Ingrid, a 68-year-old retiree, finds herself in a financial dilemma. She wants to renovate her $1.5 million home in British Columbia, a project estimated at $600,000, while ensuring her investment portfolio generates $80,000 annually after taxes for the next 27 years. Her monthly pre-tax income includes an employer pension of $1,350, Canada Pension Plan (CPP) of $1,385, and Old Age Security (OAS) of $650, with current expenses slightly over $2,700. She withdraws $2,000 monthly pre-tax from her RRIF to cover larger annual expenses.
Ingrid’s investment holdings amount to $657,000 in an RRSP, $229,000 in a RRIF, $295,000 in a TFSA, and $1.2 million in non-registered accounts — predominantly in equities. Eliott Einarson, a retirement planner, recommends a comprehensive retirement plan to coordinate income streams efficiently and avoid OAS clawbacks, with strategies like adjusting asset allocations to minimize taxable income.
Einarson believes Ingrid can sustain her lifestyle and fund her renovations with strategic planning, ensuring tax efficiency and flexibility, while maintaining a balanced asset allocation with modest returns. A detailed retirement plan will provide Ingrid with the confidence to proceed with her home renovation without undue financial stress.