• karlanvik

Unexpected Risks To Your Retirement Plan

By Karl Anvik, BSc, MA, CIM®, CFP®

The word “retirement” can conjure up many emotions: excitement, joy, and even anxiety or nervousness. Reaching retirement is an amazing milestone, but making sure you’re ready for it can be overwhelming, especially if you look at all the unknowns. Thankfully, there are ways to plan for many of the risks and headaches that retirement brings. Let’s look at some retirement planning challenges so you can feel empowered to prevent or work through them.

How Is Your Asset Allocation?

At retirement, the last thing you want to experience is losing a large portion of your investments due to a misallocated portfolio. It’s important to make sure your assets are handled carefully to guarantee you have money for the long haul.

That’s why it’s crucial for your money to be allocated based on your age, time horizon, and personal risk tolerance. Someone who is 20 years away from retirement may be okay with more volatility than someone who is retiring in 5 years and isn’t willing to lose more than 8% of their savings.

When you get to retirement, having a portfolio that can generate consistent income is key. In a low-interest-rate environment, generating income is all the more challenging. At Northfront Financial, we specialize in using alternative assets that are used by some of the largest pension plans in the world, such as the Canada Pension Plan (CPP). This allows us to help our clients solve the “income puzzle.”

Before you retire, it is important to have a financial professional walk you through the process of determining exactly what level of risk you want to take and can afford to take, how much liquidity you need, and help you design an income-generating portfolio customized to your needs.

The Reality Of Inflation

Inflation is a reality; not planning for inflation is the risk. CPP factors in inflation through the Consumer Price Index (CPI), but how can you protect your other assets? There are many ways to reduce the risk of inflation, such as diversifying your assets appropriately to strike a balance between principal protection and growth or making a conservative withdrawal plan that accounts for inflation surges in the future. The best way to prepare for the impact of inflation on your retirement savings is to plan for multiple scenarios, seeing how your nest egg will hold up under different circumstances.

Outliving Your Savings

Perhaps one of the most overlooked items in a retirement plan is your income plan, or lack thereof. We work so hard to get to retirement that we forget to make a plan for how to handle our money after reaching that milestone. Think of it this way: When you climb a mountain, you spend the bulk of your time preparing and strategizing for how you will get to the top (in this case, retirement). But once you’re up there, you realize you didn’t plan for the descent (withdrawing your money in retirement) and are not sure if you will make it to the bottom safely.

Having your money last as long as you do requires extensive planning to create a concrete income strategy that is designed to act as a personal pension. This is based on your needs, wants, savings goals, and unique lifestyle factors, which means a cookie-cutter strategy or withdrawal rate won’t give you the security you desire. A financial professional familiar with your situation can help you retire—and stay that way!

Don’t Let These Risks Get You Down

Retirement is an incredible time of life, one that you’ve worked hard for and deserve. That’s why it’s so important to do more than just save and invest; you need to look at the big picture and prepare for the many variables that could come up. If that sounds overwhelming, don’t fear! That’s what we do best at Northfront Financial.

If you are looking for effective strategies for the financial challenges you face in your everyday life, we’d love to talk with you and help you take care of the intricacies of retirement planning. Contact us for an introductory appointment by calling 403-571-8960 or emailing

About Northfront Financial

Northfront Financial is a boutique full-service financial planning firm serving individuals and families in Calgary, Alberta. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), and Certified Financial Planner (CFP) designations. To learn more about Northfront Financial and how we can help you, visit their website and schedule a complimentary appointment.

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