Weekend Reading – Retirement with higher inflation
Hey Folks!
Welcome to a new Weekend Reading edition about retirement with higher inflation – definitely a foe to fight!
In case you missed some recent posts, here they are!
Last weekend I wrote about an easy way to invest in AI stocks with minimal risk.
And this week, I updated this post about an important way to fund your TFSA every year without new cash savings.
Weekend Reading – Retirement with higher inflation
I get where former personal finance columnist to The Globe and Mail Rob Carrick is coming from on this: What it’s like to retire in an era of high inflation (subscription).
In his recent opinion post, Rob wrote about the following in his household to help combat inflation:
“We eat out less than we anticipated before I retired, and we are way less interested in top-tier restaurants. We’ve also travelled less than expected, but that’s as much due to family obligations as anything else.”
“On a more micro level, we trimmed our portfolio of streaming services to bring down our household expenses a bit. A bigger win was negotiating our cable-internet bill down.”
These are valid changes – look at your monthly spending and ensure you make changes to combat inflation.
We’ve only been retired for less than a year and like Rob, we monitor our spending. Just like our working years, retirement has a budget too. We don’t have endless cashflow but we’ve tried to construct our investment portfolio for cashflow: to deliver a meaningful and realistic mix of dividends, distributions, interest earned and gains – from selling assets from time to time.
Rob correctly cites the annual cost-of-living adjustments can be countered by many annual dividend increases paid by many of the blue-chip companies in Canada – if you own them. We are shareholders of many Canadian stocks and have been for 15+ years.
At the time of this post, a few dividend increases have helped us YTD combat inflation. Some examples:
- BMO
- CNQ
- GWO
- PPL
- RY
- and more.
And I suspect more dividend raises in the range of 3-5% (where personal household inflation is sitting these days) will come via our hybrid portfolio later this year too from some steady-eddy utilities like EMA and FTS that have yet to raise their dividends in 2026. (I’ll come back to this post later this year to see if I am right.)
One counter-argument to Rob’s article I have though was his comment on the following:
“Having a good year in your investment portfolio is not the same as getting a raise in the amount of money deposited into your bank account because it doesn’t help pay the bills.”
To be honest, this is an excellent time to rebalance your portfolio if you’re an indexed investor since the TSX-60 is up more than 10% YTD as is a global all-in-one ETF. So, by trimming your portfolio when the market is up 10% (or more) in any given year, you can feed your cash wedge for future spending.
Feeding your cash wedge is putting that money into your bank account to pay the bills. When investments do well, i.e., they deliver more than the typical 7-8% equity total returns, you can and likely should confidently draw more from the RRSP/RRIF, LIF or non-registered investments in your retirement.
This is why you invested for retirement in the first place.
I have no doubt inflation will continue.
I wrote a few years ago on X/Twitter that inflation was not transitory whatsoever in my opinion. (Ignore my poor grammar below!)
So far, I’ve been proven correct since July 2021 five-years later:
Our retirement income projections continue to be run every 6-months or so and include the following conservative/pessimistic assumptions – assumptions are this way since I’m not convinced equity returns will be as good as they have been recently AND inflation will continue to occur for years to come.
- We use 5% annualized returns / cashflow assumptions from our portfolio –
- We use 3% annualized / sustained inflation.
_____ = 2% real return to meet our long-term retirement income needs and wants and buffer as part of this formula:
You might wish to consider these conservative return and inflation assumptions for your long-term retirement income plan too. This way, by being conservative with your long-term projections you are pleasantly surprised when returns are better and/or inflation runs lower at times.
Just don’t bank on either happening…
If you’re preparing for retirement, what key assumptions are you using? If you’re already in retirement, how are you fighting inflation? Drop me a comment and share with others.
More Weekend Reading – Beyond retirement with higher inflation
I enjoyed Ben Carlson’s post: Investing in the Boom times.
It reminds me about this post, how to invest during all-time-market highs.
Weekend Reading – How to invest when the stock market is overvalued
In Ben’s article, consider the following if investing during market boom times:
- Avoid putting yourself to become a forced seller when the good times come to an end.
- Ask yourself are you diversified? – “Tech stocks make up an increasingly large share of the U.S. and global stock market.” So, “diversification is much easier to pull off than market timing.”
- What is your plan when things go sour?
My own / our own approach these days has us considering increasing our cash wedge later this year.
When markets are up 10%+ YTD (higher than our annualized needs of 5% returns in our projections) it has us considering doing something I/we haven’t done in a long time now that we’re in retirement, trimming some equities to ensure we remain in our desired 90/10 asset mix to:
- Avoid becoming a forced seller.
- Ensuring we remain diversified, and related to that,
- We have a plan when things go sour.
Worse case from here, if markets continue to go up even after some trimming, we still have that growth.
I pinged a wealth manager on this topic recently, @MPelletierCIO, we are very aligned:
From my investor advocate friend Ken Kivenko, I got wind of this article: discussing the war on costs and fund inflows between active and passive money management. Part of the punchline:
“In an industry where managing trillions of dollars has become a business of ever-narrowing margins, the great paradox is that never before has so much money been managed while charging so little. And, for now, ETFs are winning that battle.”
Finally, in dividend investing news, the long-wait for a Telus dividend cut is over (subscription).
Telus Corp. cut their dividend by 55% and also lowered its financial guidance for the year in a bid to improve its finances after a challenging period for the telecom and technology company’s share price.
“The company’s decision to cut its quarterly dividend to 18.75 cents per share from 41.84 cents per share marks a broadly anticipated move from its new chief executive officer, Victor Dodig, as he reorients the company’s finances and strategic direction. Analysts have been raising concerns about Telus’s dividend growth plans since last year, when some called its previous plans to continue increasing its dividend unsustainable. Telus paused dividend growth last November, but has faced ongoing pressure from Bay Street to cut the payout.”
Like your household, company debt can be crippling to day-to-day operations.
“The company said Friday the dividend cut is expected to generate about $2.7-billion in cash savings through 2028, which will be used to reduce its long-term debt.”
I was thinking a 50% dividend cut was going to happen sometime this year, so I priced that in last year, so I wasn’t too far off. Telus makes up just 0.5% of our entire portfolio at the time of this post so this dividend cut won’t impact us.
How much Telus stock do you own?
I will report our July 2026 Dividend Income Update and those dividend cut impacts in the coming weeks.
This was our June 2026 tally and we’ve received at least one dividend increase in between that I will report. 🙂
Have a great weekend and hopefully the Telus dividend income cut didn’t hurt your portfolio cashflow too much…
Mark
Mark
My name is Mark Seed – the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I’ve reached financial independence and I’ve retired from the workforce in my early 50s. Now, I share my lessons learned for free on this site. Join the newsletter read by thousands every week.
