July 2, 2025 • 15 mins
Thinking about retirement? Do you know how you will spend your time? And perhaps most significantly, how much retirement can you afford?
Christine Benz is Director of Personal Finance & Retirement Planning at Morningstar; her new book is “How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement.” She joins Barry Ritholtz to discuss what you need to know about planning for retirement.
Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Out of the tree of Life, I just pick me plumb.
You came along and everything started into hum. Still it's
a real good bet. The best is yet to come.
Speaker 3 (00:31):
Have you thought about retiring? Do you know what you'll do,
how you'll spend your time and income? I'm Barry Ridhelts
and on today's edition of At the Money, we're going
to discuss your retirement. To help unpack all of this
and what it means to you, let's bring in Christine Bens.
(00:52):
She is the director of Personal Finance and retirement Planning
at morning Star. She's published numerous books on the subjet,
most recently How to Retire Twenty Lessons for a Happy, successful,
and Wealthy Retirement. So let's start with the basics, Christine.
(01:12):
In your book you talk about you need to define
your purpose in retirement.
Speaker 1 (01:18):
Explain purpose is super important to us throughout our lives,
very and that's true as we age. The problem is
is that a lot of people do receive some sense
of purpose from their jobs, and so when they step
away from work, they're stepping away from part of themselves.
(01:39):
So the idea is, as you approach retirement, make sure
that you're being super thoughtful about how you will replace
that sense of purpose that you derived from your work,
that you should kind of pre populate your activities to
find some that do provide you a sense of purpose.
Jordan Grummitt, who is the last chapter of the book,
(02:01):
has a whole book about purpose called The Purpose Code,
and his point is that there's a lot of purpose
anxiety out there that you say you find a purpose
and people think really big. They think, oh, I need
to write a book or start a foundation, or climb
everest or something like that. And maybe you do things
like that. But his point, I think is really comforting,
(02:23):
which is that small pee purpose. He calls it like
bird watching or gardening, or you know, cooking meals for
your family, smaller things that bring you joy. Those are
just fine too well. So while you're trying to cook
up what your big pee purpose might be, just find
those things that bring you joy, that give you that
(02:45):
animating force for your days.
Speaker 3 (02:46):
So daily goals and activities up film and not just
kill them. Onjaro. So let's talk a little bit about planning.
How important is it when should people start playing? Is
this something you do five months before you retire or
is this something you do fifteen years before you retire.
Speaker 1 (03:07):
I've really concluded that this idea of retirement has a
hard stop where we're not really thinking about it except
for like the months leading up to retirement. It's a
terrible model. And I know why it happens that, you know,
the way we work in this society is so intense
that people show up in retirement totally depleted and they
haven't really been able to envision anything besides like Netflix
(03:31):
or traveling or whatever. And those things are all great,
but you should ideally start I think age fifty is
kind of a good marker, start thinking about this vision
for your later years. Perhaps you will continue working a
little bit longer. And I love the idea of people
at that life stage being super thoughtful and trying to
(03:53):
direct the work that they do, taking an inventory of
the things that you still enjoy, taking inventory of the
things you don't enjoy as much. I have a stop
doing list on my desk of things that I don't
enjoy as much that I have to remind myself to
stop saying yes to. But I think that that is
a great way to segue very gradually into retirement. So
(04:16):
that the complexion of your work is that you're doing
more things that you enjoy and you're shedding some of
those things you don't like as much.
Speaker 3 (04:23):
So let's talk about income while you're in retirement. What
are some of the more common forms of retirement income.
We automatically think of stock diven ends or bond yields.
How do most people generate the sort of income they
need to enjoy a retirement.
Speaker 1 (04:42):
I think it starts with non portfolio sources of income.
So being thoughtful about how you are maximizing social security potentially,
you know, I've warmed up to the idea of using
simple income annuities to augment what someone might get from
Social Security. So the idea is that you you're trying
to address your basic living expenses with those non portfolio
(05:05):
sources of income, then it just gives you a ton
more flexibility with your investment portfolio, and it puts you
in a better position to put up with what will
be the inevitable ups and downs in the market. You
mentioned bond income and dividend income ary and certainly retirees
love the idea of subsisting on organically generated income. I
(05:30):
think that that can be actually a huge trap. From
a portfolio construction standpoint. I can't tell you how many
weird looking portfolios I've seen that have been assembled in
the name of kicking off whatever amount of income someone wants.
I'm a big believer in assembling a total return portfolio
and then maybe annually taking a step back and saying,
(05:54):
what is the best source of funds for me in
this year. For the past few years, it has been
trimming large growth stocks, I think for a lot of retirees.
