Weekend Reading – Retirement with higher inflation
Hey Folks!
Welcome to a new Weekend Reading edition about retirement with higher inflation – definitely a foe to fight!
In case you missed some recent posts, here they are!
Last weekend I wrote about an easy way to invest in AI stocks with minimal risk.
And this week, I updated this post about an important way to fund your TFSA every year without new cash savings.
Weekend Reading – Retirement with higher inflation
I get where former personal finance columnist to The Globe and Mail Rob Carrick is coming from on this: What it’s like to retire in an era of high inflation (subscription).
In his recent opinion post, Rob wrote about the following in his household to help combat inflation:
“We eat out less than we anticipated before I retired, and we are way less interested in top-tier restaurants. We’ve also travelled less than expected, but that’s as much due to family obligations as anything else.”
“On a more micro level, we trimmed our portfolio of streaming services to bring down our household expenses a bit. A bigger win was negotiating our cable-internet bill down.”
These are valid changes – look at your monthly spending and ensure you make changes to combat inflation.
We’ve only been retired for less than a year and like Rob, we monitor our spending. Just like our working years, retirement has a budget too. We don’t have endless cashflow but we’ve tried to construct our investment portfolio for cashflow: to deliver a meaningful and realistic mix of dividends, distributions, interest earned and gains – from selling assets from time to time.
Rob correctly cites the annual cost-of-living adjustments can be countered by many annual dividend increases paid by many of the blue-chip companies in Canada – if you own them. We are shareholders of many Canadian stocks and have been for 15+ years.
At the time of this post, a few dividend increases have helped us YTD combat inflation. Some examples:
- BMO
- CNQ
- GWO
- PPL
- RY
- and more.
And I suspect more dividend raises in the range of 3-5% (where personal household inflation is sitting these days) will come via our hybrid portfolio later this year too from some steady-eddy utilities like EMA and FTS that have yet to raise their dividends in 2026. (I’ll come back to this post later this year to see if I am right.)
One counter-argument to Rob’s article I have though was his comment on the following:
“Having a good year in your investment portfolio is not the same as getting a raise in the amount of money deposited into your bank account because it doesn’t help pay the bills.”
To be honest, this is an excellent time to rebalance your portfolio if you’re an indexed investor since the TSX-60 is up more than 10% YTD as is a global all-in-one ETF. So, by trimming your portfolio when the market is up 10% (or more) in any given year, you can feed your cash wedge for future spending.
Feeding your cash wedge is putting that money into your bank account to pay the bills. When investments do well, i.e., they deliver more than the typical 7-8% equity total returns, you can and likely should confidently draw more from the RRSP/RRIF, LIF or non-registered investments in your retirement.
This is why you invested for retirement in the first place.
I have no doubt inflation will continue.
I wrote a few years ago on X/Twitter that inflation was not transitory whatsoever in my opinion. (Ignore my poor grammar below!)
So far, I’ve been proven correct since July 2021 five-years later:
Our retirement income projections continue to be run every 6-months or so and include the following conservative/pessimistic assumptions – assumptions are this way since I’m not convinced equity returns will be as good as they have been recently AND inflation will continue to occur for years to come.
- We use 5% annualized returns / cashflow assumptions from our portfolio –
- We use 3% annualized / sustained inflation.
_____ = 2% real return to meet our long-term retirement income needs and wants and buffer as part of this formula:
You might wish to consider these conservative return and inflation assumptions for your long-term retirement income plan too. This way, by being conservative with your long-term projections you are pleasantly surprised when returns are better and/or inflation runs lower at times.
Just don’t bank on either happening…
If you’re preparing for retirement, what key assumptions are you using? If you’re already in retirement, how are you fighting inflation? Drop me a comment and share with others.
More Weekend Reading – Beyond retirement with higher inflation
I enjoyed Ben Carlson’s post: Investing in the Boom times.
It reminds me about this post, how to invest during all-time-market highs.
Weekend Reading – How to invest when the stock market is overvalued
In Ben’s article, consider the following if investing during market boom times:
- Avoid putting yourself to become a forced seller when the good times come to an end.
- Ask yourself are you diversified? – “Tech stocks make up an increasingly large share of the U.S. and global stock market.” So, “diversification is much easier to pull off than market timing.”
- What is your plan when things go sour?
My own / our own approach these days has us considering increasing our cash wedge later this year.
