The sky filled with lightning

When markets are stormy, take the opportunity to review your investment volatility

When stock markets drop, even just for a couple of days, it is a powerful reminder of just how important the ups and downs affect your retirement income.

It also shows how valuable the Canada Pension Plan, a workplace defined benefit pension or even annuities are to generate reliable, steady, consistent and predictable retirement income that you cannot outlive.

If you are retired or getting close to retiring, then you’ll want to pause to think about the impact of volatility on your income in retirement.

The tricky part of planning your retirement income is that it will never coincide with the stock market. When the stock market drops 3 per cent today and it just happens to be the same day when you sell some investments to create your monthly income, the stock market doesn’t care.

When you decide to make a large purchase like a vacation or a car or renovations on your home and withdraw the money today when the stock market drops 3 per cent, the stock market doesn’t care.

You’ll often here that stock markets will bounce back (many times true) but for you, today, you have possibly $5,000, $10,000, $20,000 or more fewer dollars invested in stocks that you hope will go up.

When you are looking at retirement income you want to last for 25 or 30 years, too many days like today where your life and the stock markets are not in sync, will cause shortfalls in the future.

So, when stock markets have a short term drop it is an important reminder that stock markets go up and down and this volatility can have a major impact on your retirement.

So, what can you do? Read More