New research shows that 60% of investment earnings can come after retirement
TORONTO, April 2008 — If investors are worried about what the current market conditions are doing to their retirement nest egg – have no fear – there’s ample time to make up those losses. According to new research by Russell Investments, as much as 60% of retirement portfolio growth can come from investment returns earned after retirement.
“Too often, fear and anxiety are associated with retirement. However, reassurance can come in the form of an investment plan, working with a Financial Advisor, and investing in retirement solutions that can continue to grow during retirement. Investors can also feel more assured knowing that close to 60% of retirement income can be attained during retirement – Just because you retire doesn’t mean your portfolio has to as well,” says Irshaad Ahmad, President and Managing Director of Russell Investments Canada.
This different way of thinking about retirement is part of the innovative strategy behind the launch of the Russell Retirement Essentials Portfolio (“RREP”). The portfolio’s 35% allocation to equities and 65% allocation to bonds can generate the consistent monthly distributions needed to cover essential retirement expenses such as housing, groceries, health care and insurance, among other costs of living. The RREP’s strategic allocation to equities allows the portfolio to retain an element of growth that may help replenish capital. It is ideal for investors who want long-term, consistent, tax-efficient cash flow of 5%, 6%, or 7% throughout their retirement years.
“We all know the power of compound interest over time. But what really struck us about the research was the high percentage of retirement portfolio returns that could be generated after retirement,” says Ahmad.
“That’s why it is important to remain invested in some allocation to equities during your retirement years. You need to continue to grow your portfolio to protect against inflation and rising costs such as health care. Keep in mind that it’s not the end of the investment journey when you stop working. In fact, the journey isn’t even half over when you retire.”
The RREP is based on the distinctive Russell 10/30/60 Retirement Rule. Unlike, many other retirement strategies that estimate investors need a large portfolio to retire comfortably, the Russell 10/30/60 Rule concludes that investment earnings during retirement could come from 10% initial savings during the working years, 30% pre-retirement investment growth, and as much as 60% from growth after retirement – this all depends on having the right asset mix of bonds and equities.
The Russell Retirement Essentials Portfolio is part of Russell’s complete retirement investment solution, which feature a full range of retirement portfolios optimized for three distinct retirement needs: Essentials, Lifestyle, and Estate.
For more information on the Russell Retirement Essentials Portfolio or research details regarding the Russell 10/30/60 Retirement Rule, please visit www.dontretirefrominvesting.com
For interviews or comments for this story please contact Irshaad Ahmad (416) 640-2529
About Russell
Russell Investment Group provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. With more than C$225 billion in assets under management as of Dec. 31, 2007, Russell Investments serves individual, institutional and advisor clients in more than 40 countries. Russell Investments provides access to some of the world’s best money managers. It helps investors put this access to work in corporate defined benefit and defined contribution plans, and in the life savings of individual investors.
Founded in 1936, Russell Investments is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Sydney, Singapore, Auckland and Tokyo.
Russell Investments Canada Limited is a wholly-owned subsidiary of Frank Russell Company. For more information, please go to www.russell.com/ca.
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