Castanet
Dec. 30: BEST OF THE BLOGOSPHERE
December 30, 2024
Saving for retirement is only half the battle: Brett Millard
While saving, investing and building wealth are key to retiring well, there’s a second factor to consider – drawing down those savings as income when you actually leave paid work.
So writes Brett Millard in Castanet.
Saving is the “accumulation” phase, but drawing down that money, or “decumulation” also requires a lot of thought, he writes.
“Once retirees reach their golden years, a new challenge emerges: how to best withdraw those funds in a sustainable and tax-efficient way. This phase, known as ‘decumulation,’ is just as crucial to a retiree’s financial well-being as the accumulation phase. A well-thought-out decumulation strategy can make the difference between financial security and uncertainty in retirement,” he explains.
After a lifetime of saving in such vehicles as “RRSPs, TFSAs, pension plans and other investment accounts,” it’s important to get decumulation right, he adds.
“Without a proper decumulation plan, retirees risk depleting their savings too quickly, paying more in taxes than necessary and leaving less behind to their loved ones. To maximize the funds available in retirement, Canadian retirees need a thoughtful, carefully managed withdrawal plan that considers taxes, investment growth, longevity, and lifestyle needs,” Millard writes.
He offers up a number of guidelines to help people think through the decumulation process.
- Determine retirement income needs: You need to know how much you are going to be spending once you are retired, he explains, and then budget accordingly. “A thorough budget helps you understand how much income you’ll need each month, setting the foundation for your decumulation plan,” he notes.
- Calculate sustainable withdrawal rates: You want to try and determine how much money you can take out of savings as income per year at a rate that is sustainable, he explains – so that you don’t run out of savings when you are older. Some use the “four per cent” rule, if in doubt consider getting professional advice, he adds.
- Consider tax-efficient withdrawal strategies: “Withdrawing from different accounts in a strategic order can help minimize taxes and extend the life of a portfolio. Generally, but not always, it’s tax-efficient to withdraw from non-registered accounts first, then RRSPs or RRIFs, and finally TFSAs. By delaying RRSP withdrawals, you allow these funds to continue growing tax-deferred. Similarly, keeping withdrawals from TFSAs until last can help protect tax-free income. Again, everyone’s situation is different and a plan should be customized for you,” he writes. Will income-splitting be beneficial to you, tax-wise, he asks.
- Manage longevity and market risk: “Outliving retirement savings is a major concern for retirees and balancing growth with security is a critical part of any decumulation plan. One approach is to keep a mix of assets that allows for growth potential, such as stocks, alongside lower-risk investments like bonds or guaranteed income products,” he warns.
- Evaluate guaranteed income options: Millard says you may want to consider buying an annuity to provide guaranteed lifetime income. “Certain types of guaranteed income products, such as annuities, provide predictable income that isn’t subject to market volatility. While annuities often require an upfront investment, they can ensure a steady stream of income for life, which can reduce stress about market risk and longevity,” he writes. Again, consider getting professional advice to be sure an annuity is right for you.
- Review and adjust regularly: “Retirement circumstances, lifestyle changes, market conditions, and tax laws evolve over time. A regular review—ideally once a year—helps ensure your plan stays aligned with your goals and income needs,” he writes.
“By giving as much focus to decumulation as to accumulation, retirees can enjoy their retirement years with financial freedom and flexibility,” Millard concludes.
If you are a member of the Saskatchewan Pension Plan, you have several decumulation options when you retire. There’s SPP’s stable of annuity options, all of which provide you with a lifetime monthly payment so you can never run out of money. There’s also the Variable Benefit, which provides you with more flexibility in when and how much of your savings you draw down.
Check out SPP today!
Join the Wealthcare Revolution – follow SPP on Facebook!
Written by Martin Biefer
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Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.
JUN 27: BEST FROM THE BLOGOSPHERE
June 27, 2022
Is inflation throwing a wrench in peoples’ retirement plans?
An article from Kelowna, B.C.’s Castanet site suggests that inflation is making older Canadians hit the pause button on their retirement plans.
The article cites a study commissioned by Bromwich+Smith and Advisorsavvy that found “54 per cent of older Canadians have put off retirement this year because of increases in the cost of living.”
Other results from the study, administered by polling firm Angus Reid, were equally eye-opening.
Four in 10 older Canadians “have delayed, or plan to delay, their retirement because they have too much debt, while 62 per cent have delayed retirement because they don’t have enough savings or investments,” the article notes.
And there are other reasons for delaying retirement, the survey found.
Twenty-six per cent said they are still supporting adult children. Twenty-three per cent “love my job too much to quit,” the article reports, with 21 per cent not wanting to retire due to the still with us (but hopefully going away) COVID-19 pandemic, Castanet reports.
