Retirement income Essay Example | Topics and Well Written Essays - 500 words

Retirement income - Essay Example The accumulation of personal savings and income during my working period will form the largest bulk of my retirement income. This is because it requires a huge amount of retirement income to sustain a pre-retirement lifestyle. Examples of investment options that I am including in my retirement income plan are money in savings accounts, stocks and bonds investments, tax free savings accounts, and RRSPs and RRIFs (Brown, Chambers & Currie, 2001). The other investment option is accumulated property including a home and business assets. The overall savings and investments strategy is long-term and this will involve a diversified savings and investment portfolio. The advantage of maintaining a diversified portfolio is that I will be in a good position to get returns in the long-run. It also eliminates the dilemma of deciding when to return to the market after making an exit when the market performance is low. I would also like to adjust my asset mix on a regular basis because this provides the opportunity to take advantage of differences in the performance of the different classes of assets. Rebalancing will also ensure that I re-align my portfolio with my goals and level of risk tolerance. I will be making progressive and consistent financial contributions to a RRSP on an annual basis. RRSP have the benefit of generating earnings that grow on the basis of tax-deferral and its contributions provide a significant amount of tax savings (Brown, Chambers & Currie, 2001). I can use the savings to make additional investments or even pay existing debts. Employers offer two types of pension plans for their employees including defined benefits plans and defined contribution plans. A defined benefits plan will involve getting a pre-determined amount of my income upon my retirement. On the other hand, a defined contribution plan will use my accumulated investment income and contributions in providing a pension benefit. I will go for a defined contribution plan