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10 Things Not to Assume


1.    You’ll retire at age 65.  Forced early retirement is a trend that won’t go away soon.  Aim to retire at age 65, but calculate that you might have to retire at age 58.

2.    You won’t live much past 75.  Instead calculate that you’ll need enough income in retirement to last you until at least age 90.  Doubt that?  Consider that Canadians are living longer and more people each year live past 100.
Also, be mindful of the fact that Canadians’ worst fear is that they will outlive their resources.  It’s far better to have too much than too little.

3.    You can save for retirement during the final five to seven years of your career only.  You should start a saving program for retirement now, however little, and consider increasing the amount saved over time-and to take full advantage of the power of compounding.

4.    You have to preserve principal.  Sure, it’s a time-honored adage to never touch your principal.  But consider the reality of life today: It’s too difficult to save enough money to both generate a stream of income in retirement and leave an inheritance legacy for your children.  It’s OK that people may want to leave a legacy, but they shouldn’t do it at the expense of their lifestyle in retirement.

5.    Your company’s defined-benefit pension plan will match inflation.  It won’t.  Also, don’t assume that your pension, CPP (Canada Pension Plan) and OAS (Old Age Security) will be adequate to meet your goals.

6.    Medical insurance and expenses won’t be an issue in retirement.  Even though Canada has “free” health care, you will still end up with expenses not covered. Dental, Massage, Chiropractor, glasses etc. Plan on these costs increasing during retirement.  You’ll need even more if you have to enter a nursing home. 

7.    A windfall will aid your retirement.  Don’t expect an inheritance, lottery winnings, the inflation-fed equity in your house, or any other miracle to fund your retirement.

8.    You can have a laissez-faire attitude about investment returns.  Don’t just accept whatever yield you’re getting on your GIC’s and Term-deposits.  Instead, establish a target.  Shoot to beat the rate of inflation by at least one to three percentage points each year.  This way, your investment won’t face the risk of losing its purchasing power.

9.    You can time the market.  Plenty of money managers claim to move in and out of the market and generate spectacular gains.  Ignore them.  Instead develop an asset-allocation plan designed for your own investment objectives, time horizon, and risk tolerance.  Once it’s in place, stick to it.

10.    Your current portfolio will appreciate so much that you can keep your annual savings rate low.  Your returns may not grow as much as you expect.  To safeguard your retirement, save now as much as you reasonably can.

The opinions expressed within this article/communication are those of the Financial Advisor and are not necessarily those of Keybase Financial Group Inc. Any data provided is for illustration purposes only. Clients and prospective clients should always read a product prospectus and fully understand all of the risks associated with the product before purchasing. Any information relating to the discussion of taxation issues is considered to be only general in nature. Clients should seek a qualified tax professional to discuss their specific tax requirements.
Keybase Financial Group Inc. is a member of the MFDA and is a member of the MFDA IPC.