More Money Podcast - 329 A Better Way to Save for Retirement - Frederick Vettese, Author of Retirement Income for Life

Episode Date: May 18, 2022

I have another returning guest joining me on the podcast today to share more about his new book and his rule of thumb for saving for retirement. Frederick Vettesse is back on the podcast to talk about his new book, The Rule of 30: A Better Way to Save for Retirement, and the different approach he took to write this book as opposed to his others.  Frederick Vettesse is the former chief actuary of Lifeworks and a best-selling author of books all about retirement. He’s also a regular contributor for the Globe and Mail. He first appeared on the More Money podcast in episode 262 where he chatted about how to not run out of money during retirement. In this episode, Frederick explains what the rule of 30 is for retirement, including how much to save and invest at certain ages and stages in your life and is it ever too late to start. We also talk about investing options including if real estate is still a good investment for your future. Another important topic we cover is planning for the best-case scenario along with the unexpected and inevitable changes that come from getting older including potential job loss and declining health.    For full episode show notes visit: https://jessicamoorhouse.com/329 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome back to the More Money Podcast. I'm your host, Jessica Morehouse, and this is episode 329 of the show. And for this episode, we're going to be diving deep into retirement planning, planning and preparing and saving and investing for retirement. And for this topic, I knew the perfect person to have on the show. He has been on the show before, and he was wonderful. And he is kind of my favorite person to have on the show. He has been on the show before, and he was wonderful. And he is kind of my favorite person to talk about this topic with because he really knows his stuff. And I'm talking about Frederick Vittisi. So he was on the show for episode 262. So make sure to check that one out. But he was on the show to talk about his book, Retirement Income for Life, which was

really a book specifically for if you're approaching retirement or you're already retired, what can you do to make sure that you don't run out of money? Well, he is back with a brand new book called The Rule of 30. And it is about when you're in that wealth building stage of life and you were, you know, planning for, you know, retirement decades into the future, how do you make sure that you save up enough? And so in case you, you know, are new to the show, let me share a little bit more about Frederick. So he's a former chief actuary of LifeWorks, which is which makes a lot of sense when you read his book, he is all about those, you know, mathematical calculations and scenarios and all that kind

of stuff. So I love that because I am a math nerd, let's be honest. Not only that, he is the author of four retirement books. So The Rule of 30 is his latest one. Then he has Retirement Income for Life. Then The Essential Retirement Guide and The Real Retirement. This guy likes retirement. And you know what? I love it because especially too, because he's Canadian, I feel like often, you know, I love the amazing American books out there, but sometimes we're like, yeah, but what about Canada? What about us? Because, you know, things work a little bit differently.

So if you want to learn more about that, well, we're going to discuss it in this episode. He's also a contributor to The Globe and Mail. So often I'll be reading and I'll, you know, see one of his articles and love it. Anyways, we have so much to dive into in this episode. Before I get to that interview with Frederick, here's just a few words I want to share about this podcast episode sponsor. This episode of the More Money Podcast is sponsored by TD Direct Investing. Every June, TD Direct Investing celebrates Options Education Month with the goal of helping investors learn more about options trading. Throughout the month, they are hosting a number of free virtual events for beginner and intermediate

investors alike. Want to learn about some of the things people wish they knew before they began or build on some of the knowledge you may already have on options? Visit td.com slash options education month to register for one of the many live webinars TD Direct Investing will be hosting. Or if you're more interested in getting an introduction to options in the first place, there are a number of on-demand video lessons available too. To learn more and to check out the list of free events, just visit jessicamorehouse.com slash options. Once again, to find out what webinars, masterclasses, and on-demand video lessons are available to view for free, just visit jessicamorehouse.com slash options.

Welcome, Frederick, back on the show. I'm so excited to have you here again to discuss your latest book, The Rule of 30. Well, thanks, Jessica. It's great to be here. Yeah. So I'm curious, because this is your fourth book now and uh all of your books are about retirement planning um why did you want to write uh yet another book i really enjoyed you being on the show talking about your last book retirement income for life so what kind of inspired you

to write this new book the rule of 30 that's an excellent question i'm trying to think the books are like children should probably stop at two but you know, sometimes you just keep on going. So I'm feeling a bit like a Mormon right now. I did a fourth book because this was actually in the middle of COVID. And I realized that I had written, well, my most successful book has been Retirement Income for Life, my third one. But I realized that I really needed a sequel. Retirement Income for Life was all about you've got your nest egg, how do you turn that into income? I've never really talked about how you create that nest egg in the first place. And once again, I thought like is the case with so many retirement subjects that there was a

bit of misinformation out there. So I thought I would deal with that. And that's the whole purpose of the fourth book. How do you create your nest egg? Yeah, I mean, I think that's probably one of the I'm sure it's the same for you, one of the most common questions you get from people, especially who are in their, you know, 20s, 30s, 40s, in that kind of wealth accumulation phase of their lives of that big question, like, how much do I need for retirement? And, you know, like you kind of talk about in your book, you can, you know, Google all day long and find a million different answers and I think a lot of

