Is 90% Equity Too Risky Near Retirement?

A 90% equity portfolio can feel “normal” during long bull runs—right up until you’re within a few years of retirement and a bad market year suddenly has a deadline. If you’re planning to start drawing from your RRSP, TFSA, or non-registered account soon, the question isn’t whether stocks usually recover. It’s whether you have time to wait for the recovery without derailing your spending plan.

Here’s the stance I’ll take: 90% equities is often too aggressive when retirement is within sight—unless your cash flow plan is unusually flexible and you’ve built a real buffer. The goal shifts as you approach retirement. Growth still matters (inflation doesn’t retire when you do), but sequence-of-returns risk—bad returns early in retirement—matters more.

This post is part of our Interest Rates, Banking & Personal Finance series, so we’ll also connect the dots to interest rates, bonds, GICs, and how to use the right account (TFSA, RRSP, non-registered) for the right job.

The real risk isn’t “volatility”—it’s forced selling

If you’re within 0–10 years of retirement, the biggest danger isn’t seeing your portfolio value bounce around on a screen. It’s this: needing cash during a downturn and selling equities at a discount.

That risk has a name: sequence-of-returns risk. Two people can earn the same average return over 20 years, but the person who gets a market drop early in retirement can run out of money sooner—because withdrawals lock in losses.

A simple example:

• You retire with $1,000,000 and plan to withdraw $50,000/year.
• Year 1 brings a -25% equity market drop.
• If you’re 90% equities, your portfolio might fall roughly ~22% (ballpark, depending on what the 10% is).
• Now your $50,000 withdrawal is a much larger percentage of what’s left.

A retirement portfolio isn’t just an investment account. It’s a paycheck replacement. Paychecks need reliability.

The closer you are to drawing income, the more your portfolio needs a “don’t-sell-stocks-this-year” plan.

How conservative should you be near retirement?

There’s no single “correct” asset mix, but there is a useful framework: match money to its timeline.

A practical rule: time-segment your money

Instead of picking one static equity/bond split and hoping it holds up, segment your portfolio:

1. Now–2 years (Spending Cash): money you’ll spend soon
2. Years 3–7 (Stability Bucket): money that should be steady-ish
3. Years 8+ (Growth Bucket): money that can ride out volatility

This approach reduces panic and prevents forced selling.

A common retirement “glide path” range many planners use as a starting point (not a law):

• Age 50s: ~60–80% equities (depending on pension, job security, flexibility)
• Early 60s: ~50–70% equities
• At retirement: often 40–60% equities

If you’re sitting at 90% equities and retirement is 3–7 years away, it usually means one of two things:

• You’re unintentionally taking on more risk than you think, or
• You’ve got a strong plan that includes significant safe assets elsewhere (pension, rental income, business cash flow, etc.).

The pension question changes everything

A defined benefit pension can act like the “bond portion” of your retirement plan, because it’s a steady income stream. If you have a strong pension that covers essentials, you might be able to keep a higher equity allocation.

If you don’t have a pension, your investments are doing double duty: funding retirement and smoothing the ride. That’s when a 90% equity allocation gets harder to justify.

Interest rates: why the “safe” part of your portfolio matters again

For years, conservative investors got punished—savings paid almost nothing and bonds didn’t look attractive. But the interest rate environment shifted, and even with rate moves up and down, the bigger point remains:

Safe yields are no longer imaginary.

That matters because conservative assets aren’t just “dead money.” They can now contribute meaningfully to your plan.

Bonds vs. GICs vs. cash: what each one is for

• Cash / high-interest savings: Best for near-term spending and emergencies. It’s stable, but inflation can quietly eat it.
• GICs: Great for known spending needs in specific years (think: “I’ll need $30,000 in 2027”). They’re predictable and easy to ladder.
• High-quality bonds / bond ETFs: Useful when you want liquidity and diversification. Bond prices move when rates move, but they can still play a stabilizing role, especially if you’re holding a mix and reinvesting.

A retirement-friendly move I like: build a 2–5 year GIC ladder for spending needs, then invest longer-term money for growth.

Your “safe money” has a job: keep you from selling growth assets at the worst possible time.

