Once you achieve Financial Independence, you may choose to leave salaried employment but with decades of vibrant life ahead, it’s too soon to do nothing. The new stage of life between traditional employment and Full Retirement we call Victory Lap, or Victory Lap Retirement (also the title of a new book to be published in August 2016. You can pre-order now at VictoryLapRetirement.com). You may choose to start a business, go back to school or launch an Encore Act or Legacy Career. Perhaps you become a free agent, consultant, freelance writer or to change careers and re-enter the corporate world or government.
By Dale Roberts, CutTheCrap Investing, Retirement Club
Special to Financial Independence Hub
More Canadians feel nervous and unsure about retirement. About 60% of Canadians feel they will outlive their money. I’m here to bring good news. There are a few, simple strategies that will set you up for retirement success. If you read the retirement experts, if you watch all of the wonderful Canadian advice-only financial planners’ YouTube videos, you’ll notice they all repeat the same core strategies. It’s a version of going around the internet and back. Eventually you can stop and realize ‘wow, this is easier than I thought’. It is a good feeling when you discover that creating a successful retirement plan is not that difficult, at all.
Let’s assume that you’ve done most everything right. You’ve read The Wealthy Barber books. You need to pick up another one, and ask your kids, nieces and nephews to read it, as well.
I condensed my financial planning book down to 1200 words …
You cleared your debt, good debt and bad debt. You got the house purchases right, you got the car purchases right. Perhaps you’re entering retirement with no mortgage and no vehicle payments (not a bad idea). You have or had proper insurance, created a will, etcetera, etcetera. If need be, you took advantage of the Spousal RRSP account.
You’re in very good shape.
The retirement basics
Now on to the simple core strategies that will set you up for a successful retirement. You’ve been a very successful DIY investor in the accumulation stage. You might create your own retirement plan. With some research and the retirement tools available, it is certainly ‘doable’ for most Canadians.
If you want more help or a second opinion you can certainly contact an advice-only planner. Yup, those same folks who (many of them) offer the advice for free in blogs and via video channels. You can pay a one-time fee, there’s no need to have an advisor in your pocket every day. You’ll receive conflict-free advice, they are not attached to any poor performing Canadian mutual funds, ha. 😉
Retirement Cash Flow Plan
You’ll use a free-use or very affordable retirement cash flow calculator to discover an optimized, tax-efficient spending strategy. There’s comfort in seeing and knowing that your money is going to last.
Delay CPP and OAS for greater payments
Most Canadians (many planners suggest it’s almost all Canadians) will benefit if they delay The Canada Pension Plan (CPP) and Old Age Security (OAS) payments. From age 65 to age 70 you’ll receive a 42% boost to your CPP payments and a 36% boost to your OAS payments.
The retirement cash flow calculator will show you the way. It’s different for everyone, of course. To enable the delay of those government monies (let’s call those pensionable earnings), you’ll enact the RRSP meltdown strategy.
You’ll spend down your RRSP / RRIF in an accelerated fashion early in retirement to provide a bridge as you await those larger pension-like earnings from CPP and OAS.
The flexible cash flow plan
You’ll embrace a variable withdrawal strategy. The retirement cash flow calculator will show you that a flexible spending plan offers a much higher success rate compared to a static or rigid plan. For example, you might set a desired spending range of $90,000 – $100,000 annual after taxes, compared to a rigid $100,000. If we enter a severe recession and market correction you’re OK to spend a little less.
The investment returns and life events will shape your retirement plan over time. We will certainly evaluate the plan every few years.
The U or You-Shaped spending plan
Speaking of life events, out of the gate you might start with a U-shaped retirement spending plan.
Of course, we build the cash flow plan around your life plans, and the life you want to live in retirement. You might embrace and plan for a U-shaped retirement plan.
Spend more in the early go-go years
Spend less in the mid slow-go years
Boost spending in the no-go years
Spend more when you have your health and energy. Be prepared for surprisingly high healthcare and residence costs in the late-in-life stage.
Income splitting, sharing is caring
When you run a retirement calculator you might be shocked by the low-tax environment you are entering if you are ‘with spouse’.