people are like I'm just I'm looking for a simple answer it can't be this complicated is it 10% is it 20% everyone has a different rule of thumb and I appreciate that you really go in depth you talk about the rule of thumbs and at the end you're like okay if you need a rule of thumb here's some rule of thumbs if you just want a starting point but I think what's really important to note is people are looking for a simple answer but it isn't that simple and that point. But I think what's really important to note is people are looking for a simple answer, but it isn't that simple. And that's kind of, I guess, what you explore with. And in the version of this book, it's a bit different than some of your prior books. This is kind of a narrative, you've got some characters who were kind of used as examples,

and you know, how to kind of maybe develop a plan for them. So I'm curious, why did you also want to write it in this kind of way, where there's, you know, fictional characters, and then kind of the mentor who's helping the couple kind of determine how much they need for their retirement? That kind of happened by itself. I was going to write this book the same way as I wrote the first three books, kind of an essay format. But I started with a couple of characters and a little bit of a dialogue back and forth. And I realized that it's actually a lot easier to explore the subject with dialogue than it is the other way. Because with a dialogue, when you come up against a difficult concept, whatever, then you can say, well, hold on there, could you please explain that some more?

And the person can do that. Or if you come across something that might be controversial, you can have one of the characters express skepticism, and then you can deal with that controversy. So I just found it was actually a very, very easy way to write, actually easier than essay format. I also thought it was maybe more approachable as well, like an easier to read as well as easier to write. But I guess my readers can be the judge of that. No, I thought so. Because you do explore quite a few complex concepts, which I appreciate. It did remind me, honestly, of studying for the CSE, especially when you're talking about bond yields and all that kind of stuff. And those are kind of, I think, if you were to read some of this information in more of

an essay kind of format, it could be kind of hard to wrap your head around. So having the characters there asking those questions that you as a reader would have the same questions I thought was very helpful. So I appreciate that. I thought it was really well put together. So let's kind of start with the main, you know, the title and the kind of main concept of the book, which is the rule of 30, which is a different way of kind of organizing how you should save for retirement. Do you want to kind of explain how did you kind of develop this rule of 30? So first of all, basically, the rule of 30 is that the percentage of your gross income

that you ought to be allocating throughout your career, your lifetime toward saving ought to be 30% less what you're putting into your mortgage on your house and also less any one-time expenses that you really can't ignore, you really can't avoid, which are going to be very onerous for maybe a few years of your life. And the example I give in the book is one about daycare expenses. So, and I kind of, I didn't actually start with the rule of 30 when I started the book. It was about halfway through. I started, I had all kinds of complicated rules like, well, maybe you want to add on another 5% saving if this happens and

subtract 3% if that happens and so on. But when I got to the end, I realized, well, it's actually very close to having those pieces being adding up to 30%. And then I realized, well, it's actually very close to having those pieces adding up to 30%. And then I thought, well, should it really be 31% or 32%? Well, I guess you can always say that. But Rule of 30 just was more catchy, and it still got the job done. So then, of course, I back-tested it. I actually assumed that people would have used that rule in the past under historical periods to see whether or not they would have saved enough for retirement. And the answer was yes, they would have saved

just as much as if they saved something more conventional, like 10% of pay every year. Yeah, it did work. And it's always nice to have kind of a nice round number, like 30 instead of 32 to remember. But I thought it was really interesting how you explained because, like I kind of mentioned, so many people are just looking for a rule of thumb, how much of my income right now should I be putting towards retirement? But like you talk about in the book, well, your life is so different, we go through different phases, there's really expensive times in our life. You know, usually, like during our 30s and 40s, we have kids, we have daycare, we have a lot of expenses, we have maybe an expensive mortgage. And that makes it very difficult. I mean, that's what I

come up with, you know, talking to so many people, it's like, it's really difficult to save for retirement during those particular times in our lives. And then it gets easier when some of you know, we don't have daycare costs, or maybe the mortgage is paid off. And that kind of frees up, as you mentioned, the book loss of your spendable income. And so your kind of strategy is not about having a strict, you have to save 10 or 20% of your income for retirement. Otherwise, you're just not going to be able to retire. It's about being flexible and changing how much you can save and put towards some of those expenses, depending on what phase of your life is. You want to kind of explore that a little bit more about how, you know, like in your younger years, you'll save less, but that's going to be okay in the end?

Well, yeah, that's right. When I went through the example, first of all, assuming that the individuals, the couple was saving 12% of pay every year, I just found that they ended up having such a tiny percentage of their pay that they had to live on. When you subtract income taxes, subtract daycare expenses, mortgage payments, everything else, they were living off about 25% of their pay. Now, 25%, say gross that up for taxes, call it 30%. I mean, no one's going to say that you only need 30% of your income in retirement. So why should you be expected to live off of this 30% of your income when you're, when you're 30 or 35 years of age? So it was insane. So I looked at that at the, at the chart showing how much of your income you're actually living

off of it, different parts of your life. And it was generally in one's thirties. Usually I say when you have daycare expenses or young children, and that's when your mortgage is the biggest percentage of income that you're going to have during your lifetime, that's when it becomes most of a challenge. And I do understand that it's going to be nerve-wracking for some people not to be saving very much for a few years. They'll be afraid that this is going to become the norm.