When markets are up 10%+ YTD (higher than our annualized needs of 5% returns in our projections) it has us considering doing something I/we haven’t done in a long time now that we’re in retirement, trimming some equities to ensure we remain in our desired 90/10 asset mix to:
- Avoid becoming a forced seller.
- Ensuring we remain diversified, and related to that,
- We have a plan when things go sour.
Worse case from here, if markets continue to go up even after some trimming, we still have that growth.
I pinged a wealth manager on this topic recently, @MPelletierCIO, we are very aligned:
From my investor advocate friend Ken Kivenko, I got wind of this article: discussing the war on costs and fund inflows between active and passive money management. Part of the punchline:
“In an industry where managing trillions of dollars has become a business of ever-narrowing margins, the great paradox is that never before has so much money been managed while charging so little. And, for now, ETFs are winning that battle.”
Finally, in dividend investing news, the long-wait for a Telus dividend cut is over (subscription).
Telus Corp. cut their dividend by 55% and also lowered its financial guidance for the year in a bid to improve its finances after a challenging period for the telecom and technology company’s share price.
“The company’s decision to cut its quarterly dividend to 18.75 cents per share from 41.84 cents per share marks a broadly anticipated move from its new chief executive officer, Victor Dodig, as he reorients the company’s finances and strategic direction. Analysts have been raising concerns about Telus’s dividend growth plans since last year, when some called its previous plans to continue increasing its dividend unsustainable. Telus paused dividend growth last November, but has faced ongoing pressure from Bay Street to cut the payout.”
Like your household, company debt can be crippling to day-to-day operations.
“The company said Friday the dividend cut is expected to generate about $2.7-billion in cash savings through 2028, which will be used to reduce its long-term debt.”
I was thinking a 50% dividend cut was going to happen sometime this year, so I priced that in last year, so I wasn’t too far off. Telus makes up just 0.5% of our entire portfolio at the time of this post so this dividend cut won’t impact us.
How much Telus stock do you own?
I will report our July 2026 Dividend Income Update and those dividend cut impacts in the coming weeks.
This was our June 2026 tally and we’ve received at least one dividend increase in between that I will report. 🙂
Have a great weekend and hopefully the Telus dividend income cut didn’t hurt your portfolio cashflow too much…
Mark
Hey Mark,
We are melting down RRSPs during our early 60s. I was fortunate to lock in 5.2 to 5.5% GICs for 5 years starting in 2023 when they peaked. That and divs from NR and TFSA accounts are paying the bills. Besides Bell and Telus (grr), those divs are increasing an average of 4-5% a year.
Re: inflation. As a retiree my personal inflation is very different from the national number. Less fuel, more time to shop groceries, travel, etc. Although I seem to to spending more on the golf course??
Thanks again for a great blogpost
Chuck
P.s You have done 3 YouTube episodes to date, right? Ive subscribed but don’t want to miss any.
Awesome to hear from you, Chuck.
Portfolio doing well overall?
We use 3% as you might know from various posts for our inflation factor…since I don’t trust the Bank of Canada to control it!
You are wise to enjoy/spend some RRSP assets in your 60s.
Yes, getting out to play more golf and do other things on my own terms this summer. Retirement seems to be my favourite job yet!
Playing today actually so hopefully a round in the 70s. That’s my target.
Also, on the YouTube, I think Cathy (my wife) is going to look into some new notification settings for users on the channel – ensure folks don’t miss anything but subscribing on your side will help!!
https://www.youtube.com/@myownadvisor
We’ve done a few travel ones too! More to come!
Thanks for your comment.
Mark
Awesome to hear from you, Chuck.
Portfolio doing well overall?
We use 3% as you might know from various posts for our inflation factor…since I don’t trust the Bank of Canada to control it!
You are wise to enjoy/spend some RRSP assets in your 60s.
Yes, getting out to play more golf and do other things on my own terms this summer. Retirement seems to be my favourite job yet!
Playing today actually so hopefully a round in the 70s. That’s my target.
Also, on the YouTube, I think Cathy (my wife) is going to look into some new notification settings for users on the channel – ensure folks don’t miss anything but subscribing on your side will help!!
https://www.youtube.com/@myownadvisor
We’ve done a few travel ones too! More to come!
Thanks for your comment.
Mark
Anyone who has retired in the last six years has seen a huge jump in prices. Many grocery stores, restaurants and the like all raised prices citing supply chain issues as the reason. Once those issues were gone they just kept the prices at the new elevated rate with businesses making record profits and the rest of us having higher monthly expenses. As a result I think many people are eating out less and being more careful with what groceries to buy. They are also being more selective in other areas of retirement spending as things are just more expensive then we could have imagined 10 years ago pre pandemic.
