April 2018 Dividend Income Update

April 2018 Dividend Income Update

Welcome to my latest dividend income update.

For those of you new to these posts on my site, every month I discuss our approach to investing focusing on Canadian dividend paying stocks.  We believe buying and holding a number of Canadian dividend-paying stocks in our tax-free (thanks TFSA!) and non-registered accounts will, over time, provide some steady monthly income for future wants and needs in retirement.

To summarize those wants and needs, my wife and I have calculated our “enough” income number.  We believe an income level of about $4,000 or so (net) per month should cover most expenses.  That income, in today’s dollars mind you, includes the following big bucket items:

  • Condo expenses (property taxes; utilities such as heat, hydro, water and internet; and condo fees)
  • Personal expenses (healthcare, food, clothing; a few hundred bucks per month for contingency therein)
  • Auto expenses (assuming 1 car that consumes gas, maintenance and licensing; includes saving for another newer car every 10 years)
  • General savings/contingency money/fun money up to $500 or so per month.

This cost of our happiness reminded me of this article from MoneySense a few years ago.  In that article, here was a breakdown of three different retirement budgets and how they might help you figure out your number:

Image courtesy of MoneySense. 

This makes our potential retirement expenses not far from “Phil and Sarah Statscan” but certainly far below any moderately wealthy couple.

How are we going to cover these expenses?  There are four key sources:

  1. Workplace pensions. We’re lucky to have both defined benefit and defined contribution pension plans in our house – one of each.  The defined benefit plan is estimated to pay out just north of $28,000 per year, indexed to inflation, starting at age 65 without penalties – for life.  That’s good.  My wife’s plan based on contributions to date should easily yield $12,000 per year as long as she lives; should we never draw down that capital (…but of course we will).  If a) work would have us and b) we worked full-time until age 65, I believe our pensions alone would be enough to cover our basic retirement expenses.  But that’s not our plan…
  2. Government benefits. Canada Pension Plan (CPP) and Old Age Security (OAS) will kick in eventually for us, also in our mid-60s, but that’s more than 20 years away.  We estimate we’ll earn about $1,000 per month each from those programs at that age.  Those programs could change however.  Beyond that, based on our expenses above we certainly can’t rely on just CPP and OAS to cover all expenses, it wouldn’t be enough.  So, we save on our own using #3 and #4 below….
  3. Registered Retirement Savings Plans (RRSPs). RRSPs are a great tax-deferred vehicle so we try and maximize those accounts out.  We’re optimistic if we do that, we can grow our RRSPs to $500,000 within another 10 years.  That should provide some modest income to draw down in our 50s and 60s before taking our pensions at age 65 along with…
  4. Dividends from Canadian dividend paying stocks. That’s what these updates are all about!  Our goal is no secret: we want to earn $30,000 per year from our Canadian companies (most of it tax-free thanks TFSA).  We some hard work over the last decade that goal is getting closer every month.  In doing some math recently, I have a great deal of confidence if we can reach this dividend income goal of earning $30,000 per year from those accounts, and have no debt whatsoever – we’ll be free and clear to semi-retire in our 50s given other assets and future government benefits.

Our method to saving and investing, while carrying some mortgage debt, might not work for some.  Geez, I mean we’re far from perfect people with our money.  For example, if we never bought a house (or a condo recently) we could be semi-retired today in our mid-40s let alone potentially not working at all outside running this blog.  But that’s not our plan either.  We’re slowly doing things our own way that includes condo/home ownership.  Your mileage might vary.

Thanks to more cash flowing in from the companies we own, we’re on pace to earn just over $16,200 this calendar year from the Canadian dividend paying stocks held in our tax-free (TFSA) and non-registered accounts.  That means we’re more than halfway to our goal to largely “live off dividends” (or 54% there to be exact) and I think we have an outside chance of reaching $16,500 this year due to reinvested dividends alone – no new money added.  Recent dividend increases like the one from Sun Life are an example of that!

We save, invest, pay down debt and live our lives.  Stay tuned for my next dividend income update in June and thanks for reading.

Mark Seed is the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've grown our portfolio to over $600,000 now - but there's more work to do! Our next big goal is to own a $1 million investment portfolio for an early retirement. Subscribe and join the journey!

101 Responses to "April 2018 Dividend Income Update"

  1. Thanks, Mark, it’s a very interesting read to see real retirement examples. I set my eyes on the tax each couple paid and I figure if a big part of the income is dividends they can actually pay less taxes. Here in BC, one can have around $57K dividend income with 0 tax. Of course it’s very difficult to have that many dividend income from unregistered accounts, but it helps a lot to have dividend income. The first couple’s pre-tax income is $42,600 and they pay $5,000 tax. If half of that is dividend, as they live in BC, they pay only $1,643. They get $3,357 more to spend. Tax optimization is really important I guess.

    I am also surprises the first couple earning $250K while working and spend less than $40K. I would imagine their saving rate was sky high too when they were still working. Is that really necessary? I recently read this article talking about the mental mistake that frugal people stays frugal during retirement and die with tons of money unspent. I don’t want to die broken, but I would like to have a comfortable life within my means, both before and after retirement.

