Question: I am 63 years old, retired and having the best time of my life on a Champagne budget. I have $950,000 in a RRIF and no debts.

Is it a good idea to withdraw more capital from my RRIF (i.e. $65,000/year) before the age of 65 when I start collecting my CPP and OAS which is approximately $12,000/year, then reduce the RRIF withdrawal by the same amount at that time, and invest any extra cash I have now in a non-registered account?

Or shall I withdraw the least amount of capital from my RRIF, let the money grow inside the RRIF, and live on other incomes for our daily expenses?

Presently, I have $350,000 in a non-registered account, mostly income trusts, which pay a monthly dividend. I owe $150,000 on my personal line of credit at prime minus one-half. Shall I borrow more to invest?

Answer: Your retirement planning is about relying on the accumulated nest egg for many years. At your age, planning for 25 to 30 years may well be realistic.

As a first step, I would determine whether your nest egg is sufficient to provide the champagne budget, in today's dollars, for your lifetime. This provides valuable insight.

Next, I would consider the effects of rising inflation and the impact of health issues. Especially on the cash flows required during your later years. Some "what if" retirement income scenarios are valuable exercises.

It is important to be comfortable with your investor profile and the risks that you incur during retirement. You need to implement a well-diversified portfolio so that no investment inflicts serious damage if it generates a loss.

I assume you that are comfortable with your portfolio asset mix. However, you may wish to consider reducing the allocation to income trusts and the amount of borrowings. You likely have little or no need to borrow and incur the added risks.

I am not a fan of borrowing during retirement. The stakes are too high when things go amiss. Reducing your borrowings to $20,000 or $30,000 may be a more appropriate compromise.

I suggest waiting until age 69 before converting to a RRIF because the RRSP is more flexible. You can draw funds from the RRSP without the RRIF minimum withdrawal requirement.

Depending on the cushion of comfort provided by your nest egg, accumulating funds in the RRSP/RRIF could afford greater future cash flows in case they are required. Hence, I would withdraw only what you need. That balances your current consumption with possible future needs.

Best wishes for a long and happy retirement.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.