Income Needs and Wants in Retirement

Income Needs and Wants in Retirement

Some time ago on this site I wrote one of the biggest retirement questions is: how much is enough?

What might be our income sources, needs and wants be in retirement?

The answer to such questions are usually: it depends.

This updated post will share those details and outline how such needs and wants might be funded in our upcoming semi-retirement days – planned for sometime in 2024.

Read on and let me know your thoughts, questions or comments!

What are your income needs and wants in retirement?

It largely depends on what you’ll spend in retirement.

That’s always been step #1 in our book. 

How and when to withdraw from RRSP and TFSA

Source: The Behavior Gap

Whether you’re 35, 45 or 55, I believe it’s essential to figure out what retirement might look like to you. 

Here are a few questions we’ve been working through:

1. When do we want to retire or semi-retire?

Math is helpful but I also believe we want to retire to something.

Both of my parents stopped all form of work around age 60. That may or may not work for me – literally. I like to be busy and instead of stopping work cold-turkey per se I would rather glide into semi-retirement/work on own terms and then slowly ease off the gas pedal per se whenever I want. At least that is my thinking now…

Sure, math helps: the later you retire from full time work, the longer you have to accumulate that retirement nest egg. But I believe there is also the work optional option of part-time work in our 50s when the debt is gone and most of the assets needed for full-on retirement spending have already been accumulated. 

Your mileage may vary 🙂

2. Where do we want to live in retirement or semi-retirement?

Likely Ottawa, as a home base still.

Our family is here. Most of our good friends are here or in the immediate area.

We don’t aspire to own a second home in the sunny south – too many liabilities.

We do however want to travel more/live some time abroad.

Our thinking could always change but it will be nice to have our condo bought and paid for without any debt on the books very soon and maintain it as a home base. 

This means all income we do intend to make, including during semi-retirement, is for us to spend as we please. 

3. What will our expenses be?

The general wisdom is that you will need somewhere between 70-80% of your current salary for living expensses in retirement. That means, if you make $100,000 combined per year, you should plan to have $70,000 to $80,000 in combined retirement income spending, as an example.

This general wisdom includes the logic that you are likely to spend less as a retiree – since you’re not commuting to work, you might have downsized your home, and/or you’re not supporting dependents.

I think these rules of thumb (like the 4% safe withdrawal rate/rule while valuable to a point) don’t make much sense when you dig further into your personal details, needs and wants. Rules of thumb are a starting point – only. 

Further Reading:

Why the 4% rule is actually (still) a decent rule of thumb

I far prefer to calculate what our fixed expenses will continue to be, during retirement, including inflationary spending, adding in some variable spending needs and wants as well.

We keep tabs on what we believe our basic expenses will be in retirement, on this page here.

Travel + major entertainment costs = our $X factor beyond those basic expenses…

4. What will our income be each month?

Over the last few years, I’ve started to take a much deeper dive into the world of retirement income funding – not only because we need to figure this out for ourselves but I enjoy supporting others too! 

Knowing how and when to fund our semi-retirement income needs and wants is key to know our that our plan is largely accurate, attainable, sustainable, while also mitigating risk for the unexpected.

How and when to withdraw from RRSP and TFSA

And the answer is…

Figuring out how much you need for retirement or semi-retirement can be complicated but we’ve got a decent plan IMO. This next section is going to break down how we are largely going to fund our income needs and wants each month. 

Key income sources in retirement – beyond any part-time work:

Source # 1 – Workplace pensions

At the time of this post, when I started my job with my current employer well over a decade ago I was offered a choice for my pension plan – defined contribution (DC) or defined benefit (DB). I chose DB. When my wife started her job she was offered the same choice and chose the DC plan instead (based on advice from her Investors Group Financial Advisor before I knew her.  Yes, this is a true story). Our hope is that pension income will fund a good portion of retirement expenditures in our 60s and beyond… 

Source # 2 – Registered Retirement Savings Plans (RRSPs)

Ever since I read David Chilton’s The Wealthy Barber it reinforced the lesson of pay yourself first.  In my 20s the RRSP contributions were rather lean but I made up for some lost time in my 30s. Later this year I hope my RRSP will be fully maxed out. We hope to contribute more money to my wife’s RRSP in the years ahead.

I figure we’ll need a nest egg of >$500,000 inside our RRSPs (combined) to help fund semi-retirement with. I figure that should allow us to withdraw a solid $15,000 – 20,000 combined per year for a few decades, but start with “living off dividends and distributions” and eating capital along the way. 

Source # 3 – Non-Registered and TFSA Dividend Income

Investing in stocks that continually pay dividends is a lovely thing.

Investing in stocks that continually increase their dividends year after year is even better!

Not only does this provide investors like myself with a steady passive income stream but also an increasing passive income stream.

We’ve been on a long-term journey to earn tax-efficient (non-registered) and tax-free (TFSA) dividend income for semi-retirement, a goal of earning $30,000 per year I’ve been blogging about for years now…

December 2022 Dividend Income Update

That goal is now very close in fact at the time of this post.

Given that, I’ll be sharing (soon) how I intend to change my monthly dividend income updates in the coming year, to better align with our semi-retirement drawdown plan. More to come in 2023!

Our long-term goal has always been: once we earn about $30,000 in dividend income from these accounts by around age 50-55, we can consider working part-time and scaling back given other assets we own or expect.