But it doesn't have to be, because the vast majority of people go through the same stage they their income is lower in real terms in their 30s then they have heavier expenses and then all of those factors change by their 40s and then they just have to bear down and start really applying the rule of 30 and really saving more money so rule of 30 means you may end up saving 0% or very close to 0% for a few years in your 30s, but also means you may have to be saving 20% at some point in your 40s and maybe even close to 30% for a few years in your 50s. But in every case, though, it's going to be a more comfortable way to save for retirement than if you just bite the bullet and try to save 12% year in and year out. Yeah, I mean, I think that's the thing I hear so often.

It's, you know, how am I supposed to afford, you know, buying a home and those expenses and then having kids? Like, is it even realistic depending on, you know, where you live, you know, in Canada or the US? And I think a lot of people are, you know, feel again, that kind of guilt or that obligation to set aside a certain amount for retirement. Otherwise, they're not being responsible with their money. But you know, it's basically you're asking yourself, how do I do it all? And it's like, you can't do it all at the same time. It's,

it's going to change with whatever phase of life you're in. And also what your kind of lifestyle is like, if you're going to have one kid versus two, that's a very different, you know, lifestyle, you're going to have some more, you know, spendable income if you have one kid versus two because of the daycare costs and all the stuff that's involved. So I think, yeah, I really appreciated how you kind of explained a different way of thinking as opposed to just these, you know, really strict rules towards savings, because, you know, that's just it's just not realistic. And I would say the underlying philosophy of the book is that retirement is important to the years that you live in retirement are important and you want to get the most of them. But that's only one aspect of your life, one phase of your life.

You also have to think about your life when you're in your 30s and 40s. You want to look back wistfully when you're in your 70s and maybe no longer able to do everything and say, I should have done more when I was 35. But you couldn't because you were saving every penny toward retirement. Absolutely. but you couldn't because you were saving every penny toward uh toward retirement absolutely now some other things that you talk about in the book which i also appreciate and i think really explain some of the questions that i get often so you know okay um that's great i kind of understand how much i should be putting away and my rsb and my tfsa and stuff like that but uh what should i actually invest in and because obviously with your background i always appreciate you have like lots of charts and lots of um you know going through lots of different simulations to kind

of share different scenarios. One thing I think that is shifting is, you know, in lots of the books I used to read, you know, a decade ago, they would be that kind of asset allocations, they would kind of suggest for investors, especially younger investors in their 20s, 30s, 40s, you know, did have a huge percentage of bonds. And you kind of talked about, well, you know, we can look at historical figures, but then we can also take a look at what's probably going to happen in the future. There may be, you know, a good argument for not having as big of a portion of your portfolio in bonds. But it's like, honestly, when I was in my 20s, I think my portfolio was 70% stocks, 30% bonds. And now I look at that, I'm like, wow, I probably should, that probably

wasn't the right asset mix for someone who was 25. Do you want to kind of share a little bit more about how things are shifting with kind of some of the old, I think, advice about asset allocations from when you're a bit younger? So as you as you say, I looked both in the past as well as made some forecast of what's going to be happening in the future with respect to the capital markets. But even if you look at the past, I still found that somebody aged 30 ought to be investing 100% of their nest egg in stocks at that point in time. And that 100% will then kind of taper off to maybe closer to 60% by the time they actually reach retirement age. But it should be 100%. And this was, when I tested it, this even was true during periods when bonds were producing a real return, that is after inflation return of 4% a year, even 4.5%, 5% a year. These days, the real return on bonds is actually below zero.

It's negative. And it's funny that we'd actually be applying the same asset mix at a time when real returns on bonds are zero, as we used to do when real returns were 4%. So bottom line is, if this made sense historically in times when real returns were 4%, then it makes even more sense now when real returns are closer to 0%. So yeah, a 30-year-old ought to be putting 100% in stocks,

and then over time that ought to be tapering off. And one way to do that is with target date funds, but you also can just do it manually and just insert a bit more bonds in your portfolio over time. One question I often get, and I don't know if you'd be able to answer this, is in terms of like a target date fund is great because it does it for you. But let's say you did want to do it on your own, whether using a robo-advisor and then changing your asset mix or doing it self-directed. At what point do you know it's time to shift, you know, bring more bonds into my

portfolio? Is there, you know, again, a rule of thumb or is it really it depends? There, you could you can make up a rule of thumb, you can just assume that it's going to be 100% when you're 30. And you can then also if you're, if you're have, if you're reasonably able to take take on some rescue, you can also assume it should be 60% when you're 60. And then you just slowly shift from 100% to 60% over that period of time. And maybe what you do is you add on another 5% every five years between that period. That's easy. That's an easy answer to that.

