The trouble with fixed income, we might imagine a retired Winnie-the-Pooh saying, is that it is so very fixed. That is, until it threatens to shrink – a fear many a retiree is now facing amid one of the most volatile stock market years in history.
According to CTV News, new RRIF measures are designed to help preserve the capital of retirees. “Canadians are required to convert their RRSPs into a RRIF at the end of the year they turn 71. They must withdraw a minimum amount from that fund every year at a graduated rate from 5.28 per cent at age 71 to a full 20 per cent for those 95 and older. The new measures will reduce the amount retirees will be mandated to withdraw by 25 per cent in 2020, reducing the risk of seniors being forced to sell assets in a volatile market.”
That’s all well and good for staying invested and riding out the storm, but it doesn’t help much in terms of income. In July, seniors eligible for OAS pension received a payment of $300, and those also eligible for the GIS received another $200. There was also a GST credit in April, which provided an average of $375 to single seniors and $510 to senior couples. However, these payments were one-time only.
Financial experts all seem to advocate for a wait-and-see approach, dangling promises of a V-shaped recovery and imploring us not to panic. Easy for them, tougher for you when it’s time to pay bills. So, here are some ideas to get you thinking:
Get balanced. Book a review of your portfolio to ensure it’s well-balanced and aligned with your risk tolerance and investing horizon. Your financial planner can help identify the right hedging strategies to increase the chances that, when one side of your portfolio is going down, another side is going up. This can help stabilize your portfolio.
Moonlight. The more sources of income you have, the less vulnerable you will feel. Could you sublet a suite in your basement or garage? Sell your old stuff on Kijiji. Start a home-based business using Etsy or Shopify. Become a consultant, an expert-for-hire, or teach your skills to a new generation.
Find a J.O.B. Many retirees prefer to work part time in social and low stress occupations. Coffee shops, libraries, retail boutiques and so on…all need seasonal or part-time help.
Free up some cash. Chat with your banker to adjust fee schedules, reduce interest or reorganize debt. This can easily be done over the phone. However, if you need a face-to-face (mask-to-mask) meeting – many banks reserve their opening hour for seniors and others who might be at higher risk of coronavirus.
Spend less. At the risk of being no fun at all, there is also the option of putting your spending into lockdown temporarily. It won’t be forever. Having a tighter rein on expenditures until you can get a handle on your income might just help you sleep better at night.