It has been more than 10 years since I started offering financial planning advice – and more than five years since I quit my day job to work as an advice-only planner full-time.

I have a soft spot for who I call regular Canadians with regular problems. That’s the majority of you who read this blog – typically you’re T4 salaried employees, some with pensions, others with employer-matching savings plans, and many more just doing their best to balance living for today with saving for the future.

This is the mass market – one that has struggled to access quality financial advice over the years. You’re working with a bank-branch or investment firm advisor selling high fee mutual funds, or got roped into a financial MLM’s insurance-based investment scheme by a friend or relative. Worse (maybe), you’re just going it alone and following tips from your favourite finfluencer(s) online.

These folks need good financial advice at certain ages and stages of life, whether they’re starting a family, buying a home, changing careers, receiving an inheritance, or gearing up for retirement.

And while there are some fabulous financial advisors in Canada, most of them aren’t tripping over themselves to work with the mass market. Instead, the best of the best are working with high or ultra-high net worth clients.

Cool.

Imagine the time and resources spent on scenario planning for the 0.13% who might have been affected by the now (likely) dead increase to the capital gains inclusion rate. Not my idea of fun.

Advice-only planning, at least my version of it, aims to help the mass market and give them a fighting chance to survive in an increasingly complex financial world.

I’ve written an astonishing number of financial plans over the past three years (451 to be exact). 

But I’m only one person and the mass market is, by definition, massive. And not everyone has the means to pay for advice, or is not yet at a stage where a financial planning engagement makes sense. That’s where this blog comes into play. There’s a good 12,000 of you who subscribe and read regularly, and tens of thousands more who poke your head in from time-to-time.

Last weekend I was busy with kids’ activities and didn’t get around to writing a Weekend Reading update. That was a mistake, because many of you were busy freaking out over the threat of tariffs and wondering if you should hit the panic button and sell before the market opened Monday.

Indeed, I received at least a half dozen emails from concerned readers about exactly that.

So I quickly took to social media to put out a Keep Calm and Carry On message:

Markets have been through a lot in the past hundred years (heck, in the past five years) and continue marching on over the long term.

Unless you got way over your skis (leverage, too much risk, too concentrated) then just stick to your sensible, low cost, globally diversified strategy.

— Robb Engen (@boomerandecho.bsky.social) 3 February 2025 at 06:53

Meanwhile, I try to train my clients to be emotionless robots when it comes to investing, but it’s easier said than done when everything feels scary and uncertain:

Hi Robb, while I do tend to err on the emotionless robot side when it comes to investing, there has been so much talk about these tariffs and I wonder if this is a situation when we would want to make some changes in investment strategy, allocation etc.

I’m guessing you’ll say don’t change anything, same as always but wanted to ask regardless haha.

and:

Hey Robb,

I’ve never seen a trade war before but I can’t imagine this is good for the markets. I’m assuming your recommendation is to just keep investing with the dollar cost averaging mentality?

Notice how they both knew what I was going to say, but I think they just needed to hear me say it again this time?

Finally, my absolute favourite message was from another client (who’s friends with another client):

I was freaking out last weekend with all the crazy stuff about tariffs. I did not do a thing. And you were right! 

I almost emailed you, but I talked to (other client / friend) and she said, “do not bother Robb – he has taught us.”

I love it.

So what exactly is a regular Canadian with regular problems?

My ideal client is an individual or couple who is 3-5 years away from retirement and looking for a roadmap. They want to know if they can retire at their desired date, how much they can safely spend, and ultimately if they’re going to be okay. 

They want to know if they’re paying too much in fees in a managed portfolio, or if their self-directed portfolio is appropriately allocated.

They want to know if they can travel more, or help their children get through post-secondary and/or buy a house one day.

That’s my wheelhouse. But I also have many clients in their 30s and 40s who want guidance on how to maximize their life enjoyment now while also saving for the future. I have many clients who are already retired and want a tax efficient withdrawal of their resources. And I have an increasing number of clients who are dealing with an influx of money from an inheritance, settlement, or insurance pay out.

