Why do we work? Some will answer: to earn a living, to pay the bills… others will say they want to give meaning to their lives, to feel useful, to be on their “X”, to rally to a cause, or a mission, or other things. However, almost everyone will agree that they are working to achieve the kind of financial independence that means they no longer need to work. If someone continues to work, it’s not because they need to, but because they want to. For most, financial independence is synonymous with retirement, coinciding with the disbursement of the funds they’ve worked hard to save.

In this short guide, we’ll show you how to make sure the disbursement process goes smoothly. Note: This exercise should be a smooth one, if you have a qualified financial planner’s help. If, on the other hand, you try this alone, at home, with Chat GPT’s help, swap the word “smooth” for the word “complicated.” ????

What is disbursement?  

Disbursement is the point in your financial life cycle when you’re finished with the accumulation and consolidation phases. In other words, you stop accumulating wealth, and start living off the fruit of your labour. Disbursement is the process of converting your assets into retirement income. Obviously, since disbursement doesn’t happen all at once, it’s important to optimize the order and pace at which each investment vehicle or financial asset is liquidated.  

 How do I optimize my disbursement strategy for retirement?   

Still, disbursement should be considered during the accumulation phase.

The points below recap our previous article:

  1. Identify all your sources of retirement income
  2. Figure out your current cost of living and the cost of living you want in retirement
  3. Identify your current savings capacity, and your savings capacity until retirement
  4. Assess the distance you need to close between you and your retirement goal
    At this stage of retirement planning, it’s important to be conservative in your assumptions about projected returns. Click here for an article on the assumptions recommended by Quebec’s Institute of Financial Planning (IQPF)

Create a retirement plan

Implement savings strategies that suit you, based on vehicles that optimize the family’s accumulation and disbursement plan. It’s essential that you don’t wait until the last minute, and that you be realistic about the current savings capacity specified in your savings plan.

Follow-up and adjust the retirement plan–Make sure you meet deadlines

  • More than 15 years before retirement, you shouldn’t need to monitor the retirement plan any more than every 36 months.
  • Less than 15 years before retirement, you should follow up on your retirement plan at least once a year.

It’s important that you update your retirement plan regularly. Whenever there’s a major change in your financial situation, you need to keep your information up to date. Getting married, having children, moving house, and changing jobs are all examples of changes that call for an update.

Tips, tricks, and questions to ask yourself to make sure you don’t miss out

How can I be sure I’ll have enough money for the rest of my life? This is one of the most common concerns people have when they get to retirement age. They’re afraid they’ll be short of money in their old age. A number of studies have even shown that this stress causes many people to stay in the workforce longer, because they fear running out of money. Below are some ideas for reducing that stress.

Tips to address the risk of longevity

a) At what age should I apply for my government pensions (i.e., QPP and OAS)?

Lifetime annuities address longevity risk most effectively, as payments continue until the annuitant’s death. Since government annuities (QPP and OAS) are lifetime annuities (that are indexed, which is increasingly rare in the annuities market), considering the deferral of annuities is a good way to address the risk of outliving your money. By deferring your pensions until you reach 70, you could increase your QPP by 42%, and your OAS by 36%.
But, since every disbursement plan is unique, you need to consider several variables to make the right decision as to the ideal age to apply for the QPP and OAS.
b) At what age should I convert my RRSP into a RRIF and what are my options?

  • The 71-year rule. It’s important to understand that the government requires people to start using (i.e., making withdrawals from) their RRSPs at some point. Those RRSP amounts can’t remain tax-sheltered forever. When a person reaches the age of 71, their RRSP must be converted to an RRIF, a disbursement vehicle that requires a minimum withdrawal.
  • Have you thought of converting your RRSPs to a RRIF based on your spouse’s age rather than yours? You should know that the mandatory minimum withdrawal percentage of your RRIF increases the older you get. In some cases, it may be a good idea to base the timing of your RRSP to RRIF conversion on your spouse’s age so that you can make smaller withdrawals.  
  • Deferring tax payments for as long as possible is often the best option.
  • Without necessarily converting to your RRPS to an RRIF, making one-time RRSP withdrawals may a good idea if your taxable income is below the tax threshold or backed up by a non-taxable income strategy and by deferral of QPP and OAS annuities.
  • Besides converting your RRSP to an RRIF, another possible alternative is to convert it to an annuity.

c) Insured life annuity, joint life annuity, or guaranteed annuity?

Several annuity options are available to the public. How do you untangle all this and compare between options? Chat GPT may be of little use to you at this point. As a life annuity is irrevocable, your financial planner’s help will be more than welcome, not only to explain the pros and cons of each available option, but also to help you compare options and make an informed choice among them.

Reduce taxes to increase net income

The majority of retirement incomes are taxable. What’s more, if your taxable income in retirement is too high, certain government benefits will be cut, and you’ll see your average tax rate increase. A good disbursement plan should take into account the many facets of Quebec’s tax regime to reduce the family’s tax burden in retirement, thereby providing access to income-based benefits for retirees.

Below are a few points you should consider, to reduce taxes at the time of disbursement:

a) Preventing OAS clawback should be one of the priorities of a disbursement plan. A post on this topic will be published on our social media channels shortly.

b) Splitting their incomes should be one way most retired couples in Quebec consider reducing their taxes. A full article on the topic will be published on our social media channels shortly.

c) Having a tax-free income vehicle such as a TFSA, a reverse mortgage, or retirement insurance available at retirement to reduce the average tax rate payable at disbursement. When they are developed 15 to 20 years from retirement, these strategies can provide a great deal of help.

Your financial planner will be your best asset, making sure that all the variables that make you special are considered, When drafting the strategic accumulation and disbursement plans.


If your disbursement strategy is planned several years in advance of retirement, it has a better chance of being optimized by your financial planner.

  1. An individual who plans their retirement at 42 has more time to make adjustments than someone who is 56, if their retirement plan is not suited to their needs.
  2. Unlocking funds from a locked-in retirement account (LIRA) to move them into an RRSP can be to your advantage, but you must begin that process at 55.

Furthermore, just as every individual is unique, so too is every strategy: one-size-fits-all, off-the-shelf disbursement plans simply don’t exist.
For example, disbursement strategies may differ considerably from one person to the next, depending on whether they are single, in a relationship, with or without children, or are salaried or self-employed.
As such, it’s very important to review your disbursement plan when major life changes occur.

Finally, some people won’t need to disburse all of their assets to have a comfortable retirement. In that case, what we talk about is estate optimization, and optimizing disbursement. Estate optimization will be the topic of one of our next articles.

To learn more about how to create your disbursement strategy, or to get the financial support you need, book an appointment with one of our advisors.