That brings me to our final income source…

Source # 4 – Government Programs

Based on recent information, here are the average Canada Pension Plan (CPP) and Old Age Security (OAS) payment benefits:

Maximum annual BenefitsAs of January 2022Projected Benefit*
Old Age Security (OAS)$7,707$11,452
Average annual BenefitsAs of October 2021Projected Benefit*
Canada Pension Plan (CPP)

We figure very conservatively CPP and OAS combined will pay us about $1,000 per month, each, at age 65+ and we’re planning on that = a minimum of $24,000 total per year at age 65+.

Income Sources, Needs and Wants in Retirement Summary

When I add up our future, smallish workplace pensions, along with our RRSP income/drawdown plans in our 50s and 60s, in addition to growing non-registered and tax-free dividend income, and then finally government benefits later in life – the sum of these investing parts should continue to put us in decent financial shape for retirement providing multiple income streams for retirement needs and wants.

We just need to keep doing what we are doing.

That said our retirement plan includes a host of assumptions, hopes and savings goals. Lots of things need to converge in the coming year or so to keep the Financial Independence Plan intact.

I’ll keep you posted on that progress and financial organization this year.

“…Plans are worthless, but planning is everything…”  – Dwight D. Eisenhower.

If you’re in retirement, how did you determine your enough number?

Further Reading:

This was our most recent Financial Independence Update.

How much do you need to retire on $7,000 per month?

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

Can this couple retire at age 55, with $800,000 in their RRSPs, with growing higher inflation?

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.

80 Responses to "Income Needs and Wants in Retirement"

  1. Good article Mark, although part way through reading I had to check that I wasn’t listening to myself talk. I think in the exact same way as you do. Know what you want to do or how you want to live in retirement, where you want to live, estimate those expenses and that will drive how much you need to retire. I also go through the same thoughts on where is my money going to come from to generate that income. Being a few years older than yourself I am probably just a bit ahead of where you are at this time. I am 55 going on 56 and for the last couple of years I have been in semi-retirement. Last year I had an unexpected large one-time expense, so I took a 3 month contract to make up for the money I had to spend on the expense, I actually made about 3 times what I needed so it was a little extra added to my investing / spending pot. I have tracked my actual spending at a couple different points in my life including the last couple of years. Even with the one-time large expense my spending was under $60k, take out the one-time expense and it is under $50k. I have not paid off all my debt and that is one of the single largest expenses I have, if I were to pay off that expense, my annual expenses would be around $35k per year. For comparison I live in Toronto so not exactly the cheapest city in Canada. My dividend could probably cover my full expenses every year but the money coming from my LIF and RIF is actually taxed as working income as opposed to dividend income so I need to make a little more to cover taxes. To make up the difference I write some covered calls on my holdings in my margin and TFSA.

    1. Ha.

      ….”although part way through reading I had to check that I wasn’t listening to myself talk.”

      Certainly knowing what you intend to spend is important. I read some Canadians believe they need $1.7 M to retire now.

      That could be true…but my math tells me someone/a couple in their 50s could spend quite a bit with $1.7 M invested and never run out of money.

      Nice 🙂 “…I actually made about 3 times what I needed so it was a little extra added to my investing / spending pot.”

      My wife and I figure we need our portfolio to generate about $4,500 per month, on average, to cover basics expenses. We figure some part-time work after 2024 for a few years should be able to generate another $2k per month on average. Once workplace pensions can be tapped at age 55 (yes, you are just ahead of me…) I figure we should be fine and be able to live off about $6k per month indefinitely with 3% inflation.

      We’ll see. For now, just staying invested, maxing out the TFSAs, RRSPs, etc. as you know and trying to live my life too!

      Keep me posted on things. Always great to engage with like-minded folks!

  2. Hi Mark: Yes I left the workforce when I was 43 going on 44 and took a package were I would get a pension at 65 but everyone got one at sixty so that is when I took mine. A lot of people live long but there are some who die right after they retire or in their sixties so I took the reduction and put it in a high interest savings account. As for the stocks I kept on investing in the market and the dividends keep on increasing. I have given $490000.00 to nephews and they pay me minimal interest. Better me than the bank were the money would disappear. I have more than made up that difference in the last 7 years. As mentioned I don’t plan to die broke and some day, hopefully not soon, someone will get a lot of money from my estate. Instead of withdrawing money I plan to add to it as having a large buffer in retirement lets me breath easier and enjoy life better. It gives me comfort. On New Years I had some fun with a neighbour of my brother. I asked him how it felt going on 3/4 of a century old or would he rather I say 75. They are both the same but one just sounds older. I have five checks at home that I try to live off of and Top up the checking account to pay my instalment payments as the government want their money quarterly. My nieces and nephews have heard about the stock market all their lives growing up and now all have small portfolios of their own and in the future will not have to worry about money and their kids shouldn’t worry about money either. Put another way just one less thing to worry about.

    1. That’s incredible, Ronald, you can gift so much – well done and kudos to you!!

      It is my hope for you, you live a happy and healthy (continued) retirement and you can continue to pass along your investing wisdom and experiences to family. Your nieces and nephews would be wise to learn from you 🙂 – if not already.


