Boomers face Difficult Choices with Retirment Income Planning

As Canadian baby boomers enter retirement, there is a lot of concern, anxiety and confusion as to how to plan their retirement income.

“When we consider the risks of outliving retirement assets, unexpected costs, healthcare expenses and unpredictable investment returns, the importance of retirement planning and, more specifically, retirement income planning become more clear,” says Tina Di Vito, head of the BMO Retirement Institute.

When it comes to effective retirement income planning, Canadians need to accept that hard decisions have to be made and that some concessions will be necessary.

There is always a trade–off between risk and return, and in order to ensure a predictable income stream, one may have to give up some return to achieve more stability. In achieving predictability, however, one may also have to sacrifice some control and flexibility.

In deciding on their personal retirement income strategy, Canadians must recognize that they cannot have their cake and eat it too. They should make an honest assessment of what they need and value most and what they are prepared to give up, and choose the appropriate product or strategy that will best enable them to achieve those needs with a price tag that they are prepared to live with.

One's individual situation, as well as one's individual goals, will determine which solution—or combination of solutions—is best. It is also important to start thinking early, since the successful implementation of one's strategy may involve taking action well before retirement.

Remember—there are no certainties in life. Just like those in other phases of their lives, people in retirement will need to stay flexible and be prepared to make adjustments to their retirement income plans in response to changing conditions.

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