December 18, 2019

Retirement Income For Life: Getting More Without Saving More


Frederick Vettese introduces us to Carl (65) and Hanna (62), who are ready to retire. Carl and Hanna are based on a real-life couple although their names have been disguised and their income and asset numbers have been slightly changed.

The author lists three types of spending during your decumulation (reduction of assets):

  1. Regular Spending consists of all reasonably predictable and repeatable expenses (food, utilities, home maintenance, taxes, insurance, and so on).
  2. Rainy Day Spending involves expenses that you cannot easily anticipate and cannot ignore when they arise (major medical or dental expenses, major home repairs, or an urgent request from a grown child).
  3. Bequests are those gifts provided through your will,  which you pass on to specific individuals or institutions when you die.

He also introduces the reader to four basic types of retirees.

  1. Mainstream Retiree – desire to maintain their lifestyle
  2. Cleavers (from Leave it to Beaver) – provide for adult children
  3. Super-savers – could never bring themselves to spend lavishly
  4. You only live once (YOLO) – spend extravagantly in early retirement years

The book then takes Carl and Hanna through a number of steps in planning their retirement income and decumulation strategy. These include:

  • setting your income target for year one and future years
  • rainy day spending
  • planning an inheritance
  • assessing investment risk
  • knowing what not to do
  • crafting a strategy (there are five parts to the strategy that are covered chapter by chapter)
    • enhancement 1 – reduce investment fees
    • enhancement 2 – defer/delay CPP pensions
    • enhancement 3 – use some assets to purchase an annuity
    • enhancement 4 – (most important) make some adjustments to spending habits
    • enhancement 5 – (nuclear option) consider taking out a reverse mortgage
  • fine-tuning the asset mix
  • deciding whether you saved enough
  • planning next steps

At the end of each chapter is a list of takeaways (the key points from that chapter).  Appendix A, at the back of the book, gives a summary of all of the takeaways.

The book takes the anxiety out of decumulation, which can be both complex and psychologically difficult. A smart decumulation strategy will enable you to produce a stream of income that is stable and predictable. Describing what type of retiree you are helps you to determine your spending priorities and the decumulation strategy that’s right for you. It shows how to coordinate and maximize your multiple streams of retirement income in a tax-efficient way. The access to an online calculator at the back of the book (and also at is helpful in determining your annual retirement target and how much of your savings you can safely spend each year.

Frederick Vetesse was the Chief Actuary at Morneau Shepell for twenty-six years, and thus, some parts of the book are a little heavy on charts and numbers. However, they are easily understood.

Retirement Income For Life: Getting More Without Saving More
Frederick Vettese

Milner and Associates. 2018.