Inflation

8 Effective Strategies for Managing Retirement Income and RMDs

Posted By Financial Independence Hub | September 17, 2025

Retirement income management and Required Minimum Distributions (RMDs) can be complex topics for many Americans. This article presents effective strategies to help readers navigate these financial challenges. Drawing on insights from financial experts, the following tips offer practical approaches to optimize retirement income and manage RMDs efficiently.

Purchase Annuity for Guaranteed Retirement Income
Leverage Qualified Charitable Distributions for RMDs
Optimize Asset Location for Tax-Efficient RMDs
Consider Annuities for Steady Retirement Income
Use Trusts to Manage RMDs Strategically
Convert to Roth During Market Downturns
Implement Bucket Approach with Beneficiary Designations
Start Home-Based Business to Offset RMDs

Purchase Annuity for Guaranteed Retirement Income

It is important to always consider broader planning needs, but one strategy that can be useful for generating retirement income and managing required minimum distributions (RMDs) is purchasing an annuity. This annuity would be purchased within an IRA and would create a level stream of guaranteed income for the rest of one’s retirement. This will not only satisfy one’s RMDs, but it can also lower taxes by stretching income across many years. In particular, it could help avoid large, irregular distributions that might push one into higher tax brackets. — Aaron Brask, Retirement planner, Aaron Brask Capital LLC

Leverage Qualified Charitable Distributions for RMDs

The obvious choice is to find a part-time job that aligns with your passion. This way, you can generate income and get paid to enjoy your favorite hobby. For example, if you love golfing, getting a part-time job at a golf course may give you discounts or even free games.

As far as managing RMDs, the amount that you must distribute is not determined by your income. It is based on the value of your Traditional IRA at the end of the year and the IRS Uniform Lifetime Table or Joint Life and Last Survivor Table.

This doesn’t include Roth IRAs. There are no RMDs in these accounts.

The best way to manage the increase in income, which can lower benefits such as Social Security or Medicare Part B (which are based on annual income), is to leverage Qualified Charitable Distributions (QCDs) for those who are philanthropic or give to a 501(c)(3) religious institution such as tithing.

When you reach the age to take RMDs, you can directly give to your favorite charity without incurring the tax implication or the increase in income that comes with RMD distributions. In 2025, you can donate up to US$108,000.

This will eliminate the RMD from being counted in your gross income and, at the same time, qualify for satisfying your annual distribution requirement.

I think this is useful because their favorite cause still receives donations, they satisfy their RMD, and they don’t have to pay the taxes up to that amount.

One thing I love about it is that you can make as many QCDs as you wish during the year as long as the total doesn’t exceed the threshold. — Alajahwon Ridgeway, Owner, A.B. Ridgeway Wealth Management, LLC

Optimize Asset Location for Tax-Efficient RMDs

After 15+ years managing corporate finances and helping businesses with cash flow optimization, I’ve seen how asset location strategy can be a game-changer for Required Minimum Distribution (RMD) management. The approach involves strategically placing different types of investments across taxable, tax-deferred, and tax-free accounts to minimize the tax impact when RMDs hit.

I worked with a client in the software technology space who had accumulated significant wealth through stock options and 401(k) contributions. We repositioned his bond holdings and REITs into his traditional IRA while moving growth stocks to his Roth accounts. When his RMDs started, he was pulling from bond interest and dividend income rather than forcing the sale of appreciating assets.

The key insight from my Financial Planning and Analysis (FP&A) background is treating this like portfolio optimization: you’re maximizing after-tax income rather than pre-tax returns. His RMD tax bill dropped by 18% because we were distributing lower-growth, income-generating assets instead of his high-performing tech stocks.

This works especially well for anyone with diverse investment types across multiple account structures. The planning needs to start at least 5-7 years before RMDs begin, but the tax savings compound significantly over time. — Michael J. Spitz, Principal, SPITZ CPA

Consider Annuities for Steady Retirement Income

Although annuities are often a source of debate and critique, they are still a functional and conservative way to generate income in retirement. If set up early enough, the steady income can often account for Required Minimum Distributions (RMDs) across all Individual Retirement Account (IRA) assets since the withdrawal rates are higher than the often quoted 4-4.5%. — Pedro Silva, Financial Advisor, Apex Investment Group, LLC

Use Trusts to Manage RMDs Strategically

After 25 years of helping clients navigate estate planning and witnessing countless families deal with Required Minimum Distribution (RMD) challenges, I’ve discovered the most effective strategy: creating an offshore Asset Protection Trust that feeds into a domestic charitable remainder trust for your RMDs. While this may sound complex, it’s incredibly powerful for the right situation.

