Retirement can come with a lot of uncertainty, especially when it comes to taxes and market volatility. But with the right planning, a few small adjustments can make a big difference.
In this post, we’ll walk through a real-life example of how one woman saved over $50,000 in taxes and reduced her portfolio stress using two simple strategies.
Prefer to watch the Video?
Their Situation
Sarah, 66, is recently widowed and newly retired. She had been working with an advisor for years but wasn’t confident her current plan matched her needs in retirement. Her two main concerns:
- How to invest more tax efficiently
- How to reduce stress from market fluctuations
Sarah’s portfolio was worth $1 million, split as follows:
- RRSP: $500,000
- TFSA: $100,000
- Non-Registered: $400,000
- Investor Profile: Balanced (50% stock, 50% fixed income)
A Smarter Strategy: Tax-Efficient Asset Location
Originally, Sarah’s balanced portfolio was spread evenly across all three accounts. This meant each account held a mix of stocks and bonds, regardless of tax efficiency.
We proposed a simple tweak:
- Move all fixed income into her RRSP
- Move all stocks into her TFSA and non-registered account
This did not change her overall risk level, she remained a balanced investor. It just changed where each asset type was held to reduce future taxes.
Why it works:
- Growth in RRSPs is fully taxable
- Growth in TFSAs is tax-free
- Growth in non-registered accounts is taxed at favorable capital gains/dividend rates
The Results: Over $50,000 in Tax Savings
After 10 years, both strategies grew her portfolio to the same value: $1.8 million.
But under the new structure:
- Her RRSP grew less, reducing the future tax bill
- Her TFSA and non-registered accounts grew more, increasing the tax-efficient portion of her portfolio
- Net result: Over $56,000 in tax savings
That’s money that could go to her kids or grandkids, not the CRA.
Reducing Market Stress: The Bucket Strategy
Sarah’s second concern was volatility. She was withdrawing $75,000 per year and felt anxious watching her portfolio rise and fall.
To help with this, we introduced the Bucket Strategy:
- Bucket 1 (Short-Term Needs):
$75,000 for year one — held in cash or ultra-safe investments - Bucket 2 (Medium-Term Needs):
$450,000 for years 2–7 — invested conservatively to refill Bucket 1 annually - Bucket 3 (Long-Term Growth):
$475,000 for year 8+ — invested for growth with time to recover from market dips
This gave Sarah a 10-year buffer before she would need to touch her more volatile investments — helping her avoid selling in a downturn.
Final Thoughts
By making one small change to her portfolio’s structure, Sarah saved over $50,000 in future taxes. And by organizing her withdrawals into clear time-based buckets, she gained the peace of mind to enjoy her retirement without obsessing over market dips.
If you want to feel more confident about your own retirement income and tax strategy, we’re here to help. Come visit our website and book a free appointment with us.
