Five risks to retirement income
Be prepared for these five realities so you can account for them in your retirement income plans:
- Longevity – Your plan should address the possibility that you’ll need 25 to 30 years of retirement income.
- 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.
- Inflation – Even a modest two per cent inflation rate over a 25-year retirement can erode your purchasing power by 40 per cent.
- Asset allocation – A diversified portfolio that includes stocks, bonds and cash helps provide growth and protection against market volatility.
- 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