My Retirement Budget to Guide Investment Strategy
I'm not there yet, so I may change my mind. I'll probably budget for my first one or more retirement year(s) into two expense categories, controllable and uncontrollable. Things like property taxes, provision for income tax, shelter expenses, etc. would go into uncontrollable. Things like travel, entertainment, etc. go into controllable.
I would forecast my annual uncontrollable expenses and annuitize an amount to cover them. The annuity would include CPP, OAS and a private life annuity, if required.
I would use a diversified portfolio of CDN dividend stocks to cover the expected controllable expenses.
Finally, any remaining funds would go into a diversified global stock portfolio as contingency or mad money.
There are many ways to do this but the basic strategy is to annuitize the funding for your fixed expenses.