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