Market Volatility, Retirement Income and the Risk of Time

Recent surveys show that over 60% of pre-retirees feel most comfortable with the knowledge that they’ll never outlive their income.  Do your current investments offer you peace of mind like this?

With interest rates stubbornly stuck at historic lows, many savers and investors find themselves caught in a catch-22 situation with investment choices that on the one hand offer either poor results, or on the other hand offer uncertain results.

For safety and short term needs many people leave money in bank accounts, and invest in GICs and term-deposits. Savings in these types of savings are safe, but growing at a rate that is barely keeping up with inflation. In many cases savings may not be growing fast enough to meet their longer – term financial goals.

Others place hope for better growth on their investment savings in volatile markets that don’t guarantee gains, and may actually lose value by the time they need the money for lifetime income.

It’s not that market risk or volatile markets are necessarily bad. In fact, higher risk tends to bring higher rewards with some investments. In fact it is technically correct that over time, securities markets outperform many other investment savings choices. But these rewards are typically gained over long and uncertain periods of time. As an example, the Toronto Stock Exchange is only slightly above level today as it was 10 years ago.

So time is a very important factor, particularly for savings that are earmarked to provide you with an income the you’ll need to use at a specific time such as during retirement.

Obviously the closer you get to retirement the sooner you may wish to reduce  risk and put some guarantees on your savings you’ll use for income. We know that for many people, the simple fact of knowing that you’ll never outlive your savings is a far more important part of the investment process than hoping for out-sized gains in the markets or running the risks of having to hope for markets to ‘come back’ and make some money eventually.

Thankfully there are a variety of guaranteed investments – no matter the size of your nest egg – that will take the risk of time out of your future financial plans.

To discover whether these guaranteed investment options meet your unique circumstances, good questions to ask are:

  • Can our lifetime expenses be covered by our current pensions and government retirement benefits?
  • Can we finance our future travel plans and other bucket list items?
  • If we want to convert some of the equity from nest eggs into a guaranteed-for-life income stream, what are the best available options?
  • Can we afford to support our dependents?
  • How will we cover our long-term care needs?
  • After we’re gone, will we have enough to cover the needs of our survivors, bequests and the charitable legacies that we wish to leave behind?


Some guaranteed income plans offer additional benefits that suit a variety of circumstances such as:

  • Guaranteed future income growth during savings years.
  • Plans that allow you to participate in the upside of the markets while also guaranteeing an income for life.
  • Guaranteed income payments that won’t go down over your lifetime.
  • Minimum guarantees. What you put in is what you can take out, even if the market value goes lower than your initial deposits.
  • Control and access over your investments.
  • Joint accounts, for the purpose of guaranteed income continuation for a surviving spouse.
  • Avoid probate taxes and maintain control over savings. Note: in most Canadian provinces, it is unnecessary to set up joint accounts on guaranteed investments if your wish is to avoid probate taxes and dramatically ease the distribution of the residual values to your beneficiaries.
  • Transfer of residual proceeds to your beneficiaries can be delivered as incremental payments over time and/or as lump sums, as you see fit.

Disclosure note: As an independent Certified Financial Planner and an expert on guaranteed-for-life income solutions, I have personally invested in some of these plans since they are a perfect fit for my circumstances.

If you’d like to learn more about taking the risk of time out of your investment savings, I invite you to contact me to help you discover if guaranteed investments are the right fit for you today.

Jack Bergmans CFP

Certified Financial Planner/ Founding Partner

Life Insurance & Estate Consultant

Phone: (416) 356-4511
Toll free: (888) 708-3134 Ext. 2

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