5 Ways Retirees Can Sustain a Rich Retirement

Key Takeaways

• Christine Benz’s new book, How to Retire, is for people at all different stages. It might not be appropriate for your 25-year-old, but people who are within 10 or 15 years of retirement and those in retirement will have a lot to think about.
• One of the key takeaways for those already retired is to check up on how much you’re taking out of your portfolio and then potentially adjusting it. Ideally, you would be revisiting that withdrawal rate each year and making adjustments.
• The book also discusses retirement portfolio construction in-depth. Bill Bernstein tackled the topic of asset allocation during retirement and leading up to retirement, and he had a focus on inflation and preserving purchasing power. J.L. Collins talks about simplifying a portfolio.
• Mark Miller tackled housing in retirement. He talked about retirement as a series of phases, how you’d want to be preemptive and get ahead of some of the decision-making that might need to accompany your aging self.
• One of the most touching chapters of the book involves Benz’s conversation with Cameron Huddleston about sharing financial information with your adult children or other loved ones and creating plans for after you are gone.
• The closing chapter of the book is about making sure you don’t have regrets at the end and making sure that you have purpose throughout your life. Jordan Grumet, who is a hospice doctor, shares that people regret things they didn’t try.

Susan Dziubinski: Hi, I’m Susan Dziubinski for Morningstar. Christine Benz’s new book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement, includes a lot of food for thought about how to find success—both financially and otherwise—in retirement. She’s here today to discuss key takeaways from the book for people who are already in retirement.

Christine, thanks for being here today.

Benz: Hi, Susan. Great to see you.

Dziubinski: And congratulations on the book.

Benz: Thank you.

Who Is Christine Benz’s New Book, ‘How to Retire,’ For?

Dziubinski: So before we get started, let’s talk a little bit about your intended audience for the book. I can see maybe that people who have already started, who are in retirement might think, well, this book isn’t necessarily for me. Is that fair?

Benz: No. In fact, it’s funny, I have a couple retired friends who made exactly that point like, “well, you’re too late. I’m already here.” And the point is there’s a lot in the book, I think, for people at all different stages. You could be 10 years from retirement or you could be already retired, well into retirement. I think there is good food for thought for people at all of those life stages. It might not be appropriate for your 25-year-old, but I think for people who are within 10 or 15 years of retirement and those in retirement, I think there’s plenty to think about.

Retirement Spending and Revisiting Your Withdrawal Rate

Dziubinski: All right, well, let’s talk about some of the things they can think about. Some of the key takeaways for those retired already, one is to check up on how much you’re taking out of your portfolio and then potentially adjusting it. So why is this something that people should continue to be doing, this ongoing re-evaluation, I guess, during their retirement?

Benz: In the book, I tapped several people who have worked on research about how to spend from a portfolio and safe spending rates. And our team at Morningstar, of course, has done work on that. And each of them made the point that if you are able to tolerate some variability in your spending, that that is a beneficial thing to do, to potentially spend less when your portfolio is down. In exchange, you can often spend more when your portfolio is up. So staying flexible is really the name of the game. And so ideally, you would be revisiting that withdrawal rate each year and making adjustments, making course corrections. The market has been really good for many retirees. It may mean a raise versus what they were taking initially when they began pulling from their portfolios. So I just think it’s a good practice. But of course, the ability to tolerate flexibility in spending does depend on your budget. So you’d want to be looking at that because certainly people with more discretionary spending have more flexibility to make those adjustments.

Tips for Retirement Portfolio Planning, Asset Allocation, and Simplifying Your Portfolio

Dziubinski: Now, the book also discusses retirement portfolio construction in-depth. What are some key takeaways here for folks who are already in retirement?

Benz: Yeah, several discussions about retirement portfolio construction. Bill Bernstein tackled the topic of asset allocation during retirement and leading up to retirement. And I think one thing that will jump out at people who read that discussion is just how concerned Bill is about inflation and preserving purchasing power. So there are a lot of categories that he doesn’t love in part because they lack inflation protection. So a basic annuity product, for example, would be something that Bill would be pretty worried about because you can’t buy a CPI-linked annuity today. So that’s a recurrent theme in the discussion for Bill. He’s a big believer in using TIPS, Treasury Inflation-Protected Securities, as kind of a bulwark against your basic living expenses. If you can build that TIPS ladder, you should consider doing that.

