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…
It’s all over the news. The price of one ounce of gold is over $4,000
Millions of people — and even some governments — consider gold to be an investment. Good for them.
Ever since I became interested in investing, I’ve always dismissed the idea of owning gold. I still haven’t changed my mind, but I must admit: the gold bugs are having a good moment.
As of October 22nd, gold was trading at $4,067. That’s a 48% increase from one year ago when it was $2,744. Congratulations, gold bugs. Especially to my friend Michael who has been telling me to buy gold for the past 10 years.
It’s been an amazing run. If you had put your money into gold at the beginning of the millennium, in January 2000, you would have ended up with more money than if you had invested in the S&P 500. A lot more. About three times as much, as you can see from this chart.
And remember: the S&P 500 represents real businesses. Companies producing goods and services, generating profits, paying dividends, and giving you a claim on future cash flows — cash flows that are much larger today than 25 years ago. Gold, on the other hand, is — as British economist John Maynard Keynes put it — a barbarous relic. It produces nothing. It just looks shiny.
Yes, it has some industrial use in electronics, and millions of people all over the world wear it as jewelry. But economically speaking, it’s just a shiny object.
So how does this shiny object — which does nothing except sparkle — outperform one of the greatest bull markets in U.S. history? It boggles my mind.
Why I still prefer stocks
First, let me tell you why I prefer stocks.
The reason I prefer stocks over gold is simple: cash flow compounds.
When you own productive assets:
Companies earn profits.
They reinvest those profits to grow.
They pay dividends or buy back shares.
Your slice of the economic pie keeps expanding — even while you sleep.
That compounding effect is relentless. It’s like planting a tree that keeps bearing fruit year after year. Gold, on the other hand, just sits there. It doesn’t grow. It doesn’t reproduce. It doesn’t innovate. You’re entirely dependent on the next buyer being willing to pay more for it than you did.
That’s not investing. That’s speculation.
Why some like Gold
I admit it, gold does have a legitimate purpose: it serves as insurance against currency collapse or geopolitical disasters. Imagine for a second that you live in a country with high inflation, like Venezuela. If you have gold, you don’t care that the local currency, the Bolivar, collapses. You are good, you have gold.
One possible reason for gold’s recent rise is central banks. Many of them have been buying gold as part of their foreign exchange reserves. Traditionally they buy U.S. dollars, but some of them are switching to gold because their relationship with the U.S. has been deteriorating. 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.
By Dale Roberts, CutTheCrap Investing, Retirement Club
Special to Financial Independence Hub
We all make mistakes. There is no such thing as the perfect portfolio. In the accumulation stage we usually have time to recover from mistakes and hopefully we’ll learn from those mistakes. Learning from mistakes will usually move us towards a more passive global core index-based portfolio. In retirement, we don’t always get a second chance. It is crucial to be aware and avoid any retirement pot holes. Kyle at the Canadian Financial Summit asked me to discuss and outline some of the key and common retirement mistakes. Of course, they are too many to mention in a 45-minute interview. Below, I will outline more of the common mistakes in retirement.
Here’s an AI outline of the Canadian Financial Summit.
The Canadian Financial Summit is an annual, free, virtual conference for Canadians to learn about personal finance and investing from Canadian experts. It covers topics like retirement planning, tax optimization, and investment strategies, with content tailored specifically for a Canadian audience to address Canadian-specific financial products and regulations. The goal is to provide practical advice to help attendees save money, invest better, and improve their financial literacy.
Canadian Financial Summit Speakers
The Summit begins on October 22 with headliners such as David Chilton (new Wealthy Barber book out in November), Rob Carrick, Jason Heath, Preet Banerjee and more. Here’s the list of speakers and topics.
Once again, I am covering common retirement mistakes. Here’s the range of topics I had prepared for my discussion with Kyle. We touched on a few of these.
We have to start in the accumulation stage
Many retirement mistakes are born in the accumulation stage, and in the retirement risk zone.
Too much risk
Most investors take on too much risk. They are not investing within their risk tolerance level. That said, it has not been a problem since 2009: we have not been tested. But retirees and near retirees were certainly burned by the financial crisis and the dot com crash. For too many, their retirement was greatly impaired.
And of course, we can add in not taking on enough risk, for those who are risk averse. We need to take on the risk necessary to achieve our financial goals. All said, we always need to invest within our risk tolerance level.
The accumulation stage is dead simple
Go for growth while investing within your risk tolerance level. More money is “more better.” More money will create more retirement income.
