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About 900,000 Canadians are set to exit the workforce before 2026, according to a report last year from TD Economics. As the ‘pre-retiree’ cohort prepares for this next phase, one of its biggest challenges is getting the right advice.
Even pre-retirees who’ve accumulated sufficient assets may not yet have fully figured out lifestyle and retirement budgets, what percentage of a portfolio can stay in more of a growth strategy or what percentage can be built as a legacy portfolio to be passed down, Ms. Wilson says. Financial strategies can be tailored to retirement stages. Many pre-retirees build a cash wedge into their portfolio, designed to meet the immediate financial needs of the first years of retirement with cash-ready sources of money. The rest of their savings can remain invested in vehicles designed to grow capital that will support them later on.
Still, for pre-retirees it makes little sense to shift all or even the majority of growth assets into low-risk options such as GICs. “The GIC interest rate is never going to beat inflation. When you look at it on an after-tax basis, we’ve never seen an extended period of time where interest rates on GICs kept up,” Ms. Wilson says.
Adveditorial Financialplanning Preretirees Retirement Retirementplanning
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