After leaving the workforce together 13.5 years ago, my husband Rich and I have now been retired for more than half the duration that we worked full-time. Had this made last year’s “Retirement in Retrospect” discussion, I would have termed 2025 the “Crazy Year of Instability” with all the threats of tariffs and counter-tariffs. While the cost of groceries and sundries has risen dramatically to the point where we had to get over sticker-shock and adjust to new “reference prices”, we were otherwise not overly affected by the trade wars. Because our retirement income strategy relies on dividends and not the value of our portfolio, we merely stood pat with our holdings and ignored the noise. Since we started our dividend income strategy back in the late 1990s, our total dividend income has now survived and continued to grow through multiple economic downturns including the 2001 burst of the Dot-Com bubble, 2008 Financial Crisis, 2015 Oil Price Collapse, and the 2020 COVID Pandemic, so we were not worried despite the 2025 Tariff Wars.
Dividend Income
In 2025, dividend increases came less frequently and were smaller percentagewise than from previous years, yet our total dividend income increased as usual. In our non-registered account which funds our expenses, we were up 1.53% from the end of 2024. For us, this was the lowest annual percentage increase since we started tracking after our retirement in 2012. Yet, a few factors made this figure seem lower than our actual increases which we did receive from 28 of the 33 distinct companies that we own stock with. Even BNS, the only big bank that didn’t raise its dividend in 2024, was back with a 3.77% raise at the end of May. And as of mid December 2025, six of our companies (BMO, CIBC, Enbridge, National Bank, Royal Bank, TD) have already declared dividend increases for 2026 for a 1.52% increase. The two factors that skewed our dividend growth numbers for 2025 were as follows:
First, Bell Canada (BCE) cut its dividend by 56% which reduced our annual income by 2.3%. In the early days of our retirement, a dividend cut of this significance would have been cause for concern. We now own so many distinct stocks and have received large dividend increases for so many years that at this point, no cut by any one company will significantly impact us.
The other factor that directly caused a reduction in the dividends from our non-registered account was self-inflicted and intentional. Canadian dividends are grossed up 38% when calculating taxable income (as part of the dividend tax credit formula) which directly affects how much tax we owe. Without selling stock, which could trigger capital gains, I am trying to reduce the total payouts from our non-registered account to keep the total at a reasonable figure. To do this, I have started to donate stock to charitable organizations, but more on that later. Without these two factors, our dividends would have increased 4.03% which is much closer to the rate of increase over the past couple of years.
DRIPS
In 2025, the newly spun off (from TRP) company South Bow Corp (SOBO), the newly merged company AW Food Services (AW.T) and the restructured Brookfield Renewable Corp (BEPC) each paid their first dividend. This had to happen before I could enroll them in the Dividend Investment Program (DRIP) within my registered accounts. I also restarted my DRIP of BCE which I had canceled with the news of financial trouble and dividend cuts. Since we don’t plan to sell this stock, then we might as well pick up more shares while the price is low. My hope is that this company is part of a Telcom oligopoly so in the long run it will probably recover. Note that we only DRIP in registered accounts so that we don't have to worry about re-calculating adjusted cost base with each DRIP share purchase.
Changes to Stock Portfolio
Rather than panic because of the market turmoil, we try to take advantage of lower stock prices. We needed to start rebuilding our TFSA accounts after raiding them to pay for condo renovations a few years back. In each case, we contributed cash to our TFSA from excess dividend payouts, selected a stock that we wanted to purchase, set a low limit buy price and waited.
Rich wanted to own Dollarama (DOL) stock since it is a Canadian company in a sector (retail) that was not represented in our portfolio. This is a departure for us since DOL is a growth stock that hardly pays any dividend. In April while tariff rhetoric was raging, Rich caught a dip in the stock and bought Dollarama for an average price of $147.45. By the end of the month, the price had risen above $170 and as of this writing, it is hovering around $200. Still, the value of a stock is so variable compared to its dividends. Who knows what the price will be at when we finally want/need to sell it. In the meantime, we make little to no earnings and don’t generate enough dividends to DRIP to gain more shares. This is why I don’t like holding growth stocks but if there is anywhere to do it, it is within a TFSA.
One idea that I had for trying to grow this Dollarama stock in a simulated DRIP scenario is to perform some limited form of “day-trading” within the TFSA. I would put a limit sell of the shares at an aggressively high price to try to catch a temporary spike. If it never hits, then Rich is no worse off than just holding the stock. If it does hit, then I would put in a limit buy for the stock at a lower price, ensuring that the gap is large enough to buy one or more shares than he originally owned, and cover the trading fees. If the shares don’t fall from that higher price, then at least Rich will lock in his profits and can buy something else. Because there are no tax implications in a TFSA, there is no capital gains to worry about.
