If you find the idea of retirement planning so complex that you’d rather avoid thinking about it, the book Retirement Blueprint by Ed Downey may be of help.

“It is just not that difficult,” he writes of retirement planning.

“What you need more than anything is to organize what you already have going on so far for retirement, get clarity on what you are going to need for your lifestyle income, and then let that dictate course corrections you need to make now to give you the highest probability of success. That is what a retirement income and tax plan truly is,” he explains.

While the book is primarily aimed at a U.S. audience, the core concepts it discusses are universal.

He talks about the tricky risks people face when they decumulate (draw down) retirement savings as retirement income. He cites the story of Ben and Amy who were going along nicely in the early part of retirement, but then hit the economic crisis following Sept. 11, 2001.

They saw their retirement savings go from $1 million to just over $350,000 in short order. They hadn’t thought about the fact that their U.S. government pensions would not add up to the same monthly amount once the first of them died, or “that what they needed to withdraw out of their portfolio would increase, not decrease, because of inflation.” The example shows winging it, in this case, did not serve them well for their later years of retirement.

You need diversity in your investment portfolio to guard against sudden changes in the market.

He says that your portfolio should not only have “horizontal diversity” by being invested in both stocks and bonds, but “vertical diversity… among asset classes. This means having different product types, including securities products, bank products, and insurance products — with various levels of growth potential, liquidity, and protection — all in accordance with your unique situation, goals and needs.”

Downey expands on the point that the “accumulation” phase of savings differs greatly from the retirement income phase. “When we get (there), what we want our money to do changes 180 degrees. It’s not about having the highest income in the land. It’s about having just enough income to pay for the lifestyle that we desire.” You are, he writes, becoming “very goal-orientated” with your money, aiming for “a set income number that you are trying to produce every month.”

It’s very important, he writes, to have an idea of what you want to do in retirement. “I believe the most important thing is not even financial: I believe it is knowing (or discovering) what you are passionate about doing besides work, and then finding out how you are going to implement that in retirement.”

In addition to having to deal with inflation here in 2022, Downey says longevity brings the risk that you’ll need to pay for long term care.

“No one wants to admit they will likely need it, but estimates indicate almost 70 per cent of us will. Aging is a significant piece of retirement income planning because you’ll want to figure out how to set aside money for your care, either at home or away from it.”

In a chapter on annuities, Downey makes the point that annuities are essentially income insurance — a guarantee that you will get “consistent and reliable income payments” for life in exchange for turning over some of your savings to the annuity provider.

He notes that the great thing about annuities is that your payment continues for life, and you don’t have to worry about investing assets to provide the money. That income will supplement any income you get from government retirement benefits, he adds.

Near the end of the book, Downey provides a gentle warning to any do-it-yourself retirement planners out there. While the concepts behind retirement planning may not be complicated, “they are numerous… they are constantly changing. Laws change constantly. I have been doing this for 30 years and still consider myself a student of the financial industry.”

What we like about this book is that it makes the point, very clearly, that retirement savings isn’t the same as wealth management. In the latter, your goal may be to maximize returns and grow your savings. But when you are living off retirement savings, it’s more about protecting your assets, managing investment risks, and figuring out how much to take out today to ensure there’s still a similar amount available each year in the future.

This is a well-thought-out book that’s a worthy candidate for your retirement bookshelf.

The “accumulation” phase of retirement savings is what we all ought to be going through prior to the retirement income phase, when savings drives income. If you don’t have a retirement savings program at work, and don’t want to bone up on how to invest, take a look at the Saskatchewan Pension Plan (SPP). SPP has been helping people build and grow their retirement savings since 1986. Make them part of your future today!

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