Some measures to mitigate retirement income risks

By Admin 2020/12/03

Ottawa River trail — This trail hugs along Ottawa River and is my favorite walking route that goes all the way to the Parliament.

For those approaching retirement or are in the retirement phase already, the uncertain market, less a falling market, creates many worries. Here are some suggestions to ease these worries in these troubling times:

To create or maintain a cash reserve
- You may want to keep enough cash on hand to cover two to three years of retirement expenses. This will not be affected by the ups and downs of stocks and bonds. Thus you do not need to see them at an inopportune time.
To re-balance portfolios to reflect your risk profile
- Over time, the equity and the fixed income allocation will drift due to market fluctuation. It needs those that have gained in value to be sold to buy more of those that have lost weight --- sell high and buy low. Stocks need time to recover. We have to be patient and prudent.
To postpone the retirement date
- Under such uncertainty, postponement of retiring may be a wise choice, giving the savings more time to recover while there is still an active employment income coming in.
To cut spending
- Income – expenses = savings
- Paying attention to expenses reduction is as important as increasing income or return. And the reduction process is mostly under our control, not like the market.