“No pension? Not wealthy? Here’s YOUR plan!”
Those are the words from The Worried Boomer, Derek Foster’s sixth and latest book in his portfolio. Unlike the rest of Derek’s books, Canada’s Youngest Retiree, this book takes a different approach. Instead of focusing on dividend paying stocks, dividend reinvestment plans and other tools for investors in their accumulation stage of life, this book focuses on baby boomers, asking them to take a more holistic view of their financial situation if they haven’t done so.
Like other Foster books, this one is easy to read. The Worried Boomer is broken down into three main parts:
- Part I – Lights
- Part II – Camera
- Part III – Action
Unlike what some financial advisors inform clients, Foster suggests you don’t need to shoot for a “retirement number”. “Why should you measure how much money you need to retire differently than how you measure what you need to live on today?” Foster suggests what you need for retirement is “a dependable income” to live from – and I think he’s right. Instead of focusing on some portfolio value number, it’s likely worth stepping back first and looking at your financial situation; figuring out what you spend today and what future expenses you’ll have in retirement. This section sets the tone for the rest of the book.
In this section Foster introduces the reader to a series of spending and saving ideas. He asks the reader to take a critical look at current income and current expenses, to ensure you’re not spending more than you earn. This is a good process for most people to do, baby boomers aside, since Derek argues many people probably don’t know the answer. It also encourages you to save money by spending wisely since it can make a huge difference over time and Derek uses many examples to make his point.
Probably the best part of this section is Derek’s list of retirement risks. In no particular order they are:
- Running out of money
- Inflation eating away at your spending power
- Financial crisis/stock market crash
- Financial protection of family members
- Unforeseen financial calamity
Derek goes on to share how investors can equip themselves with a financial plan to mitigate these risks and his top choices all make good sense. Part II concludes with a few more chapters, a couple of them entitled “A pension plan for you, even if your employer doesn’t offer one!” and “Your basic retirement checklist.” This checklist reflects what many financial advisors preach:
- Be totally debt-free and mortgage-free
- Have a reliable income that covers basic living expenses
- Have additional income which covers FUN
- Have some cash or short term deposits in case of emergencies
- Have some stocks to protect against inflation
- Have some money left over to give away to charities or family members
In order to paint your retirement picture Derek feels it’s important to have an idea of what you want. To help you out, Derek has included a few worksheets to get those retirement wants down in black and white. The next step is to define what your expected passive pension income might be, whether it’s from defined contribution, defined pension, Canada Pension Plan (CPP), Old Age Security (OAS) or a combination of these. After looking at other investments, such as RRSPs and TFSAs, you should now have an idea of what your expected income from pensions and savings will be. Hopefully Derek says, the expenses in your retirement do not exceed your retirement income projections. “If so, you’ve got some work to do!” Luckily, Part III provides an actionable workbook for boomers who haven’t done these assessments yet.
As the title suggests, this book was written for boomers who are close to retirement age and to simplify some retirement elements that sometimes are made overly complicated by the financial industry. For boomers who are already savvy investors, who know how to manage their self-directed portfolios and have been doing so for decades, this book might not tell you anything new. For other boomers who are not sure what government benefits they may be eligible for or worse still, wondering if they can retire at all, this book is worth reading. Derek has done a good job putting some retirement principles into plain language and has included some actionable worksheets in The Worried Boomer to get you thinking clearly about the next phase of your life.
Are you a Worried Boomer about retirement?
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