Investing for Retirement: Understanding the Three Essential Phases

Planning for retirement can feel overwhelming — but it becomes much clearer when you break it into three distinct phases. Each stage comes with different priorities, risks, and opportunities. Understanding how they work helps you invest confidently and stay on track for a comfortable retirement.

Here’s a simple breakdown of the 3 phases of retirement investing and what you should focus on in each one.

Phase 1: The Accumulation Phase (Your 20s to early 50s)

This is when you’re actively building your wealth. Your biggest advantage here isn’t money — it’s time.

During this phase:

• Your income grows

• You may take on major life responsibilities

• You can afford more investment risk

• Compound growth works strongest in your favour

What to focus on:

• Contributing regularly to RRSPs and TFSAs

• Choosing growth-oriented investments (equities, ETFs)

• Increasing contributions as your income grows

• Avoiding long gaps in investing

• Building a strong emergency fund so you don’t interrupt your portfolio

Even small, consistent contributions during this stage can create significant long-term wealth.

Phase 2: The Pre-Retirement Phase (Mid-50s to early 60s)

This is the transition period — you’re still working, but retirement is now within sight. Your priorities shift from aggressive growth to preservation plus moderate growth.

During this phase:

• Your investment timeline becomes shorter

• Market losses feel more impactful

• You need clarity on income needs for retirement

What to focus on:

• Reducing unnecessary investment risk

• Increasing diversification

• Reviewing your CPP/OAS expectations

• Paying down high-interest debt

• Planning how and when you will withdraw from RRSPs/TFSAs

• Estimating your retirement budget

This is also the time to stress-test your retirement plan — making sure your savings can support your lifestyle for 20–30 years.

Phase 3: The Retirement Income Phase (Your actual retirement years)

Now you shift from growing your money to using your money wisely. The goal is to make your savings last while still keeping up with inflation.

During this phase:

• You start withdrawing from your RRSP, TFSA, or investment accounts

• Market downturns can impact your withdrawals

• You need stable, predictable income sources

What to focus on:

• Building a withdrawal strategy that minimizes taxes

• Keeping part of your portfolio in growth investments

• Using TFSAs for tax-free income

• Avoiding big swings in your investment risk level

• Planning around mandatory RRIF withdrawals

A well-structured plan ensures you enjoy retirement comfortably without worrying about outliving your savings.