Most of what we hear about retirement asset planning focuses on how much we need to save. We spend decades building investment portfolios, maximizing registered account contributions and preparing for the day work stops.
But saving is only part of the equation. Understanding how to turn those assets into sustainable retirement income is just as important.
And it has become even more critical as retirement grows less predictable. Longer lifespans and rising costs are pushing some people to work later than expected, while layoffs, health challenges and shifting labour markets are simultaneously accelerating earlier exits from the workforce.
Even so, far fewer conversations focus on what happens next: how to draw down retirement assets in a way that supports income, manages taxes and helps savings last.
So how can people plan for a transition that could arrive in their 40s or 50s – or be delayed by a decade or more? “Having an idea of what you need, a sense of how close you are and a plan is critical,” says Thomas Irwin, Genus Client Relationship Manager. Here’s how to start thinking about it.
Why many people delay retirement income drawdown planning
There are countless articles, tools and calculators designed to help people build their nest egg. But far less attention is paid to how to actually turn those savings into sustainable income.
Part of the reason is psychological. While many people look forward to retirement, it’s tough to conceptualize what retired life might look like. After all, work is often closely tied to identity and routine, and the idea of stepping away from that structure – and relying on savings instead of a paycheque – can feel foreign, and even scary. “When people approach retirement, there’s often a lot of uncertainty around what that transition will look like,” Irwin says. “Anything we’re not comfortable with, we tend to delay. That’s human nature.”
But psychology isn’t the only factor. A lack of education and awareness can also make retirement income planning feel overwhelming.
“In my experience, many people simply haven’t been taught how retirement income works,” Irwin says.
“Most people go through their working lives with one source of income. And then all of a sudden in retirement they can have many sources of income, including work and government pensions, RRSPs, RRIF or LIF accounts, and any other investments or savings they may have accumulated. How it all fits together and creates a retirement picture is really important.”
Once those pieces come together, the process often becomes far less intimidating. “When we walk through the plan and show how everything fits together, there’s usually a sense of relief,” Irwin adds. “Understanding the strategy helps people feel much more confident about the transition.”
Key components of a retirement income strategy
An effective retirement income strategy starts with understanding how different assets work together – and how to access them in a tax-efficient and coordinated way.
Organize your buckets
One common framework is the ‘bucket’ approach, which organizes savings based on time horizon and risk.
Short-term buckets typically hold cash or highly liquid assets designed to cover near-term spending needs. Medium- and long-term assets remain invested to support growth and provide income later in retirement.
“Anything short term should be liquid and low risk,” Irwin explains. “It’s there to cover your immediate needs without worrying about what markets are doing. The medium bucket has income producing assets and the long term bucket has growth assets. The longer timelines allow for markets to recover from any downturn,” he adds. “They give you flexibility around when you draw down or access that capital.”
Build in flexibility
A key factor in retirement income planning is how flexible different accounts are. For example, “income from a Life Income Fund (LIF) has both a minimum and a maximum withdrawal each year,” Irwin says. “So there’s not much flexibility there.”
Registered Retirement Income Funds (RRIFs), on the other hand, provide more control. “With a RRIF, you have a minimum withdrawal, but you can take out as much as you want above that,” he says. “That flexibility can be very useful when you’re coordinating withdrawals across different accounts.”
Understand tax treatment
Understanding the tax treatment of different accounts is equally important. Withdrawals from RRSPs and RRIFs are fully taxable as income, while withdrawals from non-registered accounts may have lower tax implications depending on the type of investment income.
“A lot of people assume they should leave their RRSP as long as possible to avoid triggering tax,” Irwin says. “But that’s not always the right way to think about it. You have to look at your income year by year and consider how withdrawals affect your overall tax picture.”
Leverage your planning window
For many Canadians, there is a valuable planning window between retirement and age 71, when RRSPs must be converted into RRIFs. “That period can create opportunities,” Irwin explains. “Even if someone doesn’t need the money right away, we might look at withdrawing or deregistering some funds during those years to potentially reduce the total tax paid over their lifetime.”
The window can be even larger for people who retire earlier than expected. “If someone is forced to retire earlier, that window is even larger,” he says. “And if they need income right away, understanding which accounts to draw from becomes even more critical.”
Design a strategy that reflects real life
While retirement asset planning can feel a bit nebulous, family histories can help to paint a picture of personal realities around which to base decisions. “The longer your family’s longevity, the more reason to consider delaying government pension benefits (if you have other assets to draw on), which can increase the amount you receive later,” Irwin says. “But if longevity isn’t typical, that decision might look very different. Longevity plays a role, as does your tax situation – now and in the future.”
Major decisions – such as what to do with a workplace pension when a job ends – can also have long-term consequences. “When someone leaves a job, they may have the option to commute their pension or leave it with the company,” Irwin explains. “If you commute it, you can often name a beneficiary so the asset can pass on to your family. If the pension stays with the company, payments may stop after the surviving spouse, depending on the pension plan structure.”
Because many of these decisions have long-term implications, Irwin says careful planning is critical. “Unless someone gets guidance, they may not fully understand the implications,” he says. “That’s why having a plan – and revisiting it regularly – is so important.”
Start the process – and keep it going
Ultimately, retirement drawdown planning isn’t a one-time decision – it’s an ongoing process.
For some people, conversations begin with a financial advisor. Others start with a discussion among friends or family members, or with a tax professional. But the important thing, Irwin says, is simply starting to think about what retirement might look like and what matters most.
“Everyone’s situation is different,” he says. “Some people are thinking about family legacy planning, others are focused on maintaining a certain lifestyle or making sure their income lasts. The key is understanding your priorities and building a plan around them.”
Like many aspects of financial planning, that plan will inevitably evolve as life circumstances change and goals shift over time. After all, retirement drawdown planning isn’t about locking in a strategy forever – it’s about creating a framework that can adapt with you.
Interested in building a retirement income strategy that meets your unique needs? Speak with a Genus advisor today.
References:
- King, R. (2026, February 13). Retirement isn’t what it used to be — why more older Canadians are delaying their exit as costs climb and family pressures grow. Money.ca. Retrieved March 10, 2026, from https://money.ca/retirement/older-canadians-are-hitting-pause
- Bieber, C. (2026, February 15). Here’s why more Americans are retiring earlier than ever before — even if they don’t want to. Is it your turn to hang it up in 2025? Money Wise. Retrieved March 10, 2026, from https://moneywise.com/retirement/heres-why-more-americans-are-retiring-earlier-than-ever-before-even-if-they-dont-want-to
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