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The Best Asset Allocation entering Retirement
By Mark Seed, myownadvisor
Special to Financial Independence Hub
The trigger for this post was some recent reading on vacation in Belize.
Our morning view from the villa in Belize, March 2026.
With retirement just over a month away for me (with my wife already retired since 2025), I’ve been reading a bit more on this subject – more specifically, what might be an optimal asset allocation to enter retirement with – if there is one!?
I examine some options and reference some literature in today’s post, concluding with my own plan good, bad or indifferent.
First, a primer:
Asset allocation is the mix in your portfolio amongst different asset classes — primarily stocks, bonds, and cash for most — to balance risk and reward based on an individual’s goals, risk tolerance, and time horizon.
It is a central feature to portfolio management that helps minimize volatility and align investments to an investor’s personal long-term financial objectives.
That said, asset allocation can change over time, over an investor’s lifecycle and it probably should: including entering Retirement. Consider the following options:
Option #1 – Use a Constant Equity Asset Allocation
One of the simplest strategies to enter retirement with might be using a single, all-in-one, asset allocation ETF across your registered accounts (i.e., RRSP/RRIF, LIRA/LIF) – and continue to maintain that fund for years on end.
Consider something like a “VBAL or XBAL or ZBAL and chill” approach in a 60% equities and 40% fixed income mix. The idea here is you simply sell off “BAL” units over time to fund your lifestyle at a modest withdrawal rate of 4-5% per year.
I know a few DIY investors that do this, very successfully.
I did a case study on my site about doing just that as well.
Selling off the capital you’ve accumulated is absolutely normal and fine and largely intended: why you saved money for retirement in the first place.
The challenge with this approach becomes what withdrawal rate to sell off at.
- A withdrawal rate lower than 3-4% is likely too low over many years: your portfolio will just continue to grow and you are likely underspending in retirement.
- A withdrawal rate in the range of 4-5% is probably just fine.
- A withdrawal rate higher than 5-6% could put you at risk of outliving your money.
I’ll link to how I can help later on…
Option #2 – Use an Age-Based Equity Asset Allocation
Unlike option #1, this one is about using your age as an anchor.
Traditional retirement income planning looks like this:
Source: For illustrative purposes only. T. Rowe Price, August 2025.
- As you accumulate assets, the portfolio is heavily weighted towards equities. As we know by now, equities deliver higher volatility associated with stocks relative to fixed income but that’s the price you pay or have to stomach for long-term gains.
- As you age, get closer to retirement or start retirement, traditional thinking is you might follow an “age-matches your bond or fixed income” allocation formula. Traditional wisdom also says as retirement continues, the portfolio should glide-down in equities to be more conservative: with less time on your side to recover from bad market cycles.
More conventional thinking turns the tables on this below in option #3.
Option #3 – Use a Rising Equity Asset Allocation
If traditional thinking was about lower equites as you age, a rising-equity glide path is the opposite: more equities as you age throughout retirement.
Because: investing doesn’t end when you retire.
A rising-equity glidepath has demonstrated that a portfolio that starts out conservative and becomes more aggressive throughout retirement can deliver a few key benefits:
- it can reduce the probability of long-term failure starting out with secure retirement spending, since
- higher fixed income is available to deliver the meaningful income desired by retirees by avoiding selling any equities at all during any market dips early in retirement, such that,
- by naturally increasing equity exposure over time you will earn greater capital appreciation in the latter, aging years of retirement, helping to combat inflation with any increased life expectancy.
The rising-equity approach works well since if bad returns occur early in retirement (say in the first few years) the portfolio might otherwise be prematurely depleted by equity withdrawals.
So, lower up-front allocations to equities leave retirees less susceptible to a series of bad market returns for a few years.
Here a deep dive on rising equity glidepaths:
Here are two (2) key things to keep in mind when it comes to asset allocation in retirement, at least what I think about:
1. What do you need the money for, and when?
Saving for retirement is different than saving for a single expenditure like a Belize vacation: a one-time event. Figuring out what your annual retirement spend will forever be essential to income planning.
