Planning your retirement is a waste of time and money if you don’t start with your values. Full stop.

Oh, you might put together a strategy that squeezes every last dollar out of Old Age Security or perfectly calculates when to convert your RRSP to a RRIF and even feel good about it for a minute...but unless your only measure of success is how correct you are, you aren’t going to feel great about your retirement strategy for very long.

As I’ve written before:

I have learned that there is no one set of values that fits everyone. Even where people share values, how each of us approaches and lives those values is unique to each one of us. I have also learned that, without connection to our specific set of personal values, our goals fall flat, our achievements feel unimportant, and we lose motivation.

I’ve found over my decades in this profession that prospective clients often show up with “how” questions, like:

• How should I draw down my assets in retirement?

• How should my portfolio be managed?

• How much can I spend?

They’ve been trained (by every bank ad ever) to believe that answering the “how” questions are what retirement planning is all about, and since it’s likely the first and only time they’re going to retire, they’re understandably nervous about getting the details wrong.

The problem with starting with the details of “how” is very similar to the problems you’d encounter if you started to build a house without stopping to design it first. Even if you somehow manage to get the foundation poured properly and the walls and roof attached to each other, starting with design first is the only way you’ll end up with a home worth living in.

Think for a minute about your own financial situation: you may have the exact same income as someone else. Your portfolios may be eerily similar, and you may have retired on the same day and have the same cost of living. Spooky. Your retirement strategy can’t be that different from theirs, can it?

If you’re only comparing your net worth and cash flow statements, you might be tempted to say “no”. But what about your values?

What if you have a passel of kids and grandkids, strong values around education, and a family cottage that you inherited from your parents and want to pass down as seamlessly as possible to the next generation? What if your doppelganger has a second home but no kids and no other close family, suffers from anxiety, and had parents and grandparents who all lived into their very late 90s?

Your retirement strategy might include:

• Facilitated family meetings to help you understand what the next generation wants (you might be surprised!)

• Planned gifts to each child’s RESP.

• Setting your portfolio up for growth since it will definitely outlive you.

• Money set aside in your Will for a trust that will cover annual cottage expenses even after you’re gone.

• Even more facilitated family meetings so that everyone is clear about your intentions and hurt feelings can be addressed with care or avoided altogether.

• Overfunded permanent life insurance policies so that your final tax bill is covered.

Your double’s retirement strategy should look completely different, even if both of you spend the same amount every year and have identical portfolios down to the penny. Their strategy might include:

• A large enough cash wedge to cover two years of spending, and enough money in fixed income to ride out five full years of horrible equity returns.

• Canada Pension Plan benefits deferred all the way to age 70, with strategic RRSP withdrawals in the years before CPP begins.

• An annuity that (along with their CPP benefit) creates enough guaranteed income after age 70 to cover their core lifestyle expenses even if they lost every cent in the market (an unlikely scenario that nevertheless wakes them up at 3AM most mornings).

• A professional trustee named as their substitute decision maker and executor.

Applying your strategies to their life and vice versa might not be disastrous for either of you..but it would almost certainly feel that way!

It’s easy to dismiss feelings as irrelevant to the dollars and cents of financial planning, but paying attention to them is the key to making sure your retirement strategies are congruent with—and ultimately supportive of—your values.

Wouldn’t it be great to figure out your retirement, set it… and forget it? As I mentioned in November’s Rebuilding Retirement case study, retirement isn’t a destination. It’s an ongoing process.

In my final case study of 2020, I thought I’d give you one last peek into retirement planning with Ben and Leslie, who were just about ready to retire… and then the pandemic made them wonder if the plan I’d created together made sense anymore.

Meet Leslie and Ben, Ready to Retire

Leslie and Ben are in their early 60s, with two grown children and a grandson. Leslie had already retired when I met her, and Ben was planning to retire in the spring of 2020.

Ben and Leslie had read some of the key books I read (and recommend!) and gave a lot of thought to their retirement finances. They’d considered their core expenses as well as their dream expenses and came up with a range. Since Leslie is a super math nerd and has had a little time on her hands now that she’s retired, she created her own spreadsheets to try and calculate their ability to retire successfully - she even contacted my friend Doug Runchey to get an expert calculation on their Canada Pension Plan benefits.

The math had been done and yet… both Ben and Leslie felt like they were missing some key information. Had they asked all the questions? Had they considered all their possibilities? Are there other factors that a professional planner might consider? Is there more to retirement planning than projections?

Isn’t Retirement Planning Just About the Math?