    Almost forgot, here is the link to that article:


    1. I recall in Ontario, if you have no other income, you pay $0 tax on about $50,000 in taxable dividend income. Tax optimization will be very important for us in the years to come – not that’s is not important now. Thanks for the link but can’t get behind paywall. 🙁

    2. RBull (58, retired, hitched, rural coastal NS) · Edit

      Some interesting comments May.

      I’m with you on comfortable life before and after retirement. We also earn much less now than when we were working but have tried to maintain some balance in lifestyle.

      I also agree tax optimization is important. Probably plenty of us haven’t thought as much about that aspect.

      I think you’re right on the 1st couple living frugally now and likely before retiring. I can’t see wanting to retire in early 50’s and spend only 43K after having a working income of 250K. That’s a spartan amount after having a well above average working income but it sounds like they can easily afford more. However all people have different spending needs/wants, money comfort levels or different plans for their money later or after death.

      1. Being a frugal type myself can totally understand it’s very difficult to break the habit. I have my cell phone for three years now and no plan to get a new one. I don’t have a data plan either. I guess I am being unreasonable frugal depending on who you ask. I am trying hard to break the old habit and spend a little more if it really improves life quality.

        Before we moved to our new home, I got advice how to manage in our old home. I guess it’s completely doable. Five people in a 1700 square feet house is not too bad I assume. And moving cost is huge. After we moved, I have none regret at all and feel every cent spent is completely worth it. Taking a lesson from that, I am trying to persuade myself to spend money on things I can afford and I know I will enjoy. E.g. travelling more with kids.

        1. RBull (58, retired, hitched, rural coastal NS) · Edit

          Ditto here on both my wife and I being relatively frugal, so we can spend a lot on some things we want.

          Our phones are 6+ years old. Work ok and probably have for another 6 yrs or when they die. Cheap plans also. Don’t use data.

          We’ve found many ways to save money in retirement so that we can spend more on what we want. Necessity is the mother of all invention they say.

          Spending money on experiences and creating memories with loved ones is priceless and certainly worth cutting other things in order to do it.

      2. @RBull,

        Please see my post below and our 2017 spending numbers in the G&M article. Note that in 2018 dollar, we do spend over $4K/month, just like Mark’s plan for their own in retirement. The difference is that we don’t have any pension, and left the rat race 10 years ago at ages 48/52 by our own choice, due to our savings and life style, and some luck (moved out most funds from the stock market and sold main house before Sept 2008, as we were going aboard to spend time with family).

        To be honest, our life style is pretty much same as before we stopped working, minus one car (and one child ;-), and less restaurant meals out, as we have more time to cook better and healthy meals at home. Our oversea trip number is a bit less, but not by much and we can stay much longer now than just a week or two each time.

        Actually what I found out is that, after stopped working for 10 years, money is only a very small part in retirement happiness, once you have enough. See a good article in MoneySense about it: http://www.moneysense.ca/save/retirement/the-four-phases-of-retirement/?utm_source=nl&utm_medium=em&utm_campaign=pfm_weekly


        1. RBull (59, retired, married, rural coastal NS) · Edit


          Thanks for sharing your story and updated details.

          I agree money is a small part of happiness but the real question is what is “once you have enough”? I suspect this is very different for all people and many folks never reach this number, or even recognize it if they do. You seem to have found your number, are okay with being very conservative with investments, and spending and that’s great. For your original statement I would replace the words ” in retirement” with “in life”.

          Similar here. Our lifestyle in retirement is similar to when working. The difference is we are a little more careful on what we spend on day to day, but also don’t hesitate to spend much more on travel that we enjoy.

          1. Thanks for you reply. It sounds like you are happily in “phase one of retirement” per the article as in link above :-), good for you!

            For us, we traveled overseas one to two weeks every year when we were working (in Ottawa) to get away from SIWS (snow, ice, work stress). Now we moved back to beautiful Victoria after stopped working, with its Mediterranean like climate, more time to enjoy outdoors and no more SIWS, we feel less need to travel overseas. But when we go, we go for a much longer time (5 weeks to 3 months each time) to enjoy the culture and food in depth, to learn to speak a bit of their language and to understand more of local people and their lives.

            We do still travel (over small sea water from our island 🙂 after “retirement”) each year in Canada, and to US each winter (bought a nice foreclosure condo in AZ in 2011 at market bottom, also by luck, as our child went there for grad school then), plus to go relative’s home (far oversea) each year to visit and help them as well.

            But as we are getting into our 60s (age 58/62 this year), we do feel change in our body conditions, and we do feel to do a bit more oversea travel while we are able. We went to France for 5 wonderful weeks last year, and have booked up for this year with a summer month in TO/NL, and 10 days to Maui in winter. We do plan to hike TMB and travel surrounding areas in Sept 2019, and to Dolomites in Italy in 2020, if TMB hiking trip goes well ;-).


