Posted By 
We’re happy to present another Decumulation blog from the forward-thinking Doug Dahmer, which you can find below.
This instalment focuses on a very interesting web-based game that demonstrates how important tax planning is, particularly during your Decumulation years.
No doubt you’ll be shocked but not surprised to discover that the single biggest expense in Retirement will be income tax. Fortunately, there is more opportunity to take advantage of proper tax planning once you have begun to draw down on your nest egg. After you read Doug’s blog below, click on the links provided to view a 3-minute video on how to play the Retirement Tax Game. Then you’ll want to play the game yourself to see how well prepared you are for this daunting task. Note that you may be asked to download Microsoft Silverlight in order to play the game. — Jonathan Chevreau
By Doug Dahmer,
Emeritus Retirement Income Specialists
Special to the Financial Independence Hub
Many of our clients and friends still believe there’s inherent fairness in government programs.
When I point out disparities in medical services, government contracts, municipal board decisions, welfare payments and the greatest of them all — taxation — I, sadly, waken them to the painful reality that lots of government programs just aren’t fair.
Too often in our first world, enlightened, democratic society it is still “What you know,” “Who you know” and “When you know.”
While I can’t help with many of the program disparities I can help in one and it’s the most important to you anyway: Taxation.
The greatest expense in retirement
I can tell you without a doubt that Taxation will be your greatest expense in retirement. And I can say that many of the things you are doing in your accumulation years in the runup to retirement are laying the groundwork for costly tax traps that will cost you a lot (and I mean a lot!) of money.That how you draw down savings and access your various pools of assets and income sources can add hundreds of thousands of incremental dollars to your lifetime cash flow and assets. That few people realize their drawdown years provide the greatest opportunity for strategic tax management because their cash flow comes from so many different sources. That no one at the Canada Revenue Agency is going to tell you how to do it.
One of Emeritus’ core business strengths is to help clients navigate the tax system. We use proprietary financial modelling tools to build effective individual retirement drawdown strategies. In short, we help our clients make their money work harder and last longer . . . .so they can do more and worry less.
The Retirement Tax Game
To show interested people (and who isn’t when you think about it) the magnitude of the impact of the pitfalls and opportunities in tax planning and income drawdown we developed a game. In a moment of low creativity I named it: The Retirement Tax Game. This game allows users to see how different tax strategies and drawdown executions can impact their financial worth. The Retirement Tax Game uses a prepared case study and we have put it on the public section of our Emeritus website.
Through the game you will see how some strategies drive up one’s tax rate while creating clawbacks from entitlements. You will see how some keep rates lower and extend the life of your assets. It’s that simple.
Take a moment to see how better planning leads to better results. The retirement tax game will help you discover how easy it is to fall into retirement tax traps and provide you with guidance on how to avoid these tax traps while minimizing the taxes you will pay over the balance of your life.
If you choose not to and wish to play your own game, well, I hope you win but I am afraid you won’t.
Now is the time to start protecting yourself from needless over payment. Tax planning starts early and runs long. With a little knowledge and a bit of help you can keep more of your money.
Doug Dahmer, CFP, is founder and CEO of Emeritus Retirement Income Specialists. With offices in Toronto and Burlington, Emeritus’ C3 process is one of the industry’s most comprehensive retirement planning processes.
