Subscribe: 
Magazine
Newsletters
subscribe Read Magazine
Hot Topics:
Investing
Print Text: A A

How to extend the life of your retirement fund

By Larry MacDonald  | January 27, 2012
Chat Email
CB_gold coins
(Photo: Getty Images)

Related

About 75% of retirees in Canada withdraw capital from their investment portfolios, according to data cited by Daryl Diamond in his newesr book, Your Retirement Income Blueprint. The rest are reliant on government programs like CPP and OAS, or else live off interest and dividends from their portfolios.

For retirees making withdrawals from capital, a big concern is running out of funds too soon. Diamond, a retirement-planning specialist, offers readers a solution he has used with his clients since 1993. Called the "Cash Wedge," it seeks to extend the income-generating ability of a retirement portfolio by avoiding withdrawals on assets that are down in value, and using withdrawals to rebalance to the retiree’s strategic asset allocation.

The approach structures the fixed-income portion of a diversified portfolio to include the following three items: a cash position, a 1-year GIC and a 2-year GIC, each representing one year of expenses for a total of three years. This represents the wedge.

If stocks are having a bad year, the maturing GIC is allowed to replenish the cash position used up during the year; if stocks are having a good year, a chunk is sold to replenish the cash position (the maturing GIC is rolled into another GIC). Also, surplus cash from the sale of stocks is funnelled into asset classes that are flat or down. Within this framework, Diamond recommends a withdrawal rate of about 5% annually.

Print Text: A A
More from Investing
RECENT POSTS More from Investing
Comments
Comment Anonymously

Cancel
Loading comments - please wait...
1 of 1 Back Next
Investing: Blog ThumbnailInvesting: Blog Thumbnail
Investing
The Investing blog is dedicated to discovering investment trends and ideas in Canada.
Contributors
Subscribe



TOOLS:

Stock Quote / Mutual Funds / Portfolio

Market News

More Market News
  • Popular
  • Commented
Editor's Pick

Canada's Best Jobs

Special Report: Find your future in these professions.
Poll
View the results from recent polls


twitter From Twitter
Connect
Rankings & Awards
More Awards & Rankings
Subscribe
More from the Canadian Business Network
Canada's Best Jobs 2012
rotator Wondering who's hiring, what they're paying and whether their industry is booming or dwindling? Our rankings will help you plot a practical course through today's job market.
JPMorgan and derivatives
Dice Directors don't understand them and regulators are too conflicted.
Canada's youth see little employment gains
CB_youth_unemployment Here's a silver lining for young Canadians seeking work: at least you're not looking for jobs in 1983, or in Greece.
SNC-Lavalin scandal won't hurt future business: analysts
Duhaime_CB A police raid is not a good sign, but despite the turmoil, analysts aren’t calling SNC-Lavalin a sell.
Internet too important for free-market economics
CB_world The Internet is not just a service. It's the most democratizing and equalizing technological tool ever invented.
MoneySense June 2012
ISSUE: June 2012

.

Profit cover March 2012
PROFIT: Issue - March 2012

CB07_COVER (web)
Issue: April 30, 2012

Subscribe
Back to Top
Blogs & Analysis
CSR
/
Business Ethics
/
Consumer Insight
/
Sales & Marketing
/
Performance
/
Tech
/
Business Briefings
/
Investing
Multimedia
CBN Podcasts
/
CBN Videos
/
CBN Galleries
Tools
My Portfolio
/
Discussions
/
Stock Quotes
/
Mutual Fund Lookup