Know Your Net Worth Before You Retire: A Guide for Canadians

Jason Rideout, CPA, CA, TEP |ANR Chartered Professional Accountants

Most people approaching retirement have a rough sense of what they own and what they owe.

A house. A mortgage that is nearly paid off. An RRSP they’ve been contributing to for decades. A TFSA they started more recently. Maybe a pension. Maybe some savings in a non-registered account.

That rough sense feels like enough. But it almost never is.

Retirement planning built on a rough sense of net worth is like navigating with a map that is missing half the roads. You might get where you’re going. You might not. And you probably won’t know which until it’s too late to change course.

This post explains how to calculate your net worth properly, the traps that cause most people to overstate it, why it matters for your retirement, and how to use it as a planning tool rather than just a number on a page.

What Is a Personal Net Worth Statement?

A personal net worth statement is a snapshot of your financial position at a specific point in time.

On one side: everything you own, listed at current market value. On the other side: everything you owe. The difference between the two is your net worth.

Simple in concept. Genuinely useful only when done completely and honestly.

Assets to Include

A complete net worth statement captures every category of asset, not just the ones that show up on a bank statement:

•Primary residence — current market value, not what you paid for it

•RRSP and RRIF accounts

•TFSA accounts

•Non-registered investment accounts

•Defined benefit pension — the commuted value, or the present value of the projected income stream

•Defined contribution pension or group RRSP

•CPP entitlement — your estimated monthly benefit at your planned start age

•OAS entitlement — your projected benefit at 65, or more if you plan to delay

•Business interests — shares in a private corporation, partnership interests

•Other real estate

•Life insurance — cash surrender value of any permanent policies

•Money owed to you — shareholder loans receivable, family loans outstanding

Liabilities to Include

•Mortgage on your home or any other property

•Home equity line of credit balance

•Investment loans or margin balances

•Business-related personal guarantees

•Outstanding tax liabilities including deferred tax on registered accounts and unrealized capital gains on investments

How to Calculate Your Net Worth Properly

Listing your assets and liabilities is the starting point. Calculating their true value requires one more step that most people skip.

Step 1: Use Current Market Value, Not Purchase Price

Your home is worth what it would sell for today, not what you paid for it in 1995. Your investment portfolio is worth its current market value, not what you contributed over the years. Use today’s numbers throughout.

Step 2: Calculate the Adjusted Cost Base of Each Investment

The adjusted cost base (ACB) is the tax cost of an asset, generally the original purchase price plus any additional investments made, including reinvested distributions for investment accounts.

The gap between an asset’s current market value and its ACB is the embedded capital gain. That gain represents a future tax liability that belongs on the liability side of your net worth statement.

Step 3: Estimate the Deferred Tax on Every Asset

This is the step that separates a useful net worth statement from a misleading one.

Every asset in your net worth carries a different tax treatment on the way out:

•RRSP and RRIF: every dollar withdrawn is taxed as ordinary income at your marginal rate in the year of withdrawal

•TFSA: withdrawals are completely tax-free, no adjustment needed

•Non-registered investments: capital gains are taxed at a 50% inclusion rate for individuals on gains up to $250,000 per year

•Defined benefit pension income: taxed as ordinary income when received

•Business shares: may be eligible for the Lifetime Capital Gains Exemption, which can shelter up to $1.25 million of gains on qualifying shares.

Learn more about the Lifetime Capital Gains Exemption from this ANR blog post:

https://anraccountants.com/post/lifetime-capital-gains-exemption-new-brunswick

Apply the relevant tax estimate to each asset. The result is your after-tax net worth, the amount you would actually keep if you converted everything to cash today.

Step 4: Review It Every Year

A net worth statement is a point-in-time snapshot. Property values shift. Account balances change. Tax rates are adjusted. A statement that is three years old may significantly misrepresent where you actually stand.

Reviewing it annually, ideally at the same time as your tax return when financial information is current, keeps your planning grounded in reality.