J.L. Collins talks about simplifying a portfolio, which I really loved as a message because I do believe that, as we age, it really is a beneficial thing to think about reducing the number of moving parts in our portfolios. He is an ultra-minimalist. He talks about using just the total market index funds, maybe a little bit of cash around the margins. But I like that it’s a call to try to reduce the number of moving parts in your portfolio. And I know I’m saying this to Morningstar.com viewers, many of whom are real investment junkies. But I think if you can try to skinny down your number of holdings, that’s a beneficial thing to do, especially if you’re already retired.

Key Lessons for Retirees Thinking About Housing in Retirement

Dziubinski: Got it. Now, one chapter that I found especially fresh in the book was this discussion that you had about housing in retirement. What are some of the key lessons retirees should bear in mind as they think through where they’ll live over the course of their retirement?

Benz: Mark Miller tackled that topic. And of course, he’s written such thoughtful columns for us on Morningstar.com. But he talked about retirement as a series of phases, how you’d want to be preemptive, don’t necessarily think about your 65-year-old self and assuming that you’ll be in the same body in 30 years. You won’t be. So getting ahead of some of the decision-making that might need to accompany your aging self was Mark’s point. And another thing that I really liked in the interview with Mark is that sometimes people are too literal about this idea of aging in place. That they think, “well, it has to be that same home where I’ve lived for the past 20 or 30 years, where I raised my kids,” and you might have a lot of memories in that home. But Mark’s point is what you really are probably clinging to—or that’s probably too negative—but what you’re saying is that you want to stay in your community. You want to stay near your friends, near your family if they’re there, near the healthcare providers that you really like—that that’s what aging in place is really about. It’s not necessarily the home. It’s more the broader community that surrounds you. And so I just thought Mark had some super-practical takeaways for people thinking about where they’ll live in retirement.

Creating a Financial Plan With Loved Ones for After You’re Gone

Dziubinski: Now, one of the most touching chapters of the book involves your conversation about sharing financial information with your adult children or other loved ones. What are some takeaways for retirees on that front?

Benz: Right. This is a discussion with Cameron Huddleston, who went through loss of her dad fairly early in her life and then her mom experiencing cognitive decline while her mom was quite young. And so Cameron was left to kind of pick up the pieces in both of these situations. Her parents were divorced, and she had to do this paper chase basically to help figure out what their financial assets were. Her dad died without any sort of estate plan or will. So that was a big takeaway. Just make sure you’re organized. Make sure you have an estate plan. Here are the basics of an estate plan. But then in terms of communicating with your loved ones, if you have children, communicating with them. Cameron makes the point that they’re going to find out. Right? Why have secrets? This will all come to light at some point. If you have things you don’t want them to know for whatever reason, well, they’re going to find out. So why not make it as clear as possible? Why not involve them in your thinking on how you want your financial affairs and other affairs handled for you? So I thought it was a very practical, helpful discussion, very much influenced by her own personal experience.

Having Fewer Regrets and Living With Purpose

Dziubinski: And then the closing chapter of the book is really quite beautiful. It’s about making sure you don’t have regrets at the end and making sure that you have purpose throughout your life. Talk a little bit about this chapter in this conversation.

Benz: Yeah, this was with Jordan Grumet, who is a hospice doctor. And he works with people at the very last stages of their lives, of course, and has had a lot of these conversations with people about what they regret. And a lot of it is about relationships that became fragmented. But one key thrust in his work with people at this life stage is that people regret things that they didn’t try. So that’s Jordan’s point: That it’s not that you tried and failed to summit Mount Everest or something like that; it’s that you never tried to do that. And of course, it doesn’t have to be something as grandiose as that. So his point is to try. And then he also makes this great point about purpose, that it’s super important for all of us to have purpose throughout our lives. And we might get some of that from work. It might not be from work, but not to be paralyzed by purpose, that things like being a great partner to your spouse or a great parent or really loving baseball or whatever it is, those are all perfectly valid purposes as well. I loved that message that pursuing those things that give you joy that you can do every day is just as important as the really big P purpose things. I thought that was a beautiful way to wrap up the book.

Dziubinski: Christine, the book is terrific. There’s plenty in here for those already retired. So I hope they pick it up. And there’s plenty in here for preretirees, too. It’s a great read, very practical. Appreciate the book. Appreciate your time.

Benz: Thank you so much, Susan.

Dziubinski: I’m Susan Dziubinski with Morningstar. Thanks for tuning in.

Watch the How to Retire podcast with Christine Benz.