Can I retire with $1 million in our RRSPs?

Can I retire with $1 million in our RRSPs?

Once again, you probably know from my site, I love sharing case studies.

Part of the reason I continue to do so is because of positive reader feedback.

The other big reason: I believe any case studies help the process of planning even if your personal finance situation is different.

Personal finance is and will always be personal. 

Can I retire with $1 million in our RRSPs?

Before we jump into today’s case study, some context and inspiration.

A few readers including recent emails and comments on the site have highlighted to me some of the following:

  • Not everyone wants to retire early, how about a more traditional age or path to retirement? And yes, please exclude a government pension most of us don’t have!

And…

  • Not everyone wants to semi-retire, how about a case study whereby folks stop working and never work again and simply retire?

And also…

  • I truly enjoy what I do…working on my own terms. I am beginning to think of slowly edging into retirement. How about some projections on how much capital you need if you retire at say 65 or 70?

Great stuff. 

You ask, I try and accommodate!

I’ll link to a number of other previous case studies on my site after this post, but inspired by the above let’s look at the case study whereby a couple has been fortunate to amass $1 million in their RRSPs after 30+ years of saving and investing, and they want to know what they can reasonably spend in retirement.

Let’s get into it. 🙂

Can I retire with $1 million in our RRSPs?

Our case study participants today are Max and Zarah.

Max will be 65 soon, Zarah just turned 64. They live in Halifax, NS and own their home worth $700,000.

While Max and Zarah both enjoy what they do, working on their own terms for the last 5-years, they are looking to travel more, enjoy more downtime, and volunteer more frequently in their community. They need more time for some of those things!

They want to know how far their money could go when Max is 65 in a few months….can they retire the way they want?

Let’s find out. 

Before we get into the results for Max and Zarah, here are some leading assumptions:

  • Their combined salaries are about $80,000 per year (after tax), for now, that is until they stop working in a few months. 
  • We’ll assume these folks are not government workers with juicy pensions – so they cannot rely on any workplace pensions to support them. 
  • Given their long working careers coupled with their desire to retire soon, I’m going to assume about 80% of max Canada Pension Plan (CPP) benefits at age 65 for each of them in this scenario.

They’ve read my post about when to take CPP to make an informed decision on that.

  • They will also take Old Age Security (OAS) benefits at age 65, 100% benefits, to take some pressure off RRSP/RRIF withdrawals. On that latter note, once you have reached age 65, the income you are withdrawing from your RRIF is eligible to be split unlike withdrawals from an RRSP, or RRIF income prior to age 65, that is not eligible to be split.
  • Max and Zarah have one child, all grown up, and totally independent so no need to fund his lifestyle. 
  • They live in their 3-bedroom bungalow just outside Halifax and have no intentions to move near-term. 

Max and Zarah assets and projection assumptions:

  • They have $1 million in RRSP assets.
  • They have $240,000 in combined TFSA assets, now 100% of that recently moved into XGRO for long-term growth. 
  • They plan to enter retirement in a few short months without any debt and keep it that way… 
  • They keep $75,000 or so mixed between a higher interest savings account that earns 4% interest these days along with their chequing account to manage daily expenses – a bank account I will not include in this case study since that money is not part of their drawdown plan. 
  • Like other recent case studies on my site, Max and Zarah invest in a simple but effective approach they can stick to. They own a few Canadian bank stocks along with some utility companies in their RRSPs, but otherwise they’ve put everything else inside their RRSPs into low-cost ETF XGRO. Owning XGRO is a simple and efficient way to gain exposure to a portfolio of ETFs that is broadly diversified by asset class and across regions, in an all-in-one package – they appreciate the fund is automatically rebalanced, as needed for them in a low-fee structure. They landed on owning XGRO to deliver meaningful long-term equity-like returns while receiving CPP and OAS benefits as inflation-protected bonds at age 65. 
  • This couple has assumed 5.5% growth over the coming decades from all of their accounts (RRSPs/RRIFs, and TFSAs) with 3% inflation. 
  • To be a bit extra cautious, we’ll assume the market goes flat for the rest of the year with 0% returns pre-retirement. 
  • Max has hinted he might work here and there for the coming years, but if he does, he would simply treat any hobby income as “play money”.
  • Max and Zarah maintain their own spreadsheets for their financial projections and use free tools like this simple TaxTips.ca RRSP/RRIF calculator to assume they could likely spend about $7,000 per month after-tax in retirement – but they are not totally sure so I ran these projections for them. 🙂
  • Finally, they assume they might live to age 95 but they are smart – they know the process of planning is key – so they will revisit any assumptions annually to recalibrate any projections as things change.

