What does the COVID-19 market shock mean for retiring or retired physicians?

March 19, 2020

The novel coronavirus (COVID-19) outbreak and measures to control it are changing by the minute. Many of our physician clients are on the front lines, while dealing with the situation on multiple levels.

The financial markets are reacting to the ongoing pandemic, and we can expect markets to be volatile for the foreseeable future.

By now, investors have seen advice about staying the course, reassurances on how markets bounce back and guidance on focusing on your long-term financial goals.

But for those who are nearing retirement or already retired, hearing about the “long term” may feel less relevant.

Advice for retiring and retired physicians

COVID-19 has shocked global markets, and with the media sensationalizing the markets’ daily movements, you may be feeling very anxious. What you might not realize is your actual portfolio performance may not have fallen as much as you think, depending on how much of your portfolio is made up of equities.

If you are concerned and wondering what to do next:

Talk to your Advisor. If you’re looking at the market volatility and unsure where you stand and how your portfolio can recover, the first step is to talk to your MD Advisor*. You may find it reassuring.

Our Advisors know that older clients are more affected by short-term market volatility, and they plan with that in mind. Your own plan was likely set up with investments suited to your life stage and reduced risk tolerance, and it may be more heavily weighted toward fixed income, which has provided some protection from the volatility we are currently experiencing.

Revisit your retirement income strategy. If you are retired and drawing income primarily from your equity portfolio, it may be time to re-evaluate your withdrawal plans. Some possible changes to consider:

  • Avoid selling equities in the short term if you can withdraw from your fixed income investments first.
  • Revisit your systematic withdrawal plans (SWPs), including payments from your RRIF accounts. Mandatory minimum RRIF withdrawals have been reduced by 25% for 2020.
  • Review your expenses for opportunities to reduce how much you withdraw from your portfolio.
  • Talk to your MD Advisor about using a secured line of credit, if you have access to one, as an alternative to selling equities. 

The measures above should help you deal with your retirement income needs in the short term. 

Speak with your MD Advisor about the longer-term impact of recent events on your financial plan to ensure you’re in the right portfolio to meet your ongoing financial needs.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.

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