More Money Podcast - 262 How Not to Run Out of Money in Retirement - Frederick Vettese, Author of Retirement Income for Life

Episode Date: January 27, 2021

I've had so many guests on the show over the years to talk about the wealth accumulation stage of investing, but I haven't had any, besides Mike Drak from episode 208 who wrote Victory Lap Retirement, to talk about what happens when you actually retire. What happens when you have to start decumulating your nest egg? That's why I've got Frederick Vettese on the show for this episode. He is the former Chief Actuary of Morneau Shepell, a major Canadian human resources firm. He's also a frequent contributor to the Globe and Mail on retirement issues. And lastly, he's the author of three books, including his latest book that we talk about in this episode, Retirement Income for Life: Getting More Without Saving More. Even if retirement is decades away for you, it's so important to know what to expect when it's right around the corner. How do you ensure you don't drain your retirement savings in the first few years? What strategies should you use to decumulate your savings in a sustainable way? And what are some key things to know about enjoying your retirement and the fruits of your labour? For full episode show notes visit https://jessicamoorhouse.com/262 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome back to the Mo' Money Podcast. This is episode 262, and I'm your host, Jessica Morehouse. Welcome back to the show. I'm so excited to have you back, especially, hi, my Canadian listeners. I got a special guest for you. If you're from any other country, you're still going to want to listen because we talk about things that are applicable to everybody. But I mention this only because I get so many messages asking, hey, do you have any good Canadian specific personal finance books or books on retirement or investing? And the sad truth is there's not a ton. There's a ton by Canadian authors.

Well, maybe not a ton. That's still a stretch. But there are a lot of books by Canadian authors, but they usually keep the talk very general. If you want to know specifically about RSPs and TFSAs and CPP and OAS and all this jargon that does Canadians know, then there's not too many books that really go in depth about them. Luckily, I have another one to kind of add to my general list. Also, if you're ever wondering, and I'm going to have to update this actually, on my website, I have a list of all my kind of top book recommendations, lots that have been featured on the podcast over the years. If you go to JessicaMorales.com slash recommendations, that is where you'll find a big list of book recommendations.

So make sure to check that out. But anyways, I've got the wonderful Frederick Batiste. He is the former chief actuary of Morneau Chappelle, a major Canadian human resources firm. He's also the author of three books on retirement planning and a frequent contributor to the Globe and Mail on retirement issues. So that is what we're going to be talking about in this episode, retirement planning. His latest book called Retirement Income for Life is a must read in my opinion. Believe me, I've read some books, guys. I've read some books. I've read a lot of books. And I'll tell you, when it comes to retirement planning or retirement income planning, there's A, not a ton of books, B,

not a ton of books specifically for Canadians, and C, not a ton of books that are good reads. Some of them are just textbooks. So this one, actually, I really, really enjoyed reading and loved having Frederick on the show. So that's what we're going to talk about in the show and you're going to love it. It's important to understand this phase of the financial planning, really. We talk so much or think so much about the accumulation stage of, I want to make sure I have enough for retirement. But then what happens? What happens when we're actually retired? I think we haven't talked about this enough on the show. I'm not even sure if I've had anyone on the show to talk about this specifically. I'm not sure. I don't think so. Anyway, so without further ado,

well, actually, before I get to that, and also just a reminder, I'm doing my big book giveaway. So listen till the end of the episode to find out more information about that. I also have some very important details I'm going to share with you about my investing course that I know I promised to launch in January, and we're going to do it. We're going to do it. It's happening. So stay till the end of the episode to find more information about that. But first, before getting to that interview with Frederick, here's just a few words about this episode's podcast sponsor. This episode of the Mo Money Podcast is supported by the Canada Deposit Insurance Corporation, CDIC. Have you seen those commercials about CDIC and wondered,

who are they? Why do they exist? And why do they advertise? Well, those are some good questions. First, the Canada Deposit Insurance Corporation, or CDIC, is a federal crown corporation that protects your savings at their member institutions. Basically, this means that you won't lose your money in the unlikely case of a bank failure. Well, that's reassuring to know, but could a bank in Canada ever actually fail? You may be surprised to know that they can, and they have. Since its creation in 1967, the CDIC has handled over 40 of these failures, but the good news is no one has ever lost a penny of their savings under CDIC protection. Oh, and to answer the third question, CDIC advertises because public awareness has a direct impact on financial stability. In other words, when Canadians know about CDIC, they can make more informed decisions about their money.

