It is widely thought that the advisor-client relationship is pillared around the wealth accumulation stage of the investment cycle. Although this represents a large portion of the client experience, many clients spend 20 or more years in retirement which is why it is just as important to think of smart strategies for withdrawing the money you worked so hard to earn.

Naturally, withdrawing funds is a significantly different process than the accumulation stage. There is a greater focus on spending instead of saving, as well as trying to determine RRIF payments, pension withdrawals, CPP/OAS payments, taxes owing and more. When a client is approaching retirement, they are usually faced with many different dilemma’s – do they withdraw funds from non-registered accounts first? Do they take the minimum or maximum amounts from their RRIF plans? Do they drawdown their TFSA’S? The answer to all these questions is simple: it depends entirely on the client and their individual situations. To achieve optimal results, it is best to create a “withdrawal hierarchy” that will determine the best possible method for a client to generate their desired retirement income.

Consider CPP and OAS
If you are approaching retirement with a smaller than anticipated retirement portfolio, it may not be a bad decision to consider delaying the receipt of CPP and OAS payments. Waiting until age 70 will result in a 42% increase in CPP and a 36% increase in OAS.

Consider using your TFSA
If you are heading into retirement in a very high tax bracket and are worried about triggering large capital gains, it might be best to withdraw money from your TFSA. This will ensure you are receiving tax-free income and sheltering your capital gains from non-registered accounts to a later date whereby you anticipate being in a lower income bracket.

Keep healthcare costs in mind
Consider the possibility that healthcare costs will increase with age. It is imperative that enough money is kept aside as an emergency fund in case of unforeseen medical expenses in the event that you do not have insurance coverage. Whenever possible, it is strongly recommended to carry over insurance coverage from your employer into your retirement years. The premiums on the coverage could be costly, but it is always your best bet to safeguard you from expensive medical bills.

Consider selling losing securities
This may seem like an idea contrary to popular opinion, but a losing stock in your portfolio may warrant being sold simply to take advantage of the capital loss. If you estimate having a large tax bill during one of your retirement years, it could be a wise idea to offload one of your losing positions and use the loss to offset some of the taxes you owe. This is particularly beneficial if you are in a high tax bracket.