  3. Hi Mark: As you can see I am back. The monitor was going and on Tuesday night I new this so I turned it on about 10:00PM but the screen never lit up until 3:00AM. Yes I keep awful hours. So on Wednesday I bought a new monitor. As far as financials go mine are sort of organic. In 3 days I will have been out of the workforce for 31 years and now have a lot for the types of jobs that I had but it didn’t happen over night. 25 shares here and 25 shares there but now I buy a 1000 shares at a time. I have basically one bucket but it is spread out. As mentioned before I used to deal with a full service broker until “90 at which point I switched to at the time TD Greenline, now Web Broker. Through buyouts or potential buyouts which never happened most of the stock in Canada Trust was switched to Web Broker. GIC’s and some cash is at home and in the credit union. I still try to live prudently but if I need it like this monitor I can go and get it. I don’t take trips all the time and I still look for deals while shopping which makes my brother and sister in law laugh since I could afford anything I want, but I tell them I wasn’t raised that way. When I left the workforce I still kept on buying stock as it worked before so why wouldn’t it work now. Back in the ’90’s the Globe still printed the stock pages and I would go down the list looking for the best P/E compared to the dividend yield and the stock name and came across some keepers. One thing you omitted on your list that you will have to do when you retire is instalment payments quarterly to the CRA. At the moment I pay a lot even though I declare over $46000.00 of dividend tax credit. My advice such that it may be is to keep on investing in the market even after retirement as if what got you to your stated goal of $30000.00 should also work in the future with more dividends to come.

    1. Ronald, that’s a long time to be retired – congrats!

      Seems you still live prudently to use your words, despite having considerable dividend income.

      Curious, are you going to spend “everything” eventually or is the plan to gift some of your assets over time?

      Seems to be you could pass on some generational wealth!

  4. One question I have is travel. We have several “trips of a lifetime” planned! How do we fund this? Should we start now? Retirement will be in 3-5 years for hubby and I will continue to work part-time/REI for the next ~ 10 years. Should we start a ?cash wedge for travel?

    1. Interesting questions and nice trips of a lifetime problems to have! 🙂

      Rhonda, have you considered understanding all your cashflow sources for semi-retirement? It’s not an easy puzzle but take some time to write those potential income streams down on paper – how much could flow from:

      -part-time work?
      -RRSP withdrawals?
      -TFSA withdrawals?
      -non-reg. assets?
      -rental income?
      -CPP income?
      -OAS income?

      I think figured out potential income sources is smart, then you can consider how much you might need from each and go from there….

      I’ve personally started my savings for a cash wedge and will write more about that in 2023:


      1. Well, when you put it on paper, I have many income streams! Lol! I am going to map out our trips through our retirement and see how much all of that is, and then will go from there.

        1. I assume we’ll build a “travel wedge” each month by withdrawing more than we actually spend and set aside the “extra” for taxes and travel in a HISA. No doubt we’ll pay for travel with credit cards to collect points/cash but then immediately pay the bill from the “travel wedge”.

          I’m still expecting to stop dripping stocks about 6-12 months prior to our retirement date and let that be our cash wedge to get the ball rolling.

          1. “Travel wedge” is nice. We basically funnel money over to savings for travel, so it’s a fund per se.
            We expect to DRIP stocks inside our TFSAs for the coming decades. That’s the plan anyhow!

  5. You must have made that spend budget up some time ago Mark.
    At $100 per month the missus might get tired of eating at MacDonalds all the time Mark. LOL
    As to 80% of your working salary that is a sales pitch by the RRSP guys for you to deposit more money.
    As mentioned in previous posts I had to guesstimate many of my expenses as I was a road warrior so the cost of food, car expenses even heating were obviously affected by my employment.
    At any rate once I had a spend budget that I was comfortable with I pretty well augmented just about all of the lines to take in the guessing part and also build in a little inflation protection so that I was not running over budget because of inflationary increases.
    Tracking your 2023 spend will be a good starting point. More people should do it.
    Don’t forget to add in all those things you forgot to include though! Boost the finalized budget.

    Your $26K mortgage will cover a lot of incidentals but if you get in to travelling and living abroad you might easily blow through that.
    At any rate it is better to err on the side of caution than trying to make the spend budget match you income.


    P.S. Still running below my budget projections from around 2015

    1. Ha, that’s a basic budget with the odd takeout meal. Fine dining is not a basic need 🙂

      “As to 80% of your working salary that is a sales pitch by the RRSP guys for you to deposit more money.”

      Or, they have nothing better to base your plan on…

      We need to track our spend since we can’t really plan for retirement very well without that. At least that’s my take.
      What’s your monthly budget, on average?

      Thanks for your inputs!

      1. I averaged out to $3,250 for 2022
        $3,370 for 2021
        $2,705 for 2020
        Maybe a few hundred more at the very most if I missed anything in my spending.
        Back around 2015 when I guesstimated my budget I had $3,560 as a yearly spend projection.
        So some approx eight years since I made my budget I am still running below my projections.
        Back in 2015 my TFSA was paying me approx >$9.5K
        2022 it paid me >$16K All monies are reinvested and I put in the max every year.
        My cash wedge is approx75% invested in a non registered account and that is paying approx. $165 mth but that gets re-invested as well (currently)


        1. That’s a very low budget – good average!

          I figure we’ll be close to needing $4,500 per month, in 2024 dollars, on average without major travel or major capital expenses.

          “Back around 2015 when I guesstimated my budget I had $3,560 as a yearly spend projection.”

          That’s very, very good estimations…

          We’re approaching $13k in dividends inside our TFSAs per year; all dividends and distributions are re-invested as much as possible.

          Congrats on the success.

          1. OOPS! That should have been $3,560 per month, not yearly.
            Wouldn’t even have been able to eat dog food for that low ball spend. LOL
            Once we get back to rolling along I figure the spend rate will be going up.
            Daughter’s wedding coming up in June so the monthly spend will be higher for sure.