To top up my TFSA, I caught a smaller dip in the market in June and bought shares in Restaurant Brand International (QSR) and Brookfield Infrastructure (BIP.UN) while they were on the decline. Both share prices are currently higher than what I paid for them so I guess I fared well. But I missed the biggest short-term crash that happened in September, which shows that it is impossible to time the peaks and valleys of the stock market unless you get really lucky.
In June, Parkland Corp (PKI) went through a shareholders vote to determine if it should be sold to Sunoco, an American oil and gas company in the energy sector. This was definitely not something that we wanted to happen since we had no interest in owning shares in an American company. We voted “No” with our few measly shares but knew that our vote would not make any difference, so we took steps to prepare for the possibility that this sale would go through. If it did, shareholders were offered three options for each share of PKI held:
• Accept $19.80 in cash and 0.295 shares of a Sunoco subsidiary Suncorp (SUNC)
• Accept all in shares of the Sunoco subsidiary
• Accept $44 per share in cash
Since we held shares of PKI in both registered and non-registered accounts, we worried about potential capital gains triggered by this action. As it turns out, the adjusted cost base for the PKI shares in our non-registered account was just over $45 so we should receive a small capital loss for any of the options, which we could carry forward for use in future years. From last year’s lesson learned, I knew that we each needed to declare 50% of that loss on our tax returns.
We were not interested in having shares of SUNC and wanted to get all cash so that we could purchase shares in another Canadian dividend-paying company. To make sure our desired option was understood, we sent an email to and phoned our discount broker Scotia iTrade several times to try to make this declaration. In each case, they said that the sale had not completed yet so they could not register our wishes. I then sent an email to PKI Investor relations and was assured that we would be notified when it was time to make the declaration. Accordingly, we sat back and waited to be notified which was a mistake. Imagine my shock when I found out in November that the sale had gone through and we had missed the opportunity to make our declaration for a cash payment back in October (which we were NOT notified about!). Now we were stuck with some cash and shares of SUNC in both my LIF and our non-registered account. I was extremely annoyed but there did not seem to be any way to rectify the situation.
Not wanting to own this American stock, I quickly sold the shares in my locked-in Life Income Fund (LIF) for a small profit and will use the cash proceeds for my 2026 LIF withdrawal. As it turns out, because of the crazy increases in stock in 2025, the 2nd LIF Maximum calculation rule kicked in and my allowed maximum withdrawal is multitudes larger than expected. So, this cash came in handy!
It was trickier in our non-registered account. First, I had to calculate whether or not we qualified for a capital loss on the PKI deal and if so, how much was the loss, based on the adjusted cost base of my PKI shares. Looking at the transaction history of our non-registered account, I saw that my PKI shares had been deemed “sold due to merger” for a certain amount of cash and then part of that cash was used to buy shares of Suncorp. I decided that the Suncorp part of the transaction was irrelevant and that my capital loss should be <PKI Adjusted Cost Base x # of shares – Cash from PKI sale). Rich and I will each declare half of this loss in our 2025 tax filings.
As for the SUNC shares in our non-registered account, I put in a limit sell of these shares at the same cost that we received them for. This should mean there is no capital gain or loss for me to deal with. Unfortunately, the share price has fallen since we got them, so my limit sell will just sit and wait for the price to hopefully recover. If things don’t look better by next year, I may sell anyway and bank the capital loss so I can at least use the proceeds to buy some other Canadian dividend paying stock. Had we just been able to receive all cash, we would have avoided all this headache. In retrospect, I should have kept Googling every few weeks to verify for myself if and when the sale went through. Lesson learned for next time.
For years both before and after retirement, we have been actively and passively trying to grow the dividend income generated from our non-registered account which pays our bills and funds our spending. We actively bought stock before retirement and withdrew stock-in-kind from our RRIFs after retirement to add to the dividend income paid out of our non-registered account. Passively, we let dividend increases and compounding do its magic.
Now that we are in our 60’s and moving towards a time when we will start taking CPP and OAS, we are looking at ways to slow down the growth and even reduce the payout from our dividend income. While dividend income is taxed at a favourable rate due to the dividend tax credit, it is also “grossed up” by 38% which significantly increases our net taxable income. If we allow this income to grow too much, it will lead to OAS claw back.