But the idea is that it's a dynamic approach. It's
not a one and done I'm going to source my
income through the portfolio and never think about it again.
Speaker 3 (06:12):
I like the idea of the dynamic approach. We're going
to come back to portfolio organization in a moment. But
since you brought up social Security, I always get asked, Hey,
what's better. Do I start taking Social Security as soon
as I'm eligible, or if I could get by, do
I wait until I have to take it and generate
(06:34):
the maximum monthly income? How do you answer that question?
Speaker 1 (06:39):
We had seen this steady trend toward people delaying over
the past several years, but that seems to have reversed
itself a little bit recently as some of the scary
headlines about potential adjustments to Social Security have been predominant,
And so delaying is a really good strategy for people
who can of for to do that, who can afford
(07:01):
to subsist on their portfolio income prior to social Security starting.
And everyone's heard the reasons, but you know, you get
a guaranteed pickup and benefits for every year that you're
able to delay past your full retirement age, and that
benefit is also inflation adjusted, so even if you haven't
yet claimed, the benefit that you eventually receive will be
(07:25):
inflation adjusted to reflect whatever inflation increases have come along.
So it's a terrific strategy, especially for the high earners
in a household. If you've been the main earning partner
or the high earning partner, it's often a great strategy
for you to delay in order to enlarge for the
whole household that social Security income. For a lot of couples,
(07:48):
that's maybe, you know, kind of divide and conquer, where
one claims it full retirement age and the other weights
until age seventy. I often recommend the open Social Security
tool is kind of a good basic and free tool
for people.
Speaker 3 (08:01):
And since you brought up portfolios earlier, let's talk about
I do like the idea of being dynamic and flexible,
where you can look at, hey, we're up twenty percent inequities.
I could peel that off rather than draw something else down.
But how do you advise people organizing structure their investment
(08:21):
portfolios from maximum cash flow during retirement.
Speaker 1 (08:25):
I've become a huge evangelist for the bucket approach to
retirement portfolio planning. I remember talking to Harold Dvinski, the
financial planner, probably twenty years ago, and I was asking
him how he sources cash flows for his clients, and
basically he said, I run a total return portfolio, and
I bolt on this cash bucket. And he noted that
(08:46):
having that cash ear marked for down markets really gave
his clients a ton of peace of mind with the
long term portfolio. They weren't bugging him about losses in
that portion of the portfolio because, as they knew, in
a down market, they could pull from the cash. So
I love that idea of having very liquid reserves, maybe
(09:08):
amounting to a couple of years worth of portfolio withdrawals,
then maybe fixed income assets accounting for another five to
eight years worth of portfolio withdrawals, and then the rest
of the portfolio in a globally diversified equity portfolio. I
think it's kind of a simple way to think about it,
and I always say, even for financial advisors who aren't
(09:29):
using buckets, it's a wonderful client illustration tool. My senses
that people really get it and they're on board with
the acid allocation. It doesn't seem so black boxy to them.
Speaker 3 (09:41):
And just to clarify, when you say cash, in my
mind's eye, I immediately think money markets with just last
summer were paying over five percent some form of investment
grade corporates or treasuries. And then depending on the tax
bracket and the state people live in, munis, how do
(10:02):
you think about quote unquote cash.
Speaker 1 (10:05):
So I would think of cash as being more or
less pure cash, money market fund, some sort of high
yield savings account. The idea is that you aren't monkeying
around with any potential losses. These are your cash flow
needs and so you don't want any volatility whatsoever. I
would put fixed income assets in that second bucket, and
(10:28):
I would kind of stair step at my risk level
where maybe I have very short term bonds, just kind
of a step beyond cash and then moving into intermediate
term bonds. MUNI. Certainly, if pulling from the taxable portfolio
is part of the equation, you would want to think
(10:48):
about them, especially for people in higher tax brackets. But
I'm kind of a purist about that cash bucket, and
I think of it as kind of a zero risk
portion of the portfolio, probably a federal money market fund
or maybe AMMUNI money market fund for higher income folks.
Speaker 3 (11:05):
So we started out talking about what actually retirement is
and how people should define their purpose. What about those
who want to keep working part time? How does that
transition go from full time to part time or even
from full time to fully retired. It seems like that's
(11:28):
a challenging time period.
Speaker 1 (11:30):
It's a beautiful model. What we see when we look
at the data is that working is really good for people.
That people who are able to work later in life
do tend to be healthier and wealthier, And of course
it's a little bit of a cause and effect puzzle
there that the healthier and wealthier people are probably able
to continue working longer. And it's important to note that
(11:53):
the spoils of being able to work longer are not
following equally in our population. That that wealthier people are
able to continue working longer and they need to less.