  6. Great post Mark, thank you.
    Are you thinking this will also be your order of drawdown as well? Pensions followed by RRSP,s etc? Or a combo?
    CPP and OAS at 65? (Versus 68,70, etc)
    Thanks and all the best for 2023

    1. Thanks, Chuck.

      Actually, it really depends on my pension 🙂

      I’m thinking my general drawdown plan will be NRT = (N) Non-reg. slowly “live off dividends” with a mix of slow RRSP withdrawals (R) and leaving TFSAs (T) until the end per se.

      Likely taking CPP at age 70. OAS at age 65.

      It really depends on my commuted value of my pension. I hope to stay with my employer in some part-time way but we’ll see?!

  7. First of all, I admit I did not read them all, but it’s pretty cool to read eight year old comments!

    Second, I did notice quite a few comments on the the absence of a car payment / car savings plan. I have $650/month in our retirement budget to represent a car payment. Our “dream” retirement is a 4 season home on a lake, somewhat remote. The thought of one of us taking off for the day (me fishing, her shopping / crafting) and leaving the other “stranded” is not too comfortable. On the other hand, part of our retirement vision is 2-4 months in Florida or other sunny destinations. We would drive, but that leaves a car sitting useless for as much as a third of the year. The impact to my budget, in addition to the payment itself, is twice the insurance costs, and twice the fuel costs. I definitely can see us downsizing to one vehicle eventually, but probably not until at least 8-10 years in. Looking back, my parents only kept a second car for about 2 years, so perhaps my plans on this will change.

    Another significant difference is my predicted costs for utilities. I budget $800 / month for electricity, heating fuel, 2 cell phones, internet and streaming services. The “rural-ness” of our expected retirement is playing into this a bit.

    Also our insurance rates are quite a bit higher, and I think I will seriously consider reviewing the need for life insurance once we get to retirement.

    Otherwise we’re fairly close. I use a higher number for groceries / eating out but I agree that there can be a lot of variability and adjustment for those values so I could probably just as easily use your values.

    As of now, our “standard” monthly expenses are just over $4,800 / month, without any travel extras. I do think a key difference is condo living in a city versus “cottage” living on a lake. It remains to be seen if we realize that dream, or modify our plan. I have often shared with my wife that an alternate retirement home might afford us greater flexibility and more travel, or at least a higher margin of error, but we both think shooting for the stars is the place to be for now.

    1. Thanks, James!

      Overall, our values are close/comparable.

      We may not have a car in another 15 years, we’ll see. If I have one, it can likely be funded with existing cash savings 🙂

      We plan to buy nearly new or newer in another year or so, an EV or hybrid, and that should last another 15 years. We live in the city and can walk or bike to everything within 30 mins.

      Wow, a four season home on a lake sounds lovely. You’ll need at least one good car for that, for sure.

      “I budget $800 / month for electricity, heating fuel, 2 cell phones, internet and streaming services. The “rural-ness” of our expected retirement is playing into this a bit.”

      Ya, our condo fees + utilities are less than $1k per month for heat, hydro, water, cell phones, internet, streaming, condo maintenance costs, etc. That will go higher over time with inflation I suspect which is fine.

      We don’t feel the need for life insurance when we’re debt-free and we have assets to take care of things. What are you insuring then? 🙂

      We figure we could live off about $4,500 per month, now, without any “extras” or international travel for a few months per year so that could add another $3k per month!! LOL.

      Keep ya posted!

      1. Hi Mark,
        Regarding insurance, we will definitely keep it until we’re mortgage free. We’re expecting that to happen when we sell our suburban home and “move to the lake”, but we might end up with a bit of a mortgage, especially depending on the price differential.

        There are two other considerations I think about. One is with my wife’s DB pension. A 75% survivor pension reduces her yearly pension amount by about 60% of what her term insurance costs. The insurance is worth roughly 10-15 years of her anticipated annual pension. So one consideration is keeping her policy and opting out of any survivor pension. If she predeceases me then I’d end up with no survivor’s pension but I’d have the insurance payout. Of course the deeper we get into retirement the less value there is here (at least, that’s how I think of it).

        I think either way we likely terminate my policy as I have no pension to “protect”, other than CPP, but that’s fine with us.

        Secondly, I really appreciated my parents having life insurance to help offset the taxes that had to be paid from their estate. I will consider something similar for us for our children. Between our RSPs and non-registered holdings it would be nice to protect them a bit from the tax burden.

        I guess, ultimately I like to think we can dispense with the life insurance, but it’s in the budget now as a planning item. Perhaps we will drop it as we get closer to the full retirement picture. Lots to consider.

        1. Good stuff.
          Related to a pension, or any income really, you do need to think about survivorship. That would be smart, for your partner!
          Term insurance and insurance in general makes sense when you cannot incur a catastrophic financial loss. I’ve always viewed insurance as a risk mitigation tool – your mileage may vary. A good way to offset estate taxes is yes, via insurance but you can also reduce your RRSP/RRIF eventually to zero and focus on the TFSA. No “estate taxes” to worry about.



  8. How did we know when enough was enough?

    First step was to know what we spent in various categories and then estimate (ok guess) how the expenses in each category would change after retirement. We kept a fairly detailed spreadsheet for a couple of years before retirement. That gave us a better start point than just basing retirement on a percentage of working income.

    Ww don’t really know if the plan is working, several trips of a lifetime went the covid route and inflation is something that we are wary of. However, dividends remain healthy and RIF withdrawals are being used to keep the tfsa full.