Good stuff, Joe.
There are certainly ways to control household inflation:
1. Change shopping habits – including intake of meats.
2. Less dining out.
3. Reduce discretionary spending including any subscriptions.
Those items alone might save most households >$1,000 – $2,000 per year without any major changes in lifestyle.
For my own planning I assume 2.5% inflation and with an all equity portfolio 6.25% returns. TSX 60 returns over 10, 20, and 30 years are all above 8%. If we were 60/40 or 70/30 I would use a more conservative growth rate.
I did more trimming of Telus (and Bell) a week ago. Telus is now 1.73% of our portfolio with a loss of 37.3%, and contributes 2.17% of dividend income after the cut. The only position left is in our non registered account which means I can use the loss to offset gains.
Our go forward distribution income is still over my $84,000 target and further increase announcement are likely to be made before the end of the year. My thinking has started to shift now to focusing on growth and tilting away from increasing our income.
I’ve reduced our mortgage by 31% since January and still plan to bring it to zero, if not by the end of the year, then very early in the New Year. My contract is getting stretched out a bit and so too are the payments.
I made some further steps this month cancelling my private disability insurance. I did the math and paid $32,000 over the years for the policy. No regrets as it would have helped make ends meet in the event I became disabled but the premium no longer made sense.
Our second taxable portfolio was set up over two decades ago to beat inflation through dividend income only. Invest and re-invest our income dividend income. That’s all we’ve done in retirement. Even after adding more shares back in May, Telus has shrunk so much in our portfolio that it now makes up less than 2% of our total non-registered portfolio. No plans to sell. Only one of what is now 39 Canadian companies we own for the long term, that just happen to pay dividends of one sort or another. Even with the cut, I’m projecting our total dividend income will still rise much higher than the rate of inflation by the end of this calendar year.
You have a lot invested I recall, in Canadian stocks, so won’t be surprised if your dividend income exceeds inflation.
Ideal. 🙂
The only account we reinvest dividends and distributions now is our TFSAs. Everything else since around 2024 has cash coming in, rising, to pay for living expenses now.
We’re just over 20+ Canadian companies now and I think I’d like to get the portfolio down to about 15-20 eventually (in the coming 5-10 years) for simplicity to go along with our indexed ETFs that provide lots of growth. That seems like a sweet spot to manage.
What’s the dividend income forecast for this year?
I’ll be posting our next forecast soon. July is higher than June which is nice even with Telus dividend cut.
Mark
If by the end of 2026 I can get the same income increase as last year (10%) in the non-registered through investing any savings from pensions (not every month) plus monthly dividends I’ll be happy Mark. Even including the Telus cut I expect more than a 10% increase, but I’ll know by the end of this calendar year. That’s also including some Canadian companies in the portfolio that don’t even increase their dividends annually.
Great stuff. I would agree, a 10% dividend income raise would be very, very good YoY.
Telus was/remains <0.5% of our total portfolio so no real impact to the dividend cut for us and I will be posting our latest income projection soon!
Buying anything lately?
Mark
Not buying anything exciting. Yesterday added more shares to Nutrien (NTR). I keep hearing that potash is very important to farmers. Canada has a supply in Saskatchewan. Some of that may be shipped around North America and to the coast by CNR for overseas shipment. I also know that Westshore Terminals in Vancouver is slowly converting from a coal port to one handling potash. In addition to other commodities, Algoma Central also ships potash from the port of Thunder Bay to various destinations on the Great Lakes and the St. Lawrence Seaway system. We own shares in these four companies. Still building Canada strong.
Look forward to your income projection Mark.
I used to own NTR a long time ago, sold and bought some lazy XIU and XAW with it years ago. Didn’t look back…but I totally get the purchase and rationale for it. Might jump a bit as more Potash is required longer-term….
CNR has had a nice rally this year. Just a matter of time before it came back.
Algoma (ASTL.TO) has been hit hard in recent years. I don’t own any Westshore (WTE.TO) but nice 5-year+ run coming out of COVID.
Thanks, hope to post the income update in a few more days around some golf games. I could get used to retirement… 🙂
Mark
No we don’t own any shares in Algoma Steel. Our holdings are in Algoma Central Corp. (ALC). The $billionaire family, the Jackman’s have a large stake in it. I started buying shares in ALC during the spring of 2023 when it was a bit cheaper than today.
