Inflation is getting to retirees and some pre-retirees, Fidelity survey finds

2024 Fidelity Retirement Report (CNW Group/Fidelity Investments Canada ULC)

More than four in five (82%) Canadian retirees say inflation is having a negative financial impact on them in retirement, according to a just-released report from Fidelity Investments Canada ULC.

The 2024 Fidelity Retirement Report also found that 43% of pre-retirees say the rising cost of living is delaying when they think they will retire. In addition, 59% of retirees report helping their non-student adult children in retirement: both with day-to-day expenses as well as big-ticket items like home purchases, weddings and even education savings for their grandchildren.

“It comes as no surprise that retirees are feeling the bite of inflation. Other macroeconomic issues such as a slowing economy, rising rates and volatile markets are also common factors that have negatively affected retirees financially,” says the report, “Pre-retirees are also feeling the pinch. We find that compared with last year, a larger share of pre-retirees are considering delaying their retirement in response to the rising cost of living.”

As you can see from the graphic below, the percentage of pre-retirees who plan to retire later than originally expected rose from 37% in the 2023 survey to 47% in the new 2024 edition.

While less than a third of those already in retirement have worked in some capacity once they have left full-time work, most pre-retirees anticipate that they will work at least part-time once they’re retired, according to the report.

While Fidelity cites rising inflation as one reason for this trend, it also says “most pre-retirees would like extra money for recreational purposes.” Further, the report says, “We also find that there isn’t a clear relationship between those working in retirement and their level of household income, suggesting that in general, many Canadians may be working or anticipating working to maintain a higher material standard of living, rather than just to keep up with the rising cost of essentials.”


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Gold glitters amid Persistent Inflation and Rate Uncertainty

Image courtesy BMO ETFs/Getty Images

By Chris Heakes, CFA

(Sponsor Blog)

Gold prices have gained more than 14% since late last year, renewing market interest for the precious metal.

Recent gains have been driven by an expectation that the U.S. Federal Reserve (Fed) is getting closer to reducing its trendsetting overnight rate, which led to a weaker U.S. dollar index to close 2023.

In recent months, inflation concerns have ramped back up with recent U.S. CPI data coming in slightly ahead of expectations. While consumer prices continue to trend in the right direction, higher shipping costs are becoming a concern with cargo ships having to avoid the Suez Canal. Shipping costs have surged 150% as a result, potentially add 0.5% percentage points to core inflation1: and re-igniting worries that CPI could accelerate again.

These developments have created a favourable environment for gold, given bullion tends to be used as a multi-purpose hedge for portfolios.

BMO Global Asset Management has launched a gold ETF that is backed by physical bullion. This ETF stores physical 400-oz. bars, secured in a local vault operated by BMO. Investing in the new BMO Gold Bullion ETF is efficient for investors as it is listed on the Toronto Stock Exchange (TSX) and trades like any stock or ETF. Additionally, since the underlying bullion holdings are professionally vaulted, investors do not have to worry about safe-keeping on their own. The BMO Gold Bullion ETFs are available at a cost-efficient management fee of 0.20%.

The BMO Gold Bullion ETF


  • Amid reaccelerating inflation concerns and interest rate uncertainty, gold could be used as a defensive hedge.
  • Macro as well as weaker-U.S. dollar risks have risen in recent years, and could remain elevated going forward.
  • Gold offers effective diversification from stocks and bonds, which have experienced a notable rise in correlation3.

Why Gold could continue to Glitter

Gold is often used to hedge three main risks: macro-economic/geopolitical and inflation risks, as well as against a weaker U.S. dollar and fiat currencies4. All of these risks have risen in recent years and it is quite possible and perhaps probable that they will remain elevated going forward, spurring further demand. Continue Reading…

Real Life Investment Strategies #2: Debunking Retirement Financial “Rules”

Should you Plan your Retirement Savings according to the 4% Withdrawal Rate Rule or 70% of Pre-Retirement Income Rule?

Lowrie Financial: Canva Custom Creation

By Steve Lowrie, CFA

Special to Financial Independence Hub

Last month, we kicked off our “Real Life Investment Strategies” series by taking on the geopolitical world. Today, we’re going to tackle an FAQ that hits closer to home.

Whether you’re an accumulator or preparing for retirement, how do you plan for saving AND spending your hard-earned cash in retirement?

My Answer: It depends.

