Episode 214: How Much Do Canadian Business Owners Really Need To Retire?

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How do you know if you can actually afford to retire as a Canadian business owner — and are you sure the “freedom number” you’re chasing is even the right one?

Most business owners have built impressive balance sheets, yet still feel uncertain about stepping away from work because their wealth isn’t structured to pay them when they stop earning. You may have properties, retained earnings, or a thriving company — but little of it translates into reliable, personal cashflow. This episode breaks down why traditional retirement advice fails entrepreneurs and shows a simpler, more accurate way to calculate what your lifestyle truly costs. You’ll also hear how reorganizing the wealth you already have can convert static assets into sustainable, tax-efficient income for decades.

You’ll discover:
• How to calculate your real financial freedom number using a lifestyle-first formula.
• How to sort your assets into three practical buckets so you can unlock income without selling everything.
• How to build a predictable, tax-efficient income engine that keeps paying you even after you step away from your business.

Press play to learn how to turn your existing wealth into a system that makes work optional.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Canadian business owners looking to build long-term wealth in Canada need a retirement planning approach that goes beyond traditional RRSP optimization and real estate investing. A modern Canadian wealth plan blends financial vision setting with smart asset organization, using financial buckets, tax-efficient investing, and corporation investment strategies to create reliable income strategies that support financial freedom Canada. By combining salary vs. dividends Canada planning, personal vs. corporate tax planning, and business owner tax savings, entrepreneurs can design a system that generates passive income while reducing tax drag. Tools like high–cash value life insurance, capital gains strategies, and diversified investment strategies help create a stable, long-term income engine, while legacy planning Canada ensures wealth transfers efficiently to the next generation. Whether aiming for early retirement strategy, modest lifestyle wealth, or full financial independence Canada, a well-designed corporate wealth planning framework—built around tax efficiency, retirement planning tools, and real estate vs. renting considerations—gives entrepreneurs the clarity and confidence to secure their financial future.

Transcript:

As a Canadian business owner, how much do you really need to retire? And what if the financial freedom you’ve been chasing isn’t actually freedom at all? Every day we meet with Canadian business owners. They’ve built strong companies, they own real estate, they’ve solid net worth statements. But when I ask, if you stopped working today, how long would your income last? Most can’t answer. And that’s proof that traditional retirement advice doesn’t fit Canadian business owners. Today, I’m going to give you a practical plan.

the plan. We’re gonna find your number, we’re gonna organize your assets, and we’re gonna build your income engine. Let’s jump in.

one is knowing your number. And really what this is is knowing your clarity or getting clear. We call this vision and freedom here at Canadian Well Secrets. And before you can retire, you need to know how much income your life actually costs. We need to know.

Most people pick random numbers, a million, two million, five million, but your freedom number isn’t a guess. It’s based on a simple formula. Your freedom number equals your annual lifestyle cost, which you have to know, you have to get those numbers, divided by a safe withdrawal rate, let’s say

If your lifestyle, let’s say costs $200,000 a year and you want to withdraw 4 % safely, you need $5 million of invested income producing capital. So if you spend $150,000, then you need about 3.75 million. This is where business owners mostly stop. They get that number and they think that’s it. That’s my tally. I’ll tally up all my assets and I’ll work until I hit that number. And when I hit that number, that’s my retirement number.

Now don’t panic at all those numbers because you already have pieces of this puzzle. You’ve got real estate equity, got corporate retained earnings, you’ve got investment accounts. The key is turning those static assets into working capital. And that’s where step two comes in. So step two is organizing your assets. Here’s the problem I see most often. Canadian business owners are asset rich, but cashflow poor. On paper, they look great,

but the moment they stop working, the income stops too. let me show you what I mean. let’s say for an example, you might have a $1.8 million primary homes value with a small mortgage. You’ve got a million dollar cabin or cottage that costs more than it actually earns in revenue. And you’ve maybe got a thriving business that depends on you being there.

And that all adds up to a strong net worth, but none of it actually pays your bills once you step away from the business. So here’s how we fix that. We map your balance sheet into three simple buckets. Bucket one is income assets. These are things that already pay you without you working. Let’s say a rental property that nets you $1,500 a month after expenses or a dividend paying investment portfolio or a corporate investment account generating passive income.

say you have $400,000 in your corporation earning 4%. That’s $16,000 a year, but it’s fully taxable as passive income.