The Traps That Cause Most Canadians to Overstate Their Net Worth

Even people who do the exercise often end up with a number that is too high. Here are the most common reasons why.

Trap 1: Treating Your RRSP Balance as Spendable Wealth

This is the most widespread mistake in Canadian retirement planning.

Your RRSP balance is not money you own free and clear. It is money you have agreed to share with the CRA at your future marginal rate. The government has a claim on every dollar inside that account.

An RRSP balance of $500,000 is not $500,000 of retirement wealth. At New Brunswick’s combined top marginal rate of approximately 53%, a fully taxable withdrawal nets roughly $235,000. The deferred tax liability on that account is $265,000 and it belongs on the liability side of your net worth statement.

This does not mean the RRSP was a poor strategy. For most Canadians, it was the right choice. But for retirement planning purposes, the after-tax value is what matters.

Trap 2: Ignoring Unrealized Capital Gains in Investment Accounts

A non-registered investment portfolio that has grown substantially over the years carries an embedded tax liability in the form of unrealized capital gains.

At the current 50% inclusion rate for individuals, a portfolio with $200,000 of unrealized gains has roughly $200,000 × 50% × your marginal rate sitting as a future tax obligation. At New Brunswick’s top rate, that approaches $53,000 in deferred tax on the gain alone.

That liability is invisible on a brokerage statement. But it is real.

Trap 3: Treating All Assets as Equally Liquid

Your home may be your largest asset. But it is not a retirement income source unless you sell it, downsize, or take out a reverse mortgage. Counting it at full value without accounting for transaction costs, your housing needs in retirement, and the timeline to access it overstates what is actually available to fund your retirement.

The same applies to business interests, real estate, and other illiquid assets. Value and accessibility are two different things.

Trap 4: Forgetting the Impact of Inflation

A net worth statement captures today’s dollars. Retirement spending needs to be projected in future dollars.

At 3% annual inflation, a reasonable planning assumption for New Brunswick: $60,000 of annual spending today requires approximately $80,600 in ten years and $108,000 in twenty years to maintain the same purchasing power.

A net worth statement that looks adequate today may be less comfortable in fifteen years if inflation erodes the real value of fixed income sources.

Trap 5: Overlooking the OAS Clawback

Old Age Security is reduced by 15 cents for every dollar of net income above the clawback threshold, which is indexed annually by the CRA.

Retirees who project their income without accounting for this can find themselves with meaningfully less OAS than they expected. Stacking RRIF minimum withdrawals, CPP, pension income, and investment income can easily push net income above the threshold and the clawback can cost thousands of dollars per year.

This is not a problem that appears until it is too late to plan around, unless you model it in advance.

Learn more about the OAS clawback here:

https://www.canada.ca/en/services/benefits/publicpensions/old-age-security/recovery-tax.html

Why Knowing Your Real Net Worth Matters for Retirement

A complete, after-tax net worth statement changes how you make every retirement decision that follows.

It Tells You Whether You Can Actually Afford to Retire

The honest answer to “am I ready to retire?” requires knowing how much after-tax wealth you have, how much after-tax income it can generate, and how long it needs to last.

Without a proper net worth statement, you are estimating. And in retirement, estimates that are off by 20% are not minor inconveniences — they are material problems that compound over time.

It Shows You Where the Inefficiencies Are

A breakdown of net worth by account type reveals the tax efficiency of your retirement portfolio at a glance:

•A retirement funded almost entirely from a large RRIF is structurally inefficient, every dollar is taxable, mandatory minimums increase with age, and there is no flexibility to manage income below the OAS clawback threshold

To learn more about the required minimum annual withdrawals from a RRIF, visit this CRA site:

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/completing-slips-summaries/t4rsp-t4rif-information-returns/payments/chart-prescribed-factors.html

•A retirement with a healthy TFSA balance alongside registered and non-registered assets gives you flexibility to draw from tax-free sources in years when taxable income is high

•A retirement where most wealth is locked in illiquid assets requires a different kind of planning around cash flow and liquidity

Identifying these structural issues while you still have time to rebalance is far more valuable than discovering them at age 65.

