Weekend Reading – Year-End Tax Planning
Hey Investors!
I hope you had a great week as the holidays approach – welcome to a new Weekend Reading edition on year-end tax planning and more…
Before that, some recent reads from my site!
Last weekend, this was my article and take on regulatory bodies going after Finfluencers. I welcome some guidelines on amateurs providing advice for sure but finfluencers offer value some professionals cannot. Same thinking applies with DIYers in other areas of life…personal finance is not special in that regard.
And I was pleased to interview Henry Mah, passionate 80-something DIY investor who owns a concentrated portfolio of just Canadian stocks (no U.S. stocks, no international assets, no ETFs, no bonds, etc.) Quite the lively set of comments and a reminder what can work for some may not work for others. Read on below!
Weekend Reading – Year-End Tax Planning
Jumping right in, here is a great article on year-end tax planning strategies for registered accounts in particular, to save more money – along with a few reminders:
- There is no attribution on the TFSA or the latest First Home Savings Account (FHSA) – so holiday-gift your money away if you have it to do so.
- If you continue to work into your early 70s, consider at least one final RRSP contribution … because RRSPs must be converted to RRIFs by the end of the year the RRSP annuitant turns 71.
- Tax loss selling can work but be mindful of superficial loss rules when contributing.
- Age 65 can be a good age to covert your RRSP assets to a RRIF — to benefit from the non-refundable pension tax credit.
- The FHSA is a great way for younger Canadians to help save and fund their first home – the account’s dollar limit is $8,000 per year, with a $40,000 lifetime contribution limit – to claim a deduction.
- Year-end is also important for these select milestones:
- Convert an RRSP to a RRIF if any investor turned 71 in the year
- Contribute to an RESP or RDSP to receive respective government grants
At Cashflows & Portfolios we collated a few top tax tips for aspiring and current retirees.
Inflation continues to run warm, so Ben Carlson reminded DIY investors that owning stocks in the best hedge for that. At the time of this post, we are about 90% equities and 10% cash/cash equivalents.
From Ben:
“I don’t know if that will repeat over the next 75 years but the stock market remains your best hedge against inflation in the long-run even if that’s not always the case in the short-run.”
Source: https://awealthofcommonsense.com/2025/12/the-best-hedge/
Some of these Globe and Mail Financial Facelift articles (subscription) are getting a bit extreme. From the profile: retirees Kurt and Eloise are self-directed investors living mainly on the returns from their substantial registered retirement savings plans (RRSPs). He is 69, and she is 64. “Their combined RRSP holdings surpass $4.8-million.” As per the article, they want to help their 40-year-old daughter, a single parent, buy a house. Amazing gifting, but they are concerned with taxes not their retirement income plan. They are wondering if they should take it all out of their RRSPs vs. using some TFSA or some small non-registered assets. If you have a subscription, quite the take but a few quick thoughts from me for those that do not subscribe:
- Amazing, phenomenal problem to have on the surface but seems to me they totally missed the boat on helping their daughter sooner (or themselves) when taxation could have been less.
- On taxes: the taxman is going to enjoy this windfall too. I read further in the article they have underutilized TFSAs which is too bad – they could have gifted that money to their daughter tax-free if they moved more RRSP/RRIF assets to their TFSAs every year. Here are great things you can do with your TFSA every year.
- Without aggressive drawdowns of RRSP/RRIF assets, now, their estate and related taxation will balloon. As of now, with so much invested, their combined income consists of Kurt’s Canada Pension Plan benefits and withdrawals from their RRSPs is about $240,000 a year or $20,000 per month (which is a bundle of course and most of that is highly taxed.) When you have this much money, life is for the living and spending and gifting when you reach those stratospheric levels – 99% of us will never get there.
Based on the fact that Henry Mah in his 80s mentioned the following in my interview, I suspect he has a few thoughts on RRSP/RRIF withdrawals and taxation too:
“We’ve managed to retire with more income than we need, having less capital, and our retirement income continues to grow. And as mentioned earlier we’ve sold over $1 million dollars of our stocks, gifting most of net proceeds to our kids, and grandkids.”
And on RRIFs as he has aged:
“We’ll be making the final withdrawal in early 2026. Then both of our RRIF accounts will be closed out. I mentioned earlier that even after selling capital, we recovered the lost income. In other words, even with less capital, because we’ve sold over $1 million of our RRIF holdings as mentioned above, our income grew to a higher level than before.”