Yeah, that's fair. And it's interesting, too, because I know, I think target date funds were, I think, more prevalent in the US. And I think they're going to become I foresee them, they're going to be, you know, more involved in Canada. And I think that's something that we've been lacking for a long time, especially for people who want to, you know, be more involved in their investments, maybe not use an advisor's managing their portfolio, but want to do it on their own. And that's always been been like, kind of, I think, a sticking point or a place of concern. They're like, well, I don't know how to do that on my own. But it's actually fairly simple. Another

interesting thing, because, you know, we talked a lot about, you know, how to build your portfolio and ask allocations and things like that. And you addressed a lot of questions that I also get, which is like, okay, well, but what about real estate? You know, real estate has been very hot in the news for, I mean, honestly, 10 years, because, you know, I'm from Vancouver, I live in Toronto, it's always been, you know, a topic of conversation with just the rising cost of housing. And that's a question I get a lot too. It's like, well, I want to invest for my retirement, but it seems like everyone's making some really great money in investing in real estate. And you had a really great section in your book, you know, addressing that. So, you know, what would you kind of say for someone who's thinking of maybe I should focus more on real

estate because I see, you know, my neighbors are making a killing? Well, if you look at the very long term picture, real estate may not look quite as attractive as it has over the past 10 or 20 years. And this phenomenon is largely isolated to Vancouver and Toronto. I mean, it has been a phenomenal time to be invested, but the more phenomenal it has been over the last 20 years, the less you can really expect in the future, because we are getting to the point where we are one of the most expensive markets, housing markets in the world. And at some point in time, others will also kind of perceive that maybe this is getting a little expensive. And then at that point, you're going to see future increases being less than they have been. So we shouldn't be extrapolating past increases into the future and say, well, this is always going to be the case.

It just can't be. Mathematically, it can't happen this way. So in the book, I do mention, for example, in New uh the the increases over the past 20 years have been much less than than they have in toronto and that might be more more the kind of future that we can we should be expecting than than what we've seen over the past 20 years and as i said when you do that and look at that um real estate i mean it can be kind of enticing but if you're going to become a landlord, it's going to be bringing in problems of its own in terms of cash flow, in terms of having to change tenants, in terms of having to fix a leaky toilet at 2 o'clock in the morning, those kinds of things. So it's not the real estate for the past 20 years. But I concluded, you know, having looked at, at the longer trends and looked at different parts of the world that I probably wouldn't be doing it. If I were 35 today, I probably wouldn't be investing in real

estate for it within my within my retirement portfolio. Yeah, so but then on the other side of it, you know, you do kind of discuss renting versus owning, which is obviously, you know, if you own your principal residence, very different than owning real estate that you're renting out as kind of an investment. And it seemed like overall, even though there's, you know, historical data that shows, you know, renting has been actually pretty good. Again, if you're investing the difference and there's lots of great benefits of renting. But overall, for most people, buying is still a pretty good idea for most people. Yeah, I look at that and I was a bit surprised by that, that even in more recent periods when real estate has done as well as it has, that you actually would have been better off renting than owning.

And that's because stocks have also done very well during that period of time as well. And also because of the fact that we're actually paying less, or I'd tell very recently, we've been paying less in rent than we used to pay as a percentage of the price of a home. So it actually was a pretty good deal. So with renting, if you timed everything perfectly and markets pan out in a certain way, you can hit a home run.

The trouble is you also can strike out pretty badly. Whereas if you own, you can never really strike out. You might only hit a single, but to use a baseball analogy, but you're never going to strike out. And that essentially was the conclusion that came to that. It still does make sense to own a home if you can. And obviously for young Canadians these days, that's a tremendous challenge. A big challenge, that's for sure. But yeah, like you talk about in the book and even the examples you were giving with the couple who did own their home is, you know, the one thing that I think we often kind of don't maybe pay as much attention to because it is so far into the future is there will be eventually a point where you don't have a mortgage. And so you free up, you know, thousands of dollars. Whereas if you're renting and you don't, you know, own a place, you're going to have to continue to have that line item in your budget. How will that really impact? I'm just curious, if you do decide to rent long term, how big of an impact will that be on your retirement savings number and just your retirement income plan?