    1. Excellent stuff, Richard and very aligned to what I’ve learned from other successful retirees as well:

      Step #1 – figure out what you spend. Everything. In detail.
      Step #2 – figure out where that money is going to come from, all income sources. In detail.

      Not saying this is easy work, but it is simple in the approach.

      We’re baselining this year, in detail in fact throughout 2023. I want to know what the math is although I’ve had assumptions for many years.

      Inflation is a long-term wild card but we have lots of economic history to know it can and does spike from time to time, best be prepared and will try my best 🙂

  9. I’m no expert and like many found a strategy which I feel works, too late. Had I learned about Tom’s site in the 80’s or 90’s I shutter to think where we would be.

    Looking back and in hind sight Diversification, at least to me, is as much a loser as Taking Profits. Had I stuck to a basic core of good dividend growth stocks I would be much better off and much happier. Even with my portfolio I’d be happy holding only 10 or less stocks and adding to those positions when the prices drop. I know my market value would be much higher than is.

    Everyone has to decide what and how they feel about investing and how to best achieve their goals. Your doing a good job with your blog and I’m amazed the amount of information you provide. Good work! But for me I’m sticking to the simple, slow and easy route.

    1. Had I known about this approach in my 20s, I would likely be retired now! Such is life. At least I woke up in my 30s so we’re on pace for our early 50s.

      I appreciate the kind words about the site Henry, I have fun with it and it helps to have great interactions with folks like yourself.

      1. Both of you are way ahead of me. I started even later! If only I could turn back time and correct the mistakes that I have made. LOL

        I found Mark’s blog truly by chance through another website when I was researching about RRSP investing and credit cards. I was amazed to say the least, and it completely changed how I see investing and gave me the knowledge to start my on DIY path. I wish I had known twenty years ago. On the other hand, were there any DIY dividend investing bloggers online back then? Haha

        I’m still trying to reverse some of the things that I have done and wish I hadn’t, ie. AQN, MMM, SQ.

        1. Ha, I was around 15 years ago…but the blog was hard to find as I was just starting out.

          Kidding aside, we all learn over time, Sharon. Investing just like life, is no different. We all make some mistakes with money but we also (hopefully more often than not) make some great decisions too.

          Yes, I still own a bit of AQN but alas, it happens. Then again, a LOT of dividend increases already this year to be proud of:
          NTR, EQB, CNR, BCE, GWO, MFC, TRP, BLK, WCP, BIPC and BEPC – and it’s not even March.

          We’ll see what the rest of the year brings!

          Thanks for your kind words, Sharon 🙂

  10. Sounds like you’ll Definitely reach your goal. I owe my success to Tom Connolly. Before I started following his advice (and for a while after), I invested in what I thought were growth stocks and listened to way too many tv experts. We also got into the mind set of Taking Profits. After many years we ended up at breakeven, which is a loss.

    Once I stuck to Toms advice (though I do own 2 US stocks) my income grew steadily and we were able to generate real income from our investments. Now we have a core holdings and just sit back and watch the dividend grow.

    1. Tom is a bit of a celebrity really to dividend investing fans. I’m somewhat following his advice to buy and hold CDN banks, utilities and a few other stocks with dividend growth year after year and decade after decade. I recall the top growers in terms of longevity are CU, FTS, CWB, ACO, TRI, EMP, MRU, CNR, IMO, ENB and others.

      It’s pretty amazing Henry to see your income grow (dividends) even when the stock price does not.

  11. Just as a side note, we have our holdings (not counting ones with Transfer agents) with ShareOwners Investments. As we don’t buy or sell (rarely, if ever) we get the advantage of full drips. When we transfer from rrif’ we do an In Kind so there are no costs and they continue to reinvest the dividends.

    Without any additional input our portfolio continue to grow at about 4% a year after our withdrawals.

    1. Great insight…thanks Henry. Full DRIPs are great and it’s a big reason to where we are today, understanding the value of them as a wealth-building machine. Given your portfolio value you can certainly do what most can’t – live off your dividends without any real threat of running out of capital. Kudos to you – we hope to be there in 15 years.

  12. Good for you Mark: We don’t have any etf, funds, bonds or preferreds. Why have etf’s when most of their holdings are not what one would want (at least I wouldn’t). Even those small fees will cost you thousands over time. Our portfolio is made up of 17 Cdn DG stocks and 2 US stocks. We also only have one reit. Our total investment is about 1.4Mil. We have several drips, rrif’s, tfsa and a joint acct. We only use about $25K from the rrif’s withdrawal and the rest goes into the tfsa and joint account.

    1. You raise a good point re: the holdings that you might not want. This is the downside of ETFs – you can hold what the market holds; the good, the bad and the ugly. My money management fees for the ETFs we own aren’t very much so I will continue to own them for the diversification they provide.

      I have a post about bonds so stay tuned!

      We own about 25 CDN stocks, a handful of CDN REITs and about 10 US stocks. We don’t own anything that doesn’t pay a quarterly or monthly dividend.

      Very smart to withdraw from RRIF and put what you don’t need inside the TFSA. But you already know that 🙂 Thanks for the insight, great to learn from folks like yourself who have been there and done that.

  13. Wish the TFSA was available when we were in the accumulation mode. I’d recommend everyone max out the tfsa then use rrsp, and drip if there are any other funds available to invest.

    If one is starting out I’d drip and transfer into a tfsa when the drip gets large enough. Continue the process as one gets dollar cost averaging and no fees on small investments. Stick with large, solid companies and ones which allow drip & spp.

