You’re 55 and planning to retire at 60. That means you have just five years to decide exactly where your income will come from and how to keep as much of it as possible. After helping hundreds of Canadians in this situation, I’ve seen the same mistakes happen over and over:
- No clarity on expenses
- No withdrawal plan
- An investment plan that doesn’t align with future expenses
Jane’s Case Study: Common Retirement Planning Mistakes
In today’s video, we’ll walk through a case study of a client we’ll call Jane. We’ll show the mistakes she was about to make if she stuck to her current plan and how we were able to pivot and adjust.
Jane is 55 and ideally wants to retire at 60. She was working with an adviser who only focused on investments. She did not have a complete retirement plan. Jane created her own plan using Excel and felt confident she could retire at 60—or maybe even 55.
Jane’s Financial Snapshot
When we reviewed her situation:
- Income: $150,000 per year
- RRSPs: $850,000, saving $10,000/year
- TFSA: $120,000, maxing $7,000/year
- Non-registered account: $130,000
- CPP at 60: $911/month
- OAS at 65: $891/month
- Home: $800,000, no debt
- Expenses: $72,000/year after tax
On paper, Jane’s plan looked solid. Her retirement was over 150% funded, and she could leave a $4.2 million estate.
The Critical Missing Piece: Inflation
But there was a critical missing piece: inflation. Jane hadn’t factored it into her Excel spreadsheet. Over 30 years, spending $72,000 today would require $200,000 by age 90 assuming 3% inflation. Once we added inflation, her plan at 60 was only 79% funded, and at 55 she would run out of money by 2042, a classic retirement tax trap risk if withdrawals aren’t planned properly.
Portfolio Risk During Retirement
Other issues included a 100% stock portfolio. While this is great for beating inflation, it’s risky during the de-accumulation stage. If the market drops 40% before retirement, withdrawals happen at a low point, putting Jane at risk.
The Bucket Strategy: Protecting Retirement Income
The solution? Bucket strategies:
- Short-term bucket – 1 year of income in extremely secure investments
- Mid-term bucket – conservative investments for years 2–8
- Long-term bucket – growth investments untouched for 8+ years
We also adjusted:
- Delayed CPP from 60 → 70
- Delayed OAS from 65 → 70
- Topped up TFSAs using non-registered funds
- Created a strategic withdrawal plan targeting $80,000/year
Retire with Confidence and Avoid Tax Traps
This approach allowed Jane to retire at 60. She was able to ensure her money would last and that it would help her avoid costly tax traps.
Interested in a retirement strategy like Jane’s? Learn more with our Atlas System, designed to give you confidence that your money will last.