It's as simple as that. So make sure to visit cdic.ca to see how you're covered. Once again, that's cdic.ca to learn more. ago. Why did you, in not too many years, come out with a new version of the book? I made the mistake of actually rereading the book after not looking at it for two years. And I decided that I was missing a few chapters. I had a couple of chapters that I thought were superfluous. Some of the material actually changed in the interim, and I wanted to reorganize everything. So I was once told by a mentor many years ago that, that the, the urge to edit is the only thing stronger than the sex drive. So I,

I now understand that. So that's why we created a second edition, but I promise not to, not to do this again. Well, I'm sure you will have to make a new version eventually in the future, just because I'm sure as you've kind of realized, as you you know uh edited this there a lot of things have changed and even when you like when this um like the second edition came out it was was it during the spring or when

did this uh come out this uh was actually released it was actually written um last winter but it was released in october of 2020 right And so a lot of things happened in 2020. How did that kind of affect what actually ended up in the book? Because I'm sure you had one idea and then you're like, well, we have to put some new things in because this is kind of a crazy time. It did affect things because in the old edition, the first edition, I did talk about black swan events, about things that we can't really predict, things that turn our life upside down, but it was all done in a vacuum at the time and all done in theory. So I thought, well, you know what, we're actually in the middle of one. So I wrote a chapter about COVID-19, the pandemic, in my newest edition, and I wrote it all in April, and I made it a point not to edit it or revise it

after April. I wanted to give the feeling of what it felt like to be right in the middle of it at the beginning when we didn't know what was going to happen, how it was going to unfold, how serious it was going to be ultimately, and how it would change our world. Because I wanted to put myself into the shoes of an investor who is living in an uncertain world and showing, well, this is what happens in real life. And so how do we actually react to it? How do we change our retirement planning to account for it? I'm curious, because you already had your original book out, did you get a lot of messages or emails from people who were approaching retirement or in retirement kind of freaking out, being like, hey, read book I'm I'm just like not sure what to do because of the pandemic uh yeah well because the pandemic that would have been one reason also because of interest rates going down which was

also a cause of the pandemic or a result of the pandemic um and that was another reason like they said does it still make sense to it to buy annuities because that was one of the enhancements I talked about in the book so yeah I had a lot I had a lot of emails about that. And it kind of sounds like your advice from your book was consistent. You're like, even with this happening, still what I say in the book is what I'd say. What happened? Yeah. So the five enhancements basically didn't change as a result of writing a second edition, except the emphasis on those enhancements changed. So one of the enhancements, which by the way, most of the enhancements are hugely unpopular with the general population. Go figure.

But one of the enhancements was deferring CPP until age 70. And I demonstrated how that actually helps a lot. It helps to make sure that you never outlive your money. It actually gives you more money in later life and so on and gives you a lot more assurance. You actually have more income that's inflation protected and so on and so forth. But people just really don't like doing it. Anyway, I pointed out that with interest rates going even lower, that this enhancement makes even more sense because effectively it's guaranteeing, for that portion of our money, it's guaranteeing us a return of 6%. And 6% riskless return at the time when banks are giving about 0.2% on savings accounts is phenomenal. So how can you turn that down? On the other hand, annuities have become less

attractive. And I did the modeling of it. And yeah, there still is some sense in doing annuities have become less attractive. And I did the modeling of it. And yeah, there still is some sense in doing annuities, but it's not as much of a slam dunk as it would have been two and a half years ago. Absolutely. Since you mentioned, well, I'm curious because I really liked your book and I was actually surprised how much I liked it because you were in a past life, an actuary. And I feel like I've met a few actuaries and I wouldn't really necessarily like you should write a book. So I'm sure you'll write it in a way that's understandable and digestible for the masses. But you actually did that. You actually did a really good job.

Well, thanks for saying that. Yeah, yeah. It's like actuaries are very smart but not necessarily the most eloquent when it comes to like not dumb know, not dumbing down, but like, can you make it so it's, you know, easy to understand. So you did a great job. Well, thanks very much for that. Yeah. Can you explain a little bit about your background? What drew you to write this book?

I'm curious because there's like you kind of say in the book, there's not a lot of people who have written about this topic, which is about when you're in retirement or approaching retirement, what to do. You're totally hit the nail on the head. Almost all the books out there are about building wealth, not about the, you know, decumulation stage. Well, I was an executive in the chief actuary of a major consulting firm in Canada, Morneau Chappelle. Actually, my old boss was Bill Morneau, our former federal finance minister. In any event, about 10 years ago, I just decided that I wanted to change my responsibilities, change what I did there and just make a career change, but within the same firm. So I had a chance to move away from the operations end of things and move into the thought leadership. You can put quotation marks around that for the company.