TFSA, RRSP, and non-registered: put the right assets in the right account

If a couple has TFSAs, RRSPs, and non-registered accounts all sitting at ~90% equities, it’s worth asking whether the portfolio drifted that way because equities performed well—or because nobody assigned each account a role.

A clean way to think about account roles

RRSP/RRIF:

• Best for tax-deferred growth.
• Withdrawals are taxed as income.
• Often a good home for income-producing assets (like bonds) because the interest is sheltered.

TFSA:

• Best for flexibility and tax-free growth.
• Great for higher-growth assets if you can emotionally hold through downturns.
• Also an excellent place for part of your “buffer” because withdrawals don’t create taxable income.

Non-registered:

• Taxable each year (interest is fully taxable; eligible dividends and capital gains get better treatment).
• Often better for equities (capital gains treatment), but it depends on your tax bracket and your plan.

One portfolio, three tax wrappers

Your asset allocation should be set at the household level first (how much equity vs. fixed income overall). Then you place assets tax-efficiently.

A common mistake: “My TFSA is 100% equities, my RRSP is 100% equities… so I guess I’m 100% equities.”

A better approach: “We want 60/40 overall. Let’s place bonds where they’re tax-sheltered and keep equities where they’re tax-efficient.”

A step-by-step plan to de-risk without “timing the market”

If you’re 90% equities and you know it’s more risk than you want, the worst move is usually an emotional all-at-once switch on a scary headline day. The better move is a rules-based transition.

Step 1: Decide what you need to protect

Start with a number, not a feeling:

• How much do you need per year after tax?
• How many years until CPP/OAS/pensions start?
• How much of your spending is non-negotiable (housing, food, insurance)?

A strong baseline: aim to cover 1–2 years of spending needs in cash, and another 3–5 years in high-quality fixed income (GIC ladder or bonds), depending on flexibility.

Step 2: Set a target allocation you can stick with

Pick an allocation you won’t abandon in a downturn. Many near-retirees discover they’re not “aggressive investors” when their portfolio drops 20%.

If you’re unsure, stress-test your emotions:

• If your portfolio fell 15% in three months, would you sell?
• If it fell 25% over a year, could you still sleep?

If the honest answer is “I’d panic,” you’re over-allocated to equities.

Step 3: Shift gradually using contributions, distributions, and rebalancing bands

Three clean methods:

1. Direct new savings to fixed income until you hit your target.
2. Rebalance on a schedule (quarterly or annually).
3. Use rebalancing bands (e.g., rebalance when equities drift 5% above target).

This is boring by design. Boring is good.

Step 4: Build a withdrawal order before you retire

Your withdrawal strategy affects your risk level.

A common, workable sequence (not universal):

• Use non-registered first (manage capital gains)
• Then RRSP/RRIF (manage tax brackets)
• Keep TFSA for last or for large one-offs (car, roof, helping kids)

But the best withdrawal order depends on age, tax bracket, pension income, and whether you’ll face OAS clawback later. The point is: asset mix and withdrawal plan are one system.

“People also ask” retirement allocation questions

Should a retiree ever be 90% equities?

Yes, but it’s rare and specific. It usually requires (1) a pension covering essentials, (2) a long time horizon, and (3) the ability to cut spending during market downturns.

Is shifting to conservative investing a mistake if inflation stays high?

No. The mistake is going too conservative with no growth plan. A retirement portfolio still needs equities for long-term inflation protection. The goal is balance: enough safety for near-term spending and enough growth for the decades ahead.

Do higher interest rates mean you can take less stock risk?

Often, yes. When safe yields are higher, your fixed-income allocation can contribute more to your return target, which can reduce how much equity risk you need to take.

A better retirement mindset: growth plus defense

Most couples approaching retirement don’t need a portfolio that wins every year. They need a portfolio that doesn’t blow up their plan in the years that matter.

If you’re sitting at 90% equities, treat it as a prompt—not a verdict. Run the numbers. Build the buffer. Decide what your safe assets are for. Then let your equity allocation do what it’s supposed to do: grow the portion of your money that truly has time.

If you want a simple next step, start here: how many years of retirement spending could you fund without selling a single stock? If the answer is “less than one,” you already know what to fix.