One way we can reduce the dividend income in our non-registered account is to donate stock directly to a registered charity. This is better than selling stock and donating cash since a stock donation does not trigger capital gains. Looking at which stock to donate, we considered dumping a crappy stock that was not doing well either in terms of stock price or dividend payout. However, this did not achieve our goal of reducing capital gain exposure if we ever lose another stock to a forced sale due to buyout or merger as happened with PKI.
Instead, we looked at which stock would generate the most capital gain and landed on Premium Brand (PBH). We first bought this stock when it cost around $13 a share and at its peak, it had risen to over $100. Around the time of our donation, the stock price had dropped to around $75 but it would still be our largest capital gain if we were ever forced to sell or if the company ever got was bought out, as PKI was. We decided to donate this stock to start reducing our holdings in it. Since we still like this company, Rich is slowly buying it back within his TFSA.
For donation of publicly traded securities, the valuation is based on the closing price on the day that the securities are sent to the charity's brokerage account from our discount broker. We can’t really control the price of the transfer since we don’t know which day the transaction will take place. With news of tariffs changing daily, stock prices were fluctuating like crazy. The best that I could do was to wait for a relative period of calm when prices had recovered a bit from the initial reactions to the tariffs before making my request.
There are several ways to make a stock donation to a charity. The organization Canada Helps operates as an online platform that allows you to make a stock donation to one or more registered Canadian charities. You would go to their website to access and fill out a form indicating the company or companies you want to donate to, as well as the name/description/stock ticker of the stock, # of shares and your discount broker/account information. The form is then sent to your discount broker with a letter of direction authorizing your broker to transfer the shares. Once the shares are received by Canada Helps, they sell the shares, sending the proceeds less a fee to the charity or charities and sending you a tax receipt.
The problem is that Canada Helps takes 2-3% of the donation as a fee. It is therefore much better to donate stock directly to the charity so that they can receive the full donation, if they are able to support this. I contacted our desired charity and found out that they did have a process to receive stock directly through their discount broker. I received the required form from the charity, filled it out and sent the form plus a letter of direction to my discount broker. Within a couple of days, the shares were withdrawn from our non-registered account and sent to the charity. A few days later, we received our tax receipt for the full value of the donation. No transaction fee was charged for this process. The added benefit of the stock donation was that we did not have to save up cash to make the donation. All this went very smoothly and we will continue to do this going forward.
Stock-In-Kind RRIF Withdrawals
The turbulent markets provided a great opportunity to make stock-in-kind withdrawals from our RRIFs this year while prices were relatively low. When you withdraw stock-in-kind, you can specify that it be taken out at the lowest price of the day. The lower that price, the more shares you can take out for the same withdrawal amount. Anticipating that Trump’s tariff threats were going to rock the stock market at least in the short term, I made preparations to take advantage of this.
First, I had to decide how much taxable income I wanted my RRIF to generate this year from both my stock-in-kind withdrawal and the amount of withholding tax that I needed/wanted to pay. If withdrawing more than the legislated minimum from your RRIF, you are subject to paying an escalating withholding tax depending on how much you go over. That amount is “grossed up” or increased even more when taking stock-in-kind. I had figured out the gross-up formula back in 2019 so I knew how much was mandated.
Over the past few years, we have been withdrawing more than the legislated minimum and paying more than the required withholding tax in an attempt to reduce the sizes of our RRIFs before we turn 70. We usually try to pay enough withholding tax to account for our entire tax burden which includes dividends from our non-registered account which we share 50/50. We try to arrange for a small refund each year and by not owing taxes, we also avoid having to remit quarterly installment payments the following year. To ensure that we have enough cash to cover our tax payments, we save up dividends in our RRIFs throughout the year and supplement by selling stock if we don’t have enough.
Next, I decided which stock(s) to withdraw. I chose Manulife Financial (MFC) because we did not have as much of that company in our non-registered account, and the timing of MFC’s dividend payouts would help smooth out our monthly income flow. I held MFC in my RRIF and Rich held it in his Spousal RRIF so I planned for us each to withdraw shares from these accounts.
Each year, Rich and I decide how much taxable income we want to generate and try to reach that number by first estimating how much grossed up income our dividends will earn from our non-registered account. Then we calculate how much we can withdraw from our RRIF accounts (including withholding tax) to reach that limit. Our goal is to aggressively reduce the size of our RRIFs by the time we hit age 70 to reduce OAS claw back but not push ourselves into such a high tax bracket that we would be penalized on Basic Personal Amount (BPA) tax credit reductions.