But it is a really great model for people who
like some aspects of their jobs. So, Barry, I think
you're probably a perfect example. I'm a good example of
(12:15):
this where I really like a lot of what I
do and want to continue doing it longer. Have that
conversation with your employer, and I realize it's kind of
a rarefied position to be in where you are able
to have an open dialogue. But older workers are good,
good workers, and I think people should realize the power
that they probably have if they've been in their positions
(12:37):
for a while.
Speaker 3 (12:39):
The idea of retiring at sixty five or seventy is
an anathma to me. At the same time, what was
Warren Buffett when he announced he retired earlier this year,
ninety four. That's that's like incredible. I don't know if
I got another thirty plus years in me, but he
clearly loves his job. If you're in a situation where
(13:01):
you can keep working, find it not only remunative but
fulfilling and bringing you some degree of purpose. Is there
a reason not to retire.
Speaker 1 (13:13):
Absolutely not. I mean you do want to check that
you are able to continue to do the job. I
was recently on a panel with Carollen McLanahan, who's an
MD and a financial planner. She made the point that
financial advisors should actually consent to take cognitive tests periodically
just to make sure that their acuity is where it
needs to be in order to do the job. And
(13:35):
you'd want to have a feedback mechanism in place so
that people could tell you if you're not really delivering
on the on the responsibilities of that job, there needs
to be something in place to help you step away
from that. So that's one kind of thing that I
think people should troubleshoot in advance. But it is a
beautiful model, you know, especially if people might say, well,
(13:58):
I like my job, I just don't like at forty
hours a week, and so maybe you can transition where
you're you know, taking Wednesday off at first, or you know,
maybe just just working three days a week, whatever days
it might be. It Yeah, yeah, exactly.
Speaker 3 (14:14):
Three day weekends.
Speaker 1 (14:15):
Move into it very gradually.
Speaker 3 (14:17):
So to wrap up, like so much else involving our
financial life planning goes a long way. The sooner you
start planning, the better you have to think through where
your revenue is going to come from, what your spending
looks like. I like the idea of having a dynamic
portfolio that gives you flexibility and adaptability no matter what
(14:39):
the markets do or what inflation looks like. And then,
most importantly, organize your financial affairs and communicate it with
your immediate family. I'm Barry Ridults. You're listening to Bloomberg's
at the Money.
Speaker 2 (14:58):
The best is yet to come. Come the day you might.
Speaker 3 (15:05):
Come.
Speaker 2 (15:06):
The day
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Out of the tree of Life, I just pick me plumb.
You came along and everything started into hum. Still it's
a real good bet. The best is yet to come.
Speaker 3 (00:31):
Have you thought about retiring? Do you know what you'll do,
how you'll spend your time and income? I'm Barry Ridhelts
and on today's edition of At the Money, we're going
to discuss your retirement. To help unpack all of this
and what it means to you, let's bring in Christine Bens.
(00:52):
She is the director of Personal Finance and retirement Planning
at morning Star. She's published numerous books on the subjet,
most recently How to Retire Twenty Lessons for a Happy, successful,
and Wealthy Retirement. So let's start with the basics, Christine.
(01:12):
In your book you talk about you need to define
your purpose in retirement.
Speaker 1 (01:18):
Explain purpose is super important to us throughout our lives,
very and that's true as we age. The problem is
is that a lot of people do receive some sense
of purpose from their jobs, and so when they step
away from work, they're stepping away from part of themselves.
(01:39):
So the idea is, as you approach retirement, make sure
that you're being super thoughtful about how you will replace
that sense of purpose that you derived from your work,
that you should kind of pre populate your activities to
find some that do provide you a sense of purpose.
Jordan Grummitt, who is the last chapter of the book,
(02:01):
has a whole book about purpose called The Purpose Code,
and his point is that there's a lot of purpose
anxiety out there that you say you find a purpose
and people think really big. They think, oh, I need
to write a book or start a foundation, or climb
everest or something like that. And maybe you do things
like that. But his point, I think is really comforting,
(02:23):
which is that small pee purpose. He calls it like
bird watching or gardening, or you know, cooking meals for
your family, smaller things that bring you joy. Those are
just fine too well. So while you're trying to cook
up what your big pee purpose might be, just find
those things that bring you joy, that give you that
(02:45):
animating force for your days.
Speaker 3 (02:46):
So daily goals and activities up film and not just
kill them. Onjaro. So let's talk a little bit about planning.
How important is it when should people start playing? Is
this something you do five months before you retire or
is this something you do fifteen years before you retire.