To lower the tax burden you can split employer pensions, RRIF amounts and even CPP in some situations. Income splitting with strategic use of your RRIF, TFSA and Taxable accounts can enable a ridiculously low effective tax rate for many Canadian retirees. Continue Reading…
Mini-retirement requires dedicated savings to cover expenses and missed retirement contributions
Semi-retirement can dramatically reduce the total capital needed for full retirement
Early retirement requires significantly more savings than traditional retirement to fund decades without employment income
Government benefits like CPP have flexible timing options that substantially impact your retirement income, while OAS doesn’t begin until age 65
Sustainable withdrawal rates vary based on retirement length: longer retirements require more conservative spending approaches
Canva Custom Creation: Lowrie Financial
By Steve Lowrie, CFA
Special to Financial Independence Hub
After decades of working with clients, I’ve noticed something interesting: the concept of retirement at 65 has become almost quaint. The reality is that very few people follow that traditional path anymore, and frankly, they shouldn’t feel obligated to. Your retirement should reflect your life, not some arbitrary date on a calendar.
Let me share what I’ve seen work for real people, and more importantly, help you figure out which approach might be right for you.
The three Alternative Retirement Paths people actually Take
Retirement isn’t a one-size-fits-all event anymore. Instead of that dramatic “last day at the office” moment at 65, most of my clients take one of three very different approaches.
Mini-Retirement: The Career Intermission
Think of this as an adult gap year but done right. You’re taking several months or even a couple of years away from work during your career, not at the end of it. I’ve had clients do this in their 30s, 40s, and 50s to travel, for a career change, or simply to take a break to recharge.
The upside is compelling: you get to enjoy life while you still have the energy and health to really do it. You can reset your career trajectory or return with fresh perspective. The mental and physical health benefits are real and measurable.
But let’s be honest about the downsides. Every month you’re not working is a month you’re not saving. You’re losing CPP credits that you can’t get back. And there’s no guarantee you’ll return to the same salary or position.
Here’s my advice if you’re seriously considering this: run the numbers first. Look at what taking a year off now means for your planned retirement date. Sometimes the math works beautifully. Other times, you realize that mini-retirement might cost you three extra years of work later. Know what you’re trading before you trade it.
Semi-Retirement: The Gentle Glide Path
This is my personal favorite approach for most people because I’ve seen it work so consistently well. Semi-retirement means you’re scaling back, not stopping. Maybe you go from five days a week to three. Maybe you move to consulting on your own terms. Or maybe you keep ownership in your business and hire professional managers to run it.
The benefits go beyond just the financial. Yes, that part-time income takes enormous pressure off your retirement savings. But you also maintain your professional identity and network. You stay mentally sharp and socially connected. The psychological adjustment is gradual rather than jarring.
The challenges are real though. Your time is still partially committed. Some clients find they can’t fully relax because they’re always thinking about that next project. And here’s a trap I see people fall into: they become dependent on that part-time income and never fully retire, even when they should.
Here’s a practical example. If you can earn $40,000 per year from part-time work for five years in your 60s, you would need $200,000 less on day one of retirement (before tax). Because you are not drawing from your investments in those early years, your portfolio has more time to compound, which often makes the overall impact even larger. That kind of bridge income can be the difference between retiring a few years sooner versus waiting. So, working fifteen hours a week doing consulting work you enjoy could mean the difference between retiring comfortably at 62 versus working full-time until 67.
Early Retirement: The Big Leap Exit
Early retirement means fully stepping back from your career: not just scaling down or taking a break but choosing to stop working altogether and move into the next phase of life with intention. Whatever age that might be, it’s ultimately a lifestyle choice about how you want to spend your time.
The appeal is obvious: no alarm clocks, no boss, no commute, complete control over every single day. If you retire at 55 instead of 65, that’s a decade of freedom while you’re still healthy and energetic enough to really use it.
But early retirement is not for everyone. You need significantly more savings because you’re funding potentially 40 or more years without employment income. The risk of outliving your money is real. You will receive smaller CPP payments if you start them before 65, and OAS doesn’t even begin until 65. While healthcare is covered in Canada, prescriptions, dental work, and long-term care come out of your pocket.
The truth is that early retirement requires substantial financial resources and a realistic understanding of what it costs to maintain your lifestyle. For many people, that can mean needing millions more invested to comfortably support several decades without employment income. Funding that many years of spending is no small task, and the risk of outliving your money is real. What matters most isn’t the retirement age or the size of your portfolio. It’s whether your resources can sustain the life you actually want, without unnecessary stress or sacrifice.