And so I started writing articles and so on. And fortunately, I got in early on with National Post and then Global Mail, and I wrote quite a few articles for them over the years, probably over 100 now. But about nine years ago, there was a lot of talk about how the country has a retirement crisis, which we didn't have then. The best protected people in the country were seniors. And I told my old boss, Bill, I said, we should write a book about this. So that was my first book called The Real Retirement. Then anyway, fast forward, and then I wrote a second book. And then the third book came about when I was sitting in a conference given by the Institute of Actuaries. At the conference, one of the session leaders talked about decumulation, i.e., how do you actually turn your lump sum, your nest egg,

into income in retirement. Anyway, all kinds of ideas exploded in my head when I heard this. First of all, they gave some good ideas. Also, I thought they got things not quite right. But main thing is I realized that no one's really turned their attention to it, including us actuaries, not to any great extent at that point in time. You're hearing more about it now, but there wasn't much then. And finally, I realized that the financial advisors, bless your hearts, kind of got this wrong as to what advice they were giving to people who were retiring. So I thought this is a great time for it. And by the way, it also came at a time when over a thousand Canadians were turning 65 every day. So it was a good time for it, I felt. And that's why I wrote the book.

Absolutely. And I feel like even if, you know, because a good portion of the audience for this show are younger people, well, millennials as we're getting older. We're not in our 20s anymore. We're in our 30s. But still, I think a lot of the guests I've had on the show to talk about investing and retirement, it's really about that beginning, the retirement planning stages, how to make sure we have enough for retirement. And it's like I need to have someone on the show to talk about what do we do once we're there? Even though that's decades into the future, it's important to know because you don't want to be 65. You're like, okay, so now what?

Like you should probably have a plan in place. Do you want to kind of share some of your advice for when you're approaching retirement? What are some steps you should take? So you, so you have a plan. You don't turn 65. You have that retirement party and then you have no clue what to do. That what to do. That's exactly right. You do want to plan in advance. And this actually was one of the other reasons why I had to write a second edition. Because the people who were coming to me, I mean, friends of mine, acquaintances, people I knew who thought they'd come to me for advice,

and I helped them with their planning a little bit. They were all in the same category, and none of them were really covered in my book. Because my book really covered, well, you have your nest egg, you're on the verge of retirement, what do you do with your money? They were actually all about five to ten years out. I mean, they were close enough to retirement to be able to get a whiff of it, but they weren't sure whether or not they were still on the right track and what they still had to do in their remaining years.

So that's why I rewrote the book partially for them. And so the biggest thing you want to do is you want to get a really good idea of how much retirement income you're going to have. And you want to actually look at spendable income. So you want to figure out how much spendable income you're going to have in retirement given your nest egg. So you needed to have a way to do that. And that's why I created a better retirement calculator that coincided with the book, which I call PERC, Personal Enhanced Retirement Calculator. So that's free. It's available online. You go to perc.mornoshappell.com. Oh, awesome. I love a good calculator. And it's actually one of the rare things online where you don't have to give your email address, so you don't get any unwanted emails.

You don't have any sales calls because you don't have to give your phone number or anything like that. You don't have to give it. You put in confidential information, but you're not identified, so it's all erased after you leave the session in any event. So it's just a free service. And the reason I did it was because otherwise the book would have been pretty close to useless. Because if you don't know how much income you can draw, then nothing else really matters. But then I realized we can actually use this even when

we're 10 years out from retirement to figure out, well, how much income will I be able to draw 10 years from now if things keep on going the way they are? Do I need to ramp up my RRSP spending or maybe kind of cut back on RRSP spending? What do I have to do in order to kind of be there to have the right glide path to actually be ready for retirement? So that would be the biggest step I would say for people who are within shouting distance of retirement to take a look at PERC and plug in their own numbers. Well, I'm going to plug in my numbers. I'm definitely like far away from retirement, but I like to, I like planning in advance. So I like, I like seeing different scenarios and seeing what's going on though. I guess my parents are, are about that. They're about

five to 10 years out. So this might be a good book to do or just, you know, or I could just send them this episode. Yeah. A little nudge there. Yeah, so I find this topic of retirement income, I've had some conversations with people who – because I work with one-on-one clients as well. And some of them are a little bit older, 40s, 50s, thinking about that kind of retirement. And usually I have to refer them out to someone who's a retirement specialist who can help them create that retirement plan while they're in retirement. And I think sometimes it can be kind of scary because it's already intimidating and scary to plan for retirement, to build that nest egg. Thinking of then having this nest egg and drawing it, and you definitely mentioned this in the book, people's biggest fears is outliving the money that they saved up. You spend your whole life saving up this amount of money. The idea that you'll

spend it all within 10 to 20 years and run out is terrifying. And you do definitely share some different scenarios, which I really appreciate and give some examples. And your experience as an actuary too, seeing a bunch of data, how common is it for people to actually outlive their savings? Is it common or is that kind of just a fear? People can certainly do that, but those are the rare anecdotes in Canada. It seems to be more like an American phenomenon

than Canadian. It's not that common simply because people are fearful of it. And so they do everything in their power to make sure it doesn't happen. And until interest rates went down to nearly zero, the biggest thing they did was they tried not to touch their principal, their actual capital, and they tried to live on just the investment income. But we've now reached the point where you can't live on investment income anymore when interest rates are like 1% or less.