Initially, Leslie thought that the best way to go might be to provide me with her plan and have me try to poke holes in that. However, my experience in attempting this in the past told me that I’d end up simply telling them how to fix their process (or what was unfixable) and still not arrive at any helpful conclusions.

A large part of successful financial planning is knowing the right questions to ask, in order to truly shape, design, and define your future. The next step is determining what to pay attention to out of the endless amount of information available, and how that focus will get you the answers that you need. After that is the math and the strategy - where Leslie and Ben had reasonably started - considering the information that’s available about retirement planning.

Then, of course, there are contemplating potential risks such as fluctuating rates of return, longer than average lifespan, health costs, elder care, and who knows what else - and how to handle them. Finally, are all the right legal documents in place and the assets owned in a way that the legal documents work well in reality… and what’s left for the kids?

Leslie and Ben had done some work on the retirement math but they knew that they needed help with the rest of the puzzle. They spoke to me about their dreams and I agreed to help them assess their retirement strategies for risks, opportunities, income tax minimization (which hadn’t played into Leslie’s spreadsheets just yet).

Retirement Planning in Action

Before their Foundation Meeting, I sent over a brief video called Watch Me First that gave them a brief walkthrough of the report they would be reviewing together during their meeting. This video clarified that the purpose of the Foundation Meeting was really about data validation and goal shaping - but not yet about solutions.

During the Foundation Meeting, I had a lot of questions. First, I walked through the assumptions I would be making in their plan, regarding income and expenses, account values, inflation rates and more. From there, I clarified their goals around a cottage purchase they wanted to make in retirement. Was the number based on a specific idea? Had they thought about property transfer taxes? Where in priority did the cottage fit in relation to their other goals? Would they accept a smaller cottage if that meant more security for elder care? More questions were asked about replacing vehicles, gifting to children, the pension option Leslie had selected, the various options available for Ben’s pension, and more.

Ben and Leslie felt really confident at the end of this meeting that their financial plan would be based on goals they felt energized about, and a lifestyle that they really wanted in retirement. They understood how the projections would be created, and were excited about the outcome.

Now, I was ready to go to work, and here’s what I found:

Leslie and Ben’s reliable income - the guaranteed stuff from pensions - is projected to be enough to cover their “core expenses” - the basics of their lifestyle - all the way to their projected life expectancy. This is before even touching their investment portfolio, which could manage the costs of their “dream” expenses as well as potential health care costs, emergencies, and elder care. There would be lots of money left for their children and grandchildren, plus their home and their cottage.

Then, I ran some worst-case scenarios, because Ben and Leslie were concerned that there was even more risk than they knew. These scenarios, which tested their portfolio against some of the worst market returns in history, ate up a lot of their portfolio, but they still were able to cover costs (even with their dream expenses, emergencies, and potential costs) all the way to the end of their projected life expectancy, plus another decade. Their home and cottage were left for their kids, along with the equivalent of about $41,000 in today’s dollars in the bank.

If Ben and Leslie’s personal sequence of market returns and inflation ends up being just as bad but not worse as what’s gone on in the past century (a century that included two World Wars, multiple economic crises, and a global pandemic, to only briefly scratch the surface), they will be fine even if they live a very long, active life together.

If the future is worse for investors than anything experienced in the past century, then at some point in the next 30 years, Ben and Leslie will be faced with the choice of reducing some of their dream expenses in order to maintain their home and cottage for their kids, or sell one of their properties to maintain spending. Their core comfortable lifestyle would not be in jeopardy.

The plan was set: Ben would retire in May of 2020, and they would ride off into the retirement sunset with confidence. A happy, tidy ending.

Except successful retirement planning is - and always will be - planning. As in: never finished, always responding to circumstances, never tidy.

Along Came COVID...Does Everything Change?

Ben and Leslie were fortunate to have the resources they needed to stay safe at home, but seeing the devastation the pandemic was wreaking and looking ahead to how it might unfold over years created quite reasonable anxiety for them. Did it still make sense for Ben to retire? Wouldn’t the prudent choice be for him to continue working until all this uncertainty worked itself out of life and the markets?

To help think through this choice, I led them through the results of their plan again. With the stress-test results in front of them, I asked them to consider the following questions:

Do we think that the markets today are worse than the very worst of what has happened in recorded market history?

Understanding that we can’t actually know the significance of this decision today, what will you regret most looking back: deciding to retire now, and realizing later it was the wrong financial decision? Or deciding to delay retirement and realizing later you didn’t have to?