Here’s how it works: I had a client with US$2.3 million in retirement accounts who was facing substantial RMDs that would push him into the highest tax brackets. We transferred a portion of his Individual Retirement Account (IRA) into a charitable remainder trust, which allowed him to take his RMDs as annuity payments over 20 years at a much lower effective tax rate. The added benefit? The remainder goes to charity, providing him with immediate tax deductions that offset other income. Continue Reading…

September may be Crunch Time for investors

Posted By Financial Independence Hub | September 8, 2025

By John De Goey, CFP, CIM

Financial Independence Hub

In the eight months since Donald Trump was reinstalled as the American President, monetary policy south of the border has been subjected to political interference at an unprecedented level. Most observers are of the opinion that Jerome Powell has performed his duties honourably and that the monetary stance taken has been broadly reflective of overall macro circumstances.

Given how relentlessly Trump has berated Powell throughout the year, any move to ease rates could be interpreted as a form of capitulation. Of course, if the economy is weakening and inflation remains benign, a move to lower rates would be entirely justified. Observers need to be careful not to imply political causation when the rationale behind such a decision is properly based on economics.

Now August is over and a September interest rate decision looms. For months now, I have been warning that the American economy (and by extension, the global economy) may be heading for a bout of stagflation. The current circumstances are delicate, and few people envy the task in front of central bankers around the western world.

The challenge is especially acute in the United States, not only because the stakes are highest because of the size of the economy, but also because the objective metrics for the economy continue to flash red. No one wants to make a policy error, but when you’re already walking on a knife edge, even the slightest miscalculation can be devastating.

Tariffs a curious case of mistiming

This may lead to a curious case of cause-and-effect mistiming. It appears the tariffs that have belatedly been imposed by Donald Trump have caused employment numbers to suffer somewhat, while giving importers time to make band-aid adjustments. The delays in implementation have allowed importers to stockpile inventories in anticipation of the tariffs ultimately being imposed in the ensuing months. It is against this backdrop that the central bank needs to weigh its options. There are numerous commentators who believe inflation will manifest once those inventories are drawn down, which seems imminent. Continue Reading…

The Abnormal returns for Canadian Asset Allocation ETFs

Posted By Financial Independence Hub | September 5, 2025

By Dale Roberts

Special to Financial Independence Hub

I recently updated the returns for the Canadian asset allocation ETFs. The returns over the last year and three years can be described as abnormal returns. So much so that I had to double-check the performance for the equity markets that fuelled this incredible run. How did they do it?

Over the last three years equity markets have delivered average annual returns that are 60% to 100% greater than historical averages. The U.S. has delivered outsized returns over the last five years and beyond. In fact, coming out of the financial crisis U.S. equity returns are nothing short of spectacular.

Here’s the Canadian asset allocation ETF page that shows the returns for the major Canadian asset allocation ETF providers. You’ll also see a ranking by risk level.

And here’s an overview of the assets that drove the returns for the (wonderful) managed all-in-one global ETF portfolios. Also, bonds stopped being a portfolio anchor over the last three years, as inflation is under control (for now).

U.S. stocks XUS-T

International stocks XEF-T

Canadian stocks XIC-T

Canadian bonds XBB-T

U.S. bonds (in U.S. Dollars) AGG

A look at iShares asset allocation ETFs

Here’s an example of the returns for iShares asset allocation ETFs.

The returns are incredible, especially over the last year and three years. Five-year returns are abnormally generous as well.

Here’s an example of the asset allocation and holdings of iShares XGRO, with a target of 80% equities to 20% bonds.

How do your returns stack up?

Everyone should benchmark their personal returns. Of course, if you have an advisor and are invested in high-fee mutual funds your returns are likely waaaaay behind. Remember: Canadians should avoid most mutual funds.

