Retired (And loving it)

Withdraw a Portion of your Investments

You have put money aside for your retirement for many years so that you can now spend a portion of your investment savings each year. The withdrawals from your portfolio need to be done in the most tax-efficient way possible. There are many different theories and strategies used to determine which investment assets in which accounts are sold first in retirement (RRSP/RRIF, TFSA, Corporate or Non-Registered accounts). It is necessary to balance taxation with future easy access to your investments. You need to be prepared for potential unforeseen income needs. Also, it is not good to pay no tax today and a lot of tax in the future. This is not proper tax planning. A much better approach is to pay attention to the marginal tax brackets and maintain the lowest possible tax rate over the life of the retirement assets. You are planning for the long run – not just planning for today.

Plan to Live Forever

You don’t want an actuary somewhere telling you how long you are going to need your retirement income. Life expectancy is becoming increasingly uncertain due to massive technological and medical advancements. Also, this is your life, not some theoretical statistic. You have now stopped working and do not want to have to start earning an income if you are short of funds. It is important to plan to NOT draw your investment portfolio down to zero at some specific age or time in the future. Doing so would expose your retirement plan to many potential problems like lower portfolio growth rates or higher inflation than expected. Your retirement plan needs to be robust and therefore able to handle unforeseen events like poor bond and stock market returns along with high inflation. If you assume that your investment principal remains intact in retirement then some things can go wrong and you will still be able to withdraw your regular, necessary income required from your portfolio.

Protect your Principal

In retirement you need your investments to grow, provide income, and be less volatile than when you were earning an income. The stock market will continue to be volatile forever. You don’t want your portfolio to drop by a significant amount day by day or month by month. Although there is still a significant need for portfolio growth because of inflation, you don’t want a stock or bond market decline to change your retirement plans. Preservation of your principal becomes essential. You are retired and you need assurance that your income needs can be met even if the stock market underperforms.

Growth in your investment portfolio is still required. This means it is important to own a portion of your investment portfolio in stocks, either individually or in a mutual fund – which can grow along with inflation. Of course you need a diversified portfolio – holding a variety of investments so that you increase your chances of success and decrease your chances of your portfolio varying in value by extreme amounts. Confidence in your investment portfolio and retirement plan should allow you to sleep peacefully.

You need to position your investments so that there is much less chance of losing money – and many opportunities to make a positive return even if the stock market falls. This conservative approach has worked well for investors since investing began. Capital preservation is the paramount investment thesis and will influence each and every investment decision.

Inflation is NOT your friend

Planning properly for inflation is one of the most important aspects of your retirement plan. Inflation goes from being an economic principle when you are working and your income is rising with or above inflation – to a stifling force that steals money from your pocket each and every year in retirement if your investment portfolio does not include investments that rise along with inflation – stocks. Assuming 3.1% inflation, $10,000 today would only be worth $7,369 in 10 years and only $5,430 in 20 years. It can be frustrating because the only way to protect a portfolio from inflation is to buy investments that are volatile. It can seem that we are simply trading inflation risk for volatility risk – and that is 100% true. However, volatility risk can be managed by holding a diversity of stocks whereas inflation risk cannot be managed without holding stocks. These are not easy decisions to make or maintain and it is essential to work with an objective and independent professional who has significant experience working with investors in your exact situation. I have seen some of the worst that history can throw at us and my clients’ retirement plans have remained intact.

Estate Preservation with Life Insurance

You may not need as much Life Insurance as you once did because your investment portfolio has grown and needs of your dependents are reduced or eliminated. However, if estate preservation is your paramount objective and you would like to leave money to your heirs or a charity, there is no better way to do so than through a life insurance policy. Life insurance proceeds are provided to named beneficiaries confidentially, bypassing probate and a will and are tax-free within about two weeks of the death of the life insurance policy owner.

Enjoy Spending Your Savings!

Changing from saving to spending can be quite unnerving – especially if you don’t have an employer guaranteed pension. Spend your savings. Retirement is not a time to be increasing your nest egg – that has already been accomplished otherwise you wouldn’t be retired. Retirees often need to discuss the change from saving to spending many times during the retirement planning process. It is not a natural process. Once again, you need to have an objective professional who has had this conversation 100’s of times and has seen the benefits of a conservative balanced portfolio. Once you know that your financial future looks fantastic, you can peacefully enjoy today knowing that you are ready for anything that life has in store for you.


  • Focus on capital preservation and reducing volatility while maintaining a portfolio that can grow along with inflation.
  • Volatility and Inflation become the two greatest investment risks.
  • Withdraw money from investments in the most tax-efficient way possible over the long term.
  • Preserve your estate through the use of life insurance if desired.
  • Plan for charitable giving – paying it forward – if desired