Sure, accumulating and building wealth can be fun and addictive. As you see your investment portfolio grow and see compounding work magic on your retirement nest egg, you may wonder though, what happens when I start withdrawing money from my portfolio? Will I run out? When should I actually start withdrawing money from my investment portfolio? Here is a detailed Cashflow and Portfolios Retirement Projections Review to help you with these burning questions.
If you’ve ever wondered how much you will need to withdraw from your portfolio, for example, to prevent mandatory RRIF withdrawals and OAS clawback, a new product called the Retirement Projections Report may be useful for you.
This review will go over why a retirement projection might be useful for you, what retirement calculators in Canada currently exist (there is a paucity), what the Cashflow and Portfolios Retirement projection is all about and what it looks like.
Table of Contents
Why Is a Retirement Projection Helpful?
Those of you interested in Canadian personal finance and wealth building are probably pretty adept by now with the accumulation phase of financial independence. It boils down to straightforward steps such as spend less than you earn, avoid lifestyle inflation, and invest the rest with a dollar cost averaging strategy (if that works for you) in low cost index funds or dividend growth stocks.
However, when it comes to the retirement drawdown phase of financial independence retire early and considerations related to a sustainable portfolio (will it last?), you might feel a little more uneasy about what the next steps are.
Some of my own questions are how to be most tax efficient so that you don’t get your OAS completely clawed away (if it still exists at that time for Canadians), and how much can you reasonably withdraw from your portfolio without running out of money.
If you know that the 4% withdrawal rate won’t work for you, and you have any concerns about the longevity of your portfolio, what would your retirement projections look like?
Psychologically it doesn’t feel good not seeing your retirement nest egg growing and instead you see it shrinking (I know I felt this way when I had limited parental leave income). It would be beneficial to calculate projections on different drawdown scenarios so as to preserve your wealth from too much of the CRA’s grip and from estate taxes.
Retirement Calculators in Canada
Currently there are limited retirement calculators in Canada, the information they share with you help you indicate whether you are on track for retirement without factoring important individual things like OAS, or CPP, or defined benefit pension even.
After diligently inputting your current numbers such as the balance of your TFSA, RRSP, and non-registered accounts, you just get a blanket statement like “yes you are on track for retirement by age 50” without much guidance on exactly HOW to drawdown your portfolio or how much to take out each year.
This is where the comprehensive Cashflow and Portfolio Retirement Projections come in.
Cashflow and Portfolios Retirement Projections
Cashflow and Portfolios is a new Canadian personal finance blog founded by familiar faces, Mark from My Own Advisor and Joe from Million Dollar Journey (the OG Canadian personal finance blog fame who achieved an impressive million dollar net worth at 36).
They are both in their 40’s and manage 7 figures of their own investment portfolio…so essentially, they are eating their own cooking and essentially, ‘walk the talk’.
Mark and Joe created Cashflows & Portfolios since they wanted to develop a site geared towards aspiring or current Do-It-Yourself (DIY) investors, with the beginning to end in mind.
That DIY investing journey boils down to how to understand and manage your cash flow; how best to invest that cash flow for wealth building, then onto using that nest egg to fund the next phase of your life – whether it is early retirement or retirement at a traditional age.
They also wanted to share their knowledge about retirement drawdown plans. So beyond their free case studies you can read on their site – this is where their Cashflows & Portfolios Retirement Projections services come in. With their services, you can get your personalized, unique, individual, and customized retirement projections report so you can know with confidence where you stand with your retirement income plans.
The projections reports they deliver to you come from professional financial planning software used in the financial industry, software they use themselves for their own retirement income and cashflow planning needs.
According to Cashflows & Portfolios, most fee-only planners in Canada typically charge between $1,500 and upwards of $8,000 for a detailed, personalized financial plan and investment advice.
Or to get a financial projection or plan you may be paying an advisor at least 1% of your investment portfolio annually – on a $1,000,000 portfolio that’s $10,000 per year in commissions.
