My takeaway from this book: (1) start thinking and planning for one’s retirement BEFORE the retirement years, (2) best to plan as early as possible; time is an asset, (3) it’s also never too late to plan; knowing is better than not, (4) plan not only for how money is needed for the retirement years but also other factors like one’s purpose, emotional, social, security, health and shelter needs; Maslow’s Hierarchy of Needs, plans to pass on assets to survivors, (5) calculate the effect of taxes/ tax brackets and tax breaks on income stream.

Has a Canadian-focus, e.g. Tax and pension policies. Some tax and retirement schemes don’t seem to have the equivalent in Singapore. But general principles would be equally applicable to most readers.

I also shudder at the amount of taxes Canadians have to pay (40+ percent at the highest bracket; 15% considered relatively low. Ouch).

Much of the taxes seem to before social safety nets and also state pensions (e.g. Old Age Security and the Canadian Pension Plan were two schemes mentioned). But not everyone is eligible, and even then the high taxes represent a high opportunity cost for those who are disciplined enough about financial management in one’s income productive years. Made me realize our CPF scheme may be a better scheme, as it’s savings – compulsory and state-dictated but one’s asset nonetheless. Taxes, on the other hand, are immediate expenses and loss in potential investment gains for those who are willing to invest.

That it’s more that just answering “how much do you need each month upon retiring”, but also asking questions about needs relating to:
– love
– Purpose/ fulfillment
– recreation
– security
– health
– accommodation
Author calls these “time hub” factors that are not measured but subjectively defined. Applying these subjective measures will help quantify the financial requirements pre and post retirement.

Chapter 1. “… the number one financial annoyance for retirees is the tax they pay on income.”
Explains the objective of “layering” financial streams to obtain desired income levels and still keeping “net income” low to reduce taxation on income. Suggests strategies like leveraging on dividend income, tax deferments, income splitting or other financial schemes for seniors. The point (for the rest of us) is to know and apply the available financial tools, exemptions or schemes.

Section 2 – suggests consolidating assets with one advisor or institution, rather than diversified, for efficiency and less paperwork for beneficiary (have to admit overall it does go against what I’ve learned but it is food for thought).

Also talks about Regular Retirement Savings Plan, which seems similar in concept to the Supplementary Retirement Scheme in Singapore.

Chpt 2 – the structured plan: “your retirement assets cannot stop working when you do”. They must be invested to last 25 to 35 years (after retirement). Have to also endure inflation and taxes for two or three decades after retirement.

Talks about an idea called “systematic withdrawal plan” (SWP), the reverse of a regular savings plan (RSP) for unit trusts. Author suggests some criteria for funds that are to be treated as SWP, e.g funds that show growth potential like equity or balanced funds, tax-free switches. In a RSP, you buy up units, which fluctuate in price, with a regular amount of investment and benefit from dollar-cost averaging. In a SWP, you regularly sell units to get a regular income/ withdrawal stream. The author suggests the benefit is that markets tend to rise over time, so the depletion in units may be less over time also. Though there are risks like inflation (eroding the present value) and coinciding with a depressed market with depreciated price. I also think there are the associated transaction costs (like platform fees) to consider. But an idea nonetheless.

Mentions a “joint life annuity” and joint “last to die” insurance contract, where the annuity will keep paying as long as one of the two beneficiaries are alive. Maybe this would be a new product in Singapore in future years?

“Purpose of your capital” section includes advice on how to reduce financial risks in various financial instruments (btw, book has one of the clearest explanation, that I’ve come across, how bonds work). In summary, I read it as diversifying in terms of funds/ asset types (e.g. drawing on cash reserves rather than depleting mutual fund values during already depressed markets, rebalancing, start early and not trying to time the market.

Advocates the use of a written financial plan, stating objectives, risk tolerances, preferred asset mix etc.

Advices that financial planning is also done with one’s parents.

Chapter 4, on health-risk management. To consider aspects like cost of long term care (and options), power-of-attorney.

Chpt 5, on wealth transfer. Offers questions to be considered. E.g.
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