Five risks to retirement income

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: Advisor.ca, InvestmentExecutive.com, June 2011