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Making an investment error in retirement can feel very different than making one earlier in life. When you’re still working, you usually have time to recover — in retirement, a wrong move can put pressure on your income, your lifestyle and your peace of mind.
That’s why many retirees shift their focus. Instead of trying to grow their nest egg as fast as possible, the goal becomes protecting what they’ve built, and drawing from it in a way that can last for decades. Balancing income, stability and inflation protection becomes far more important.
This transition isn’t always easy. Moving from a growth-focused strategy to one centred on income and security requires different tools and a clearer understanding of risk. While many retirees work with financial professionals, staying informed about how different assets behave can help you make better decisions and avoid costly mistakes.
With that in mind, here are five types of assets that many retirees find useful for generating income while preserving stability over the long term.
For a long time, cash-like investments felt pointless. Interest rates were low and money sitting in savings earned almost nothing. But that’s changed.
Higher interest rates have brought money market funds and high-interest savings options back into focus for retirees. These investments aim to preserve your capital while paying a modest, steady return, making them useful for covering short-term expenses or planned withdrawals.
Canadian retirees often use money market funds (MMFs) or high-interest savings ETFs to park cash they will need within the next year or two. These accounts are designed for liquidity, meaning you can easily access your money without worrying about market swings (1).
The trade-off is growth. These investments aren’t meant to build wealth over time. Instead they offer stability and predictability — qualities that become more valuable once you’re relying on your savings for income rather than long-term growth.
For retirees who want a low-stress place to hold cash while earning more than a traditional savings account, this category can play a useful supporting role in a well-balanced retirement plan.
One of the biggest risks in retirement isn’t market volatility, it’s inflation (2). Even moderate price increases can eat away at your purchasing power over time, especially when you’re living on a fixed income.
Real return bonds are designed to help address that risk. These government-issued bonds adjust their principal value based on inflation (3). As prices rise, the value of the bond increases, and interest payments are calculated on that higher amount (4).
The trade-off is that real return bonds often come with lower starting yields than traditional bonds. They aren’t designed to deliver high income up front. Instead, their value lies in protecting your spending power over the long term — something many retirees underestimate until inflation shows up in everyday costs.
For those concerned about rising living expenses, real return bonds can act as a stabilizer within a broader portfolio. They’re not a total solution on their own, but when used alongside other income-generating assets, they can help reduce the risk of inflation slowly eating away at your hard-earned nest egg.
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Annuities aren’t suited to everyone, but in some scenarios they can solve a specific retirement problem: creating reliable income you don’t have to manage yourself.
Fixed annuities offer a guaranteed rate of return or a guaranteed stream of income for a set period (5). Some retirees use them to bridge income gaps — for example, if they retire before they collect Canada Pension Plan (CPP) payments or delay it to receive higher payments later.
One advantage of fixed annuities is predictability. You know what income to expect, and that can make budgeting easier in the early years of retirement. In some cases, taxes can also be deferred until payments begin, which can help with short-term tax planning.
The downside is flexibility. Once your money is locked into an annuity, you’ll have limited access. That means annuities work best when they’re funded with money you’re confident you won’t need for emergencies or unexpected expenses.
For retirees who value certainty and want to reduce the stress of managing investments, a carefully chosen fixed annuity can play a useful supporting role — as long as it’s used deliberately and not as a one-size-fits-all solution.
Covered-call exchange-traded funds (ETFs) are designed for investors who care more about steady income than big growth. These funds hold stocks and generate income by selling call options on those holdings. In return, investors receive regular distributions (6).
The trade-off is clear: If markets rise sharply, covered-call funds usually won’t capture all the upside. Some of the gains are given up in exchange for higher, more predictable income (7).
Retirees often use covered-call ETFs for cash flow without having to regularly sell investments. The income can help smooth withdrawals and reduce reliance on market timing.
That said, these funds still carry risk. Their value can move with the market, and high yields aren’t guaranteed. Covered-call strategies work best when they’re used as part of a diversified portfolio — not as a replacement for safer assets or long-term growth investments.
For retirees focused on income and are willing to accept limited upside, covered-call ETFs can be a useful tool when used carefully and in moderation.
Real estate can play an important role in retirement, but owning property isn’t always practical. Managing tenants, handling repairs and qualifying for financing can be stressful — especially if you’re looking for simplicity in retirement.
That’s where real estate investment trusts (REITs) come in. REITs are publicly traded companies that own and operate properties, such as apartment buildings, warehouses, office space and data centres. By law, they distribute a large portion of their income to investors, which makes them attractive for retirees seeking regular cash flow.
REITs also offer diversification. Instead of tying up a large amount of money in a single property, retirees can gain exposure to multiple properties and sectors with a relatively small investment. This can help spread risk while benefiting from rental income and potential long-term growth.
The downside of REITs is they trade like stocks, so their prices can fluctuate with the market and interest rate changes. That means they’re best-suited for retirees who can tolerate some ups and downs in exchange for ongoing income.
Retirement investing isn’t about chasing big returns. It’s about protecting what you’ve already built while creating income you can rely on.
Using a mix of proven assets that manage risk, inflation and cash flow can help you draw from your savings with confidence — without putting the plan you spent decades building at risk.
– With files from Melanie Huddart
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
BNN Bloomberg (1, 7); PWL Capital (2); Government of Canada (3, 5); TSI Network (4); The Globe and Mail (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.