          2. RBull (59, retired, married, rural coastal NS) · Edit

            Yes, I guess phase one and that wouldn’t be a bad place to stay for us. 7 years retired for my wife, 6.5 since semi retired for me and 4 years since full stop. We’re a year older than the youngest of you. Our retirement plans changed since unlike you we didn’t luckily time the market; had 2 careers ending earlier and not by choice. It has still worked out nicely. We are conservative with investments -60/40 for now, but also have 1 moderate DB pension. We plan to spend our $, and anything left is 100% to charities. May be a lot, may be nothing.

            Nice trips and plans. We’ve been away 11 months of 48 since retired and more planned. Won’t bore everyone with where but have had some fantastic trips and memories so far!

            We live on the ocean and enjoy the view, boat and kayaks and a physically active lifestyle. But being rural drive everywhere-kinda crazy but have 3 cars & 1 motorcycle. My spouse likes winter and doesn’t want a southern home. Both our parents had/have small ones. I wanted to buy a Florida one in 2010 when market tanked & dollar appreciated, which would have worked well. Renting at some point when active travel is less appealing may be an option. Right now we’re happy and feel fortunate.

            Enjoy your freedom and cheers.

      1. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

        -7C here this morning with a -13C windchill….might as well look at market stuff. 🙁

        Stay tuned for AQN after market closes!

      2. I got only $24 per year but nothing to complain. Tried to buy another 200 shares this morning now the yield is 4.6%. Finger crossed that my order will be filled.

        Maybe I should instead buy more BCE. It broke the 52 weeks low this morning.

      1. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

        600 shares will get you 8 ish per quarter in the DRIP. Nothing wrong with that.

        I picked up another 1100 last week in the RRSP. It’s a long term hold for me.

  2. Now retired. I made up a budget before retiring trying to guesstimate my retirement expenses. One of the low balls that surprised me is the grocery bill. I had calculated approx. >$400 per month and I can easily go over that if company comes to visit or I receive family. Considering that I live alone, or as George Thorogood says I Live all by Myself, this cost surprised me. My previous job had involved extensive road travel and my meals were paid so I had to take a ball park figure of $5K per year for food. I have wondered about living in a nudist colony to save on clothing but ruled that out because of our climate – lol.
    Another major expense is how much we pay to “stay connected”. It can easily be several thousand per year what with telephone (land line & cell), internet and substantially more if you like to watch all your favorite TV programs & movies (cable/satellite)
    The rest I was fairly good with my projections. Still need well over $30K to live a “normal” life. House and car are all paid for.


    1. “I have wondered about living in a nudist colony to save on clothing but ruled that out because of our climate – lol”

      We track our grocery bills and clothing bills fairly closely. I’m pretty convinced without including restaurant bills and takeout food, etc. we can live off $600 per month ($150 per week) – family of 2. Clothing costs us about $2,400-$2,500 per year. That’s basically a $100 to spend per month a new dress, or new shoes or other. This budget might decrease when we are not working full-time.

      Telcos can be a major expense for sure. When you start adding up cell phones + internet + Netflix + other – you can easily be into $300 or more per month.

  3. Though we still record Every cent spent in our accounting program, we rarely look at the Income & Expense statement. Rather we keep the Bank reconciled, add transactions expected for the next month, or two and when we see the balance falling below $1,500 we transfer in funds. If the balance is above the $1,500 we may transfer funds out to the Tangerine savings. Our monthly expenses are fairly consistent and only credit card transactions may increase once in awhile. Major expenses, like when we purchases a new vehicle are paid from the savings. We fall in to the $50k to $70k per year.

    1. Well, assuming no debt, no major travel, and we’re not saving for retirement nor doing major repairs to the home, our expenses have been pretty consistent in the $4,000 range per month for the last couple of years.

      Beyond that, the $4,000 costs per month:
      -Saving for TFSA every year ($11k)
      -Mortgage debt (tens of thousands per year)
      -Saving for RRSP every year (a few hundred per month, if not closer to $12k per year many years)
      -Major expenses to house/improvements (a few thousand per year every year on average e.g., new roof amortized cost)

      Right now, while working, we need to make a helluva lot more money to pay for expenses that should eventually go away in retirement or even semi-retirement. Mortgage debt and saving for retirement are ones that consume tens of thousands of dollars per year.

    2. We were not tracking our expenses and just have rough estimates. We are debt free and can max out all registered accounts every year and then some so I assume we are doing OK. Currently our single biggest expense is kids. Activities and summer camps alone are well over $10K a year. We also just paid $10K for a Disney world trip for Christmas time. The trip of course will have extra cost added on that. We go to Disney world purely for kids. Another one is commuting. We need two cars and we spend lots on gas for going to work. Once we retire and kids go to independent our expenses will be reduced a lot only by these two.

  4. RBull (58, retired, hitched, rural coastal NS) · Edit

    I recall reading that article 2.5 years ago. Always interesting to see how things break down for others. Re your $4K/mth now Mark: We’re probably in that ballpark if I allowed 1200/mth (reasonable) for car replacement & larger house repairs. I can see this happening in another 3 years or so and adding to our expenses.

    In our case since retiring 4 yrs ago our actual annual total expenses have ranged 73-89K and averaged ~78K.
    I track totals but not categories. My wife keeps track of groceries for self interest and I keep track of travel spending to know what the largest part of discretionary spending is.

