From Saving to Spending: Retirement Planning Needs a New Mindset
For most of us retirement planning means saving — building RRSPs, paying off the mortgage, eliminating debt, and growing investments.
But when we retire, the focus changes. It’s no longer about building your nest egg; it’s about spending it.
That shift can be surprisingly tricky because knowing how and when to spend requires planning withdrawals, managing taxes, and making sure your money outlasts you.
This month’s article, written by our guest author Jonathan Kestle – President of Ian C. Moyer Insurance Agency Inc. – shares Joan and Robert’s story, revealing:
- Pitfalls of one-size-fits-all planning
- A better way – modelling smart withdrawal plans
- How clarity builds lasting confidence
Meet Joan and Robert
Joan and Robert, both in their early 60s, did everything right.
Over 35 years, they saved $1.2 million, with the majority held in RRSPs, along with additional savings in TFSAs and non-registered accounts.
Their spending plan seemed simple: withdraw only what they needed from their RRSP for core expenses, while relying on their TFSA and non-registered savings for discretionary spending like travel and home renovations.
Their plan had even been reviewed and supported by their tax preparer.
At first glance, this strategy made sense, preserving registered assets while supplementing lifestyle spending from more flexible accounts.
But after reviewing projections from our retirement income planning tool – Milestones Retirement Insights – they quickly realized their plan had serious flaws.
Pitfalls of One-Size-Fits-All Planning
Joan and Robert’s approach would have caused big tax headaches down the road.
Minimizing RRSP withdrawals early on meant a larger balance to convert to a RRIF, resulting in – higher mandatory withdrawals – higher taxes starting at age 72.
Their higher future income increased the likelihood of Old Age Security (OAS) clawbacks.
At death, their large RRIF balance would have created a big tax hit on their final return.
In short, what seemed like a reasonable withdrawal strategy may not have been the most effective approach over the long term.
Today’s Retirement Planning Challenges
Joan and Robert’s story isn’t unique. Many of us save diligently — but enter retirement with a one-size-fits all 4% spending rule or without any spending strategy.
To meet retirement and legacy goals, today’s retirees need to juggle decisions about:
- When to start CPP and OAS
- How and when to draw from RRSPs, RRIFs, and TFSAs
- Managing yearly tax brackets
- Managing market volatility and inflation
- Life expectancy and whether money is to be left for loved ones
Each piece affects the others. Adjust one decision and the whole plan shifts.
Retirement planning is a complex puzzle of timing, tax strategy, and cash flow.
A Better Way - Modelling Smart Withdrawal Plans
When we rebuilt Joan and Robert’s plan, the picture improved dramatically.
By drawing modest additional amounts from their RRSP earlier, they reduced the size of their future RRIF – lowering taxable future income, and reducing the likelihood of OAS clawbacks.
By delaying CPP and OAS to age 70, they created opportunity to:
- Draw down on RRSP more strategically in the early years of retirement
- Secure higher, inflation-adjusted lifetime income
- Reduce the potential burden on their estate at death
By coordinating withdrawals across RRSPs, TFSAs, and non-registered savings, they improved overall tax efficiency throughout retirement.
The result was clear:
- Lower lifetime taxes
- Higher after‑tax income
- Lower potential estate taxes
- Higher guaranteed income for life
Beyond Guesswork: The Power of Modelling
Joan and Robert tested ‘what if’ scenarios using our Milestones Retirement Insights planning tool by seeing what would happen if they:
- Started CPP at 60, 65, or 70
- Funded new vehicles and renovations with cash
- Withdrew additional funds to gift to children while they were alive, rather than leaving it as an inheritance
They replaced guesswork with real evidence and turned uncertainty into a clear, coordinated retirement plan.
Clarity Through Coordination
Without a coordinated income plan, many retirees:
- Pay more tax than they need to
- Pay themselves less income out of caution
- Lose part of their OAS to clawback
- Feel anxious about spending their own savings
After seeing the power of modelling, it became evident to Joan and Robert that the traditional “rules of thumb” haven’t kept up with today’s retirement challenges.
How Clarity Builds Lasting Confidence
When investment portfolios, income sources, and government benefits are coordinated with a focus on tax efficiency, retirees can make the most of what’s been built over a lifetime – and confidence follows.
- Lower taxes during retirement
- Higher after-tax income
- A more efficient and tax-conscious estate for wealth transfer
For Joan and Robert, that confidence changed everything.
They booked their dream trip and started gifting money to their grandchildren’s education funds.
And they did it all knowing their financial base was solid.
In Summary
Retirement planning isn’t just about how much you save — it’s about how smartly you draw from your savings.
Rules of thumb no longer cut it in a world of flexible pensions, longer lifespans, and complex taxes.
Integrated planning tools like Milestones Retirement Insights help Canadians — and their advisors — test strategies, visualize outcomes, and make decisions that last.
When it comes to retirement, clarity brings confidence.
And confidence brings the freedom to enjoy retirement with peace of mind.
Do you have confidence in your retirement income plan? Consider learning more about Milestones Retirement Insights platform.
Author: Jonathan Kestle, CFP®, CLU President – Ian C. Moyer Insurance Agency Inc. Contributor: Janet Jackson, Financial Concierge Inc.
About Our Author
Jonathan Kestle, CFP®, CLU
President – Ian C. Moyer Insurance Agency Inc.
Jonathan is a Certified Financial Planner based in Southwestern Ontario who specializes in retirement income planning, tax-efficient decumulation strategies, and estate planning for Canadian retirees.
He is also a co-founder of Milestones Retirement Insights, a planning platform designed to help Canadians and financial professionals model retirement income strategies and make more informed decisions about withdrawals, taxes, and longevity.
Financial Concierge™ offers Professional Executor and Power of Attorney services to assist with executor, attorney duties or help with managing daily financial activities. Learn more about Financial Concierge™ here.
DISCLAIMER: This blog is not intended to be legal or financial advice and should not be construed as anything other than for information purposes.
