

Canadian healthcare is publicly funded

This is a massive, underappreciated advantage. In the United States, healthcare costs in retirement can be catastrophic – six figures or more for a couple. This is one of the main reasons American retirement research emphasizes capital preservation. You need a huge buffer for potential medical expenses.

In Canada? You have universal healthcare through provincial plans. Yes, there are out-of-pocket costs for dental, vision, prescriptions, and long-term care. But the risk of a $300,000 medical bill wiping out your retirement doesn’t exist here. That means you can afford to take more growth risk with your portfolio because you don’t need a massive emergency healthcare reserve.

Housing wealth provides a hidden safety net

Many Canadian retirees own their homes outright. A paid-off home in a major Canadian city represents significant wealth that can be accessed through downsizing or a reverse mortgage in an absolute worst-case scenario. This isn’t Plan A – but it’s a meaningful safety valve that makes 100% equities less risky than it appears on paper.

3. The CPP/OAS “Pension Floor” Argument

This deserves its own section because it’s the linchpin of the entire case for holding equities in retirement.

When financial advisors tell you to hold 60% bonds, they’re essentially saying: “You need a large portion of your portfolio generating stable, predictable income to cover your basic expenses.” Fair enough. But what if you already have stable, predictable income covering your basic expenses?

That’s exactly what CPP and OAS do.

Here’s what a Canadian retiree can expect from government benefits alone:

Look at that couple with maximum CPP and OAS: $53,208 per year in guaranteed, inflation-indexed income – before touching a single dollar of their portfolio. That’s the equivalent of having roughly $1.3 million in bonds at a 4% yield. Except you don’t have to actually hold those bonds. The government is providing that “bond-like” income for you.

Even the average couple receiving $37,368/year is getting the equivalent of nearly $1 million in bond income.

Now, if you also hold 60% of your personal portfolio in bonds, ask yourself: how much of your total wealth (including the present value of CPP/OAS) is actually in fixed income? The answer is often 70-80% or more. That’s not a balanced portfolio. That’s an extremely conservative portfolio. And for a 30-year retirement, extremely conservative is extremely risky – because it likely won’t keep pace with inflation.

The insight is simple: CPP and OAS are your bond allocation. Your personal portfolio can be 100% equities and your overall financial picture is still balanced.

4. When 100% Equities in Retirement DOES Work

Let me be specific about the conditions under which holding XEQT through retirement makes sense. This isn’t a blanket recommendation. It’s a strategy that works when certain conditions are met:

You have CPP + OAS covering your basic living expenses. If government benefits cover your rent/mortgage (ideally paid off), groceries, utilities, and basic needs, then your portfolio withdrawals are for discretionary spending. That’s a completely different risk profile. If the market drops 30%, you can temporarily cut back on travel or dining out – but you’re not skipping meals.

You maintain a cash/GIC buffer of 2-3 years of expenses. This is the critical tactical piece. You don’t withdraw from XEQT during a crash. You withdraw from your cash buffer. This eliminates sequence of returns risk as a practical concern. More on this in Section 8.

Your withdrawal rate is 4% or less. The 4% rule has been shown to work even with 100% equity portfolios over 30-year periods. At 3-3.5%, you’re in very safe territory. If CPP/OAS covers your basics and you’re only withdrawing 3% from your portfolio for extras, your money is almost certainly going to last longer than you do.

You have an employer pension (DB or DC). If you’re getting $1,500/month from a defined benefit pension on top of CPP and OAS, you have an even larger income floor. Your portfolio is practically all upside at that point.

You’re psychologically OK with volatility. This one matters more than any spreadsheet. If you watched XEQT drop 25% and your first instinct was “I should buy more,” you’re wired for this strategy. If your first instinct was “I need to sell everything and go to cash,” then you need a different approach. The best strategy is the one you’ll actually stick with.

You have a long time horizon. If you’re 62 and healthy, you might be investing for 30+ years. That’s a full generation. Over that period, equities have outperformed bonds in virtually every historical scenario.

