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Insulate

Once youíve built a well-thought out plan, it would be a shame to see your efforts go to waste. But thatís exactly what can happen if you donít take time to "insulate" your plan against unexpected shocks.

What are portfolio shocks? Any unforeseen event that could take an unwelcome bit out of your carefully built nest egg--from unexpected market downturns to a devastating health event.

For example, how would you replace income or pay for some of the costs if you or a loved one should suffer a critical illness? In the absence of insurance, you might be tempted to turn to your RRSP.
Thatís a strategy that could end up costing you more than you think:

Donít Be Forced to Dip Into Your RRSP

  • Did you know that you are more likely to suffer from a critical illness and survive, than to die?

  • Your RRSP could be severely damaged by a disability or critical illness


Next Step
Evaluate


How much would it really cost to withdrawal from their RRSP?

Lost RRSP
Source: StandardLife. Assumes $38,000 of RRSP savings at age 38 and annual contributions of $5,000 invested at a growth rate of 5%, an inflation rate of 2% and a marginal tax rate of 45%. Assumes that prior to projected retirement age of 65, withdrawals are made at age 53 due to disability or illness and contributions cease at 53 and resume at age 57 until adjusted retirement age (after illness) of age 65. Assumes life expectancy of 90 years of age and adjusted life expectancy of age 80 after disability or illness.
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