Can I retire with $1 million in our RRSPs?

To answer the question, yes, this couple can retire but they are unsure how much they can reasonably spend with such assumptions in mind. 

The results indicate quite a bit thanks to a healthy RRSP balance turned into RRIF income at age 65. 

Here is the cashflow from their portfolio starting with their RRSP/RRIF assets first:

Can I retire with $1 million in our RRSPs - Cashflow

And here is how much they might need to withdraw year-after-year from their RRSP/RRIF to meet their cashflow needs; depending on rates of return, inflationary needs, other:

  • Total withdrawal Year-1 = ~ $115k (since CPP and OAS are prorated this year; since withholding taxes apply but these will trend downward over time).
  • Year-2 = ~ $60k (CPP and OAS fully online by end of year).
  • Year-3 = ~ $45k and so on as RRIF min. values kick-in.

Can I retire with 1 million in our RRSPs - RRSP-RRIF withdrawal

And for good measure, here is where their financial assets stand around age 95 after a healthy retirement spend rising by 3% inflation:

Can I retire with $1 million in our RRSPs - Financial Assets

  • Yes, RRSP/RRIF assets essentially go to $0 which is great for estate planning. 
  • TFSAs ~ $213,000 remaining which is also good for estate planning/gifting money. 
  • Their Halifax home, assuming they never sold it nor downsized and assuming that primary home might also appreciate by 3% over the decades could be worth $1.8 million to fund any elder care as a tax-free asset. 

Disclosure: all images, figures and assumptions courtesy of Cashflows & Portfolios work for educational purposes only. 

RRSP vs. TFSA drawdown order revisited

I personally believe for Canadians that have amassed a good sum of money inside their RRSPs/RRIFs at the time of retirement, they should consider drawing down those accounts first before TFSAs – allowing TFSA assets to compound tax-free for any future estate planning. 

You can read up on RRSP/RRIF and TFSA withdrawals in more detail here:

Watch out for RRSP and RRIF taxation

Can I retire with $1 million in our RRSPs Summary

The projections are a bit simplified (on purpose, focusing on RRSP/RRIF assets) but I believe in doing so it also makes some things clear:

  1. Any couple in their mid-60s that has > $1-million portfolio value has set themselves up well for retirement even without any workplace pension(s). Saving diligently during any working career using your RRSP can deliver a comfortable retirement. 
  2. Assuming healthy contributions to CPP over your working career, CPP and OAS benefits (combined) can be a significant source of retirement income for any individuals or couples which can help prolong personal investment withdrawals. CPP and OAS income, for some individuals or couples, could amount to 50% or more of your guaranteed inflation-protected income needs (depending on your spending plans). 
  3. Investors that have healthy RRSP/RRIF assets at time of retirement should consider withdrawing from those accounts sooner than later when compared to the TFSA assets – since the latter can grow tax-free along with other tax-free assets like the capital gains exemption related to primary home ownership. 
  4. As long as taxation rules related to RRSP > RRIF conversion remain stable, income splititng can be an enabler to reduce retirement income taxation at age 65. You can also consider “RRIFing” your RRSP in the age of your younger spouse. 
  5. Being conservative with long-term rates of return (in this case 5.5%) and pessimistic with inflation (in this case 3%) should allow for ample wiggle-room to adjust to any spending needs.

In closing, I want to thank my readers for their inspiration for this post.

I also hope some of the retirement income planning concepts remain helpful for your own personalized planning. 

You can check out dozens of case studies, financial independence stories, retirement essays from readers and much more on my dedicated Retirement page here.