Enjoy your golf and retirement Mark.
Oh, I see. I mixed that up.
Continued success.
Yes, hopefully some good golf in my future. 🙂
Could you clarify this: if market is doing well(10+) and you withdraw and deposit as cash or cash equivalent, but given high inflation, wouldn’t you just devalue your cash even further and faster? This might be make sense when inflation is low
Happy to clarify.
The way I see it, William, if you’re a total return investor in something like VGRO or some 80/20 mix, and your portfolio is up 10% but only require 5% withdrawal rate, then trimming your portfolio can make sense to ensure you have cash/cash equivalents ready for the next year or so of spending.
$1M invested. Grows at 10% = $100,000 growth so far.
Trim $50k or 80k or up to $100k of that growth = now have $50k or $80k or $100k in cash/cash equivalents to spend in the coming months or year and your $1M capital has reminained intact in VGRO or related asset mix.
Lots of folks in retirement will need to sell assets from time to time for living expenses. When your portfolio is up 10% or 15% this year like it is for some DIYers then it makes sense to take some gains – that’s why you invested in the first place – to spend the money.
Would much rather sell assets when up 10%+ vs. down -10%.
Thoughts?
Mark
Telus, we knew it was coming didn’t we? I held my shares and I’ve been on the fence about unoading them for a while. It makes up about 2% of my dividend cashflow so not a major impact there. I am sure all the increases that come from the FIs will more than compensate me. T makes up <1% of my portfolio but of course I hate seeing a capital loss. The day before the announcement I happened to show my spouse our portfolio and said – ignore Telus – we can't have all winners! Then the next morning the cut came. Haha, I must have had a premonition of some kind. The share drop isn't ideal but maybe there will be a "dead cat bounce" and I can unload some because it's unclear when they will get their act together. I've been ditching some Canadian equities like T and buying into a Canadian ETF instead to simplify my life.
Ha, yes, we did – at least I posted as much in fall 2025 and had that baked into my income updates on purpose since then.
Telus making up <1% of your portfolio is nothing.
“I’ve been ditching some Canadian equities like T and buying into a Canadian ETF instead to simplify my life.”
Very wise as you age I think. I’m biased since we’ve been doing that for years now with my wife’s portfolio in particular and her gains are slowly catching up to mine since I hold more individual Canadian stocks! All good. Big fan of XIU as you know and that’s up 14% YTD. Pretty darn good when you get any double-digit returns from your portfolio. Will make retirement spending easier if that always happens. 🙂
I didn’t address the inflation topic. I think it’s going to stay on the high end given the shenanigans south of the border. They are blowing up their bond market and the latest selloff of Euros is going to impact the EU. What a mess! I use 3% inflation even though the Financial Planning Canada association sets long term inflation at only 2.1%. I also use 5% for returns (worst case scenario) because we don’t know if there will be another lost decade. The FP Canada site estimates the long term equity return of about 6.5% (all equity portfolio). I have “tested” 2 scenarios, one where I use worst case and FP case. The last few years have definitely been best case double digits making it easier for us to enjoy our Go-go years. I’ve worked through our equities dropping by 50% and whether our plan holds and we’ll be fine. It just means less gifting down the road.
Biased again but I think you’re wise to use 3% sustained inflation.
FP Canada uses just over 2% which I don’t agree with.
I recall they use the following for the next 10 years:
– 6.3% for Canadian equities,
– 6.4% for U.S. equities,
– 6.6% for international developed equities,
– 7.5% for emerging markets,
– 3.2% for fixed income,
– 2.4% for short-term investments.
All very reasonable but I like 5% or so for the next 10-years given where the last 10-years have been.
I’m sure we will up our go-go years spending and likely to do so starting in 2027 and 2028.
https://www.myownadvisor.ca/financial-independence-budget/
Our base is about $70k-$75k and then discretionary / international travel on top.
Mark
Our base is a bit lower (minus fun money and travel) at about $60k but it helps not owning a vehicle and using bicycles for most of our local travel. Then we are adding to our TFSAs and our kids TFSAs annually (like early gifting with a warm hand, let the money compound in their accounts). So that tacks on another ~$30k. Our travel budget is fairly high right now, but varies depending on what we do.
I agree FP seems to be basing the future on the past without a thought for how the world is shifting. Time will tell!
Cycling is great. Love it myself.