        1. Yes, I recall that one Paul. I hope to leave some funds to a charity of our choice in the coming decades. It won’t be millions but I hope I can give the money to good use to those in need.

    1. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

      I like this. We’ve now set up two endowment funds with our local Foundation and one endowment fund with Winnipeg Foundation. Probably two or three more to go but I’m spacing them out as I pull money out of the RRSP. I like the concept of the perpetuity as well as seeing these funds do some good (albeit minor) whilst I’m alive. Researching and working with the recipients is enlightening as well. I’ve met some great people (admin and volunteers) and it is amazing that they can do so much with so little.

    1. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

      From the link…”Ignore the share price fluctuations and focus on the income.”

      Whilst I understand the sentiment I think it is not prudent to ignore price fluctuations. I think if a person is considering buying a stock they can be cognizant of the high and low and have a plan to perhaps take advantage of a nice drop in price. Between watching for fluctuations and knowing ex-dividend dates, a person can sometimes get stuff on sale.

      1. @Lloyd: Agree, buy when prices drop, but the statement refers to once you’ve bought the stocks, don’t worry if the price drops and be tempted to sell. Hold for the growing income, which I’m sure is how those above in the article RBull referenced achieved their success. A growing income will also see growing price.

        1. Talking about this, I was tempted to add more CU now it’s so low, and I looked at it’s chart and hesitated. CU’s dividend is 0.2425 five years ago, and currently 0.3933. But the price is almost at it’s five years low. Why is the price beaten so much? Anything I missed here? I am pretty new to dividend investing. Its payout ratio too high and not sustainable?

          1. Had to sell my BIP as ShareOwners does not DRIP its dividends (another mistake on my part), so I bought EMA. Hard to beat 5.6% yield for a solid utility.

          2. RBull (58, retired, hitched, rural coastal NS) · Edit

            It seems CU is being punished for a bad quarter compared to ’17 (higher p/e ratio now), for being a utility in an era of higher rates, and having a fair bit of debt. Debt ratio is higher than AQN, but less then EMA. Payout ratio is higher than EMA, but lower than AQN. Depends also on looking at trailing or forward ratios. Both debt and payout ratio “seem” reasonable and manageable.
            10 yr dividend growth rate 8.6% is higher than AQN which has had 3 cuts since ’02 (-6.6%), but slightly less than EMA 9.0%. CU price is approaching 5 yr low & dividend is much higher than avg (+33%) now (~highest I think in ~15 yrs or so, and has 46 yr history of raising. EMA used to own chunk of AQN and sold.
            I own CU & EMA but not AQN (for now). Do your own research and verification!!!

          3. Yes, do your own due diligence for sure! Not overly worried about CU, EMA or AQN long-term. As long as the dividends flow in, I really don’t care too much about higher or lower prices. Besides, with the DRIPping I do with all of them, I get a few shares of each every quarter at lower prices if the stocks go down in price – buying things on sale – fine by me 🙂

            I have about 250 shares of CU, almost 400 of AQN non-reg., about 200 in RRSP and a few hundred shares of EMA.

            Interestingly enough, I should write a post about this someday, I tallied up all the shares/units I receive from DRIPping every month or quarter.

            Any guesses what the total is per year – how many units or shares I reinvest every year? I was actually rather surprised.

          4. Mark: From Jan-Apr in our TFSA’s my dividends added 39.432 shares and wife’s 40.4817.
            Should allow for a fair comparison at least for those who have max’d their TFSA’s.

          5. Nice. That’s impressive. Our portfolio generates more than 500 more shares every year. I was totally blown away when I added that up recently.

          6. RBull (58, retired, hitched, rural coastal NS) · Edit

            For these stocks I’m also concerned mostly about dividends continuing to grow. Prices will become more important in 15 yrs range when I expect to start liquidating. I own 500 EMA, 500 CU.

          7. I hear ya but if I/we/you could predict the future we’d all be fantastically wealthy 🙂 In my asset accumulation years, I’m very happy CU and EMA have been beaten up. I wonder if I’ll feel the same in another 20-30 years?

    2. A good set of basics, thanks for sharing:

      Save as much as you can for as long as you can, as soon as you can. (yes, within reason, you have to live your life too).
      Always spend less than you have coming in, forever. (agreed).
      Have a case cushion to get you through the really bad times. (we keep an emergency fund of about $10k for that reason – when $hit hits the fan).
      Consider dividend growth investing to build a reliable income stream for a lifetime. (this site is all about that!)
      Focus on quality blue-chip stocks that have an elite history of paying and increasing their dividend payments year after year for decades. (see above :))
      Ignore the share price fluctuations and focus on the income. (I do my best but I do like finding stocks “on sale”).
      Hold those great stocks as long as they keep paying you and give you increases. (AQN and SLF this week thanks very much!)
      Time in the market rather than timing the market will allow the magic of compounding to work. (indeed, living the dream now)
      Know your risk tolerance level and your goal before investing a dime. (easier said than done)
      There is nothing risk-free, and continual due diligence is a must. (agreed)
      It is not that tough but it does take focus and discipline. (investing can be easy, but it’s also VERY hard long-term, re: discipline)

  5. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

    ” how many units or shares I reinvest every year?”

