Guaranteed minimum withdrawal benefits have become very popular as a retirement investment because they guarantee that you will be able to withdraw a set percentage of your svings for life. But GMWBs have hefty fees, and they're not very flexible. Looking for an alternative? Here's one designed by financial adviser Ted Rechtshaffen of TriDelta Financial, with his comments.
|
Asset |
Weighting Reg. Account |
Weighting Non-Reg. Account |
Comments |
|
Cash |
5% |
5% |
High-interest savings accounts are used |
|
Government bonds |
15% |
15% |
Prefer bonds maturing in 5 to 8 years to maximize yield |
|
Corporate bonds |
15% |
nil |
Prefer bonds maturing in 5 to 7 years |
|
Convertible debentures |
15% |
nil |
Prefer those maturing in 3 to 4 years |
|
Utility stocks |
25% |
25% |
Dividend yields in the 3 to 4 per cent range |
|
High yield stocks |
10% |
10% |
Includes banks, telecom stocks and REITs |
|
Preferred Shares |
nil |
30% |
For dividend income, which is taxed more lightly than bond interest |
|
Speculative seg funds |
15% |
15% |
Look at sectors like emerging markets and small companies; look for 100% principal guarantee after 10 years and a 100% death guarantee |