Our travel budget is WAY more than I thought for 2026, because we’ve largely purchased travel in advance for 2027 (flights, accommodation deposits, etc.). I probably should have factored that in more!
Might as well see part of the world while it is still here!
Mark
So much for the folks that were claiming the dividend cut for Telus was already baked into its current price. Seems that things at Telus may be worse than thought. My position is just a bit over 1% now after paring down earlier in the year so not a big impact.
Similar to Lloyd, I don’t get too excited about inflation. My dividend payers have steady increases above inflation, though I do a yearly check on them. I usually assume 2.5% inflation, not quite as much as Mark and 5% growth. My wife’s pension and our CPP and OAS are inflation adjusted so that helps.
Thanks Mark for another interesting post.
1% is nothing for any individual stock. Over 5% of your life’s savings in Telus, or any one stock, well, that would be annoying though. That’s not us either.
Like you I enjoy the dividend payers matching or exceeding inflation.
Using 2.5% inflation and 5% returns for your long-term projections = 2.5% real return is very reasonable.
Inflation is personal so whatever is in the news will be wrong for me. In isolation any number is not super useful and only a problem if it impacts your purchasing power. I plan with 2.5% long term as this is what economic systems are designed around. We build in the assumption our income will grow >4% yoy just from distribution increases and reinvestment of income. Remember inflation is good for assets so higher is actually beneficial for equity holders, too much fixed income or cash will bite in the long term.
No longer hold Telus, been selling T for quite some time and sold everything I had left earlier this year. It’s still in several ETF’s like XEI but it’s not going to matter. Interesting that a business fleecing almost 30% of Canadians while overall offering mediocre products still can’t make a dollar. Note that Entwistle got >$19.5M in compensation last year sure Mr. Dodig is not doing it for much less, no board member resigned so while a cut is helpful much needs to be done before I consider investing in T again.
I think inflation is going to run in the 3% range for many years to come. I’ve been right since July 2021 so we shall see?!
A few passionate readers that visit this site own XEI and it’s a great income fund to own Telus and dozens of Canadian stocks without worry of any dividend cut. Seems smart to me.
I had a small position in Telus in a non registered cash acct.. took the opportunity for tax loss harvesting.. sitting at approx 23% cash. I can’t really find anything to buy yet..
I might do the same, loss to offset gains for 2027. We shall see!
Mark
Hi Mark timely article for me as I was also taking some profits and putting them into FI for 2 years out spending. It was simple math as you did. Up 10% in RRSP (60/40 ish). Take the add’l growth and invest in a GIC for future spending.
Telus- well I read your blog so I can’t be surprised lol. I have some Telus (not very much) and now it is even less. Nothing to see hear keep it moving lol.
Steve
Seems smart to me – we might take some profits later this year…for even more cash wedge.
Ha re: “Telus- well I read your blog so I can’t be surprised lol.”
Nothing to see here either when the value in Telus is <0.5% of our portfolio.
All my best!
Mark
Ya – it was just a matter of time before the Telus dividend drop happened. I too only hold a small position (0.6% of my portfolio) so not that big of a deal. Plus, I was more than compensated with the almost 20% surge in MSFT this past week. When the investing gods “taketh”, they also “giveth” to keep things fun. 😉 Re: inflation in retirement – just continuing to track expenses (I still use the budgeting spreadsheet you created!) and seeing if there are areas we can cut back on. At the end of the day we do a pretty good job of keeping within our allotted income threshold – if we’re higher in some areas, we can usually dial-back other areas.
Good stuff on Telus. Glad you are not impacted too much. Yes, MSFT jumped huge. I don’t own any directly but I do own some via indexed ETFs of course.
Great stuff on the spreadsheet – glad that is helping and I personally use something very similar!
Mark
Thanks Mark. I hold a very small position in Telus (and Bell), so my income stream will be ok. Days like this are a reminder of the risks holding Equities. But there’s risk in everything! Have a good long weekend.
CJ
Good stuff. Always risks in owning some individual dividend paying stocks.
Analyzing inflation and all its intricacies hurts my brain at this age. So I practise the art of self-delusion by convincing myself that as long as the work pension and CPP are indexed, and the rate on the GICs generally exceed or match the CPI, everything is fine. It’s just too complicated (and unproductive) to try to figure out all the ramifications to the Nth degree.
As to Telus, no direct holdings anymore. XEI has a 2.02% weight and XEI makes up 9.39% of the total portfolio. So basically irrelevant.
No impact to you on Telus! Well done. XEI is a great income fund for Canada.