    Difficult to know or even guess. Depends on quite a few variables.

    I don’t track the total number of units/shares being generated. I have a column on the spread sheet that calculates the $$ amount that those DRIPs or any other compounding (e.g. GICs) will generate for a twelve month period going forward. More of a curiosity thing than a planning thing, but in X number of years from now a person could roughly figure on an annual income range.

    1. Over 500 more shares per year thanks to DRIPs. Isn’t that wild? I too keep a column on my spreadsheet that calculates the amount paid when dividends are paid. That’s where I get the $16,200 from TFSAs (x2) and 1 non-reg. account.

  6. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

    “calculates the amount paid when dividends are paid.”

    I was speaking of the dividends on the DRIP additions and compounding GICs. In the next 12 months, the dividends on the added shares through DRIPping, as well as compounded interest, will amount to $2,777.67 (2 RRSPs, 1 LIRSP and 2 TFSAs).

    Counting the added share units may be interesting but it really means little as some shares could be high value and some could be low value.

  7. Nothing against dripping especially when the monthly dividend income is in the beginning stages. EX: Set up the grand daughter’s RESP as a DRIP so that she can 1) accumulate shares without the sales commission and 2) pay a lower than market rate. When you are only getting sufficient divs to purchase one unit per month then it makes sense to drip. The cost of “buying” one share would be exorbitant (close to 50% of the value in this case).
    However once monthly divs are sufficient to purchase a sufficient quantity of stocks outright then I prefer this to a DRIP as it allows me to 1) diversify and 2) hopefully pick what I consider below my trigger level for the “buy”. My criteria is that I expect the dividends from the new stock or in some cases the additional stocks to fully pay their buy & sell costs within two months – or less. Obviously if I purchase additional stocks to add to what I already own then, if available, the drip would have been more economical but I prefer to have the option to buy something else if it suits me. As I am now retired I am not throwing any “new” money in to the account which would have allowed me to more easily diversify each year.
    Presently on track for approx. $60K of divs this year.
    This will diminish as I draw down my non-registered accounts and eventually convert to a RIF probably next year.


    1. Hi, Ricardo, from your post above, looks like you don’t need $60K for annual expense. You are in a very good position for retirement. In this case, should it be that your dividends continue to grow more every year?

      I was hoping to get the point where dividends/interests can cover all the expenses. But it will be quite tough so now I change my retirement plan to also touch principles.

  8. @May
    At present the divs will grow. If the majority of your investments are in an RRSP once you convert to a RIF the government mandates the withdrawal rate (it is not the 4% that is often alluded to unless you are around 65 or younger). Eventually the withdrawal rate will exceed the growth rate. Having said that there may be years where I will have sufficient funds from the RIF withdrawals to continue building the TFSA.

    1. Got it. You can transfer in kind and not necessarily spend all the withdrawals once RRIF minimum withdrawals begin so hopefully your divs will continue to grow. But you might get a tax hit if you have a big size of fund in your RRSP. We might encounter the same problem in the future.

  9. @May
    Transferring in kind from an RRSP to a RIF is the same as a withdrawal from the RRSP. It WILL BE taxed. You would save the brokerage fees but that is all. The government wants all those RRSP tax deductions back. The whole idea was that when you retire your income would be less than your last few years of work employment and you would benefit from a lower tax bracket. However if you have diligently saved and wisely invested you may find that your RIF mandated withdrawals could exceed your working wage when coupled with OAS, CPP/RRQ and any workplace pension if you should be so lucky. This is NOT a bad thing, it is a testament to your saving and investment skills. It is actually a great position to be in and not very many people will be that lucky.
    At any rate, you can’t take it with you, or so I’ve heard, so enjoy the pleasures of retirement before health issues get to you.

    We all just like to minimize the tax load we have to bare in our golden years

    1. I am thinking to retain your dividends, you can transfer in kind from RRIF to non-registered and TFSA to meet your RRIF minimum withdrawal requirements? Not only you save the transaction fee, you avoid market volatility this way if you don’t need the principle to live. Of course you still need to pay tax.

      Yeah, lots of good example in Mark’s comments area for me to learn and follow. You and many others here are able to have a very comfortable retirement. Hopefully we will be there too.

      1. @May
        There is no reason to retain dividends if you are going to transfer stocks, if that is what you mean. You might as well just withdraw the dividends and decide what to do with the money. There is no commission on the money other than the tax due unless you decide to purchase more stocks outside the RIF. Obviously use some of it to pay expenses but otherwise it can be re-invested in to a TFSA or non-registered portfolio.
        If you retain the dividends then it is just cash sitting in the RIF doing nothing for you. If you re-invest it within the RIF you will still pay a purchase commission.
        The minimum withdrawal rate is a yearly percentage. You DO NOT need to withdraw the mandatory amount all in one shot. As an example, if you are obliged to withdraw $12K in that year because of the principal amount in your RIF you can elect to withdraw it in any one of several ways – lump sum at the beginning of the year; at the end of the year or any variation of monthly, quarterly, semi-annual withdrawals as long as you withdraw the mandated minimum for the year. So you could leave your portfolio intact for the whole year and then in December sell the necessary amount of stocks to meet the minimum withdrawal and transfer it to your bank account. In this case you would have benefited from the almost full year of dividends while taking the chance that your portfolio has either gained (good) or lost value (not good). I am not aware if the withdrawal percentage if based on the previous year end principal or the current principal value at the time of withdrawal. Will have to check that out. Anyone on here know about that?


