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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.
My segment will air on October 24th. You can register through this Canadian Financial Summit link.
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.
Not using spousal RRSP accounts
Use RRSP spousal accounts for tax advantaged income splitting in retirement.
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.
Check out Retirement Club for Canadians
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.
We might call that a ‘you-shaped’ spending plan.
Once again, a retirement cash flow plan will show you the way. But be prepared to spend, learn how to spend. Allow money to enable enjoyment.
The retiree did not create a Life Plan
The Life Plan can be as important as the money plan.
We will need a lifestyle filled with friendship, enough activity, a fitness and wellness focus, and this is very important: purpose. We need to help others to help ourselves.
Consider volunteering, work part time, engage with family and friends and help neighbours.
Be sure to test drive the retirement life you think you want. Maybe the RV life is not for you. Maybe living on a sailboat was not what you thought it would be. Maybe Thailand isn’t what you thought it would be.
Counting on inheritance
Inheritance might not be a solid retirement plan. I’ve seen too many get a terrible surprise.
Giving too much to children and grandchildren
Don’t gift yourself short. Once again, later stages of life costs can be considerable. Build your retirement cash flow plan with a nice buffer for those very golden years.
Not accounting for inflation
While core stock market index funds and portfolios might cover inflation over the longer term, stocks generally don’t work for inflation in the heat of high and unexpected inflation. We got a taste of that in 2022. Stock markets were negative as inflation soared to the 8% range. During the stagflation of the late 60s into 1981 U.S. stocks had a period of no real returns for some 17 years.
Consider gold, commodities, oil and gas stocks, REITs, TIPS.
I like the diversified inflation-fighting Purpose Real Asset ETF – PRA-T.
Not considering annuities
Pensionize more of your income. Once again, retirees with more conservative portfolios have the confidence to spend more. Annuities can be used in modest fashion as part of your fixed-income allocation.
Pensionize your nest egg with annuities: your super bonds.
You can cover off the lack of inflation protection of annuities with those dedicated inflation fighters.
Not considering a HELOC
Used properly and in modest fashion, a HELOC can be a wonderful source of income in retirement. It’s tax free income. You exchange income and the tax benefits for interest costs that reduce your ownership in your home.
A HELOC or reverse mortgage can increase income and/or reduce your sequence of returns risk.
Not matching investments to the cash flow plan
We need to consider the time horizon for the account, and required rate of return. This is asset allocation 101 stuff. To exaggerate a mistake. If you plan to meltdown your RRIF in the next 4 years, it should not be in 100% equities. For that time horizon, you might even consider all cash and cash equivalents.
See the risk table in my asset allocation ETF page.
Not using defensive equities
Portfolio success in retirement comes down to the total return and the risk level. Defensive sector stocks and low-volatility stocks can add a wonderful layer. They will work in concert with cash/bonds/gold.
Defensive Sectors – Consumer Staples – Utilities (including pipelines and telcos) – Healthcare.
Longevity risk
When you reach age 65 you then stand a 25% chance of entering the 87-92 age cohort and a 25% chance of entering the 92-115 age cohort.
Consider the Purpose Longevity Pension Fund. It is designed to offer very very generous mortality credits that boost income greatly in the later stages of life.
Ensure you have enough equities within your asset mix.
Improper insurance
This can include not considering the use of insurance to protect many assets including assets in the estate. Insurance can be used to cover capital gains (cottage and investments) and protect a spouse from the early death of their spouse. That said, we can have too much life insurance as well, if your portfolio amounts are large enough to remove the risks normally covered by life insurance.
No estate plan, or no will
Not updating your will can be as costly as not having a will. Be sure to understand up front estate planning. How are your assets held? How will you transfer these assets to your spouse, family and charities of choice?
Beneficiary Forms
Be sure to have proper beneficiary forms for all accounts, and proper paperwork for employer pensions.
Closing thoughts – Retirement can be “simple”
Our motto for Retirement Club is Doing Retirement Right, we’ll also suggest that you can ‘Make Retirement A Breeze.’
We need only to master a few core ideas and strategies. And we need to avoid the common mistakes in retirement. It is not difficult to set yourself up for success.
Thanks for reading, offer your thoughts on common retirement mistakes in the comment section. Or, use the Contact Dale form.
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Do retirement right. It is a series of monthly Zoom Presentations, newsletters, plus a secure and private online space where we learn, share ideas and connect with members. Here’s the Retirement Club overview page. In our latest Zoom call, Purpose Investments delivered a presentation (and answered questions) on the Purpose Longevity Pension Fund. It’s a pension for those who do not have a pension.
Make sure you’re doing retirement right. It’s also suitable for those who are approaching retirement. Use Contact Dale if you’d like more info, or to sign up for the next group.
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Dale Roberts is a former advertising writer and creative director and long time index investor. In 2013, he followed his passion to become an investment advisor, and then trainer at Tangerine Investments. He won Advisor of the Year in his first year. He left Tangerine in 2018 to start Cut The Crap Investing, where he helps investors learn how to use ETFs, simple stock portfolio models and Robo Advisors to full advantage in the accumulation stage, and especially in retirement. A ‘hyper-focuser’ Dale has spent thousands of hours studying retirement – from the financial planning aspects to the portfolio models that make it happen. Early in 2025 he co-founded Retirement Club for Canadians, described in this Findependence Hub blog. Keep in mind Dale is not a financial planner. Retirement Club provides ideas and learning for consideration. As we know, self-directed investors are responsible for their own investment decisions. This blog first appeared on his site on Oct. 12, 2025 and is republished here with his permission.
