In Retirement

Product Allocation

productAllocation_41104144A recent survey on Canadians has yielded some interesting results about retirement. Most surprisingly, 69% of Canadians plan on continuing to work after they formally retire. The reasons Canadians plan to work after retirement are to stay socially active (with 57% of respondents selecting this as their main reason), to remain mentally active (72%), and because they cannot afford not to work (38%). The last result, to continue working for financial reasons, is not surprising given the recent economic downturn in Canada. The poll also reveals that 65% of retirees do not have a financial plan. Fortunately, however, Canadian financial advisors are adopting Product Allocation strategies to assist retirees with making financial plans.

Product allocation ensures sustainable retirement income by placing clients’ assets in specific proportions in three product categories. This methodology assures minimal financial risk and it also optimizes retirement income potential. The three product categories are Systematic Withdrawal Plans (SWPs), Guaranteed Minimum Withdrawal Benefits (GMWBs), and Immediate Annuities (IAs). Whereas SWPs are linked to portfolios of segregated funds, stocks, bonds, cash, etc., GMWBs are designed to provide sustainable and predictable increasing levels of income. IAs, on the other hand, are established to deliver guaranteed income for clients, usually for life.

In this way, clients have a better idea of how much to invest, which categories to invest in, and, most importantly, if they can afford to retire. We are here to help determine what makes sense.