There is little value chasing a $1.7-million retirement number if you don’t need that much anyhow….
I’ve envisioned and therefore created a Retirement Income Map for my wife and I to forecast our first five (5) years of retirement-spending needs. Your spending may be different. That’s OK. I would recommend you figure it out though. Continue Reading…
5 Key Factors that Influence Investment Decisions every Investor should know
Posted By Understand the factors that affect investment decisions so you maximize your portfolio returns
It’s generally a waste of time to obsess about a short-term downward movement in the economy, stock market or both.
These downward movements can occur for a wide variety of reasons, at any time: even outside the kind of significant downturn caused by COVID-19 or, more recently, higher inflation and the Russian invasion of Ukraine, or the current U.S./Israel attack on Iran.
Still, for every “real” short-term downturn, you can spot a dozen fake-outs: situations where the market or economy looked like it was going into a tailspin but pulled out of the drop and began rising at the last minute.
On the other hand, it does pay to obsess about factors that affect investment decisions like portfolio diversification, investment quality, and the extent to which your portfolio suits your personal goals and temperament.
1.) What is the appropriate asset allocation for my portfolio?
A diversified investment portfolio should be spread across multiple asset classes for risk management and potential growth. The main components typically include:
Stocks provide growth potential and can help protect against inflation over the long term. They tend to be more volatile but historically offer higher returns.
Bonds offer steady income and help reduce overall portfolio risk. They generally provide more stability than stocks but lower potential returns.
Cash equivalents, like money market funds or GICs, offer safety and liquidity but usually provide the lowest returns.
The specific percentage allocated to each depends on your personal circumstances, but maintaining this basic diversification helps balance risk and return potential.
Remember that regular rebalancing helps maintain your target allocation as market values change over time.
Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and the Consumer sector). The proportions should depend on your objectives and the risk you can accept. The Finance and Utilities sectors generally involve below-average risk. Manufacturing and Resources tend to be riskier, and the Consumer sector is in the middle.
As well, balance aggressive and conservative investments in your portfolio, in line with your investment objectives and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.
Discover more about properly diversifying your portfolio.
2.) How do I find quality investments?
Quality investments can be identified by examining key financial metrics such as consistent revenue growth, stable profit margins, low debt levels, strong cash flows, and competitive advantages within their industry.
The best blue-chip stocks offer strong investment quality. When the market suffers a significant downturn like that prompted by the emergence of the coronavirus pandemic, these stocks generally keep paying their dividends, and they are among the first to recover when conditions improve.
In keeping with the Successful Investor philosophy, we feel stocks that have been paying dividends for five years or more are some of the safest investments you can have. Dividends are a sign of quality and a company’s financial health. Canadian banks and utilities are among the income-paying stocks that we consider to be safer investments.
Learn more about developing a long-term strategy focused on stocks with high investment quality.
3.) Why is it important to have a disciplined savings plan?
A disciplined savings plan creates financial stability by building wealth consistently, protecting against emergencies, and helping achieve long-term goals through the power of compound growth.
If there is one piece of personal wealth management advice you should immediately implement, it’s to have a disciplined plan for saving during your working years. This, above all things, can set you up for optimal investment gains. We talk more about this in 9 Secrets of Successful Wealth Management, which is free for you to download.
Many of our wealth management clients live off their investments. From time to time, they need to sell some of their holdings to supplement their dividend income. But rather than trying to predict price changes or spot highs and lows, we ensure that decisions affecting the client’s portfolio are tailored to his or her circumstances and temperament.
4.) How can I find hidden assets on a company’s balance sheet?)
A company’s hidden assets can be uncovered by analyzing the footnotes in financial statements, examining goodwill valuations, reviewing off-balance sheet items like operating leases or joint ventures, and investigating intangible assets like patents, brand value, and customer relationships. Continue Reading…
How I manage my RRSP in Retirement
By Michael J. Wiener
Special to Financial Independence Hub
Spending from retirement savings, or decumulation, in a way that maximizes what you have left to spend after taxes is surprisingly complex. I’ve done extensive simulations of various strategies for my situation, including strategies that change over time, to find what works best for me. Here I describe how I’m managing my RRSP in retirement, but it’s important to remember that it may or may not work well for you depending on your particular circumstances.