Congrats to Henry and others with a large RRSP/RRIF balance. Amazing tax problem to have. We should all be so lucky to navigate.
Some deep personal thoughts I read from medalist Clara Hughes. Olympic speed skater Clara Hughes, after winning a gold medal:
“In my heart it is clear to me why I go to the line time and again. I can assure you it’s not a medal hanging around my neck I’m after. Medals are things I send to my mom in Winnipeg, which she in turn shares with friends and family. They are not what provide the deep sense of accomplishment, which fills my sense of self, in turn teaching me how to live.”
Have a great weekend and I’ll be back next week with some year in review kinda stuff. 🙂
Mark
Regarding the couple in the Globe and Mail story, they’ve clearly done a good job building their capital, and perhaps they’ve enjoyed spending along the way as well. That said, the fact that they’re only now asking whether they should be drawing money from their RRSPs suggests that they may not have received proper planning advice earlier on. With better guidance, this question might never have been a question.
Mark, wishing you and all your readers a prosperous 2026. And if it isn’t, and they have a solid financial plan in place, just stay the course, hang on in there, and “enjoy” the ride.
Bob
Totally agree: “…the fact that they’re only now asking whether they should be drawing money from their RRSPs suggests that they may not have received proper planning advice earlier on.”
Hard to know where they are getting their information from in any short Globe story but seems like a major missed opportunity.
Thanks for your kind wishes. Back at you – for a healthy and happy and properous 2026.
Got anything on your buying list for next year? TFSA? Other?
Mark
Mark, all I do now is rebalance what we have, mostly using dividends and RRIF drawdowns. It’s all become rather unexciting, which isn’t such a bad thing. RRIF withdrawals in excess of our living-cost needs go into our non-registered accounts, where we’re 100% in Canadian dividend ETFs (well, just XEI). Each year on January 2, we initiate the transfer of $7,000 (in 2026) from these accounts into each of our TFSAs.
For the grandchildren, we deposit cash into each of their RESPs and buy VEQT, VGRO, VBAL, or VCNS, depending on how close they are to age 18. The 20% government grants show up towards the end of February.
The big event for us in the coming year will be wrapping up an estate plan we began in late 2025. With a blended family, grandchildren, the need to protect the estate from predators after one of us is gone, and ensuring the survivor is adequately looked after, it’s a fairly complex undertaking.
I guess all of the above is going to make for a busy January at least.
My most important event of 2025 wasn’t financial at all: I adopted my step-daughter, and through her, her three children as my legal grandchildren. Legal and court fees came to about $4,000, and it was well worth it.
I’d ask what your plans are, but hey, why spoil the surprise of your upcoming posts? 🙂
Wow, Bob, that is GREAT. Congrats. :))) Hard to put any price on family.
Yes, seems wise what you are doing – live your life via RRIF withdrawals and any RRIF excess to non-reg.
I remain 100% Canadian stocks in my non-reg. as well but own individual stocks vs. XEI although XEI is a great fund for a nice blend of income and growth as you know.
Well done on the RESPs. 🙂
I’ll keep you posted for 2026!
Mark
Hi Mark: Great job as always and I will not trash your investing style because I believe in different strokes for different blokes but I would like to trash some financial thoughts on retirement by professionals or people who should know better in my opinion anyways. Take Ken Fishers ad were he says “you have worked hard all your life to get to retirement now you have to save for it”. Excuse me but if you never put anything aside while you were working hard than you are SOOL. WHAT? Well there appears to be an epedemic of initializasion going around in the financial world so I thought I would throw in my nugget. The last 3 letters stand for out of luck and this being a family blog I will leave the first letter to your imagination. Also there is the graph of what looks like a snake that devoured a pig. You know the one that is low at both ends with a lump in the center. This is supposed to represent accumulation and de-accumulation. There is anothe graph were your savings go straight up on a fourty five degree angle and thenyou retire and live off those savings. None could be farthest from the truth. Fear not for I shall attempt to show Henry’s style and why retirement should be welcomed and de-accumulation need not occur. I will use 2 illustrations. The first you have a river running across the land and you put a dam on the river. There is a constant light flow of water over the dam. With all this water flowing over the dam why does the reservoir not sink down in size, because new water is entering it from the preceding river. The old water is your life expenses while the reservoir is your cash account and the river is the stream of dividends entering your cash account from the companies in your portfolio. Now we come to analygy number 2. You have come to the end of the year and will be entering retirement next year. You do a little math and discover that your companies will send you 70k in dividends. Being a responsibe investor and living within your limits you decide that you can spend 60k. You do and find out that you made out okay. The end of the year comes and you figure out next year. You know that( from illustration 1)that you can start with 70k but your companies boost the dividend by, say, 5k so now your starting point is 75k but you still have 10k left over from last year so now your starting point is 85k. You live the year and then you look ahead to the coming year. Now you know that you will have 85k and your companies will raise their dividends by 5k so now your starting point is 90k but you still have a lag of 15k so now for the coming year your starting point is 105k, etc, etc. As you can see the cash you could spend keeps on increasing. This is a very simple illustration as although your cash is increasing there is no mention of more funds such as bank interest, RRIF withdrawal, pension payments and potenial funds in your TFSA. If you read this and say that this makes sense and this is how Henry has cash for life than this is my Christmas present to you.
