Mr. Sharma, 62, retired last year and is drawing $5,000 monthly from his RRIF. His family also incurs annual medical expenses of $10,000 not covered by provincial health insurance or his private plan. His investment portfolio is $1,000,000. What is the most significant short-term liquidity concern for Mr. Sharma's portfolio?

Question: Mr. Sharma, 62, retired last year and is drawing $5,000 monthly from his RRIF. His family also incurs annual medical expenses of $10,000 not covered by provincial health insurance or his private plan. His investment portfolio is $1,000,000. What is the most significant short-term liquidity concern for Mr. Sharma's portfolio?

Answer options:

• The $5,000 monthly RRIF withdrawals
• The potential for inflation to erode purchasing power ✅ The $10,000 annual uncovered medical expenses
• The need to diversify his investment holdings

Correct answer: The $10,000 annual uncovered medical expenses

Explanation: While RRIF withdrawals are predictable, the $10,000 annual uncovered medical expenses represent an unpredictable, potentially lumpy short-term liquidity need. Unexpected medical costs are a common, significant short-term liquidity concern.