All those popular retirement spending rules you hear about in the popular press or through your favourite financial guru really should be called guidelines. Augmenting blunt estimates with finer-pointed planning may not be as quickly accomplished. But it’s a far more effective way to plan for how much to save as you accumulate wealth, and how much to spend as you withdraw it. In fact, it’s best to consider retirement spending as being a variable process, versus a one-and-done equation.

Which is why it depends.

Let’s bend some Rules: the 4% Withdrawal Rate Rule & the 70% Pre-Retirement Income Rule

I do feel most popular retirement spending rules were made to be broken: or at least bent to fit your specific assumptions, and adjusted over time as you encounter various phases in your retirement lifestyle.

Take the 4% Retirement Rule, for example. The catchphrase has been around since 1994, when William Bengen published his Journal of Financial Planning paper, “Determining Withdrawal Rates Using Historical Data.” In it, Bengen suggested that under certain assumptions, retirees could avoid outliving their money by withdrawing no more than 4% of their wealth in the year they retire, and then adjusting this figure annually for inflation.

The 70% Retirement Rule is another popular retirement spending hack. Here you plan to spend no more than 70% of your pre-retirement income in retirement and save accordingly toward that figure. This is supposed to work because, in theory, retirees spend less in retirement to fulfill their lifestyle wants and needs.

There are many similar shortcuts for guesstimating your retirement numbers. It’s tempting to accept these simplified rules as close enough and assume they’re all you’ll need to proceed. But the thing is, while Bengen’s analysis was rightfully lauded as an innovative new way to think about withdrawal rates in retirement, I don’t think even he meant for the 4% figure to serve as a hard and fast rule for every retiree, under every assumption, throughout their entire retirement (during which your lifestyle is likely to evolve).

The same goes for the 70% rule, and similar retirement rules.

Financial Talking Heads’ Rants on Retirement withdrawal Rate and other Shenanigans

In lieu of rules of thumb, people are also known to follow the shotgun advice of popular financial gurus who spout sweeping generalities as perfect solutions for one and all.

A prime example is Dave Ramsey of The Ramsey Show, who recently assured listeners that an 8% retirement withdrawal rate should “last forever,” as long as you invest as he suggests. He said a 4% spending rate was “asinine,” based on calculations generated by “super nerds,”“goobers,” and “morons who live in their mother’s basement with a calculator.” He then goes on a Wizard of Oz tirade about flying monkeys stealing your ruby slippers. Seriously, you can’t make this stuff up. (Check out 01:19:20 in The Ramsey Show’s “You Can’t Win with Money if You Don’t Know Where Your Money Is”  podcast episode.)

Ramsey’s math is simple, which makes it appealing and easy to understand: “If you’re making 12 [percent] in good mutual funds and the S&P is averaging 11.8, and if inflation for the last 80 years is 4%, if you make 12 and you need to leave 4% in there for average inflation raises, that leaves you eight. So, I’m perfectly comfortable drawing eight. But if you want to be a little bit conservative, seven. But, sure, not five or three.”

In a Rational Reminder rebuttal episode, “Retiring Retirement Income Myths with the Retirement Income Dream Team,” my super-nerd friends (David Blanchett, the Managing Director and Head of Retirement Research for PGIM DC Solutions; Michael Finke, a distinguished professor of wealth management at the American College of Financial Services; and Wade Pfau, Director of Retirement Research at McLean Asset Management) offer what I believe is a considerably more realistic assessment of the market’s risks and expected rewards over time, with no monkey business involved:

Without going too heavily into the math, the two main counter arguments against an 8% withdrawal rate from the Retirement Income Dream Team are:

  • There can be large differences between geometric returns (what you earn in an investment) and arithmetic returns (the simple average). For example, an average 12% return doesn’t mean that a retiree’s portfolio grows by 12% per year. If $1 million invested in stocks falls by 20%, you now have $800,000. If it rises by 25% the next year, you’re back up to $1 million. The average return of -20% and positive 25% is 2.5%. But you still only have a million bucks. Your actual return was zero.
  • A 100% stock portfolio significantly increases the sequence of returns risk. For example, a U.S.-based investor, owning U.S. stocks in the 2000s and following an 8% withdrawal rule would have run out of money in as little as 13 years.

I would add from a behaviour side of things, that a 100% stock portfolio, especially during retirement would be virtually impossible to stick with.

When it comes to Retirement Savings, One Size rarely fits all

Besides, don’t you want your retirement numbers to be based on personalized levels of evidence and reason, instead of hope and hype? I know I do, which is why I treat sweeping assumptions and general rules of thumb as starting rather than ending points.