What guarantee would you prefer: always maintaining your core and dream spending, increasing regularly as inflation plays its tricks, for the rest of your lives? Or spending as much as you can (within reason) while you’re young and active, knowing that you may need to cut back later in life?

Are you focusing on Ben’s retirement date as the one thing you can control amidst so much uncertainty… and potentially elevating the importance of this decision beyond the impact we can reasonably expect it to have in the future?

The purpose of retirement planning - beyond the math - is to minimize regret in the face of an uncertain future. Although I couldn’t make this decision for them - as much as they may have wanted me to - I asked Ben and Leslie to follow the same retirement income planning process I recommend to everyone, which can be summarized as:

• Make the best choices for the future with the best information available today;

• Regularly review potential future outcomes based on actual portfolio values and spending to give lots of lead time for necessary adjustments; and

• Let it go for the rest of the time.

This is the work I love to do, and as you can see, it goes far beyond the math. I’d be delighted to do the same for you.

I’m delighted to present you with another financial planning case study as part of this year’s theme. This one was drawn from a mash-up of typical clients and scrubbed of identifying detail, because privacy.

Remember, I’m writing these case studies to illustrate the value of financial planning centred around the unique life story and personal values each person brings to the process. I also want to demonstrate how the decisions one person makes in light of those values might be very different than the decision you would make in the same circumstances. 

What follows isn’t meant to be universally applicable advice. The solutions articulated below were designed for the client, and while you may see yourself in some of the details, these are the recommendations that created success for her. You should seek professional advice before applying these solutions to your own situation.

Zoe Retires Alone

After Zoe’s husband, Wash died, she was worried. Suddenly becoming a widow at age 55, receiving a big lump sum from insurance, and not knowing what to do next left her feeling insecure, overwhelmed, and embarrassed. 

Although Zoe was the one who paid the bills and managed the budget, she felt like she hadn’t paid enough attention to their money over the years. She had “only” paid off their mortgage and contributed regularly to savings invested at the bank. 

After losing her husband and moving, Zoe’s lifestyle hadn’t quite settled into a predictable pattern of expenses. Her income was coming from a patchwork of survivor benefits and she was topping up her pensions from the insurance money. This money was still sitting in a savings account at the bank because she didn’t know what to do with it. Her uncertainty and lack of knowledge about her investments led her to believe that she was just bad at money! 

There are two things you need to know about Zoe, though: 

First, she’s a master of living within her means. For the 25 years leading up to this period of disruption, she kept her expenses safely below her (sometimes quite low) income. She had the bare minimum amount she could live on down cold. 

Second, she is an enthusiastic student. Although she had a dim (and incorrect) view of her own money management skills, she came to me keen to learn. She had already spent some time investigating how well her bank-managed mutual funds had performed over the years and how much she was paying in investment fees.

Zoe came to me with two questions, one very specific and one very broad: 

1. How much can I spend every month? 

2. My bank is offering me a discount to invest the insurance money with them. Is that the right choice for me?

I was keen to help Zoe realize just how well she had actually managed for all those years, and to build a simple plan that Zoe could follow with confidence. 

Testing her portfolio

The first thing I did once I received Zoe’s information was to figure out two things: 

1. If she was receiving value for the high investment management fees she was paying, and

2. If the amount she needed to withdraw from savings was likely to work, given the amount she was starting with and her asset allocation.

I found that Zoe was paying more than 2.5% for her mutual funds, and receiving no guidance beyond fund-picking in return. The fact that Zoe came to me to ask about investments was a pretty good indicator that the advice she was supposed to be getting in return for her fees was insufficient. 

The next step was to prepare a shortlist of investment managers that charge reasonable fees (including discounted fees for higher account balances, similar to what Zoe’s bank was offering) and consistently deliver valuable advice. I helped Zoe find a match for the kind of advice-relationship she wanted at a cost that made sense.

The difference between what Zoe would have paid at her bank and what she is paying to her new investment manager is $9,500 per year!

Next, I examined the amount of money Zoe had between her investments and the insurance proceeds. I tested how much she could withdraw from her portfolio under a variety of scenarios that included:

• Contributing more or less of the insurance proceeds to her investments and leaving the rest in cash

• Reducing the cost of her investment management in the future

• Changing the balance of stocks to bonds 

• Living much longer than the average life expectancy for women her age

• Facing spending shocks, like long term care

I found that Zoe had a good chance of making it through retirement without spending her whole portfolio if she simply stuck with her bank and added her insurance money to her current investments. However, this would only work if she didn’t live much longer than age 94 and didn’t have any increased healthcare or nursing costs as she aged. 