Speaker 1 (03:07):
I've really concluded that this idea of retirement has a
hard stop where we're not really thinking about it except
for like the months leading up to retirement. It's a
terrible model. And I know why it happens that, you know,
the way we work in this society is so intense
that people show up in retirement totally depleted and they
haven't really been able to envision anything besides like Netflix
(03:31):
or traveling or whatever. And those things are all great,
but you should ideally start I think age fifty is
kind of a good marker, start thinking about this vision
for your later years. Perhaps you will continue working a
little bit longer. And I love the idea of people
at that life stage being super thoughtful and trying to
(03:53):
direct the work that they do, taking an inventory of
the things that you still enjoy, taking inventory of the
things you don't enjoy as much. I have a stop
doing list on my desk of things that I don't
enjoy as much that I have to remind myself to
stop saying yes to. But I think that that is
a great way to segue very gradually into retirement. So
(04:16):
that the complexion of your work is that you're doing
more things that you enjoy and you're shedding some of
those things you don't like as much.
Speaker 3 (04:23):
So let's talk about income while you're in retirement. What
are some of the more common forms of retirement income.
We automatically think of stock diven ends or bond yields.
How do most people generate the sort of income they
need to enjoy a retirement.
Speaker 1 (04:42):
I think it starts with non portfolio sources of income.
So being thoughtful about how you are maximizing social security potentially,
you know, I've warmed up to the idea of using
simple income annuities to augment what someone might get from
Social Security. So the idea is that you you're trying
to address your basic living expenses with those non portfolio
(05:05):
sources of income, then it just gives you a ton
more flexibility with your investment portfolio, and it puts you
in a better position to put up with what will
be the inevitable ups and downs in the market. You
mentioned bond income and dividend income ary and certainly retirees
love the idea of subsisting on organically generated income. I
(05:30):
think that that can be actually a huge trap. From
a portfolio construction standpoint. I can't tell you how many
weird looking portfolios I've seen that have been assembled in
the name of kicking off whatever amount of income someone wants.
I'm a big believer in assembling a total return portfolio
and then maybe annually taking a step back and saying,
(05:54):
what is the best source of funds for me in
this year. For the past few years, it has been
trimming large growth stocks, I think for a lot of retirees.
But the idea is that it's a dynamic approach. It's
not a one and done I'm going to source my
income through the portfolio and never think about it again.
Speaker 3 (06:12):
I like the idea of the dynamic approach. We're going
to come back to portfolio organization in a moment. But
since you brought up social Security, I always get asked, Hey,
what's better. Do I start taking Social Security as soon
as I'm eligible, or if I could get by, do
I wait until I have to take it and generate
(06:34):
the maximum monthly income? How do you answer that question?
Speaker 1 (06:39):
We had seen this steady trend toward people delaying over
the past several years, but that seems to have reversed
itself a little bit recently as some of the scary
headlines about potential adjustments to Social Security have been predominant,
And so delaying is a really good strategy for people
who can of for to do that, who can afford
(07:01):
to subsist on their portfolio income prior to social Security starting.
And everyone's heard the reasons, but you know, you get
a guaranteed pickup and benefits for every year that you're
able to delay past your full retirement age, and that
benefit is also inflation adjusted, so even if you haven't
yet claimed, the benefit that you eventually receive will be
(07:25):
inflation adjusted to reflect whatever inflation increases have come along.
So it's a terrific strategy, especially for the high earners
in a household. If you've been the main earning partner
or the high earning partner, it's often a great strategy
for you to delay in order to enlarge for the
whole household that social Security income. For a lot of couples,
(07:48):
that's maybe, you know, kind of divide and conquer, where
one claims it full retirement age and the other weights
until age seventy. I often recommend the open Social Security
tool is kind of a good basic and free tool
for people.
Speaker 3 (08:01):
And since you brought up portfolios earlier, let's talk about
I do like the idea of being dynamic and flexible,
where you can look at, hey, we're up twenty percent inequities.
I could peel that off rather than draw something else down.
But how do you advise people organizing structure their investment
(08:21):
portfolios from maximum cash flow during retirement.