Understanding Financial Independence
Before we go further, we need to talk about what Financial Independence actually means in the context of these three paths.
Financial independence doesn’t necessarily mean you never work again. It means you have enough assets that you could live without employment income if you chose to. It’s about having options, not about making a specific choice.
For a mini-retirement, you’re not financially independent in the traditional sense. You’re taking a break, but you’re planning to return to work. Your financial goal is simpler: having enough savings to cover your expenses during the break without derailing your long-term retirement plans.
Semi-retirement sits in an interesting middle ground. You might be financially independent but are choosing to continue earning some income. Or you might not be fully independent yet, but close enough that part-time income bridges the gap. This flexibility is one of semi-retirement’s greatest strengths.
Early retirement requires full financial independence. Your investment portfolio needs to generate enough income and/or withstand enough withdrawals, to cover your living expenses for potentially 40+ years. This is a high bar, and it should be. The consequences of getting it wrong are serious.
Key Considerations before you Choose your Preferred Retirement Path
Every retirement decision has financial implications that ripple forward for decades. Let me walk you through what you need to think about.
CPP and OAS
Your Canada Pension Plan (CPP) benefit is directly tied to how much you’ve contributed and for how many years. Take a mini-retirement or retire early, and you’re leaving CPP contribution years on the table. You can defer taking CPP until age 70, increasing your monthly payment by 42% compared to taking it at 65. But if you’ve retired early and need the income, you might start at 60, accepting a 36% reduction.
Old Age Security (OAS) is simpler but has its own timing considerations. OAS doesn’t start until age 65, period. You can’t take it early like CPP, but you can defer it up to age 70 for a 36% increase. If you retire early at 55, you’re funding 10 years of life before OAS even begins. This is why early retirees need substantially more savings: you’re bridging a longer gap before government benefits kick in.
RRSPs and TFSAs
Every year you’re not working is a year you’re not maximizing these accounts. Miss a year of RRSP contributions in your 40s, and you’re losing not just that contribution but 20+ years of tax-deferred growth. If you retire early, you might need to start drawing from your RRSP before 71, and every dollar you withdraw is fully taxable as income.
Workplace Pensions
If you have a workplace pension plan, the rules around early retirement or phased retirement matter enormously. Some plans let you work part-time while starting to collect a partial pension. Others are all-or-nothing. You need to know your specific plan’s rules before making any retirement decisions.
Healthcare
Canada’s universal healthcare covers a lot, but prescription drugs, dental work, vision care, and eventually long-term care all come out of your pocket unless you have supplementary insurance. For a couple in their 60s, comprehensive health insurance can easily run $3,000 to $5,000 per year, and that’s before you actually use any services.
How your Retirement Path Choice shapes your Financial Strategy
Each retirement path requires a fundamentally different approach to saving, investing, and spending. Here’s what you need to know.
Mini-Retirement: Building the Bridge Fund
If you’re planning a mini-retirement, you’re essentially building a separate fund for that specific purpose. If you need $100,000 per year to maintain your lifestyle and want two years off, that’s $200,000. But if your original plan was to maintain $30,000 to $40,000 per year in savings, you will need to add another $60,000 to $80,000 to your savings/investments. So really, you’re looking at saving $260,000 to $280,000 for this mini-retirement.
Early Retirement: Maximizing Everything Now
Early retirement requires the most aggressive savings strategy. If you want to retire at 55 instead of 65, you need to save as if you’re retiring at 55 but living until 95. That’s funding 40 years of retirement instead of 30. It’s a double whammy: you have fewer years to save and benefit from investment growth, and you start withdrawing earlier, which means your portfolio must last longer to sustain your lifestyle. On top of that, retiring early also means smaller CPP benefits, since you’re giving up contribution years and potentially starting the benefits earlier. The result is that you may need 40–50% more capital than a traditional retirement would require. Continue Reading…
By Shael Weinreb, CEO and Founder of The Home Equity Partners
Special to Financial Independence Hub
November marks Financial Literacy Month, a time when Canadians are encouraged to “Talk Money” and build confidence in their financial decisions. When it comes to one of the biggest financial assets we own, our homes, though, that conversation is still far too narrow.
Right now, one message dominates the conversation: if you’re a homeowner struggling with affordability, a reverse mortgage is your best bet. Reverse mortgage rates are dominating headlines, even for retirees aging in place, but it’s making the alternative financing conversation biased and incomplete.
