Are you a Canadian living in the U.S. who has saved diligently for retirement, but still worries about spending too much?
One of the most common concerns we hear from retirees is: “What if I run out of money?”
That fear can cause people to spend far less in retirement than necessary. In this video, Bryan Haggard, CFP®, CFA, discusses ways Canadians living in the United States can potentially feel more confident spending in retirement, including:
– Looking at your retirement income instead of just your portfolio balance
– Creating a consistent “retirement paycheck”
– Deciding when to start Social Security, CPP and other retirement benefits
– Coordinating withdrawals from U.S. and Canadian accounts
– Using tax planning to create more after-tax retirement income
– Determining how much you actually want to leave behind
The goal of retirement planning shouldn’t simply be to avoid running out of money. It should also help you confidently use your money to enjoy the retirement you’ve worked so hard to build. If you’re a Canadian living in the United States and wondering how much you can comfortably spend in retirement, we can help.
At RetireMitten, we specialize in helping Canadians in the U.S. coordinate their investments, retirement income, taxes, Social Security, CPP, RRSPs, and other cross-border retirement decisions.
Watch the video here:
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Quick recap
Bryan discussed strategies for Canadians living in the US to confidently spend more in retirement without the fear of running out of money. He explained that focusing on generating income from various sources, such as Social Security, CPP, OAS, pensions, and investment accounts, is more important than reaching a specific portfolio size. Bryan emphasized the importance of creating a consistent “retirement paycheck” to provide spending confidence. He also suggested considering starting retirement benefits earlier to enhance flexibility and enjoyment in early retirement. Bryan highlighted the need for long-term tax planning to minimize taxes over a lifetime and maximize spendable income. Finally, he encouraged retirees to define what a successful retirement looks like for them, whether it’s maximizing spending or leaving an inheritance, to guide their financial planning.
Summary
Canadian Retirement Spending Strategies
Bryan discussed the common fear among Canadian clients living in the US about running out of money in retirement, particularly due to the complexity of managing multiple accounts across different countries. He explained how some retirees become too conservative with their spending, which can lead to unexpected growth in their retirement accounts. Bryan introduced his presentation on strategies to help Canadian retirees feel confident about spending in retirement without worrying about running out of money.
Retirement Income Planning Strategy
Bryan discussed how clients often focus on reaching a specific portfolio value before retirement, but emphasized that the actual retirement income should be the primary focus. He explained that many cross-border retirees receive significant income from multiple sources including Social Security, CPP, OAS, and other benefits, sometimes totaling $4,000-$8,000 per month. Bryan concluded that portfolios should be viewed as tools for funding retirement rather than as goals to be preserved indefinitely.
Retirement Paycheck Strategy
Bryan explained the strategy of creating a “retirement paycheck” to help clients maintain consistent monthly income in retirement similar to their working income. He described how this involves calculating a client’s current net monthly income and designing a withdrawal strategy from retirement accounts and benefits to provide a similar monthly amount in retirement. Bryan emphasized that this approach provides clients with budgeting confidence and “permission to spend” in retirement.
Early Retirement Benefits Strategy
Bryan discussed the strategy of starting retirement benefits, including Social Security, CPP, and OAS, earlier rather than delaying for a higher lifetime benefit. He explained that while delaying benefits might seem optimal for maximizing total lifetime payments, many clients find it more beneficial to receive these benefits earlier to ensure financial security and flexibility in retirement. Bryan emphasized that the goal should be to maximize retirement happiness rather than the total amount received over a lifetime.
Retirement Tax Planning Strategy
Bryan discussed a tax-planning strategy to help clients create more spendable income during retirement. He explained that while taxes may initially decrease in early retirement due to benefits from tax-favored accounts like Social Security and CPP, taxes can later increase significantly when clients exhaust after-tax accounts and must withdraw from tax-advantaged accounts like IRAs and RRSPs. The strategy aims to develop a long-term tax plan that minimizes both current and lifetime tax burdens, allowing clients to retain more of their earned income.
Cross-Border Retirement Planning Approaches
Bryan discussed different approaches to retirement planning, explaining that while some people aim to maximize their estate by dying with more money than they started with, others prefer to spend more during retirement to maximize happiness and leave a reasonable inheritance rather than generational wealth. He emphasized that retirement planning should balance both financial security and lifestyle goals, particularly for Canadians living in the US who need to coordinate retirement accounts across borders. Bryan concluded by inviting listeners to schedule a complimentary consultation at RetireMitten.com to learn more about cross-border financial planning services.