Disclaimer: I get nothing from pointing out this deal, and I haven’t used the product below myself. But all the same, it might be of possible interest to readers of this blog.
“Cashflows and Portfolios” is one of my top places to get advice. (It’s listed along with other great resources, in the blogroll).
Along with great (and free) advice, the folks behind the blog offer for-fee retirement planning services. But they do have one twist for the hard-core DIYer: they offer access to retirement projection software so you can do your own projections. (Looks like they use Adviice — just like a lot of planners do).
Anyway, their latest newsletter indicates that they’ve lowered the price of their DIY retirement planning service and are offering an additional 10% off. You can get all the details here.
I do recommend paying for some kind of retirement planning service; I did it and it gave me the confidence to set my retirement plan in motion 2 years earlier than I first anticipated. You can read about how I came to the decision to “pull the plug” here.
DIY investing also means DIY decumulation. I recently completed a change in online broker from QTrade to Questrade and this is how I get paid in retirement; I’ll refer to the letters in the diagram below so you can follow along.
How I get paid, April 2025
A: QTrade? What?
I know I started by saying I completed the transfer from QTrade to Questrade, but due to an unexpected snag, I still have 4 accounts with QTrade which are currently paying a monthly obligatory RRIF-minimum contribution to my salary. I talked about the snag here, but suffice it to say I could have moved these accounts too, but at the expense of foregoing monthly payouts for the remainder of 2025, which I didn’t think was worth it.
Next year, those accounts will disappear and Questrade will handle the RRIF minimum payments.
B: Yes, there are multiple RRIF accounts
When I started the paperwork to open RRIF accounts, I was surprised that the same choices were offered as were offered for RRSPs — individual and spousal. I’m sure that some of the reason is due to the attribution rules for spousal RRIFs, but anyway, there are 4 RRIF accounts generating 4 individual payouts every month. This is automatic, so I have to make sure that there is cash available in the 4 accounts each month, or else my provider will happily charge me an arm and a leg1 to do the necessary asset sale.
The asset sale takes a few seconds; and with T+1 settlement, the cash is available the next day. Right now I try to do all my moves on the 22nd of the month, but admittedly, this is more time than strictly necessary.
C: Opening the RRIF account includes providing your banking information
I don’t know whether there is any provider out there who permits RRIF payments to be paid to a non-registered account, but so far it seems that they all prefer to make EFTs into a bank account. That’s not a problem for me but this may not be what you’re expecting. The money just shows up like a paycheque on or near the last day of the month.
D/E: The sum of all RRIF payments isn’t enough to fund my desired lifestyle
I’m withdrawing RRIF minimum payments and funding the rest of my monthly paycheque by liquidating assets held in my non-registered account. Another approach would be to increase the RRIF payments, but then that attracts withholding tax, which I hate. The monthly liquidation of assets in my non-registered account generates taxable capital gains each time, naturally. The advice I got from my retirement planner suggested I should be able to maintain an overall 15% tax rate by making sure that I have a mix of favorable taxable income (capital gains and dividends) along with the unfavorable2 RRIF income.
I keep an eye on my 2025 tax bill by using the tax calculator I mention on https://moneyengineer.ca/tools-i-use/. I can always choose to switch gears if needed.
In Questrade, movements of cash are done from their aptly-named “Move Money” menu. Setting up your bank account in Questrade was a bit clunky3 and relied on some app like Plaid to get the job done. Moving funds in this way isn’t instant, expect a delay of at least two business days in each case.
Another oddity with Questrade is that any joint non-registered account is set up as a margin account, which means it’s shockingly easy to borrow money you don’t have4.
One unknown with Questrade — I was able to move money instantly after an asset sale. It’s not clear to me whether this uses margin or not5. I’ll know more once I get my April statement, I guess. If I get charged margin interest, I’ll have to hold off moving money until the day after the asset sale.