Many DIY investors may feel comfortable with their investing (plunking your money in an all in one ETF is pretty much a no brainer for 0.25% management fee) but do not feel comfortable with their retirement withdrawal plan. Understandably so because it is more complicated.
There are RRIFs, OAS, CPP to factor in and our frenemy, taxes!
With the Cashflows & Portfolios site and services, Mark and Joe take your inputs, your assumptions, and run the retirement projections report with scenarios for you in a succinct PDF.
As DIY investors, Mark and Joe do not (and will not) offer any financial advice.
Instead, just like their blogs such as My Own Advisor for the last 11+ years or on the new Cashflows & Portfolios site – they offer their personal take and experiences. They are happy to share their journey, what’s has worked for them, what they are improving upon, and provide unbiased and unfiltered takes about various financial services or products. A recent example of that is the Longevity Pension Fund that you can read about here.
What I really like about their service is that they take your personalized questions and concerns about retirement and provide answers for you from trusted sources. Their work costs a fraction of what some financial plans cost (with advice) because their only concern is an accurate, relevant report with your information – not charging for advice, not chasing your assets under management, nor charging you additional fees for extra work.
After you get your personal report, you can then use that information as a guide for any additional retirement planning, like estate planning.
Cashflow and Portfolios Membership Options
How much does Cashflow and Portfolios Retirement Projection Report cost?
For pricing on their services, you can just contact them.
They are happy to outline their report options to you (hint: it is much less than $1,500) and what’s involved including any limitations, such as the reminders about no financial advice.
I asked them a some questions before my report (like how to avoid OAS clawback and minimize taxes) and they answered everything clearly and promptly.
cashflow and portfolios Retirement Projections Review
Cashflow and Portfolios were kind enough to provide a retirement projections report for me to review their services.
Here’s my review.
Cashflow and Portfolios recommend that you do a Projection with a spouse for more accuracy and calculation of optimized tax opportunities that you can have as a couple, but in this case since we have joint and separate finances, I did my own projection and did not include any of our joint assets.
The on boarding process is straight forward. There was a form that I filled out online (your data is encrypted, and privacy is protected, and your data is not shared with others unless they have your consent). There is a waiver that reinforces the upcoming report will be for personal educational and illustrative purposes only, and that you could opt out any time.
The questions in the form which included things like:
- Savings Account Balance
- Non-Registered Investments Account Balance
- TFSA Balance (and asset allocation)
- RRSP Balance (and asset allocation)
- Liabilities like a mortgage
- Your intended retirement age
- The age you plan to take CPP and the estimated amount you will receive
After you complete your form, they will process your data, calculate the projections, and provide a detailed report to you. You will receive your Cashflow and Portfolios Retirement Projections report within 5-10 business days.
The report was 20 pages long for me and they kindly provided a few projections given my ambiguous retirement age.
One projection was to continue my RRSP and TFSA contributions, retire at age 55 and have an estate value of almost $0 when I am 100, basically, live it up and die broke. This scenario is essentially a maximum spend projection. I was very pleased to see that annually I could spend in the range of $82,000 and $113,000 after-tax!
I am not planning to do that though 😉
Another scenario was to retire at age 48, withdraw from my RRSP first to zero before the mandatory RRIF withdrawal age. This way, I could minimize any potential OAS clawbacks. This scenario showed that my OAS should last until age 98 without being completely clawed back, with a healthy maximum spend per year between $58,000 and $72,000 per year.
Withdrawing from my non-registered first, then RRSP, then TFSA, results in OAS lasting until age 84 but with a slightly larger estate (due to RRSP compounding longer).
It was very interesting to see the summary of the scenario calcuations.
What I liked about the report was the care taken with any assumptions.
I was worried about what might have been used for future returns or inflation.
It listed assumptions such as the inflation rate, the default rate of return for equities, my age of retirement, CPP start age, and OAS start age in simple tables that were everything I wanted and also aligned with those outlined for 2021 from the FP Canada Standards Council.