And so you do have to actually start thinking about a systematic way of actually drawing down your money. And you're right. I mean, this is very scary for people because when you're 20 or 30 or even 40, you can make any number of mistakes or any amount of, in terms of spending too much, not saving enough and all that, but you can still save yourself. You still have enough income in the future that you can rectify the situation. But once you reach retirement age, you're kind of done. You've got your money. Now you have to draw it down the best possible way.

And there are two mistakes we can make. One of them, the common mistake people think is that they'll draw their money too fast, but the far more common mistake people will make in actual fact is not drawing it fast enough and being left with a large amount of money. There's all kinds of stories of aunts you have who were aged 85, 90, and they died, and they left a ton of money, a lot more money than you thought they ever had, because they never spent it during their lifetime. And part of the problem is, and I actually talk about this in the book, part of the problem is we think our spending is going to be keeping up with inflation for our whole life. But

studies in all kinds of different countries, Canada included, have shown that we don't do that. We do keep up with inflation in our spending and maybe even a bit more than inflation in our 60s. But once we reach 70, something happens. We just start spending less. We maybe aren't quite as keen on exotic travel anymore. At a certain point, maybe at 75, 80, we might lose a spouse. And then things like that just become less interesting.

We stop buying durable goods like furniture. My parents have the same furniture that they had since the 1960s. But we just end up spending less money. And it's not because we haven't got the money to spend, because this is across the board, high income levels and low income levels. And so the bigger problem is that we end up being too cautious with our money because we don't know how much to spend. And that's why I created the PERT calculator. And so we end up underspending. And then later on, we may have regrets when we're 80 or 90, 80, 85, because we could have spent more money and had maybe more fun taking an extra couple of cruises when we were 70 than we did.

But that's how it is. So I want to make sure people are spending at the right pace. And, yeah, you want to be properly cautious and conservative, but you don't want to be too cautious. Yeah, that's interesting. And I've read that statistic before, too, that as you get older, you just spend less. And that's kind of what I've seen with my grandparents, too. And I think it's you mentioned this in the book, and I think it's really important because i've talked to a lot of people who are like part of the fire community so the people that have like you know uh retired early in their 30s or 40s and they always kind of talk about the four percent rule

and in their mind it's usually how they talk about it is it's like a consistent or a constant percentage that they're drawing and you kind of talk about how that may not make actual sense when you're in you know true retirement retirement over 65 or whatnot to draw the same percentage. And that makes sense to me too. It's like, well, you don't always need the same amount to live off every year, especially as you get older and you just need less money. So it doesn't make sense to do anything constant. I think that makes a lot of sense. And you talk about how important it is kind of to revisit your retirement budget, I think, on a yearly basis to see where you're at. That seems like the best way to kind of

manage your retirement income and make sure that you don't outlive it or you don't, you know, are too frugal and then you're left with a big amount of money that you're, I mean, hey, the people in your will are going to be happy about that, but maybe you'll have regrets that you didn't, you know, splurge on this thing or do this experience because you could have afforded it. It's something that's not supposed to be fixed, I guess. And I think a lot of people think it is, and it's not. But the impression is still that we need a lot of money when we're 80, 90. We're going to keep on spending at very high rates.

So I hear all kinds of anecdotes. For example, one of my friends said, because I've been saying this for quite a number of years, one of my friends said, well, that's not true at all. My father's 85. He spends all kinds of money. So I said, really, tell me, tell me how. And then he thought about it and he was drawing a blank. And then he realized, well, he was spending his money on paying rent for his daughter, but he was spending nothing on himself. And my friend suddenly realized that he actually wasn't. I mean, he was giving it away because he wasn't spending it on himself. That was one example. It sounds like my grandparents. Yeah. I remember my own grandmother, this goes back many years now, but she had virtually no

money. She had a very small pension from Italy. She was living in Canada now. So she would have been deemed poor by government standards because she had virtually no income, but she was living with us and so she had all her needs met. And so whatever little money she had, she just gave away to her grandchildren because she wasn't spending any of it. That also sounds like my grandma. Yeah. These stories go on and on, but they're not just anecdotal. It's also statistical as well. I mean, that just is how it ends up happening. But nevertheless, I mean, you still do want to have money in. You don't want to run out. And I do have an example in my book.

I start off with, at the very first chapter, showing how they can run out, you know, if they follow the 4% rule. And they have no, they only have to live on only government pensions after age 80, essentially. And that obviously isn't what you want to do. And that actually, so I did talk obviously isn't what you want to do. And that actually, so I did talk about the 4% rule in my book. And by the way, just for, I guess, listeners who don't fully understand it, 4% rule is you take your assets at the point of retirement, take 4% of that, and that establishes your income level in retirement. And then you

increase it by inflation every year after that. That actually doesn't work anymore. It would have worked 30 years ago when you had a real, after inflation, 4% return on bonds. But now the return on bonds or the yield on bonds is essentially 0% or 1%. And actually that's phenomenal. The real yield is actually negative. So you can't do that anymore. You can't actually use the 4% rule. And in the book, I also show if you have a bad investment scenario, which is quite hot, it can happen.

