Instead of ratcheting up risk and counting on a “Hail Mary” pass to save the game at the eleventh hour, boomers should acknowledge the sad fact some of their money is gone, then do what they should be doing at this stage of their lives: cut back expenditures, live more frugally, work longer and be prepared to work part time even in retirement. “These are painful things but are things that are more sure of working.”
It’s not just individuals with this gunslinger mentality. Hamilton sees it in many large pension funds that are making allocations to risky asset classes because otherwise they’d have to raise contribution rates, cut benefits or do other distasteful things.
Nor should boomers go to the other extreme and flee exclusively to safe interest-bearing investments that pay almost nothing after inflation and taxes. “The natural thing is to say they can afford to lose what they’ve already lost but can’t afford to lose any more so cut their risk and invest in safer things.”
Hamilton hasn’t formalized his retroactive TFSA idea but has raised it with various groups in light of ongoing discussions about changing the retirement system so it can better weather such “black swan” events in the future.
If you agree Ottawa should make the TFSA retroactive, contact your local Member of Parliament or email me for a follow-up column. Upcoming videos look at recent measures that discourage early retirement and make it easier to work part time through liberalized Phased Retirement provisions.
[email protected] – Jonathan Chevreau is the author of Findependence Day and blogs at www.wealthyboomer.ca.The first of four video interviews with Malcolm Hamilton is posted today at www.financialpost.com