The shift to ETFs and asset allocation ETFs can be a life-changing move. Consider it. High fees are a wealth destroyer. Use the Contact Dale form on this page if you want to know how to make that happen. And if you want low-fee global ETF portfolios, advice and financial planning …

If you’re a self-directed investor you should also benchmark (compare) your accounts to the asset allocation ETFs of the same risk level. That is, you will match the equity to bond ratios. If you’re underperforming you can discover why. Continue Reading…

Semi-Retirement Q&A with Mark McGrath

Posted By Financial Independence Hub | September 3, 2025

By Bob Lai, Tawcan

Special to Financial Independence Hub

The Financial Independence Retire Early (FIRE) community is a very supportive and tight-knit one. One thing I appreciate from the diverse FIRE community is that there are people ahead of us who are always willing to share their knowledge and help others slightly behind them on the FIRE journey.

I would like to welcome Mark McGrath, CFP and CIM, who entered the world of semi-retirement on April 30. Before semi-retirement, Mark worked as a financial planner and associate portfolio manager at PWL Capital Inc. Based in Squamish, BC, Mark has been helping Canadian physicians, small business owners, and high-net-worth families on their financial decisions about portfolio management, retirement planning, tax planning, estate planning, and risk management. If you like the Rational Reminder podcast, Mark is one of the regular contributors as well.

Q1: Hello Mark, welcome to this little blog of mine. Can you tell us a little bit about yourself?

Thanks Bob!

I’ve been a financial planner for the past 15 years or so, and have worked primarily with physicians and their families. My most recent role was as a Financial Planner and Associate Portfolio Manager for PWL Capital, and as of May 1st I’ve decided to semi-retire and step away from full-time employment.

In 2022 I started creating educational financial content, writing mostly on Twitter and LinkedIn. I’m a huge advocate for basic financial literacy and getting the big things right, and while I occasionally write about more complex topics, a lot of my content is focused on those core basics like index funds, using your RRSP and TFSA, getting insurance in place, etc.

Outside of work, I spend most of my time with my wife and two young children, and I enjoy reading, playing strategy games, listening to music, and playing the guitar. We like to travel as well but haven’t had much time for that over the past few years, but hopefully that changes now that I have more free time.

Q2. Congrats on your semi-retirement! You mentioned that financial planning is more than spreadsheets, retirement projections, and optimal portfolios, it’s really about helping people find and fund a good life. What is your definition of a “good life?” Explain why it’s important to focus on having a good life rather than spreadsheets and projections.

Having worked with hundreds of Canadians of varying ages and backgrounds, I’ve realized that many of us never really decide what a good life is for us. We follow the traditional path – go to school, work your whole life, and retire at 65 – without pausing along the way to reflect on what’s important. Retirement can end up being very anti-climactic as a result, and those who haven’t prepared mentally and emotionally can find themselves lost. I saw this happen with my own father, unfortunately, and have spoken to literally hundreds of people who know someone who has gone through something similar.

I recently had this conversation with a 66-year-old professional client of mine, who was having what he called an identity crisis: he had worked hard for decades, amassed a small fortune, sent his kids through university, and was now unsure about what he was supposed to do with his life. Designing a good life, intentionally and earlier on in his career, may have led him to optimize his time more instead of his wealth. Avoiding this type of regret is a big impetus for my decision to semi-retire.

A good life means different things to different people, of course. For us, it means optimizing the use of these precious years with our young children while we have the energy to do it, and while they still want to hang out with us. My kids are 7 and 2, and growing up fast. I still love financial planning, and likely always will, but we wanted to design our lives so that I could engage in that on my own time, at our own pace.

For me, that means more writing and creating educational content, and likely taking on a select number of clients on a fee-only, advice-only basis. If I can do that successfully, it also means I can do it from anywhere in the world, so we plan on travelling extensively as well. My wife is a systems and industrial engineer specializing in supply chain management and data analytics. She’s basically a math and data nerd. She stepped away from work about 4 years ago to be a full-time mom, but she also wants to find a way to put her skills to use on her own terms.

So our “good life” is spending time together as a family creating experiences, travelling, and doing some fulfilling work.

Q3. It was not easy to walk away from PWL and reach the decision on semi-retirement. Walk me through how you and your wife reached the decision.

The genesis of this idea came over Christmas in 2023. My wife is from Mexico, and most of her family, including her parents, still live there. We try to visit them twice a year. Her sister Tamara, and her sister’s husband Fernando, moved to Sweden for work four years ago and joined us in Mexico for Christmas that year. Fernando’s hobby is photography, and he was showing us pictures of all the amazing places in Europe they’ve visited since moving to Sweden. My wife and I kept joking that we should just retire and travel as well.

