Why it’s still early days for retirement income planning in Canada

Chief Retirement Architect and preeminent academic unpacks issues and challenges confronting retirees

Why it’s still early days for retirement income planning in Canada

As a professor of Finance at the Schulich School of Business who’s authored several books on retirement (among other topics), Moshe Milevsky has a lot to say about the challenge of retirement income planning.

“Retirement income planning, which I prefer to call income and decumulation planning, is a relatively new field that is still in its early stages,” says Milevsky, who’s also the Chief Retirement Architect working with Guardian Capital.

He’s also one of the experts who’ll be speaking at Wealth Professional’s next AdvisorConnect Session, titled “Examining the Strategic Planning & Solutions Needed for a Sustainable Retirement,” on November 1.

As Milevsky notes, the Baby Boomer generation has not yet reached the point where their spending rate is at its highest, a life phase known as “peak decumulation.” To date, the financial industry has poured its attention into asset accumulation rather than spending, partly because advisor compensation is mainly based on the value of assets rather than the flow of income.

“I believe that technology needs to be improved to better accommodate different retirement planning philosophies,” he says. “Most retirement planning programs are focused on accumulation and geared towards people in their 40s, 50s, and 60s, rather than decumulation and those in their 70s, 80s, and 90s.”

Milevsky says Canadians’ financial affairs also become more complex during the lead-up to retirement. Ultimately, creating a retirement income strategy involves managing a fragmented portfolio of various accounts, investments, family liabilities and financial advisors.

“In addition to pensions, RRSPs, TFSAs, and annuities, they must also navigate a lifetime of behavioural biases and beliefs,” he adds. “It requires time, effort, and a different mindset to overcome these challenges.”

At the upcoming AdvisorConnect webinar, which is free to attend for advisors, Milevsky will discuss some hard-won insights on longevity risk and planning. He’ll also be showcasing the results of a research project he conducted with Guardian Capital LP over the course of summer and fall, which were summarized in a recently published white paper.

“We surveyed financial experts to understand their approach to longevity risk and how it might impact their decumulation strategy,” he says. “I plan to share the results of our work, along with ongoing projects related to retirement income and decumulation phase, and highlight the financial and product innovations in this field.”

To hear more of Milevsky’s insights, along with other retirement income planning trends defining the industry today and in the future, please click here.