I call it a fifth percentile scenario, something that happens only once every 20 times. But I show if you have a bad investment scenario, you can run out using the 4% rule. So you do have to think about spending your money in a different fashion than that. So I didn't want to be alarmist. I mean, I don't want people to think they're likely to run out their money, but they can't. Yeah. It's like, it's possible, but it's unlikely, but it is possible. Right. Yeah. No, I absolutely. And I appreciate too, that you talk about, because again, I feel like there's, when people are talking about this subject, they really do talk about rules of thumb a lot because it's easy to digest and comprehend. But that's not really how things work.

You do need to run different scenarios, which you actually do in your book, which is, I think, really helpful to see what could happen and what are their different... I feel like that's also what I've been seeing with a lot more investment companies and robo advisors before. I feel like the graphs that they used to show is like, if you continue to contribute this amount, you'll end up with this amount of money by the time you're retired. Now they're actually showing graphs that are like, actually, here's a bunch of different scenarios because we actually can't guarantee this. Which I'm like, good, that's good. Because yeah, we need to kind of be aware of that. And that's, I think, the other kind of annoying thing that people kind of get, I guess, kind of concerned about is so no one can really guarantee me or tell me how much I'm going to have or how much my money is going to last because no one can predict the future.

Is that something that you kind of come across and you're like, yeah? 100%. You cannot predict the future. In addition to all the usual things, it's not only the things that we know we don't know, it's also the things we don't know that we don't know. I mean, both those things are possible and they can affect what's going to happen in retirement. Having said that, one of my enhancements was having a backstop

and that is being able to tap into the equity in your home. And I do that by way of a reverse mortgage in one of my chapters. But I tried to create a scenario under which a couple had to do that. So I started off with the idea, well, they followed all the other enhancements, so they did everything else right, and they still ran out of money, and so they could then tap this last enhancement and tap the equity in their home to make ends meet. And I found it was really hard to actually find a scenario in which they had to worry about this backstop, this reverse mortgage. Because if they do everything else right, it's actually very hard to run out of money and to be actually in dire straits in your 80s if you do it or everything else right. Well, that's good to know. And I think also a part that I really enjoyed too is a lot of people think when they're

just drawing down their retirement savings and living off it that they spend all that money that they're withdrawing. I think a lot of people don't realize that, especially for your RIF, there are mandatory withdrawal rates. And I think a lot of people think, well, what if I don't need all that money? It's like, it doesn't matter. You still have to withdraw it, but you don't have to spend all of it. You talk about how there's certain like different, you know, life shocks, you know, you know, kind of a life emergencies that may pop up. And that's why it's actually important to save. And I think that was an interesting concept that a lot of people don't

think about that when you're in retirement, you can continue to save money, which seems maybe a bit counterintuitive because you're like, but I saved up all my money. Do you want to kind of explain the importance of actually putting aside some money and having some savings while in retirement? Well, I actually, before I started writing the book, I actually had trouble with this concept myself. I figured people save for retirement, but once you're retired, what do you have to still keep on saving for? And if you have a lot of money, if we're talking about people with seven figures in terms of savings, then they always can dip into their savings to take care of that rainy day situation where the roof springs a leak and they have a

massive flooding in the house and they have a big bill that they have to cover. So they can always handle that. But for the people who I wrote the book for, those who are middle income, who are just trying to save properly and have a decent, comfortable retirement, they do have to worry about spending shocks. Spending shocks are, first of all, it'll be things that you can't predict. It might be like a health issue. And as a result, you need to have home care for six months or a year. And that costs money. Most of the medical bills are covered, but there are still things which aren't covered, and that can cost money. So that would be the kind of thing that you can't do anything about. Some of the spending shocks, and this is based

on a study that was done by the Society of Actuaries, some of the spending shocks you should totally be able to predict, like you have to repave your driveway, you have to re-single your roof every 10 or 15 years. And yet they come as shocks when the time comes. They really haven't got the money set aside for it. So I suggest in the book that you think about, even in retirement, putting aside three to five percent of your income that you're drawing and put it into a reserve fund. Just put it aside like in a separate place so that you can actually dip into that when you need to, as opposed to having to cut back on every other aspect of your life. Exactly. Because you kind of explain it really well in the book in that, you know,

if you don't do this, then whenever something like this does pop up, and I mean, in regular life, these things pop up, like something breaks down in your house, like your boiler, and you have to replace it. You need money. You need to have some emergency savings for these situations. And so why would that change in retirement? And it's kind of, yeah, no one wants to live in retirement when something pops up because something always will, and you have to then change your habits and your spending patterns. You know how hard that is? You know what's easier? Having that savings tucked away so you can afford to pay for whatever the thing is you need to pay for. So I'm curious. With this book, you've probably talked to a lot of people maybe writing the book or from your first edition.