Being a financial planner I’ve always had a good head for our own personal finances. We saved as much as we could, and I’ve largely used index funds for the past decade. We got lucky a few times in the housing market as well, so our finances were in good shape. That obviously made the decision viable in the first place. That said, I tried not to overthink this decision from a financial perspective. I didn’t model a hundred different scenarios or anything like that.

Knowing that each of us can find a way to generate income if needed, and that we have a decent sized portfolio, was enough analysis for us on that front. Most of the decision making process was a discussion about the non-financial aspects of retirement – purpose, identity, how we want to spend our time, the benefit of being there for our children, etc.

Tawcan: Interesting that your sister-in-law and brother-in-law inspired you on the early retirement idea.

Q4. Tell me more about your plans for the new chapter of your life.

This summer we’re going to travel Europe, primarily Spain. I plan to fully disconnect from work over that time period and reassess in the fall. I do really like writing and creating educational financial content, so I’m going to focus more on that when we return, though I’m not exactly sure what that looks like yet. Likely a blog at least, perhaps another book or two in the future. I’ve wanted to get into video for some time now, so maybe a YouTube channel at some point.

Investing for Income vs. Total Return: Why choose?

Posted By Financial Independence Hub | August 4, 2025

By Mark Seed, myownadvisor

Special to Financial Independence Hub

Welcome to a new Weekend Reading edition, on an important but seemingly never-ending debate: should you be investing for income or total return?

Maybe in the end, why choose one over the other at all???

First up, recent articles on my site.

I contributed to this recent MoneySense Best ETFs in Canada edition – that includes one global ETF I own for total return since 2020:

And, I shared our planned financial independendence budget. I would be happy to compare notes with you on what you intend to spend and when in your retirement.

Investing for Income vs. Total Return, why choose?

Leading off this Weekend Reading edition, a theme I’ve written about from time to time here: income investing vs. total return.

Both approaches have merit: which was the subject of my enjoyable debate with passionate DIY income investor Henry Mah a few weeks ago. You can watch it here!

Personally, while I’ve always had a passion for owning some dividend-paying stocks in my portfolio and likely always will, I can’t ignore the benefits of total return.

At the core:

Investors often focus on total return and likely should during their asset accumulation years in particular since total return encompasses both income generation, such as dividends, and capital appreciation (changes in the market value of your investments). We should all know by now that growth/price increases remain an essential component of wealth-building: prices moving higher and higher than what you paid for them is good.

Income investing focuses on generating regular cash flow from your investments, rather than solely relying on capital appreciation or downplaying it based on your stock selections. Income funds, income-oriented Exchange Traded Funds (ETFs) or in Henry’s particular case, owning a small basket of concentrated stocks from the TSX that pay dividends has provided income-focused investors like Henry arguably lower-risk for him while growing his income higher over time via higher dividend payments.

$Honest Math - Dividends$

In the TD debate here, I argued striking the right balance between income needs and growth in the total return equation is probably best for most: it has historically delivered long-term success and there is no reason to believe why a basket of global stocks won’t continue to do so.

So, I get the income investor debate, I really do, and maybe moreso given I consider myself in semi-retirement now; my part-time work started a few months ago.

Investing for income via dividend stocks often includes these benefits for retirees:

Tangible income: shares of companies that distribute a portion of their profits to shareholders, are often mature and established businesses that have ample cashflow to sustain their payment obligations. This tangible income (and arguably stable income) can help cover living expenses.
Rising income: such established companies can also raise their dividends year-over-year, rewarding shareholders with rising income that can help offset inflationary pressures. Sustained 3-4% or more dividend increases by some companies can be inflation-fighters.
Tax benefits: depending on what stocks you own where (i.e., in what accounts), dividend payments can offer favourable tax benefits. Read about the tax treatment of Canadian dividends below.

Academic history lessons along with any Google search on this subject will show various charts and graphs that demonstrate the critical role that dividends – and, in particular, reinvested dividends – play in delivering an attractive total return to investors over time. But this just makes sense, in that reinvested dividends are like not getting any dividend payment paid to you in the first place …

Another important contributor to equity market returns has been dividend growth. Equities are growth assets – which I argued in the TD debate – so companies who tend to grow their revenues, profits and earnings over time, is the reason why they can continue to reward their shareholders with higher dividend payments. Growth is needed, for total return, for your/our juicy dividend payments to continue. Continue Reading…