The Retirement Plan

THE RETIREMENT PLAN

Retirement, As A Chapter Rather Than A Cliff

A long-horizon strategy for converting working-life savings into reliable, tax-efficient retirement income.

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The Problem

Consider a Canadian household approaching retirement at age sixty-five, with accumulated savings across RRSP and TFSA, a modest workplace pension, and entitlement to CPP and OAS. The household wants reliable income of approximately eighty thousand dollars per year, after tax, to maintain its current standard of living. The household also wants the income to be sustainable for thirty years, which is the realistic planning horizon given current life expectancy at sixty-five.

The Retirement Plan models the drawdown sequence, tax timing, and benefit claim timing that produces that income with the highest probability of sustainability and the lowest lifetime tax cost. The numbers will be different for every household, but the structure of the question is the same.

The Scenario

Consider a family with one newborn child. The family can commit approximately two hundred and ten dollars per month, or twenty-five hundred dollars per year, to education savings. The Education Plan organises this contribution to capture the full Canada Education Savings Grant (CESG), which adds twenty percent on the first twenty-five hundred dollars contributed each year, up to a lifetime maximum of seventy-two hundred dollars per child. For families with lower household income, an additional CESG of ten to twenty percent on the first five hundred dollars annually is available, and the Canada Learning Bond may be available regardless of contributions.

Over eighteen years, with consistent contribution and grant capture, a single child's RESP can accumulate well over one hundred thousand dollars. For families with greater contribution capacity, or for families starting earlier with multiple children, the available funding is meaningfully larger.

The Instrument

The Retirement Plan works across the full set of registered and non-registered accounts available to Canadian retirees. The RRSP, eventually converted to a RRIF, is typically the largest source of retirement income for working-life Canadians and the most tax-sensitive to handle. The TFSA, often underused during working life and over-preserved in retirement, provides tax-free withdrawal flexibility that complements RRSP drawdown. Workplace pensions, where present, provide a defined income stream and inform how aggressively the RRSP can be drawn. Locked-in retirement accounts (LIRA, eventually LIF) require separate handling because the withdrawal rules differ. Non-registered savings provide further flexibility. CPP and OAS, claimable from age sixty to seventy with significant differences in payout depending on when claimed, are decisions that should be modelled rather than defaulted.

Annuities, where appropriate, can convert part of a portfolio into guaranteed lifetime income, removing longevity risk from that portion of the plan. Aevum advises on whether annuitisation is appropriate and at what proportion, recognising that annuities are appropriate for some retirees and not for others.

The Mechanism

The Retirement Plan operates in two stages. The pre-retirement stage, typically the final five to ten years of working life, is the period in which contribution decisions, asset allocation, and tax-loss optimisation can still meaningfully affect retirement readiness. We work with clients in this stage to maximise final-decade RRSP and TFSA contributions, to position assets across registered and non-registered accounts in a way that simplifies eventual drawdown, and to coordinate any pension commutation decisions where applicable.

The retirement stage is the active drawdown period. Here the Plan determines the order in which accounts are drawn, the timing of CPP and OAS claims, the size and frequency of RRIF withdrawals, the use of TFSA as a flexible top-up, and the structural decisions that minimise lifetime tax. The Plan is reviewed annually because tax law changes, personal circumstances change, and market conditions change. Retirement planning is not a one-time exercise.

The Coordination

The Retirement Plan is the Plan that most often overlaps with the other three. Property held in the form of investment real estate generates retirement income and may require integration with the Property Plan. Estate considerations, particularly the tax treatment of registered accounts at death, intersect directly with the Legacy Plan. Education funding decisions made earlier in life affect retirement readiness in ways most families do not model. Where overlaps exist, we handle the coordination across Plans rather than treating each in isolation.

The Legacy

A well-structured retirement plan does more than produce reliable income for the retiree. It preserves the position of the surviving spouse, manages the tax consequence of accounts transferring on death, and aligns with the family's estate intent. The Plan is built with the understanding that retirement is a chapter inside a longer story, not the final destination.

The Next Step

A first conversation about the Retirement Plan covers your current account position across all sources, your retirement income target, your time horizon to retirement, and any specific circumstances that affect the planning such as pension commutation, business sale, or cross-border considerations. It is a complimentary thirty-minute meeting, virtual or in person.