Key takeaways:
- Secure and grow your retirement income with investments that provide steady and consistent returns in a strategic mix of registered and non-registered accounts.
- Diversify your retirement portfolio with a variety of investment types, including private alternative investments, to help preserve the financial foundation you have built and to continue building generational wealth.
- Plan how you’ll be transferring your wealth, ensuring your loved ones and beneficiaries understand the structure of your legacy and the plan for its future.
Your working years were focused on building your wealth, establishing the financial foundation needed to support you and your loved ones, and creating a secure, full life. Now that you’re retired, it’s time to shift gears, slow down, enjoy the fruits of your labour, and make sure you have a solid plan to protect, grow, and pass along your wealth.
Here are three questions you can ask yourself to make sure you’re doing all you can to preserve and bolster your retirement income and financial legacy.
1. Am I securing my retirement income while continuing to grow my investments?
Managing your retirement portfolio is different than managing your investments while in your peak earning years. Before, your goals were to accumulate wealth and save for specific milestones, like buying a home, sending your kids to post-secondary school, and eventually retiring; retirement is when you zero in on how your long-term investments are performing, which investments are ideal for income withdrawals, and how you’re going to achieve all of your retirement dreams.
Balance retirement income withdrawals with retirement wealth growth
Preserving your overall wealth while drawing on it for your retirement income can be a balancing act. You may want to consider including investments in your portfolio that will provide you with regular dividends or distributions, while also incorporating long-term investments that can continue to grow and provide income in the future. For example, private alternative investments, like real estate investment trusts (REITs), often yield regular distributions, a stream of passive income that can potentially help cover day-to-day living costs, as well as any discretionary expenses, like travel. And when you select REITs that have historically stable returns, you’re positioning your portfolio for potentially consistent distributions, helping to ensure you’ll have access to the cash flow you need, when you need it.
Strategize your retirement income withdrawals
Beyond ensuring you have steady retirement income streams, strategizing when you make withdrawals, from which accounts and investments, and how much you withdraw are also key factors to consider.
For example, you may want to make withdrawals from your non-registered accounts first so you can keep your other investments growing tax-sheltered in your registered accounts for as long as possible, like those stocked in your Registered Retirement Income Fund (RRIF) and Life Income Fund (LIF).
The amount that you withdraw will also have an effect on your overall marginal taxation rate and could affect your government benefits, like Old Age Security (OAS). Additionally, you’ll need to consider the minimum withdrawal requirements of your RRIF and LIF, making sure to hit those minimums without going over the maximum, to avoid taxation penalties.
Finally, consider cash flow options that won’t trigger taxation or affect other retirement income streams. Specifically, when you take distributions from investments held in your non-registered accounts that provide Return of Capital (RoC), which is a return of a portion of the initial amount that you invested and therefore isn’t considered income in the year received, or leverage your Tax-Free Savings Account (TFSA), which has no withdrawal limitations and all earnings are tax-free, you’ll receive the cash you need without drawing extra taxation or penalty.
2. Is my retirement portfolio diversified enough?
Regardless of the stage of investment you’re at, diversification remains a key component to buffering your wealth from market unpredictability. This is especially true when you’re done working: the more anchored your portfolio is in strategic asset allocation, the greater chance you’ll have of securing your sources of retirement income and spending more time fulfilling your retirement dreams than worrying about your finances.
Think wide: invest in different markets, industry sectors, and investment types
Diversification can include investing in different global markets, a variety of industry sectors, and several investment types. This helps to ensure that if one market or industry struggles, your other investments in other markets and industries may not be as affected, and any resulting losses you experience may be balanced by gains or stability in those other investments.
When reviewing your current level of diversification in your retirement portfolio, you can consider how best to incorporate alternative investments. The addition of these alternatives may help hedge against the volatility of typical public investment options. For example, when you incorporate Skyline private alternatives into your portfolio, namely Skyline REITs and Skyline Clean Energy Fund, you’re leveraging real assets backed by historically stable returns, potentially securing retirement income streams and increasing your overall wealth. Further, since these Skyline products are structured for long-term growth, they may help buffer your portfolio from feeling the full effects of current public investment trends or short-term, riskier quick wins, stabilizing your financial health at a time you need it most.
