Is Typical Retirement Advice Good Advice?

If you’re thinking of retiring or your parents or friends are retiring, beware of the typical advice you get.

In my latest video and podcast episode, I talk about the 5 conventional wisdom rules of thumb for retirees.

As the unconventional wisdom guy, I do the math for you to see whether they actually worked in history.

Then I give you 7 new retirement rules of thumb (supported by history) that I advise my clients on.

Watch and listen to find out:

• How to manage your retirement income withdrawals.
• Why the real issue is inflation, not stock market crashes.
• Why learning the stock and bond market history will give you an accurate picture of risks and returns.
• Why inflation kills bonds, but not stocks if invested in the long-term.


Planning With Ed


Ed Rempel has helped thousands of Canadians become financially secure. He is a fee-for-service financial planner, tax  accountant, expert in many tax & investment strategies, and a popular and passionate blogger.

Ed has a unique understanding of how to be successful financially based on extensive real-life experience, having written nearly 1,000 comprehensive personal financial plans.

The “Planning with Ed” experience is about your life, not just money. Your Financial Plan is the GPS for your life.

Get your plan! Become financially secure and free to live the life you want.


  1. Ed Rempel on May 13, 2024 at 5:18 PM

    Hi Ed,

    Bonds might make sense for shorter periods of time, but risk is only one of several factors. Rate of return and tax efficiency are also important.

    There is a question of what your time horizon is. For older people with short lifespans left, their money might be mainly for their heirs, not for them.

    I studied variations of your strategy of holding 5% cash. I found that the drag of having cash was always greater than any benefit of buying low with the modest amounts. This is especially true because it’s usually only once every few years that you buy in low, but you hold the low return cash all the time.


  2. Ed M on November 15, 2023 at 2:16 PM

    Hi Ed,
    Great Article and has got me thinking a bit about my asset allocation over time.

    Based on one of the graphs it shows that bonds are less risky for time frames less than 20 years. So wouldn’t it make sense in retirement that if your plan is up to the age of 100 that at 80 years old you start to increase bond exposure a bit more to reduce the potential swings on portfolio value and hence drawdown amount?

    Secondly on the cash portion, I currently maintain 5% cash on hand which I draw from each month. I don’t replenish or adjust the cash balance unless the balance hits a low of 3.75% or a high of 6.25%. If the non-cash portion of the portfolio goes down then the cash % goes up. If I hit 6.25% cash % I buy into the non-cash portion when it is down getting me back to 5%. This works in reverse if the non-cash portion goes up, the cash portion goes down and if I hit 3.75% cash I sell some of the non-cash portion. Sort of a buy low, sell high to some extent. I do get cash income monthly to the portfolio and take out what is needed to live as well. So for me the cash portion works both as a control on when to rebalance, the ability to purchase equities and bonds when they are down or at least in a dip, and reduce the need to have to sell equities or bonds each month for the monthly withdrawal. Comments?


  3. Ed Rempel on July 27, 2022 at 10:00 PM

    Hi Bill,

    Based on your figures, you are withdrawing about 10% of your investments per year. It is probably lower, because you must be getting some CPP and OAS, so maybe 8%. That is a lot more than the 4% Rule. You have a bit less than 50% in equities, including your cash wedge.

    Your risk is mainly your wife living longer. She has a 10% chance of living to age 100, which is 21 years.

    Your current withdrawal rate is almost definitely too high. Without even allowing for investment fluctuation, your investments may grow close to 5%/year and you withdraw 8%. With 2-3% inflation, your portfolio in real dollars is declining by 5-6%/year. Multiply by 21 years and you are out of money.

    My general rule is “2.5% + .2% for every 10% in equities Rule” (not a catchy name), which would be a 3.5% withdrawal rate for you.

    You can go somewhat higher, since you probably need only 20 years, not 30.

    I would have to work it out more precisely, but I would suggest to keep your withdrawal rate to 4-5%. I realize it is a signficant drop from the 8% or so you are probably taking now.

    Since you are so conservative, you should assume a lower income, Bill. Risk tolerance is a skill you can learn at any age.

    I hope that is helpful.


  4. Ed Rempel on July 27, 2022 at 9:05 PM

    Hi Dividend Daddy,

    The longer the time period, the more reliable the stock market has been. The 96-97% success rate would probably be 100% or very close for 60+ periods of time.