I also found that Zoe had a great chance of living comfortably through her whole retirement when her annual investment management costs were reduced by 1% and she withdrew 10% less from her portfolio each year.

Qualifying for Allowance for the Survivor

Knowing that Zoe is a widow with relatively low income, I looked to the Allowance for the Survivor program. I checked to see if there was any way to boost Zoe’s government benefits during the years between age 60 and 64, and reduce the amount she had to withdraw from her own savings over the same period. 

Zoe’s qualifying income was projected to be slightly too high to qualify for the Allowance, but fortunately she also had some unused RRSP room. Making contributions to her RRSP at age 59, 60, and 61 will reduce her qualifying income for those years and result in just over $35,000 in tax-free income she would have otherwise had to withdraw from her savings. 

Deferring Canada Pension Plan and Old Age Security

With a $35,000 boost from government benefits, Zoe had that much less to withdraw from her portfolio. The next thing I looked at was when Zoe should apply for her own Canada Pension Plan (CPP) and Old Age Security (OAS) benefits to see if that decision could reduce her portfolio withdrawals even more. 

Zoe’s income from her survivor benefits was too high for her to qualify for the Guaranteed Income Supplement, and she only had enough RRSP room to qualify for the Allowance. This means that the common strategy of applying for CPP and OAS as early as possible to keep taxable income down and increase income-tested benefits wasn’t going to produce much of a result. 

Deferring benefits as late as they could go, however, did produce a result! Zoe would:

• Wait until age 70 to start collecting CPP and OAS benefits

• Withdraw from her RRSP while she waited 

Resulting in:

• A 45% increase in OAS benefits

• A 36% increase in CPP benefits from age 70 on

This scenario would ultimately reduce the total amount she would have to withdraw from her portfolio over her retirement. 

And - bonus! - these higher benefits at age 70 were actually more than the amount she estimated to be her minimum comfortable standard of living. She could leave the rest of her portfolio alone after age 70, and let it act as a reserve that she will be able to draw against to protect her from spending shocks. 

I tested this scenario in more detail, and found that with lower investment fees and increased government benefits (resulting in the same amount of spending but lower portfolio withdrawals), Zoe’s plan was likely to work. I drafted an annual review strategy to check in with Zoe’s income, spending, and portfolio each year. 

Building Confidence

Zoe’s reaction? She’s delighted with a concrete monthly income that’s substantially more than she thought she’d have. She’s happy to have found an investment manager that communicates regularly and provides the simplest, clearest statements and client education we’ve ever seen... All for less than half of the cost she used to pay each year. And she’s grateful that I planned from the start to review her progress regularly.

She’s not quite as confident as I think she’ll become, though. From my work with similar clients in the past, I think it will still take a few years yet before Zoe truly understands that she didn’t mess up for all those years and is really, actually going to be okay in the future. 

It’s unfortunately common that single women in their 50s come to me doubting their own competence, even in the face of evidence that they’ve done extraordinarily well for themselves despite often very tough circumstances. 

Building these women up is one of my favourite things to do as a planner, and I’d love the opportunity to do the same for you!

Congratulations! You made it to retirement, and are living off of a combination of personal savings, company pension, and government benefits ...and here’s where most of the retirement income planning resources stop, as if retirement is a finish line instead of a milestone! 

Never fear, your neighbourhood design-thinking financial planner is here to pick up where many of the personal finance books left off (with the exception of a notable few, like Fred Vettese’s ). Over the past year, I’ve used Design Thinking to prompt you-centred planning around tough topics like cash flow, taxes, investing, disability as a business owner, estate planning, emergency preparedness, business building, and charitable giving.

I’ve helped you intentionally identify what will make you happy and fulfilled once you stop working, and spent time working through how to prepare your finances for this you-centred retirement. Today, I’m sharing a repeatable annual process for redesigning your retirement income as life, income tax, and investment returns unfold around you. 

Why is this annual process important? Because markets cycle, tax policies change, and your retirement income plan needs to adapt! You may have thirty or forty years of happy, active life ahead, and we want you to spend as little of it as possible worrying about your income, your portfolio, or your taxes. Just like with your furnace, your car, and your cat, a bit of time and money spent on regular maintenance keeps you warm, moving, and...well, whatever it is healthy cats do all day. 

