7 Key Risks to Your Retirement Income
Addressing these issues will improve your peace of mind.
Longevity Risk
- Living longer can put pressure on your savings to sustain your standard of living and the ability to cover living expenses
- The longer you live, risks like market and inflation can be compounded
Inflation Risk
- Being too conservative or committing to lower return guaranteed investments can erode purchasing power over time
- Longevity can compound this risk with rising costs over an investment time horizon
Market Risk
- Market fluctuations can affect performance and income payments
- A diversified portfolio can help mitigate these fluctuations
- A disciplined income delivery process can help minimize impact on income payments
Taxation Risk
- Different investment vehicles attract different levels of taxation
- Investment income can affect things like after tax return performance and affect taxable income which can influence eligibility for certain government benefits
- Organizing withdrawals and having an income delivery process can help minimize taxable income in order to maximize spendable income
Health Risk
- Short or long-term health issues can impact employment income and place strain on an investment portfolio if required to supplement living costs
- Living benefit insurance (health, disability, critical illness protection) can help protect income earning potential and allow investment plans to continue without unanticipated withdrawals
Mortality Risk
- Financial and overall life plans can be jeopardized by an untimely death
- Life insurance can help protect the sustainability of financial plans, provide capital for income protection and estate planning as well as safeguard assets for dependents and beneficiaries
Estate Transfer Risk
- Estates fees, taxes, lawyer and accounting fees can reduce capital for beneficiaries
- Estate settlement can cause emotional and financial stress for executors and beneficiaries
- Estates can be audited up to 4 years after death in Ontario
- Estate Information Return requires all assets to be valued and accounted for shortly after death