Just as you would carefully plan your budget for a road trip to Gaspésie, you have to do the same for retirement. In your calculations, you must take into account longevity, inflation, rate of return and liquidity risks. Start calculating!
Longevity
No one likes to think about leaving for the big trip from which we do not return. However, when planning for retirement, it is unavoidable: life expectancy is a key factor. You could live much longer than you believe and outlive your savings! It would be a shame to run out of money at 80...
Inflation
One day, you might have to pay $12 for broccoli. With the constant increase in the cost of living, once you have retired, you might not be able to buy as much as before. Given that only part of your retirement income is protected from inflation (e.g.: your retirement pension under the Québec Pension Plan), you can adapt your withdrawal strategy accordingly.
Rate of return
You can have an idea of the rate of return on your investments, but it is impossible to foresee it with certainty. Therefore, you have to be able to compose with the possible fluctuations in income. A good investment strategy can have several types of investments and be adapted along the way.
Liquidity
Do you have water damage or an unplanned getaway with friends? No problem: you have money aside, but still, you must have access to it. Certain investments prevent you from withdrawing amounts quickly or without any fees. It is therefore paramount that your investment portfolio allow you to have access to part of your money quickly when needed.
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