Paying ridiculously high fees
Fire your wealth-destroying high-fee mutual funds and the advisor they rode in on. Ditto for the retirement stage. You can do the research necessary, or look to an advice-only planner who specializes in retirement planning.
Don’t count the dividends
Don’t PADI – Potential Annual Dividend Income.
That’s like watching the oil gauge as you try to make the car go faster.
The dividends do not contribute to wealth creation. Dividends are a removal of value; that’s it. The share price drops by the value of the dividend. If you move the dividends back to your stock or ETF holding to buy more shares you are simply owning more shares at lower prices.
As Yogi Berra would ask: do you want your medium pizza cut into 8 slices or 6 slices?
You still have a medium pizza, no matter how you slice it.
Dividends are a tax drag in taxable accounts. You are paying tax on money you don’t need. You are paying tax on money that creates no value. It’s phantom wealth creation, but with real taxes.
Avoid covered calls and other specialty income
They underperform by design. That fact should be outlined in the prospectus.
Canadian home bias
This can be related to a fascination with Canadian dividends or Canadian Blue Chip stocks in general. For sure, building a portfolio of Canadian Blue Chips is known to greatly outperform the TSX Composite. But we need greater diversification to reduce risk.
A Canadian with severe home bias is putting all of their chips on a few sectors, one country and one currency. It’s not smart.
We should consider a global portfolio, at the very least a Canadian and U.S. portfolio.
Stock portfolios that are too concentrated
It’s common to see portfolios with just a few stocks. We need 15 to 20 stocks to mimic an index. You’re likely best to hold 20 or more.
We create severe company risk with a concentrated portfolio.
Clear your debt
Carrying debt into retirement is a common “mistake.” A recent report suggested that 29% of Canadian retirees will carry a mortgage.
Consider the tax burden that it takes to create the income to pay the mortgage. Every extra dollar is at the top marginal rate. It’s a mortgage payment plus tax on top. A $3,000 monthly mortgage payment might cost you $4,000 or more when you consider taxes. It could also contribute to OAS claw back.
Consider the car payment as well. Try to enter retirement with a paid-off vehicle.
This allows us to ‘split income’ before the age of 65. At age 65 we can then split income from your RRIF.
Ditto for setting up joint taxable accounts. Pay attention to attribution rules for taxable accounts.
The Retirement Risk Zone
Not preparing the portfolio (de-risking) for retirement before retirement is a common mistake. We enter the retirement risk zone several years before retirement. That was our topic last year for the Financial Summit.
Mistakes in Retirement
Not running a retirement cash flow calculator
This is a must for every retiree. A retirement calculator will help you discover the most optimal (and tax efficient) order of account harvesting. That is when, and how much, to remove from your RRSP / RRIF, Taxable accounts, and TFSAs, working in concert with pensions, other amounts plus, CPP and OAS. It can help us create tax efficiency and manage OAS claw backs.
Most Canadians will benefit from the RRSP / RRIF meltdown strategy. It involves delaying CPP and OAS for the massive increases in pension-like, inflation-adjusted income.
From age 65 to 70, CPP increases by 42%, OAS increases by 36%.
To delay CPP and OAS we often use the RRSP / RRIF accounts (and at times a slice of TFSA or Taxable) to bridge the gap during those years. That is, we spend more heavily from the RRSP / RRIF while we wait for increased CPP and perhaps OAS.
It’s different for everyone, the retirement cash flow calculators will help you uncover the right approach for you. Only the software knows.
There are many retirement calculator options that are free use, or available at a very low fee. We are reviewing many of them at Retirement Club.
Examples: MayRetire, Milestones, Adviice, Perc-Pro from Frederick Vettese, optiml.ca, PWL Capital also offers a retirement calculator.
Not spending, not enjoying their money
We might embrace a U-shaped spending plan. We spend more in the early years: the go-go years. It might dip in the slow-go years, and then increase again in the later no-go years as health care cost, living in place, or retirement home plus assisted living costs increase greatly.
Retirement planning experts suggest current market conditions may present an opportune moment for retirees to consider annuities. With potentially higher yields available in today’s interest rate environment, strategic approaches like partial annuitization and laddered purchases offer ways to enhance retirement security. Financial advisors emphasize the importance of weighing tax implications and long-term income stability before making decisions about annuities in a changing economic landscape.