Looking for the fully optimal financial strategy is futile. I ran my simulations and chose a simple enough strategy that worked well across a wide range of investment outcomes. The only reason for changing my strategy is if something happens that is far outside my expectations. Those who constantly seek perfection waste their time and hurt their outcomes with constant tinkering.
Our portfolio and goals
My wife and I have RRSPs, TFSAs, and non-registered accounts. I prefer not to discuss exact amounts, but broadly speaking, our combined RRSPs are larger than our combined non-registered accounts, which are larger than our combined TFSAs. In addition to the exact sizes of these accounts, two other figures that are significant for simulations are our unrealized capital gains in the non-registered accounts and our deferred capital losses from previous years.
My wife and I have roughly the same net worth. Although we consider all our assets to be owned by both of us, CRA doesn’t see it that way. We spent decades carefully choosing whose money to spend each year so that we’d have close to the same net worth now.
Our goal is to maximize the amount we can safely spend each year, rising with inflation, for the rest of our lives. We have no interest in scrimping now just so we can live rich when we’re much older. Some might even choose to spend more in their 50s and 60s than they will spend later, but I can’t see any logic in living poor early on just to be rich later.
The main tax challenge we face is high taxes and possibly OAS clawbacks on forced RRIF withdrawals after we turn 72. These taxes will be even higher after one of us passes away, and higher still after the second passes away. The remedy here is to make modest RRSP/RRIF withdrawals in the years before we turn 72. The goal is to make lightly taxed RRSP/RRIF withdrawals early rather than heavily taxed withdrawals later. This gap in tax rates has to be large enough to overcome the value of continuing to defer taxes.
This is where the simulations help. At one extreme, we could be spending entirely from our TFSAs to keep our incomes very low. My simulations show that this “collect the GST rebate” strategy is not optimal for us (nor do I find it palatable). At the other extreme, winding down our RRSPs quickly is far from optimal as well. Something in between is best.
Our decumulation strategy
My simulations tell me that we’re best to target a particular income level each year. Note that our income is not the same thing as how much we spend. The amounts we spend from non-registered accounts create only modest declared income for taxes. By adjusting how much we spend from each type of account, we can target different amounts for how much we spend and how much we declare on our income taxes. Continue Reading…
Reduce your Credit Exposure Immediately!
By John De Goey, CFP, CIM
Special to Financial Independence Hub
A month ago, I wrote about how the cycles pointed out by Kuznets, Kondratieff, and Minsky, combined with the writings of Joseph Schumpeter seemed to be coming together at the same time. Now that the war in Iran is nearly a month old, it seems the match has been lit that will set the frightening confluence ablaze. It sure looks like we’re in a credit bubble that is beginning to burst.
The challenge when writing about major developments is to sound calm and purposeful when the natural inclination might be to be more animated. How to get people to take urgent action without coming across as an over-the-top doomsayer?
To begin, I need to stress that I do not see myself as a pessimist. I’ve been speaking to college students throughout southern Ontario for the past few months and when I tell them about something I call Bullshift (the optimism bias fomented by the financial services industry), they often ask if I’m not being biased and overly gloomy. I respond both with evidence and by conceding that everyone has biases, so their allegations against me, while not incorrect, are nonetheless likely to be overstated. My view is that better wealth decisions are made using facts, critical thinking and a dash of skepticism regarding the finance industry’s motives.
If Iran war lingers on, credit markets will be stressed
There are multiple indicators that are now showing credit markets in a state of high stress. The longer the war in Iran persists, the worse the situation is likely to become. As such, here are a few things you could do immediately to reduce your exposure to credit:
1.) If you have not already done so, build an emergency fund. Many people use the equity in their home for this. The caveat here is that real estate prices are likely to drop in the short term, as well, so be careful. Where possible, consider setting aside money in a high-yield savings account for emergencies. When you’re financially cushioned, you’re less likely to rely on more punitive alternatives when money is tight. Continue Reading…