    Interestingly, studies have not shown this, but I believe this is just because of a quirk in the data. If we are looking at 60-year periods of time, that is almost half of the 150 years for which we have reliable stock market data. There have been 2 bad periods of time for the 4% Rule in history – the Great Depression caused one failure and the high inflation of the 1970s and 1980s caused 4 failures. With the limited time periods we have, all of the 60-year periods in the last 150 years would include one or both of these 2 bad times.

    Failure of the 4% Rule depends on having a very bad and long market. I believe the central banks now know how to avoid the 1930s type crash. They made it much worse back then.

    It also looked like they knew how to control inflation now, however, recent events have put some question on this. I think it is very unlikely, but possible that the Fed and Bank of Canada could lose control of inflation for a decade or more. In that type of horrible market, it is possible that the 4% Rule may not quite provide for a full 30 years for you.

    I believe this is highly unlikely, so I would be very confident for you for a 60+ year retirement.

    You might have a slightly higher risk, since you may be restricting yourself to the slower-growing sectors of the market, but even a dividend portfolio should work fine for you.


  5. Ed Rempel on July 27, 2022 at 8:50 PM

    Hi Don,

    Comparing the benefits of holding cash (cash wedge) with the cost of holding cash (cash drag) is interesting. When your investment period is shorter, the confidence in the cash drag being the bigger effect on your retirement should probably be lower – depending on how much shorter and which time period.

    Over 30 years, the cash wedge strategy (holding some cash to draw on when your investments are down) has had 0% success over having zero cash over the last 150 years. This makes sense, since the stock market has quite consistently provided strong gains over 30-year periods of time.

    In your case, as a male aged 73, if you are average health, you should have a 50% chance of living to 89 and and 10% chance of living to 97. Lets say an investment time horizon of 16-24 years.

    It would be the periods of time with the lowest long-term returns or the periods with the deepest/longest declines where a cash wedge might win.

    Comparing 20-year and 30-year time horizons, the worst returns since 1871 have been 3.1%/year vs. 5.1%/year. The Great Depression had a 63% 4-year decline from 1929-32. During these lower return periods and the very deep delince, a cash wedge might have worked.

    However, since 1350, the story is different. This is the modern stock market. Returns were lower from 1871 until the early 1930s with the stock market being mainly railroad and agricultural stocks.

    In the modern stock market since 1930, the worst 30-year period was 8.5%/year and the worst 20-year period was 6.5%/year. We did have the Great Depression, but it was followed by huge bull markets in the 1940s and 1950s.

    This would be an interesting study I may do. In general, I believe a 20-year period would have had the cash wedge work occassionally before the modern stock market and possibly in the Great Depression, but I believe it would never have worked for 20-years in the modern stock market.

    Remember, the cash drag is huge! That is a chunk of your portfolio making almost zero for decades. Not surprising that the drag on your return is larger than modest gains from occassionally being able to avoid selling investments during a market downturn.


  6. Bill Silverberg on May 30, 2022 at 12:09 PM

    Great Video
    I am 85 years old, recently retired, my wife is 79 retired
    I receive cpp my wife receives cpp and oas
    Investment portfolio 1.6mill, 50% equities, 50% corporate grade bonds
    plus125k cash wedge in savings account
    conservative investor, low risk profile
    annual spend 150-160 including taxes
    Concerned about running out of money in retirement…….
    What would be a safe withdrawal rate in retirement ?
    Concerned about asset allocation

  7. Dividend Daddy on May 27, 2022 at 9:57 AM

    How do things hold up for a retirement that is not a conventional age retirement of 60+ years but an early retirement scenario of 40+ years?

  8. Don Jackson on May 27, 2022 at 7:49 AM

    Hi Ed:
    Your ‘cash drag’ vs ‘cash wedge’ premise is interesting, to say the least. If I understand correctly, your argument is premised on historical stock market returns viewed through a 30-year time window. Since I’m starting my retirement late (age 73), I’m interested to hear your thoughts on whether the cash drag vs. cash wedge argument weakens as the time window (investment period) shrinks.

  9. Ed Rempel on May 27, 2022 at 12:20 AM

    Thanks so much for taking the time to say that, Gene. I appreciate it.


  10. Gene Emslie on May 26, 2022 at 9:07 PM

    Great video Ed, your plan has made a huge difference for us as we approach retirement.

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