The Wedge Method: A Smarter Approach to RRSPs

When it comes to planning for retirement, your RRSP (Registered Retirement Savings Plan) can be one of your most powerful tools, IF you know how to use it effectively. That’s where the Wedge Method comes in. This is an incredibly strategic approach that balances stability, growth, and long-term potential, ensuring that your money works smarter and harder for you.

What is the Wedge Method?

Imagine your retirement portfolio as a finely balanced pyramid. The Wedge Method segments your investments into three carefully curated tiers, each designed to address specific needs during your retirement:

1. Defensive Portfolio: The base of the wedge, this portion secures One – two years of income in highly stable, low-risk investments. This ensures you have the peace of mind of predictable income, no matter how the markets behave.
2. Moderate Growth Portfolio: The middle layer holds another Two – three years of income, strategically placed in investments with moderate growth potential (still low risk). These funds maintain a balance of stability and opportunity, ready to replenish the base as needed.
3. Full Growth Portfolio: The peak of the wedge, this tier consists of your remaining funds in high-growth investments (medium risk). These assets are designed to maximize your portfolio’s long-term potential and outpace inflation, providing the backbone of your financial security for the later years of retirement.

Why the Wedge Method Works

• Protects Your Short-Term Needs: By securing six years of income in more stable investments, the Wedge Method ensures your essential retirement income is shielded from market swings.
• Enhances Growth Potential: While the foundation of your plan is steady, the growth-focused segment drives long-term wealth creation.
• Adapts Over Time: As you move through retirement, the Wedge Method can evolve, replenishing the base and middle tiers while keeping growth opportunities alive.
• We recently met with our clients, which are a couple that draws $7,500 in monthly income from their retirement portfolio, which for the last two years. equates to $180,000. Not only did their principle not decrease, but it actually increased by about 30%!! This is the power of a strategic approach like the Wedge Method. By balancing stability, growth, and calculated risk, we are able to provide them with the income they needed while increasing their wealth and the same time.

Building Your Wedge with a Financial Needs Analysis

Curious how this strategy fits into your retirement plan? It starts with understanding your unique goals, which is why I always recommend beginning with a Financial Needs Analysis (FNA).

An FNA offers a clear roadmap of your financial situation, helping to identify how the Wedge Method can work for you by analyzing:

• Your Income Needs: How much do you require annually, and how does that translate into investment tiers?
• Your Risk Tolerance: What mix of defensive, moderate, and growth investments makes sense for you?
• Tax Efficiency: How can we optimize your RRSP withdrawals to minimize taxes while maximizing income?

Start Building Your Financial Wedge

Retirement is about more than just financial security—it’s about peace of mind. The Wedge Method offers a powerful, flexible way to make your money work smarter so you can enjoy the retirement you’ve worked so hard for.

Ready to see how the Wedge Method can transform your RRSP strategy? Book your free Financial Needs Analysis (FNA) today. Together, we’ll craft a retirement plan that balances your present needs and future dreams.

Helping Canadians Build Real Wealth
– Michael Knapp