Okay, so who is NOT a regular Canadian with regular problems? Well, let’s say you own a business (not a sole proprietorship or a “freelance” business like mine, but something more complicated with employees and widgets, or other business partners), or you’re a US citizen, or you plan on leaving Canada or retiring outside of Canada, you receive regular stock options or other equity based compensation, or you own multiple rental properties (or foreign properties), to name a few.

Complexities like that deserve more time and expertise than I can offer. When I receive requests from folks with those issues, I typically refer them to other rockstar advice-only planning firms such as Spring Planning, Objective Financial Partners, or Modern Cents.

There are others, but in general I’ve found that more and more financial planners have co-opted the advice-only planning label but also offer investment management for a percentage fee.

I believe true advice-only planning separates advice from product sales. That’s just me. The trade-off, and a frustrating aspect of advice-only planning, is that I’m just giving advice. It’s up to my clients to accept and implement that advice.

Which leads me back to my point about keeping the blog up-to-date. If you’re a client, you should be following the blog and subscribing to email updates. When I publish something, I’m speaking to you (and many more like you) about good financial decision making and (hopefully) reinforcing the more specific advice I have given you.

Next weekend we’re heading to Cancun to escape this never ending winter freeze. Meanwhile the RRSP deadline is fast approaching. To head-off dozens of emails about RRSP contributions, I should probably publish a quick blog post explaining how to think about optimizing your RRSP contribution for the 2024 tax year.

This Week’s Recap:

In my last post I opened up the money bag to answer reader questions about investment loans, optimizing your RRSP, underspending in retirement, and more.

Prior to that I wrote about putting your retirement income puzzle pieces together.

And my last Weekend Reading looked at the power of simplifying your finances.

Promo of the Week:

Wealthsimple is back with an even more generous transfer bonus promotion that they’re calling their Big Winter Bundle Promotion.

What’s included in this new transfer bonus promotion?

• 2% cash back match on RRSP, spousal RRSP, and LIRA transfers
• 1% cash back match on TFSA, FHSA, and other eligible transfers
• 5 lift tickets for referring friends, setting up your first direct deposit, and more

New and existing Wealthsimple clients can qualify for the match offer.

In order to receive the match bonus, the client must have a Wealthsimple Cash account.

The match bonus will be applied as 24 equal monthly payments to your Wealthsimple Cash within 60 days after the full net funding amount has settled.

Open your Wealthsimple account here, and then register for the Big Winter Bundle promotion to get yourself some cash back.

I’ve helped hundreds of clients and readers set-up their own self-directed investing accounts and start investing with a single, risk appropriate asset allocation ETF. You can do this!

Weekend Reading:

YCharts is debunking investing myths such as “investing is like gambling”.

Financial planner Markus Muhs looks at true long-term investing and why recent returns can be misleading.

On a similar note, Dan Hallett says if you’re piling into US stocks don’t expect the past decade to repeat.

Mark Walhout takes a thorough look at the health conditions that may necessitate a stay in long term care, the different types and levels of long-term care support in Canada and their associated costs, and how retirees should be planning for the potential costs and lifestyle impact that a move to long-term care will bring:

Fred Vettese looks at whether minimum RRIF withdrawal rates are too high (G&M subs):

There’s indeed an argument if returns are too low (or the portfolio is invested too conservatively) and the retiree has a long life expectancy.

Finally, a double-shot from A Wealth of Common Sense blogger Ben Carlson. First he describes the perfect level of wealth.

Next, does buying the dip actually work? In theory, yes. But not so much in practice.

Have a great weekend, everyone!

Welcome to the Money Bag, where I answer questions and address comments from readers on a wide range of money topics, myths, and perceptions about money. No question is off limits, so hit me up in the comments section or send me an email about any money topic that’s on your mind.

Today, I’m answering reader questions about borrowing to invest, optimizing your RRSP, market timing, the reluctance to spend in retirement, and switching from dividend stocks to index funds.