It's so much easier to plan for retirement if you own versus if you rent. In my previous writings, I've shown that your retirement income target should be more like 50% of your final gross income as opposed to 70%. Once again, even in this book, I do flesh it out as to why that's the case. I show that it really has to be more closer to 50 than 70 by mapping out the expenses in excruciating detail for Brett and Megan in the book. So that's kind of what it should be. But I get to 50% if somebody owns a home, because by the time they retire, yeah, they certainly still have the property taxes that they have to worry about, housing insurance, housing maintenance, all that. They always had that, but they no longer have their mortgage payments, assuming they've done everything right and they paid off the home. And so it means that they're kind of front-loading the expense of accommodation over their lifetime into their working years. And so it makes it that much easier, I guess, to retire. Whereas with

renting, you've got the same expense both before and after retirement. So it does mean you have to save a bit more for retirement as a result. And you also talked a little bit about, because there was a scenario, the characters in the book, Brett and Megan were talking about, okay, you know, what would be, I guess, the big impact of, you know, because I see a lot of this with, you know, what would be, I guess, the big impact of, you know, because I see a lot of this with, you know, people retiring now, staying in their house that they have owned for all these years, it is paid off, as opposed to downsizing, I feel like downsizing was kind of, oh, of course, you're going to downsize in retirement. But I feel like a lot of people are choosing not to they, you know, they like the neighborhood, they're close to family, they just like being in their

house. What do you see that going to be more of a trend? People staying in their houses instead of doing what, you know, we always thought people would do is, you know, downsize their house into a condo. That actually is very, very interesting. I've seen, I have seen examples of people downsizing. Um, I belong, I belong to a golf club and I know a bunch of, a number of couples who have, who have downsized, they almost never do it for financial reasons. At least not the people I know they number of couples who have downsized. They almost never do it for financial reasons, at least not the people I know. They've been doing it more for reasons of lifestyle. They just don't want to have to cut their lawn anymore or take care of a yard and they want to be able

to travel more easily. So there have been people who've been downsizing and that's been happening, but it hasn't been happening as much as I was expecting it to happen. I thought the vast majority of baby boomers would end up downsizing in retirement and giving up their bigger homes but it hasn't been so that has come as a surprise to me. I guess it's because number one is inertia, they're comfortable in their homes. Another two is they tend to have children and grandchildren and they still want to have a house to accommodate all that's going on so that may end up becoming the the new the new norm the other thing too of course is that they've done so well on the real estate on their home that maybe

they just want to I don't know if they just want to keep it intact as opposed to selling it off but downsizing certainly is and that's another reason why I like the idea of owning a home, because it certainly is an option for people who maybe didn't save quite enough for retirement or decide they want to have maybe a more active lifestyle in retirement, more traveling and so on. They want to spend less of their income on accommodation and more uh, and more on, uh, on travel and other, other aspects of their life. Yeah. We'll see what happens, but yeah, it's, it's, it's interesting. I feel like less and less people are downsizing, which is also kind of wreaking havoc on the real estate, uh, you know,

in Toronto, Vancouver and other areas, because there's just not a lot of, uh, accommodation to, uh, buy. But, um, another thing that you, you talked about, which I think is also another thing that you're like, Oh, think is also another thing that you're like, Oh, I never really thought about that, probably because I'm not at that phase in my life. But, you know, we make the you know, these plans, you know, several decades in advance, but there's always something that could potentially happen. And you talked about the potential that, you know, let's say you plan to retire at 65, you may not, you know, have that option, you may be forced out of your job earlier, because your employer, you know, have that option, you may be forced out of your job

earlier, because your employer, you know, gives you a package, and you kind of have no option but to leave. And it's important to kind of take into consideration some of these, you know, unexpected things, you might have to retire five years earlier, like what I guess, if this could happen, and I know it can, like prime example, you know, my dad thought he was going to work at the same company until he retired. And then he was laid off because there was a big merger and he had to retrain and get a completely different job. And now he's been working contracts because he's in a completely different industry now until he was retired. So it was one of those things was like, and this kind of happened, I guess, maybe 10 years before he was

going to retire, but a big life event that it's like, oh, okay, this is changing our whole retirement plan. What do you kind of say to people who are making, you know, really are into like making a good solid plan, but it's important to make plans for when those plans don't happen? Yeah, well, if they plan to retire at 65, they'll have to save X percent of pay. If they retire at 58, they'll have to save an awful lot more. So people might look at that when they're 35 and say, well, on that basis, I'll just assume I'm going to keep on working until I'm 65. That way I can save less money. But that's not how things actually pan out, as you say.

There have been studies showing that the average age where people expect to retire, when you ask them before retirement, they expect to retire on average at 65. But in actual fact, their average age when they actually do retire is 58, seven year difference. And what's going on are two things. One is forced down sizings, or they're just laid off. The employer no longer wants them around. The other thing that's going on is health. And you can't assume that your health is going to be good that whole time. The third thing that's going on too is you just don't have the energy to be working full time after age 60, which isn't even a consideration when you're 35. You can't imagine that's going to be a problem. But believe me, by the time you get past 60, it's difficult to work from 830 to 530 on a daily basis. Oh, yeah.