Want to your own low-cost projection?

Just reach out!

Check out my work along with my partner Joe at Cashflows & Portfolios.

Cashflows & Portfolios

My partner and I have been using various retirement projection tools over the years for our personal retirement income journeys and now we’re using these tools to help readers, like you, with your personal retirement projections. We often answer key questions like:

  • When do I have enough to retire with my current lifestyle/spending?
  • Amongst my pension, RRSPs, TFSAs and taxable accounts which account should I drawdown first and in doing so, what are the taxation implications?
  • Should I take CPP or OAS at age 65 or 70?
  • And more!

Again, contact us anytime to learn more and get started.

Other popular case studies:

How much do you need to retire on $5,000 per month?

What you need at age 50 to retire on $6,000 per month.

If you want to retire early vs. age 65 how much more do you need to retire spending $7,000 per month?

And finally:

Disclosure: no case studies are direct investing advice nor should they be taken as such. All information is for educational purposes only. Thanks for reading and sharing. 

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

29 Responses to "Can I retire with $1 million in our RRSPs?"

  1. Hi Mark

    In these scenarios it has always bothered me why a rate of annual return is assumed and a rate of inflation. Why not just assume growth rate equals inflation and therefore do the analysis in constant today’s dollars? By using a growth rate greater than inflation seems to me to be a little aggressive when a more conservative approach is available. What am I missing??

    Reply
    1. Hi Mark…thanks for the feedback.

      Most software leverages rates of return, linear, variable, etc. and rate of inflation (whatever that might be = 2%, 2.5%, 3%, etc.) since that also plays into CPP and OAS inflationary assumptions as well – software uses an algorithm to generate data.

      If you are saying 5.5% is too high, well, you could be correct but that’s slight conservative again. See link below from FP Canada. The blended equity rate with Canadian stocks, foreign stocks and emerging stocks is averaging over 7%.

      I personally think 7% is too high and I actually use 5% for my own calculations to be extra conservative.

      https://www.fpcanada.ca/docs/default-source/standards/2024-pag—english.pdf

      What assumptions do you use? Happy to read those since everyone has their own assumptions about the future…
      Mark

      Reply
      1. Hi Mark

        I am a dividend investor much like yourself. Pretty much all my holdings increase their payout annually by at least the rate of inflation. So when I do my own numbers I just use today’s dollars only. That is, provided my income/draw down strategy exceeds my lifestyle needs, I don’t worry about adding growth to the analysis. For example our basic lifestyle needs, before vacation is around $65k annually. Our investments generate around $125k plus we have a pension of $42k. After tax those two streams net $110k. The balance we blow on vacations. That’s how do it and keep up to date as dividends increase and our spending changes. I find this takes away any need to plan around inflation and growth. Thoughts??

        Reply
        1. Hey Mark,

          Nice to hear from you!

          Ya, I don’t add too much if any growth to my analysis. I report our dividend income from our RRSPs + Taxables mainly every month have been doing some form of monthly income updates for about 10+ years now.

          https://www.myownadvisor.ca/dividends/

          https://www.myownadvisor.ca/may-2024-dividend-income-update/

          I need to do June soon. 🙂

          If your investments generate around $125k plus + you have a pension of $42k per year then you are / would seem more than set for life. :))

          It is my hope that our portfolio income will eventually match or meet most of our expenses since we’ll also have a small DB pension + small DC pension from work to rely on + CPP x2 + OAS x2.

          In your case, if portfolio income > expenses I don’t think you don’t need to worry about inflation very much at all….amazing.

          Mark

          Reply
  2. I enjoy these scenarios. Thanks Mark.
    Couple of things to point out.
    They will make more money after taxes retired then working – awesome. 80K working vs 84K retired.
    They can artificially create an RRSP split income before age 65 by withdrawing from more than one RRSP account. Most couples have 2-4 RRSP accounts. You don’t get the pension credit applied to RRIF until age 65 but you can still evenly split the income in the first year.
    With a little tax planning, their numbers get even better.

