Your Retirement Income Blueprint: A Six-Step Plan to Design and Build a Secure Retirement
BOOK REVIEW BY BLAIR LOWRY
Daryl Diamond is a recognized leader in the financial services industry. His practice, Diamond Retirement Planning, focuses on advising pre-retirement and retirement clients on the income structures, investment strategies, and estate conservation issues that are unique to those groups.
In the first two chapters, he talks about key concepts for an efficient blueprint. As everyone enters retirement, they have their own reasons for wanting to retire, lifestyle objectives, priorities and preferences, cash flow needs and time frame, income-producing assets and benefits to create income, family issues, and state of health.
Transitioning into retirement means considering your own adjustment period, personal time, and financial position. Diamond talks about the weight of carrying debt into retirement and quotes an RBC survey that revealed that four in ten retirees had some form of debt when they retired and nearly one in four had a mortgage.
Diamond states there are four distinct planning channels involved in comprehensive retirement planning, including a structural plan, an investment portfolio, managing health-risks, and wealth transfer.
The income continuum needs to provide for today, the future, your survivor, and your estate.
The Six-Step Plan is introduced in chapter three:
- Assessing your current life stage
- Establishing your lifestyle and time objectives
- Determining your financial goals and priorities
- Creating the income needed through layering
- Aligning your investments with your income plan
- Assessing the impact of the plan on your net worth
Under step 4, Diamond advises using the least flexible income sources as are available, the least tax-efficient income sources in lower tax brackets (including CPP, OAS, pension income, RRIFs, etc), and taking government benefits as early as you can. Although this book was published in 2011, all of the changes to CPP (2012–2016) were known and the author does refer to them.
Chapter four is called ‘Putting your money to work.’ Diamond starts with the balancing act of saving years versus retirement years. When people begin to draw income from their portfolios, their focus changes from rate of return to risk management. There are many risks that can erode the income-generating assets over time, including longevity, encroachment, taxation, inflation, health-costs, and withdrawals. Diamond introduces an income delivery process which he calls ‘The Cash Wedge,’ which is similar to the bucket system used by other financial planners.
Chapters five, six, and seven cover government, corporate, and personal sources of income.
Chapters eight and nine deal with tax considerations and planning. Diamond introduces the four Ds of effective tax planning: deduct, divide, defer, and discount. He also covers such topics as the pension income amount and credit; the age amount; and credit, pension, and income splitting.
Chapter ten looks at special tools and strategies, including four key investment considerations: certainty, probability, flexibility, and perpetuity. Taxation, inflation, and fees can all impede the effectiveness of financial tools and strategies. Diamond also covers corporate class funds and all kinds of annuities.
Critical illness and long-term care insurance are topics in chapter eleven.
The last chapter includes thoughts for making the book work for you. He wrote this book to help the reader make the best use of the three commodities that we carry with us into retirement: health, longevity, and income-producing assets and benefits.
Diamond provides a retirement income blueprint at boomersblueprint.com.
Your Retirement Income Blueprint: A Six-Step Plan to Design and Build a Secure Retirement. 2nd ed.
Toronto: John Wiley and Sons. 2014.