First up is Andrea, whose financial advisor is trying to talk her into setting up an investment loan. Take it away, Andrea!

Should I borrow to invest?

My advisor suggested using a HELOC, paying only the interest, and using the rest to invest (obviously in hopes of gaining a higher return than the cost of the HELOC interest). Do you think this is a wise idea?

Hi Andrea, I’ve recently helped several clients extract themselves from unnecessary investment loans. It’s one of those ideas that looks good on paper but is not so great in real life.

Interest is tax deductible, yes. But that’s a one-time savings when you file your taxes. You still need to service the loan interest each month. 

What are you investing in? It should be high enough exposure to equities to give you a higher expected investment return than the loan interest, but not too risky (betting on individual stocks) and not too expensive (what kind of fees are you paying to your advisor?).

Stocks can fall sharply (34% in March 2020, or down 12-18% in 2022 depending on the index).

How would you feel about a $140,000 market value when your loan is $200,000?

Investment loans are great for investment advisors because they get a loan on the books and an investment to manage (from which to extract fees).

Finally, are your other goals being fulfilled (optimize RRSP, maximize TFSA, prioritizing other goals like living your best life)?

All more important than creating a tax deductible investment loan.

What does it mean to optimize your RRSP?

Next up is Tim, who wanted clarification on my suggested way to optimize your RRSP contributions when you have an employer matching RRSP.

In a recent Weekend Reading edition, you suggest to ”contribute enough to max out the match, but no more” when it comes to employer matching savings plans. Why not contribute more?

Let’s say someone earns $100,000 per year and can contribute 18% of his income to RRSPs. At work, five percent would come from the employee and five percent would come from the employer’s match, for a total of 10%. But what about the remaining eight percent? Why not maxing out the RRSP with the employer only? What are the cons with this approach?

Hi Tim, the answer is a bit nuanced. First of all, it might make sense to contribute the extra 8% but I would only do that in the context of my next point, which is to “optimize” your RRSP within your marginal tax bracket. Take the free money with the match, yes, but the extra contribution is either warranted or not. If not, maybe TFSA makes more sense.

If it does make sense to contribute more to the RRSP, my point is that most people should do that in a personal RRSP that is not tied to the group plan. Remember the group plan often limits its members to a narrow menu of investment options, which most of the time will be higher fees than an ETF that you can buy on your own.

So, the idea is that you’ll take the free money and max out your employer matching plans, then possibly contribute more to your RRSP, but do that in a personal RRSP and invest in lower cost ETFs.

Is a market crash coming?

Next, we have Adam who is feeling nervous about a post-election market crash and wants to know what to do about it.

Hi Robb: I keep reading about the impending market downturn after the election glee is over.

That said, since my wonderful foray into VEQT (with your encouragement,) should I be taking steps to secure my portfolio by moving say half of VEQT to a more balanced fund? Will you be writing about this in the near future?

Hi Adam, you’ll find no shortage of opinions on when the market is going to crash (and how bad). Whether it’s the election, or aftermath, or the next big thing that people are nervous about there will always be a reason for panicky investors to sell.

Your investing strategy should not change based on market conditions.

Meaning, if you are investing for the long haul and are in an asset mix that you’re comfortable with, then stay the course and ignore punditry and short-term price fluctuations.

Moving half of your VEQT into VBAL just creates VGRO (an 80/20 portfolio). If an 80/20 portfolio allows you to more comfortably stay in your seat then that might be a prudent move.

Just know that if VGRO existed during the great financial crisis it would have fallen 33.89% from June 2007 to March 2009 (45 months). So it’s not like 80% stocks is substantially less risky than 100% stocks (which fell 42.06% during that same time period).

Finally, know that the US market is not THE entire global market. It’s why you’re invested in VEQT (14,000+ global stocks) and not VFV (500 US large cap stocks). You’re taking risk, but you’re diversifying that risk around the world.

Stocks will absolutely fall at some point. But they’ll also recover eventually and make new all-time highs. That’s the nature of investing.

