By Canada Life | May 21, 2021
Shannon Barret, CFA

An important factor that retirees and near-retirees need to take into consideration is figuring out the best approach to draw an income from their investments. Once retirement withdrawals begin, looking at long-term rates is not enough, the sequence of returns in retirement matters, too. This is called sequencing risk. Sequencing risk has two components – timing of withdrawals and order of returns. Negative returns early in retirement when clients start withdrawing money from an investment portfolio can cause the portfolio to fall faster than if those same negative returns occurred later in retirement after experiencing some growth. 

Using illustrative and real-world scenarios, we explore the significance of sequencing risk as well as other risks retirees face like longevity risk and inflation risk. We also explore investment solutions such as Canada Life™ Risk-Managed Portfolios, which take a very deliberate risk management approach that may help avoid some of the consequences of sequencing risk through careful management of portfolio volatility. A portfolio that is less prone to steep rises and losses during market ups and downs may be less exposed to the negative consequences of sequencing risk. 

Read the full article in the link below to learn more.

The views expressed in this commentary are those of Canada Life as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their financial advisor for advice based on their specific circumstances. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. Unit values and investment returns will fluctuate.

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