Empathize

As always, step one is to empathize, or collect information about the world around you and your place in it. Start your retirement income plan for the year by asking some questions about what actually happened last year and what you think might happen in this one. Your professional advisory team (which includes your accountant, your portfolio manager, and your financial planner) should be able to help you with this: 

Year behind questions:

• How much did you spend last year? Did you have any new expenses that started or old expenses that stopped?

• How much did your investments earn last year across your total portfolio?

• If you have non-registered investments, what was the split between interest, dividends, realized and unrealized capital gains and losses, and/or return of capital? 

• Did any sources of income start or stop last year? 

• Were you surprised by last year’s tax bill? 

• Did you have any difficulty with your health? Did you find managing your finances more challenging than it used to be?

Year ahead questions:

• How much do you want to spend on regular lifestyle things in the upcoming year? 

• Are there any big purchases or expenses coming up (repairs, vacations)?

• How much will you receive from sources like your pension, annuity, Canada Pension Plan, and Old Age Security benefits? 

• How much do you have remaining in your retirement portfolio? How is it allocated?

• Do you expect to work at all in the upcoming year? How much are you likely to earn, and what does your employer deduct from your paycheque?

• Are there any important deadlines to watch out for coming up? For example: the age 70 deadline to apply for Canada Pension Plan and Old Age Security benefits, the age 71 deadline to convert your Registered Retirement Savings Plan to a Registered Retirement Income Fund, or the age 72 deadline to start withdrawals from your Registered Retirement Income Fund?

Define

I’ve been writing about Design Thinking for a whole year, so by now you probably know the drill: step two is to take what you learned in step one and use it to define the problem you’re solving this year, which is very likely to be some version of this question:

How much money do I need to live comfortably, where should I take it from, are there any strategies I can use to avoid tax or spending surprises this year, and am I still on track to live longer than my income will last?

Although this level of detail every year may sound like overkill, it is essential in those first confusing years of retirement, as you acclimate to spending your nest egg instead of building it. Over time, as you get more comfortable and start to put that first sensitive decade of retirement behind you, you might be able to relax on this routine a bit. In the meantime, here is the general framework: 

• Calculate the difference between what you’ll receive after tax from pensions, annuities, CPP, and/or OAS and how much you expect to spend on your regular lifestyle

• Estimate your tax bill for this year (you can use a free tool like TaxTips.ca if you don’t have a regular accountant). 

• Check your RRSP and TFSA contribution room, as well as any carried forward RRSP contributions that you may not have deducted yet

• Calculate how much you’ll likely be required to withdraw from your RRIF (your RRIF balance as of December 31st is multiplied by an age-based rate prescribed by the government)

• If you have a spouse or common law partner, calculate how much of your qualified pension income you can split between you

• Check the minimum and maximum thresholds for income-tested benefits (like Old Age Security, the Guaranteed Income Supplement, the Allowance, and the Allowance for the Survivor)

• Calculate how much you will need to withdraw from your portfolio to pay your taxes and spend the amount you want

Ideate

If you already have a retirement income plan in place, the ideate stage, otherwise known as the throw spaghetti at the wall without even checking to see if it sticks phase, might not be as necessary for you. Although you and your financial planner (and your accountant too, if you’ve got one) shouldn’t limit yourselves to a past plan, you might be able to avoid much of the ideation mess because you did most of the spaghetti throwing already. 

Retirement income ideation, when done right, is where you might brainstorm strategies like:

• Taking advantage of an unusually high or low income year 

• Crystallizing capital gains or losses

• Charitable donations

• Making changes to your regular spending

• Adjusting your asset allocation

Prototype

Finally, you’ve made it to prototyping! This is where you draft your plan for the coming year, and you write it down to avoid Mr. Confusion, Mrs. Panic, and their terrible, ugly baby: Little Miss Horrible Decisions. 

In your plan for the coming year, you want to make sure that your long-term plans are still being served while you take advantage of short-term tax optimization strategies. For example, you may withdraw more from your RRSP or RRIF than is strictly necessary in order to reduce the account balance before minimum withdrawals start increasing rapidly as you age. 

If it doesn’t already, your retirement income plan should include a cash flow infrastructure that creates ultra-visible boundaries around your desired spending for the year. You need to give yourself permission to spend the amount you’ve determined is safe, while building in an early-warning system that tells you you’re spending more than you wanted to...before it becomes a problem. 

This plan should have your tax payments built into it, either via voluntary withholding on your Canada Pension Plan and Old Age Security benefits, or quarterly installments for those of us who paid more than $3,000 in income tax last year. 

