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How a Cash Wedge Strategy Can Help Protect Your Retirement Income
By Martin Cloutier, CFP®, CIM® – June 30, 2026
When markets fall, many retirees worry about one thing: having to sell investments while they are down.
That concern is completely valid. In retirement, your portfolio is not just there to grow. It also needs to provide income. If your money is fully invested and markets decline, you may be forced to sell at the wrong time just to fund your monthly retirement paycheque.
This is where a cash wedge strategy can help.
What Is a Cash Wedge Strategy?
A cash wedge, sometimes called a cash flow wedge, is a portion of your retirement portfolio set aside to help cover near-term income needs.
The goal is simple: give retirees access to income without having to sell long-term investments during a market downturn.
Used properly, this strategy can create more flexibility, reduce stress, and help protect the long-term retirement plan.
The Problem With Holding Too Much Cash
While cash can provide stability, it can also create a problem if too much of your portfolio sits in low-return investments for too long.
For example, cash, GICs, or money market investments may help reduce short-term risk, but they may not provide enough long-term growth. This is often called cash drag.
Cash drag matters because retirement can last 20, 30, or even more years. If a large part of your portfolio is not working hard enough, it may affect how much income you can safely withdraw and how long your money lasts.
Why the Structure Matters
In the video below, Martin compares a retirement scenario using a $500,000 portfolio.
In both cases, 20% of the portfolio, or $100,000, is allocated to the cash flow wedge, while the remaining $400,000 stays invested for long-term growth.
The key difference is how the cash wedge is structured.
In the traditional scenario, the cash wedge earns a lower return. In the enhanced scenario, the cash wedge is designed to work harder while still supporting the income plan.
That difference can have a meaningful impact on retirement income, portfolio longevity, and overall financial confidence.
The right structure can help provide income stability, reduce the pressure to sell during difficult markets, and give retirees more confidence that their money can support the life they want to live.
Watch the full video to learn more about how the cash wedge strategy works and why it may be an important part of retirement income planning.
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Disclaimer: Any view or opinion expressed in this article are solely those of the Representative and do not necessarily represent those of Harbourfront Wealth Management Inc. The information contained herein was obtained from sources believed to be reliable, however accuracy is not guaranteed. The information transmitted is intended to provide general guidance on matters of interest for the personal use of the viewer, who accepts full responsibility for its use, and is not to be considered a definitive analysis of the law or factual situations of any individual or entity. Any asset classes featured in this presentation are for illustration purposes only and should not be viewed as a solicitation to buy or sell. Past performance does not necessarily predict future performance, and each asset class has its own risks. As such, this content should not be used as a substitute for consultation with a professional tax or legal expert, or professional advisors. Prior to making any decision or taking any action, you should consult with a licensed professional advisor.
Harbourfront Wealth Management Inc is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization .
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