When the paycheques stop

How to pay yourself in retirement

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One of the first things to consider when planning for retirement is where your income will come from after your paycheques stop. It’s time to start thinking about how you’re going to pay yourself. Creating a “custom paycheque” is a good way to begin.

First, you take inventory of your potential income sources, then it’s about finding the best way to manage these sources to maximize your cash flow.

Identify your sources of income

During your working years, you’ll likely receive income from one or both of these sources:

  • a paycheque from your employer
  • interest or capital gains from your non-registered investments (such as mutual funds or rental income)

Once you’ve transitioned into retirement, your income will probably get a bit more complicated because you may need to coordinate money coming from a variety of sources.

Managing these sources of income

Organizing your income sources in retirement typically starts by considering the most inflexible income sources first. Since you have less control over your CPP, OAS or pension plan payments, there are fewer tax-planning options for those types of income.

One of the key decisions to make is when to start taking payments from your pension plans. Typically you’ll receive less income from CPP and pension plans with your employer when you start taking payments earlier. But depending on the details of your situation, that might still be the right choice. Alternatively, if you’re less worried about cash flow at the start of your retirement, you may think about delaying these payments to provide a larger income down the road.

Next Steps

Start the journey of creating your own retirement paycheque:

  • Take inventory of your potential income sources
  • Consider how much income will come from each source and in what order
  • Determine if this will meet your retirement income needs
  • Talk to your financial advisor to ensure your current investment and retirement income strategy will keep you on track to meet your goals​​​​​​​

Talk to your financial advisor about creating your retirement paycheque.


This information has been provided by RBC Global Asset Management Inc. (RBC GAM) and is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. The information contained herein is from sources believed to be reliable, but accuracy cannot be guaranteed. Please consult your advisor and read the prospectus or Fund Facts document before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. RBC Funds, BlueBay Funds and PH&N Funds are offered by RBC Global Asset Management Inc. and distributed through authorized dealers.

® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © RBC Global Asset Management Inc. 2017

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