Weekend Reading: Your Retirement Withdrawal Edition

One of the biggest shifts in retirement is learning how to spend your own money without second-guessing every decision. After years of building your portfolio, it can feel strange to wind it down. That’s usually the time when people watch the markets too closely and worry about every dip.

The whole point of retirement is to get your time back. You need to travel, play golf or work on your pickleball spin serve and not refresh the financial news multiple times a day.

A simple system can help take the pressure off. Start with the basics: Hold your risk-appropriate asset allocation ETF at about 85 to 90 percent of your RRSP or RRIF, keep a 10 to 15 percent cash wedge in a HISA ETF to cover short-term withdrawals, and turn off DRIPs so distributions flow naturally into your cash wedge without selling shares.

Withholding taxes and surcharges

If you withdraw from an RRSP, the bank will withhold tax. They withhold 10 percent on withdrawals up to five thousand dollars, 20 percent on withdrawals between five thousand and one and fifteen thousand dollars, and 30 percent on amounts over fifteen thousand dollars.

More important is your average tax rate for the year, because that determines how much tax you actually owe. That’s why some retirees prefer smaller monthly withdrawals, others opt for quarterly withdrawals, and some take one or two larger withdrawals when their average tax rate is likely to be closer to 20 or 30 percent anyway.

Also take withdrawal costs into account. Some institutions still charge fees for RRSP withdrawals, known as partial disenrollment fees. If so, switching to a RRIF may make more sense, as RRIF withdrawals are typically free and there is no withholding tax on the minimum amount (or switching to a platform like Wealthsimple, which doesn’t charge RRSP withdrawal fees).

Quarterly rebalancing

Once the structure is in place, your monthly routine is simple. Sell ​​the amount you need from the HISA ETF, move the money to your checking account and continue with your day. The most important part is the quarterly audit. This is the rule that will help you avoid watching the markets every day.

Choose four dates. March 15, June 15, September 15 and December 15 work well. On those dates only, ask one question: Is your asset allocation ETF up year-over-year?

That just means this: is the price higher today than it was twelve months ago? If the answer is yes, sell enough units to replenish your cash wedge to the 10 to 15 percent target. If the answer is no, do nothing and check again next quarter.

Why use year-to-year instead of year-to-date? Year-to-date changes reset every January 1 and can give a false sense of recovery. A portfolio may be slightly positive in March this year, even if it is still well below the level of a year earlier. Year over year is a better measure of whether the market has actually recovered and can support a small sale to replenish your cash wedge.

Rebalancing in practice

Now look at how this works in practice. If you had retired at the end of 2024 with 90 percent VGRO and 10 percent CASH, you would have been back in balance in March 2025, because VGRO was essentially stable this year, but up about 12 percent from March 2024.

Even after the short-lived rate cut, VGRO was still up about 11 percent year-over-year in June 2025, which would lead to a new replenishment.

Compare that to the much tougher bear market of 2022. If you retired on December 31, 2021, VGRO fell more than 17 percent between January and the October bottom. Actually, you would have rebalanced in March because it was slightly positive year after year, but after that the signals would have all been negative.

In June, the VGRO fell by approximately 12 percent year-on-year. In September it fell by about 13 percent. In December it fell by about 11 percent. In March 2023 still a decrease of about 7 percent. You wouldn’t have replenished your cash wedge until June 2023, when VGRO finally turned positive again year after year. Your cash wedge and ETF distributions kept you from being forced to sell in a recession for about fifteen months.

Remember, your 10-15% cash wedge is designed to give you 18-24 months of safe spending without having to sell stocks during a down market.

This cash wedge + monthly withdrawal + quarterly rebalancing approach isn’t too complicated. It’s not predictive. It simply gives you a calm, structured framework so that you can actually spend your time enjoying your retirement, rather than worrying about what the markets are doing on a daily or weekly basis.

This week’s summary:

My last weekend talk looked at the concentration of the seven great stocks and how to diversify away from technology and AI without market timing.

Before you fire your parents’ advisor and start building their portfolio in low-cost ETFs, read this first.

I then explored the myth of the oversized RRSP promoted by social media influencers. Nonsense.

Finally, I looked at the annuity puzzle and why Canadians tend to avoid this misunderstood retirement income stream.

Promo of the week:

I mentioned Wealthsimple’s new Apple promotion with some hesitation because, for me, I’d rather have cash than a new iPhone or MacBook.

But many of you feel differently and were excited because you NEEDED a new phone or computer. Hey, you do.

Here are the details on Wealthsimple’s latest deposit/transfer promotion:

I get it. If you’re looking for a new iPhone 17, it starts at $1,129. And depending on the MacBook, you’ll pay at least $1,299.

Please note that when transferring accounts from one institution to another, keep my Las Vegas analogy in mind:

“What happens in your registered account stays in your registered account. You just move to a cheaper hotel with better amenities. You’re still in Vegas.”

This applies to all registered accounts (RRSP, RRIF, LIRA, LIF, TFSA, RESP, etc.).

Open an account with Wealthsimple, open the appropriate account type(s), initiate the transfer(s), and Wealthsimple’s back office will contact your existing bank’s back office to request the transfer. This is a federally regulated event that takes place every day, and no divorce discussions are required at all.

Weekend reading:

Many thanks to Lora Grady of the Toronto Star for including my comments in hers step-by-step guide to building a $1 million portfolio.

A must-read post from Nick Maggiulli on investing at record highs:

“Whether you invest in US stocks, international stocks, gold or Bitcoin, the evidence suggests that record highs should not change your regular investment plan.”

What is the purpose of decumulation after retirement? Michael James says yes maximize his safe spending level.

Here’s how retirees can manage their money quarterly tax payments to the CRA.

A Wealth of Common Sense blogger Ben Carlson on why Bull markets make you feel smarter than you really areand bear markets make you feel dumber than you really are.

PWL Capital’s Ben Felix covers ‘Investing 101’: why investing matters, what stocks and bonds are, what a sensible approach to investing looks like, and what tools you should consider to implement these ideas:

Planner Shannon Lee Simmons, who only provides advice, explains the growth gap between teenagers and the concept of money.

For small business owners: when to take salary versus dividends.

The politics of aged care reform are changing, and a key driver is its continuation generosity from OAS to retired couples with six-figure incomes (each).

Finally, filmmaker Norman Jewison had always planned to leave his $30 million estate to his three children. Then, in a will signed two months before his death, he gave most of his fortune to his second wife.

Have a nice weekend, everyone!