Most of your investing life you and your adviser (if you have one) are focused on wealth accumulation. But, we tend to forget, eventually the whole idea of this long process of delayed gratification is to actually spend this money! That’s decumulation as opposed to wealth accumulation. This stage may also involve downsizing from larger homes to smaller ones or condos, moving to the country or otherwise simplifying your life and jettisoning possessions that may tie you down.
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…
The majority of Canadians are afraid they’ll run out of money in Retirement, especially women and young people, according to a survey released Wednesday morning by the Canada Pension Plan Investment Board (CPPIB).
The 2025 CPPIB Retirement Survey (for Financial Literacy Month) says 59% of all Canadians are afraid of running out of money during Retirement, with the percentage jumping to 63% for women, compared to just 55% of men. It also found a whopping two thirds (66%) of Canadians aged 28 to 44 share the same fear. As the CPPIB graphic below illustrates, those who have a financial plan are slightly less worried.
As you’d expect the CPPIB to point out, the Canada Pension Plan (CPP) helps protect retired Canadians from this risk: as it says above, CPP “benefits are payable as long as you live and [are] indexed to inflation.”
Indeed, CPP and the other main government retirement income program, Old Age Security, are both valuable sources of inflation-indexed retirement income. CPP is available as early as age 60 and OAS at 65 but a staple of Canadian personal finance commentary is that the longer you wait to receive benefits, the higher the benefits will be. In the best of all worlds, you’d wait until 70 for both programs to start paying out, even if you have to keep working longer and/or start withdrawing money from your RRSP before it’s mandated at age 71/72. (While the CPPIB doesn’t mention it, retirees with no other savings may also benefit from the Guaranteed Income Supplement to the OAS: and the GIS is tax-free.)
The second graphic reproduced below is less straight-forward: it appears to present various excuses for delaying the creation of a proper financial plan to help get to Retirement. Roughly half of younger Canadians cite their need to advance their careers and make more money, and to buy their first home as priorities.
While it’s true that if nothing else, the future arrival of CPP and OAS benefits should put minds partially at ease about covering off basic Retirement expenses, it seems to me pretty obvious that at least for those who lack a generous employer-sponsored pension plan (ideally an inflation-indexed Defined Benefit pension), that it will be necessary to maximize savings in RRSPs and TFSAs as soon as possible.
Because of the Time Value of Money and the magic of compounding investment returns (especially when tax-deferred in RRSPs and TFSAs), the sooner you start saving in these vehicles the better. There’s no excuse not to make RRSP contributions from the get-go, ideally as soon as you land your first real job, since it reduces your income tax. Yes, decades from now when RRSPs become RRIFs you’ll have to pay some tax on the ultimate withdrawals, but that’s more than made up by the tax-deferred investment growth. Continue Reading…
My latest MoneySense Retired Money column looks at a must-read new book on Retirement as well as two related books on DIY stock-investing. You can read the full column by clicking on the highlighted headline: Who you gonna trust: Barry Ritholtz or Jim Cramer?
The must read and main focus of the MoneySense column is William Bengen’s A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More. If that sounds familiar it should: Bengen’s original book on the 4% Rule is considered the bible of retirement, with his famous “SAFEMAX” guideline of 4% a year being an annual amount of withdrawals that should be “safe” for retirees to continue for a full 30 years, even after inflation. The original book, titled Conserving Client Portfolios During Retirement, was first published in 2006.
Never mind that even Bengen considers 4.7% be a more universal SAFEMAX. The original book was aimed at financial advisors and professionals while the new one ostensibly is aimed at retail investors and retirees. I say ostensibly because I was a little disappointed with it and found the plethora of complicated charts and tables a bit much for lay investors. Still, there’s a lot of common sense there: Inflation is big long-term threat to retirees as are bear markets. Withdrawing too much from portfolios can be disastrous if you are unfortunate enough to retire just as a bear market hits and/or inflation starts to bite.
On the other hand, sticking with the old 4% rule or even the smaller amounts of 3% or even 2% advocated by some cautious souls, could result in you withdrawing less than you really need to enjoy retirement, although the tax department and any heirs might commend your caution and frugality.
How to make money in any market
Amazon.ca
While it’s rare for me to buy new hardcover books because I receive so many “free” review copies of financial books, I actually did buy A Richer Retirement as soon as it was available on Amazon. Plus, unusually, I also bought two other brand new books on the related topic of investing and stock-picking.
One was Jim Cramer’s How to make money in any market, by the sometimes revered but often maligned host of CNBC shows Mad Money and Squawk on the Street. It’s fashionable for some financial journalists who believe in efficient markets and indexing to diss Cramer but I am not in that crowd. In fact, Cramer recommends that newcomers to investing put the first US$10,000 into an S&P500 index fund or ETF.
However, for seasoned investors and even retirees, Cramer suggests putting half a portfolio in index funds and the other half in individual stocks. Where we part company is his recommendation that the bucket of stocks be restricted to just five names, which would mean 10% in each. For my money, that’s way too concentrated and risky, even though he often brags about how he is often accosted by Nvidia Millionaires who tell him they bought that stock as soon as he announced on air that he had renamed his dog Nvidia.
How NOT to invest
Amazon.ca
Finally, regulars to this site may already have read Michael Wiener’s review of Barry Ritholtz’s How NOT to invest, which appeared here in this blog a few weeks after appearing on his Michael James on Money blog.
To be sure, those who are fond of disparaging Jim Cramer might quip that should have been the title of his own book, seeing as there are actually ETFs out there that try to profit by shorting Cramer’s picks. As of this writing, my copy has arrived but I have not yet finished reading it, as it’s a bit longer than the other two.
But based on the book blurbs and Michael’s review, I have no doubt it will be worth reading, whether for younger investors or seasoned ones and/or retirees.
Finally, while I only just received my review copy, I note that David Chilton is publishing a new edition of his classic financial novel, The Wealthy Barber, which any young person just starting to invest should acquire. I look forward to revisiting it.
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