# Jonathan Chevreau review of Fred Vettese's new book: Retirement Income for Life



## milhouse (Nov 16, 2016)

Jonathan Chevreau has a review on the Moneysense website of Fred Vettese's new book "Retirement Income for Life" which is due out on Amazon later in February. It sounds to be a book about decumulation along the lines of Moshe Milevsky’s Pensionize Your Nest Egg and Daryl Diamond’s Retirement Income Blueprint. 
The key discussion points appear to be:

Cutting investment costs with exchange-traded funds 
Delaying receipt of Canada Pension Plan benefits to age 70
Annuitizing initially 30% of an RRSP at the onset of Retirement;
Adjusting spending “dynamically” up or down as markets surge or falter
A reverse mortgage, the last resort “nuclear option”

I don't suspect the use of ETF's instead of mutual funds to be controversial. However, I suspect the majority won't want to delay their CPP to 70 nor annutize part of their RRSP. The goal, I'm assuming, as Fred mentions in the linked Youtube video, is to help guard against the worst case scenario of running out of money. 

The adjustment of spending dynamically up or down as market surge or falter is interesting to me as a form of variable withdrawal I suppose. 

If anyone eventually picks up the book, I would appreciate any additional reviews or thoughts on it.


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## Beaver101 (Nov 14, 2011)

milhouse said:


> ...
> 
> I don't suspect the use of ETF's instead of mutual funds to be controversial. However, I suspect the majority won't want to delay their CPP to 70 nor annutize part of their RRSP. *The goal, I'm assuming, as Fred mentions in the linked Youtube video, is to help guard against the worst case scenario of running out of money. *
> 
> ...


 ... or maybe everyone of us is going to live a verry verry long time or possibly being immortal based on the latest mortality studies and all the high medical life saving gizmo? And in the meantime, where's the holygrail for curing cancer?


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## OnlyMyOpinion (Sep 1, 2013)

Sounds interesting. Hopefully Vettese's book examines the pros & cons of these key points for providing retirement income. It will be disappointing if it assumes that 'one size fits all'. Personally, I have no use for deferred CPP or an annuity.


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## AltaRed (Jun 8, 2009)

OnlyMyOpinion said:


> Sounds interesting. Hopefully Vettese's book examines the pros & cons of these key points for providing retirement income. It will be disappointing if it assumes that 'one size fits all'. Personally, I have no use for deferred CPP or an annuity.


There are a lot of good reasons to annuitize a portion of one's RRIF at age 75 or 80, especially to cover the 'tail' on longevity risk if one has a marginal portfolio. Same with deferred CPP to age 70. I imagine the book would cover that. I won't need to do that, but many might.


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## agent99 (Sep 11, 2013)

A thought passed my mind. Why would Fred write a book? Maybe to help fund *his* retirement 

Everyone's situation is different. Can't imagine any book being able to cover all or even a few situations. Maybe a well designed software program could do a better job? And allow what-if analysis. Some do exist, but most need more work.


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## My Own Advisor (Sep 24, 2012)

I thought it was a good book. Enter to win a copy. The publisher sent me one:
https://www.myownadvisor.ca/retirement-income-for-life-review-and-giveaway/


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## milhouse (Nov 16, 2016)

Beaver101 said:


> ... or maybe everyone of us is going to live a verry verry long time or possibly being immortal based on the latest mortality studies and all the high medical life saving gizmo? And in the meantime, where's the holygrail for curing cancer?


I think about a potential longevity spurt but I'm also curious if quality of life improvements will keep up to allow one to enjoy spending their savings versus potentially throwing it at medical costs. 



agent99 said:


> A thought passed my mind. Why would Fred write a book? Maybe to help fund *his* retirement
> 
> Everyone's situation is different. Can't imagine any book being able to cover all or even a few situations. Maybe a well designed software program could do a better job? And allow what-if analysis. Some do exist, but most need more work.


I agree but it's nice learning about different ideas that one might be able incorporate parts into your own plan. 



My Own Advisor said:


> I thought it was a good book. Enter to win a copy. The publisher sent me one:
> https://www.myownadvisor.ca/retirement-income-for-life-review-and-giveaway/


Thanks for linking your review which provided additional insight.


