Book Synopsis and Takeaways – The Procrastinator’s Guide to Retirement: How YOU can retire in 10 years or less – By David Trahair, CPA, CA
The reasons for purchasing this book are lost to me it was so long ago. I will have to admit to having felt considerable guilt every time I saw it sitting on my bookshelf unread after such a long period of time. And, every time I pulled it out and fanned through it, I was reminded that it would probably be a very good book to read and write about.
To put it more plainly, I had procrastinated in the reading of The Procrastinator’s Guide. It was time to get on with it! This will not come as a great surprise to the Love-goddess who is decidedly NOT a procrastinator, but knows one when she sees me … er, sees one
The fact that it was a small enough size that it wasn’t going to add a lot of weight to my luggage probably contributed to my decision to bring in with me on 2019’s winter getaway. AND, putting it off to this point allowed me to take a snappy photo of the cover from my terrace with the Mediterranean in the background; an oh so classic retirement picture. The overwhelming feelings of guilt also figured into my decision to take it, of course.
In all fairness to my procrastinating self, looking back, I think one of the reasons it sat on the shelf for so long is that I thought I was way past what it might have to offer. I was wrong. There is plenty of useful information in this book for anyone who, like me, has been retired for several years.
Synopsis and Some of My Takes:
When thinking about how to approach the overall summary of the information contained in this book, none of the styles I conjured up seemed to do justice to the amount of content David Trahair has covered. I could see no way to distill it down to a number of overarching themes. In the end, I decided to simply list all the chapters and their general content exactly as he and his editors had decided on – with some thoughts or experiences of my own thrown in where I felt they would be relevant or necessary. The result is a longish read, but you should have a clear understanding of the information covered in this publication when done.
For those of you who like real life examples, Trahair uses an interesting approach. He presents a hypothetical ten-year countdown to retirement using the financial affairs of a fictitious couple, Mike and Nancy Clark, as a framework for his discussion.
David Trahair prefixes The Procrastinator’s Guide by acknowledging and thanking Cairine Wilson, Vice-President of Corporate Citizenship for inspiring him to write this book and her vision to improve financial literacy throughout Canada. A wonderful sentiment. Improving one’s financial literacy is something all Canadians should be working on constantly.
PART ONE
Ten Years or Less to Retirement
Chapter 1
The Key: Tracking Your Current Spending
Great to see Trahair starting off the book by addressing what I think is one of the most fundamental and easy to achieve first steps in financial planning, i.e. tracking your spending. It really doesn’t matter what phase of life you are in, everyone should be doing it. Understanding exactly where the money is going is extremely important and enlightening. As he points out, it will provide a better understanding of how much you will need to save for retirement if you want to maintain the same lifestyle.
I also appreciate the fact that he expounds on the importance of not having meaningless, catchall categories like “Cash Withdrawals” and “Miscellaneous” when doing your tracking. He recommends using a credit card for making all of your purchases, rather than using cash. The Love-goddess and I have been doing this effectively for some time now. Credit card statements help remind you where the money was spent each month. The caveat being, as he says, only if you can handle it. Paying off your credit card bills every month is absolutely critical.
Trahair offers up a tracking strategy and tool in Appendix 1, which might be helpful for those of you who are comfortable with online banking, and have some competency working with spreadsheets.
Chapter 2
Your Golden Opportunity: When Expenses Decline
In his “couple” scenario, Trahair assumes that their annual expenses will decline as they approach retirement; children are no longer financially dependent, car loans are paid off, etc. This may or may not be realistic for everyone. He then talks about what they should be doing with the extra money.
Chapter 3
RRSP versus Paying Down the Mortgage
Glad to see that he downplayed the age-old axiom of “contribute to your RRSP, and then use the tax return to pay down your mortgage”. He clearly understands that it is not always that simple or feasible. He offers a link to a downloadable “RRSP vs Pay Down Debt” calculator that can be used to address the specifics of individual situations. It is clear that he thinks carrying a mortgage in retirement is NOT a good idea.
