Retirement should be a time of celebration and freedom, but for Curtis and Rachel, it brought unexpected worries. Despite building an impressive $3 million portfolio, they were uneasy—not because they feared running out of money, but because they felt their financial life wasn’t as organized or optimized as it could be.

For 25 years, their lives had revolved around raising their three kids. Between hockey practices, swimming lessons, and other activities, planning for retirement took a back seat. They followed all the advice they could: maximizing pensions, topping up their RRSPs and TFSAs, and funding their children’s RESPs. They even hired an investment advisor to manage their portfolio.

Now, with the kids out of the house, Curtis and Rachel finally had time to focus on their future. They realized they had enough to retire comfortably, but they still felt their finances weren’t in order. They wanted to make sure their hard work and savings would be used effectively in retirement.

Uncovering Gaps in Their Retirement Plan

When Curtis and Rachel sought help, we identified several critical gaps in their financial plan that needed attention:

1. Outdated Wills and Estate Planning

Their wills hadn’t been updated since their kids were born, and their named executor had moved across the country. Since they wanted their estate divided equally among their children, updating their wills was a top priority.

2. No Power of Attorney or Health Care Directive

If either of them became incapacitated, there was no plan for someone to manage their financial or medical decisions. Creating these documents provided much-needed peace of mind.

3. Improper Beneficiary Designations

• RRSPs and Work Plans: They had named their estate as the beneficiary, which meant the entire account balance would be taxed as income upon death. Naming each other as beneficiaries allowed for a tax-free rollover to the surviving spouse.
• TFSAs: Similarly, their estate was listed as the TFSA beneficiary. Naming each other as successor holders ensured tax-free growth and avoided probate.

4. Disorganized Financial Records

They lacked a centralized record of their accounts, insurance policies, and legal documents, which would have made it challenging for their executor to locate assets. A consolidated document, like an asset map, solved this issue and streamlined their records.

These gaps, while common, had the potential to cause stress and financial losses. Here’s how we helped them resolve these concerns.

Optimization Strategies for Retirement

Once the foundational issues were addressed, we shifted our focus to optimizing Curtis and Rachel’s retirement plan.

1. Reducing Tax Liabilities

Their registered accounts were set to grow significantly, leaving a large balance taxable at over 50% upon death. To minimize this burden, we implemented an RRSP meltdown strategy. By drawing from their RRSPs early while in a lower tax bracket, they reduced future estate taxes.

2. Timing CPP and OAS Withdrawals

We created a plan to strategically time their Canada Pension Plan (CPP) and Old Age Security (OAS) withdrawals. This approach minimized the risk of OAS clawbacks while maximizing their benefits.

3. Aligning Investments with Their Withdrawal Plan

We adjusted their investment strategy to align with their goals and timelines:

• RRSPs: Made more conservative to reflect their near-term usage.
• TFSAs: Invested more aggressively for long-term, tax-free growth.

By doing so, their TFSA balances would grow significantly without impacting their estate taxes, maximizing tax efficiency.

4. Reevaluating Insurance Policies

With reduced projected estate taxes, their existing insurance policies were no longer necessary. Canceling these policies freed up funds to enhance their retirement lifestyle.

Evaluating Professional Fees

Curtis and Rachel’s investment advisor had performed well in managing their portfolio, but the fees they were paying felt disproportionate for a single service.

Paying for portfolio management alone is like hiring a contractor to build a house but stopping after the foundation. Without walls, plumbing, and electricity, you’re left with something incomplete—and likely more expensive to finish later.

For the same fee, Curtis and Rachel transitioned to a team offering comprehensive financial planning. This included tax strategies, retirement planning, and estate optimization, ensuring their financial “house” was fully built and ready for any challenges.

The Result

After addressing these gaps and optimizing their plan, Curtis and Rachel entered retirement with newfound confidence. They knew their wealth would sustain them and be managed effectively for future generations.