Are you ready?
Retirement planning can often leave you with more questions than answers. It can be difficult at the best of times, and recently Canadians are facing even more challenges.
Balancing cash flow and asset longevity in retirement
When planning for retirement, one of the toughest decisions is balancing cash flow—the money you have available to spend each month—with asset longevity, ensuring your savings last throughout your lifetime. Retirees often want a comfortable income early in retirement to enjoy travel, hobbies, or family time, but withdrawing too much too soon can deplete savings, especially with longer life expectancies.
Understanding the trade-off
High cash flow early in retirement can enhance your lifestyle, but may reduce the longevity of your assets. For example, withdrawing 6% annually from a $500,000 portfolio might provide $30,000 a year initially, but could exhaust funds faster, particularly if investment returns lag or inflation rises. Conversely, a conservative withdrawal rate, like 4%, may preserve your savings longer, but could limit your ability to cover expenses or enjoy discretionary spending.
Strategies to balance both
- Adopt a flexible withdrawal strategy: Consider the 4% example earlier as a starting point, adjusting withdrawals based on market performance or personal needs. In strong market years, you might withdraw slightly more; in downturns, cut back to preserve capital. Alternatively, Sun Life has a solution called “MyRetirement Income” that can automate this decision-making process for you.
- Prioritize essential vs. discretionary spending: Allocate funds for necessities (housing, health care) first, then adjust discretionary spending (travel, hobbies) to protect long-term savings.
- Diversify income sources: Combine government benefits (e.g., CPP, OAS), workplace pensions, and personal savings (RRSPs, TFSAs) to create steady cash flow, while minimizing portfolio withdrawals.
- Plan for inflation and longevity: Account for rising costs and a potential 20–30-year retirement. Consider investments like dividend-paying stocks or annuities for stable income.
- Consult with a professional: Work with one of our licensed professionals, available any time through your plan with us. A professional can work to make a tailored plan just for you to optimize cash flow while ensuring your assets last.
By carefully planning withdrawals and diversifying income, you can enjoy retirement today without compromising financial security tomorrow.
Sun Life has helped millions of Canadians like you save and set up retirement income for 160 years. We are here to help you navigate the complex world of retirement planning, with tools, knowledge, advice and solutions to help you reach your goals.
What do I need to think about to ensure I’m ready for retirement?
The 4 L’s
| Living expenses | Lifestyle | Longevity | Legacy |
|---|---|---|---|
What daily expenses in retirement will you need to cover:
Government pensions may not provide enough to cover these, which is why you may want to consider guaranteed income options to help cover your living needs. |
Early in retirement you may want to travel, start a new hobby or join a social club. You may need to cover costs such as:
You may also want to continue to invest some of your money for future growth. |
Government health care plans vary from province to province. They all cover physicians’ care and hospitalization. However, most don’t cover:
As you age, your health-care needs may expand to require some personal assistance and possibly permanent care. |
If you do have funds left over, it may be important to you to leave a legacy to your family or a worthy cause. An estate plan can help protect your estate and leave a legacy. |
Key questions
| Building your income base | Funding discretionary spending | Covering health costs | Leaving a legacy |
|---|---|---|---|
| How much money do you expect from CPP, QPP or OAS? | What do you dream of doing in retirement? | Do you have a health insurance plan you can carry over into retirement? | Would you like to leave an inheritance to your family? |
Do you have a company pension? |
How important is it to you to have spending money for things like travel and entertainment? | Do any serious health problems run in your family? | What type of life insurance do you have? |
| How much personal savings will you have? | Do you plan on making any big purchases? | How do you think aging and your health will affect your expenses in retirement? | How important is it to you to leave money to a worthy cause? |
How Sun Life can help
We can help guide you step-by-step with a plan that works for your life and savings. Book an appointment
As a Sun Life plan member, you also have access to digital self serve resources and assisted planning support throughout your saving years and into retirement. Some of these include:
Education
- Planning your best retirement on mysunlife.ca
- Sunlife.ca Retirement Page
- Webinars
Planning
- Sun Life Retirement Planner (complete in just 5 minutes)
- Sun Life One Plan (create an in-depth Financial Roadmap)
Advice
- Self Serve – Digital
- Saving for retirement – 360 Plan Advice
- Setting up income – Retirement consultants4
When you are ready to take income, you’ll also have access to our full line of income solutions, including Sun Life’s exclusive MyRetirement Income.
| Income Solution | Details | Typical member |
|---|---|---|
| RRIF/LIF | Maintain your investment management and choose from several income focused investment options. Depending on the product you select, you may be subject to minimum and maximum withdrawal percentages. | You want to stay involved in your investments, have flexibility on withdrawals and are comfortable with adjusting your plan over time. Our team is always here to help with guidance. |
| Annuities5 | In exchange for a lump-sum premium, Sun Life guarantees to pay you an income for life or as long as the annuity contract specifies. | You want peace of mind above growth or flexibility. Ideal if you want certainty in your retirement income. |
| MyRetirement Income | A fully automated solution—you don’t need to manage anything. Retirement income is automatically delivered to your bank account on a regular basis. You have access to your savings at any time – you are not locked in. | You’re looking for a “do it for me” approach to income and simply want to choose the age you want your investments to last until. Sustainable variable stream of income with less day-to-day decision making. |
For more information about our income solutions
Contact us at 1-866-224-3906
Monday to Friday
8 a.m. - 8 p.m. ET
Or call 1-866-292-3664
Monday to Friday, 8 a.m. to 8 p.m. ET
1 2023, Statistics Canada (2021 data)
2 2024, study by the Canadian Association of Retired Persons, conducted for Sun Life
3 2024, study by the Canadian Association of Retired Persons, conducted for Sun Life
4 Registered as financial security advisors in the province of Quebec
5 Annuity payments depend on various factors such as your account balance, your age, and the annuity purchase rate in effect at that time