Episode 166: 4 Financial Milestones to Ensure Your Early Retirement Strategy Works — Are You on Track?

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What does a nearly perfect Canadian financial freedom health score look like — and where do even the best wealth planners stumble?

If you’re working hard, investing smart, and wondering if you’re truly on track for financial independence, this episode is your blueprint. You’ll follow Frederick, a disciplined 49-year-old professional in Toronto, as he navigates all four key phases of a healthy Canadian wealth plan — and discover where his strong financial strategies still need refinement. Whether you’re eyeing early retirement, optimizing investments, or building a legacy that lasts, you’ll hear what works and what needs tweaking.

In this episode, you’ll learn:

• How a modest lifestyle and strategic renting can supercharge your Canadian wealth-building efforts.
• Why clarity around your financial vision — including your “financial freedom number” — is non-negotiable for early retirement.
• Where most high earners miss the mark on legacy planning and how one tool can simultaneously solve three major financial gaps.

Hit play to see how your Canadian wealth plan stacks up — and what it takes to turn near-perfect into complete confidence.

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.

Financial freedom in Canada takes more than income — it takes strategy. Whether you’re a seasoned entrepreneur, high-earning professional, or building wealth through real estate, mastering the four phases of a healthy financial plan is non-negotiable. This podcast unpacks the smartest Canadian tax strategies, corporate structuring moves, and investment tactics that create lasting wealth. From optimizing RRSP room and leveraging real estate to balancing salary vs dividends and planning your legacy, we focus on actionable insights tailored for business owners and investors. Each episode gives you the tools to align your personal financial buckets with your business goals and use a proven Canadian wealth blueprint to future-proof your finances. Follow Frederick, a disciplined 49-year-old professional in Toronto, as he earns near-perfect marks on his Canadian financial health assessment — and uncovers where even top planners need to improve. Learn how modest living, real estate investing, and precision financial vision-setting can accelerate your path to early retirement and long-term security.

Transcript:

Jon Orr: In this episode, we’re going to unpack a case study. We’re going to be talking about Frederick, lives in Toronto, been doing some really great things. And here’s the lean in part. According to our financial wealth assessment, which is kind of the four zones we look at, the four zones, you may have heard on the podcast, we’re going to outline them here for you. But these are four zones and four phases, four stages, whatever you want to call them. These are four.

for considerations that you do need to say, think about and plan for and structure around to have a healthy financial wealth plan. And here’s the part about Frederick. Frederick is gonna get almost a perfect score. Almost. on the first three, he’s gonna get A’s and on the last one, he’s gonna, this is where his perfect is kind of like running dry, but this makes sense for like his age and so usually where we are on those journeys. So I’ll leave that last one.

a little bit of a mystery. But let’s unpack in this episode, unpack Frederick’s kind of journey and then also, you know, where he’s excelling in each of the phases of the stages and where some of his say possible and accepts. Like I said, he’s almost getting a perfect report here, but we do have some recommendations for him so that he can change it into a perfect report. But before we get going, let’s just make sure we unpack the four phases, the four stages for a Canadian

you know, wealth assessment or Canadian Healthy Wealth Financial Plan. So those four stages are one. This is your your financial vision. Thinking about your goals like what is it the what are you striving towards? Like, do we have clarity around what we’re trying to do financially for ourselves, for our families, for our future? That is stage one. And we’re going to be talking about how to optimize and structure your goals around that stage two is your personal or corporate

wealth reservoir. This is your access to capital. This is your access to the opportunity fund. This is your emergency fund. This is just like your reservoir that you are building that you can pull from to make the right move at the right time. In any financial health, know, healthy financial system, you’d need this. We all need this as investors. You know it. As say entrepreneurs, you know that this is an important component in your planning.

The third is about optimizing structure and optimizing your available structures. So are we making use of our registered funds personally? Corporately, are we making use of the efficient tax strategies? Are we making use of different, say, structures that we have available to us to optimize for taxes and for planning and for making sure that we’re putting two uses to the same dollar or eliminating this thing over here? Like this is all about optimizing your available structures for your situation.

a really important component of a healthy system. And then the fourth is about legacy planning and estate planning. So this is kind of like, where is, they say, my wealth going to go? And how do I say use my wealth to maximize my estate now while I’m living? But then where does it go, I say, after I pass? So this is an important component as well. So these are the four stages. Let’s dig in. We’re going to be looking at Frederick and how he’s done on them. Kyle, let’s start with the first one.

vision, goal setting, talk to us about, like give us a little bit of history here about Frederick and then some of the great moves to get an A. Like he got an A here, so let’s unpack why he gets an A.