Think deep: incorporate both registered and non-registered account types
Having a deep bench of different account types can maximize the potential value of your retirement portfolio diversification. By leveraging tax-advantaged registered accounts for your higher-taxed investment types, like interest-yielding investments, you can increase tax efficiencies and help reduce the overall cost of the income you receive. For investments that offer lower-taxed returns, you can house these in your non-registered accounts, since they already come with tax efficiencies. And with some alternatives, like Skyline REITs, you can leverage both types of accounts, depending on your cash flow needs. For example, when you stock your registered accounts with Skyline REITs, you can take advantage of any returns by reinvesting them and deferring taxes until you are ready to make withdrawals. If you need regular cash flow or you’ve maxed out your registered accounts, you can stock Skyline products in your non-registered accounts to take advantage of their inherent tax efficiencies, as distributions from these products are issued in both cash, which is considered a capital gain and only 50% of the amount is taxed, and RoC, which isn’t considered income in the year received and therefore isn’t immediately taxed, helping you maximize your potential earnings.
3. Are my successors prepared to receive my retirement wealth disbursement?
Creating a wealth transfer plan is not just vital for protecting the value of your financial legacy, but it can also give you and your loved ones peace of mind. Consider the following to help remove the stress and guesswork out of your wishes, so everyone can be on the same page when the time comes.
Designate beneficiaries and wealth disbursement roles
Only 40% of Canadians have a will, even though 65% state that having a loved one pass away without a will would cause stress, a recent poll found, which is why drafting a will should be part of your wealth transfer plan. Your will can help you clearly lay out the roles of all the parties that will take over the stewardship of your wealth, including any executors, powers of attorney, and beneficiaries. And once established, you can review it regularly, making any updates as your life, assets, and estate evolve, so it continues to be the most effective it can be.
Another key component of your wealth transfer plan is to consider how your investments will be transferred as part of your estate. Naming beneficiaries to your investments in your retirement portfolio, including any private alternative investments, can help ensure a smooth, cost-efficient transfer of wealth. Assets with named beneficiaries can avoid getting stuck in lengthy and expensive court-supervised probate processes, and your beneficiaries will not be forced to liquidate investments in order to transfer them as part of those processes, helping preserve their value. This is especially true for your registered accounts: by naming a spouse or common-law partner as a successor, your registered accounts are transferred directly without penalty or the need to cash out investments and will have no effect on your successor’s account limitations. Keep in mind that whoever you name as beneficiaries to your investments should also be named accordingly in your will so there are no discrepancies that could cause issues with your wealth transfer.
You might even want to consider leveraging holding companies and trusts to potentially give your beneficiaries even more tax efficiencies and wealth management options.
Communicate your current and future wealth strategy
One of the most vital parts of your wealth transfer plan is communicating that plan to your heirs. Talk to your beneficiaries about how you’ve structured your investments, the values and strategies that you’ve employed to make those investment decisions, and each facet of your wealth disbursement plan. Having these discussions can help ensure that your heirs are prepared to become the stewards of the intergenerational wealth you’ve built and can reduce the amount of uncertainty and stress faced during the wealth transfer process.
Next steps
You’ve worked hard to create the financial freedom and security you’re currently enjoying and have built a legacy that has grown under your stewardship. Make sure you’re prepared to pass along that legacy and its management to your loved ones:
- Create a wealth disbursement plan that includes an up-to-date will, fulsome estate plan, and named and informed beneficiaries.
- Secure and grow your retirement portfolio by leveraging investments that provide consistent and steady returns, like Skyline’s historically stable and professionally managed products, namely Skyline Apartment REIT, Skyline Industrial REIT, and Skyline Retail REIT, as well as stable value increases, like those historically realized through Skyline Clean Energy Fund.1
- Incorporate a blend of registered and non-registered accounts to maximize tax efficiencies.
- Diversify your portfolio with private alternative investments by contacting a Skyline relationship manager to determine which products best align with your overall wealth plan.
Your retirement years are meant for enjoyment, connecting with loved ones, and new experiences. Protect your wealth and legacy so you and the next generations to come can continue to live life on your own terms.
Retirement income and wealth FAQs
What is a retirement wealth disbursement plan?
Your retirement wealth disbursement plan lays out how your wealth will transfer to your beneficiaries. The plan can include the roles each beneficiary will serve, including executors and power of attorneys, which can be set out in an updated and detailed will. Further, the plan should include named successors for each of your investments and registered accounts to avoid costly and lengthy probate processes. Finally, you should communicate your plan to your beneficiaries to explain all aspects of your wealth transfer strategy.
How can I transfer my wealth tax efficiently?