Chapter 4
The Procrastinator’s Number Cruncher
This chapter reviews how to use his downloadable worksheet to help you answer the RRSP/Mortgage question posed in the previous chapter. He talks about it having other uses as well throughout the book. I have not tried it.
Chapter 5
Your Pre-Retirement Investment Strategy
This chapter focuses on what to do with your RRSP funds, but it offers advice that is applicable to non-registered investing as well. He examines both using an advisor to assist with your financial planning, and doing it yourself.
PART TWO
The Retirement Years
Chapter 6
How Much Will You Spend During Retirement?
Here he reinforces the importance of getting a handle on spending before you retire. He recommends you base your estimations on current expenditures, rather than relying on percentages of income you may have heard quoted as “rules”. Sound advice.
Chapter 7
Maximizing Your Canada Pension Plan
I found this chapter to primarily be about CPP generalities and how it is calculated, rather than on how to maximize it. Other common, but important, aspects of the CPP are discussed.
Chapter 8
Old Age Security: The New Rules
This chapter reminds us that after 2023 the age of eligibility for the OAS and GIS “will gradually increase from 65 to 67…”.
Chapter 9
Your Retirement Investing Strategy
Offers up the suggestion that you alter your investing style once you retire. Sounds like he is still a proponent of the old investing adage, “you should not hold a higher percentage of stocks in your portfolio than 100 minus your age”. e.g. if you are 73, then no more than 27% of your investments should be in the stock market.
Chapter 10
Registered Retirement Income Fund versus Annuity
Contains some interesting thoughts on converting your RRSP to a RIF, and about annuities. He also addresses using a mix of both.
Chapter 11
Your Retirement Age
Trahair promotes working a little longer than you had planned to help build up savings.
Chapter 12
How Long Will You Live?
Finally, the answer! 🙂
Chapter 13
Old Age Healthcare Planning
This chapter reviews the various provincial healthcare plans, housing choices for seniors, the cost of care, and available tax credits.
PART THREE
Special Situations
Chapter 14
Attacking Debt
The title pretty much says it all. If you are in debt GET IT PAID OFF. A number of approaches on how to accomplish that are examined.
Chapter 15
Your Home as a Source of Funds
I’ll have to admit that this is an idea that makes me squeamish. I can’t help but think that down the road this would all end with me pushing a shopping cart around town with all of my remaining meagre possessions in it. That notwithstanding, it may be a necessary option for many folks. We’re planning on hanging onto our home until we go to “the home”.
Trahair identifies five ways in which you can free some or all of the money tied up in your home. I was very happy to see him declare that retirees should “regard a reverse mortgage as a last resort.” This has always seemed like a profoundly bad idea to me. Seeing ads for the concept get so much rotation on television screams out to me “this can’t be good for you.”
That said, I guess the Love-goddess and I did do what he identifies as one of the five courses of action. We downsized from the big suburban home to a downtown, urban townhouse. But, for us, it was more of a lifestyle choice than a financial one. We wanted to live right in the heart of our city so we could walk to everything — having become tired of having to jump in a car to pick up a bag of milk. And, the money we put into our jeans is constantly being poured back into the new house. Our long-term contractor is thrilled about this.
Chapter 16
Car Strategy: Lease or Buy?
Trahair is obviously a leaser. Most of the discussion is about leasing, and basically his message is that “leasing is not ‘bad’, it’s just more complicated than buying…”. He provides a link to another downloadable spreadsheet that you can use to compare the costs of buying and leasing for a car you are thinking about acquiring. I’m going to try it out. And I may even report back to you on how it works out…if I don’t procrastinate too long before doing so, of course.
I am going to try out his tool because this is a topic that is front of mind for me as I write this. As soon as we get home from this trip, we are planning on selling both of our cars and picking up a new, smaller one. Part of this is because of the single car, small garage we have at the new townhouse.
