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At 60, how do you plan for retirement at 65?

Turning 60 is a milestone: there are only five years left before the traditional retirement age of 65. This period is strategic—every decision made now will have a direct impact on income and quality of life in retirement.

In this context, let’s imagine someone who has worked continuously as an employee since the age of 25. They currently have only employment income and will begin receiving public pensions (Québec Pension Plan – QPP and Old Age Security – OAS) at 65. Two scenarios deserve attention:

  1. Without an employer-sponsored pension plan (RPP).

  2. With an employer-sponsored registered pension plan (RPP).

We will then look at three key financial questions: is it better to finish paying off the mortgage or invest elsewhere, should one sell the home and rent to save money, and what concrete steps should be taken during the last five years of work.

Scenario 1: Without an Employer Pension Plan

Someone without an employer pension plan will depend mainly on:

  • personal savings (RRSP, TFSA, non-registered investments),

  • public pensions (QPP and OAS).

Simplified example:

  • Current net employment income: $65,000

  • Savings at age 60: $120,000 in RRSP + $40,000 in TFSA

  • Possible contributions for 5 years: $12,000/year to RRSP and $6,000/year to TFSA

If the person saves $18,000 per year for 5 years, they will add about $90,000 to RRSP and TFSA, which could grow to about $110,000 with a 5% return.

At 65, they would have:

  • $230,000 in RRSP,

  • $50,000 in TFSA,

  • QPP: approx. $14,000/year,

  • OAS: approx. $8,500/year.

That means about $22,500/year in guaranteed public pensions, plus planned withdrawals from RRSP/TFSA (say $10,000 to $15,000/year), reaching a total net income close to $35,000/year.

Scenario 2: With an Employer Pension Plan (RPP)

The picture is quite different with an RPP.

Simplified example:

  • The person has 30 years of service in a defined benefit plan.

  • The plan provides 2% of final average salary per year of service.

  • Average salary of last 5 years: $65,000.

Pension at 65:

  • $65,000 × 2% × 30 years = $39,000/year.

Adding public pensions:

  • QPP: $14,000/year,

  • OAS: $8,500/year.

Total: $61,500/year gross income, which is much more comfortable.

In this case, RRSPs and TFSAs play a complementary role (travel, unexpected costs, estate planning). The focus is on tax-efficient withdrawals and estate preparation.

Is It Better to Pay Off the Mortgage or Invest?

At 60, many wonder whether they should eliminate their mortgage.

  • Paying off the mortgage:

    • If the interest rate is 5%, repaying is like earning a guaranteed net 5% return.

    • It also brings peace of mind: no debt at retirement.

  • Investing instead:

    • If investments earn 6–7% on average and discipline is maintained, investing may yield more than the mortgage cost.

    • But market risk can be stressful at the start of retirement.

General recommendation: if the balance is small (e.g., under $50,000), it may be better to keep some liquidity for investing and flexibility. If the mortgage is large (e.g., $150,000), paying it down before retirement significantly reduces financial stress.

Should You Sell Your Home and Rent?

The primary residence is often the largest asset.

  • Selling and renting:

    • You free up capital (e.g., sell for $450,000, pay off $80,000 mortgage, invest the $370,000 balance).

    • No more maintenance costs, but you must pay rent.

  • Keeping the home:

    • You continue building equity and maintain stability.

    • But taxes and upkeep can be expensive.

Example:

  • House: $450,000

  • Taxes + maintenance: $7,000/year

  • Equivalent rent: $1,500/month = $18,000/year

Here, staying in the home costs less per year ($7,000 vs. $18,000). However, if the goal is to simplify life, avoid upkeep, or move to a more affordable area, renting may make sense.

What Concrete Steps Should Be Taken Between Ages 60 and 65?

  1. Build a realistic retirement budget: estimate fixed expenses (housing, food, insurance) and variable ones (travel, leisure).

  2. Maximize RRSP and TFSA contributions: these five years are the last with employment income, making contributions tax-efficient.

  3. Reduce or eliminate debt: entering retirement debt-free provides security.

  4. Simulate public pensions (QPP and OAS): verify if deferring QPP to age 70 could be more advantageous.

  5. Prepare an emergency fund: keep 6–12 months of expenses in liquid savings.

  6. Review insurance and estate planning: life insurance, will, power of attorney, beneficiary designations.

  7. Test the retirement lifestyle: try living on the projected “retirement budget” now to see if it feels realistic.

Conclusion

Between ages 60 and 65, retirement planning must be proactive and structured.

  • Without an employer pension, the focus is on aggressive saving and debt management.

  • With an RPP, financial security is stronger, but tax and estate planning become key.

  • The house vs. investing vs. renting decision depends on debt levels, lifestyle preferences, and liquidity needs.

  • Finally, the last five working years are crucial to securing both the financial and psychological aspects of retirement.

Disclaimer: The information in this article is general in nature and does not replace advice tailored to your specific situation. We recommend consulting a financial planner or qualified advisor to receive personalized guidance based on your needs and goals.

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