This is a pension plan

Most people who contact me aren’t necessarily trying to retire early or do anything particularly smart with their money. They’ve worked a long time, saved steadily, and are starting to wonder if this is the point where work becomes optional.

Dan and Elizabeth are a good example of this.

They live in Calgary. Dan is 62 and works in sales, earning around $145,000 a year, while Elizabeth is 60 and works in the public sector, earning $88,000 and is a member of the Local Authorities Pension Plan. They have no debt, their house is paid off and they have spent decades doing what most people have to do: save regularly, avoid lifestyle and continue to work.

On paper it looks fine, but in their heads they still feel anxious.

Their question is simple enough. Can we retire at the end of 2026?

What makes this question difficult isn’t the math. It’s the uncertainty that comes with giving up paychecks after forty years of receiving them and replacing something predictable with something that feels much less certain.

What they came in with

Dan and Elizabeth have approximately $1.18 million in financial assets, spread across savings accounts, TFSAs, RRSPs and a LIRA, along with a paid-off house worth approximately $675,000. They don’t have a balance on a line of credit and they’re not trying to stretch things out or squeeze every last dollar out of their retirement.

Before we get into forecasting or retirement income, it helps to slow things down a bit and look at what they’re actually working with at the start.

Opening balance at retirement (end of 2026)

For simplicity, the figures have been rounded.

Elizabeth will receive a fixed pension from LAPP once she retires, while Dan will have no pension at all, meaning much of their retirement planning revolves around coordinating withdrawals and timing government benefits in a way that feels manageable rather than stressful.

This is the point where people often say, “That sounds like enough,” but that’s rarely what it feels like when you’re the one about to quit your job and replace two steady paychecks with something that depends on markets, withdrawal decisions, and a whole lot of uncertainties.

That gap between what seems reasonable on paper and what feels emotionally safe is usually what drives people to it.

The questions below the question

Once we start talking, the questions come out quickly and often all at once.

Can we really afford to retire this year, or are we going to push it? How much can we safely spend without fear of running out later? What if one or both of us lives into our 90s? What happens if markets struggle early on? Which accounts should we draw from first? Should we cut back? When should we take CPP and OAS? What should Elizabeth do with her survivorship option? What happens to Dan’s LIRA when he retires?

None of these questions are unusual. They’re the same ones I hear every week, and they’re rarely about getting better returns or finding the perfect strategy. Most of the time, people just want to know if the plan they have in mind is actually reasonable.

Where I always start

Before I get into the investment structure or tax planning, I want to answer one thing first: whether retirement is even possible under assumptions that feel realistic.

So we assume they both retire at the end of 2026 and never earn another dollar of earned income.

From there, we build the plan using assumptions that are intentionally conservative. Inflation persists, investment returns are modest, and they both live to be 95 years old. We assume they will continue to live in their current home or a home of comparable value, and we do not rely on inheritances or future windfalls to make the numbers work.

If a plan holds up under those circumstances, it usually holds up much better in real life.

How much they want to spend

Dan and Elizabeth currently spend approximately $84,000 per year after taxes, which supports their normal lifestyle. Plus, they have a handful of one-time expenses they want to fund in the early years of retirement, including a kitchen and bathroom renovation, a retirement trip to Italy, future gifts to help their children with down payments, and vehicle replacements over time.

Instead of pretending these expenses won’t happen or treating them as optional mistakes, we integrate them directly into the projections so that the plan reflects the life they actually want to live.

Turn expenses into something useful

Rather than trying to arrive at one perfect spending figure, I prefer to think in margins that give people flexibility without creating fear.

There’s a lower level of spending that feels comfortable and familiar, and there’s a higher level that still seems sustainable in the long run.

In their case, the plan supports expenses of roughly $84,000 per year, plus their planned one-time expenses in the first five years after retirement, and up to $108,000 per year later in retirement as pensions and government benefits come online.

The $108,000 later is intended as a catch-all for whatever the next round of one-time expenses will be (home renovations or repairs, bucket list trips, financial gifts to children or future grandchildren, etc.)

Those expenses are indexed to inflation (2.1%) until age 80 and then increase until age 95 at inflation minus 1% to reflect the slow, no-go phases.

Having a scope is important because it provides context. They no longer have to guess whether a holiday or a renovation is too much, because they can see where the floor and ceiling are and make decisions within that.

What the projections show

When the numbers are run against these assumptions, the plan holds together in a way that feels reassuring rather than uncertain and fragile.

They can retire at the end of 2026, spend what they want to spend and still have flexibility later in life. The projections are not dependent on strong markets every year or an unusually short lifespan, and if returns are lower than expected or last longer than average, the plan still makes sense.

That’s usually the moment when people start to breathe a little easier, not because the future is guaranteed, but because they see that the plan won’t fall apart if something goes slightly off script.

How the income manifests itself when you retire

In the early years, income comes from a combination of Elizabeth’s LAPP pension and withdrawals from registered accounts, while CPP and OAS are deliberately deferred until age 70 for both.

This is not done for theoretical reasons. Between retirement and age 70, taxable income is lower and there is an opportunity to draw more efficiently from RRSPs and LIFs. By the time CPP and OAS kick in, the guaranteed income is higher and the reliance on portfolio withdrawals is lower, making later life feel much more stable.

The goal is to manage their various sources of income to maximize desired expenses and minimize lifetime taxes.

Investment structure

Their investments are currently held in high-fee mutual funds (the ubiquitous RBC Select Growth fund), which will eat into their long-term returns. Indeed, a $1 million portfolio with a 2% MER costs them $20,000 per year in fees. That’s their retirement travel budget!

Not to mention that the bank branch representative has changed three times in the last five years, and they barely got a phone call once a year during RRSP season, let alone a good retirement plan to answer their burning questions and show they were on the right track.

The recommendation is to move to a self-driving platform and use a low-cost asset allocation ETF as a core investment, combined with a modest cash reserve in retirement accounts to fund short-term withdrawals. This keeps costs down, simplifies decision-making, and makes the plan easier to live with for decades.

An asset allocation ETF costs just under 0.20%, or less than $2,000 per year for the same portfolio of global stocks and bonds – just kept in an ETF wrapper rather than a bank-managed mutual fund.

Which accounts are used first?

There is no perfect withdrawal order, but there is a sensible order that fits the way taxes and government benefits work.

Registered accounts are withdrawn earlier to take advantage of lower tax years, CPP and OAS are deferred to increase lifetime income, and TFSAs are held for as long as possible and used later as a source of flexibility.

A nice margin of safety in your TFSA gives you the flexibility to absorb any spending shocks, health expenses, or early giving opportunities in a tax-free manner.

Should they cut back?

No.

Many downsizing plans look attractive in theory, but are disappointing in practice when transaction costs, moving costs and alternative housing are taken into account. This plan doesn’t require downsizing to work in retirement, meaning any future move becomes a choice rather than a necessity.

What about an inheritance?

Dan and Elizabeth said they might one day receive a small inheritance, but we’re not building the plan around that.

If they want to acknowledge it, we can assume that the youngest parent lives to be 95, take whatever number seems realistic and halve it. In this case, the plan works without it (and there is nothing to worry about), so it is completely ignored.

Bringing it together

For Dan and Elizabeth, seeing the numbers this way makes the decision feel much less abstract and much more manageable.

It brings together their pensions, investments and government benefits into something they can actually understand and imagine