Managing retirement risk to protect your savings
Posted by Admin on January 01, 2011
Even if your retirement is far off, reducing your risk exposure to a comfortable level is just as important while saving for retirement as it is when planning your retirement income.
Know the risks, plan to manage them
Whether they are close to, in, or saving for retirement, many individuals have concerns about their retirement income; questions like:
- Will I have enough saved to generate the income I need to retire?
- Will my savings last as long as I live?
- What can I do to ensure my savings aren’t eroded by poor market performance?
They’re good questions.
Canadians are living healthier and longer
The risk of outliving your savings is real:
- Canadian life expectancy hit 80.4 years of age in 2008, an increase from 77.8 years in 1991.1
- One in every two people aged 65 today will live to see age 90.
Successful retirement planning considers you might live beyond your life expectancy.
1 Source: “Life expectancy in Canada hits 80.4 years: Statistics Canada”, CBC news, Monday Jan. 14, 2008
It costs more to live
The impact of inflation becomes greater in retirement because expenses can keep increasing while your income may not.
At just a one-per-cent inflation rate, the purchasing power of one dollar in 25 years will be reduced to just 78 cents.
Market volatility hits those in early retirement the hardest
Market declines early in retirement when you’re withdrawing an income can erode your savings at an accelerated rate.
You need individualized solutions
Addressing these concerns requires product solutions and strategies that provide you with:
- Growth potential to keep up with inflation
- Guarantees to help maximize your retirement income and ensure it lasts
- Ways to manage market uncertainty
- Access to a wide choice of investment funds for all levels of risk
Consider the protection and versatility of segregated fund policies
Segregated fund policies are flexible solutions that can be structured in a number of ways to meet your specific life circumstances. They provide a number of fund choices, and options that give you the ability to generate income for life when you start drawing on your savings. They also can provide risk protection against volatile markets and growth potential from exposure to equity markets.
Combine all these elements with the benefits segregated fund policies can provide
- like potential creditor protection and various options for maturity and death benefit guarantees, and they can become a powerful part of your retirement income solution.