Avoid The Retirement Risk Zone ... Innovative Solutions Required

In Canada Baby Boomers account for more than 30% of the population – the largest population segment in the country. The oldest turned 65 in 2011. For the majority of Baby Boomers the Canadian Pension Plan and Old Age Security will not be enough to cover expenses during retirement. Baby Boomers could find themselves outliving their savings, inflation could dig into their hard-earned savings, and they could find themselves thwarted by market volatility. It's a fact that Canadians are living longer and there is concern about outliving retirement savings

The five years before and the five years after retirement are a critical juncture called the retirement risk zone. During this 10-year period, short-term losses will have a negative long-term effect on retirement income because there is no time for investments to rebound

What can you do

• Your retirement savings need to provide guaranteed retirement income for life and the ability to start this guaranteed income at age 55 – this means you will not outlive your savings regardless of market performance
• You require Anniversary resets every three years so that you can take advantage of higher market values which protects your from inflation
• Annual income Base Bonus of 5% - this is still available from limited participants
• Automatic income reset which increases payout for the rest of your life

I am noticing a trend in the industry and Guaranteed Withdrawal Plans are becoming less attractive with lower guarantees and bonuses or they are simply no longer available. Currently there are some plans available that offer 5% bonus and 5% guarnateed withdrawals. Take advantage of the programs that remain by implementing an RSP loan strategy.

 
The RSP Growth Spurt
 Taking advantage of an RRSP loan can make the difference between retiring and retiring comfortably. Loans from $2,500 to $50,000 are available. Terms range from 1 year to 10 years (or longer). Rates range from prime+1% to prime + 2.75%. Applications are easy and approvals are fast!
 
Buy your RRSP now, pay later
You can arrange for your loan today and pay later by deferring your first loan payment up to 6 months. If you are expecting a tax refund and choose to defer your first payment you can use all or part of your refund to pay down the loan before the first payment is even due.
 
Combine an RSP loan with a Guaranteed Withdrawal Benefit Plan this RSP season and avoid the Retirement Risk Zone.