A few years ago, I shared a simple yet powerful idea for managing your portfolio in retirement: hold a low-cost, globally diversified equity ETF for long-term growth, and pair it with a high-interest savings ETF or money market fund to cover short-term cash flow needs (12-24 months).

I called it a two-fund solution, and the core idea was to eliminate complexity while reducing the behavioural risks that trip up so many retirees – things like selling during market downturns, holding too much cash out of fear, or managing a complicated mess of stocks and funds.

More recently, after digging into research from Scott Cederburg and others, it’s become clear that a globally diversified all-equity strategy may be optimal for investors to hold throughout their lifetime.

That’s why a fund like VEQT (with its roughly 30% domestic, 70% international mix) may be ideal for self-directed investors to hold both during their working years AND throughout retirement.

Related: VEQT and Chill for Life?

Indeed, VEQT’s structure not only simplifies investing for self-directed investors but also aligns with cutting-edge research on optimal lifetime asset allocation.

In this updated article, we’re blending the academic research with behavioural practicality. The Two-Fund Retirement Solution gives you long-term growth, short-term stability, and (in theory) a higher chance of staying invested when it matters most.

The Problem: Selling When Markets Are Down

Even the most diversified, evidence-based portfolios like VEQT are still 100% equities. That’s great for long-term growth. But it also means they’ll experience steep drawdowns from time to time.

For retirees who rely on portfolio withdrawals, that’s a real problem. It’s incredibly hard – psychologically – to sell shares when they’re down 20% or more. You know you’re supposed to stay the course, but when your income depends on those shares, logic takes a backseat. This triggers:

• Loss aversion (“I’m locking in a loss!”)

• Market timing impulses (“Maybe I’ll wait until it comes back up…”)

• Cash flow stress if income needs are inflexible

This is how people start with an equity portfolio and end up in GICs.

The Solution: Pair Growth with Liquidity

The Two-Fund Retirement Solution solves for this by carving out a small portion of your portfolio – 10% or so – and parking it in a high-interest savings ETF or money market fund (like CASH.TO, CSAV, or PSA).

How To Use It

• Withdrawals come from the HISA fund, not your VEQT holdings.
• Turn off automatic dividend reinvestment (DRIP) on VEQT. Let those dividends flow into cash instead – this helps refill the HISA sleeve passively over time.
• Refill the HISA bucket during up markets (or on a regular annual schedule).
• Keep roughly 12 months of planned withdrawals in the HISA fund to weather market storms.

Case Study: Two-Fund Retirement Solution in Action

Meet Sarah, a 60-year-old single retiree who retired at the end of 2024. She has the following assets:

• $500,000 in an RRSP
• $240,000 in a LIRA
• $150,000 in a TFSA
• $100,000 in a non-registered investment account
• $50,000 in a high-interest savings account

Her goal: Spend $60,000 per year after tax and defer CPP and OAS until age 70 to maximize guaranteed income.

The Two-Fund Strategy in Action

Sarah invests 90% of her RRSP, LIRA, and non-registered portfolio in VEQT, taking advantage of its global equity exposure and low cost. She keeps the remaining 10% in a high-interest savings ETF, which she uses for withdrawals in the early years. Her TFSA remains in 100% VEQT until age 65 – it’s the account she’ll touch last, once the non-registered funds are exhausted.

• She turns off dividend reinvestment on VEQT, allowing dividends to accumulate in cash.
• From age 60 to 69, she draws primarily from her RRSP and LIRA, gradually reducing her tax-deferred balances.
• Her TFSA is untouched during this phase, growing tax-free and serving as a long-term reserve or legacy asset.

What the Projections Show

Using realistic return and inflation assumptions (5.6% after-tax return, 2.1% inflation), Sarah’s plan is well within reach:

• Her withdrawal strategy maintains a 105% funded status
• Her portfolio lasts to age 95, even with conservative assumptions
• By delaying CPP and OAS to age 70, she increases her benefits by 42% and 36% respectively, versus taking the benefits at 65.