Yeah, no, was a pleasure chatting with Frederick. So he’s 49 years old. He’s a senior manager at a big bank in Toronto, lives downtown Toronto. But here’s the part that sometimes you might not anticipate is he lives a modest lifestyle. Downtown Toronto, senior manager at a big bank, working in the big buildings, all of that stuff, but lives a modest lifestyle. And he’s got clear objectives. So he kind of knows what he wants.

and he’s been going for them for quite some time. you know, this is what’s gonna lead us to that first stage and getting an A on the vision for freedom is, you know, he earns a lot of money, but yet puts a lot of it away. And that we’ve talked about it before. It’s like, you, the more money you earn, the almost the more challenging it becomes to prepare for retirement because you almost give yourself permission to spend more of it.

Kyle Pearce: But then lifestyle creep takes over, right? So if I’m earning 190, it’s like, well, guess what? If I’m spending 150 of it every year, my retirement income is probably gonna need to be closer to 150 every year. Well, guess what? This particular individual, Frederick, has been buying investment properties, and here’s the kicker. He rents himself. So he rents in downtown Toronto, but owns properties in different places, and of course has.

you know, mortgages on them and so forth. So he’s using leverage. He’s being smart about it. But here’s where things are interesting. A lot of people would say like, geez, like if you’re renting, he did the arbitrage. He pays $1,300 a month for not a large place, but it’s in downtown Toronto. So like from a lifestyle perspective, he has also agreed that he has lucked out that

You know, it sounds like the, you know, the landlord hasn’t maybe kept up with rents. And even if they tried to, it’s difficult with rent caps, as many real estate investors would know. And what he’s been doing this whole time through is he’s been taking the difference between what he was paying in rent and what he should be paying. So he did some calculations to figure out like, if I bought a home, how much I would be paying every month on a mortgage.

property taxes on all these other expenditures and all these things. And he invested that difference. There is research out there that suggests that actually renting if you’re disciplined enough to do what Frederick has done here makes way more sense financially. However, all the statistics show the opposite is true that most renters actually have a much lower net worth than those who own a property, which is why so many people feel like owning a home is

the quote unquote American or Canadian or whatever dream, right? So right there, that’s a huge, huge one. So he’s been optimizing along the way to continue investing. And he’s very clear that he wants to at least be financially free by 55. He’s 49 now. He wants 55 to be that number, but he may choose to continue working longer, but he has that clear. And he also is clear that he only requires

Kyle Pearce: $60,000 per year to feel as though he could completely leave his job if he wanted to. However, he does intend to continue as a landlord and potentially between now and then picking up a couple more properties. So he’s not even done yet, but he’s just doing sort of a check-in with us to go, like, am I on the right track? Like, here’s what I’m doing. Here’s what I’m thinking. But it’s always nice to get a little bit of that, you know,

third party sort of perspective to feel like yes, I’ve everything I’m doing has been reaffirmed.

For sure, for sure. And just think about the clarity he has to say, is the age. 55 sounds very typical, but I mean, he’s also going, the fact that he knows that exactly what he’s going to need to live the lifestyle he wants to live is essential. that’s what gives him, part of what’s giving him the A. And he’s done the math to reverse engineer what he needs to say, get there. This is why he’s on the right plan with like,

buying this rental property or this, and he’s investing in this way. He’s structured, say, his buckets to get him towards that path without saying going, like, I hope I get there. The fact that he’s like, you didn’t mention this, but he’s factored in the 4 % rule to help him calculate that he only needs $60,000. And looking at his current asset classes and his current, say, portfolio, he’s already close to that number, which means he’s like, I know that I can hit this number.

And I know that the 4 % rule, you know, helps me helps me do that, which is, know, take 4 % of all of your of this number that’s in the future, you know, if 4 % of that is is what your expenses are, then boom, you’ve you know, you’re you’re going to make ends meet, you’re not going to say dry up your your your portfolio in retirement stages or in retirement life. So I know that so we get he’s getting an A because of the clarity here. But

Jon Orr: I know that you did have a suggestion to him about, say, being a little bit more flexible on his 4 % rule.

