6 Retirement Risks and How to Mitigate Them

Fee-only Retirement Income Planning, Calgary

Are You Retirement-Ready?

No one wants a nest with no eggs! Many Canadian's retirement dreams quickly turn into sleepless nights as they worry about outliving their money. If you are 65 years old you have a 50% chance of reaching your 90th birthday. In fact, StatsCan projects that by 2040 there will be more than 80,000 people in Canada over the age of 100.

Retirement poses a lot of questions:

How long will my money last?

How do I generate enough income from my retirement savings?

What kind of investments do I need?

What kind of investments will generate the best income?

You have questions and you need answers. Here are 6 of the biggest risks to consider as you prepare.

What are the 6 big risks to Your Retirement?

1.) Longevity Risk - Outliving your money. Half of 65 years olds will live into their 90's. This means that your retirement income plan needs to last for 30 years or more. No one wants a nest with no eggs! Many Canadian's retirement dreams quickly turn into sleepless nights as they worry about outliving their money. If you are 65 years old you have a 50% chance of reaching your 90th birthday. In fact, StatsCan projects that by 2040 there will be more than 80,000 people in Canada over the age of 100. if you have several million dollars of assets or a good work pension, this is not a huge concern for you, but if you have less than $1 Million of retirement savings you have to consider creating as much guaranteed income as possible with as little stock market exposure as possible. The best way to do this is to allocate an amount of your savings into some kind of an annuity. There are numerous ways you can do this. We specialize in annuities so feel free to give us a call to discuss.

2.) Inflation Risk - Your money buys less. The Bank of Canada aims to keep inflation around 2%, but there is no guarantee of that target. Health care inflation is even higher. One strategy you can use to offset inflation is to grow some additional reserve money inside a TFSA. The benefit of the TFSA is that your money grows tax-free and the withdraws are not included in your taxable income.

3.) Market Risk - Losing money due to market performance. Volatility is a huge risk to generating retirement income. If you have to take money out of your investments when the markets are down, you have less money to work with to build your investment fund back to a sustainable level. There are several ways to deal with this but I'll give you one. Asset allocation with your investments. Most funds and investors in Canada tend to divide their investments into 60% equity and 40% fixed income. The problem is compounded if most of your investments are in the Canadian markets which represent less than 4% of the world's wealth. A better approach s to diversify into several assets classes like consumer staples, information technology, banks, industrials, energy, and real estate, to name a few. The next key to diversification is spreading your investments all over the world. The US represents about 50% of the world's markets and an investment plan needs to begin here and then include Asia, Europe, and Canada.

4.) Health Risks - Changing health needs over time. Advances in medicine mean that people are living longer but not necessarily healthier. With living longer comes increasing healthcare costs. 

5.) Mortality - An untimely death of a spouse or partner. It isn't a whole lot cheaper for one person to live than two. However, the death of a spouse or partner could mean a major hit to the household income being generated. The surviving spouse may not be entitled to the pension money that their partner had previously. There is no survivor benefit with the OAS pension and a possible 60% benefit from a deceased spouse's CPP.

6.) Taxes - History has proven that taxes go nowhere but up. All over the world, we are seeing increased taxes. There are fewer working people contributing to the tax base, which only means that taxes will go up. When you consider the aging population in Canada and the costs associated with that, it will require more taxes from everyone. 

It is important to have a plan in place and not be taken by surprise by the changing retirement landscape. This plan needs to be updated on a regular basis, simply because your circumstances are always changing. At Langford Financial Inc. we specialize in helping our clients with a quality Retirement Plan that is individually customized to ensure more predictable outcomes.

Want to retire in the next few years? Learn more about our flat-fee and all-inclusive planning services.

Retirement Income, Investment & Tax Planners,

Willis J Langford BA, MA, CFP

Nancy R Langford CRS


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If you are nearing retirement, newly retired, or well into that stage of life and need some honest, reliable financial advice and tax planning services, I highly recommend Willis and Nancy Langford at Langford Financial. I have been working with them since the fall of 2020 and am really happy I made the switch.

I needed much better advice than I was getting from my new bank rep as I was actively preparing for retirement. I found Langford Financial online and booked a review meeting. I was happy that I was sent a complete list of all the information that would be needed prior to my initial meeting so I arrived prepared.

From that initial meeting, I decided to have Willis prepare a retirement plan for me. After we reviewed everything he had prepared, I felt much more confident in what was to come financially during retirement and how I could manage it. That's when I decided to transfer my investment portfolio from my bank to Langford Financial so they could manage it with and for me. I felt they really had my best interests at heart.

It was a pleasant surprise that their approach combined both income planning for retirement and tax planning for both the immediate future and well into retirement. This has proven to be very helpful as it has ended up saving me a lot of money (a lot!) by using credits that had been missed by the company I previously used to prepare my taxes.

I really like working with Willis and Nancy. They are very quick to answer any questions I have and can accommodate virtual or in-person meetings based on what is needed. They also produce a regular newsletter that I really enjoy. It has lots of tips in it and some very good in-depth information that helps me make better decisions---or at least ask better questions!

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Sharon Stroick
Full Service Client Since 2020

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