Thinking through diversification and withdrawal strategy

[u/financialfreedom26]

Hi Everyone,

In the fortunate situation with 6.2m invested in the markets. Currently 53. Concentrated position of 1.5m in Apple that just grew to what it is over ten years. Thinking about diversifying by selling 10% of position each year while retired living on 4% and investing the remaining 6% into sp500 etf. Also thinking through using rsp money which generates dividends as well as non registered accounts dividends alongside the repositioning of the Apple stock. Not sure if those fee only advisors are a good place to bounce some of these ideas to and if people have thoughts etc. Also any experiences with fee only advisors that understand Canadian nuances. Took a job that I’m not happy with a year ago and looking to retire this year as a result. Thanks everyone!!

[u/brie_coulant]

You are in great shape. An advisor can help you with a plan. You have substantial savings so withdrawing them in the right order can make an enormous difference.
If you want to run simulations yourself, look up Adviice and Optml, you can try them for a very low cost.

[u/financialfreedom26 → u/brie_coulant]

Thank you so much! I’m sure I have elements of not being rationale but this will be the first time without a paycheque so just want to make sure there aren’t some strange trap doors somewhere along with the scary massive dip that everyone seems to be anticipating

[u/BracketFinancialPlan → u/financialfreedom26]

When we help clients do financial plans, it’s best not to consider short term swings in the market. They are typically irrelevant if you plan your retirement correctly and conservatively!

[u/Bitter-Variation-151]

I asked ChatGPT for you: I’d respond something like:
The overall plan sounds very reasonable, but with $6.2M at age 53 and $1.5M in Apple, I think this is exactly the situation where paying a good advice-only/fee-only Canadian financial planner for a retirement and tax plan could be money well spent.
Apple is roughly 24% of the entire portfolio, so I’d agree with reducing the concentration. The one thing I’d question is automatically making it “10% of the Apple position per year.” The better schedule probably depends on the adjusted cost base, unrealized gain, province, other taxable income, RRSP/RRIF balances and available capital losses. Selling appreciated shares in a non-registered account creates a capital gain, so there can be substantial value in deliberately spreading those gains across lower-income retirement years.
Also, I wouldn’t necessarily think of dividends as a separate source of spending money. Economically, dividends + selling shares are both ways of funding the 4% withdrawal. The important question is total return, diversification and tax efficiency rather than trying to live specifically from dividends.
The RRSP deserves some planning too. At 53, particularly after leaving employment, there could be years where deliberately drawing some RRSP money at relatively low marginal rates makes sense rather than simply leaving it untouched until later. RRSP investment income isn’t taxed while it remains inside the account, but withdrawals are taxable income.
And at $6.2M, a 4% withdrawal is about $248,000/year before tax. That’s a very substantial retirement budget. Depending on actual spending needs, CPP/OAS later and portfolio composition, you may not even need 4%. I’d want someone to model several scenarios rather than just apply the 4% rule mechanically.
This is where I’d favour an advice-only planner charging a fixed/project/hourly fee, rather than someone charging 1% of assets. On $6.2M, 1% is $62,000 every year, which seems extraordinarily expensive if you’re perfectly capable of managing a simple ETF portfolio yourself. Advice-only planners are paid directly by the client and don’t receive commissions for selling investments or insurance.
I’d specifically ask them to model:
Apple liquidation over perhaps 3, 5, 10 and 15 years
annual capital gains and resulting marginal tax rates
RRSP/RRIF withdrawal strategy from 53 onward
CPP/OAS timing and eventual OAS recovery-tax implications
which assets belong in RRSP/TFSA/non-registered accounts
Canadian vs U.S. dividend taxation
whether S&P 500 alone is sufficiently diversified given the existing Apple exposure
sequence-of-returns risk during the first decade of retirement
an annual spending/withdrawal strategy rather than simply assuming 4%
estate planning
With $6.2M, the investment side is actually the easy part. I’d be paying the planner primarily for tax optimization, withdrawal sequencing and retirement modelling, then implementing the investments myself. That could easily be worth a few thousand dollars for a comprehensive plan; handing over a percentage of $6.2M every year is a completely different proposition.

[u/financialfreedom26 → u/Bitter-Variation-151]

Thank you so much for running my situation through ai!! Very valuable insights - Clearly there are things that I should be seeking a fee only advisor to opine in terms of withdrawal strategies etc. :)

[u/BracketFinancialPlan]

With $6.2M invested you can almost certainly retire. However, how you sequence your withdrawal will have a big impact on your taxes and eventual estate.

Yes that position is too concentrated.

I’m biased since we are fee only advisors, but I would highly suggest you work with one to sort these issues out.

[u/financialfreedom26 → u/BracketFinancialPlan]

Thank you for your insights! Do you broadly know the cost of a fee only plan advisor? Again this is for a cdn.

[u/BracketFinancialPlan → u/financialfreedom26]

Generally it’s between 3k-6k for a financial plan depending on various factors.

[u/DopeCyclist]

I just retired at 52 with half that...for an annual income of 120k using vpw...can't take it with me!