    1. Are you reading my mind Henry? This is our order of priority as well. Max out TFSA, then try and max out RRSP, then kill the mortgage with lump sum payments. We DRIP everything we can, all stocks and ETFs and use the leftover cash from shares not-DRIPped to save for more indexed product purchases.

      We also did exactly what you said. We had “full” DRIPs with company transfer agents then moved all full DRIPs when we had enough to run synthetic DRIPs. Never looked back!

      What’s in your portfolio Henry? How many CDN stocks and US stocks? Are you still DRIPping or simply enjoying the $90 k per year in cash flow? 🙂 Ah, that must be nice! Something to aspire to!

  14. Hi Mark, Great thread. I have been retired for 13 months now and I rent a 1 brdrm apartment in Victoria, BC. I’m single with 2 adult children who I’ve informed that there will be no more $$ coming from me. Paid for both of their educations & $50K for my son’s business. Now it’s my time to be selfish. I have been spending 3 months in New Zealand the past 2 winters(their summer). I bought a motorcycle down here and store it for 9 months. I have 2 MC’s in Victoria + a jeep. The jeep was purchased new in 2008 and it will probably be my last car. It has 30,000k on it as I ride my bikes most of the time but use the jeep for cross country trips to visit family.
    So what are my retirement expenses?
    NZ last yr – Jan to Mar (3 months) cost a total of $16,162(including $7,142 of initial expenses + $820 MC storage in NZ) + $2,691 to keep my apartment in Victoria. My Apr to Dec ( 9 months) total costs for everything in Victoria $28,794( including a 30 day road trip with my daughter to Ont to visit family). Total 2014 expenses = $47,647.
    DB Pen net (3,005 x 12) = $36,060 therefore a shortfall = $11,587 made up from a RRSP withdrawal.
    In 2015, I now have someone from Manitoba subletting for 3 months and the MC in NZ is paid for. So I am hopeful that my 2015 NZ expenses will be around $16,000 in total.
    I am holding off applying for CPP until 65 and using my RRSP to supplement my income until then.
    I was able to increase my DB Pension net to $3,221 in 2015 because I had a heavy Fed tax hit for 2013. Paid in 2014 so I increased my Inc Tx / Pen cheque last yr.
    I hope my BC expenses for 2015 will be about the same as 2014 with fuel prices having gone lower & my landlord only increasing my rent by $19/month (2.44%) starting in May.
    My goal is to travel while I can as long as I can then spend less in my 80s to 100. I may even give up the MCs by the time I’m 80. We’ll see. Thanks Mark.

    1. Thanks for the detailed comment Lawrence.

      First of all, New Zealand sounds wonderful. I hope my wife and I can go there someday.

      Total 2014 expenses in retirement = $47,647, that sounds pretty good and you’re living it up as well.

      A DB pension close to $40,000 is great, very well done.

      If you can use up your RRSP before CPP, I think this is a smart move since CPP in indexed. Then you still have OAS to rely on. Sounds like you’re doing very well and good on you!

  15. Interesting comments on vehicles. Most of you must be city dwellers. We will always need a car. Our mail is a 22k round trip, the grandkids 600 k and mom 1000 k. It would be difficult to keep food to $700 per month as we are hostage to Overwaitea. OAS and CPP for us will be $2000+ per month in a couple of years. Much more than the couple of hundred you mentioned. Also you completely left out the boat and motorcycle expenses.

    1. Certainly planning isn’t one size fits all! The vast majority of Canadians are urban, and more so in retirement. Since we have a cold climate if I had to list a vehicle as a necessity it would be my car not my motorcycle even though my bike clocks far more km currently. I agree your CPP numbers are more normal. Even taking it early it should be over 600.

      A lot of these type of discussions seem to assume people are married. I assume that is the minority situation once people hit their 60s, given the divorce rate over 50% and some of us drop off.

      Mail? Its 2015. Rare trip.

    2. We live just outside the city. I still think only one car is needed for “retirement”. I suspect we’ll go down to one vehicle in another 10 years.

      I’ve never owned a motorbike. I’m worried it would be a dead trap for me!

  16. Another issue to look at is aging and money. Having saved for a career and retired recently, I find it somewhat hard to spend, and I do not want to run out of money. What if inflation returns to double digits at some point, or indeed how can my nest-egg handle inflation now? This is a point where I struggle although logically I should not.

    By simple observation, it is obvious that as one moves through the decades of one’s 60’s, 70’s, 80’s …, aging to a large degree cancels inflation with regard to money. For example, there is almost zero percent chance you will be trying expensive new hobbies in your 80’s or traveling 5 months a year all over the world – but you well may in your 60’s.

    I do not think that things will change much in this regard in the future. Mortality is an incredible friend in financial planning (cheery thought of the day). I just have to convince myself!

    1. Inflation is a huge wildcard Robert. A great friend of mine and I talk about this one quite a bit.

      I would agree with you, as inflation rises and as you age, I figure you might have less variable expenses to deal with and consequently because those discretionary spending habits change you might not be affected as much in your later years vs. earlier retirement years. This is partly the reason why I gravitate to dividend paying stocks: the solution to help fight inflation is to buy the very companies that charge you more year after year.

      It will be interesting to see how inflation will change over the next few decades given how low borrowing costs have been for so long. I guess it will all play out eventually!