What we would do here at Canadian Wealth Secrets is instead of losing 50 % in passive income taxes to that passive income, we would reallocate those dollars into a corporate-owned life policy and then we could, down the road, leverage that policy to put cash flow into your personal pocket. Because the goal here is to keep the cash flow but reduce tax drag. All right, bucket two. These are valuable assets that can be converted into income later.

but they don’t pay you now. So think your home, the home’s equity, the building your corporation owns, the value of the company itself. You know, for an example, you might own a commercial unit worth $1.2 million with no debt. You could refinance 50 % of that and therefore access $600,000 and then invest it in an income producing vehicle that earns 6%. That’s $36,000 a year in new cashflow while the property continues to appreciate.

or if your business is worth two million,

Part of your retirement plan might be selling a portion of ownership to a partner or an investment firm or private equity to create income while staying involved part time. The goal here in bucket two is to unlock dormant value without liquidating everything. All right, bucket three, opportunity assets. These are dollars sitting idle, waiting to be repositioned.

think retained earnings accumulating in your corporation. You’re sitting there at the rainy day fund, large cash balances doing not much, excess profits that could be structured a little bit more efficiently. So here’s an example. Maybe your corporation has $500,000 in cash doing nothing. You could use it to fund a high cash value life insurance policy, which is building tax-free growth and future income access, or

You could create an investment corporation to buy dividend paying assets and feed future retirement income. Either way, what you’re doing is you’re turning idle cash into productive capital. Once you’ve sorted your assets into these three buckets, the big picture becomes more clear. Now you can see what to keep purely for lifestyle, what to restructure for tax efficiency, what to convert into your long-term income engine, which is the next step.

Most business owners find that they already have enough wealth, it’s just sitting in the wrong structures. So in step three, we’re gonna show you how to transform that structure into predictable tax-efficient retirement income. And that keeps paying even when you stop working.

This is the structure that makes work optional. Here’s what that looks like for most incorporated business owners. You move some of the retained earnings from your corporation into a high early cash value life insurance policy. We’re talking about instead of money sitting to pay premiums per year. This becomes your safe tax sheltered floor or base. The cash value inside that policy is going to grow every year.

It’s gonna grow because you’re putting in the premium every year, but it’s also going to grow because it’s dividend paying. It’s going to grow in dividends every single year. It’s guaranteed and it’s tax deferred. Now, when you retire, you can borrow against that cash value, creating a tax-free income or cash flow while keeping your capital compound. And you can leverage against the capital that’s sitting in that policy owned by the corporation. And now it’s a loaned

to you personally because of the balance sheet that you have and you have ownership of that corporation. So here’s a client case. A client funded $300,000 per year for 10 years, which created about $3.8 million in cash value on their policy. And it had $8 million in death benefit by year 10. From there, this client could draw roughly $173,000. Now when I say draw,

$170,000 tax free for 30 years, what they’re doing is they’re leveraging against the policy. So they’re borrowing it. Since it’s borrowed funds, there’s no tax on that. You’re now leveraging it against that policy with a third party lender. Yeah, you have say interest to pay to that lender, but it’s a lot less than losing that money to tax.

You’ve got that death benefit cushion there to make sure that it all comes out in the wash down the road when it’s time to pass on.

That $170,000 of tax-free income, since it’s tax-free, it was more than enough to replace his lifestyle income. And that’s true, that’s a true income engine, one that pays you without eroding your wealth. You don’t wanna deplete that wealth. Most tax plans you withdraw and you see that account getting smaller and smaller. This is not the case. And research from Ernst and Young found that combining insurance with investments

can boost retirement income by 5 % and legacy value by 19 % over investment only portfolios. So when you layer in high cash value, life insurance, policy strategies with investment strategies, you’re better off. Because when markets fall, your insurance value doesn’t. It acts as your volatility buffer. All right, let’s bring it back together here.

Let’s go back to our Vancouver business owner example. He wanted to spend more time in his cabin and step back from his company within 10 years. Once we mapped his assets, here’s what his plan looked like. Step one, his freedom number was about $180,000. Step two, he realized his properties produced zero income. They were equity rich, but not cash flowing. He redirected in step three, $200,000 of annual retained earnings that were just sitting there into a corporate policy to build that liquidity.

and flexibility. That created a predictable tax-efficient income stream that he was now leveraging. Now if he stops working, the policy loan and the real estate income cover his lifestyle without selling his company or triggering personal tax. And that’s what we call practical financial freedom. So how much do you need to retire as a business owner in Canada? It’s not one number, it’s a system. A healthy wealth system built through four components.

The three components actually make the fourth component the cherry on top. So those components are vision and freedom. Defining what that looks like for you. Your number to start with. What does your lifestyle look like? Making sure that you are looking at those numbers and those

decisions about what you want your life to look like. The second component is that wealth reservoir. This is organizing your assets and creating access to capital, those three buckets, and making sure that you’re building liquidity and using the tools that are at your disposal to make sure that you have access in those buckets. Optimizing and growing is the third stage,

It’s about turning that capital into a self-sustaining income engine. If you do all three of those, what ends up happening, if you use those right structures, you end up having the fourth stage show up. It’s your legacy in estate planning already done for you. It protects your legacy, it protects your family, and you can pass on your wealth efficiently to your heirs. When you have these four components working together, work becomes optional.

If you would like help mapping your freedom numbers or designing your plan, you can head on over to CanadianWealthSecrets.com. do this with business owners every single day. You can go to CanadianWealthSecrets.com forward slash discovery. Book a call with us and we can be talking about your plan right now. Or you can go get a free assessment from us on the four stages by going

CanadianWealthSecrets.com forward slash pathways and we’ll send you a free report. I’m John Orr from the Canadian Wealth Secrets team. Thanks for watching.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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