How many people have kind of taken some of the advice from your book? And do you have any kind of perspectives on how this has maybe changed their outlook on retirement or how they're living their retirement? Certainly, there are many people who have taken my advice. I do get emails from the public pretty much on a weekly basis. And somebody is telling me that or they're following and then they just want some clarification on a point or they're thanking me for the advice I've given them. So that happens. I actually get surprisingly few emails from people who say that I'm totally out to lunch. Oh, that's good. Now, I get comments like that in my Global Mail articles. Oh, wow. I've been advised quite a while ago, don't read the comments.

Yeah, don't read the comments. You'll go crazy if you read the comments. So I don't read them anymore. But from the ones I've seen, yes, there's a tremendous amount of resistance to some of the enhancements. The first one, reducing investment fees. People might shrug their shoulders and say, how important can this be? In these days of low returns, low interest rates, it's hugely important. But there's not much pushback on that.

The deferring of CPP until 70, as I mentioned, yeah, huge pushback. The Canada Pension Plan Actuary, the chief actuary shows that maybe 1% of people wait until age 70 to start their Canada Pension Plan. And it should be more like 50% should start it by age 70. It's not for everybody, by the way, and I point this out in the book, but it's for the vast majority of us. It actually is a good thing. But there's a lot of pushback on that. And I see one reason why it happens. I haven't talked much about the financial planners out there. Some of them totally subscribe to my views and some of them resist them. And I can understand why, even if they want to be fair, this goes totally against their own

monetary interests. If they defer until 70, it means that they're drawing down their own money that much faster. And if the advisor is getting a percentage of that money, then they see their remuneration dropping down that much faster. So they're going to be straining to find reasons as to why this isn't a good idea. Yeah. Oh, that's important. And I don't want to be totally cynical. I mean, some of them might be that cynical and just based on their pure self-interest. Majority of advisors I've talked to, they seem to be trying to be more conscientious than that. They do want to do a good job, but they have trouble seeing this phase of entering retirement or just managing your retirement income? Or is it something that if you know this stuff, you could do it ourselves. I mean, actuaries can do it themselves. I'm not sure how many other people can. For example, even accountants, I mean, they all certainly understand some aspects very, very well, but other aspects not very well at all.

I know one accountant who's been advising me that, you know, I should be, for example, I should be trying to create income through a corporation so that my wife can pay Canada pension plan contributions. And I say, well, that's actually one of the worst investments out there. And then I have to explain to him as to why that is. And this is a totally separate subject, so we won't get into it. My point is that not a lot of people can actually do all this. Now, I think it would be very useful to have advice, probably from a fee-only financial planner, not a commissions-based, for the few months leading up to and maybe into retirement, just to get all your affairs in order, make sure that you've got the will and you got your estate properly settled and so on and so forth, that would be tremendously

useful. You don't really need to have an advisor to look at your investments and your asset mix every six months. You really don't need that. Your mix is going to change very slowly, if at all, in your retirement, at least for many, many years. And that's something you mentioned in the book too, because I think historically, it's been kind of, you know, once you're in retirement, typically you're going to have an asset mix of 50% stocks, 50% bonds, but you've kind of seen, you know, so many changes in our world that you're like, maybe that's actually too conservative because of what's going on with bonds.

Maybe something closer to 60-40 might actually be better. Yeah. And actually, for younger people, if you're 25 or 30 or even 35, you should be 100% in stocks, which, I mean, I've done the analysis. And over 30-year periods of investments, stocks are always going to do better than a mix of stocks and bonds. You're always going to do better just to have purely in stocks. At retirement, obviously, you have to be a bit more cautious. And that's why 50-50, 60-40.

If you buy the annuity, you can definitely be 60-40 because the annuity is kind of like bonds. Yeah, that's interesting. I feel like just because so much has changed over the past few years, a lot of the kind of typical investing advice that we got, like if you read're 35 or younger, you should be 100% in stocks. And I'm like, I guarantee you most people are not. Most people in that age range are doing a 70-30, maybe 80-20 in their asset mix just because that's lots of the advice that they got in the past. That's what aggressive but still 100% equities. That's crazy. Well, you know what? Almost nothing of what I'm saying is actually wildly controversial.

