Most clients arrive with a savings target. What they actually need is an income plan built to last
When a client sits down across from me with a savings target in mind, the first thing I do is slow the conversation down. Before we discuss what they have, I need to understand what they actually need not the conservative version, not the number a plan was originally built on, but the real picture. What does retirement cost for this specific person? What travel have they been deferring? How do they want to show up for their grandchildren? What kind of financial support do they want to provide their adult children while they can still enjoy giving it?
The number in the portfolio tells me what a client has built. It tells me almost nothing about whether it will hold up. I have had clients with $1 million who were financially secure. I have had clients with $3 million who were not because of their expectations, their lifestyle and how things were originally structured. Portfolio value matters. But it does not give us the income plan that needs to match where the client actually wants to live.
Retirement is not a number. It is a co-ordinated plan. The skills that help someone accumulate wealth over a 35-year career are not necessarily the same skills required to convert that wealth into reliable retirement income. Retirement planning is the transition from accumulation to distribution.
Two clients with identical account balances can have completely different outcomes depending on how they spend, how they are taxed, when they draw income, and how resilient their framework is when markets do not co-operate. What most people underestimate is variability. Spending evolves. Markets move. Tax laws change. Health impacts uproot what we were expecting. A retirement income plan must account for all of that. It must work not only when both spouses are healthy and everything goes according to plan, but also when life inevitably changes.
The withdrawal sequencing mistake that quietly erodes wealth
One of the first things I ask every prospective client for is a copy of their tax return. You would be surprised how often someone tells me their previous advisor never asked for it. But how can you make an informed long-term decision for a client without understanding how tax integrates into the picture? Proactive tax planning is not optional in retirement. It is essential.
The mistake I see most often is treating all accounts interchangeably. Clients draw from everything at once because it feels balanced pulling from their RRSP, their Tax-Free Savings Account, their non-registered accounts and, where applicable, their corporation. But account types differ fundamentally in tax treatment, and the real value of every dollar is not the same after taxes. An RRSP withdrawal is fully taxable and stacks onto the highest marginal rate. A dollar from a capital gain is taxed on only half the gain. Money withdrawn from a TFSA does not appear on the return at all. Treating these as equivalent quietly erodes significant wealth across a 25-year-plus retirement.
The window between retirement and the point where RRIF minimums begin is the most consistently underused planning opportunity I see. CPP and OAS can both be deferred to age 70, keeping taxable income deliberately low in the interim. That combination allows us to draw down registered assets on our own terms, at lower marginal rates, before the government sets the schedule. For clients who wait, the consequence is tax stacking, by the mid-70s, mandatory RRIF withdrawals, CPP and OAS, and other income sources converge simultaneously, often pushing effective tax rates far higher than people expect. That outcome is largely preventable, but only with a plan built years in advance.
Clients almost always push back at first. The instinct to defer tax feels rational. But deferral is not elimination — it is about whether that tax happens on your terms or the government's. For clients with a corporation, a rental property or significant non-registered assets, this pre-RRIF window is also the ideal time to trigger taxable income strategically, when the cost is far lower.
Planning around how clients actually spend in retirement
Conventional retirement projections assume a straight line: an inflation-adjusted increase in spending, year after year, forever. That bar graph looks excellent on a spreadsheet. It has no resemblance to what actually happens in a client's life.
In the early years of retirement, clients are more active. Travel, experiences, supporting family, home renovations while energy and health allow. Retirees regularly spend more than they planned — the trip they had been deferring, the golf club membership, a boat, things not fully factored into the original projection. In the middle years, costs often taper. Clients slow down, health may be a factor, the urge to travel diminishes. And then in the later chapter, costs can rise again: private care, home modifications, supporting a spouse through a health transition.
The flat-line model systematically underestimates the years that matter most, at both ends of the curve. A plan built around that model tends to produce one of two outcomes. Clients hold back unnecessarily, cautious of every dollar, never quite feeling permission to enjoy what they built. Or they spend freely in the early years, the account looks large, and then when later costs arrive, the assets simply are not there. I have watched clients work their entire lives toward this chapter and then spend the first decade of retirement worried about every dollar they spend. That is a failure of planning, not a failure of saving.
Building an income strategy around real spending behavior means front-loading income in the early years, bridging the gap before CPP and OAS come on stream, and ensuring enough accessible capital to support the life the client wants to live. It also means protecting the plan in those first five years of retirement , when a significant market decline combined with ongoing withdrawals can do lasting damage.
The income floor most advisors are leaving on the table
I think about guaranteed income as the foundation of a retirement income design, not as a supplement to the portfolio. When a client has a reliable income floor that covers essential needs regardless of what markets are doing, something important happens: the portfolio is liberated. It can be invested for long-term growth without simultaneously functioning as a survival mechanism.
CPP and OAS deferral is probably the most consistently under-leveraged decision in Canadian retirement planning. A healthy client who defers both CPP and OAS to age 70 receives an increase of 42 per cent and 36 per cent respectively. Both are indexed for life. Together, they represent a guaranteed income stream with no market risk whatsoever. The resistance is almost always psychological. Drawing from RRSPs while deferring CPP feels to clients like going backward. The reframe is simple: you are not depleting the portfolio, you are purchasing a larger guaranteed income for life. Using the portfolio now and deferring those government sources builds a stronger foundation underneath everything else.
Beyond the income floor, how the portfolio is structured matters enormously. Retirees rarely fail because markets decline. They fail because they are forced to sell growth assets during a downturn to fund their day-to-day expenses. The approach I walk every client through is what I call the strategic income bucket: a minimum of five years of income needs held in stable, accessible assets outside of major market exposure. The remaining capital is invested for the long term. This protects the plan mathematically and protects the client behaviorally. When someone can see that their income is covered for the next five years regardless of market conditions, they stay invested through volatility with confidence.
The goal is always a structure that pairs reliable income with flexible capital because needs change, priorities shift, and a good plan should be able to adapt without forcing difficult trade-offs. Every retirement income plan is different. The right strategy depends on the accounts you own, your tax situation, your pension income, your health, your family goals, and how you actually want to live. The best retirement income designs are not optimized for perfect conditions. They are durable enough to survive imperfect ones.
Evan Riddell, CFP®, CIM®, is a nationally recognized financial planner based in Victoria, BC, specializing in helping successful Canadians approach and transition into retirement with clarity, structure, and confidence.
www.evanriddell.com
Disclaimer:
The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fund.