I hear that from my parents all the time. They're like, I can't wait. They're both about three or four years away. And, yeah, it's interesting. They never talked about this in their 50s. But now that they're in their 60s, they're like, I am just, you know, counting the years. Just like, you know, one more year, two years. And I was going to bring up, it's like, oh, you know, like, for example, like, my dad, he's actually working in a job that he

absolutely loves. It was something that he aspired to when he was in his, you know, 20s working in the film industry. But he's like, you know what, I'm like, wouldn't you want to continue that, you know, it's contracts, you can always say, yeah, sure, I'll take this contract. Like, you don't have to say, no, I'm done working forever. And he's like, you know what, no, it's I'm tired. And the technology changes every project. It's just a lot to keep up. And again, yeah, I used to always think, oh, yeah, no, definitely. I'll never stop working.

But it's like you don't know how you're going to feel and what your desires and needs are going to be, you know, so different in 30 years time. So it's best to kind of have some be a little conservative when you are planning, you know, when will I actually retire? Well, I've spoken to many, many people on this subject, and I find almost everybody over the age of 60 still wants to work, but they want to work on their own terms. So they want to work on very flexible hours. They want to be able to play golf maybe two or three afternoons a week. They want to be able to sleep in maybe a couple of mornings. They want to, they don't want to have set deadlines.

So in other words, they want to be able to work. They just don't want to be told how much they have to work and when they have to work, which isn't always very useful, I mean, for a job. But so to have that kind of flexibility just means you're going to be making less money after 60 than you were used to. So it's about having kind of a game plan for like, if that happens, what does that mean? Does that mean that we have to downsize or change something in our plan, I guess? Yeah.

So it becomes a compromise at some point. For every extra year you work, you're going to be, and saving and putting away money for retirement, you're going to be improving your potential lifestyle in retirement for every year you do that. But also, you're also going to be cutting down the number of years in which you can enjoy that lifestyle. And it becomes especially problematic in 160s. I've always thought of, well, they talk about retirement years, one talks about them as the go-go years, the slow-go years, and the no-go years. The go-go years are really 160s. And that's when you're almost what you were when you were in your 40s and 50s.

But now you've got money and you've got some freedom. You don't have children to take care of anymore. And that's really a wonderful time. If you spend that whole time working on the assumption that you're going to really enjoy life even more when you're in your 70s. It often doesn't pan out that way. So it sounds like most of us need to plan for an earlier retirement than we expected, because we just don't know how we're gonna feel. I mean, that's something that's that I've been thinking about a lot, because I was like, Oh, yeah, no problem. I'll work until 65. I mean, I've got a unique situation that I don't work a typical nine to five for an employer

work for myself. But you know, I don't know what I want by then. Maybe I won't want to, you know, maybe I will want to just take up one or two projects when I want to, you know, starting in my mid 50s. Because like you say, once you are at that point, yeah, do you really want to work throughout your 60s when you can enjoy your 60s, you know, and just hang out with the grandkids or travel or do those things? Because once you hit 70, you may not have the energy or the desire to do that anymore. Or the health or the health or the health. Exactly. Yeah, that's another thing that I think a lot of us take for granted when you're younger in your accumulation years, you don't really think about potential health things. These happen and they're sometimes out of your control.

One of the interesting statistics I uncovered in the previous book was that, now, in the case of a male, it wouldn't be that different for females, but for a healthy 50-year-old male, they only have a chance in two of surviving until age 70 without either dying or without having a critical illness. And that by critical illness, I mean, something serious like cancer, heart disease, tumor, but there's only chance in two of being able to actually get through those 20 years. So something we might take for granted when you're 30, but you shouldn't. Yeah, absolutely. Now, I know what I do appreciate in your book is because again, a lot of people are looking for that guidance, that direction. It sounds like your kind of advice in the book is practice the rule of 30 in your accumulation years. And then when you hit 50, when you're getting close to your retirement date, that is when you want to kind of maybe look into adjusting that strategy. Look at that PERC calculator that you talked about in your previous book to kind of see where you need to shift if you need to make any changes. Is that about right?

That's very important. And this is actually one of the reasons why I didn't worry too much about tweaking rule of 30 to make it rule of 31 or rule of 29, whatever. Because if you practice this religiously up until, say, up until age 55. And at that point, you then let the calculator take over because up until then, you've been making assumptions about when you're going to retire and how much money you're going to be making and so on, and also how much you would have accumulated, like how well your investments would have done. By age 55, it'll be largely reality. You can look back and see how much you've saved, and you also have a much better idea of how many more years you're going to be working. So at that point, I would say, yes, use a calculator. I suggest my PERC, not because

I make any money off of it. It's actually offered for free at perc.lifeworks.com. And there's other calculators out there as well, I know. And I'd say, sure, use whichever one you find you're most comfortable with. But at that point, use a calculator to figure out how much more money you ought to be saving for retirement in your remaining years. Yeah. Cause yeah, really once you've hit that time, cause again, I think so many people are afraid of retiring with not enough money. And so they just, you know, get into this like, Oh, we just got to save every penny. But if you realize, you know, put in the numbers, you're like, actually, we're doing really great.

