This will be my first year withdrawing funds. At the moment portfolio draw-down "strategy" is just a plan in two parts:
Which accounts to withdraw from?
To minimize taxes for the next few years, withdrawals will be exclusively from my taxable account until age 65 (or next 11.5 years). Withdrawals will be partially replaced by CPP beginning at age 60. Tax-deferred and tax-free accounts will be left to grow for this time.
I have a big tax hit in 2015 from the unsheltered portion of a pension CV payout, but do not expect to pay tax again until 2026.
Taxable account will be mostly depleted by 2026, so will begin withdrawing from LIRA/LIF in 2026. The full amount of withdrawals will be taxable, but eligible for pension income deduction. This income will be supplemented by CPP, and beginning December 2026, OAS. The income is expected to be somewhat larger than my needs, so I expect to be able to start putting funds back into the taxable account
RRSP/RRIF will be tapped for income starting in 2032 - when I'm forced to withdraw.
I don't ever expect to "need to" withdraw funds from my TFSA, and will continue to transfer funds into it each year.
Withdrawal mechanics
I'll call it the "Bucket System"
Initially this is applied only to the taxable account, but when withdrawals begin from tax advantaged accounts, I will apply this methodology to those accounts as well.
Bucket #1 is one year's estimated cash needs in a high-interest [sic] savings account. Monthly, I will transfer funds from this account into our operating account to cover expenses. Until age 60, this will be replenished with dividends/distributions from the taxable account and proceeds from the sale of bonds. Thereafter, supplemented with CPP, OAS, and required distributions from tax-deferred accounts.
Bucket #2 is bonds. As needed, these will be sold to replenish Bucket #1. When stocks are doing well, I'll sell stocks to replenish bond holdings. I also retain the option to sell bonds to buy stocks if we have a bear market.
Bucket #3 is stocks. Currently hold a mix of low-cost ETFs split more or less equally between Canadian, US and International indexes (with a small amount in various dividend income EFTs and REIT). Generally, I expect to sell these over time, however will reinvest dividends in tax advantaged accounts until withdrawals begin, and will re-invest any surplus cash in the taxable account over time.
I'm hoping there's enough cash/bonds to weather a sustained downturn in the markets.
Al