by Pam Mundell, CFP, CLU, CHS

Create sustainable income for life.

You’ve worked hard during your earning years to diligently set aside money each and every year for your retirement.The nest egg is looking big and healthy and now it’s time to convert all of your financial assets into a sustainable retirement income stream.There can be no mistakes. Now that you are no longer earning income you may not have the opportunity to recover from any negative financial decisions.

Tip One – Create and maintain an effective budget

Figure out exactly how much after tax monthly income you need to support your lifestyles needs. Start with the fixed expenses and know the basic income you need to support yourself and then factor in ‘lifestyle wants’ to get a clear understanding of what you want and need in retirement. If you are in a spousal relationship than this is a joint venture. One partner unwilling to co-operate or participate in this vital function creates an unfair burden on the other partner.

Tip Two – Understand the Canada Pension Plan

The Canada Pension Plan (CPP) is the foundation of our Canadian retirement income program. Every employee and employer pays into this plan to provide a sustainable retirement income for employees. How to extract the most income from this plan takes understanding and planning. The full pension is paid when a contributor reaches the age of 65. You can choose to take your CPP as early as 60 years of age and as late as 70 years of age. If you choose to take your CPP at 60 you will lose 36 per cent of your pension income and this reduction of 36 per cent will continue for the rest of your life. If you choose to take your CPP later at 70 years of age you will receive an extra 42 per cent of pension income and this enhanced income will continue for the rest of your life. The CPP also has survivor and dependant provisions when the contributor dies. If you have a spouse your CPP can provide a survivor income of 60 percent of your CPP benefit up to the maximum pension for the year. So, if both you and your spouse are receiving the maximum CPP benefit and one of you dies the remaining spouse would not receive the additional 60 per cent survivor pension because she/he would already have reached the maximum pension.

Tip Three – Structure a tax efficient retirement income stream

As you approach retirement you maybe entitled to receive income from many different sources. An employer sponsored pension plan, RRSP or RRIF income, your own private corporation, perhaps you owned a business and the successor is paying you income for a period of time in your retirement, CPP, Old Age Security (OAS), Tax Free Savings Account (TFSA), GICs, individual stocks or bonds, a mutual fund portfolio, an annuity from a life insurance company or segregated funds. Each type of income, investment or financial asset is taxed differently during the accumulation stage and also when you finally start taking income from each source. Seek the help and guidance of a trusted tax professional and/or financial planner to structure a tax efficient retirement income stream.

Tip Four – Consider your estate plan

Also for consideration, is how each of your financial assets, pension and income streams pass to a spouse or children and/or grandchildren. A divorced or widowed retiree with children would have a different set of estate planning priorities than a retiree with a spouse, either common law or legally married. Consider if you would rather make the government of Canada the beneficiary of your estate or your children and/or grandchildren or a favourite charity. Estate planning now could ensure your heirs and charities receive their fair share.

Tip Five – Revisit your asset allocation

Low interest rates make for low income rates. Federal bonds, provincial bonds, and GICs are at close to historic lows. Consider swapping out some of your low risk fixed income investments for more moderate risk investments. Consider dividend income paying stocks, mutual funds or segregated funds. Dividend segregated funds issued by life insurance companies that offer guarantees may provide better rates of return with a modest increase in risk. Take the time to structure an effective asset allocation plan that takes into consideration your unique set of financial circumstances and risk tolerance. Enlist the help of a trusted advisor to work through this very important function.

Tip Six – Don’t underestimate health care costs

As we age we need more health care, more assisted living and our aging population will struggle to financially support our health care needs. Many retirees want to stay in their homes as long as possible, but will require home care, help with home maintenance, perhaps help with one or more of the functions of daily living. A healthy 65-year-old, new retiree does not have the same health care costs as an 85 or 90-year-old retiree.

More retirement income planning tips…

Retirement income planning can help retirees create a reliable sustainable income for life.


Pam Mundell is a licensed investment fund advisor and independent life insurance broker and the principal of Pam Mundell Financial Planning Services in Kingston, Ontario. She can be reached for questions or comments at or (613-417-7117). 


(Republished with permission from