Reduce Retirement Income with Prudent Financial Planning

Hello everyone, and welcome to the Retiring Canada Podcast!

In today’s episode, we’re discussing how to reduce retirement income risk through prudent financial planning. Specifically, we’ll cover:

How uncertainty seeps into our daily lives
The importance of tuning out the noise
Two crucial planning considerations to safeguard your retirement income
How to prepare for inevitable market downturns
Actionable steps to enhance your financial security

The World Feels More Chaotic—Or Is It Just Me?

Does it seem like the world is more chaotic than it used to be? I remember growing up in the late ’80s and early ’90s—life felt simpler. Of course, part of that was because I was more focused on catching perch at the lake and playing hockey than on world events. But even then, I recall hearing David Suzuki warn that the ozone was disappearing, and it terrified me!

Back then, there were no smartphones, no 24-hour news cycle, and no constant stock market updates. Today, we’re bombarded with information, much of it negative, leading to stress, anxiety, and even depression. You know what I mean—open a news app, and the first headline is likely alarming. Scroll through Facebook, and an old friend has probably shared something that makes your skin crawl.

But here’s the question: What’s the benefit of consuming this nonstop information? Does it improve our lives? Can we even control what’s happening?

In my opinion, this information overload does more harm than good, leading to stress and draining time that could be spent on meaningful relationships. If you’ve never tried disconnecting, I highly recommend it.

The Added Stress of Retirement Finances

When it comes to your retirement savings, I completely understand the added layer of stress. If your investments represent your future paycheque, it’s natural to feel uncertain about how current events impact your ability to stay retired—especially if you don’t have a solid plan in place.

This is where a well-structured retirement plan provides peace of mind. With the right strategy, you can sleep soundly, knowing that no headline or market dip will derail your financial future.

Today, I’ll share two key planning considerations to help reduce the risk to your retirement income.

Planning Consideration #1 : Understanding Your Investments & Risk-Adjusted Returns

A fellow advisor recently said to me, “Making money in the stock market is inevitable. It’s how the portfolio reacts in a downturn that makes all the difference.”

This is what we call risk-adjusted returns—ensuring that the level of risk in your portfolio aligns with the returns you’re receiving.

One of the first steps in our Fundamental Retirement Plan is assessing whether you’re being properly compensated for the risk you’re taking. This is where incorporating alternative assets—such as options strategies, private credit, and private real estate—can help reduce downside risk while still participating in market growth.

For decades, a traditional mix of stocks and bonds was the go-to strategy. However, with today’s tightening credit cycle, the historical low correlation between stocks and bonds is less reliable. Diversifying across asset classes can provide a better risk-adjusted return, helping retirement investors grow their wealth while mitigating downside risk.

That said, an investment plan alone is NOT a retirement plan.

A Football Analogy

Think of an investment plan as an offensive coach—drawing up plays, adjusting on the fly, and aiming for touchdowns. But without a defensive coach (your retirement income and tax strategy), you risk losing ground. A complete retirement plan requires both offense and defense, coordinated by a head coach who sees the big picture.

This is what a prudent retirement plan does: it integrates investments with income and tax planning, ensuring that you’re protected no matter what happens in the markets. At our firm, we call this the Fundamental Retirement Plan process.

Planning Consideration #2: The Bucket Strategy

The bucket approach helps manage retirement cash flow and aligns investments with your needs. This strategy allows retirees to focus on the long term while staying calm during market volatility.

Here’s how it works:

Emergency/Opportunity Bucket – Cash for immediate needs and unexpected expenses.
Short-Term Bucket – Low-risk investments that can be accessed during market downturns.
Income Bucket – Provides steady monthly income, supplementing CPP and OAS.
Long-Term Growth Bucket – Investments focused on capital appreciation.

The goal is to rely primarily on the income bucket while using the short-term bucket during downturns, reducing the need to sell long-term investments at a loss. When structured correctly, bucketing also helps with pension decisions, sustainable income strategies, and tax efficiency in retirement.

The Question I Hear Most Often

When I meet with pre-retirees and retirees, the same question comes up again and again:

“Will we be okay?”

This is exactly what the Fundamental Retirement Plan is designed to answer.

Market downturns aren’t a matter of if but when—so the real question is, what’s your plan?

Action Items for Today’s Episode

Download Your Free E-Book – I’ve included a link in the episode description to “Retiring in Uncertain Times.” Check it out!
Assess Your Portfolio Risk – If you’re unsure whether you’re being properly compensated for the risk in your retirement portfolio, or if you’d like to see how a market downturn could impact your investments, let’s start a conversation.
Evaluate Your Investment Structure – Are all your investment accounts in a balanced fund? Where would you pivot your withdrawals if the market dropped? How would this impact your taxes? This is where the bucket strategy can help.
Disconnect From the Noise – Take a break from news and social media. Life is too short to stress over political drama or the latest market panic.

Stay Connected

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Check out the links and resources in the show notes or visit RetiringCanada.ca
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And remember: When it comes to your retirement, don’t take chances.

Make a plan so YOU can retire with confidence.

See you next time!