|The stock market is a scary rollercoaster of risk and volatility where you never know what you are going to get each year – how can you ever plan a steady cash flow in retirement knowing this? You can’t.
- With a guaranteed pension you can count on the same dollar amount deposited to your bank account each month in retirement. You know exactly how much you can spend on food, hydro, gifts, new vehicles, trips, and all your other costs of living.
There have been ten sizeable stock market corrections in North America since 1950. That works out to one every five years! If you were a nervous stock market investor in your 40’s or 50’s, you will never sleep again in your 60’s and 70’s when you are no longer working and every up and down on the stock market will cost you money – money that can not be replaced now that your career is done. The stress of more than one severe stock market correction every decade in retirement may be enough to kill you from stress or lack of sleep. Is this really the type of retirement you envisioned?
- A guaranteed pension for at least one third of your investment assets removes all of this stress. The pension payments are guaranteed and there is no investing to do – ever.
Stock trades in the stock market incur commissions or advisory fees that reduce the assets remaining for you to live off. While your advisor deserves to get paid to complete the work you engage them for, there are ways to restructure your retirement finances to reduce investment fees, leaving more money for you to spend.
- A pension has no commissions or fees to put it in place and there are no ongoing fees either. Simply put, this leaves as much money as possible in place to maximize cash flow for you.
Income taxes are a significant part of your investment rate of return in Canada. There are taxes on dividend income you earn, foreign income on foreign investments, rental income and capital gains from rises in the stock market. All of these taxes serve to erode your non-registered investment base, leaving you with less money to live off every year in retirement.
- Not so with a pension – It is possible to generate some pension payments that contain a lower level of taxation compared to regular investment income, leaving you with far more money to live off in retirement.