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charting retirement

The C.D. Howe Institute believes that the RRIF minimum withdrawal rates are too high, leaving older Canadians at risk of outliving their tax-deferred savings. Assume that a retiree aged 71 has $400,000 in RRIF assets. The blue line shows how the RRIF balance would decline if the retiree achieves the same investment returns as did the median pension fund manager between 1991 and 2021 (less 1 per cent for fees). The first time the retiree’s assets drop below $400,000 is at age 88. Future investment returns, however, are likely to be lower than historic returns. The red line shows what would happen if future annual returns were 1.5 percentage points lower than the 1991-2021 returns.

(Source: Total median pension fund returns from 1991 to 2021 as reported in the Canadian Institute of Actuaries Canadian Economic Statistics.)

Frederick Vettese is former chief actuary of Morneau Shepell and author of Retirement Income for Life.

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