  17. We have $1.3M USD in 401Ks plus Social Security of $39K USD per year (because we worked basically our whole careers in the US) to retire in Canada with this year. Our budget is $50k/yr. We figure this will be enough. In any event, we have decided it is enough and will make do with what we have regardless. 🙂

  18. There’s nothing wrong with budgetting to use the CPP to fund your extras rather than your necessities but I do think you can count on getting it. (Insofar as you can count on the anything: the banks/brokerages could also seize your investments etc. but it’s not likely or something you have to plan to avoid.) CPP is a pension plan not really a government program like OAS. Taking it away from people at 65 would be devastating to the government in power so it’s unlikely. They don’t even like to tamper too much with the OAS because of the voter backlash.

    Car costs are a real wildcard. Will we even have conventional family-owned personal vehicles in the future? The good thing about budgetting for one or two is that you will have extra money if they are banned/gone by then. (Or at least that’s the hope!)

    1. Thanks for the comment Bet. This why I like Ike’s quote, the process of planning is critical but plans unto themselves are largely irrelevant.

      I’m a very risk adverse investor, so I’ve chosen to rely on my own savings and investing and not worry too much about what the government programs of the day are. If CPP and OAS are enhanced, great, if not we will take care of ourselves as much as possible.

      Depending upon where my wife and I decide to live, we might not even need a car. Time will tell.

      Always appreciate your comments.

      1. For me, I view CPP and OAS as my indexing mechanism. That amount added per year will help with inflation. I think I will take CPP early – around when I hit 63. Haven’t decided on OAS yet.

        As I dip into CPP and OAS that money is less I have to take out of my savings, which are in 4 different types of investment accounts – corporate, unsheltered, TFSA and CPP. Figuring out the sequence in tapping those is a challenge.

        1. I’ve read the “break even” date of taking CPP early is about 14-15 years after you take it. So, someone taking CPP at age 60 is taking a lower amount than someone deferring it until age 65, but because the payments started sooner for the 60-year-old, at age 74 or 75 they’ve both earned the same.

          I’m a big believer in bird in the hand. I guess this is why I like dividends so much. Tangible money now that can grow to fight inflation over time.

          I also don’t think the increased reduction (of CPP) is enough of a deterrent. It won’t be for me but I’ve got about 20-years to figure it out. I intend to learn from people like you 😉

          1. The break-even is half as far away if you are self-employed. And the CPP tax is twice as much.So although the calculations are trickier it is hard to imagine holding off CPP benefits for long.

  19. I went through a number of phases trying to formulate what I needed for retirement.I eventually found one I could live with.

    The government has identified an in come level at which they start taking welfare (OAS) away from you after 65 (at the moment). It is the The Old Age Security pension recovery tax. Now you may wonder how that tax is relevant. It is simply this: it is the level at which the government knows very few will make noise about losing benefits – a number currently considered well above basic requirements. In other words a very comfortable income level to be at. Currently it is $71,000.

    If you are anything like a normal person, that is definitely more than you need and always will be. If you can get there or even within 10,000 or 15,000 of it, you are in great shape. If you are worried about paying that tax, you are a spoiled brat 🙂

    I suppose some people are not single at 65, and I haven’t looked for a number for a couple.

    Here are the recent levels for this tax.

    1. Your comment about tax made me laugh. If you have a tax problem in retirement, I think this is an excellent problem to have. It means you’ve saved enough!

      I’ve also read many times, that earning an income in retirement just under the OAS clawback amount (starts around $71,000 give or take), is the “sweet spot” for retirement income. I only hope we can make that type of income Robert in retirement – again, a great problem to have.

      Thanks for your comments, I enjoy reading them.

  20. A good friend of mine in the financial industry suggested this as a rough estimate. Take 100% of your expenses now (i’m 40 years old), add inflation for each year until retirement, and then multiply by 25. When I look at that number (~$5.3 million for my wife and I), it’s quite scary. I believe it’s quite conservative, and if achieved could provide a very comfortable retirement. I’m planning for about $4-4.5 million for my wife and I. And unlike those fortunate government workers, and probably like most other people, we don’t have a pension nor do either of our employers match/contribute to our RRSPs. There are two big unknowns that will impact what we have in retirement and how long it lasts: 1) inflation and 2) ROI

    I’m sure this has been written about before, but maintaining a large difference between inflation and ROI goes a long way to maximizing your ROI and maintaining a good income in retirement. For example,at least 8% ROI when inflation is at 4%. There’s probably an ideal ratio being around 2:1 at a minimum.

    I’m not an expert and not nearly as well versed as most readers of this blog. This is just what I’ve determined, though I could be wrong..

    1. Thanks for your comment Dave, great to hear from you on this.

      I think $4-4.5 million to retire on is huge number for retirement, that would provide one heckuva lifestyle. I have almost 100% confidence my wife and I will not be able to save and invest and earn that sum for retirement. If you’re on track to have this much for retirement, I believe you are more than set.

      I am fortunate to have a pension but that could always change. It’s certainly not a “gold-plated” pension but I’m thankful nonetheless for it.

      As you point out, inflation and ROI are two huge unknowns and unfortunately investors do not have any control of either.

      I’m not expert by any means either, just an amateur trying to carve his own path 🙂

  21. Those numbers seem quite reasonable to me but the car insurance might be a bit low. We get screwed here in BC with car insurance.

    Home utilities seem a little high to me but maybe because here in Vancouver we don’t spend as much money in home heating in the winter time.

    1. Overall, it’s just an estimate. Numbers are likely a little high here, and bit low there but in the end I think the total is reasonable. The key is, time will tell if our savings can cover these expenses – I hope so.

