Three ways to make your money last

Three ways to make your money last

Bond yields are crappy.

Future equity returns are forecasted to be lower than the past – maybe 3% or 4% real return.

We’re collectively living longer on average (that’s good).

When it comes to investing there are always headwinds.  Plan for them.

This means making your money last is important.  Very important.  These are three things you can do about it and what we’re considering.

1. Spending less

I get it, you’re not happy with this one.  Neither I am really.  The reality is this can make your retirement nest egg last longer, if you’re careful on what and where you spend your money.  When it comes to our future spending we’re prepared to live on less – if we have to.  The old 4% SWR* (safe withdrawal rule) is probably more like 3% going-forward.

*The SWR guideline stems from a now famous 1994 study by William Bengen, an American financial planner. Bengen concluded the highest withdrawal rate that would have allowed a retiree’s portfolio to weather any market calamity in the previous decades; would be 4%, over a 30-year timeline, assuming the withdrawals also increase with inflation over time.  So, historically a $1 million portfolio would be considered “safe” for enough for 30-years of retirement.  You could start withdrawing $40,000 per year in year one and at least that much every year going forward – and not worry about running out of money.  See below.

We’re generally conservative when it comes to investing our money but we do have an ambitious investing goal:  a nest egg of $1 million (in addition to some small workplace pensions) to live from.

For simplicity sake, assuming this magical $1 million was invested inside our RRSPs – by only spending $40,000 per year from our personal portfolio; including 2.5% inflation factored in; we’d still have over $600,000 in the bank at age 94.

Nest Egg Last

(Note:  We have a die-broke plan to about age 95.)

Could we spend less from our portfolio if we absolutely have to?  Yes.

You can run some math yourself here thanks to this awesome calculator from

You can find more FREE saving and planning tools/calculators on this page here.

2. Working as long as we’re able 

If you didn’t like the “spend less” option above, you’re probably not very happy with this one either.  However working as long as you’re able can have a number of tangible benefits beyond more cash in your pocket to cover expenses.  Your mind may remain more engaged and your body may get more exercise if you continue to work longer.  There are, therefore, mental, physical and social benefits of working longer.  Don’t discount that value.  I personally intend to work as long as I’m able – at something.

3. Owning more equities (than bonds)

Conventional financial advice goes something like this:

  • Own a % in bonds that matches your age or 110 – age = your asset allocation as a % in bonds.  You need bonds in your portfolio because they lower the volatility of your portfolio; they help you so you don’t panic and sell when equities crash.
  • Own more bonds and fixed income as you get older.  This is because you don’t have time for your portfolio to recover from bad equity markets.
  • Own an annuity as you get older.  Guaranteed income.
  • Etc.

I’m not planning on following conventional wisdom.  You can see that from my investing approach – I follow dividend investing here (that makes passionate index investors cringe) and we own some low-cost ETFs. We don’t own any bonds in our personal portfolio.

Given the current crappy bond yields I mentioned above – you may need more growth as you age – and that won’t necessarily come from bonds.  In fact, there are studies and articles to suggest you should actually increase your equity allocation as you get older.

If you fear the stock market volatility (and many investors do) you might need to train your investing brain and learn to live with stocks.


There are other strategies to consider but these ones are top of mind for me.  The best way to make your money last is to probably have “enough money” in the first place.  That exact figure will likely need to be recalculated over time though.

At the end of the day saving early, saving often and keeping your investment costs as low as possible for as long as possible will put you on a great path.  This is regardless of what the retirement headwinds might throw at you.

What are your strategies to fight retirement or semi-retirement headwinds?  Are you considering other options to make your nest egg last?

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.

14 Responses to "Three ways to make your money last"

  1. $1M savings in RRSP and $1M in non-registered account should be treated differently, as one has to pay full income tax on RRSP withdrawals. So $1M in RRSP is like $800K or less in non-registered account.

  2. #3 Too general. Like saying owning dividend stocks. There are dividend stocks, then dividend growth stocks and the two are not the same.
    When we were in the accumulation phase, we found chasing growth garnered the same results as chasing yield, not the end results we wanted.

    1. I tend to own mostly dividend growers but not all the companies I own have always grown their dividend every year over the last 8 years. Some bank stocks come to mind.

  3. Luckily for me I am young enough to try and have some high-risk high-reward type of investments. Over the years I will tone this done into more secure investments including retirement to keep the portfolio growing and continue to produce a nice income.

    1. I think it makes sense to go for mostly equities when you’re young. I wouldn’t take on risk unnecessarily though. How are your investing plans coming along?

  4. 1. We’re starting retirement out conservatively on spending and are ready for reductions….if we have to. Our “needs” costs are less than 60% of our actual spend now, so plenty of discretionary spending. Cutting more is definitely a back up plan which we’ll have no issue with at all….. if/as needed.

    2. Possible, but doubtful. If we have to, okay, or if I get the bug to pick away at something that fits. No great urge here even after reading Victory Lap Retirement recently, and a strong no from my wife.

    3. Owing more equities than bonds. Already do (~60%), and I will almost certainly be raising our equity stake over time. I expect we’ll be ~80%+ EQ ~8 years from now, which coincides when our fed govt pensions are planned to begin.

    1. 1. From what I know you’re in a great place. Increase spending when markets cooperate, decrease when markets are flat or down.
      2. Hey, if you don’t want to work nor need to work…all good! This is why you saved money in the first place.
      3. I’m not surprised. I think this is a smart thing to do especially if you have other assets like pensions/government pensions yet to kick in. I’ve considered owning more bonds as I get older but the longer I work at my current job (with DB pension) I will own more fixed income to offset equities in my personal portfolio.

        1. I bet there is some truth to that Rob. I spend money to commute, clothes and much more given I work. If I didn’t work some of those costs would largely go away.

      1. Thanks. Bingo on spending.

        You never know about the working thing. I have an entrepreneurial part of me that sometimes creeps back.

        We’ll see. You have time to consider whether bonds need play any role with your assets, but I’m doubting it unless we had significant rises in interest rates. In any case I like having a decent cash wedge.

        Drop me a line when you get a chance.


Post Comment