Spend It All – 5 Planning Rules for Retiring with a Minimal Estate
- Mar 17
- 5 min read
Spending down your retirement savings while leaving a minimal estate. For many retirees, estate planning focuses on leaving a legacy for children, grandchildren, or charitable organizations.
But that isn't everyone's goal.
Some retirees would rather spend the money they worked their entire lives to accumulate and focus on enjoying retirement rather than leaving a large inheritance. This might be because their children are financially independent, or simply because they want to make the most of their retirement years.
While this approach is perfectly reasonable, building a retirement plan designed to spend down most of your savings comes with unique challenges.
Let's explore five key considerations if your goal is to spend down your retirement assets while leaving a minimal estate.
Longevity Matters More Than You Think
The biggest unknown in retirement planning is how long you will live.
If we knew the exact day someone would pass away, creating a plan that spent every last dollar would be easy. Unfortunately, retirement planning doesn't work that way.
Financial planners often rely on mortality tables and assumptions, such as those published by FP Canada using Statistics Canada data.
For example:
A couple between age 55 and 65 has a 50% chance that one partner will live to age 94.
A 60-yr-old single male has a 50% chance of living to age 89.
A 60-yr-old single female has a 50% chance of living to age 91.
These probabilities highlight why retirement plans must consider the possibility of living well into your 90s. longer lifespans mean your savings must stretch further, and factors like inflation and long-term care costs become increasingly important.
Define Your Retirement Paycheque
The next step is determining how much income you want to receive during retirement.
Many retirement plans divide spending into three distinct phases:
The Go-Go Years
These are typically the first decade or more retirement. Health is still good, energy levels are high, and retirees often travel, pursue hobbies, and check items off their bucket list. Spending during this phase is usually at it's highest.
The Slow-Go Years
As retirees age, mobility may decline and travel may become less frequent. Spending often decreases slightly as lifestyles become more routine.
The No-Go Years
During the later stages of retirement, spending may stabilize. Major purchases are usually behind you, but costs such as healthcare or assisted living may increase.
Retirement communities and long-term care facilities can cost $5,000 to $ 10,000 per month or more, depending on location and level of care.
Understanding how spending evolves over time helps create a withdrawal plan that aligns with your goal of spending down your savings responsibly.
Be Willing to Adjust Your Spending
Many retirees prefer a fixed monthly income that increases with inflation.
However, if your goal is to spend aggressively during retirement, you may need to adopt a more flexible withdrawal strategy.
One example is the guardrail approach to retirement planning. This strategy allows retirees to spend more when markets perform well but temporarily reduce spending if markets decline significantly.
Being willing to adjust spending - even temporarily - can significantly improve the longevity of your retirement income.
At the end of the day, your spending is one of the biggest factors determining whether your retirement plan succeeds.
Consider the Role of Your Home
For many Canadians, a large portion of their net worth is tied up in their home.
If your goal is to spend down your assets, there may come a time when unlocking that home equity becomes part of the plan.
This could involve:
Selling your home and downsizing
Transitioning to renting
Moving into a retirement community
While some people consider borrowing against their home through a line of credit, this strategy introduces additional leverage and risk that may not always be necessary.
Instead, it's often better to think about when you might sell your home and how that equity will support the later stages of retirement.
Of course, there are risks to consider:
Housing market fluctuations
Selling costs and fees
Potential home repairs before selling
Planning ahead helps ensure you aren't forced into making difficult decisions later.
Build a Thoughtful Tax and Withdrawal Strategy
When you're intentionally drawing down your savings, tax planning becomes even more important.
Decisions such as:
Which accounts to withdraw from first
How much to withdraw each year
When to start government benefits
All have a significant impact on how long your retirement savings last.
Those pursuing an aggressive spending strategy often have less margin for error, which means planning and regular updates are essential.
A well-designed decumulation plan can help ensure you maximize your retirement lifestyle without running out of money.
A Reminder About What Retirement Is Really About
Recently, I attended the funeral of my step-grandfather, Glen. The message shared that day left a lasting impression.
Every headstone in a cemetery shows two dates: the day someone was born and the day they died.
Between those dates is a single dash.
That dash represents an entire life.
Every experience. Every relationship. Every moment that mattered.
When we talk about retirement planning, we often focus on the numbers ~ savings, returns, and timelines.
Those things are important.
But retirement isn't really about the numbers.
It's about how you spend the dash.
Action Items
If your goal is to spend down your retirement savings while leaving a minimal estate, consider these steps:
Build a detailed retirement plan.
Spending down your savings is a more aggressive strategy and requires careful planning.
Use conservative assumptions.
Plan for longer life expectancies, higher inflation, and market volatility.
Think about the experiences that matter most.
Retirement is the time to enjoy the life you worked hard to build.
After all, we're all just living in the dash.
If you enjoyed this episode of the Retiring Canada Podcast, be sure to subscribe and sign up for the Retiring Canada Newsletter for more retirement planning insights.
and remember, when it comes to retirement, don't take chances.
Make a plan so you can retire with confidence.
All comments are of a general nature and should not be relied upon as individual advice. The views and opinions expressed in this commentary may not necessarily reflect those of Harbourfront Wealth Management. While every attempt is made to ensure accuracy, facts and figures are not guaranteed, the content is not intended to be a substitute for professional investing or tax advice. Please seek advice from your accountant regarding anything raised in the content of the podcast regarding your Individual tax situation. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.