  22. I base my needs on my current (and updated) monthly expenses + some k of buying power (adj with inflation) + 5500$ of saving (adj on TFSA).
    I don’t have car (only rent one when I need one), wife and children. That supress any possible additional liabilities.
    The total of all that make my investing goal.

    “I chose DB. ”
    Good choice, recently my corp. given us the choice to switch to a DC, but no thanks 🙂

  23. I agree with Robert above, seeing my parents in their retirement they hardly ever drive like they used to. It’s not even a bad thing, it’s just a choice since they don’t have to use a car to get to/from work everyday. Costs have gone down quite a bit which means their vehicles will last longer and need less maintenance along with the ‘extra goodies’ that come with a car – winter tires, wiper blades, etc.

    1. Yeah, I mean cars can be an expense but they are certainly trumped by food costs, property taxes and home maintenance costs. Along with healthcare, I see those are the “biggies” in retirement. That means we really need to save for the next 15 years. Thanks for your comment Dan.

  24. Having retired 18 months ago my main comment is that you have huge buffers in your needs. For example in retirement the car is almost nonexistent as a need. You will find it sits in the driveway unused most of the time. I have a motorcycle and car and view them both as luxuries now. Not sure what you’d ever need 2 cars for but then I don’t need 2 vehicles either.
    You will have a lot of trouble burning 200 per month on gas in retirement, the car will hardly need maintenance, and almost never need replacing, while your insurance will drop.

    It is hard to spend 700 on food unless you eat out but that is not a need. Household supplies will be much lower as will clothing. Actually 200 a month is huge for clothing in retirement.

    Expect your utilities to nudge up as you will be home far more.

    I discovered that new hobbies and projects have added tremendously to my costs.

    1. Good to hear from you Robert. Interesting to read your car is almost nonexistent as a need. I see it the same way for us in another 10-15 years. A think an older, used car should last us 15 years in the future. I don’t think we’ll need 2 cars although really I have no idea what the future holds.

      Your comment about not needing car maintenance or much gas is aligned with my thinking.

      I could see us dining out a couple times per month, so that’s why the budget for food is where it’s at. Utilities should go up as well, I’m counting on it. In a more detailed worksheet of mine I’ve counted on about 4% inflation. If it is less, that’s a nice bonus. 🙂

    2. I agree with Robert that you have huge buffers. However, that might simply be a nice surprise for you over time and means a trip more here and there! 😉 I probably have similar numbers to yours as I want to maintain a rather high lifestyle as long as possible. Why? Just as financial planning, I’m planning to be healthy and in shape for decades! 😉 Of course, there are risks of unpredictable events that could change it all.

      I think you should have an idea of costs for traveling and entertainment, based on your current spending in this matter. Many of us expect to spend more in this regard while retired, but I’ve seen it is often the contrary, mainly because they’re afraid of lacking money.

      1. Ah, maybe I do, but I’m a conservative investor and rather boring one at that. I haven’t included any travelling or entertainment costs yet but maybe I some point we will factor that in. All I know is, right now, it’s going to be a stretch for us to retire when we want to. Our alternatives to our “retirement” date are pretty simple: spend less, save more, work longer or a combo of all three. 🙂

  25. Two large spending categories not listed are gasoline (or other car fuel) and the purchase price of your two cars every 7 or 10 years.

    According to CAA (, “Yearly ownership costs for an average compact car are about $9,500.” On two cars that’s $19,000/year or about $1600/month. You may find a way to get away cheaper, but there’s no way you’ll get the cost down to $400/month.

    1. Good catch with the gas, I’ve updated the post to include $200 per month for gas.

      As for the new car purchases, our goal, although this was not stated, was to buy nearly used cars as we get older, and keep them for >10 years. I have a car that is now 15-years-old. I plan to keep that for another couple of years.

      I’m surprised yearly ownership costs are that high by the CAA study. There is no way we spend $19,000 per year on two cars – thank goodness 🙂

        1. Yes, possibly, if we buy two cars. We’re thinking we’ll only need one car 10-15 years out from now. I think I put question marks in the post for the two cars. Like any plan, there are always question marks I think but I’m a firm believer in the process of planning and re-planning. No doubt that’s a subject I’ll write about at some point.

          1. Even if you drop down to one car, you still have to buy it, and that’s about $100 per month.

            I’ve based my “enough” number on my family’s current spending with extra added to cover very infrequent things like replacing cars, rooves, furnaces, and windows. I have this figure coded into a spreadsheet (computing its increase with inflation) and I match it to the income I could safely derive from my savings (plus CPP and OAS after I turn 65). I haven’t written about the detailed figures on my blog.

            This gives me a ratio (possible income / current spending level), but 100% isn’t the final target. It needs to be higher to cover income taxes, but can be lower because we won’t be supporting our sons as much. It needs to be a little higher to cover extended medical that my employer currently covers, but can be lower because we won’t have commuting costs. The biggest reason to make it higher than 100% is as a buffer against the unknown.

            My wife and I differ on whether we’ve already reached a safe target.

            1. Good to read about and thanks for replying. I know these values will change, costs will go up, inflation, etc. This post was just scratching the surface of what I’ve started / already thought about. I think one the biggest wildcards is healthcare expenses.

              I’m not too worried about car expenses. That is small compared to other ongoing costs like annual property taxes and such.

              “My wife and I differ on whether we’ve already reached a safe target.” That line made me laugh because I suspect many couples might differ on that Michael!


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