          1. RBull (59, retired, married, rural coastal NS) · Edit

            It’s based on value at end of year- Dec. 31.

            I receive a document stating date, value, min & max available withdrawals, & my actual instructions sent to me for my LIF annually.

        1. Sorry that I did not express myself correctly. What I mean is, let’s say I have 100 shares of TD in RRIF, and I have a minimum withdrawal rate that requires me to withdrawal $10K from RRIF. Then I will transfer 100 shares of TD into my non-registered account. I will pay tax on the transfer and I will pay tax on dividends received in non-registered account after the transfer. But I still get the dividends from 100 shares of TD. So if I look at my forwarding dividends, it is not affected by the withdrawal. That’s what I mean by retaining the dividends.

          Further more, if I have contribution room in my TFSA, maybe I will transfer part of the 100 shares of TD into TFSA, then dividends from this part will be tax free.

          Just some thoughts. It’s still many years before I have to convert my RRSP to RRIF.

          1. @May
            All that depends on how much of the funds you will need for living expenses. If this is over and above what you require to live on but that you must withdraw because of the mandated percentages then yes, by all means do a transfer in kind.

          2. Same May…there are years ahead of when I have to deal with the RRSP and RRIF – although my parents are coming up to an interesting case study for me as they approach for their early 70s and I will be working with them to set up their self-directed RRIF to ensure they take out the minimum RRIF amount every year WHILE having dividends and distributions reinvested to prolong their capital inside the account.

        2. How are you managing your RRIF Ricardo? Or, are you just providing some input (which is always good to read). Curious. I can’t recall how your portfolio is constructed. Cheers.

          1. Just input for now Mark. Drawing down non-registered funds before I convert to a RIF so all divs within my registered portfolios get reinvested. As I am now retired, the only thing that gets money thrown at it is the TFSA and this year I did as May mentioned and I transferred in kind from a non-registered to the TFSA. I will get dinged for the cap gains but that saved the sell and buy commission to transfer. Now the divs from that transfer work double for me. I don’t get taxed within the TFSA and it lowers my revenue from the non-registered account. Another good timing was that they were BCE shares so I transferred just recently while they are scraping bottom (I hope) so there will be less cap gain to pay next year (2018 tax).
            I have TFSA; RRSP; LIRA and two non-registered portfolios. One I am drawing down and the other is tied to a HELOC that I just re-initiated in Feb of this year. The HELOC investment account pays the loan interest (tax deductible) as well as paying down some of the principal each month. As long as it does that I am not too worried about market variations. It has been both above and below COP for the stocks.
            Figure I will probably convert the LIRA to a RIF in 2019.


          2. Gotcha.

            I’ve done that as well, do an in-kind transfer (technically a sale as you know, cap gains hit as necessary) from non-reg. and move proceeds (e.g., $5,500) to TFSA. I might do that in 2019.

            Nothing wrong with leveraged investing as long as you can cover the debt if you absolutely had to. I figure we have enough debt now and don’t want to take any further on with the upcoming condo move in another year.

            Thanks for the update, good to read about others’ strategies and perspectives.

  10. Mark, looks like it’s in your genes to save and invest well, as obviously your parents are financially very sound in retirement.

    We came from family background where we did not get much education for financial management. The only thing we follow and do not too bad is saving for rainy days. While I am investing and planning for retirement now, I begin to gradually teach my kids a little bit here and there. Hopefully they can learn from our mistakes and do better.

    1. I’m fortunate my parents taught me some money principles but they’ll be the first to say they are not perfect either…they still have mortgage debt in their late-60s. They had good careers in nursing and are fortunate to have good pensions.

      From what I read May, you’ve done very well with your family to date and no doubt your financial awareness will serve you well.

  11. Hi Mark,

    We are the 1st couple “Pam and Rob Taylor” in 2014 MoneySense article mentioned in your post. David Aston (the author of the article) has been following us since 2009, and wrote on our living expense examples three times – twice in MoneySense: 2010, 2014 – once in G&M just this year, see: https://www.theglobeandmail.com/globe-investor/retirement/retire-lifestyle/two-retired-couples-two-different-budgets-how-much-are-they-spending/article38234412/

    As you can see from the G&M article in link above, our current spending (excluding income taxes) is just over $47K/yr in 2017 dollar, that is the same as in your plan: $4K/m in today’s dollar. To answer questions from other posters here, yes, our spending when we were working was also modest, e.g. about $70K/yr in 2002 dollar including a child (who is mostly independent now). Note that I paid about $69K income tax that year (and we paid over $100K total combined income tax between two of us in 2002).