Then, the report reviews the net worth in nominal dollars up to age 100.
Then there is a report on after tax dollar spending shown in nominal dollars up to age 100.
Since I’m quite a visual person, one of my favourite charts that I find quite useful is the “Sources of Income” page where you can see the current source of income (your current age) and the sources of expected income once you start your retirement (recommended for optimal tax efficiency).
In case you’re wondering about the blanked out area of “Employment Income”, I blocked out my income in the picture below. Sadly, my employment income is not $200,000 and up 😉
For example, drawing down the RRSP would make sense for me if I wanted to retire at age 48 and I want to keep the Old Age Security (or at least get some of it). Then at age 55 my Defined Benefit Pension would kick in, at age 60 CPP would kick in, and age 65, OAS would kick in. All of these would be layered together.
The meat and potatoes of the report is the Cashflow Summary and Income Details section.
First there’s a table of Net Worth Projections with the assumptions of inflation and rate of return on investments.
This was fascinating seeing the numbers and it included the plan of withdrawing the RRSP at age 48 should I want to retire at that age.
Interestingly, (if the TFSA still exists then) I will have a $12,000,000 TFSA when I am 100 in nominal dollars (if I am still alive by then). Wowzers! Haha 🙂
Then, the most valuable part of the Cashflow and Portfolio Projections Report is the Cash Flow Summary.
This ‘blueprint’ tells you how much to withdraw and from what asset to withdraw it from, and how much inflow you have from incomes like CPP, OAS, and a defined benefit pension plan. It also shows you your marginal tax rate and your effective tax rate.
Here’s an example of the cash flow in and outs when I am 80 and 81. The numbers in purple brackets are how much to withdraw.
This is what a full Cash Flow table looks like for a sample projection from Cashflow and Portfolios ending at age 75 (fictional individual).
Another important part of the report is the Income Details. This area shows where your income comes from at a particular age and more importantly the OAS clawback amount and a particular age.
Many retirees are worried about not being eligible for the Old Age Security pension and if you have high enough income, it will be eliminated for the following year.
Here is another example of Income Details from a fictional projection:
For a very reasonable price you can get peace of mind and feel empowered knowing the best way to draw down your portfolio in order to preserve your estate (if that’s what you want), maximize government benefits like OAS, and minimize taxes paid.
Also, you can pick the mind of two of the most knowledgeable Canadian personal finance bloggers for their unbiased takes on how they are preparing for early retirement themselves.
I think that this is a service that is a great unmet need across Canada for those nearing retirement, planning years in advance of retirement, or even those who are currently in retirement and want to optimize their withdrawals from their retirement portfolio.
This is especially a needed service for those who have a DIY portfolio and DIY invest without access to a fancy financial advisor or financial planner.
When you sign up for a projection service, you also have a 1-year access to the Member’s Forum they created where you can ask financial questions, ask about new products, or get a personalized take from Mark and Joe about anything.
Finally, they have a 100% no-risk money back guarantee without a time limit, so if for any reason you are not satisfied, you can get your money back.
What If Something Changes WIth your Financial Situation?
The founders of Cashflow and Portfolios believe that an updated report is helpful if there are significant changes to your financial situation, like an unanticipated inheritance or a large purchase.
They offer a 50% discount off any current list price for future retirement projection reports just for repeat clients.
Personally, I think this would be a great idea for those who want retirement income and cashflow planning peace of mind, key aspects to a happy retirement.
That’s my review of the Cashflow and Portfolios Retirement Projections Service.
Hope you found this review helpful.
Do you have a strategy for asset de-accumulation and your investment portfolio drawdown plans?
If so, what are they?
What is your Cashflow and Portfolios Retirement Projection Review?
You may also be interested in:
- Average savings by age in Canada
- Retirement Income for Life book review
- Buying back pension: Is it worth it?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.