The last - and arguably, most important - thing you need to do in this stage is to explain it to your partner, kids, POA, and/or executor, ideally in writing. Taking the time to articulate your thought process, expectations, and actual experience helps them if you are suddenly incapacitated, and helps them even more if your cognitive abilities start to decline and they want to know when to step in and offer help. You may even want to build a regular cognitive test into your annual conversations with these important people.

Test

The testing phase in this case is really straightforward: live your life! In the first few years of repeating this process annually, you may want to check in at the six month mark (or even quarterly) to note anything that you want to pay attention to or incorporate in next year’s plan. 

Annual retirement income maintenance is one of the best gifts you can give yourself as you move out of the savings life and into the spending life, whatever that may look like for you. If you don’t experience a thrill of nerdy joy in looking at this to-do list every year, and get overwhelmed at the thought of redesigning your retirement income every year, please reach out. I can’t think of anything I’d rather do.

(This article is reposted with the permission of the author. It was originally published here.)

Let me introduce you to my three imaginary friends: Rory, Amy, and Rose. Earning only $35,000 a year at most, each has managed to sock away 5% of that income every year, and by age 67 have each accumulated $210,000 in savings.

At retirement, all three will have the same income: $6,624 in Old Age Security benefits, $9,500 from the Canada Pension Plan, and minimum RRIF withdrawals starting at $9,135 a year*.

For those still counting, Rory, Amy, and Rose each will receive $25,259 and pay $1,562 in income taxes.

Rory and Amy get married. Their combined household income after taxes is now $47,394. Rose is alone, with $23,697 a year. And it is a truth universally acknowledged that the same standard of living is cheaper to buy for a couple than it is for a single person.

Houses cost the same whether one person or two people are buying them, cooking at home for two isn’t twice the cost as cooking at home for one, and a car that gets you from point A to point B won’t cost you double depending on if the passenger seat is occupied or not.

I think we’d all agree that in comparison to Rory and Amy’s $3,949, Rose’s monthly total income of $1,974 is going to be very difficult to live on.

This situation – while technically fair, since for the same amount of savings each person receives the same amount of income – doesn’t strike me as equitable. By treating every individual exactly the same, our retirement programs are either rewarding the choice to create a permanent household with someone else or penalizing the choice not to, depending on which side of the floor you happen to be arguing from.

(It’s here that I’m compelled to state that I don’t have an answer for this that is both fair and equitable, and I doubt anyone else does either.)

So what’s a singleton to do? Shack up for money? Hardly.

The truth is that short of making more money in your working years, retiring later, or marrying for money, there’s not much a singleton can do to bring his or her income in line with a couple of similar means, but forgoing RRSPs altogether in favour of TFSAs might make that income last longer by maximizing income-tested benefits like the Guaranteed Income Supplement.

Normally I’m not one to advocate cut-off-your-nose-to-spite-your-face strategies that reduce one kind of income to increase another, but lower-income singletons (and couples, for that matter) would be well-advised to calculate – at least roughly – the benefit they’re receiving from an up-front tax deduction for RRSP contributions against the reduction in GIS eligibility once those contributions are withdrawn and are counted as part of their income, which in turn has a big impact on how long their own savings will last overall.

Let’s go back to our friend Rose to illustrate my point. Her annual income of $23,697 is too much to qualify for the Guaranteed Income Supplement, even though her Old Age Security benefit isn’t included in the calculation.

If, however, her $9,135 RRIF withdrawal was instead a withdrawal from her TFSA, not only would she pay no income tax, she’d also receive a $3,608 GIS benefit.

Still counting? That means in real income she’ll receive $28,867 annually – or, if we want to compare apples to apples – to get the same amount of income as in the previous example, she’d only need to withdraw $3,965 from her own savings – $5,170 less than if she were withdrawing from a RRIF instead of a TFSA.

The math works for Rory and Amy too, just not as dramatically. Following the same strategy as Rose would allow them to withdraw $3,484 a year less and have the same income as they would if they were withdrawing from RRIFs.

Now, as with any kind of financial advice, this might not apply to you. In fact, if you’re reading a personal finance blog, it might not even be news to you. But it’s worth sitting down and doing the math as it applies to your own situation, and worth telling your friends about.

RRSPs aren’t the only answer for retirement savings, and – in some, particularly for singles – they might even be the wrong answer.

*This is the point at which – if I were a more dramatic woman, that is – I would be shouting “GET THEE TO AN ANNUITY!”