Having a plan for your wealth transfer is the most tax-efficient strategy you can leverage. Your plan should include naming beneficiaries and successors to each of your investment accounts, both registered and non-registered. While your heirs will have to do their own tax planning when they’re managing the investments, naming them as beneficiaries and successors will help preserve the value of your wealth by preventing lengthy and expensive probate processes and the need to liquidate investments, which will trigger taxation on your estate. For example, if you hold Skyline products as part of your portfolio, contact your relationship manager today to assign beneficiaries to your Skyline investments as part of your wealth disbursement plan, removing stress and guesswork from when the time comes for the transfer.
How often should I update my will and estate plan?
You should consider updating your will and estate plan regularly, as well as any time changes in your life, assets, or estate occur. If your will is not up to date, it won’t be useful when it’s time to transfer your wealth to your beneficiaries. Further, make sure your will is aligned with who you’ve named as beneficiaries or successors of your investments and registered accounts—any discrepancies may lead to expensive delays for your heirs.
How can I earn retirement income without triggering an Old Age Security (OAS) clawback?
The OAS clawback, or recovery tax, reduces your OAS pension by a specified percentage for every dollar of net income exceeding a set annual threshold. An integral part of your retirement income planning should be the timing and amounts of earnings that you expect from your sources of retirement income, such as returns from investments. Stocking investments in your registered accounts, such as your Registered Retirement Income Fund (RRIF) or your Life Income Fund (LIF), can help defer OAS recovery taxes if you’re enrolled in a Distribution Reinvestment Plan (DRIP) that automatically reinvests any earnings. Additionally, if you need to withdraw cash or earnings, consider doing so out of your Tax-Free Savings Account (TFSA), as any earnings and withdrawals are entirely tax-free, are not considered income, and don’t affect your OAS amount.
What should I consider when planning my retirement income withdrawals?
When planning withdrawals from your sources of retirement income, you can consider when to withdraw funds, from which accounts and investments, and how much you will withdraw. You’ll want to consider that some accounts, like your registered accounts, will have withdrawal limits and requirements. As well, withdrawals may have tax implications that you should factor in to make sure you’re maximizing your funds. You can also leverage different return types, prioritizing more tax-efficient options, like Return of Capital (RoC), capital gains, and dividends, before withdrawing from investments that pay out interest income, the highest-taxed type of return.
How does diversification fit into my retirement income plan?
Investment diversification can help buffer your overall portfolio value from market swings and uncertainties, which, in turn, can help secure your retirement income and wealth. When diversifying, you can consider including alternative investments in addition to stocks and bonds. As well, you can consider investments in tangible, real assets, like real estate through a private Skyline REIT or renewable infrastructure, like Skyline Clean Energy Fund, helping balance your portfolio with assets that can perform across varying market conditions.
What tax benefits can I take advantage of when investing in REITs as a retiree?
REITs are inherently tax efficient when compared with other types of investment because while their distributions may include taxable income, generally they are paid out as capital gains, which are only 50% taxable, or in Return of Capital (RoC), which isn’t considered income in the year received and is therefore not initially taxable. When compared to investments that pay out interest, REITs are the more tax-efficient option, letting you keep more of any earnings from those investments. Further tax efficiencies may also be leveraged if you stock private alternative investments that offer Distribution Reinvestment Plans (DRIPs) in a registered account. For example, if you were to include Skyline REITs in your Registered Retirement Income Fund (RRIF), any distributions would automatically be reinvested and tax sheltered until you were ready to make a withdrawal as part of your retirement income plan.
1 1 The performance quoted represents since inception. Full annualized return performance is as follows: Skyline Apartment REIT, 4.24% 1-year, 6.22% 3-year, 8.70% 5-year, 13.41% 10-year, 13.17% inception (June 1, 2006), Skyline Industrial REIT, 4.67% 1-year, 5.27% 3-year, 11.89% 5-year, 14.98% 10-year, 13.69% inception (January 10, 2012), Skyline Retail REIT, 6.51% 1-year, 7.72% 3-year, 10.06% 5-year, 10.70% 10-year, 11.47% inception (October 8, 2013), Skyline Clean Energy Fund, 9.51% 1-year, 9.55% 3-year, 9.47% 5-year, and 8.94% inception (May 3, 2018). Performance is for Class A of the funds and does not guarantee future results for Class F. All Skyline REIT’s figures as at March 31, 2026. Skyline Clean Energy Fund’s figures as at May 1, 2026.