    What would you do with the large tax refund they get in year one? If with holding tax is about 35K and real tax owed is 20K, what would you do with the difference?

    Reply
    1. Thanks, Gruff.

      Yes, I thought that was interesting…based on their RRSP + TFSA assets, they can spend MORE in retirement vs. working. 🙂

      That was done on purpose.

      Agreed on the subtle tax planning, just trying to keep my post aligned with best practices associated with income splitting.
      https://www.cibc.com/content/dam/personal_banking/advice_centre/tax-savings/income-splitting-strategies-en.pdf

      Q: What would you do with the large tax refund they get in year one? If with holding tax is about 35K and real tax owed is 20K, what would you do with the difference?

      Good call on the tax different and likely a sizeable refund in Year 1. Humm, probably put that into the TFSA to be honest and max that out or a hybrid approach of some TFSA contributions and potentially some fun/spending – they’ve earned it. 🙂

      What would you do?
      How is your investing and spending coming along?
      Mark

      Reply
      1. Re: tax refund, I should use it to fund TFSA but I would probably spend it LOL.
        If they managed to fund full TFSA on 80K net income, they should have no problem making future TFSA contributions on 84K net income.
        I would also investigate getting more money out of RRSP sooner and funding TFSA. Eventually one of them passes and that double TFSA contribution room is cut in half. Bracket top up strategy?
        Once they both collect CPP and OAS, it becomes even harder to get RRSP money out of a large fund in a tax efficient manner.

        Investments have been consistent pre and post retirement as I continue to lose money. Spending is the same as we spend everything we make, and then some. LOL. We are having lots of fun but travelling is on hold as we help our aging mothers.
        Thank goodness for my DB pension. Keep up the good work.

        Reply
        1. Ha.

          Most would, especially in retirement – all good.

          I know couples that live off $4-$5k per month, after tax, some higher, and some “cannot fathom” as they have told me to live off anything less than $10k per month in retirement. The latter would be a VERY healthy spend!!!

          I’ve seen this time and again with anyone in their 60s “…I would also investigate getting more money out of RRSP sooner and funding TFSA.”

          Yup. At some point, individuals or couples have “enough” and then everything else is more about friends, family and health.

          You are absolutely correct and the entire point of this case study – couples who have $1M in RRSPs/RRIFs in their mid-60s have a. done well, b. need to consider spending their money sooner that later, and c. should consider spending RRSP/RRIF money sooner than age 71 to avoid any estate issues.

          Again, personal finance is personal and everyone is different.

          Continued success and wellness back.
          Mark

          Reply
  3. Lloyd (64, retired at 55) · Edit

    If it were me (and it is the way I spreadsheet *my* numbers), I’d apply a 20% voluntary holding tax on *everything*. Sure, there doesn’t have to be a withholding tax on anything except amounts over the minimum RRIF withdrawals, but it will be tax payable on filing. After a few years of actual filings, the 20% can be adjusted if found to be too far out of whack.

    In this case I would have started the analysis for 2025 and excluded the balance of 2024 as we’re already half way through. I also would have considered both spouses to be the same age. When I read the parameters, it seems that they are on Dec 31 (I could be incorrect though) and that’s the important date for the calculated RRIF considerations.

    But to the premise of the question (retire with $1M in RRSPs at 65), ya, I’d agree with Mark’s analysis.

    Reply
    1. Thanks, Lloyd. You nailed it for the major takeaway for this post: $1M in RRSPs at age 65 is still a LOT of money and very well done.

      Yes, a number of assumptions for this one given it’s mid-2024 already and they will have earned most of their employment income this year before retirement, and depending on ages/retirement start dates, things are prorated.

      100% correct = the RRIF minimum withdrawal amount is based on the value of your RRIF on December 31 of the previous year.

