Fixed Income and Equity Strategies for Retirement Income

When maintaining an investment portfolio in retirement, you have two objectives: income and growth (to offset inflation). Achieving these objectives requires careful selection and management of investments. Applying one or more of the following strategies may be beneficial, depending on your personal situation. Research, assessment and/or professional advice are recommended prior to implementing any investment plan.

Fixed Income Strategies

Equities

Spread out interest rate risk; stagger maturities; ladder GICs and/or bonds

Focus on dividend paying stocks

Reduce allocation to fixed income assets in proportion to your Defined Benefit/annuity income

Hold foreign dividend-paying stocks in RRIFs/LIFs to tax-shelter dividends

Add quality foreign bonds with higher rates

Low-volatility REIT (real estate investment trusts): diversified by type or property and geography

Use exchange-traded funds (ETFs) to keep costs low

Keep costs low (such as, ETFs, institutional funds, low turnover stocks with a long history of dividend payments)

If holding GICs, consider those from smaller financial institutions if interest rates are higher

Maintain an adequate allocation to equities; retirement could last 20–30 years

When equity markets are down, consider withdrawing income from fixed-income or cash equivalent assets to restore your portfolio to its target asset allocation and give the equities in your portfolio time to recover  When equities markets are up, consider taking income from the equity side of your portfolio to restore your portfolio’s balance and keep it in line with your long-term investment approach

Planning Tips

  • Periodically revisit your asset mix, investment strategies and products.
  • Retirement requires your investment portfolio to maintain a long-term outlook as well as satisfying your income needs.
  • Update and adapt your portfolio annually and when a significant event occurs.