By necessity, generic advice involves making assumptions, often huge ones, that may or may not reflect your own realities. The original 4% Rule, for example, assumed the investor is investing their retirement nest egg in 50% stocks/50% bonds, held entirely in tax-sheltered accounts. It also assumed a 30-year retirement.

Not everyone wants or needs to invest this conservatively. At the other end of the spectrum, Ramsey appears to assume you’re going to put your entire nest egg in the U.S. stock market, mostly large-company growth. He also seems to assume (quite erroneously) that we can rely on this market to deliver an average 12% pre-inflation return forever.

My take: There’s nothing nerdy about wanting to avoid hoarding or squandering your wealth. If your retirement years are short enough, your income remains ample enough, and your market timing is lucky enough, spending 8% annually in retirement might be right for you. For others, even 4% is overly optimistic. Either way, I wouldn’t bank on any given number without first engaging in some serious reality checks, and revisiting your plans as you proceed.

Let’s return to our fictional investors to illustrate how real-life retirement planning, withdrawal rate, and spending works. Continue Reading…

ETF Fees Explained

By Danielle Neziol, BMO ETFs

(Sponsor Content)

Canadians are facing a lot of sticker shock lately. My grocery bill was how much? My mortgage payment is going to increase by what per cent? Don’t even ask me what it costs to fill up my car these days. With more money going to living expenses, it has become harder to save than ever. One simple way to get ahead is to be more aware of what we are spending — especially in times like these —  and to review our monthly expenses to see where there are opportunities to make cuts.

Our investment portfolios should be viewed no differently. If you are an investor who holds a mutual fund or an exchange traded fund (ETF) there are fees attached to your investments. It would be prudent to review the cost structure of the funds you hold to ensure that the fees make sense relative to the fund’s investment mandate. It would also be wise to review the cost of the funds you hold to see if that fee is competitive relative to similar products in the market. Fees detract from total portfolio returns, so anything an investor can do to manage these costs can help keep more money in their pockets.

Management Fees and MERs

Every investment fund has a management fee. This is the cost a fund manager charges to manage the portfolio operationally (buy and sell securities, rebalance, etc). The Management Expense Ratio (MER) is the bottom-line cost to the investor. It includes any taxes charged to the fund, as well as any added fees (such as leverage). An investor can look up the management fee and MER within the Fund Facts and ETF Facts of their funds. These are regulatory documents that can be found for every fund issued in Canada. Some asset managers advertise very low management fees but have higher, less advertised, MERs, so investors should always do their due diligence on the total fund cost to fully understand the bottom-line payment that they are making every year.

The MER is subtracted from daily returns. Therefore, it has a direct impact on the total return of the fund. And as investors we know that overtime, our total returns help build our overall wealth. Therefore, the lower the fee on the investment, the more money there will be for the investor at the end of their investment period.

Comparing Fees

Once investors are aware of the fees they are paying for their investment products, they have the ability to “shop around” to see if there are any products that may be a better fit in their portfolios or which offer lower fees. When comparing fees it’s important to understand what you’re getting for in return for what you’re paying for. Broad market index funds generally have the lowest fees in the market. For example the BMO S&P 500 Index ETF (ZSP) has an MER of 0.09%. Index funds tend to have the lowest fees because operationally they are easier to manage. A Portfolio Manager will go out and buy the stocks within a particular index, and rebalance when needed.1 Continue Reading…

Retired Money: Plan for Retirement Income for Life with Fred Vettese’s PERC

My latest MoneySense Retired Money column focuses on a free retirement calculator called PERC, plus the accompanying new third edition of Fred Vettese’s book, Retirement Income for Life: Getting More Without Saving More.

You can find the full column by clicking on the highlighted headline: Retirement Income for Life: Why Canadian retirees love Frederick Vettese’s books and his PERC. Alternatively, go to and click on the latest Retired Money column.

As the column notes, I have previously reviewed the earlier editions of the book but any retiree or near retiree will find it invaluable and well worth the C$26.95 price. Also, there is a free eBook offer.

PERC of course is an acronym and stands for Personal Enhanced Retirement Calculator.

PERC is itself a chapter title (chapter 15 of the third edition) and constitutes the fourth of five “enhancements” Vettese describes for getting more without saving more. Vettese developed PERC while writing the first edition in 2018: it is available at no charge at

In another generous offer, anyone who buys the print edition can get a free ebook version by emailing details of proof of purchase to

I reviewed the previous (second) edition of Fred’s book for the Retired Money column back in October 2020, which you can read by clicking on the highlighted headline: Near retirement without a Defined Benefit pension? Here’s what you need to know. Continue Reading…