Edmundo’s retirement spending goal is $110,000 a year after tax, rising with inflation.TANNIS TOOHEY/The Globe and Mail
Since Edmundo’s wife of 42 years died, he’s been struggling to “figure out a future” without her, settle in a new town and help his family financially.
“I was widowed in late 2024,” Edmundo writes in an e-mail. “2025 was an extremely transitional year.” He is 68 years old with two children, 31 and 34, and a 10-year-old grandchild.
Edmundo is one of three shareholders in a Canadian family corporation valued at slightly less than $2-million that is in the process of being wound down over the next five years. He expects to get dividends of $150,000 a year from the corporation, from 2026 to 2030, inclusive.
His other income sources are Canada Pension Plan and Old Age Security benefits, amounting to $24,900 a year.
Edmundo also holds a $340,000 interest-free first mortgage for his son that comes due in 2029, at which point he plans to forgive the loan and give a gift of equal value to his daughter.
Short-term, his goals are to support his family and community. Longer-term, “it’s very hard to say.” Edmundo wonders if he should hire a professional portfolio manager or continue managing his own investments.
His retirement spending goal is $110,000 a year after tax, rising with inflation.
We asked Matthew Ardrey, portfolio manager and senior financial planner at TriDelta Private Wealth in Toronto, to look at Edmundo’s situation.
What the expert says
Edmundo is looking for direction, Mr. Ardrey says. “Looking forward at the road ahead after the massive life change of losing one’s spouse is definitely going to give a person pause to think and re-evaluate their life.”
Edmundo owns his home, which is worth $900,000. He has a tax-free savings account worth $345,000, a registered retirement savings plan worth $1,640,000 and non-registered investments worth $538,000. He also has $100,000 in a bank account.
Edmundo’s TFSA is invested in world equity exchange-traded funds. His RRSP is largely invested in balanced ETFs. His non-registered account is mostly invested in a Canadian dividend ETF. This gives him an asset mix of about 25 per cent fixed income and 75 per cent stocks. Of that equity exposure, more than 80 per cent of it is in Canada and the United States. “This asset allocation gives a projected future return of 5.56 per cent,” the planner says.
Edmundo is one of three owners of a corporation that is being wound down over the next five years. The current value of the corporation is around $2-million total. Edmundo expects to get a dividend payment of $150,000 a year for five years, from 2026 to 2030. This dividend will be 75 per cent eligible and 25 per cent non-eligible for income tax purposes.
There are two types of dividends in Canada. Eligible dividends are paid by public Canadian corporations and taxed at higher general tax rates. They offer shareholders a higher, enhanced tax credit and lower personal taxes. Non-eligible dividends come from small businesses, or Canadian-controlled private corporations, taxed at lower rates, resulting in a smaller tax credit.
Edmundo is collecting both CPP and OAS payments. He receives $1,333 for CPP and $740 for OAS each month. “With the higher income from the dividends, Edmundo will be losing the OAS to clawback,” Mr. Ardrey says. “The clawback is further compounded by the gross-up of dividends on his tax return.”
Eligible dividends are grossed up at 38 per cent, so every dollar of income is $1.38 on your tax return. Later in the return, you receive a dividend tax credit. Keep in mind, the credit doesn’t count for the OAS clawback calculation, but the gross-up does. Someone with about $68,000 of dividend income would have their OAS clawed back.
Edmundo is spending $9,155 a month, and maximizing his TFSA contributions annually. “He notes that any surplus is going into his bank account,” the planner says. In preparing his forecast, Mr. Ardrey assumes all expenses and savings grow annually with inflation set at 3 per cent.
Outside of his regular income, Edmundo receives $1,500 a month from his son (not included in his income). “This is a non-taxable capital repayment” because Edmundo provided his son with a $340,000 mortgage. The term of this mortgage ends in June, 2029. At that point, Edmundo plans to forgive the mortgage and provide his daughter with an equal gift.
“Based on these assumptions, Edmundo can meet his primary retirement goal of spending $110,000 per year, after tax and growing with inflation,” Mr. Ardrey says.
“To truly understand the risk in this plan, we need to move beyond the straight-line projection, as we know that life and investments rarely ever move in a straight line,” he says. “To ensure the viability of this plan, we stress test it by using a Monte Carlo simulation.” A Monte Carlo simulation introduces randomness to a number of factors, including returns, to stress test the success of a retirement plan.
“In this plan, we have run 1,000 iterations with the financial planning software to get the results,” he says. “We look at the 75-per-cent and 50-per-cent levels to determine where risk due to return-rate variance may affect the success of the plan.”
In the volatility stress test, Edmundo’s results are positive with an 82-per-cent success rate.
“Despite the success of this financial projection, Edmundo should consider looking into having ongoing professional financial planning advice,” Mr. Ardrey says. “He is entering a new phase in his life, one where everything is going to be different. I believe he understands this himself, as many of his goals centre around figuring out the future and understanding what that new future looks like.”
Edmundo has goals to live well and travel more, as well as support his family and community, the planner notes. “This is where I feel that the benefit of ongoing financial advice can have a place in his life. A new life plan is evolving for Edmundo and having someone to help him understand how he makes that plan a reality, I feel, is important at this stage.”
Regarding his question about self-managing his investments versus institutional advice, this is a question larger than the scope of this Financial Facelift, Mr. Ardrey says. “That being said, I would certainly feel that his portfolio could use a better balance between asset classes and better geographic diversification,” the planner says. “It is stock-heavy and overweight in North American equities.”
Edmundo’s non-registered account, in particular, is invested mainly in a Canadian dividend ETF. He may want to consider more of a total return approach on his entire portfolio, balancing capital gains, dividends and interest income.
“Capital gains are a valid and tax-efficient way to earn investment returns alongside dividends,” the planner says. “Capital gains are more tax-preferred than dividends or interest.”
Edmundo is financially secure if he continues to do what he is doing now, Mr. Ardrey says. “That being said, is how he is living now how he wants to live in the future? Changes in lifestyle or how he wants to help out his family can impact his financial plan,” he says. “Having the ability to revisit and revise the plan would be beneficial to Edmundo as he enters this new chapter in his life.”
Client situation
The people: Edmundo, 68, his adult children and his grandchild.
The problem: Charting a new financial and life path.
The plan: Consider hiring a qualified financial planner to help him map out his future financial plan and revisit it regularly. Take steps to diversify his portfolio both geographically and among asset classes.
The payoff: Financial guidance leading to a renewed sense of direction.
Monthly after-tax income (Edmundo’s estimate): $12,000.
Assets: Cash $100,000; exchange-traded fund, mainly stocks, $600,000; tax-free savings account $345,000; registered retirement savings plan $1,640,000; share of corporation assets $670,000; residence $900,000. Total: $4.26-million.
Monthly outlays: Property tax $585; water, sewer, garbage $200; home insurance $150; electricity $175; heating $175; maintenance $500; garden $250; transportation $700; groceries $1,000; clothing $250; gifts, charity $350; vacation, travel $2,500; dining, drinks, entertainment $1,100; personal care $100; club memberships $70; pets $200; sports, hobbies $200; subscriptions $50; doctors, dentists, prescriptions $400; phones, TV, internet $200; TFSA contribution $585. Total: $9,740. Any surplus goes to Edmundo’s bank account.
Liabilities: None.
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Some details may be changed to protect the privacy of the people profiled.