It Drives Insurance Decisions

Life insurance is frequently sized based on income replacement. But for many Canadians, the larger need is covering the tax liability triggered at death.

When the second spouse passes, registered accounts, investment portfolios, and other appreciated assets all become taxable. The estate must fund that tax bill from somewhere, from liquid assets, from the sale of property, or from insurance proceeds.

A net worth statement with deferred tax liabilities quantified makes the insurance need concrete rather than guesswork.

It Informs Your Estate Plan

Your estate does not pass on what you own. It passes on what remains after tax, executor fees, and distribution costs.

A net worth statement that includes deferred liabilities tells you the real value of what your beneficiaries will receive and highlights the gaps that estate planning tools like spousal rollovers, testamentary trusts, and life insurance are designed to fill.

How to Use Your Net Worth as a Retirement Planning Tool

Once you have a complete after-tax net worth figure, the planning work begins. Here is how to apply it.

Map Every Income Source Against Your Spending Needs

List every retirement income source with its expected annual amount:

•CPP — at your planned start age

•OAS — at 65 or deferred to 70 for a higher payment

•Defined benefit pension income, if applicable

•RRIF minimum withdrawals — mandatory from age 72, rising each year

•TFSA withdrawals — flexible, tax-free, used to manage total income

•Non-registered investment income

•Rental income, if applicable

•Corporate distributions, for business owners

Compare the total to your expected annual spending, with a realistic inflation assumption built in. If guaranteed income sources: CPP, OAS, pension, cover your essential needs, you have a strong foundation. If they don’t, your invested assets need to fill the gap, and the depletion timeline becomes the central planning problem.

Build a Withdrawal Sequencing Strategy

The order in which you draw from different accounts in retirement is one of the most consequential decisions you will make and it flows directly from your net worth breakdown.

The general principle is to draw from taxable accounts in a sequence that minimizes your marginal rate each year. In practice, this often means:

•Drawing down RRSP savings in the early retirement years before CPP and OAS begin, when total income is lower and marginal rates are more favourable

•Using TFSA withdrawals to supplement income in high-income years without increasing taxable income or triggering OAS clawback

•Managing RRIF minimum withdrawals alongside other income sources so that mandatory amounts do not consistently push income above the clawback threshold

This sequencing strategy is impossible to build without knowing the after-tax value and tax treatment of every asset in your net worth. The statement is the foundation.

Stress-Test the Plan Against Three Risks

A retirement plan that works under normal assumptions should also be tested against the risks that derail it:

•Longevity risk — Canadian women reaching 65 today have an average life expectancy approaching 88. Plan to 90 or 95, not to average.

•Sequence of returns risk — a significant market decline in the first few years of retirement, when you are drawing down assets, can permanently impair a portfolio even if long-run returns eventually recover.

•Care cost risk — the cost of home care or assisted living in New Brunswick is substantial and rising. A plan that makes no provision for this is not complete.

None of these risks eliminate the plan. But each one requires a specific structural response: adequate liquidity, guaranteed income, insurance, or a withdrawal strategy that avoids forced selling during downturns.

For Business Owners: Include the Corporate Balance Sheet

Business owners often underestimate personal retirement readiness because most of their wealth is inside the corporation: retained earnings that carry a deferred tax liability when eventually extracted.

A complete net worth statement for a business owner includes both sides of the ledger: personal assets and corporate retained earnings, with the deferred tax cost of accessing those corporate funds modelled explicitly.

How and when those funds are extracted, as salary, dividends, a capital gains distribution, or through the eventual sale of the business is one of the highest-stakes decisions in the entire retirement planning process. It cannot be made well without a complete picture of where the wealth actually sits.

Net Worth Is Where Retirement Planning Starts

Most retirement planning conversations begin with a savings target or a monthly contribution amount.

