Thursday, April 5, 2018

Retirement Income for Life by Fred Vettese

TITLE: Retirement Income For Life
AUTHOR NAME: Fred Vettesse
AUTHOR CREDENTIALS: Chief Actuary of Morneau Shepell and Financial Author of Numerous Books on Canada's Retirement System
GENRE: Retirement Planning


SYNOPSIS/SUMMARY: A five-step game plan for turning your life savings into income that will last as long as you do.

From Amazon's description "You spend a lifetime accumulating assets and building wealth, and most of the financial industry and the information it produces are geared to that accumulation phase. But thousands of people are now hitting retirement age every day and are entering the decumulation phase of their life - the long period when they have to draw down their life savings to create retirement income with little information to go on.

Other than their health, retirees are most worried about running out of money before they die. Even those several years away from retiring feel this anxiety; a recent study reveals that for people aged forty-five and over, retirement-related issues top the list of their financial concerns.

Retirement Income for Life presents five clear strategies for making the most of your accumulated life savings, and for turning it into predictable, sustainable retirement income that will last as long as you do."


I highly enjoyed and learned a lot from reading Fred's latest book on how to get more without saving more. More for your retirement. It all boils down to setting a retirement target and how to decumulate the retirement nest egg you've saved so long for.

Fred introduces us to the word decumulation -  this is the process of drawing down one's financial assets after retirement with the primary goal of producing a regular income, usually for the rest of one's life.

He uses this term instead of drawdown.

Another stat that was very interesting to read was that over 1,000 Canadians a day turn 65. This requires help for this age group on better ways to get more out of what money you have now.

" the most important result that comes from a smart decumulation strategy is the ability to produce a stream of income that is stable and predictable, almost as if it came from a DB plan" - pg.#17


The main focus of the book is introducing what Fred calls 'enhancements' and using them in conjunction with a five part strategy.
  1. Using ETFs to cut investment costs.
  2. Delay CPP until age 70.
  3. Think about using an annuity for a portion of your retirement income.
  4. Adjust spending plans depending on how the market is affecting your investments.
  5. Using a reverse mortgage should you need more money. AKA the 'nuclear option'. 
What I learned and will implement in our own lives as we get ready to decumulate our portfolios, is the fact I have too many individual stocks. I like Fred's suggestion of using ETFs to minimize risk while achieving the growth my wife and I will both need. 

"you would have survived the worst stock market crash in history no worse off than you would have been two or three years before the crash started, assuming you had been investing in a balanced portfolio of stocks and bonds all along." - pg.53

ETFs more than individual stocks picks will help me sleep at night and not worry about what stocks to buy when and give me the diversification I will need. I also won't need to worry about asset allocation because I will have the world covered off.

Financial Advisors

I believe you can do this on your own. Definitely stay away from mutual fund salespeople and don't buy anything the bank is selling you. The costs are too high as Fred also warns you to keep costs as low as possible.

By all means if you need one then get one who is not compensated by selling company specific products only.


I am one of the lucky ones in receipt of a DB pension and so will my wife when the time comes. The book comes in very handy for those without one. Matter of fact the chapters and mounds of information are tailor made for individuals with NO pension income.

On deferring CPP until age 70

"if you die early, you have bigger concerns than getting short-changed on your CPP pension (like not breathing). Once you die, believe me, you are not going to be worried about missing out on CPP pension payments." pg. 95


Fred recommends annuitizing 30% of your money when you're 65 and if required depending on your income target a further 20 or 30% when you turn 75.

Fred says there is no need to suggest you HAVE to wait until your 70's to buy an annuity. When you do, his recommendation is a joint survivor option. That way your survivor will continue to collect 60-70% of the monthly. Also purchase a term life policy if that percentage does not meet your spouse's needs to bridge that gap. 

"The case for annuities is quite persuasive if you focus on what happens in a worst-case investment scenario. Not everyone does their retirement planning based on a worst-case scenario, though; and we have seen that if investment returns track the median, the merits of buying an annuity in one's 60's are less obvious". pg. 106

How Much Do You Need?

Fred has tackled this question before and goes totally against conventional wisdom by stating you can get by with a savings plan that targets 50-60% of working income vice the 70% commonly recommended by the financial planning industry.

When I first heard these comforting words I could relax more knowing that as a middle income earner my wife and I should be able to easily meet that lower threshold. 70% is just too high, that's awesome!


Fred will not receive a DB pension in retirement so he plans on delaying CPP until 70 and then buying an annuity with a portion of his retirement savings.

I missed the memo and started my CPP last year at 60. I am still up in the air about purchasing an annuity as I'm 5 years older than my wife and she plans on working longer. She loves her job, something I've never had the pleasure of experiencing. 

Throughout the book Fred uses the example of a fictitious couple to highlight and compare the different strategies in action. They have accumulated 500K in RRSP savings and a scant 50K in TFSA savings.

There are examples if you are in the category with over 5 times that amount of money.

If you google over to they have provided a free retirement income calculator as an added bonus for you to use.

My Final Takeaway

I need to make some changes to the following areas of my plan;
  • sell some individual stocks and buy broad based ETFs
  • discuss with my wife about delaying her CPP
  • further discuss with my wife about an annuity with a portion of her RRSP
  • set and establish a retirement income target
  • prepare a written spending plan in retirement
If you are preparing for retirement, then this book is a must read and should be on your shelf for further reflection and putting the recommendations into action.

Free Book Giveaway

I'm paying it forward. If you would like a copy of this book just leave a comment below. Tell me why you want my copy of this book and how it could help you.

I will pick a name at random from those who have given the best response in the coming weeks. 

Book Giveaway is now over!

Other Must Reads on Retirement Planning


  1. Thanks for the detailed review Peter. I also am recently retired and do not have any DB pension. I read The Real Retirement by Bill Morneau and Fred Vettese. I'd love to win a copy of Fred's new book. Thanks again. Bruce

  2. Hi Peter,

    Your review is very clear and to the point. If all the main issues are covered here, then we might not need to read the book anymore. Just kidding :-).

    We are also a retired "young (in 50s)" couple without any DB.

    Before local libraries starting carrying the book, maybe we could share it, to pass the book along among whoever like to read, start with Bruce?


    1. Hi Freedom, I'll give it a week and see. That scenario might indeed play out as you mention. Thanks for dropping by:)

  3. Hi Peter,

    Came across your website from Garth Turner's Greater Fool. My wife and I are hoping to FIRE in the next years in our 50s. So I'm devouring any and all literature that tells me how little I can get by on. I'd love to read more about how I can decumulate and make my savings last . . .

    1. Hi Canoe,

      It's a great book IMO. Your name is entered in the random draw. Good luck my friend and thanks for dropping by and commenting.

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