Nov. 14: Lessons on retirement success – How to Retire by Christine Benz

November 14, 2024

Christine Benz uses an interview approach in her fine book, How to Retire, to really dig into some retirement-related dos and don’t.

And while there are a few sections that focus chiefly on U.S. tax rules, the bulk of the book is still very helpful for a Canadian reader.

The book begins by asking Michael Finke about what people should be thinking about when it’s time to contemplate retirement. Being happy, he explains, is crucial – it’s not just a math problem. “Of course that’s a very important part of living well in retirement – not feeling like money is a barrier to doing the kind of things that actually make us happy,” he begins. “But you also have to develop the skills to figure out how to be happy in a time of leisure, if that’s what you’re doing. And that’s a big question. Is this just a long weekend? Is this just a big vacation? And are you set up to be able to live?”

On how to pick a retirement date, Fritz Gilbert tells Benz “what I encourage people to do is take that last year (of work) and think about all the non-financial aspects of retirement, to make sure you’re emotionally and mentally ready for the transition as well. If you get the financial piece in order, and you’ve spent some time thinking about the non-financial piece, the “when” is going to become fairly obvious between the two of those combined.”

Laura Carstensen talks about the important of keeping up social connections – different than those you had at work. Recalling vacations when she was constantly in touch with the office via her mobile phone, she said you can’t completely disconnect when you retire.

“Going from that to a complete sense of `Nobody wants me. I’m not obliged to do anything,” is just as bad. People think about retirement as a way to break out of that pressure. What we really need is to change the way we work throughout our working lives. But certainly, as you get older and you start to have some ability to work less and to be more flexible in your work, keep in mind that doing some work is good for most people.”

David Blanchett talks about buying annuities, the “a” word. “If you want more guaranteed income, you want to first exhaust your options with respect to (government benefits).” He suggests claiming your government benefits as late as possible so that you get more. “After that, it might be worth considering annuities, given the potential economic benefits, which is something I’ve focused on for most of my career.”

Another important thing for retirees to think about is “spending money meaningfully” suggests financial author Ramit Sethi. You also need to talk about death benefits. “So many of us are afraid to talk about death. I told my wife, “Here are the conditions under which I don’t want to live anymore. Here’s what going to happen one day if I get hit by a bus. Let’s talk about it.

“There’s no virtue in hiding from something that’s going to happen to all of us. We might as well be open about it, When we acknowledge that eh average person like us lives to X age, suddenly we get very honest with ourselves. `Wow, I have a limited time window to actually use this money. What am I going to do with it?’”

Wade Pfau talks about investing strategies for retirees, including the “4 per cent” withdrawal rule, and the danger of “sequence of returns risks,” which is the danger of taking out investment money before the big returns start to hit.

He suggests four steps to mitigate sequence risk – “the first is to spend conservatively. That’s the logic of the four per cent rule.” Alternatively, spend flexibly. “If I can adjust spending along with market performance, that manages the sequence of returns risk because I’m not having to sell as much from a declining portfolio.” Other tactics include mitigating volatility by diversifying into less risky assets, like bonds, and having “buffer assets,” something outside the portfolio that you treat as a temporary spending resource to spend from after market downturns, to help avoid selling from the portfolio at a loss.”

In a chapter on choosing where to live after retirement, Mark Miller notes that “most people don’t move when they retire. That’s a media myth. And when people do move, they generally don’t move very far.” But if you are considering a bigger move, he recommends that you see what the healthcare services in your new area are like, as well as “transportation, walkability, and the like.”

Carolyn McClanahan suggests you need to “make certain your home is aging friendly. If it’s not, then figure out how you’re going to make it aging friendly, or where you’re going to move so you can live at home.”

This is a very well-thought-out book that covers off most aspect of retirement in a factual, friendly way. It’s well worth being an addition to your retirement library.

Annuities are a way to turn some of your retirement savings into a lifetime income stream. The Saskatchewan Pension Plan offers a full range of annuities. Be sure to check out this option when the day comes to convert your savings into retirement income. There’s also the flexibility of the Variable Benefit option to look at!

Check out SPP today!

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Christine Benz, How To Retire

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