We can maybe even minimize how much we're saving. Then you have, you know, free up some more money so you can enjoy your 50s a little bit more. Because it's like, I feel like your 30s and 40s and your 20s, they're a grind. You've got expenses. You're not earning as much as you are in later years. And, you know, you're just trying to save every penny. It's a lot of expectations and a lot of things to do.

So maybe, you know, when you're in your 50s, then you can actually take a look back and be like, where are we doing? You know, how are we doing and what can we adjust? So, yeah, but one thing about the rule of 30, some people might think I'm giving young people a free pass to say, don't worry too much about saving money because you have other expenses you have to worry about. But there is the flip side of the coin. It does mean by your 50s that you're saving more than 10%. You might be saving even more than 20%. And that's fine because your disposable income would have gone up substantially by that point in time anyway. So you actually can do so without feeling the pain of doing so.

Now, it also means, though, that you may not be able to greatly amplify your lifestyle. You can't suddenly go on a cruise every three or four months. I mean, you do have to think about how much money you want to have once your income totally stops. So you do have to really. So if you apply the rule of 30 throughout, you're going to be fine. Well, that's comforting. I think for lots of people listening, especially my listeners who, honestly, I hear from so many.

It's like, I'm just worried that I'm not going to save enough, especially people, too, who maybe, and I like this in your book, it's like if you haven't started saving anything because, again, life has just been so expensive for you and you haven't been able to start saving really until your 40s and you do give that example of like that cousin, it's like it is possible. It's, you know, you just, again, have to kind of adjust the numbers. But, you know, I'm sure you hear this too. It's like, is it too late to start investing or saving for retirement? And the answer should always be absolutely not. Absolutely not. It's never too late to start saving for retirement. I do have an example in the book of the cousin who started saving very late. But I mean, I certainly wouldn't

encourage it. There are some really good and substantial reasons why somebody may not be able to save at the age of 32. But hopefully they'll be saving by the time they're 37 or 38. And that they just aren't making excuses as to why they can't save. I say, well, I always wanted to take that world cruise and I can't do that and save. So I really will do that cruise first. At some point, you do have to bite the bullet and start saving. So you have to be, as I say, when it comes to applying the rule of 30, you have to be very honest with yourself. And when you're looking at what you're going to be subtracting off that rule of 30 to figure out

how much you have left to save, you have to make sure it really is an essential expenditure. Yeah. Yeah, exactly. You can't just be like, oh, this is essentials. Like, is it really? You know, I think your examples of essentials being like the daycare mortgage or rent. Yeah, those are essentials. So you can't not do those in order to, you know, have a place to put your kids while you're at work or to have shelter. So yeah, no, I really appreciate it. Before I let you go, is there anything else, you know, any kind of message that you want to leave listeners with that they can look forward to extracting from your book? I would say the other thing would be people still want a rule of thumb when all is said and done. And rule of 30, well, it ends up being a very flexible kind of a number that varies throughout your lifetime.

But they say, well, what if I did want to save just one percentage? What would that be? Historically, it would have been more like 10% up until very recently. But as I say, real interest rates these days are so low, it's no longer 10%. I would say if I had to pick any one percentage, it would be more like 12%. And that would be over like a 30-year period. And the other way to look at it would be if you want to save 1% before 40% and one percentage after 40, then maybe you want to make it 5% before and 15% after. So that would be about it for people who really do want to have a simple rule of thumb.

And if you do all those things, I feel that people will do fine. Yeah. Yeah. also really like so you know if you do grab a copy of Frederick's book if you do grab a copy of Frederick's book you have a really great kind of summary in the back that really breaks down because it's like there's a lot of information in your book a lot of scenarios a lot of graphs it's nice once you finish the book you're like oh that's a lot of information where you have a really great section that breaks all like reminds you like remember this is what we went through and those are some great things that you can kind of go back to as you're like trying to apply this to your life to be like, wait,

what was that part? You can go back to the end of like, oh, right, this was this was what he he meant by that. So thank you so much for taking the time to be on the show. I'm so excited that you have this other book. I feel like it's a great like I mentioned, maybe read this book first and then retirement income for Life to kind of see what the second phase of your life, the kind of income part, retirement income part of your life is. And I think, yeah, like you said, you'll probably, you'll be fine. You'll probably be fine. You'll be fine. You'll be just fine. So before I let you go, actually, where can people, you know, grab a copy of this book and find you online if they want to follow you?

Well, the book, The Rule of 30 is available at chapters indigo stores i think at independent booksellers as well and also at amazon.ca perfect perfect perfect well thank you so much and also where was that calculator again because i know you know you talked about it in our last interview and people really like checking out where can they find that link again um if you if you put in the old link perk.mornoshappell.com it'll still take you to the new link which i believe is at uh at lifeworks but yeah just perk.mornoshappell.com will certainly do that yeah or just google perk which is p-e-r-c but i'll include in the show notes for this episode so people can try it out for themselves well thank you so much again for coming on the show and sharing all your wisdom. I appreciate it.

