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Five risks to retirement income

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Be prepared for these five realities so you can account for them in your retirement income plans:

1. Longevity

Your plan should address the possibility that you’ll need 25 to 30 years of retirement income.

2. Withdrawal rate

You should take this longevity risk into account when deciding how much you receive from your retirement income plans per year, to avoid outliving your investments.

3. Inflation

Even a modest two per cent inflation rate over a 25-year retirement can erode your purchasing power by 40 per cent.

4. Asset allocation

A diversified portfolio that includes stocks, bonds and cash helps provide growth and protection against market volatility.

5. Healthcare

39 per cent of retirees surveyed believe health care costs not covered by government programs could deplete their savings and lower their standard of living.

Sources:,, June 2011.

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Next lesson: Be prepared life's changes