5. When 100% Equities in Retirement DOESN’T Work

Intellectual honesty matters. Here’s when this strategy is genuinely inappropriate:

You don’t have a meaningful CPP/OAS benefit. This can happen if you immigrated to Canada later in life and haven’t accumulated enough years of contributions for full CPP or residency for full OAS. Without that income floor, your portfolio has to do everything, and 100% equities without a safety net is genuinely risky.

Your withdrawal rate is 5% or higher. At higher withdrawal rates, the portfolio is already under stress. Adding equity volatility on top of that creates a real chance of depletion. If you’re withdrawing 6%+, you need the stability of bonds and you probably need to reconsider your spending.

You will panic sell during a downturn. Be honest with yourself. Not “I handled 2020 fine” honest – I mean “I would watch my $800,000 portfolio drop to $520,000 and not change a thing” honest. If you can’t do that, a 60/40 or 70/30 portfolio with more bonds will give you the emotional stability to stay invested. A slightly worse portfolio you stick with beats a slightly better portfolio you abandon.

You have no cash buffer. If you’re 100% in XEQT with zero cash reserves and the market drops 35% in your first year of retirement, you’ll be forced to sell at the worst possible time. Without a 2-3 year cash cushion, this strategy falls apart during the critical early years. This is non-negotiable.

You’re in poor health with a shorter time horizon. If you have reason to expect a shorter retirement – say 10-15 years – the argument for equities weakens. Over shorter periods, bonds genuinely do provide more certainty. The equity premium needs time to manifest.

Your spouse isn’t on board. If you’re the investing nerd in the household and your partner would panic during a downturn, the resulting marital stress isn’t worth the marginal portfolio improvement. Compromise on an 80/20 or 70/30 allocation and sleep peacefully.

6. Historical Data: 100% Equity vs. Balanced Portfolios Over 30-Year Retirement Periods

Let’s look at what actually happens when a retiree holds different allocations over a 30-year retirement. I’m using global equity returns (which is what XEQT approximates) and a blended global bond return, looking at rolling 30-year periods starting from 1970 to 1996 (the most recent period with 30 years of complete data).

Assumptions: $1,000,000 starting portfolio, 4% initial withdrawal ($40,000), adjusted for inflation annually.

Negative values indicate portfolio depletion before the 30-year period ended.

The results are counterintuitive but consistent: the 100% equity portfolio had the highest median ending balance AND the lowest probability of running out of money. The “safe” 40/60 and 20/80 portfolios – the ones most advisors would recommend for a 65-year-old – actually had the highest failure rates.

Why? Because over 30 years, the drag from low bond returns was a bigger threat than equity volatility. The bond-heavy portfolios simply didn’t grow fast enough to sustain 30 years of inflation-adjusted withdrawals. The equity portfolio had scarier drops along the way, but it recovered and kept growing.

Now, a few important caveats:

1. The 100% equity worst case was still positive – $412,000 remaining. But there were white-knuckle periods where the portfolio dropped below $500,000 in the first decade before recovering.
2. These numbers don’t include CPP/OAS. If you’re receiving $20,000-$50,000/year in government benefits, your effective withdrawal rate from the portfolio is much lower, which improves all these numbers dramatically.
3. Past performance is never a guarantee. But 50+ years of global market data is the best evidence we have to make forward-looking decisions.

The takeaway: for a 30-year retirement, bonds don’t make you safer. They make you poorer. The real risk isn’t volatility – it’s running out of money. And the portfolios with the most bonds had the highest chance of running out.