For the experts out there, the academics, the actuaries, who have actually looked at this closely, they all understand all this stuff, and there's actually very, very high agreement. It would be, when you look at the general public and financial advisors with their own different set of interests and all that, where all this becomes controversial, and they are a few years behind. The thing is, the academics don't tend to talk to the general public directly. And so their ideas get only slowly disseminated. Yeah, I think that's exactly what's happening. Yeah.

Well, there's so many good things in your book, so many more things that we could talk about. I felt like it was honestly very rich. I've read, I mean, I've had this podcast for over five years now. I've read quite a few books, not a ton on retirement income planning specifically. So I appreciate this. And this is also Canadian, which is also, I get so many requests. I'm like, what are some good Canadian books about investing? There's not a ton out there. So I really appreciate this book. But you really do. I felt like it was meaty, which I really appreciate. I've read too many books that are like, well, this is a bunch of fluff.

So this was great. I really, really appreciate this. So I think people are going to love it who want to know more about the specific topic. Before I let you go, is there anything else you want my listeners to kind of know? Some really important key things that you're like, this is one thing I want to kind of make sure I get across. The only other thing I would say is that we are going to be in a world of low interest rates and low investment returns, which isn't obvious yet because stock market returns have been very good. But the time is coming when returns and interest rates are going to be low for a very long time to come. So, yes, retirement planning is going to be more of a challenge than it's ever been.

Yeah, gosh. So I guess there's never been a better time to equip yourself with some knowledge so you know what to expect and what to do moving forward. Yeah. Well, before I let you go, where can people find more information about you or grab a copy of your book? And can you remind what that link for that calculator is? I'm sure lots of people are going to want to check it out. Yeah. The link for the calculator is perc.mornochappelle.com. And

they can find out more about me if they wish, I guess, on my... I actually have a website now. This was actually a Christmas present for my wife. I never got around to doing it myself, but it's frederickvatisse.com. And grab a copy of Retirement Income for Life. I guess you can kind of get it anywhere pretty much. So yeah. Yeah, pretty much. Yeah. Pretty much. Yeah. Awesome. Well, thank you so much for taking the time to chat with me on the show. Well, thanks for talking to me. I appreciate it. And that was episode 262 of the Mo Money Podcast. You can find more information about Frederick on his LinkedIn. Connect with Frederick Fatis on LinkedIn.

I'll, of course, include links of where you can find him and also just important things you need to know in the show notes, jessicamorehouse.com slash 262. And you can find the show notes for any episode ever by just going to jessicamorehouse.com slash whatever the number of that episode is. And also, an easy way, actually, it's just going to jessicamorehouse.com slash podcast. And you can find every episode I've ever done will be on my website. So you can listen, you can find links, all that good stuff is on my website. Now with Frederick's book, Retirement Income for Life. Again, you can find that pretty much at any bookstore, but I am giving away a copy. So I'm giving away copies of any book that is featured on

this season of the show. So I'm giving away a copy of So I'm giving away copies of any book that is featured on this season of the show. So I'm giving away a copy of the book that was featured last week called Back to Business. So if you go to jessicamorehouse.com slash contest, you can find all the information about entering those book giveaways. So check it out. You can check it out frequently. I'll be updating it as I have new guests on the show and we have a book to give away. But another way that you can find out more information about this giveaway is, well,

I'll always include a link on the show notes, but also my email is jessicamorehouse.com slash subscribe. There's links like, and you know, there's a button like on my website. Very easy to find. Definitely sign up to my email list because, well, I'm going to share a little bit more info in a hot second. definitely sign me to my email list because uh well i'm going to share a little bit more info in a hot second but that is how you find out all of these important announcements and things all the time is the email list um so since i've kind of teased it um well you're gonna have to

wait a hot second later i just have a few words i'm going to share about this podcast episode sponsor then some very important exciting information about my upcoming investing course. This episode of the Mominy Podcast is supported by the Canada Deposit Insurance Corporation, CDIC. Did you know that CDIC protects up to $100,000 per category per member institution? Let's break that down, shall we? First, if you hold savings in cash, GICs, or other term deposits, or even foreign currency at a CDIC member institution, those deposits would be protected up to $100,000. And if you have joint deposits with someone else, those deposits would also be covered up to the $100,000. Same goes for deposits in your RRSP, TFSA, RRIF, and trust accounts. Each would be protected separately up

to $100,000 and that is at the same institution. Now, if you bank with more than one CDIC member institution, the situation repeats itself. So if you've had $300,000 spread evenly across three different banks or categories, your entire $300,000 would be protected. See what I did there? It's important to know this so you can maximize your deposit insurance coverage. To learn all the ins and outs of how CDIC works so you can feel confident about the safety of your savings, make sure to visit cdic.ca. Once again, that's cdic.ca to learn more. What's the deal? What's going on with this investing course? So as I teased, if you're on my email list, then you already know this. As I teased not last week, but maybe the week before, it's getting ready. There's a logo I made.