There’s no denying that reverse mortgages can be useful for some. They provide cash on hand, but they also saddle investors with new debt, compound interest, and a shrinking equity stake over time.
As someone who spends every day helping homeowners unlock equity without new debt, I see the same pattern over and over. People feel backed into a corner because they’re told they only have one choice. That needs to change.
The Alternative no one’s talking about
There’s another way to access your home equity, one that doesn’t involve taking on more debt or losing control of your home. It’s called a Home Equity Sharing Agreement (HESA).
Here’s how it works: a HESA gives you a lump sum today in exchange for sharing a portion of your home’s future appreciation. You keep full ownership and control. There are no monthly payments, no interest, and no loan sitting on your balance sheet.
When you sell (or buy out the agreement), the investor shares in your home’s gain or loss. It’s a partnership, not a payday loan in disguise.
This model works for a much broader group than reverse mortgages: homeowners under 55, people who can’t borrow enough through traditional channels, or anyone who wants to protect their equity while sharing market risk.
At The Home Equity Partners, we’ve helped clients use this model to pay off debt, fund renovations, or supplement retirement income without taking on new financial stress.
Why you haven’t heard of it
The simple answer? Awareness. Most advisors are trained on debt-based tools such as mortgages, HELOCs, and lines of credit because that’s what the industry sells. Reverse mortgages fit neatly into that mold. HESAs don’t. Continue Reading…
When most people are touting the stock market is “too high” to invest in, then, well, it probably is…
The challenge is, as I have personally experienced over the years as a DIY investor, there is no guarantee that all-time-highs don’t keep happening. You just don’t know when the party will end.
I recognized many, many years ago, I cannot time the market so I don’t even bother. Which makes my investing philosophy extremely simple when it comes to market highs or lows, I just keep buying when I have the money to do so.
That’s it.
As the Humble article suggests, any market-timing strategies, appealing as they might seem are usually very unreliable in practice. And if you are unsure about whether you should invest at all, then at least prepare things could get worse.
“That’s why this is a good time — while the market is strong — to prepare, even if we can’t predict.”
The interplay between politics and economics has never been starker. We have an American President who is doing more to stick his nose into the affairs of those that are supposed to be at arms length than any of his predecessors ever dreamed.
Despite this, people who offer commentary on both the economy and capital markets (they are separate things) act as though what’s going on on Capitol Hill is so unremarkable that they conspicuously fail to work any acknowledgement of the dysfunction into their commentary.
Last week, I sat in on a webinar hosted by Jeff Schulze, CFA, who is managing director, head of economic and market strategy for Clearbridge Investments. In his presentation, Schulze noted that the S&P 500 is currently trading at 23 times forward earnings and that only the late 1990s saw a higher number. He added that there has been recent downward pressure on the federal funds rate and opined that the ‘one big beautiful bill’ will offer further fiscal stimulus down the road.
In a dashboard of 12 indicator variables, only one was flashing red (recession). Four were yellow (neutral) and seven were green (expansion). He went on to opine that corporate profits don’t look recessionary. He concluded that a near-term recession is unlikely. I’m not disputing his economic evidence: I’m simply noticing that there was not a word about political implications or developments. That silence strikes me as conspicuously odd.
There are many smart people who look closely at all manner of economic indicators who also look the other way regarding politics. As if they are not related. Why is that? They don’t talk about what’s going on Capitol Hill at all. The topic is taboo. It’s “polarizing.” Some even allege it’s beyond the purview of their mandate. I disagree.
EMH vs Active Management
The efficient market hypothesis (EMH) posits that capital markets do an excellent job of digesting all available information (from all fields of endeavour) quickly and accurately. By synthesizing information into a consistent worldview, EMH implies that no one can reliably ‘beat the market’ through security selection or timing strategies.
The economic forecast offered by Clearbridge seemed predicated on the assumption that what’s going on in Washington is normal, but it also seemed predicated on market inefficiency since Schulze made multiple references to the need for active management. If the market is efficient, then it is already reliably taking the dysfunction in Washington into account. If, on the other hand, it is inefficient, then the vagaries of an unpredictable President stand out as being meaningful and should be noted. So if the conduct of the President is a meaningful consideration, why wasn’t it mentioned by a guy who implicitly rejects EMH? Continue Reading…
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