Thanks, Ronald. Quite the comment!
Our dividend income should be higher in 2026. I will report our update in a few weeks – it will be quite a bit higher than November 2025 since we invested my wife’s pension now.
Henry has done very well to say the least. I don’t believe he has much plans to tap his capital even in his 80s, other than gifting to family.
I/we hope to continue to live within our means such that most dividends and distributions will cover our cashflow needs by 2028 – we will be spending mostly cash/cash equivalents from our portfolio in 2026 and 2027.
Maybe we’ll be over $90k per year then? Who knows. Stay tuned to find out my update in early 2026!
A happy holiday wish to you and your ever growing income too. 🙂
Mark
About that Financial Facelift article: If I were advising this couple, my first recommendation would be to hire a good tax professional and/or an experienced fee‑only financial planner. With balances and income this large, a careful, multi‑year plan for financing the house purchase and managing RRSP/RRIF and TFSA withdrawals could save enough in taxes and opportunity cost to more than cover those professional fees.
Ya, fair Tommie, but given such large RRSP/RRIF assets – they don’t have much choice. Time to get the $$ out of the RRSP/RRIF more aggressively and anything they don’t spend, 1. move to TFSA every year, 2. gift to daughter, 3. donate more to charity, etc. Wealthy people problems. I’ve done a number of cashflow projections for folks over the years and anyone with over $4M+ not spending from their portfolio more quickly after age 65 or 70 is going to have a major estate planning issue – just the way it is.
A fee only planner or advisor like in Globe article would say the same basic things = they have a great, tax problem to manage and have more wealth than 99% of Canadians. Time to spend it or gift it or simply be ready if they don’t do either to have their estate pay more tax because even at modest 5% returns…the portfolio will continue to grow at $200k+ per year.
All my best and thanks for your readership!
Mark
“Time to spend it or gift it or simply be ready if they don’t do either to have their estate pay more tax”
Going slightly off topic here but there is an alternative to the estate tax issue. Make a charity the beneficiary of any account that is subjected to taxation upon collapse. It is still taxable income, but the charitable donation credit will ameliorate the tax owed.
Excellent call.
You have to be careful with beneficiaries. If for example you leave your RRIF to a beneficiary, they get the money and the estate is responsible for the tax. So better get some professional advice before doing this.
That would apply *if* the beneficiary was not a charity. My suggestion was to make a charity the beneficiary. The full amount from the RRSP/RRIF/LIF qualifies as a charitable donation on the final year tax filing for the estate.
I get a chuckle out of the G&M Financial Facelifts. Did you read the recent one about the single 74 year old who is finally retiring this year?? She has lived a frugal life and saved up $2.4MM in a non registered account (mostly tech stocks), $350k RIF, 60k TFSA, $2MM with a $40k LOC. And she is worried about having enough, not leaving any to heirs (a Die with Zero scenario). What a missed opportunity with the TFSA, why not pay the LOC? She is afraid to spend her money. I guess she loved her job, but it’s a doozie! 🙂
“Jodi”?
Yes. I read that one.
https://www.theglobeandmail.com/investing/personal-finance/financial-facelift/article-jodi-spend-retirement-leaving-big-estate/
But you know, some folks simply don’t know and are so scared to outlive their money.
$2M+ at in your 70s and you can spend $100k per year, easily, at 5% return, and never outlive the money. Just not possible. The facts are in the math even with lots of sustained inflation.
Given those assets, Jodi was smart to defer her government benefits to age 70 but certainly now or never is the time to spend or gift money.
And yes, having a $40k LOC was a bit interesting to say the least when she is worth $4.8M. Wild.
Have a great weekend!
Mark
Thank you Mark for all the info.