    People have different priorities in life. For us, we are never big on material things, but rather enjoy nature and simple life. We don’t have any company/private pension, but we were able to leave our high salary and high stress jobs in 2008 at age 48/52, based on our savings and spending needs. We have (and always have) a beautiful house in a big treed lot in very desirable neighbourhood, and enough cloth/goods and a good car that last long time. There are two priorities for us in life: good healthy food and travel, as you can see from the articles and our spending numbers. e.g. We did a 3 months home-swap with a professor in Zurich and traveled around Europe extensively few years ago. Also just spent 5 wonderful weeks in Paris and southern France last Sept.

    Life is short and wonderful, so do what you like and enjoy what you want, and be happy. No need to compare to others, as everyone and each family are different.

    Thanks and Cheers.

    1. Thanks, Freedom_2008. It’s nice to know you continue to do well after that article few years ago. Sorry that I have judged your life style. You are absolutely right. Personal finance is personal. As long as you enjoy your life, how much money you spend and where to spend is irrelevant.

    2. Great to e-meet you on my site, and thanks for your comment.

      In my 40s now, more and more, I’m recognizing this as well and learning more about me/us/my wife and I in the process re: “People have different priorities in life.”

      For us, we’re striving for less and less “stuff” – we don’t have lots of stuff now, crap, but rather we have too much house and have come to that conclusion. We are moving into a condo next year and hope to be debt free around age 50 along with owning the other big hairy audacious goal, a $1 M portfolio.

      Kudos to you for leaving any “high stress jobs in 2008 at age 48/52″…that’s great you could do that so young.

      A home-swap sounds amazing and we love Europe every time we go as well. We visited Portugal for two weeks last year. It was great and we hope to go back in another few years.

      “Life is short and wonderful, so do what you like and enjoy what you want, and be happy.”

      Well put and stay in touch.

      1. Hi Mark,

        About house. Ours is big for two of us too, as we use only the 1250 sqft upstairs space most of time. But principle residence is the only thing (other than recent TFSA) that you can have tax free gain when you sell. With Victoria real estate demand and price increase rate (e.g. ours increased over 72% since we bought in Feb 2009 – lucky again on timing as we just came back to Canada then and were looking for a home), we feel it is probably a good idea for us to stay put for now.

        1. You should like us! We have a beautiful 1700 sq. ft. bungalow but the other 700 sq. ft. in the basement is largely never used. Congrats on the real estate increase. Ottawa has not yet seen those price increases. Good timing!

        2. You got very good timing on both real estate and equity market. Congrats.

          Our current house is 4000 square feet including basement. For now, it’s a good size and allow lots of entertainment space for us. We have home theater where we really enjoy movie on big screen and with surround sound and active room where we can play pool or pingpang in a rainy day. The kids also have lots of space to play. But I can expect it will become too big and too much work when we get older and the kids left home. We will definitely downgrade at some point. We might be forced to downgrade if the kids decide to go to University in USA. We will have money saved for them to go to University in Canada, but not USA. Too expensive.

          1. Thanks May.

            Understand the enjoyment of a good movie room, as we currently have one on our 1350 sq ft ground floor (not a below grade basement, as In Victoria you don’t must have a basement) and like it very much too. But for just two of us, we can have a 65” on upstairs which is also very good. For investment, and beautiful trees In our lot, plus less than 15min walk to stores/banks/libraries/university/restaurants, we plan to stay put for now.

            US tuition is insane. Our child went for a Ph.D degree program and had expenses covered by the grad school there (luck again 😉).


  12. No problem and thanks May. As we are very different in lots ways comparing to “the mainstream” in addition to quitting the rat race at a early age (e.g we have a custom made canoe instead of a motor boat, we always must visit universities and libraries and old book stores in cities around the world when we travel, and we try to walk everywhere instead of driving), people don’t normally understand us, and we are used to it a long time ago :-).

  13. One more fun example: although we both worked as engineers in high-tech industry for more than 20 years and were part of the teams who developed equipment that built up internet, we don’t own a cell phone ;-). You can call it frugal, but we have a landline and can also make calls from Goggle Hangouts from our laptop or IPad anywhere that has wi-fi. So never feel the need for a cell.

    1. Ha, that’s good 🙂 We have a home VOIP phone we pay about $5 per month to keep that number for various work calls, etc. at home. We own enough Telus and BCE and Rogers stock now to pay for our cell phone bills for life and then some thanks to dividends paid. 😉

          1. We have most stocks in your list (bought EMA recently and sold SU just yesterday), plus some pref shares (with PFD 1 or 2 grade). But our equity portion is very small, just about 21% in our total portfolio (excluding real estate).

            As we have a good amount saved, so we are not after high returns, but rather safe and stable income flow in good and bad years, without need to touch the principles (most of them will go to charities after we are gone and some will start to go to charity when I start CPP/OAS in a few years).

