Don't Retire If This Is You (6 Warning Signs)

Six Warning Signs You May Need to Delay Retirement

The presenter outlines six signs that your retirement plan may need more preparation before you stop working.

1. You don’t know your spending needs. A plan based on $5,000 per month after tax met its income goal at 104% in the presenter’s example. When spending was increased to $5,500 per month, the result fell to 84%, increasing the risk of running out of money later in life. Estimate essential and discretionary expenses, add a safety margin, and consider how spending may change over time—from an active retirement to later life, when care costs could be high.

2. You still have debt. Debt reduces cash-flow flexibility and leaves less money available to grow. The presenter notes that RRSP/RRIF withdrawals used to make payments may need to be larger to cover taxes: a $1,000 payment could require a withdrawal of $1,250–$2,000, depending on total income. Higher interest rates or mortgage renewal rates can add pressure. The general recommendation is to enter retirement debt-free, though a rental property that generates income well above its mortgage payment may be an exception.

3. You haven’t set aside money for major expenses. Repairs, vehicle replacement, and family support can all create significant costs in retirement. Build cash reserves while you’re still earning so unexpected expenses don’t force you to sell investments during an unfavorable market. Count on expected downsizing proceeds or an inheritance only when those funds are reasonably certain.

4. A market downturn could force you to sell investments. The presenter recommends keeping a substantial, accessible “war chest” outside volatile investments, such as in a high-interest savings account (HISA). A suggested target, if feasible, is two years of retirement expenses, less pension income. The reserve can cover spending through a prolonged downturn and be replenished when markets recover. The presenter cautions that holding all assets in cash can limit growth and make it harder to keep up with inflation.

5. You don’t have a tax-aware withdrawal plan. The presenter groups Canadian retirement income and assets into three tax categories:

   • Fully taxable: CPP, OAS, RRSP/RRIF withdrawals, and pensions
   • Less taxed: capital gains and Canadian dividends
   • Tax-free: TFSA withdrawals

The order and amount of withdrawals can affect taxes, spending capacity, and the inheritance left behind. In one example, withdrawing proportionally from accounts reduced projected lifetime taxes from $340,000 to $245,000—a $95,000 reduction—while maintaining the retirement income goal and leaving more to heirs. Further adjustments to avoid unnecessarily entering higher tax brackets raised plan success to 102%, increased the inheritance by more than $40,000, and reduced taxes by another $18,000.

1. You haven’t stress-tested the plan. Test how your plan might hold up under adverse conditions, including a 40% market decline in the first year of retirement, lower-than-expected portfolio returns, a longer lifespan, and higher inflation. If the plan works only under ideal conditions, the presenter says it needs more of a buffer.

Bonus Tip: Consolidate RRSPs

Consider consolidating scattered RRSPs into one or perhaps two accounts before retirement. Multiple accounts can mean separate withdrawal instructions, tax withholding, and tax forms to monitor.

Planning Framework

• Calculate baseline spending, add a margin for uncertainty, and consider how expenses may change with age.
• Set aside reserves for expected and unexpected major expenses.
• Consider keeping a separate, accessible reserve of roughly two years of net retirement expenses to reduce the risk of selling investments during a downturn.
• Develop a tax-efficient withdrawal strategy across registered, taxable, and tax-free accounts.
• Stress-test the plan against poor markets, low returns, longevity, and inflation.

Presenters and Sources

• Reese is identified in the subtitles as the founder of Well Built Wealth.
• The presenter also references a Well Built Wealth video about its retirement reserve, or “war chest,” fund.
• The video provides planning examples, not specific investment, ticker, or asset-allocation recommendations. No stock tickers are mentioned.