Ladder Annuity Purchases to Capture Peak Rates
Favorable Market Creates Opportunity for Retirement Security
Strategic Timing for Annuities in High Rates
Consider Tax Implications before Rushing to Annuitize
Tax Strategy matters more than Current Rates
Lock in Higher Yields while Maintaining Diversification
Balance Security and Flexibility with Partial Annuitization
Act Now before Rate Cuts Lower Lifetime Income
Ladder Annuity Purchases to Capture Peak Rates
Through my work with United Advisor Group helping advisors serve elite clients, I’m seeing a critical window right now for partial annuitization that most people are missing. The current 5-6% immediate annuity rates are the highest we’ve seen in over a decade, but here’s what’s different from typical advice.
I’m recommending clients ladder their annuity purchases over 12-18 months rather than going all-in immediately. We’re working with carriers like Lincoln Financial where a Phoenix client recently locked in 5.4% on a $300K immediate annuity in January, then waited until rates hit 5.8% in March for another $200k portion. This staging approach captures rising rates while securing baseline income.
The sweet spot I’m seeing is 30-40% annuitization for near-retirees, not the 20% most advisors suggest. With our four-custodian structure at UAG, we’re tracking how this higher allocation actually reduces overall portfolio risk more than expected. A Scottsdale couple we work with annuitized 35% at current rates and can now be more aggressive with their remaining assets.
What makes this timing unique is the Federal Reserve’s clear signalling about holding higher rates through 2024. Unlike previous cycles where advisors played wait-and-see, the current economic indicators we track suggest these annuity rates have more staying power, making the decision timeline less pressured than typical rate environments. — Ray Gettins, Director, United Advisor Group
Favorable Market creates Opportunity for Retirement Security
Annuities aren’t flashy: but in today’s rate environment, they’re finally getting their moment.” With interest rates at multi-year highs, this is one of the most favorable environments we have seen in a long time for retirees to consider annuitizing or partially annuitizing. Higher rates mean better payout terms, especially for fixed annuities, giving retirees more predictable income in retirement. But timing is still very important. The decision to annuitize should still be in line with your personal retirement goals, risk tolerance & need for guaranteed income. Partial annuitization provides a great balance for retirees, allowing them to create a stable income stream to cover essential expenses and still have portfolios flexible enough for legacy planning and growth. It’s much more than a response to market conditions. It’s a calculated move towards peace of mind.
Now might be the smartest time in 15 years to consider annuitizing.
It’s actually quite a favorable time for retirees to annuitize, partially or fully, considering the interest rates today that are at their highest levels since before the Great Financial Crisis. Higher interest rates essentially mean stronger payouts than what we have seen over the past decades. This makes them a more attractive option for those looking for a guaranteed lifetime income. Having said that, I still recommend retirees to think of annuitization the same way they think about diversification, strategically, not emotionally. While having a steady stream of income for essential expenses can provide peace of mind, I would never recommend anyone to put all their eggs in one basket.
Employing a blended approach — one that combines annuities with passive real estate investing or dividend-generating assets — can be a much smarter way to go. It’s the right time now to explore annuities as part of a broader retirement strategy. Just make sure that it aligns with your lifestyle goals, risk tolerance, and legacy planning. — Lon Welsh, Founder, Ironton Capital
Consider Tax Implications before Rushing to Annuitize
After working with retirees for 19 years through my accounting firm, I see this timing question differently than most financial advisors. The real issue isn’t just interest rates: it’s the massive tax implications that nobody talks about.
I had a client couple from North Carolina who were considering annuitizing $300K of their retirement savings when rates hit 5.8% last year. Before they pulled the trigger, we ran the numbers on their overall tax strategy. That annuity income would have pushed them into a higher bracket and made 85% of their Social Security taxable instead of 50%.
Instead, we structured a business strategy where they started a simple consulting venture based on his 40 years of manufacturing experience. Now they’re deferring some retirement income, writing off business expenses that were previously personal costs, and timing their annuitization for when they can control their tax bracket more effectively.
The current rate environment is tempting, but I’m seeing retirees lock themselves into higher lifetime tax bills. Run the tax projections first: sometimes waiting 2-3 years while implementing proper business structures saves more money than chasing today’s rates. — Courtney Epps, Owner, OTB Tax
Tax Strategy Matters more than Current Rates
I believe the decision to annuitize in today’s higher-rate environment is more complex than most retirees are told. The bigger question isn’t just the interest rate, it’s how the IRS will tax that income stream over time. Continue Reading…
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