Understanding “real life” tradeoffs between withdrawal strategies
One thing I’m struggling with when comparing various withdrawal strategies is understanding the ‘real life’ pros and cons beyond the final numbers.
Many strategies end up fairly close in terms of lifetime spending, taxes, or estate value, but I’m wondering if there are practical advantages or disadvantages that don’t show up directly in the projections.
For example, one thing I’ve been thinking about is flexibility and liquidity during unexpected spending events.
If TFSA and non-registered accounts are depleted earlier, then a large unexpected expense later in life could force larger RRSP withdrawals and trigger higher taxes. On the other hand, if RRSPs are heavily withdrawn earlier, maybe too much taxable income is being created unnecessarily, especially if some of that money ends up unspent and could have remained sheltered in the RRSP while withdrawals instead came from TFSA/non-registered accounts.
So I guess my broader question is:
How should people think about the real-world tradeoffs between withdrawal strategies beyond just maximizing ending estate value or minimizing lifetime tax? Are there frameworks or ways to evaluate flexibility, liquidity, and resilience to unexpected expenses when comparing plans?