My game plan for 2026 is to keep investing in the right stocks!!!! That’s an impossible task given how volatile the stock market is. A promising stock can suddenly turn down and take a big hit and wipr out your portfolio value!!! The key is to diversify.
The A1 investing theme is still going to be a place where lots of moneys will keep chanelling into, I think. Precious metals is an area where I can see more and more funds will be invested into. Other areas that look appealing include nuclear, space, rare earth minerals and semi-conductors, which I will keep a special interest in.
Wish you and everyone all the very best in 2026.
Definitely some opportunities to invest thematically: AI, nuclear, silver, other.
Yes, diversification is considered the “only free lunch” with investing. I have good plans to add to Brookfield (BN) for their diversified assets or more XAW in 2026 since my CDN stocks keep growing and therefore need to offset. Some of my CDN stocks are up over 50% this year. Wild year of growth…never had that before…
I wish you and all readers a very happy holidays and best wishes for 2026.
I’ll have some new content again next week.
Cheers,
Mark
g’ morning Mark
Not sure I’d interpret that couples story the same way.
While it is apparent the total amount in their TFSAs seems to be low ($154K), my gut tells me they’ve used those accounts for spending. I base that on the assumption that if they were astute enough to utilize their RRSPs to the max and seem to have done well with their investing, it is doubtful they’d be so lax on their TFSA. I guess they may have used the TFSA as a ‘swing for the fences’ account but my gut says that’s not their style.
Secondly, with a taxable income of $120K each they are not all that highly taxed. Sure they are encroaching into OAS clawback territory, but overall they likely contributed to their RRSP at a much higher MTR given their “well-paying careers”.
And lastly, it appears they had no workplace pensions so their RRSPs are their replacement for that. Had they been in a workplace pension plan, their pensions would end at death of the last survivor so being taxed on the residuals of their RRIF at death isn’t all that bad in comparison.
I’d also give them HUGE kudos for their substantial parental support. $3550 per month (after taxes) is nothing to sneeze at. So well done on them!
You know, very fair comments Lloyd.
Everyone is different, but I would have expected folks who retired in their 50s with likely $2M+ would have shuffled extra money to their TFSAs – but maybe to the article’s point they did lots of travel and spent lots on travel too…
I guess they may have used the TFSA as a ‘swing for the fences’ account but my gut says that’s not their style.
Without workplace pensions seems they saved a bundle and good on them to do so.
I do think that is rather “rich” to have over $4M+ in registered assets in your 60s. Most will never have close to that is my guess.
“Helping parents” to the tune of $3,550 per month is very commendable indeed and they still have $5k per month cashflow leftover.
Amazing problems to have. Tax headaches in retirement are wealthy problems in retirement. In some ways, I hope I have the same issues. 🙂
Thanks for your thoughtful reply Lloyd…have a great weekend.
Mark
“I do think that is rather “rich” to have over $4M+ in registered assets in your 60s.”
My guess is they are just as surprised by that as well. The recent growth of any portfolio 100% invested in Canadian “top-tier holdings” is nothing short of miraculous. No one I’m acquainted with had plan scenario for gaining over $1 million in one year!
Take care.
Well put. 🙂 We’ll see what 2026 brings my friend.
Mark
Thanks Mark for your great topics and articles as usual. Regarding RRIF, can you withdraw more than what is the annual prescribed amount? The banks set out an annual prescribed % to be withdrawn every year based on last year’s market value of your stocks holdings. But, if someone wants to withdraw a higher amount, is’t possible to do it. If so, how?
Thank you Mark again. Wish you and all our readers a very happy and safe holiday season.
Hi Ken,
Absolutely:
https://www.getsmarteraboutmoney.ca/learning-path/rrifs/how-to-make-rrif-withdrawals/
Just one reference of many….you can withdraw more than RRIF min. anytime, just tax consequences since RRSP/RRIF money is tax-deferred as long as you keep it inside those accounts. When it comes out, lots of tax potentially like the Globe and Mail couple this week. If they don’t start taking $$ out that couple in the article could lose 50% of their registered assets to taxation. Unfortunate planning.
Yes, at the end of the year for the following year (i.e., Dec. 31, 2025 for Jan. 2026+) prescribed factors/RRIF mins. kick-in. I see it with my parents’ RRIFs every year – forced RRIF min. withdrawals.
More reading:
https://www.myownadvisor.ca/watch-out-for-rrsp-and-rrif-taxation/
What’s your game plan for 2026?
Happy Holidays back.
Mark