Final Thoughts

I tell my clients they should aim to take as much equity risk as they’re willing to stomach in retirement. For some, that’s 50-60% equities, for others that’s up to 100% equities.

Meanwhile, good recent research says the optimal portfolio to hold throughout your lifetime is 1/3 domestic equities and 2/3 international equities.

The problem is that research was done with numbers on a spreadsheet – and while the numbers recovered after steep losses from major market crashes, a spreadsheet is not reflective of how a real-life retiree would feel about their portfolio and staying the course. 

In other words, it’s easier to look backwards and see that everything worked out, but it’s much more difficult staring at actual losses in your portfolio without a crystal ball to show you the path forward.

That’s why, while “sub-optimal”, I suggest investors pair their risk appropriate asset allocation ETF with a 10% cash wedge (HISA ETF) to help facilitate withdrawals in retirement. What you give up in expected returns by holding some cash, you gain in peace of mind and psychological benefits to combat heuristics like loss aversion.

Have any retirees put the Two-Fund Retirement Solution into action? Let us know in the comments.

I went to bed after a perfectly normal Wednesday and woke up at 3am with my heart racing. I got up, went to the bathroom, and tried to get back to sleep – tossing and turning for a few hours before getting up for good around 5:30am.

I felt okay(ish) and went downstairs for an easy 20-minute spin class. I came up to the kitchen to pour myself a coffee and make the kids’ lunches for school. Something felt off. I was lightheaded and generally not feeling well.

My wife came up from her workout, took one look at me and called 811. She spoke to a nurse who asked a bunch of questions – including if I thought I could stand up and walk across the room. I tried, but immediately felt the room spin. She told us to call 911.

Minutes later an ambulance pulled up to our house and two paramedics whisked me off to the hospital.

I was in atrial fibrillation (AFib). 

A team of nurses and doctors swooped in and determined the best course of action was a cardioversion to shock my heart back into normal sinus rhythm. So that’s exactly what they did.

I woke up feeling woozy from the sedation, but the cardioversion worked and my heartbeat was back to normal.

AFib isn’t too common in healthy 45-year-olds, but it’s not unheard of either. It’s estimated that upwards of 40 million people worldwide are affected by AFib and one in four adults over 40 are at risk of developing the condition at some point in their lives. 

While I go through a host of follow up tests and appointments to determine the cause of this episode and assess the future risks (AFib is progressive), the biggest change will be related to lifestyle.

Pots of coffee and bottles of wine will be replaced by a Single cup of coffee and an Occasional glass of wine (not that we’re big drinkers – just when we travel, it’s hard to pass up an Aperol Spritz or three on a sunny day in Italy).

I’ll keep up with my regular strength and conditioning routine, pledge to walk more, and cut down on the snacks (moderation, right?).

If anything, it’s a wakeup call that your health is wealth. While I can plan to live another 45 healthy years or more, I understand that tomorrow is never promised.

This is why I’m so insistent on balancing living for today with saving for the future. If you have too many someday, maybes on your bucket list you might find that someday never comes.

We all have money dials – categories of spending that we can turn up and down based on our preferences and ages and stages of life. I encourage my clients to turn up the dial on things they value (travel, hobbies, generosity, etc.). Have some fun with it. Experiment.

If you’re used to flying economy, staying at a Best Western, and only travelling for two weeks a year, what would it look like if you flew premium economy (or business class), upgraded to the Four Seasons, and travelled for four to six weeks a year?

Even as I cut some of the joy out of my life (like that second cup of coffee – or third Spritz), I can turn up the dial so that one cup of coffee is the best damn cup of coffee I’ve ever tasted, or that Aperol Spritz is enjoyed in front of the Duomo in Florence rather than on my couch watching Netflix.

I’m feeling good today, and hopeful for the future. I’ve spent the last few days learning about living with AFib – which is serious, but certainly not an early death sentence. 

I know this is a financial blog, not a health newsletter. But what good is money without your health?

Be well.