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## GreatLaker (Mar 23, 2014)

I read Fred Vettese's first book The Real Retirement that he co-authored with Bill (More-Dough) Morneau. I quite enjoyed it.

Consider deferring CPP and annuities to be long life insurance. Who buys house insurance then 20 years later says "damn... my house did not burn down so I should not have bought that home insurance". Or who buys term life insurance and at the end of the term says "damn... I really got ripped off on that life insurance because I am still alive". And nobody is gonna say "damn, I am dead so I should not have delayed CPP or bought that annuity".

I am not advocating delaying CPP or buying an annuity because everybody's circumstances are different. But they do have a place in retirement planning and some people should at least consider them.

Delaying CPP (and OAS) are not about increasing the probability of getting more money if you are Just An Ordinary Average Guy who lives an average lifespan with average investment returns and average inflation rates. It is about getting more of your income from government guaranteed, inflation indexed income sources that are not subject to the whims of high inflation or poor market returns, especially later in life when you have less ability to generate more income. That's not much of a concern for government or some union employees whose DB pension is inflation indexed and guaranteed for life and covers at least all of their non-discretionary expenses. But people that don't have a well funded indexed DB pension should give it some thought.

The consequences of running out of money because you did not die in a timely manner are rather more severe than dying early and your estate's beneficiaries getting a bit less because you chose to defer CPP & OAS and spend more of your own money in your early retirement years.


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## Nerd Investor (Nov 3, 2015)

AltaRed said:


> There are a lot of good reasons to annuitize a portion of one's RRIF at age 75 or 80, especially to cover the 'tail' on longevity risk if one has a marginal portfolio. Same with deferred CPP to age 70. I imagine the book would cover that. I won't need to do that, but many might.


Based on the review, it sounds like in the book he advocates one annuitize a portion right away in retirement (ie: 60 or 65), then another portion at a later age.


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## AltaRed (Jun 8, 2009)

Nerd Investor said:


> Based on the review, it sounds like in the book he advocates one annuitize a portion right away in retirement (ie: 60 or 65), then another portion at a later age.


Yes, I do understand that. I suspect it depends on the forward performance assumptions of one's RRIF investments and one of the insights I gather from his conclusion is.... the risk of a major correction or a bear market in the next 5 years. If that happens, protection against that downside is to hedge one's bets and annuitize some portion of one's capital now.


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## ian (Jun 18, 2016)

I have read a few of these types of books. Clearly everyone's financial situation and attitude toward risk and/or longevity is different.

I do not expect everything in the book to apply to me, be relevant to me, or be a path that I want to follow in it's entirety. What these books do is make me think about my own situation and sometimes from a slightly different perspective. That is a good thing.

What I do find is that there are generally a few good thoughts that I have been able to take away. This is the benefit for me. A fair portion of Pensionize Your Nestegg either did not apply to me or I did not want to follow. Yet I still found the book well written and there were some good take always for my own situation. This will never be a one size or a one author situation that fits all sizes. Plus there is impact of tax and forward tax planning to take into account.

I also suspect that some of the people who really need to read some of these books and/or do a little research are exactly the ones who won't.


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## Lost in Space 2 (Jun 28, 2016)

AltaRed said:


> There are a lot of good reasons to annuitize a portion of one's RRIF at age 75 or 80, especially to cover the 'tail' on longevity risk if one has a marginal portfolio. Same with deferred CPP to age 70. I imagine the book would cover that. I won't need to do that, but many might.


This is one point I never agreed with on Garth the great. To me taking CPP early moves the risk from the government to you. Delaying it means even if you draw down all your investments you still get that money every month form the goverment


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## OnlyMyOpinion (Sep 1, 2013)

Article in FP by Fred Vettese providing more discussion on decumulation strategies, retirement types and spending buckets, His priority is to have certainty of stable & predicatable income, hence the annuity tilt. Better to have a low and certain income and be miserable - but not anxious:
http://business.financialpost.com/personal-finance/mainstream-the-cleavers-super-savers-yolos-what-type-of-retiree-are-you


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## latebuyer (Nov 15, 2015)

I don't know how many people have read pensionize your nest egg. Her argument seems similar to Vettese in that if you pensionize your nest egg you won't worry about money. As someone who is single who doesn't need to leave a legacy i'm attracted to annuitizing. However i think you need something like 100,000 to generate 430 a month so you would need to have quite a lot of money to pensionize everything. 

http://www.globeinvestor.com/servle...SL&sex=M&fund_type=R&province_of_residence=ON


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## AltaRed (Jun 8, 2009)

I think that overstates it. Better to have some reliable (annuity) income even if total resulting income over the longer period than throwing caution to the wind in the extreme. I can say that is where I fit because I elected to take my work pension as a DB annuity rather than as a lump sum or LIRA to provide me with a reliable basic income. It then allowed me to almost throw caution to the wind with my investment portfolio.

