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Retirement in Canada is Becoming More Risky

Retirement in Canada is Becoming More Risky

October 7, 2022

Canadians financial risk during retirement is a reason to plan carefully, writes Peter Watson.

Canadians underestimate the impact of longevity, inflation and healthcare costs have on retirement savings, and that’s making our country a less secure place to retire. This is according to the Natixis annual ranking as reported by Investment Executive.

Greater focus needs to be placed on retirement savings made during your working years.

The survey also indicated that many Canadians are too conservative with their investments. Most people invest with safety in mind, and this is a good starting point. However, there are two sides to the “safety” strategy.

Conventional wisdom correctly classifies stocks as riskier than bonds. Stocks are more volatile therefore you can anticipate some years that produce gains might be followed with years that have losses.

That is true. However, bonds that reduce the risk of market volatility do not provide a very strong return as compared to the long-term expectations from stocks.

Not having enough stocks in your portfolio has the likelihood of lowering your return. A lower return on investment during your career years could result in not having enough capital during your retirement years.

Considering how you allocate your portfolio between stocks and bonds is also very important during retirement. A couple that retires at age 65 has a strong likelihood that at least one will live into their 90s.

Our suggestion is to complete your own financial projections to see what portfolio mix of stocks and bonds is appropriate.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com