This Week’s Recap:

On topic, I recently tackled the emotional side of spending in retirement.

Prior to that, I explained why RESPs are the hardest account to manage.

And on the last edition of Weekend Reading I walked through our decision to start drawing a salary from our business (a change from our dividend-only approach).

Look for some changes here in the coming weeks as we give the website a long overdue makeover.

What started as a personal finance hobby blog back in 2010 has now morphed into (primarily) a financial planning website with the occasional blog post. So we need the website to reflect that, and also highlight the fact that I don’t do this alone – my incredibly talented wife Lindsay is the first point of contact for all of our clients and is a big reason for the success and growth of our business, yet she’s largely invisible on this website. That will change with the redesign.

Promo of the Week:

Good news for parents (and grandparents). Wealthsimple finally has launched self-directed (family) RESPs. I’ve been waiting years for this, so I’ve eagerly opened an account and initiated an in-kind transfer from our existing RESP at TD Direct Investing.

Note that the RESP is in beta right now, so while I could open it and I can contribute new money to it, I couldn’t initiate the transfer on my own without contacting the Wealthsimple support team first (easy, it was done in five minutes). 

RESPs are complicated, and there are weird provincial grants that aren’t always transferable across bank platforms, so this is completely understandable.

I expect the transfer to take place within a few days.

And, just because I’m sure many of you will ask about how Wealthsimple will keep track of contribution and grant history per beneficiary, here’s what they had to say about that:

During the transfer process from TD to Wealthsimple, information regarding contributions, grants, and beneficiary details is transmitted through a Form C. 

TD will provide us with the Form C, which contains all relevant details concerning contributions, grants, and beneficiaries. 

Upon approval of the Form C by Wealthsimple, they will proceed to initiate the final transfer of funds. This process guarantees that the appropriate amounts are allocated to each beneficiary.

I have nearly completed a complete transfer of our financial accounts to Wealthsimple (just waiting on dual-owned self-directed corporate accounts). 

Join me on Wealthsimple and get $25 when you fund any account with my referral link (or code: FWWPDW).

Plus, you can get AirPods by moving $25,000 or more. Register first and learn more here.

Weekend Reading:

A brilliant piece from Nick Maggiulli on the mental freedom you get when you abandon fruitless stock picking for a mindless total market indexing approach.

I’m with Ben Carlson on almost everything on his list of things he’ll never spend money on (golf being the top of that list).

I love these little case studies by Fred Vettese – this one looking at aspiring retirees considering three strategies to make sure they don’t run out of money.

This is something I’ve encountered a lot in my planning practice – retirement with lots of home equity and not enough savings:

“A basic rule if you’re concerned about not having enough retirement income and own a home: Make sure you have a home equity line of credit (HELOC) in place before you leave the work force.”

A thought provoking video by Ben Felix where he says that, “people tend to assume that homes are great investments – they’re not, that mortgages are a wealth building hack – they help, but as much as some people think, that paying off a mortgage lowers your housing costs – it actually raises them, and that owning a home makes people happy – it might, but don’t count on it.”

Dear financial planners and advisors: Retirement planning isn’t just about the numbers — it’s about the person.

Russell Sawatsky writes – can annuities help the average retiree?

The Wealthy Barber David Chilton looks at two couples and one key difference in their spending – you guessed it, cars.

Finally, Preet Banerjee looks at the topic of financial influencers online and says, “while Canadian investors are distrustful of finfluencers in general, when they find one they like, they like them a lot. And that can cost them dearly.”

Have a great weekend, everyone!

I’ve spent a lot of time helping people figure out if they can retire. But what surprises many is that the harder part often comes after that: convincing them it’s okay to actually enjoy their money.

On a recent episode of The Wealthy Barber Podcast, I talked with Dave Chilton about this very problem – how even the most financially secure retirees can freeze up when it’s time to spend. They’ve won the game, but can’t seem to leave the field.

That’s where the real value of financial planning comes in – not in the spreadsheet, but in the emotional coaching that helps people align their money with their values.

