Can Your Investments Support Retirement Income?

Why retirement investing is different from saving for retirement

Retirement Investing Is Different From Saving for Retirement

While you are working, investing is often focused on accumulation. You are contributing to accounts, reinvesting growth, and trying to build wealth for the future.

Retirement changes the equation. Once you begin drawing income from your portfolio, your investments have a new job. They need to support cash flow, manage risk, preserve purchasing power, and remain flexible as life changes.

That is why retirement investing requires a different mindset.

The Shift From Accumulation to Income

Before retirement, market downturns can be uncomfortable but often easier to manage because new savings are still being added.

In retirement, withdrawals may continue even when markets are down. This can create additional pressure if there is no income strategy in place.

A retirement portfolio should help answer questions such as:

• How much income can I safely withdraw?
• Which accounts should income come from first?
• What happens if markets decline early in retirement?
• How much should remain invested for growth?
• How much should be kept more conservative?
• How will inflation affect future income needs?

The goal is not simply to own investments. The goal is to create a coordinated income plan.

Risk Tolerance May Change in Retirement

Many investors discover that their tolerance for risk changes once paycheques stop. A level of volatility that felt manageable while working may feel very different when investment accounts are funding day-to-day living expenses.

That does not mean retirees should avoid risk altogether. Some growth may still be needed to help keep pace with inflation and support a long retirement.

The key is finding the right balance between income needs, portfolio growth, capital preservation, liquidity, tax efficiency, and emotional comfort during market volatility.

The Importance of a Withdrawal Strategy

A portfolio is only one part of the plan. How money is withdrawn matters too.

A withdrawal strategy should consider:

• How much income is needed each month or year
• Which account types are used first
• How withdrawals affect taxes
• How market conditions affect income decisions
• Whether spending should adjust over time
• How to plan for larger expenses

Without a withdrawal strategy, retirees may end up taking income randomly or reacting emotionally to markets.

A disciplined approach can help create more confidence.

Inflation Can Quietly Erode Income

Even if retirement income feels sufficient today, inflation can reduce purchasing power over time.

This is especially important for retirees who may spend 20, 25, or 30 years in retirement.

A portfolio that is too conservative may feel safe in the short term but may struggle to maintain purchasing power over the long term. A portfolio that is too aggressive may create unnecessary stress and volatility.

The right balance depends on your age, spending needs, income sources, risk tolerance, and long-term goals.

Reliable Income Does Not Mean Risk-Free Income

Many retirees want predictable income, but it is important to understand that different income sources carry different risks.

Some risks include:

• Market risk
• Inflation risk
• Interest rate risk
• Longevity risk
• Tax risk
• Sequence of returns risk
• Spending risk

A retirement income plan should identify these risks and create a strategy to manage them.

The goal is not to eliminate every risk. The goal is to understand the risks and build a plan that can adapt.

Coordinate Investments With CPP, OAS, and Pensions

Your investment portfolio should not be viewed separately from other income sources. CPP, OAS, pensions, and other income streams can influence how much income your portfolio needs to provide.

For example, a retiree with strong pension income may be able to take a different investment approach than someone relying mainly on portfolio withdrawals.

Likewise, CPP and OAS timing may affect how much income is needed from investments in the early years of retirement.

Everything should work together.

Keep a Plan for Market Downturns

Market volatility is normal, but it can feel more stressful in retirement.

Before markets become difficult, retirees should understand:

• Where near-term income will come from
• How much cash or liquidity is available
• When the portfolio will be rebalanced
• What spending adjustments may be considered
• What decisions should be avoided during emotional periods

A written plan can help reduce the temptation to make short-term decisions in response to market headlines.

Final Thoughts

Your investments should support your retirement, not create constant uncertainty.

A strong retirement investment strategy should connect your portfolio with your income needs, tax situation, risk tolerance, and long-term goals.

The right plan should help you answer:

Can my investments support the retirement I want?

And just as importantly:

What adjustments should I make if life or markets change?

Disclaimer

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (CAMI); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (WMI). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (ISI), CIBC Global Asset Management and credit products. CIBC Private Wealth services are available to qualified individuals. The CIBC logo, “CIBC Private Wealth”, “CIBC Private Banking” and “CIBC Global Asset Management” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.

Robert Van Alphen is an Investment Advisor with CIBC Wood Gundy in Penticton. The views of Robert Van Alphen do not necessarily reflect those of CIBC World Markets Inc.

If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.