Market timing is a great way to end up poorer and drive yourself mad.

Why don’t retirees spend their money?

Next we have Darlene, who wants to know why retirees are so reluctant to spend their money.

Hi Robb, you mention retirees don’t spend up to their capacity. What’s driving this reluctance to spend down to zero, and what are they holding on to the money for? And do they really need to spend to zero?

Hi Darlene, the reluctance to spend comes from a fear of running out of money, either from a bad market crash, higher than normal inflation, high expenses on healthcare as they age, or from a higher-than-normal life expectancy.

A good retirement plan can help alleviate those fears, showing a range of outcomes using conservative assumptions on spending, inflation, longevity, and rates of return.

I don’t think anyone should be planning to truly die with zero – you need a margin of safety – but in my experience most retirees are not spending nearly up to their capacity due to the above fears and concerns.

I like to give my retired clients a spending range. A comfortable spending floor (typically what they’re spending now) that they could easily stick to in good times or bad, and then a safe spending ceiling that they could spend up to if desired without worrying about running out of money.

Related: Putting together your retirement income puzzle pieces

That range might look like an annual spending floor of $60,000 after-taxes, and an annual safe spending ceiling of $72,000. In reality, the sweet spot might be somewhere in the middle at $66,000, giving them a bit more spending capacity to enjoy retirement without causing too much anxiety that they’re overspending.

From dividend stocks to index funds: When to pull the trigger?

Finally, here’s a question from Jean about switching from dividend stocks to index funds.

I’ve been a successful dividend investor for about 20 years now and have been thinking of switching to indexing for a while. One of the main reasons for me to switch is that I’m getting older and losing the patience to manage my portfolio. Also, my family is not into it at all, so teaching them indexing would be much easier. 

I have a pretty good idea what my final indexing strategy will look like. Something like VEQT with sprinkles of VCE/VV. Quite basic and simple!

My dilemma now is how to accomplish the transition? When and how do I pull the trigger?

Setting a date and doing it all at once seems to be the play like you did. But then, how do my manage my holdings till then? I’ve always had a long term approach and managing till the switch would be a pretty short term thing, hence a great part of my dilemma.

Any thoughts on all of that?

Hi Jean, you’ve listed some pretty compelling reasons to make the switch to indexing. As fun and interesting as it can be to manage your own stock portfolio, in my experience the juice is just not worth the squeeze anymore now that you can buy a single global index fund for the low price of 0.20% and get market returns without any effort.

No need for sprinkles, either. VEQT (or XEQT) has everything you need. Don’t overthink it!

Jean, this is a bit like getting into a cold pool or lake. Best to just jump in at once rather than stress about it and inch your way in.

Think of your portfolio as if it’s in cash right now. Would you buy all of your individual stocks again, or would you just buy your index fund?

Because that’s the exact same thing as selling all of your stocks at once and then immediately buying your ETF. You’re out of the market for a hot minute, and right back in with a globally diversified fund (minus some transaction fees, depending on your brokerage platform).

Pick a day – why not Monday at noon? The market is open, you can sell all of your stocks, and immediately buy your ETF. Done. No need to manage anything in the short term.

This is not like timing the market or anything. If you’re going to do it, best to get it over with and do it right away.

My only caveat to all of that is if you have large unrealized capital gains in a taxable account. More careful consideration needs to be taken there, likely with a financial planner or tax professional. I’ve worked with clients to sell their taxable holdings over a period of 2-3 years to spread out the capital gains hit.

There are no tax implications at all for selling stocks inside your registered accounts (RRSP, TFSA, and LIRA).

Do you have a money-related question for me? Hit me up in the comments below or send me an email. 

Old Age Security (OAS) is a government program in Canada that provides a basic income to eligible seniors who have reached the age of 65. It is one of the three main pillars of Canada’s retirement income system, along with the Canada Pension Plan and personal savings.