Why Good Savers Struggle to Spend

It’s no mystery why so many retirees are reluctant to open up the spending taps.

They’ve spent 30 or 40 years accumulating. They’ve maxed out their RRSPs and TFSAs, avoided lifestyle creep, paid off the mortgage, maybe even helped their kids with education or down payments. They’ve done everything right.

But when the paycheques stop, their entire financial identity gets flipped upside down. The same instincts that made them successful savers – discipline, restraint, long-term thinking – can work against them in retirement.

Now they’re looking at their portfolio and thinking, “If I take money out, I’m going backwards.” It doesn’t feel like income. It feels like loss.

The Fear Beneath the Numbers

I work with many clients who are in excellent financial shape. Their plans say they can spend $90,000 or $100,000 per year with ease. But their actual spending is closer to $60,000.

Why?

– They’re afraid of outliving their money – even when the numbers say they won’t.

– They feel guilty for spending on themselves after decades of deferred gratification.

– They want to help their kids but worry about giving too much, too soon.

– They’re anxious about the market, interest rates, health care costs, or the next unknown curveball.

These fears aren’t irrational. They’re human. But they do need to be addressed if you want to get the full value out of the money you’ve worked so hard to save.

Conflict-Free, But Not Emotion-Free

When I say I offer “advice-only” financial planning, people often think that just means fee transparency. No products. No commissions. No conflicts or hidden agendas.

All true.

But what surprises clients is how much of our work has nothing to do with investment returns or tax optimization. Instead, we spend a lot of time talking about values, identity, and purpose.

Yes, I’ll show you how delaying CPP can boost your inflation-adjusted income for life. But I’ll also ask what you’re waiting for – and whether holding out is really about maximizing value or avoiding uncertainty.

Yes, we’ll talk about withdrawal strategies. But we’ll also talk about why it’s so hard to stop saving and start living.

Sometimes people just need permission – from someone objective and unbiased – to take the trip, upgrade the vehicle, or pay for the big family reunion. And that’s what I’m here for.

Behavioural Coaching in Action

This isn’t therapy. But it’s not just math either.

Let’s say your plan shows you can comfortably spend $100,000 per year. That includes covering your fixed expenses, some travel, a new car every ten years, and gifts to your kids. You’ve got a well-diversified portfolio and guaranteed income from CPP, OAS, and maybe a defined benefit pension.

And yet, you’re still hesitating to book that river cruise or splurge on business class.

That’s when I pull up the projections. Not to show you a number – but to tell you a story. What does your life look like if you do take the trip? What if you don’t?

We explore scenarios, set spending targets with confidence, and create space for what I call values-based indulgence – not reckless spending, but intentional joy.

Why This Matters More Than Ever

Investment advice is cheap. Literally. You can build a low-cost, globally diversified portfolio with one click. You can automate rebalancing. You can find hundreds of blog posts (some of them mine) showing how to optimize your TFSA, RRSP, or non-registered accounts.

What’s scarce is the human side of financial advice – the kind that recognizes you’re not just a spreadsheet.

Good advice-only planning offers two things that an index fund or a robo-advisor can’t: context and coaching.

– Context means we look at your whole life: family, health, goals, risk tolerance, spending patterns, and personal quirks.

– Coaching means I help you stay on track – not just with the plan, but with your mindset.

Especially in retirement, this kind of support is more valuable than ever.

You’ve Won the Game. Now What?

If you’re reading this and thinking, “Yep, that’s me. I know I could be spending more – but I’m stuck,” you’re not alone. Many of my clients have plenty of financial capacity and still worry about running out of money.

My job isn’t just to build a plan. It’s to help you follow through. To nudge you, gently, toward a life that feels fulfilling – not just financially secure.

Retirement isn’t about having the biggest pot at the end. It’s about getting the most value out of the resources you’ve got – while you’re still healthy, mobile, and able to enjoy it.

So if you’re waiting for permission, here it is:

You don’t need more spreadsheets. You need to spend the money.