7. The Practical Setup: XEQT + Cash Buffer

Saying “hold 100% equities in retirement” sounds reckless. But the actual implementation is more nuanced and disciplined than a traditional balanced portfolio. Here’s the structure I’d recommend:

The Three-Bucket Approach for XEQT Retirees

Bucket 1: Cash/GIC Buffer (2-3 years of portfolio withdrawals)

• Hold $80,000-$120,000 in a high-interest savings account or short-term GICs (assuming $40,000/year in portfolio withdrawals)
• This is your “don’t touch XEQT during a crash” money
• Replenish this bucket during good market years by selling some XEQT when it’s up
• A Wealthsimple Cash account paying 3.5-4% is perfect for this

Bucket 2: TFSA (your tax-free growth and withdrawal engine)

• Max out your TFSA with XEQT
• Withdraw from here before touching RRSP/RRIF, when possible
• TFSA withdrawals don’t affect OAS clawback or GIS eligibility
• This should be your primary withdrawal source in early retirement (before forced RRIF conversions at age 71)

Bucket 3: RRSP/RRIF (your main XEQT holdings)

• Convert to RRIF by December 31 of the year you turn 71
• Withdraw the minimum required amount each year
• Consider drawing down more strategically to manage tax brackets (see: XEQT withdrawal order)

The Withdrawal Rules

1. When markets are up or flat: Withdraw from XEQT (TFSA first, then RRIF). Simultaneously replenish your cash buffer to maintain the 2-3 year cushion.
2. When markets are down 10-20%: Switch to withdrawing from your cash buffer. Do not sell XEQT. Let it recover.
3. When markets are down 20%+: Withdraw exclusively from your cash buffer. Consider cutting discretionary spending temporarily. Absolutely do not sell XEQT.

This simple system means you never have to sell equities at the worst time. Your cash buffer absorbs the first 2-3 years of any market downturn, and historically, markets have recovered from even the worst crashes within that timeframe.

The beauty is that in good years – which statistically happen more often than bad years – you’re selling XEQT at higher prices, pocketing growth, and restocking your cash bucket. The buffer rarely gets fully depleted because bear markets typically don’t last 2-3 consecutive years.

8. Why XEQT Specifically for Retirees

You could build a global equity portfolio from individual ETFs. You could hold VFV for the US, XIC for Canada, XEF for international, and XEC for emerging markets. Some people do. But for retirees, simplicity is a feature, not a compromise.

Here’s why XEQT is the right choice for retirees who want to hold equities:

Automatic rebalancing. XEQT holds four underlying iShares ETFs and rebalances them automatically. You never have to decide “should I have more US or more international?” BlackRock handles it. In retirement, you don’t want to be making allocation decisions. You want to be golfing, visiting grandkids, or reading a book.

Global diversification across 9,000+ stocks. You’re not betting on Canada, or the US, or any single country. You own the world. If the Canadian market has a rough decade (it’s happened before), your US, European, and emerging market holdings pick up the slack. This is the kind of diversification that smooths out returns over a 30-year retirement without needing bonds to do it.

Ultra-low fees. XEQT’s MER is 0.20%. Compare that to the balanced mutual funds banks push on retirees, which often charge 1.5-2.0%. On a $1,000,000 portfolio over 30 years, that fee difference can cost you $500,000 or more in lost growth. In retirement, every dollar matters.

Simplicity for estate planning. One ETF is easy for your spouse or executor to understand and manage if something happens to you. “Sell the XEQT as needed” is a one-sentence instruction. A complex multi-ETF portfolio with different bond funds, individual stocks, and rebalancing schedules is a nightmare for a grieving spouse who doesn’t follow markets.

No decision fatigue. As we age, complex financial decisions become harder and riskier. Cognitive decline is a real concern for managing investments in your 80s and 90s. XEQT is the most decision-free way to stay invested in equities. Buy it, hold it, withdraw from it when needed. That’s it.

9. The Psychological Aspect: Staying Calm with XEQT in Retirement

Let me be real with you: the hardest part of holding 100% equities in retirement isn’t the math. The math is actually quite clear. The hardest part is your brain.

Your relationship with money fundamentally changes when you stop earning it. During your working years, a market crash was abstract – your portfolio went down, but your paycheque kept coming and you were buying cheap shares. In retirement, a crash means the thing feeding you is shrinking. That triggers a visceral, primal fear that no amount of backtesting data can fully override.

