The changing retirement landscape
Investors are facing unique challenges
when entering retirement
Canada’s baby boomers comprise the largest proportion of the population, and are moving into retirement. They are focused on how much they may need to support themselves in retirement. The oldest boomers, having reached 65, are now seniors. Statistics Canada reports that seniors currently represent 15% of the population. Projections show seniors will account for between 23% and 25% of the population by 2036.
Canadians who are close to retirement are generally wary of equities after a period of heightened market volatility, but still need and desire growth potential in their investments. At the same time, they require certainty in their cash flows as they move into retirement.
Interest rates are expected to continue at extremely low levels
Interest rates are likely to remain low for an extended period. This means that traditional “safe” fixed-income investments, which are closely tied to interest rates, may not be sufficient to overcome inflation and taxes. For example, the yield on Government of Canada 10-year bonds declined from approximately 7.5% in 1993 to about 1.9% in January 2013, based on data from the Bank of Canada.