When should I start CPP and what's the best way to draw down my retirement investments?

financialpost.com:

By Mary Teresa Bitti 

One of the key challenges people face in retirement is how to determine the right amount of money to take out of their investment accounts each year. The amount has to provide the appropriate cash flow, incur minimal tax and ensure the portfolio will last through retirement.

Michael* and Stacey* are trying to create a retirement withdrawal strategy that meets each of these objectives while already in retirement.

Michael is 63 and has been semi-retired for 10 years. After working as an electrical engineer, he became a teacher and taught for 20 years in Northern Ontario, where he and his wife Stacey raised their two children before moving to Ottawa in 2013. In addition to his defined-benefit pension, which brings in about $30,000 a year before tax, he earns about $10,000 a year from a part-time job and started taking Canada Pension Plan (CPP) payments at age 60 (net $700 per month). He plans to fully retire later this year.

Stacey retired last year having worked in the non-profit and government sectors. She has a government pension of about $10,000 a year before tax.  Each of their pensions is indexed to inflation. Unlike Michael, she has not yet started drawing CPP and would like to know when she should start.

The couple purchased their home in 2012 and it is currently valued at $700,00. They have two mortgages with a combined value of a little less than $300,000 ($135,000 at 2.54 per cent maturing in 2025 and $141,000 at 3.19 per cent maturing in 2027). It’s their only debt and their total mortgage payments are $660 biweekly.

“We used to be aggressive about paying off our mortgages,” Michael said. “But when we renewed it a couple of years ago and took out the second mortgage to help fund a $150,000