FP Answers: How should I withdraw retirement money from investments during a down market?

financialpost.com:

By Julie Cazzin with John De Goey

Q: I retired in 2008, just in time for the market to crash. Fortunately, I did not need my investment money right away. But now, 10 years later, I have begun taking money out for living expenses, just in time for the current crash. I sat tight the first time and things gradually got better. I can’t now. What should I do?

FP Answers: Jane, the first thing you need to know is that no one can time market moves with anything approaching reliability. You’ve been retired for 15 years already, so my guess is that you’re well into your senior years. One thing I tell people is to resist the industry’s perpetually optimistic narrative. Things do indeed work out over the long run, but many people in your situation no longer have a long time horizon and, therefore, cannot wait.

Accordingly, the primary option for you is to reduce your lifestyle and spending expectations to account for the new reality. In addition, and relatedly, one of the great risks Canadians face is longevity risk: outliving their nest egg simply because realized life expectancy can be more than was planned for. To address that problem, you may want to buy an annuity or a risk-pooling fund product that pays a regular income for as long as you live.

There are now products available that can approximately replicate a defined-benefit pension — an income stream that is indexed to inflation and that cannot be outlived. I believe these tontine-type products will gain acceptance going forward to address precisely the concern you’ve raised.

Q: For those of us already in retirement and having been savers for most of our lives, how do you prepare yourself to switch to a spender mentality without fear or anxiety? Any tips you have to make