            After spending multiple years to set dividend stocks up since 2010, we are more or less on auto-pilot mode and spend as little time as possible on it. So not really much useful to share, but here is what I posted recently on “Financial Wisdom Forum” (http://www.financialwisdomforum.org/forum/index.php), under same “name”.

            “RRSPs: bonds + GIC + VBAL (very small portion), no cash
            TFSAs: mostly in cash and waiting to go (possibly XAW?)
            Investments: 40% GIC, 30% stocks/prefs, 17% cash reserve in HISA (= 5 yrs living expenses), 13% cash to go”

          2. Very well done… re: “As we have a good amount saved, so we are not after high returns, but rather safe and stable income flow in good and bad years, without need to touch the principles (most of them will go to charities after we are gone and some will start to go to charity when I start CPP/OAS in a few years).”

            My wife and I are building up, trying (?) a similar income stream since in the coming years, we believe we can start working part-time around age 50 (once all debt is gone of course).

            The non-reg. + TFSAs (x2) are CDN stocks churning out about $16,200 per year
            My RRSP is maxed out. Some CDN stocks but mostly U.S. stocks and U.S. ETFs
            My wife’s RRSP is almost maxed out. Some assets as above.

            We are optimistic by age 50 non-reg + TFSAs x2 + RRSPs x2 = income derived from all assets could be close to $50k per year. If no debt, then we’ll know we can start some part-time work since largely income > most expenses even without work.

            Interesting you focus on GICs and such inside RRSP and cash inside your TFSA. I’m sure you’ve considered your TFSAs as a potential tax-free income machine? Thanks for sharing!!

  14. Yeap, no dept in retirement is very important. We got rid of them in 2002 and never had any since (except on a rental house). Also, this may be different for others, we felt more comfortable to stop working only after helping our child finished university degree dept free, as education (for us and our child) is of a higher priority for us.

    1. Education is also very high priority for us when we consider our kids’ future. A bachelor degree is a MUST if you ask me. I am planning to help them with sufficient fund saved for their education but won’t wait until they graduate. We had kids at a late age in life and it will be far too long to retire after they finish university.

  15. “I’m sure you’ve considered your TFSAs as a potential tax-free income machine? ”

    Sorry, missed this question.

    Yes, and are waiting for the low point in a very casual way (maybe should have just gone in) . Note that we plan to pass our house and TFSAs (both gain tax-free) to the child when we are gone (the other leftover go to charities).

    1. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

      It is eerie how similar we were to freedom’s situation. A few minor differences but overall pretty darn close. I can relate to almost everything they have done.

      1. Very interesting LIoyd, as we haven’t met many like us yet, and did wonder a bit about being so “non-mainstream” in the early days. But we are who we are, and can’t help but do what we feel comfortable and right, right? 😉

        For us, we both are from families with modest means, we knew from a young age that we had to be independent (and to help family). We don’t have any inheritance and we helped our parents on both sides with monthly money support for many years when we were working, and felt good and proud about it (was a also priority for us, and we also helped a niece staying with us for 3 years schooling after we stopped working).

        Being different from the “mainstream” and getting “wiser” with age, we feel and understand more and more that we can’t and shouldn’t judge others by the appearance and numbers, as the owls may not be what they seem. 🙂


        1. Lloyd (57, retired (but farm a bit), married, rural MB) · Edit

          I can’t count the number of times I got razzed at work for driving an old “rust bucket”. It actually wasn’t all that rusty but it was old. My *newest* vehicle is a 2003 model and it gets me from point A to point B which is what its purpose is. Our house is “dated” but everything works, why would I replace something that works for something that works? Debt really was a four letter word in our house. I will never be accused of trying to keep up with the Jones’s. We were a one child family, had an education fund all setup and I was ready to retire at 50. Medical issues changed the plans mid-game. I’ve recently moved a portion of our investments from equity to fixed income but still have a sizable portion in equities because we don’t really need to keep growing the pot so much. And it’s not like I’m cheap. I have no problem spending money on stuff I want. It’s just that I don’t really want what others apparently want and I’m fine with that.

          1. Very good.

            Our rule is: for things we need, buy top quality and use them for a long time. Our car is a Honda Accord, the top and best model when we bought in 2004. We drove it across Canada (from Ottawa to Victoria) after stopped working in 2008 for 36 days and 7000km, carrying full year clothing and camping gears, felt it (nice name Hardi) like a home for us :-).

            What a wonderful trip we had, with 1/3 time camping in national and provincial parks, e.g. listening to wolf howling in middle night at Algonquin park with hundred other people; laying on picnic table in Elk Island National Park and counting stars when we were the only ones there …

            Hardi is still very comfortable and is running great with no rust. It can certainly run for another 6 or more years, like many cars do in our mild climate.

            Yes we do feel very fortunate and blessed.


          2. “…listening to wolf howling in middle night at Algonquin park with hundred other people; laying on picnic table in Elk Island National Park and counting stars when we were the only ones there…”

            Very nice indeed!!

          3. “I have no problem spending money on stuff I want. It’s just that I don’t really want what others apparently want and I’m fine with that.” Well said. I’m learning this more and more as I get older. Do what you want with your money, not what others’ think you should do with your money.

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