Meeting Income Needs in Retirement

Simon Barcelon


20 Jun 2023


We designed the Longevity Pension Fund to help investors reach their retirement goals by optimizing their income without the risk of fully depleting their assets. Each investor has their own unique circumstances and preferences that might indicate what portion of their portfolio they would benefit from allocating to the Longevity Pension Fund. Given the need for ongoing liquidity throughout retirement, we never recommend investing 100% of a portfolio into the Fund.

It's very important to first build a retirement plan and identify your overall goals and objectives. This will help provide you with a positive outlook on retirement and help determine how much you might consider allocating to the Longevity Pension Fund. The following table shows a general overview of different retirement goals and the respective allocation range to the Longevity Pension Fund to consider:

Retirement Goals

Longevity allocation

Case Study: Fiona

Fiona is a 65-year-old with $1,000,000 in financial assets in a balanced investment portfolio. When considering what she would like from her retirement, she wants to spend her savings to reach her retirement goals, while leaving an inheritance is not as important to her (i.e., Income Tilt).

Based on these goals, Fiona could reallocate 40% ($400,000) of her portfolio into Longevity, providing her with a monthly cash flow for as long as she lives. By incorporating Longevity into her portfolio, her ability to spend with confidence increases significantly while also helping her preserve the balance of her portfolio for her estate.

Financial planning steps
For illustrative purposes only and is not indicative of expected or guaranteed performance by the Fund.

portfolio allocation
For illustrative purposes only and is not indicative of expected or guaranteed performance by the Fund.

long term without LongevityFor illustrative purposes only and is not indicative of expected or guaranteed performance by the Fund.

Investment portfolio with the Longevity Pension Fund
For illustrative purposes only and is not indicative of expected or guaranteed performance by the Fund.

As you can see from the chart above, Fiona can expect to cover her basic income needs for life, giving her the confidence to spend to reach her goals. This peace of mind can help her weather the volatility she might experience in other areas of her portfolio.

The Bottom Line

The portion of a portfolio allocated to Longevity varies with each unique situation, preferences, and retirement plan. Still, as you can see above, the Longevity Pension Fund can help optimize the level of income you can sustainably draw in retirement to reach your goals while addressing the possibility of longer lifespans and managing market risk by investing in a balanced and globally diversified portfolio with historically low volatility.

The charts above are for illustrative purposes only and are not indicative of expected or guaranteed performance by the Fund. In no circumstances should they be considered investment advice or interpreted as predictive of the potential performance of their investment.

*The Longevity Pension Fund is designed to provide income for life, with an initial targeted annual income payment of 6.15% for a 65-year-old individual. The payments are designed to increase over the long term; however, they may go up or down to reflect the performance of the underlying investments and other factors, such as the mortality experience of the cohort. Income in the form of Fund distributions is not guaranteed, and the frequency and amount of distributions may increase or decrease.

**Case study assumptions: Annual CPP amount is $8,400, and OAS is $7,600; income is adjusted for 2% inflation. The Longevity Pension Fund and traditional portfolio investment returns are based on the growth of $10,000 and total distributions received over the first 20 years, using the LifeWorks Economic Scenario Generator model - a dataset of 2,000 potential market outcomes, and align with the approximate 50th percentile scenario. The CPM2014 public sector mortality table with the MI-2017 improvement scale was used to calculate the probability of Fiona being alive when assets are depleted

Commissions, trailing commissions, management fees and expenses all may be associated with investment fund investments. The prospectus contains important detailed information about the investment fund. Please read the prospectus before investing. There is no assurance that any fund will achieve its investment objective, and its net asset value, yield, and investment return will fluctuate from time to time with market conditions. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.   Income in the form of Fund distributions is not guaranteed, and the frequency and amount of distributions may increase or decrease. The Fund has a unique mutual fund structure. Most mutual funds redeem at their associated Net Asset Value (NAV). In contrast, redemptions in the decumulation class of the Fund (whether voluntary or at death) will occur at the lesser of NAV or the initial investment amount less any distributions received. You can always access the lesser of unpaid capital (initial value of your investment less any income payments made) or your net asset value. Fees may apply.

The Longevity Pension Fund is managed by Purpose Investments Inc. The document is not investment advice, nor is it tailored to the needs or circumstances of any investor. Talk to your investment advisor to determine if the Longevity Pension Fund is right for you, and always read the prospectus before investing. Nothing on this document shall be considered a solicitation to buy or an offer to sell, or a recommendation for a security, or any other product or service, to any person in any jurisdiction where such solicitation, offer, recommendation, purchase or sale would be unlawful under the laws of that jurisdiction. No securities commission or similar regulatory authority has reviewed this document, and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable; however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice.

Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend on or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” intend,” “plan,” “believe,” “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are, by their nature, based on numerous assumptions. Although the FLS contained in this document are based upon what Purpose Investments believe to be reasonable assumptions, Purpose Investments cannot assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on the FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.