Planning in Retirement

I have built a spreadsheet to talk about 5 year planning in retirement if you have a stock portfolio. When you take money from a stock portfolio, you want to ensure you have enough in cash and projected income to allow you to withdraw money in the next 5 years.

Basically in this scenario you expect to take out money from your RRSP stock fund, have pension income and to use the dividend income of your stock fund. If you are using money from a stock fund, you want to make sure you have enough for withdrawals over the next 5 years.

I am projecting a budget to increase by 3% per year, the pension income to increase by 2% per year and the dividend income to increase by 6% per year. (The dividend increase is quite conservative and 8% could also be used here.) See my first spreadsheet on my site at planning.htm.

Personally I use a similar sheet and change the month in column 1 each month and adjusted the budget and income left. So I track my progress month by month. See sample on my site at planning2.htm.

With the second spreadsheet, I have showed the information slightly differently and it shows that there is not enough money in either the Trading Account or the RRSP Account to cover withdrawals and therefore something would have to be sold to give the full 5 year coverage. For the Trading Account, you could also lower your budget. See my third spreadsheet on my site at planning3.htm.

In these spreadsheets, if you have a self-directed RRIF, you can just put the RRIF in the RESP spot. If you want a table showing the RRIF withdrawal rates, see Tax Tips site or the RRIF document from Canada Revenue Agency.

I use Quicken and I find it great for keeping track of my current investments. However, there is nothing like a spreadsheet to answer the question of "What if". There is why I use spreadsheet to project what I could likely expect in the next 5 years. However, with all projections, you are making assumptions. For example, I made an assumption of inflation at 3% in connection with my budget.

If you want a copy of the spreadsheet, just email me at brunner@rogers.com.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.