Some Canadians are fortunate to reach their elder years with sufficient financial assets to generate all the retirement income they need without drawing down their wealth, but they are the minority. Most investors cannot afford to live off the amount of real income their nest egg can safely yield and, thus, they then must decide with professional help at what rate to drawdown their nest egg. The scientific consensus is that no universal decumulation rate is appropriate for everyone and, in particular, the optimal drawdown strategy depends critically on each investor’s longevity risk aversion (LoRa).

By: Moshe A. Milevsky1 and Barry Gordon2

A simple Google search for the phrase “retirement strategy” results in approximately 176 million hits, whereas a search for the phrase “decumulation strategy” leads to only 78,000 results. That is a ratio of almost 2,300 to 1 favouring retirement over decumulation. Yet, an investor’s strategy for the latter is likely to be infinitely more important than the former.3 In fact, the current thinking among gerontologists and pension economists is that retirement (i.e. the complete secession of work at age 65, for example) is unlikely to be affordable for the average Canadian and a recipe for shortened longevity.4

The Forget Retirement whitepaper outlines the following topics:

    • ‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎• ‏‏‎ ‎What LoRa means
    • ‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎• ‏‏‎ ‎Why it should be part of the standard investment know-your-client process
    • ‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎• ‏‏‎ ‎How to measure LoRa with a simple survey
    • ‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎•‏‏‎ ‎ Survey results on how Canadians plan to decumulate

 

Download the Whitepaper

(French Version)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Moshe A. Milevsky is a professor, educator, author and thought leader on retirement income planning and this White Paper is written in his capacity as Chief Retirement Architect for Guardian Capital LP. The views expressed here do not reflect the opinions or position of York University or the Investment Advisory Panel (IAP) of CIRO, of which he is vice chair.
2. Barry Gordon is Managing Director and Head of Retail Asset Management for Guardian Capital LP.
3. Google search results on 10 June 2023.
4. Example of one of the many studies published by Harvard Medical School. Harvard Health Publishing, Working later in life can pay off in more than just income, Harvard Medical School, Staying Healthy Blog, published June 1, 2018. https://www.health.harvard.edu/staying-healthy/working-later-in-life-can-pay-off-in-more-than-just-income

This communication is for educational purposes only and does not constitute investment, legal, accounting, tax advice or a recommendation or solicitation to buy, sell or hold a security. This information is not intended for distribution into any jurisdiction where such distribution is restricted by law or regulation.

The use of hypothetical charts is not meant to represent the performance of any particular investment and is not intended to predict or project investment results. The charts are based upon certain assumptions, estimates and/or projections, the anticipated results of which are inherently subject to uncertainties and contingencies. No representation is being made that any investor will, or is likely, to achieve gains or losses similar to those illustrated. There are frequently material differences between hypothetical performance results and the actual results achieved by a particular fund’s investment strategy. Past performance may not be indicative of future performance.

The opinions expressed are as of the published date and are subject to change without notice. Assumptions, opinions and estimates are provided for illustrative purposes only and are subject to significant limitations. Reliance upon this information is at the sole discretion of the reader. This communication includes information concerning financial markets that was developed at a particular point in time. This information is subject to change at any time, without notice, and without update. This communication may also include forward looking statements concerning anticipated results, circumstances, and expectations regarding future events. Forward-looking statements require assumptions to be made and are, therefore, subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Equity markets are volatile and will increase and decrease in response to economic, political, regulatory and other developments. The risks and potential rewards are usually greater for small companies and companies located in emerging markets. Bond markets and fixed-income securities are sensitive to interest rate movements. Inflation, credit and default risks are all associated with fixed income securities. Diversification may not protect against market risk and loss of principal may result. Certain information contained in this document has been obtained from external sources which Guardian believes to be reliable, however we cannot guarantee its accuracy. Index or benchmark performance is shown for comparison purposes.

Guardian Capital LP manages portfolios for defined benefit and defined contribution pension plans, insurance companies, foundations, endowments and investment funds. Guardian Capital LP is a wholly owned subsidiary of Guardian Capital Group Limited, a publicly traded firm, the shares of which are listed on the Toronto Stock Exchange. For further information on Guardian Capital LP and its affiliates, please visit www.guardiancapital.com. All trademarks, registered and unregistered, are owned by Guardian Capital Group Limited and are used under license.