We try to make sure that our taxable incomes are more or less equal so that we optimize our joint tax burden. This is mostly done by splitting the income from our non-registered account 50/50 and then withdrawing comparable amounts from our taxable registered accounts. The latter is easy to control when withdrawing cash but more complicated when taking out stock-in-kind which is dependent on the stock prices on the day of withdrawal.
One way to help balance out our incomes is through tax credits such as charitable donations and medical expenses which can be shared between spouses. In 2025, With Rich’s income was slightly higher so it made sense for him to take all the tax credits. Since I usually put the charitable donations in my name, I needed to use the “transfer to spouse” option to allocate them to him. Note that for political donations, either spouse can claim the donation regardless of whose name is on the tax receipt.
Income Tax: Political Donations
Rich and I received our $200 cheques from the Ontario government around the 3rd week of January. Apparently, the cheques were mailed based on when you submitted your 2023 tax return. Because of our strategy to receive small refunds by pre-paying withholding tax, we usually file as early as possible to recoup that money. As a result, we were one of the first people we knew to receive our cheques. We saw these as “political bribe cheques” since they were issued to all taxpayers in the province and not just those who needed financial aid. Nor did it seem coincidental that the cheques arrived just as the sitting premier called a snap election to seek a new mandate. We decided that it would therefore be appropriate to donate the $400 that we received to our political party of choice.
This being our first political donation, I researched the details regarding any accompanying tax benefit. I found out that making a political donation nets you a much larger tax credit than a regular donation, but the benefit is capped. This type of donation cannot be split with your spouse, unlike a regular charity donation. But either spouse can claim the entire credit, regardless of whose name is on the cheque. For a political donation, you can claim 75% on the first $400 depending on whether you donate to the federal or provincial government (with varying rates depending on which province). This contrasts with a regular donation where you receive 15% credit on the first $200, 29% on any amount after that. Accordingly, the $400 political donation directly affects the tax payable, decreasing tax owed or increasing tax refunded by $300.
I further researched the difference between donating to a federal political party vs provincial party and decided we would get more tax benefit from a federal party since the federal rates on our taxable income (starting at 15%) were higher than provincial (starting at 5.05%). Because of the mail strike at the end of 2024, there was an extension for charitable donations made through February 2025 to be eligible for the 2024 tax year. This allowed me to reap the benefits a year earlier.
We received all of our 2024 tax forms by mid of February and were ready to file our taxes to get our refunds as soon as possible. But because of some stock sales that we made in our non-registered account in 2024 for rebalancing purposes, we triggered a small capital gain which we planned to claim 50/50 on our taxes and then offset with some of the capital loss that we had carried forward from previous years. I looked at my 2023 Notice of Assessment to confirm how much unused capital loss I still had left.
All this should have been business as usual, had it not been for the Capital Gains Increase Debacle at the end of 2024. The government had initially declared an increase of taxable capital gains from 50% to 66.67% for any gains exceeding $200,000 starting June 2024 but then deferred and later canceled it. As a result, the CRA forms and corresponding tax programs were in flux. By end of February 2025, when taxes could usually be filed, the confusion had not yet been resolved. Because of this issue, we were not able to file our taxes until well into March when the tax programs were finally updated to match the proper tax rules.
Then I noticed another wrinkle. The T5008 form which detailed the capital gain in 2024 had both of our names on it. This means that we had to split the gain 50/50 on our tax forms. But in 2023, I declared the capital loss just in my name so only I had a loss on record to offset the gain. Curiously, CRA did not flag and help me fix this mistake even though both our names were on that T5008 form as well. But I have no doubt that they would catch and penalize us if we did not properly split the capital gain.
Not wanting to wait further to file our 2024 taxes and receive our refunds, I filed both our tax returns, splitting the capital gain 50/50. I offset my share with my carry-forward capital loss while Rich did not, which increased his taxes owed, resulting in a smaller refund than expected. To rectify the situation, I signed onto each of our CRA accounts and filed a “Change My Return” request for each of our 2023 filings. On my tax return, I went to line 13200 (Capital Gains and Losses) and reduced my loss claimed by half. On Rich’s return, I added that same amount of loss to his filing. We got our notices of reassessment confirming that Rich now had half of the loss. Ten days later, Rich received an email from CRA requesting documented proof of the request. Using the Submitting Documents Online feature from his CRA account, he generated a T3 form from our 2023 version of our tax program StudioTax and uploaded that along with our shared T5008 form. By the next day, Rich received confirmation of his 2023 tax return reassessment, so now he officially had a capital loss on file.