Based on what I see in forums, there is anxiety by those who are relying on investment portfolios only (other than CPP/OAS), wondering how much they need. It is not until one has a number of years of decumulation that one really starts to get comfortable with where they are at.


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## latebuyer (Nov 15, 2015)

I don't understand what risk there is with annuitizing. Isn't the main risk inflation as many of these annuities aren't inflation protected? Annuities just aren't popular with canadians. Maybe with interest rates rising they'll make a comeback.


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## Eder (Feb 16, 2011)

Why wouldn't buying a GIC ladder paying monthly be a better option than an annuity? 100k right now could throw off $260/month but theoretically protected a bit from inflation. Or buy Royal Bank preferred... about the same income as an annuity but with inflation protection and reasonably safe, (maybe safer than some annuity company)


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## milhouse (Nov 16, 2016)

OnlyMyOpinion said:


> Article in FP by Fred Vettese providing more discussion on decumulation strategies, retirement types and spending buckets, His priority is to have certainty of stable & predicatable income, hence the annuity tilt. Better to have a low and certain income and be miserable - but not anxious:
> http://business.financialpost.com/personal-finance/mainstream-the-cleavers-super-savers-yolos-what-type-of-retiree-are-you


Thanks for the link. 
Fred's worrywart and anxiety comments in the latter half of the article/excerpt resonates with me, hence my interest in reading about decumulation strategies.


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## GreatLaker (Mar 23, 2014)

Eder said:


> Why wouldn't buying a GIC ladder paying monthly be a better option than an annuity? 100k right now could throw off $260/month but theoretically protected a bit from inflation. Or buy Royal Bank preferred... about the same income as an annuity but with inflation protection and reasonably safe, (maybe safer than some annuity company)


Life annuities guarantee payments for life. GIC ladders and stock investments cannot guarantee that. People whose savings are only marginally able to fund their retirement are at risk of running out of money because they fail to die in a timely manner, or their savings are eroded by low investment returns or high inflation. An annuity is a way of guaranteeing some lifetime income.

Annuities in Canada are guaranteed by Assuris in the event the annuity provider becomes insolvent:
http://www.assuris.ca/Client/Assuri...ut+Annuity!OpenDocument&audience=policyholder



> Assuris’ Protection
> 
> If your life insurance company fails, your Payout Annuity policy will be transferred to a solvent company.
> On transfer, Assuris guarantees that you will retain up to $2,000 per month or 85% of the promised Monthly Income benefit, whichever is higher.


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## AltaRed (Jun 8, 2009)

Eder said:


> Why wouldn't buying a GIC ladder paying monthly be a better option than an annuity? 100k right now could throw off $260/month but theoretically protected a bit from inflation. Or buy Royal Bank preferred... about the same income as an annuity but with inflation protection and reasonably safe, (maybe safer than some annuity company)


Agree with GL that longevity risk is the real issue. The annuity approach 'break even' may be based on an age of longevity of about 85. If you live beyond that date, then you benefit for free, at the expense of those that died well before age 85. It makes a lot of sense, especially with smaller portfolios, to backstop against outliving their portfolios. Don't y'all include CPP and OAS as being available forever as a foundation for your own retirement plan?

The alternative is to be conservative with one's withdrawal strategy to: a) last well beyond 85, and b) take into account significant downturns in capital markets. The risk of being too conservative is to limit one's spending in the early years and end up with a substantial legacy instead. There IS a place for partial annuitization.


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## none (Jan 15, 2013)

Any one read Chevreau's book "Findependence day"? I won it on an online contest showing my prowess as a financially knowledgeable person (ironically, if that is true why would I need that book?).

Anyway, the book sucked. I felt dumber after reading it. 2/10


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