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- เผยแพร่เมื่อ 27 มิ.ย. 2024
- Today, we get into a masterclass on retirement planning with a true expert in the field whose perspectives are distinctly evidence-based, Fred Vettese. Fred is a Partner and former Actuary at Morneau Shepell and author of three retirement books including Retirement Income For Life. We hear Fred’s thoughts on what people should be spending in retirement, why there is not a retirement crisis in Canada, and how Canadians can live on far less than they have been told. Fred talks about how to prepare for a bad investment outcome, as well as the problem of underspending early on and ending up with too many assets. He is a big proponent of people deferring their CPP until after 70 and buying an annuity with a portion of their money in most cases. Our guest weighs in on annuities, talking about how to buy them, which types to buy, and why ALDAs exacerbate the problem of early underspending. We query Fred about when people should start their CPP and OAS government benefits, and then move to hear his thoughts about different bear markets, how to invest during them, and what the current massive government interventions mean for the future of taxpayers. Fred gets into the risk of getting a retirement age date wrong, why he doesn’t endorse the 4% spending rule, and how retirement planning is affected by owning versus renting a home next. He also makes a case for when reverse mortgages are a good option, why long-term care insurance makes no sense, and why interest rates are so low right now. Wrapping up, we hear Fred’s thoughts on what this all means for early retirees, people still in the workforce, and those just entering it. Tune in for Fred’s brilliant perspectives on all this and a lot more in what should be an evergreen resource for any Canadian looking for solid retirement instructions.
Key Points From This Episode:
0:00 Introducing Fred Vettese and his evidence-based work on retirement planning.
4:55 Rethinking the rule that Canadians spend 70% of their income in retirement.
12:00 Strategies for how retirees can take on less risk but still have enough money.
16:55 The benefits of annuities and why they might not be that safe anymore.
22:47 Why ALDAs exacerbate Canadians underspending at younger ages.
30:25 Whether this bear market is vanilla or not and how it affects investment decisions; The effects that massive government stimulus could have no taxpayers.
35:12 Drawbacks of saving for an over and underestimated retirement age; How people owning versus renting a home affects retirement planning; When it’s a good time to take out a reverse mortgage.
44:10 Why long-term care insurance makes no sense; poor coverage for the price.
53:49 Whether Monte Carlo simulation is a useful tool and what success rates to aim for.
58:52 Fred’s advice for people entering the workforce to live within their means.
Books From Today’s Episode:
The Real Retirement - amzn.to/2Cy3HtG
Retirement Income for Life - amzn.to/2Ns2WEP
The Essential Retirement Guide - amzn.to/31hs0q6
Links From Today’s Episode:
Fred Vettese - / frederick-vettese-190b...
The Real Retirement - amzn.to/2Cy3HtG
Retirement Income for Life - amzn.to/2Ns2WEP
The Essential Retirement Guide - amzn.to/31hs0q6
Rational Reminder on iTunes - itunes.apple.com/ca/podcast/t....
Rational Reminder Website - rationalreminder.ca/podcast/104
The Rational Reminder is presented as an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. The funds and portfolios discussed are examples only and may not be appropriate for your individual circumstances. - แนวปฏิบัติและการใช้ชีวิต
Would love to see a revisiting of these topics with Fred, now that he's released the 2nd edition of his book and that we're now entering the post-pandemic high-inflation world.
Fantastic interview with Fred Vettese. I’ve read his retirement income book and benefited from his advice re deferring CPP and other ideas but hearing him in person is VERY powerful. My biggest aha moment was his description of why interest rates are staying low being a supply and demand of savers versus borrowers. It makes so much sense. Thank you so much for this interview. I will be following you in the future
What a great interview, love it!
I am not Canadian but I still find the content super interesting & relevant in general.
Keep up the good work!
I agree. I’m not Canadian either and this was very insightful. This gentleman you have as a guest is very knowledgeable and articulates himself well.
Thanks for listening. This is our objective.
Greetings from Switzerland. Excellent talk, and great questions. Very applicable and actionable also outside Canada. I'll be checking out the new book when it comes out. This video (and series) deserves much more views/exposure.
love the podcast, keep pumping them out!
Much of this interviewer's perspective seems to be rooted in a conviction that interest rates will remain low for the foreseeable future. It would be interesting to have him come back and reflect once more on these issues in light of the dramatic interest rate increases that have occurred since.
This is great!
Great interview and lots to consider. Wondering if you guys are thinking of having a podcast to discuss what Fred shared? Few things I'm considering: a) NOT use the 4% rule. And b) using CPP after 70... thanks and stay safe!
Good podcast.
This is so good!!
Hey Ben, can you make a video talking about portfolio's rebalancing frequency and expected stock returns?
In talking about annuities, Vettessee fails to note that most annuities are not inflation linked unlike civil service pensions. This is a huge difference
Underspending and dying with a large portfolio is not a problem imo. You can leave that money to people you care for or to a charitable cause, its not wasted. A couple 100k can do alot of good, givewell estimates that you can save a life for a couple thousand dollars on average by donating to the malaria consortium atm for example. If every retiree left half of their surplus portfolio to an effective charity we could solve many of the worlds problems.
It is only a problem if one "underlived". I mean, consume less than, lets say, a certain comfort level and died with a large portfolio.
O8
,
Delaying OAS until 70 to gain an additional 36% + inflation seems to also be a good strategy even though it is lower than CPP increase at 42% for delaying it to 70. I am thinking that it would be unlikely to achieve a 36% gain in 5 years with a 50/50 balanced portfolio and that without risk. What am I missing here?
Though I suspect it is a rhetorical question, you are not missing anything! In fact, by using more of your RRSP money from 65-70 and drawing it down before you must withdraw at least 5.28% staring at age 71, you lower the risk of OAS clawbacks. Plus, as Fred points out, you are using the higher risk portion of your overall retirement plan earlier.
You missed human nature part, they want it even though it’s illogical mathematically.
What happens if the annuity company goes bankrupt, are there guarantees like there is if a bank fails with CDIC ?
There is insurance for insurance companies that go bankrupt. One of Fred’s books explain it but similar to the one for banks
20% of net income or gross? Also, he was a bit wrong on interest rates in the end of the video.
Please consider that a retirement home stay costs $6,000 per month for a single room. That cost must be factored into the calculation.
What I heard in the video to deal with retirement homes, is that it is rare for people to go to and if its necessary your home equity should be used for retirement homes, if you rent or cannot afford you will have go on a list for a government run nursing home - which are subsidized.
1:10:57, Ben's smile when Fred talks about 'hypothetical' childcare expenses incoming :).
Minimum amount of regret
about at 45:00 - he lost me. He spent the previous minute telling people to spend more, then at 45:00 he says the tha 4% withdrawal is too much. I hope I did get something because this makes no sense.
You can tell he knows very little about investing in the market
This guy is scared of the stock market.....
His point on risk is accurate. Why take risk if it isn't necessary?