      Thanks for your comment as always!
      Mark

      Reply
  4. Hi Mark: James I don’t wish to be flippant or disrespectful but your reasoning to common sense and I have the same problem as KB. I have a trust which was turned into a back-ended mutual fund. Each month I receive more units that are assessed a price and when tax time rolls around and I receive my T3 all the money is put down as ROC. Common sense say’s that this amount should be subtracted from the base cost but wait. Each month I receive more units so my total keeps increasing and if this is true and the ROC is decreased from the base cost then this is a pretty good trick. I’m receiving more units but my base cost is decreasing. Can you see how this can be confusing as it appears that you are not only getting something for nothing but your base cost is decreasing also. What started out as 7433 units is now 20000 units but my initial cost is dropping, confusing. With fact if you can retire with $1000000.00 yes you can but you should have outside savings to live on as pensions and work pensions will not see you far, If you can then when you turn 71 you can turn the RRSP into a RRIF and the next year you won’t have to do a thing as $52,800.00 ($1000000.00 X .0528) will be taken out automatically. This $52800.00 is added to your total income and is fully taxable. Not a nice one time hit and the thing is that it will be more next year. This is the downfall of RRSP’s. That added income will make it even easier to live in retirement.

    Reply
  5. Hi Mark,
    I am having a hard time understanding how your numbers add up to a $7000 after tax monthly income in? Can you show a more detailed breakdown of the taxes for years beyond the first or 2nd year? For example, with about $40000/year in OAS and CPP for the couple plus the $44000/year RRSP/RIF withdraw in year 3 for a total of $84000 it looks like the analysis is for $7000/month before tax dollars.

    The TFSA ends up with less money in it after the retirement period despite a modelled growth of 5.5%. Did you use TFSA funds in the model for additional income? I’m also curious as why the working couple currently brings home after tax $80000/year yet they need $84000 ($7000×12) after tax for retirement?

    Reply
    1. Hi Trevor,

      Thanks for your questions and comments.

      Here you go, first full year of retirement, just an example for the income sources:

      1. Max 2025 CPP and OAS = $20,623
      2. Zarah 2025 CPP and OAS = $18,419
      3. Max and Zara 2025 combined RRSP/RRIF income withdrawals = $47,477. (Added: they would need to pull out more than $47k though ($60k) to meet that income need due to withholding taxes associated with meeting desired spending needs for that year.)

      3% increases assumed from there. Again, just an example.

      $7,000 per month in this case would be after-tax but again, just an assumption. I could have used any other value like $6k per month or $6.5k per month.

      The TFSA ends up with less money in it in retirement (than they started with) because if they keep spending 3% higher year-over-year for 30+ years then they must tap their TFSAs eventually to cover living expenses as they age. That may or may not happen of course.

      I assumed in this case, they are living fine off $80k per year now, after tax, and my post questionned “how far their money could go when Max is 65 in a few months….can they retire the way they want?”

      Again, just another simple assumption.

      All my best!
      Mark

      Reply
      1. Thank you Mark.
        Thank you for your reply and the example of the tax paid in the first year of retirment, however how about the other years following? Can you show the amount of tax paid for the following year or years? Shouldn’t there be more tax to pay for the CPP, OAS and RIF income? Even with income splitting and senior tax breaks isn’t there more tax to be paid? Or is that where the TFSA withdrawls make up any differences? It looks like quite a bit was taken from the TFSA since it would have grown from 240000 to 1.2 million in 30 years at 5.5%/year yet its only at 213000 after 30 years. It sounds like a good plan to minimize RIF tax by taking near the min amount/year for tax withholding purposes, and using TFSA withdrawels to buffer that model. Is it possible to show the TFSA income along with the RIF income and tax, or point to a calculator that does? Thanks Trevor

        Reply
        1. Hi Trevor, that’s a lot of details and would be an entire new post for so many questions to answer. 🙂

          You need to remember since they are retiring this year, they would have paid tax on employment income. You also need to remember that due to withholding taxes they would likely get a decent tax refund. See another comment from Gruff.

          For a simple RRSP/RRIF calculator, please refer to the post again since I linked one there for you and others.

          This couple does not need to make any TFSA withdrawals for the first few years. They don’t need it the extra income.

          After year 2028, for TFSA withdrawals, they are consistently taking out about $11,000 or more per year from their TFSAs to fund their spending needs…that rises by 3% or more per year. The good news is, because TFSAs are growing every year on average, they can afford TFSA withdrawals.