The other reason we want to get a new car is to have a vehicle that incorporates all of the new safety and autonomous driving features. The working plan at this point is to flip cars every two or three years to keep pace with the ever-improving technologies. Driving is not going to get any easier as we age.
Chapter 17
Planning for Elderly parents and Inheritance
A short chapter, but some useful ideas. I like his suggestion about having ones’ parents … and ones’ self I assume … document their important financial information. Again, he offers a tool you can download and use.
Chapter 18
Your Company Pension Plan
This chapter covers the basics of defined benefit and defined contribution plans.
Chapter 19
Your Credit Card Strategy
This chapter is primarily about credit card selection and “points” programs rather than responsible credit card use. He even identifies specific cards that are preferred by Robb Engen, who blogs at www.boomerandecho.com. I personally find this card “promotion” a little worrisome. And, this information is probably out of date at this popint.
Yet another tool is offered up for your use. A “credit-card-selector-tool” courtesy of moneysense.ca.
Chapter 20
The Financial Implications of Separation and Divorce
This chapter offers some practical advice on working through separation and divorce. That said, the most important information this chapter has to offer is the section entitled, “The Devastating Financial Impact”. Retirement is absolutely the wrong time in life to split up.
Appendix 1: How to Track Your Spending
Appendix 1 provides a useful way to begin tracking your spending, if you haven’t started yet , and are looking for a system to use. As mentioned, you do need to have the technical skills to do what he directs you to do.
Appendix 2: Estate Planning Record Keeper
This looks like a worthy strategy and tool. I am planning on giving it a go.
More Takes and My Takeaways:
Most of my specific takes on the information presented in this book were detailed as I summarized the many chapters. My broader take is rooted in something Trahair said.
He says:
“If you and your spouse are approaching retirement and have maximized your RRSPs, contributed the limit to your Tax-Free Savings Accounts, have no credit card or other consumer debt, have paid off your mortgage, and perhaps even started saving outside your RRSP and TFSA, you are in great shape financially!
If not, this book has been created for you, especially if you hope to retire in ten years or less and have the following concerns…”
I know from personal experience that adherence to the first paragraph will indeed put you in great financial shape for retirement. And, I am sure that if we had not achieved all of those things, we would have been searching for answers, and this book would have been a credible resource in our efforts to find them.
My personal take-aways include things like, how to compare car leasing and buying, the importance of getting your essential financial information recorded for someone else’s use after you are gone, and the sense of reassurance that we are doing many things right.
My other big picture take-away from this book is not to discount resources because you think you might be beyond them. I was reminded of a simple important fact I learned at the very first seminar I attended while working in the corporate sector. If you walk away from a new learning situation with even just one new important piece of information or learning, it has been worthwhile. I walk away from reading this book with several new pieces of important learning, so I am very pleased that I finally got around to reading it.
Opinion:
Overall, I would say that this would be a great book for anyone approaching retirement, no matter how far off it may be. Looking at a very wide range of relevant topics, it is a great point of departure with which to begin your retirement learning and planning. Given that I found some information that is new and useful to me many years into retirement, I would not discount its use by folks who are already well into their retirements as well.
It is certainly good value for the money. If you don’t mind reading electronic versions of books, eBook copies and be purchased for $6.99 at the CPA site ( https://www.cpacanada.ca/en/the-cpa-profession/financial-literacy/financial-literacy-resources/financial-literacy-resources-and-publications ).
If you find that you enjoy reading this publication you might want to pick up copies of the CPA’s other publications in their Financial Literacy series; “A Canadian Guide to Money-Smart Living”, “Parent’s Guide to Raising Money-Smart Kids”, and “Protecting You and Your Money: A guide to preventing identity theft and fraud”.
Reviews:
For those of you who enjoy reading book reviews, there are a couple available online. They will probably provide a more professional, critical analysis than what I am providing.
http://findependencehub.com/review-procrastinators-guide-retirement/
