Pay yourself forward

Money-smart Strategies for Creating and Keeping Retirement Income

Retirement is here for the first wave of millions of Canada's baby boomers. And ready or not, many are faced with the task of converting their savings into a retirement pay cheque while increasing their nest egg - a challenge complicated by the unpredictability of today's stock market. According to many industry experts, boomers may need to consider radical, fresh methods for generating income during retirement.

Here are a few tips for those hoping to create a pay cheque for life:

Put your savings to work. Just because you've stopped working does not mean your retirement income should stop growing. Consider the current allocation of your portfolio - is there a proper mixture of safety for short-term income needs, but still a balance of longer-term investments to ensure you don't outlive your money?

Stick to your strategy. Once you have developed a strategy for producing income, stick to it. Long before you invest, keep in mind that the stock market promises only one thing: it's never predictable. You should have a strategy that can meet your income needs, but provide for longer-term growth.

Maintain control and access to your nest egg. Most people want to maintain control over their savings and be able to access it on the proverbial "rainy day." They also want their heirs to receive any remaining assets on their death. Beware of new products that may promise guarantees for income, but don't have the flexibility to provide for lump-sum withdrawals.

Practice tax-smart asset distribution. To make retirement assets last as long as possible, always consider the total amount of taxes you may owe to the government and how to best manage the unlocking of those tax liabilities over time. If you put all your savings outside of an RRSP into a GIC, the interest you receive is fully taxable. Other more tax-efficient investment vehicles can provide income options.

If you are thinking about retirement within the next few years, you probably have apprehensions about ensuring you don't outlive your stream of income. And given today's marketplace, it is a valid concern. Now is the time to start that planning process. If you would like to further discuss how you will generate income from your investment, please contact our office.