Those are the wrong starting points.

The right starting point is a clear, honest, after-tax picture of where you stand today. What you own. What you owe. What the CRA has a claim on. And what you would actually keep if you converted everything to income.

The Canadians who retire with confidence are not always the ones who saved the most. They are the ones who understood their numbers clearly, structured their assets deliberately, and used that knowledge to make better decisions over the years leading up to retirement.

That process starts with a net worth statement, built the right way, reviewed every year, and used as the foundation for every decision that follows.

Frequently Asked Questions: Net Worth and Retirement Readiness in Canada

How do I calculate my net worth in Canada?

List all of your assets at current market value: home, registered accounts, pensions, investments, business interests, and any money owed to you. Then subtract all liabilities including mortgages, loans, and deferred tax obligations on registered accounts and unrealized investment gains. The difference is your net worth. For retirement planning, the after-tax figure is the one that matters.

What is a good net worth to retire in Canada?

There is no universal number. Retirement readiness depends on your expected spending, your guaranteed income sources (CPP, OAS, pension), your health and longevity, and how efficiently your assets are structured. A household with $800,000 in after-tax net worth and a defined benefit pension may be better positioned than one with $1.5 million concentrated in a taxable RRIF with no other guaranteed income.

Why is my RRSP worth less than the balance shows?

Every dollar inside an RRSP will be taxed as ordinary income when withdrawn. You contributed pre-tax dollars and deferred the tax obligation, you did not eliminate it. The CRA has a claim on a portion of your RRSP balance equal to your future marginal rate. At New Brunswick’s top combined rate of approximately 53%, a $500,000 RRSP has an after-tax value closer to $235,000 for withdrawals fully taxed at that rate.

What is the OAS clawback and how does it affect retirement planning?

OAS is reduced by 15 cents for every dollar of net income above an annually indexed threshold (approximately $90,997 for 2025). Retirees with large RRIF withdrawals, CPP, pension income, and investment income can exceed this threshold without realizing it. TFSA withdrawals do not count as income and are the primary tool for managing total income below the clawback threshold.

What is the difference between gross net worth and after-tax net worth?

Gross net worth lists assets at face value without accounting for the tax triggered on disposition or withdrawal. After-tax net worth applies the relevant tax treatment to each asset: marginal rate on RRSP withdrawals, capital gains inclusion on investments, no tax on TFSA, to show what you would actually keep. After-tax net worth is the only meaningful figure for retirement income planning.

How does a business owner calculate net worth for retirement?

Business owners must account for both personal assets and corporate retained earnings. Corporate wealth is real but carries a deferred personal tax liability when extracted. The method of extraction, salary, dividends, capital gains distribution, or proceeds from the sale of the business, determines the tax cost. A complete retirement readiness picture for a business owner requires modelling both sides of the balance sheet together.

How does withdrawal sequencing affect retirement income?

Drawing from the wrong accounts in the wrong order can significantly increase lifetime tax. Drawing down RRSP savings in early retirement years before CPP and OAS begin — when total income is lower — often reduces marginal rates on those withdrawals and lowers mandatory RRIF minimums later. TFSA withdrawals can supplement income in high-income years without triggering the OAS clawback. The right sequence depends on your specific income mix and marginal rates at each stage.

How often should I update my net worth statement?

Annually at minimum, ideally at tax time when your financial information is current. In the five years before your planned retirement date, a more detailed review every six to twelve months is worthwhile. Decisions made in that window, CPP timing, RRSP contributions, asset rebalancing, have the most direct impact on retirement outcomes and require current numbers to make well.

Want to Know Where You Actually Stand Before You Retire?

At ANR, we help individuals and business owners across New Brunswick build a complete after-tax picture of their financial position, and use it to build a retirement plan grounded in real numbers, not estimates.

If you’re within ten years of retirement and haven’t done this analysis, now is the right time.

Reach out to our team to start the conversation.