My pleasure. Thanks, Jessica. Perfect. Thanks. I'll talk to you later. And that was episode 329 with Frederick Vittisi. Make sure to find out more about him and all of his wonderful books at FrederickVittisi.com. I'm going to spell that for you. F-R-E-D-E-R-I-C-K-B-E-T-T-E-S-E.com. Of course, I'm going to link just everything really easy for you in the show notes for this episode, jessicamorehouse.com slash 329. And if you need a reminder, you can find every episode ever on my website. Just go to jessicamorehouse.com slash whatever the number of that episode is or jessicamorehouse.com slash podcast to see all of my past episodes. So I've got quite a bit to share with you, including how you can enter to win a copy of his latest book. So stick around just a

few words I want to share about this podcast episode sponsor. This episode of the more money podcast is sponsored by TD Direct Investing. June is Options Education Month, and TD Direct Investing is hosting a number of free virtual events throughout the month to educate both beginners and more advanced investors about, well, their options with trading options. Or if you want a full walkthrough of options trading for beginners, there are also a number of on-demand video lessons that will walk you through what options are, common option terms such as calls and puts, and what the difference between in-the-money and out-of-the-money options are.

To learn more and to find out what free events you'd like to check out, visit jessicamorehouse.com options. Once again, to find out what webinars, masterclasses, and on-demand video lessons are available to view for free, visit jessicamorehouse.com slash options. Okay, first things first, I'm giving away a copy of his book, The Rule of 30. And with his book, I believe now there are 13 books I'm giving away. So you can just enter to win all of them. I don't care. And then really have a bigger, you know, better chance of winning one if you, you know, enter to win because there's 13 books I'm giving away. So all you have to do to enter to win is go to jessicamorehouse.com slash contest. And you'll see all of the books I'm giving away. Enter away and I will be drawing

winners when this season wraps up, which is now looking like mid-June. So about June 15th is the date in my calendar for the last episode to air. So you've still got some time, but not too much time. You really don't have that much time. So might as well go there and enter to win. Okay, what else is new? What else is new? Not a heck of a lot.

It's just there's some things I can't wait to share with you. But I just can't right now. They're just not public yet. But in personal news, I'm slowly learning how to garden. It's a it's a lot. I don't know what I'm doing. You know, when people are like, they're just like a natural green thumb, not this gal. I have no idea what I'm doing. I'm just honestly ripping out plants. That's, that's what I'm doing right now. I need some help. That's one thing I'd never really thought about, you know, in terms of home ownership is, is taking care of your, your, you know, garden. Yeah, it's a lot of work, man. It's a lot of work. That's literally why I now I understand I used to always wonder like, why is my mom so busy every weekend, you know, from spring all throughout summer, like she's always in the garden. That's why it's just a lot of freaking

work. So that's where I'm gonna be spending most of my time besides August where I'm going to Costa Rica. I can't remember if I shared that with you already probably did. But I'm pretty freaking excited for the first vacation I've had in over two years, like two and a half years. It's time. It's time, guys. It's just I've been living in this house. Well, I haven't. But you know what I mean? I feel like I've been living in this cave for like two and a half years and I need to go. I need to go. I need to see something new. You know, need to see something new. Other things to remind you of in case you don't know, I have a full free resource library on my website, jessicamorehouse.com slash resources that has a bunch of spreadsheets that I'm currently updating,

and you will get access to the updates once they're done, and free guides and past webinars, lots of great stuff. So make sure to check that out. And also, in case you don't know, and you're Canadian, I have an investing course called Wealth Building Blueprint for Canadians. It is an online course that is focused specifically on, well, building your wealth, but through passive investing. So, you know, I talk all the time about, you know, investing and index funds and just, you know, just getting rich slowly. That's what this course is all about. And I've made a recently huge update of the course. And I think you're going to really enjoy it. So if you want to learn more, just go to the show notes, jessicamorehouse.com slash 329. Or you can go to jessicamorehouse.com slash WBB for Wealth Building Blueprint. Yeah, that is really it, I've got to say. But thank you so much for sticking around. Big shout out to my wonderful podcast editor, Matt Rideout.

And I'll be back here next Wednesday with a fresh new episode of the More Money Podcast. And that one, here's a little tease. I will have Romana King on the show to talk about her new book, House Poor No More, Nine Steps That Grow the Value of Your Home and Net Worth. If you're a recent new homeowner, or maybe you're not, but you just want some good tips. And like this literally is like the Bible. It's thick, but it's also like very specific, like anything you could possibly want to know about how to just maintain your home or increase the value of your home. It is in this book. So you're going to enjoy it. Or even if you're not a homeowner and you just like this stuff, because I mean, even before I bought my place, I loved house stuff.

You're going to enjoy this episode. So that's something to look forward to next week. Okay, thanks so much for listening. Have an amazing rest of your week and weekend. I'll see you back here next Wednesday. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.