Eligibility for OAS is based on several factors, including age, residency, and income. To receive OAS payments, you must be 65 years of age or older and have lived in Canada for at least 10 years after the age of 18.

OAS is considered taxable income. As of January 2025, the OAS maximum payments from age 65 to 74 is $727.67 per month ($8,732.04 per year), and $800.44 per month ($9,605.28 per year) for those ages 75 and older.

The amount of OAS you receive is based on how long you’ve lived in Canada after the age of 18. If you have lived in Canada for less than 40 years, you may receive a partial pension. For instance, if you lived in Canada for 35 out of the 40 eligible years you would be entitled to receive 87.5% of the OAS maximum payment (35 divided by 40).

The amount you receive may be reduced if your income exceeds a certain threshold, which is $90,997 for the income year 2024. If your income exceeds this amount, your OAS payment will be reduced by 15 cents for every dollar of income above the threshold. This OAS “recovery tax” period takes place the following year (July 2025 to June 2026).

Since July 2013, most eligible seniors are automatically enrolled to receive OAS starting at age 65. The government determines your eligibility the month after you turn 64. If eligible, you will be notified of your automatic enrolment beginning at age 65. That means, if you are still working or simply plan to defer taking your OAS benefits to age 66 to 70, you should contact Service Canada to declare your voluntary deferral.

Otherwise, to apply for OAS, you must complete an application form and provide proof of age and residency. You can apply up to 11 months before you turn 65, and you should receive your first payment within three months of your application being approved.

To apply online you’ll need a My Service Canada Account (MSCA).

In addition to OAS, there are other government programs that may be available to eligible seniors, including the Guaranteed Income Supplement, the Allowance for Spouses, and the Allowance for Survivors. These programs provide additional income to low-income seniors and their spouses or survivors.

Overall, Old Age Security is an important program that provides a basic income to eligible seniors in Canada. While the amount of OAS you receive may vary based on your income and residency, it can provide a valuable source of income in retirement. If you are approaching the age of 65, it is important to consider your eligibility for OAS and other government programs that may be available to you.

Deferring OAS to age 70

Deferring Old Age Security to age 70 is an option for Canadian seniors who have the financial capacity to do so. By delaying your OAS payments, you can increase the amount you receive each month.

For each month that you delay your OAS beyond age 65, your pension will increase by 0.6%, up to a maximum increase of 36% if you delay OAS until age 70. This means that if you delay your OAS for five years, you will receive 36% more per month than you would if you started collecting at age 65.

However, it is important to carefully consider whether delaying your OAS is the right choice for you. If you have a shorter life expectancy or if you need the money to cover your living expenses, it may be better to start collecting your OAS at age 65.

Additionally, delaying your OAS may affect your eligibility for other government programs that are based on your income. For example, if you delay your OAS and receive a higher pension at age 70, your income may be higher and you may no longer be eligible for certain programs, such as the Guaranteed Income Supplement.

Overall, delaying your OAS to age 70 is an option that can provide a higher monthly pension, but it may not be the right choice for everyone.

OAS Payment Dates 2025

The OAS payment dates for 2025 are:

• January 29, 2025
• February 26, 2025
• March 27, 2025
• April 28, 2025
• May 28, 2025
• June 26, 2025
• July 29, 2025
• August 27, 2025
• September 25, 2025
• October 29, 2025
• November 26, 2025
• December 22, 2025

Payment dates may vary depending on your payment method. If you receive your OAS payments by direct deposit, it should be deposited into your account on the payment date. If you receive your payment by cheque, it may take a few additional days to arrive by mail.

OAS is Indexed to Inflation

While Canadians can expect their CPP payments to increase annually based on the previous year’s Consumer Price Index, OAS recipients have their benefits adjusted quarterly to provide better protection against unexpected sharp increases in prices over the year.

The quarterly inflation adjustment for OAS benefits is based on the difference between the average CPI for two periods of three months each:

• the most recent three-month period for which CPI is available, and
• the last three-month period where a CPI increase led to an increase in OAS benefit amounts.