The new name, which I'm going to share with you right now, is called Wealth Building Blueprint for Canadians. So yes, it is specifically for Canadians. Sorry for anyone who is not Canadian. But if you're an American, actually, if you go to jessicamorehouse.com slash courses, my friend Amanda from the US has an amazing investing course that you're definitely going to want to check out. So you can check that one out. Highly recommend that. But for Canadians who want to learn specifically about investing in Canada, investing in the different account types like RSPs and TFSAs and the different robo-advisors and how to actually implement a DIY investment portfolio and manage it yourself and all that

in Canada, well, I got you. It's here. It's coming. And basically, how you're going to find out about it first is to sign up to my email list, jessicamorehouse.com slash subscribe. Make sure to sign up to my email list because I'm going to be sending out a very special email on Sunday. So keeping my word that I am launching it before this month is over and basically how it's going to work. Well, I'm going to include more details actually in the email. I'm not going to tell you right now. You're going to have to sign up to my email list to find out how you can actually sign up for this course. It's not going to include more details actually in the email. I'm not going to tell you right now. You're going to have to sign up to my email list to find out how you can actually sign up for this course. It's not going to be like regular courses where you can just hit a button and buy.

There's going to be a little bit of a vetting process. Basically, you have to apply to take the course because basically, I don't want this just to be any old course that you buy and then you never actually do. I want you to take this course, actually do it and get results. And the result is that you either start investing and have a very solid investment plan and know exactly what you're doing and you feel very confident about it. Or if you are currently investing, like most people are, really doing a review of what you're doing and adjusting your investment plan so it better reflects your goals and all these other important elements. So that could be, you know, really switching up what you're doing.

I mean, most of the people that I talk to, you know, either financial counseling clients or just, you know, the many, many people I talk to over social media or email or call because I've been doing a ton of these like course discovery calls to find out what people want to know about, almost everyone I talk to, I'm like, what are you investing in? And usually it's mutual funds at the bank, which you know I'm not a big fan of at all. And so this would be a great opportunity for you to learn what you don't know and just really understand first, kind of the first phase of the course is really that foundations of information. You need to know this stuff before you can move on to the action phase. Before you start investing, you need to know this stuff and really understand it. I see too many people, because I do lurk in some

investing Facebook groups, that are just like, hey, all right, I've got $1,000. What should I buy? I'm like, that is the worst way to start investing. You are going to make mistakes that way. You need to know what you're doing and make a plan. And then you initiate the plan. And that is kind of the action part of the course. So yeah, I'm going through it all. I have so many amazing video tutorials. I'm spending my own personal money testing out pretty much all of the different robo-advisors in Canon. I think in total seven. I may add another one on top of that. And then I also show you if you want to be a DIY investor, which means, you know, opening up a discount brokerage account, building your own portfolio, managing it yourself, rebalancing, how does that all work and have

all these amazing spreadsheets and resources and video tutorials on how to actually do it. And I actually do it with my own money to show you this is actually how you do it. It's so simple. Like that's the exciting part. Once you go through the course and you see what's in there, you're like, oh, I don't know why I thought this was intimidating or really hard. It really isn't. Investing is actually so simple. It's actually annoying how simple it is because people do love to overcomplicate it. So anyways, that's a little bit. If you book a call with me to learn more about this course, which again, I'm going to include a special link in the email that I'm going to send out on Sunday,

I'm going to share more about it and actually give you a little look at what's in there. So very excited. Very, very exciting. There's so much more in the course that I'm not telling you right now. But yeah, it's going to be amazing and I'm very, very exciting. There's so much more in the course that I'm not telling you right now. But yeah, it's going to be amazing and I'm very, very excited about it. And then if you're wondering, hey, don't you have that other course? It was called Fix Your Finances Masterclass and now it doesn't exist. You said you're going to update that. Absolutely.

Just wanted to get this one done first and then I'm going to revamp that course and that'll be very exciting as well. So that's kind of the tea. That's kind of the tea what's going on. Before I let you go though, just a reminder, make sure to follow me on Twitter, please. I'm at jessi, J-E-S-S-I underscore Morehouse. You can also follow the Mo Money Podcast on Twitter. It's at Mo Money Podcast. And same with Instagram. I've been doing a lot more Ask Me Anythings, which are very exciting. Just like if you have any kind of personal finance question or investing question or whatever, I've been doing a lot more AMAs. And this is a way where you can ask me your question directly and I will answer

back. So make sure to follow me on Instagram at Jessica I. Morehouse. You can also follow the Mo Money Podcast at Mo Money Podcast. So that is it for me. Thank you so much for listening to this episode. I'll be back next week with a fresh one on a Wednesday. So stay safe, stay warm, and sign up to my email list, jessicamorehouse.com, slash subscribe to find out more information about my upcoming investing course. All right. See you. Have a good day.

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