          The takeaways I believe for you and others:
          1. RRSPs/RRIFs worth $1M at time of age 65 is still a lot of money to consider spending.
          2. 3% inflation should provide lots of spending power as folks age.
          3. RRSPs/RRIFs withdrawals are likely very beneficial in the early retirement years to avoid large estate values.
          4. TFSAs can be used for extra spending as you age to be tax-savvy/income is tax-free.

          Happy saving and investing and thanks for reading!
          Mark

          Reply
  6. Hi Mark,

    This is not related to the discussion so I apologize in advance. However, something is bothering me and I request your insight whenever possible.

    I am not sure how to view ‘return of capital’ provided by the ETF’s I have? Is it a good thing? I have these ETF included in my RRSP and TFSA. However, it feels like the distribution and return of capital are almost same! Is there any accounting trick going on here and I am being issued my own money as distribution? I reply on distributions and dividend to live by since i lost my job last year. My plan was to withdraw from RRSP until I find another job or freelance work.

    Thank you in advance,

    Reply
    1. In my opinion, in most cases, return of capital is exactly what it sound like – the fund is returning a portion of their original (or ongoing, in the case of DRIP) investment in the form of a distribution. Outside of registered accounts the ROC portion lowers your cost base and can be impactful to capital gains if a sale is triggered in the future. (Technically, it lowers the cost base in registered accounts also, but it has no tax consequences).

      There are some who argue that there is “good return of capital” and also bad return of capital. To me, it’s all about the NAV of the fund and how it compares to its peers. If, with each distribution, the NAV is declining, or not keeping pace with a peer, or near peer ETF, then it is probably “bad” ROC.

      I liken ROC to putting, say $1,000 in a savings account that pays 6%. It earns $60 a year. Imagine I waited a year and then started withdrawing $5 / month. That’s analogous to taking my return ON capital, and living off the income. But, what if I wait the year, and then start taking out $10 / month? That extra $5 is analogous to return OF capital, and my “NAV” will erode over time. My investment will pay me a “yield” of 12%, but eventually my savings account will go to zero.

      Since you indicated your ETFs are in registered accounts you don’t have to track your cost base. I would say keep an eye on the NAV of the fund to understand how the ROC is affecting the NAV performance.

      By the way, I know the math above is not “perfect” but it helps keep the numbers easy to understand.

      Reply
    2. Hi KB,

      This is a great article on return of capital, I would avoid focusing on investments that focus on that myself.

      https://ca.rbcwealthmanagement.com/delegate/services/file/456782/content

      ROC is a repayment of capital but represents a deferral of tax to the time you ultimately sell your units.

      I would watch the overall price gains of any ETF/fund over time to avoid basically just getting your money back as part of the fund distribution, meaning, over time, you want growth/gains/price appreciation from your investments – that’s why we invest.

      I see another reader also replied in more detail too – thanks JamesR!
      Mark

      Reply
  7. Thanks Mark!
    I also enjoy case studies real or made up. I wonder if you might incorporate some other conditions on a case study in the future. As most people are concerned about running out of money in retirement another concern is about entering an old age home as we become less mobile. The worst case scenario would be if one spouse had to enter an old age home and the other did not. Selling the home would be an option to fund the old age home. Perhaps the other spouse could move to a condo (if still fairly mobile). I don’t mean to be a downer but planning for this scenario is always better than figuring it out after the fact.

    Thanks again, looking forward to future case studies, and financial tips.

    Steve

    Reply
    1. Thanks, Steve!

      Some (case studies) are based on reader inputs, the rare one is made-up, but many are actually real-people but I adjust the names of course and built a narrative around what they told me.

      Agreed, selling a home/going with the nuclear option per se and selling your primary home and then downsizing or renting is always an option.

      This not a “downer” perspective, very real for many people and I believe, personally, why having ample cashflow from your retirement portfoio is key since you don’t want to be forced to sell your home as you age, rather, it’s just an option on the table among others. Just my personal thoughts.

