Retirees need income growth

Re Time to raise interest rates, March 6, 2017

This is but another entry point into the discussion of investing for retirement. The very vehicles that tie investment income to interest rates are those that financial advisers usually class as low risk. As a previous letter-writer has discovered, that is not the case. Interest rates fluctuate according to the needs of the economy, not according to the needs of retirees. There is not a lot that can be done for those who have followed this conventional wisdom into retirement, but it should be a lesson for those who are currently investing for future income.

Too much emphasis is made on capital growth rather than income growth. In retirement, one needs income, not capital. The RRSP investor should be focusing on this from day one, and developing a portfolio of equities with solid performance of dividend/ distribution delivery and growth, in a self-directed, dividend reinvestment account. There are lots of great Canadian companies that fit the bill. When it is time for retirement, transfer the assets to a RIF and take the ongoing distributions into income. It is painless. Avoid full-service brokerage accounts, mutual funds and investment advisers. Brian Williams, Belleville