F: Variable Percentage Withdrawal (VPW) requires the use of a cash cushion
I described the methodology I use to calculate my take-home pay in a previous post, but in essence my salary is related to my real-time net worth, filtered through a 6-month moving average so an anomalous month on the stock market doesn’t impact my take-home pay quite so quickly. VPW makes a “suggestion”, this suggestion is added to the cash cushion, divide by 6, and presto, the “suggestion” is converted to a monthly “salary”.
In any given month, the cash cushion is either being augmented by the sale of some assets in my non-registered account (the suggestion is larger than the salary), or the cash cushion is being depleted to make up the shortfall in my calculated salary (the suggestion is less than the salary). All of those movements are manual. Transferring cash between non-registered accounts is supported by Questrade, but it wasn’t supported by QTrade6.
All in all, this process should take less than 15 minutes a month. The first time included a learning curve and extra setup, but now that pre-work is done. Next step is making sure my spouse knows how to do this, too!
Unfavorable because it’s treated as straight income, and since RRIF-minimum, no witholding tax. I’m expecting a decent tax bill come April next year. ↩︎
Bank accounts showed up in my mobile app but not on the web portal. To get them to show up there I had to set up my account — again — and successfully transfer a nominal amount. Only then would the web app remember my bank accounts. ↩︎
Which I inadvertently did, paying myself from the wrong non-registered account. Sigh. ↩︎
Since the transfer isn’t instantaneous, and since the cash really is available the day after, one could make the case that this doesn’t require margin. But I really have no idea. ↩︎
For QTrade I had to use my bank account to get around this restriction. ↩︎
Using the Multi-Asset tracker, I can break out my retirement savings in any number of ways. Here we take a look at the breakdown of my retirement portfolio between RRIFs, non-registered Investment accounts, and TFSAs.
I’m not sure when I first made a purchase of a USD-denominated ETF. Probably over 10 years ago. Clearly, I thought it was a good idea, because as of today I find that 57% of my retirement savings1 are denominated in US Dollars.
And unlike other people I’ve talked to, there’s no underlying rationale for that. I’ve never earned employment income in USD and I don’t own property in the US. So why?
I’m a cheapskate.
I started investing in USD based ETFs simply because they were a much better deal than their Canadian equivalents. This is less true now than it used to be, but it’s still true. Take for example the comparison between comparable USD and CAD ETFs that track the same index:
The Canadian market has become more competitive, and MERs have come down, but given the size of the US market, it’s still cheaper to invest there.
I’m not a very savvy cheapskate.
So although the MERs of US ETFs were stunningly attractive, I failed to consider the cost of currency conversion. For this I blame naivete as well as a lack of transparency on the part of my provider. It was not possible for me to easily figure out how much each CAD to USD transaction was costing me. A good estimate is about 1.5% the cost of the transaction, but some providers make this much cheaper5.
I also had USD investments in my TFSAs, which, from a tax perspective, isn’t the best idea.
Over time, I discovered the joys of Norbert’s Gambit to do currency transactions on the cheap and I became more savvy. And I eliminated all US holdings from my TFSA.
Preparing for Retirement
In preparing my portfolio for retirement (steps I took are outlined here), I did seriously consider converting everything to CAD in the interest of keeping things simple. I did not, and here’s why:
I figured that having ready access to USD would be rather useful to retired me, since I do vacation there. And I had made other preparations in light of that, setting up a USD credit card and USD savings account for RRIF payments to go to.
Although I knew that having USD RRIFs would make getting paid in retirement more complicated, I thought I had worked out a plan with my provider6 that would make extracting USD RRIF payments achievable, with some effort on my part.
I sort-of liked having some of my investments in USD since it’s a stable currency. Usually.
My provider decided to backtrack on allowing me to extract USD from my USD RRIF;7 we’re still going back and forth on that front, but my friends at QTrade are on my naughty list as a result. I’m not hopeful.
