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Financial planning must go on during retirement

The second edition of The New Rules Of Retirement.
The second edition of The New Rules Of Retirement.PHOTO: WILEY

The New Rules Of Retirement

By Robert Carlson

Wiley/Hardback/ 316 pages/$41.95

Available at major bookstores

WHAT'S THE BOOK ABOUT?

In this second edition of The New Rules Of Retirement, Robert Carlson says that to take advantage of retirement opportunities, we have to plan and prepare. Even if you've already retired, you should continue to review and monitor your plan.

Retirement has changed and it will change again. The old retirement model has evolved to different models, such as working past the age of 65 or a phased retirement where one "downshifts" from full-time to part-time work before calling it a day completely.

The challenge of planning for retirement is made more onerous by new critical threats to lifetime income security that past generations didn't face. They include significantly longer life expectancies, low investment returns, and more.

5 KEY TAKEAWAYS•

1. One recommendation is that retirees ensure a guaranteed stream of cashflow to meet their basic expenses.

2. It addresses how you can determine the amount you can spend safely each year in your retirement so as not to run out of money during your golden years.

The author elaborates on his "endowment formula", a spending rule that he has developed. Under the rule, spending increases over time only as the markets allow. This avoids overspending in good years and sharp spending reductions in bad years, as spending adjustments are made automatically but gradually.

Retirement has changed and it will change again. The old retirement model has evolved to different models, such as working past the age of 65 or a phased retirement where one "downshifts" from full-time to part-time work before calling it a day completely.

3. On healthcare, an interesting insight is the importance of shopping around for a long-term care insurace policy.

4. While many books focus on preparing for retirement, this book also deals with investing during retirement.

One example is investing a portion of your nest egg in dividend stocks and real estate investment trusts.

5. Estate planning cannot be neglected. The book offers tips on how to plan an estate, such as writing a will and providing for loved ones.

•Write in to lornatan@sph.com.sg if you have come across a good financial read. This will be a regular series in Invest.

A version of this article appeared in the print edition of The Sunday Times on January 15, 2017, with the headline 'Financial planning must go on during retirement'. Print Edition | Subscribe