The Globe and Mail, Tom Bradley
Just as the baby boomers brought us free love and rock ‘n’ roll, they’re also leading the way into pension-less retirement. Those who are near or just into retirement are in a tough spot. They have a long time horizon and need investment returns that are well in excess of inflation. And yet, low-risk investments provide minimal return (negative after inflation), and owning higher risk securities has been harrowing and less-than-rewarding over the last five years.
While most people entering retirement feel some level of anxiety, it is those who don’t have a defined benefit pension plan and don’t know if they’ll have enough to fund their retirement who experience the most stress. What they want more than anything is certainty, but that’s hard to come by in today’s low interest rate environment.
There are no easy answers to the no-DB dilemma, although any solution should start with a financial plan. Rather than wondering and worrying, some work up front with an adviser or fee-for-service planner will bring clarity to the issues, if not peace of mind. And as devoted followers of the column below this one know, a proper plan will likely recommend a combination of strategies.