Here are practical strategies for managing the psychology:

Don’t look at your portfolio during crashes. Seriously. Set up your withdrawal system (automatic transfers from your cash buffer or brokerage), and then don’t log in. Check once a quarter, maybe. Watching your portfolio drop in real time serves no purpose except to make you miserable and tempt you to make bad decisions.

Remember what you own. XEQT isn’t a stock ticker. It’s 9,000+ of the world’s best companies across 49 countries. Apple, Royal Bank, Nestle, Toyota, TSMC. For your portfolio to go to zero, the entire global economy would have to collapse permanently. If that happens, your bond allocation isn’t going to save you either.

Keep a “crash journal.” Before you need it, write a letter to your future panicking self. Explain why you chose this strategy. Include the historical data. Remind yourself about your cash buffer. When the next crash happens (and it will), read that letter instead of calling your broker.

Talk to other retirees who stayed invested. The retirees who held equities through 2008-2009 and came out the other side are the best proof that it works. Their portfolios recovered, grew, and kept funding their retirements. Find those people and listen to their stories.

Automate everything. Set up automatic withdrawals from your cash buffer to your chequing account. Set up automatic rebalancing alerts to remind you to replenish the buffer during good years. The less you have to actively do, the less opportunity there is to make emotional decisions.

10. Putting It All Together: A Retirement Scenario

Let me paint a picture of what this looks like in practice.

Meet Sandra and Paul. Both 65, both just retired. Combined savings of $1,200,000 in a mix of RRSPs and TFSAs. They live in Ottawa. Home is paid off. Modest lifestyle – they spend about $55,000/year after tax.

Their income sources:

Government benefits cover $41,448 of their $55,000 annual spending. They need just $13,552 from their portfolio – a withdrawal rate of only 1.1%.

With a 1.1% withdrawal rate from XEQT, Sandra and Paul could weather virtually any market scenario in history. They’d likely leave a massive estate to their children. Even in the worst-case historical scenario, their portfolio would still be worth well over $1 million after 30 years.

Now, Sandra and Paul are an ideal case. But even if the numbers were less favourable – say they needed $25,000/year from their portfolio (a 2.1% withdrawal rate) – the 100% equity strategy would still work beautifully.

The point is: when you account for CPP and OAS, most Canadian retirees have much lower effective withdrawal rates than they think. And at low withdrawal rates, 100% equities isn’t risky. It’s optimal.

Final Thoughts: Rethinking “Safety” in Retirement

The biggest misconception in retirement investing is the definition of “safe.” For most people, safe means “my portfolio doesn’t go down.” But that’s not the right definition for a retiree with a 30-year time horizon.

The real risks in retirement are:

• Inflation eroding your purchasing power over 30 years
• Running out of money because your portfolio didn’t grow fast enough
• Leaving less to your family than you could have because you were overly conservative

Bonds address the wrong risk for many Canadian retirees. They reduce short-term volatility. But volatility isn’t the enemy – it’s just uncomfortable. Running out of money is the enemy. And over long time horizons, equities are the best defense against that.

If you have CPP and OAS covering your basics, a cash buffer for emergencies, a low withdrawal rate, and the psychological resilience to stay the course – holding XEQT through retirement isn’t reckless. It’s rational.

Your bank advisor might disagree. But then again, your bank advisor makes money selling you bond funds.

Just buy XEQT. Even after 65.

Related Reading

• The 4% Rule with XEQT
• XEQT Withdrawal Order in Retirement
• Sequence of Returns Risk with XEQT
• XEQT After 50: It’s Not Too Late
• XEQT vs Bonds and Bond ETFs

XEQT (iShares Core Equity ETF Portfolio) is a long-term investment. Returns are not guaranteed, and past performance does not predict future results. This article is for educational purposes and is not financial advice. Always consider your personal financial situation before making investment decisions.