Yeah, exactly. so he knew, and his net worth now is about $1.5 million. So you do the 4 % rule, and you go up like $60,000. You could potentially be done now if you wanted to, according to that rule. And again, we always say it’s a good starting point, but we’re always for this idea of padding. So let’s be honest and say,

You know, you retire at 50, you’ve got a long way to go, right? The 4 % rule is based on research with a certain portfolio split and doesn’t, you know, take into account, real estate or other factors, but it suggests that you shouldn’t run out of money with $60,000 rising with inflation over a 30-year period. So it’s a great place to start, but like, what if I live longer than 30 years, right? Or like, what if I’m that very, very small fraction of a percent or…

percentage points that you know you do run out of money because it’s not perfect. It’s not 100 % certainty that you won’t run out of money. It’s a good starting point. It sort of you know swings or slides the scale in your favor or tilts the table in your favor. So really here and he already has this mindset in mind. He’s got like six years to his 55 number. He’s like if I could pad this thing it would be great and I said you know maybe use like 3 % as that sort of guide.

you know, and you go, you have six years, you’re earning 190. One thing worth noting, it’s not that he spends $60,000 now, it’s that what he typically spends on him and his spouse is about $60,000, but he also had children and the children cost money and they are now at an age where they’re going to be sort of, you know, exiting that world and heading into their own world. And therefore he sort of said, you know, my spending will actually

Kyle Pearce: positively impacted by that happening right where the kids leave home so he’s saying okay by fifty five I should have my lifestyle down to this sixty ish thousand dollars so why not let’s pad this a little bit more and let’s go to maybe this three percent rule and what would that do that brings you to about a two million dollar net worth.

we project out from $1.5 million now over the next six years, and he continues to do what he’s doing in terms of investing. He should be more than likely above that $2 million mark. So he is well on track. And, you know, it brings me right into stage two, which is this idea of that personal or corporate wealth reservoir. He’s going to get an A minus here because it’s got zero bad debt.

You know, cars are paid off. You know, they have heavy reinvestment strategy, like very disciplined spending. They have access to an emergency fund, because here’s the nuance. He doesn’t have a home equity line of credit on his personal residence, right, or his primary. Right, so you know, maybe it’s worthwhile looking at getting a home equity line of credit on one of the rental properties. He does own those properties personally and not corporately.

There is talk here and this is where, you know, talking about some of the structuring, kind of merges with the optimizing stage three, optimizing your wealth plan is like, if you do choose to buy more properties is now the time that maybe you want to consider a corporate structure because now the number of properties is getting larger. It gets harder to get personal financing, not to mention that when he does retire,

getting a mortgage in your personal name is going to be a whole lot harder because the income, that 190 of income was really helping him to be able to get quite a few mortgages on a number of properties. So this is gonna start shifting where we have to start now thinking about, if I do wanna continue down the real estate path, which he does, how does that impact things or influence things? And maybe it’s time for us to start considering potentially opening up a corporate structure for additional properties.

good recommendations there. And I think that’s partly why, you know, the minus shows up on the report card here is to say like, you’ve got some room to grow in that area on thinking about your reservoir, thinking about, you know, your access to different capital buckets. I know that if you’ve listened to our podcast before, we talk about utilizing say high cash value permanent life insurance, that could be say a recommendation for him as well to basically say like,

I know maybe in the future I might not be able to say get access to a line of credit because maybe I want to retire early, but then it doesn’t say maybe impact your ability to get say that life insurance policy on yourself or say a family member that now you can use that cash value as collateral when needing to establish a reservoir, whether it’s in a personal side or if he does go corporate side, he can then open that policy up.

on the corporate, on that side of the corporate bail. So that’s, you know, he’s doing well here, Kyle. What about, you know, his optimization on the wealth plan? We know we’re giving him an A. I think this one’s an A minus as well.

Yeah, this one’s really well as I would argue like so far so good. He’s been utilizing a lot of room in the RRSP, which is good because he was earning $190,000 of a T4 income at about $180,000. You hit the top end of what’s allowable for the RRSP, right? So basically around $30,000 of room opens up for him.