OAS payments remained unchanged for the first quarter of 2025, as the CPI did not increase over the previous 3-month period.

OAS Payments Increase at age 75

In July 2022, the Canadian government announced an increase to the OAS pension for seniors aged 75 or older. Starting in July 2022, the OAS pension for seniors aged 75 or older was automatically and permanently increased by 10%.

If you turned 75 after July 1, 2022 you will receive the increase in the month following your 75th birthday.

The 10% increase in the maximum OAS pension rate will not affect the calculation of your Guaranteed Income Supplement (GIS).

The increase to the OAS pension for seniors aged 75 or older is in recognition of the increased costs and challenges that seniors face as they age. The government hopes that this increase will provide additional support to seniors and help them maintain a good standard of living in their later years.

OAS Clawback Threshold

The Old Age Security (OAS) clawback threshold is the income level at which your OAS payments will be reduced or “clawed back”. The OAS clawback is designed to ensure that OAS payments are targeted to those who need them the most, by reducing or eliminating payments for those with higher income levels.

The OAS clawback threshold for the income year 2024 is $90,997. This means that if your net income (which includes income from all sources, such as employment, pensions, investments, etc.) exceeds this amount, your OAS payments will be reduced by 15 cents for every dollar of income above the threshold. 

For example, if your net income was $95,997 in 2024, which is $5,000 above the clawback threshold, your future OAS payments will be clawed back by $750 (15% of $5,000). This “recovery tax” period takes place from July 2025 to June 2026.

If your net income exceeds $148,451 in 2024, your OAS payments will be fully clawed-back during the OAS recovery tax period the following year (July to June).

The timing and mechanics of this is important to note.

Let’s say you applied for OAS benefits upon turning 65 in June 2024. You earned $150,000 in 2024 due to a variety of income sources, including capital gains from the sale of a rental property. You file your 2024 taxes in April 2025 and CRA determines that your taxable income that year has exceeded the OAS clawback threshold.

Meanwhile, you’ve been receiving OAS payments monthly since July 2024. You won’t get a bill to repay the approximate $8,732 you received in OAS benefits between July 2024 and June 2025. Instead, your repayment amount is deducted from your ongoing OAS payments as a recovery tax starting in July 2025.

You will receive a letter informing you of any recovery tax deductions being withheld from your OAS pension payments.

*Changes in OAS Eligibility (not happening)*

Back in 2015, the federal government led by Stephen Harper proposed changes to OAS eligibility – increasing the age of eligibility from 65 to 67. This would have gone into effect as of April 1, 2023 and be fully implemented by January, 2029.

This proposal was quickly repealed when the federal Liberal government was elected in 2015. It’s not happening, folks.

You can continue to apply for OAS benefits and receive them starting at age 65.

Final Thoughts

OAS is a complicated system but one that is critical to retirement planning for many Canadians. It’s important to understand how much OAS you can expect to receive in retirement, and when you plan to take your OAS benefits (between ages 65 to 70) to maximize your income and minimize any clawbacks.

Speaking of clawbacks, it’s also important to understand that OAS benefits are means-tested, meaning once your income rises above a certain threshold your benefits will be clawed-back by 15 cents for every dollar above that threshold. In some cases, OAS benefits may be completely clawed back.

It’s important to work with a financial planner who can help you understand how the timing of retirement, crystallizing capital gains, and withdrawing from an RRSP or RRIF can impact when you should take your OAS benefits and whether your benefits will be clawed back.

It’s also important to note the advantage of pension income splitting with a spouse (for defined benefit pension income and RRIF / LIF income at age 65 and beyond), and how this helps avoid OAS clawbacks in many cases.

OAS payments are indexed to inflation and benefits are adjusted quarterly to keep pace with inflation (versus CPP, which is adjusted annually in January).

Will you take your OAS at age 65, or do you plan on deferring OAS to age 70? Do you have strategies in place based on retirement, capital gains, RRSP/RRIF withdrawals, that will impact when you decide to take OAS?