September 3, 2019

How you draw down your retirement savings could save you thousands — this program proves it

Retirees wanting to maximize their retirement income frequently face a host of complex scenarios when trying to find the right timing and income optimization method for their unique situation. Often, there is a lack of information and tools available to people to help them determine the best plan for them. One new tool is called “Cascades.” It helps determine when to draw/spend and delegate money in the most tax efficient way. The program also shows a year by year chart of where and when money should be spent. In the example, it determined that the couple’s estate would be a few hundred thousand larger if they first drew on non-registered funds, then registered, and finally from their TFSA account.

Key Takeaways:

  • There may be as many as 26 distinct sources of income a retired couple may encounter.
  • It’s not as simple as merely maximizing each stream of income because tax brackets, clawbacks of government benefits and other considerations all interact in complex ways.
  • The emphasis is on finding the “winning strategy,” defined as providing the highest estate value, net of taxes and fees, at the expected life expectancy.

“Once it’s time to start using your retirement savings, it can be tricky to figure out what money to take out when and from where.”

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