What it means practically is that although the value of my USD RRIF is used to calculate my RRIF minimums, I can only withdraw RRIF payments from the Canadian side. At present, the Canadian side of my RRIF will fund my RRIF minimum payments for a while, but at some point I’ll have to use Norbert’s Gambit to move funds from the USD RRIF to the CAD RRIF.
My Advice
I don’t think that holding USD assets in retirement — especially in a RRIF — is a great idea for the DIYer. Unless platform providers give really clear processes8 for how to extract that money from a USD RRIF, expect trouble.
At some point, I will either switch providers to find one that supports my requirements9, or I will convert everything to CAD. Right now, I have a process that works, but older me I expect will find it too complicated.
Majority of the USD holdings are in my / my spouse’s RRIF; small portion is in my non-registered account. ↩︎
Not an apples to apples comparison, admittedly. This ETF is hedged so it’s less impacted by changes in the CAD/USD exchange rate but this comes at a cost. ↩︎
This is ALMOST the same thing; RSSX uses a capped version of the index ↩︎
And try as I might, I couldn’t find a USD ETF that invested in the TSX/S&P 60. Not really surprising, and my USD retirement holdings have very limited Canadian exposure. AOA has about 2.4% Canadian exposure. ↩︎
Summary: The spousal RRSP is a great way to reduce current taxes, but if you’re planning on using the money in that spousal RRSP soon, be aware of the rules concerning who declares the income!
Disclaimer: As this article will demonstrate, I’m not a tax expert, lawyer, CPA or anything else. Use with discretion, some assembly required.
I made substantial use of spousal RRSPs during my working life. Spousal RRSPs are a way for the higher earning spouse to take advantage of the lower earning spouse’s unused RRSP contribution room, thus leading to a lower overall tax bill1. All good so far.
Some vocabulary will help with the next bit.
The contributor is the person providing the cash for the spousal RRSP and is the one who gets the tax deduction. Usually this is the higher income spouse.
The annuitant is the person whose name is on the spousal RRSP statements. This is usually the lower income spouse.
What most primers on spousal RRSPs don’t mention is that there is a restriction when it comes to withdrawing from the RRSP2. Paraphrasing the source material:
If the annuitant withdraws from a spousal RRSP within three years of the last contribution, the income from that withdrawal is considered to belong to the contributor, not the annuitant.
What? Why?
As with all things, there’s no free lunch. CRA doesn’t want to make tax avoidance so easy3, so this little detail will prevent the purely hypothetical scenario of a higher earning spouse making a large spousal RRSP contribution in the last year of their employment, and then getting the lower earning spouse to take out that same money at a much lower tax rate when the calendar moves from December to January.
There is one, small, bone that CRA throws our way in this case. Paraphrasing again:
If the annuitant withdrawal is instead made via a spousal RRIF, and the payment is RRIF minimum, then fine, the annuitant can declare that income.
So, as long as our lower income annuitant spouse opens a spousal RRIF, and as long as for the three years4 following the last spousal contribution, that spousal RRIF only pays out RRIF minimums, then all is well. The annuitant spouse declares the income, as expected.
Now of course, this rule may not matter to you. If you’re newly retired and don’t have much in the way of income, then it may not trouble you that you have to declare the income from your spouse’s spousal RRIF/RRSP. It’s just a bit more paperwork (a T2205, looks like).
In my case, I’m only taking RRIF minimums for the time being. So no extra paperwork for me.
I’ve never myself made a withdrawal from an RRSP. That would break my rule of keeping retirement savings firewalled. And it looks to me to be an expensive proposition — your provider will surely charge a deregistration fee, your provider will have to withhold tax, and you have declare the full amount as income in the year you grab it. ↩︎
I have learned to be guided by the humbling tenet of: “If I think I’ve figured out a way to outsmart the taxman, it’s probable that I’m simply demonstrating an incomplete understanding of how it actually works….” ↩︎
To illustrate/clarify: the rule applies in the year the contribution is made, and the previous two years. So the contribution I made in 2024 will be free from all constraints in the 2027 tax year. ↩︎
The Money Engineer 