Other reasons for delaying retirement including taking care of a spouse (13 per cent) or other family member (10 per cent), the article notes.
“Canadians are all feeling a bit exhausted from the last two years, between multiple waves of COVID-19 and a tattered economy,” states Laurie Campbell of Bromwich+Smith in the article. “For those close to retirement, 2022 might seem like the best year to do so. But with inflation still high and bank accounts and retirement savings being depleted, it might be wise to ask yourself, can I retire in 2022?”
Perhaps the most alarming stat in the article is this one – “63 per cent of survey respondents were worried about never being able to retire.”
Other concerns were the fear of running out of money in retirement (71 per cent), as well as the worry of having to go back to work after retirement (24 per cent).
“The results of the survey are somewhat dispiriting,” states Advisorsavvy founder Solomon Amos in the article. “There have been economic shocks throughout time, but the last couple years have tested many people, and put the importance of proper retirement planning into plain view.”
Finally, while “almost a quarter” of Canadians surveyed hope their homes will fund part of their retirement, those homes are now carrying quite a cost due to the combination of already-high home prices and rising mortgage rates. Twenty per cent of those surveyed (aged 18 to 34) are spending “50 to 74 per cent of their income on mortgage payments alone.”
If you don’t have a retirement program at work, it’s up to you to save for your retirement – and that can be difficult when the cost of everything seems to be going up. But there’s a solution.
The Saskatchewan Pension Plan is a full service defined contribution pension plan that’s open to every Canadian with registered retirement savings plan room. You can arrange to make pre-authorized contributions to SPP, perhaps coinciding with your payday, so that you are paying your future self first.
SPP will invest those savings for you in a pooled fund, professionally managed at a low cost. And if you are worried about running out of money when you retire, SPP gives you the option of receiving a lifetime monthly annuity payment from some or all of your SPP savings.
If you know you should be doing something about retirement savings, but haven’t had the time, get in touch with SPP and they will help you get going on a program tailored to your requirements.
Join the Wealthcare Revolution – follow SPP on Facebook!
Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.
Oct 18: BEST FROM THE BLOGOSPHERE
October 18, 2021
Retirees and savers take note – inflation appears to be on the rise
An article in Castanet from Kelowna, B.C., warns us all that inflation appears to be making a comeback.
The article begins by noting that inflation is at its “highest level in 18 years,” and that continued high levels of spending by government could drive it even higher.
Inflation, the article explains, “is the general increase in prices and the fall of the purchasing power of a dollar. Put another way, it refers to the cost of putting gas in your car or buying groceries increasing.”
While no one can exactly predict how and when inflation will increase, your retirement plan should be prepared for action, Castanet reports.
Even modest-sounding inflation of three per cent “can cut the purchasing power of your money in half over a 20-year period,” the article notes. This is especially concerning if your income sources are not “indexed,” which means inflation-protected, or if your income sources are not growing, the article adds.
One good thing to be aware of, the article states, is that your government retirement income is inflation protected. So sources of income like the Canada Pension Plan and Old Age Security will be adjusted upwards if inflation is running higher.
If you have a pension plan at work, it may offer inflation protection – find out, and select this option if such a selection is required, Castanet advises.
If you are investing for retirement, the article advises a balanced approach. A portfolio that is completely risk-free – invested in Guaranteed Income Certificates (GICs) – can actually decrease in value in the inflation rate outpaces the GIC interest rate.
“Often, those that want no risk would be far better served by investing in a conservative portfolio that still holds some equity or other alternative investments that will offer a certain amount of inflation protection. These riskier assets can of course lose money as well, so it is imperative that the investor fully understands the plan they are putting in place,” the article explains.
“You may also want to consider investments in sectors that benefit from inflation like real estate and commodities,” Castanet adds.
The article also mentions real-return bonds as a sort of “hedge” against inflation.
Be prepared for inflation, the article concludes, or face “disastrous consequences.” Consider reviewing your plans with an advisor, the article suggests.
Did you know that the Saskatchewan Pension Plan’s Balanced Fund provides an easy way to ensure all your retirement eggs aren’t in one potentially inflation-sensitive basket? The fund is invested in Canadian, U.S. and Non-North American equity, but also bonds, mortgages, real-estate, short-term investments and infrastructure. That diversification has led to an average rate of return of eight per cent throughout the 35-year history of SPP. And while past results don’t guarantee future returns, it’s a pretty nice track record of helping build retirement futures! Check out SPP today!
Join the Wealthcare Revolution – follow SPP on Facebook!
Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.