When you re­tire it’s nec­es­sary to shift in­vest­ments


You worked hard to save for re­tire­ment. Now you’re re­tired and you get a big shock.

You don’t have the right in­vest­ments. And you don’t have the right ad­viser, ei­ther.

The in­vest­ing strat­egy you used dur­ing your work­ing years is not ap­pro­pri­ate for you at this stage of life. You need to move from the ac­cu­mu­la­tion phase to the in­come phase.

Robert Find­lay, a re­tiree, is frus­trated to see so much in­vest­ment ad­vice aimed at younger peo­ple. He wants to see more for baby boomers.

“An in­creas­ing num­ber of peo­ple need some ad­vice specif­i­cally for se­niors,” he says.

“They may have a sig­nif­i­cant amount of as­sets be­cause of in­her­i­tances, down­siz­ing and pen­sions — and they have con­cerns about how to han­dle it.

“Few se­niors are go­ing to live long enough to ben­e­fit from growth stocks. They are prob­a­bly bet­ter to go for in­come.”

Find­lay read a book, Your Re­tire­ment In­come Blue­print (Wi­ley, $26.95) by Win­nipeg fi­nan­cial ad­viser Daryl Di­a­mond, which he found help­ful.

Di­a­mond starts by say­ing that in­vest­ing is not like a game of golf.

It’s com­mon to say that the years when you build as­sets are “the front nine” and the years when you draw in­come from those as­sets are “the back nine.” But the com­par­i­son is only par­tially ac­cu­rate, in his view.

Ac­cu­mu­lat­ing as­sets is sim­i­lar to play­ing the front nine holes in a golf game.

Then, you go into the club­house for lunch.

When you leave the club­house and start turn­ing your as­sets into an in­come, the anal­ogy needs to change.

“Imag­ine that in­stead of step­ping onto the 10th tee, you are step­ping onto a freshly flooded ice rink,” Di­a­mond says.

“The play­ing field changes be­cause there are such sub­stan­tial dif­fer­ences be­tween the plan­ning ap­proaches, in­vest­ment strate­gies, risk man­age­ment is­sues and sheer dy­nam­ics of those two phases in some­one’s life.”

Many well-known in­vest­ing rules for the ac­cu­mu­la­tion years don’t ap­ply in the same way — or ap­ply at all — in the in­come years. Some ap­proaches are ac­tu­ally harm­ful to cre­at­ing an ef­fi­cient in­come stream.

Di­a­mond uses a de­tailed process to help peo­ple move from a sin­gle source of in­come (em­ploy­ment) to six or seven sources of cash flow.

You can down­load the book’s first 25 pages at his Boomers Blue­print web­site. Find­lay said (and I agreed) that it wasn’t an easy read for av­er­age in­vestors.

“I’ll have to go through it again to re­ally un­der­stand what he is say­ing, but it was worth the price for what I have learned so far,” he said.

“I was pleased to read a cou­ple of his rec­om­men­da­tions that I have al­ready fol­lowed. As a do-it-your­selfer, it is al­ways good to get some as­sur­ance that I am do­ing some­thing right.”

The book skimped on specifics, Find­lay added.

He’d have liked to see a few model port­fo­lios, with stocks and bonds suit­able for peo­ple of a cer­tain age.

Di­a­mond says he’s more in­ter­ested in in­come plan­ning than stock pick­ing.

He’s seen so-called plans with two or three pages of cur­sory pro­jec­tions and 15 pages of prod­uct rec­om­men­da­tions.

“That is not de­tailed plan­ning. That is push­ing prod­ucts and it is of­fered far too of­ten to con­sumers — and may ex­plain why there is so much con­fu­sion in the mar­ket­place.

“The re­tire­ment in­come area of fi­nan­cial plan­ning is not a pro­duct­driven mar­ket.

“Prod­ucts do as­sist in pro­vid­ing so­lu­tions but, done prop­erly, the em­pha­sis is first on plan­ning and process.” Here’s my pre­dic­tion: Look for more books, web­sites and apps aimed at boomers turn­ing 65.

There’s a grow­ing au­di­ence for this ma­te­rial.

But fi­nan­cial in­sti­tu­tions won’t jump on the band­wagon un­less they see a profit po­ten­tial.

It’s more lu­cra­tive to sell prod­ucts that pay com­mis­sions.

So, you may have to go it alone when plan­ning your re­tire­ment in­come.

Di­a­mond’s book pro­vides a great step­ping stone. Ellen Roseman writes about per­sonal fi­nance and con­sumer is­sues. You can reach her at erose­man@thes­tar.ca or www.el­len­rose­man.com

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