Kyle Pearce: And he’s been utilizing that even though he’s still doing in real estate. Like sometimes people go either or and they go, I’m all in on real estate. I hate the RSP. Here we look at and go, listen, you’re going to get half, almost half of that money back 40 ish percent back on in terms of taxes on that 30,000 you dump in there. You could take that tax return, that refund at the end of the year, do something else with it, tax free savings, put it in your opportunity fund, whatever it is you’re going to do.

for your real estate, but let’s try to find a way that we can get that marginal tax bracket down on those last dollars that you’re earning, the last $30,000 that he’s earning. So he’s done a great job there. Where I’d say the gap exists here, it’s on his radar, so we’re not gonna, you we’re not gonna like say, you know, you get a C or anything. That’s why an A minus makes sense here. He is now starting to like in his mind go,

what is going to be the best way for me to utilize these assets when I hit that 55 number, if he’s choosing to take money out, is it all coming out of the RSP? Is it nothing coming out of the RSP? Should I be selling a property or the property’s cash flowing because maybe a mortgage or two is paid off? Like this is some of the planning that we have to start doing now, which he is starting to engage in, which is great.

in order to start going, OK, what’s going to be the most efficient strategy? And of course, because there’s real estate, there is the door open for leverage strategies as well, right? So how do I reduce the amount of, say, rental income showing up on paper but still have access to capital through leverage? That could be an option here for him so that he can slowly drain the RRSP, right? Not get taxed too heavily there but still have access to additional capital.

as well. So there’s a lot of things we can do here. And that takes us nicely into the last stage, which is talking about legacy and a state strategy. When we optimize in stage three optimization, why we’re optimizing is not just to make sure we have enough money to spend in our lifetime. It’s so that we don’t spend unnecessary dollars that could eventually pass on to the children. He does have children.

Kyle Pearce: And he is now at a place where he is starting to really focus in on if I’m doing all of this work, right? I’ve been saving. I’ve been doing all the right things. No bad debt, all of these great things that he’s doing living modestly. How do I make sure that my little, you know, my little pile here, right? He’s got a substantial pile that that he’s built along here. How do I keep that pile from dwindling away unnecessarily and

when it comes to legacy in a state strategy, a lot of times it comes down to taxation, capital gains and such. So we’re now looking at ways that we can build in more leverage strategies to help them optimize in stage three, as well as how do we take care of the legacy and estate side of things? And the number one tool that helps us do both of those things is going to be, as you mentioned earlier, high early cash value.

permanent life insurance got to be very very specifically structured and here’s the nuance it’s very easy for us to wait it makes sense that you want to get your pile started but if we wait too long and the pile gets too big and my age gets a little bit too far gone my insurability may not be there in order for me to leverage some of those strategies so it’s really important that someone like Frederick here is now looking at it now

probably could have done it earlier as well. But again, so could I, I could have done it as well. It took me a very long time to do that type of learning. But now that I have joined that journey, once he hops into this side of things, he’ll be able to sort of hit two birds with one stone by optimizing for his own spending, as well as taking care of legacy without having to make it in either.

I think, yeah, I think he’s primed for that tool to maximize not even just those two zones or those two phases really. Also, it helps with your wealth reservoir phase. what’s why I was talking about it back in there. like having that tool now helps him say optimize for those three, which is why we always talk about it here on the show. People are like, why do these guys keep talking about it? Like, well, if we had another tool that helped optimize all three of those zones without hindering another

Jon Orr: then we would use it. But we haven’t found one yet. So Frederick here is, you know, he’s getting an A overall here on his report card, even though, you know, he’s got some moves to make in that legacy estate strategy, but he’s aware of it. He’s a perfect candidate for that tool to kind of like make use of to make sure that he’s, you know, not only say planning for legacy, but also utilizing those assets while he’s living.

that tool can help him do that as well. So he’s, you know, he’s a great example here of discipline, wealth building strategies, know, vision, vision assessment for his like retirement preparation. His financial literacy is high, modest, you know, the fact that he’s, he’s, knows that he’s, he’s running a modest lifestyle, but living downtown Toronto is like putting him in a great spot financially. And his commitment to long-term growth is, is high, which kind of

keeps these zones as A, know, getting A’s on all four or all three of them for sure. So, you know, we’re excited for where he’s going to go and prime example of someone who’s, you know, doing so great at say his on his journey.

Hey, my friends, if you are interested in figuring out where you have some strengths and where there’s some maybe gaps or next steps in your own wealth building plan, head on over to canadianwealthsecrets.com forward slash pathways and you can dig in. And of course, if you’re ready to hop on a discovery call with us to see how we can help you firm up that plan, head on over to canadianwealthsecrets.com forward slash discovery and we will chat. with you soon. All right, Canadian wealth secret seekers, we will see you next time.

Jon Orr: Just a reminder of the content you heard here today is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Also as a reminder, Kyle Pierce is a licensed life and accident and sickness insurance agent and president of corporate wealth management at Canadian Wealth Secrets.

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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