      I welcome your feedback on that!
      Mark

      Reply
  8. (RBull) deane hennigar · Edit

    Hmm, I’m interested in the assumptions of no withholding tax on the minimum withdrawal, and then paying withholding tax on only the small excess amount. A fair bit of tax will be owed at tax time or I wonder if instalments will come into play.
    Its not my understanding but if that is actually the way it works I have some re evaluating to do with mine.

    Reply
    1. Great to hear from you on this one.

      Yes, RRSP/RRIF withdrawals in this case, in the early years, have some modest withholding taxes due to their desired spend. I suspect if they made their spending more variable, not linear as overly simplified in this case study, then withholding would come down a bit.

      When it comes to more real life per se, maybe your situation, seems to me that whatever folks can do to meet their income needs, avoid lumpy tax hits/tax installments, that would be beneficial but I can appreciate it’s not always the case when RRSP/RRIF withdrawals are large amongst other income streams coming online (CPP, OAS).

      Not sure that is overly helpful, you know this stuff inside and out!
      Mark

      Reply
  9. Interesting post Mark. I am 100% in your camp on leaving the TFSA until the end. My wife and I don’t have any government pensions or defined benefit pensions so we will be relying on our RRSP’s and our investing (hopefully) skills. We are lucky in that we have no debt or mortgage and we plan on using our home as our nuclear option (yes I did borrow this from you Mark) Living in the Toronto area our home is a fairly large asset that we hope to utilize later on in our retirement when we are old ( 60’s 70’s & mid 80’s is not old) Our plan is have my wife start drawing her CPP and OAS when I retire and leave my CPP and OAS until I turn 70. To me the CPP & OAS is our defined plan with a government index built in or our bond fund. When I was younger I always thought the biggest retirement concern would be money/capital. Now as we near retirement it is becoming health, family and friends. We plan on spending more time with family and friends in retirement but that is all predicated on our health and theirs. Funny how over time your concerns change. I guess to a degree that may be why some people opt for early retirement to have “more years of good health” Although health is a wild card even if you retire early. Thank you for your insights Mark.

    Reply
    1. Thanks, Don!

      Ya, I see time and time again the value of keeping TFSA assets “until the end” for most, including those that do not have any workplace pensions.

      Again, another great reminder from you as well in that having $0 debt to enter retirement is ideal for most too. Less obligations to others, more simplification.

      When possible, as you well know, you’ll get the most government benefits for your buck if you delay CPP and OAS to age 70, but CPP moreso if you had to pick one over the other.

      As we enter semi-retirement years, my wife has started that journey a bit (! 🙂 ) we realize more and more that our health is our greatest asset. I hope we have it for many years to come and I hope the same for you too.

      Mark

      Reply
  10. Thanks for this Mark
    Maybe I’m misunderstanding the definition of cashflow, but the first chart appears to show cashflow from retirement assets at around 80K. Yet the table immediately below it seems to indicate a total withdrawal requirement of 115K accounting for taxes.
    Can you elaborate? Cheers!

    Reply
    1. All good, Dave! RRSP/RRIF withdrawals need to be $115k or so due to withholding taxes.

      From the post:

      “And here is how much they might need to withdraw year-after-year from their RRSP/RRIF to meet their cashflow needs; depending on rates of return, inflationary needs, other:

      Total withdrawal Year-1 = ~ $115k (since CPP and OAS are prorated this year; since withholding taxes apply but these will trend downward over time).
      Year-2 = ~ $60k (CPP and OAS fully online by end of year).
      Year-3 = ~ $45k and so on as RRIF min. values kick-in.”

      Cheers,
      Mark

      Reply
      1. Understand and agree with everything you said Mark, but shouldn’t cash flow be $115K, not $80K? $115K withdrawal is required to pay taxes + living expenses. What is your def’n of cash flow?

        Reply
        1. Very fair DaveG, just how the software / some financial software works and I just showed one section of the report to distinguish between total withdrawal, less withholding = income left for after-tax spending. Probably too much detail.

          My personal cashflow definition relates to my after-tax spending capability.

          All my best!
          Mark

          Reply

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