5 key risks to retirement income

By Special to MoneySense on June 24, 2015
Estimated reading time: 1 minute

Inflation is a big one but there are other things to prepare for

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Inflation is the single biggest risk for retirees, with 58% of pre-retirees and 45% of retirees worried about the potential for rising prices to erode purchasing power, finds a Fidelity Investment survey. “Inflation hurts retirees more than any other group,” says Peter Drake, vice-president, retirement and economic research, Fidelity Investments Canada. “In retirement, you have to plan for inflation because it can do a lot of damage over the long term.” The stress-free guide to retiring rich » Additional risks include:

healthcare (53% of pre-retirees are concerned vs. 42% of retirees);
asset allocation (46% of pre-retirees vs. 31% of retirees);
running out of money (46% vs. 30%); and
longevity (49% vs. 33%).

The survey also found that 62% of pre-retirees expect to continue working in retirement, and 54% of those that work do so for financial reasons. Meanwhile, 27% of retirees are currently working at least part-time. The true cost of retirement » Still, 85% of retirees have a positive outlook on retirement. Drake cites three key observations on retirement from the last decade. 1. Working in retirement is not a retirement plan. 2. Inflation is a risk to retirement income. 3. Financial advisor is key to retirement fulfillment. This article originally appeared on advisor.ca.