Rich and I both received our 2024 assessments and tax refunds around April 1 and the money was deposited into our bank accounts by April 9. With our refunds safely received, I filed a “Change My Return” on his 2024 filing and applied the equivalent loss on line 25300 against his share of the gain. On June 10, Rich was notified that the reassessment was complete and on June 19, he received an additional refund. I had successfully changed our tax returns retroactively to correctly split our past capital losses and Rich successfully applied part of the losses to his taxes. Going forward, I will know how to correctly handle future capital gains and losses from our joint non-registered account on our tax returns.
In late 2024, the Federal government declared a “GST tax-free holiday” from December 14, 2024, through February 15, 2025, inclusive. This would remove the GST from certain purchase items, as well as on all groceries and restaurant meals including wine and beer (but not liquor with greater than a 20% alcohol level). The Ontario government matched the holiday by also removing the HST, meaning no tax was charged during this time period. I initially thought it was crazy that the tax break included alcohol as opposed to necessities such as shampoo and toothpaste. But someone explained that this policy was to spur discretionary spending to give the economy a boost.
In that light, the tax-free holiday certainly did the trick since all restaurants that we passed by seemed to be packed throughout the weekdays and weekends during this period. We took advantage of not needing to pay tax to try some new high-end restaurants that had interested us. As a result, by the end of February, we had spent more than twice the allocated dining budget for the first 2 months. After that binge, we seriously cut back on dining out for the next few months to get back on track. At least the higher dining expenditures were slightly balanced out by lower grocery spendings. It was fun while the tax-free holiday lasted and very difficult to stomach the tallies of our restaurant bills once that period was over!
During this period, we tried out restaurants on our radar including ones that we hadn’t gotten around to yet or considered too expensive without the extra incentive. Where possible, we went for a tasting menu to sample multiple dishes from each restaurant since it was possible we would not go back once we had to pay full fare. Spurred on by this early tax break impetus, restaurant traffic has increased Canada in 2025 as people continued to dine out more throughout the year, so this initiative seems to be a rousing success!
Annual Budget
At the start of each new year, we review how we fared against last year’s budget and make a new budget for the upcoming year, taking in mind inflation and any expected, larger-than-usual but non-recurring expenses. For example, the heat pump in our living room conked out on December 30, so we can expect an additional one-time cost to repair it in January. That will be added to the budget.
In areas where we under-estimated the previous year, we determine if that was a one-time anomaly or whether we should increase the estimate for the upcoming year. Throughout the year, where discretionary expenses are trending higher than expected (like our dining budget during the Tax-Free Holiday), we try to spend less in subsequent months to try to get back on budget. Where the expenses are mandatory, we take note and allocate a higher amount the next year.
In 2025, we were over budget in a few categories including "Auto" where an unexpected expense arose, and "Entertainment" when we upgraded our theatre subscription seats and watched more shows than usual. The auto expense was a one-time thing that won’t happen every year but we also know that the service warranty will run out for our car in August, so expenses will go up there. Our entertainment overage will probably be ongoing so we need to add more money to that category.
We were under our estimate in other categories while being pretty close for condo fees/utilities, groceries, sundries and subscriptions. I will be analysing our budget results from this past year to produce a new one for 2026. As always, we use Quicken to categorize all of our expenses and purchases throughout the year so that we can run detailed reports and have a pretty good idea of how much we spend and where our money goes. My Quicken reports give me good historic data as well, so I was able to easily find the last time that we had to replace a heat pump (in 2018 and that time, it was in our bedroom).
Overall, we were under-budget in 2025 because we over-estimated how much our vacation would cost. I prefer to allocate more towards Vacation expenditures and ending up not needing the funds rather than feel like we need to skimp on our trips. It costs so much to get anywhere these days and there are so many new places to visit that we are not likely to return to past locations, so we might as well do everything we want to do the first time.
Vacation
2025 marks the first of our 4-year boycott against traveling to the United States. We usually take an annual trip to New York City to watch plays and musicals or visit some other American city as part of our vacations for the year. We will not return to the USA until the current president is gone and/or his oppressive policies are revoked. We also tried our best not to buy American products or foods but that was small potatoes compared to what we usually spend on travel.
Instead, we concentrated on traveling within Canada and to Europe, which aligned with our plan to check off as many of the locations on our European bucket list as much as possible before we turn 65 and health care becomes more problematic and expensive. We started off with a week trip to British Columbia for a long-overdue trip to visit family. It is crazy that airfare within Canada is still as expensive if not more expensive than flying abroad. Hopefully the tariff war with the United States will rally national pride and loosen some of our inter-province trade barriers.
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