Speaker 1 (08:25):
I've become a huge evangelist for the bucket approach to
retirement portfolio planning. I remember talking to Harold Dvinski, the
financial planner, probably twenty years ago, and I was asking
him how he sources cash flows for his clients, and
basically he said, I run a total return portfolio, and
I bolt on this cash bucket. And he noted that
(08:46):
having that cash ear marked for down markets really gave
his clients a ton of peace of mind with the
long term portfolio. They weren't bugging him about losses in
that portion of the portfolio because, as they knew, in
a down market, they could pull from the cash. So
I love that idea of having very liquid reserves, maybe
(09:08):
amounting to a couple of years worth of portfolio withdrawals,
then maybe fixed income assets accounting for another five to
eight years worth of portfolio withdrawals, and then the rest
of the portfolio in a globally diversified equity portfolio. I
think it's kind of a simple way to think about it,
and I always say, even for financial advisors who aren't
(09:29):
using buckets, it's a wonderful client illustration tool. My senses
that people really get it and they're on board with
the acid allocation. It doesn't seem so black boxy to them.
Speaker 3 (09:41):
And just to clarify, when you say cash, in my
mind's eye, I immediately think money markets with just last
summer were paying over five percent some form of investment
grade corporates or treasuries. And then depending on the tax
bracket and the state people live in, munis, how do
(10:02):
you think about quote unquote cash.
Speaker 1 (10:05):
So I would think of cash as being more or
less pure cash, money market fund, some sort of high
yield savings account. The idea is that you aren't monkeying
around with any potential losses. These are your cash flow
needs and so you don't want any volatility whatsoever. I
would put fixed income assets in that second bucket, and
(10:28):
I would kind of stair step at my risk level
where maybe I have very short term bonds, just kind
of a step beyond cash and then moving into intermediate
term bonds. MUNI. Certainly, if pulling from the taxable portfolio
is part of the equation, you would want to think
(10:48):
about them, especially for people in higher tax brackets. But
I'm kind of a purist about that cash bucket, and
I think of it as kind of a zero risk
portion of the portfolio, probably a federal money market fund
or maybe AMMUNI money market fund for higher income folks.
Speaker 3 (11:05):
So we started out talking about what actually retirement is
and how people should define their purpose. What about those
who want to keep working part time? How does that
transition go from full time to part time or even
from full time to fully retired. It seems like that's
(11:28):
a challenging time period.
Speaker 1 (11:30):
It's a beautiful model. What we see when we look
at the data is that working is really good for people.
That people who are able to work later in life
do tend to be healthier and wealthier, And of course
it's a little bit of a cause and effect puzzle
there that the healthier and wealthier people are probably able
to continue working longer. And it's important to note that
(11:53):
the spoils of being able to work longer are not
following equally in our population. That that wealthier people are
able to continue working longer and they need to less.
But it is a really great model for people who
like some aspects of their jobs. So, Barry, I think
you're probably a perfect example. I'm a good example of
(12:15):
this where I really like a lot of what I
do and want to continue doing it longer. Have that
conversation with your employer, and I realize it's kind of
a rarefied position to be in where you are able
to have an open dialogue. But older workers are good,
good workers, and I think people should realize the power
that they probably have if they've been in their positions
(12:37):
for a while.
Speaker 3 (12:39):
The idea of retiring at sixty five or seventy is
an anathma to me. At the same time, what was
Warren Buffett when he announced he retired earlier this year,
ninety four. That's that's like incredible. I don't know if
I got another thirty plus years in me, but he
clearly loves his job. If you're in a situation where
(13:01):
you can keep working, find it not only remunative but
fulfilling and bringing you some degree of purpose. Is there
a reason not to retire.
Speaker 1 (13:13):
Absolutely not. I mean you do want to check that
you are able to continue to do the job. I
was recently on a panel with Carollen McLanahan, who's an
MD and a financial planner. She made the point that
financial advisors should actually consent to take cognitive tests periodically
just to make sure that their acuity is where it
needs to be in order to do the job. And
(13:35):
you'd want to have a feedback mechanism in place so
that people could tell you if you're not really delivering
on the on the responsibilities of that job, there needs
to be something in place to help you step away
from that. So that's one kind of thing that I
think people should troubleshoot in advance. But it is a
beautiful model, you know, especially if people might say, well,
(13:58):
I like my job, I just don't like at forty
hours a week, and so maybe you can transition where
you're you know, taking Wednesday off at first, or you know,
maybe just just working three days a week, whatever days
it might be. It Yeah, yeah, exactly.
Speaker 3 (14:14):
Three day weekends.
Speaker 1 (14:15):
Move into it very gradually.
Speaker 3 (14:17):
So to wrap up, like so much else involving our
financial life planning goes a long way. The sooner you
start planning, the better you have to think through where
your revenue is going to come from, what your spending
looks like. I like the idea of having a dynamic
portfolio that gives you flexibility and adaptability no matter what
(14:39):
the markets do or what inflation looks like. And then,
most importantly, organize your financial affairs and communicate it with
your immediate family. I'm Barry Ridults. You're listening to Bloomberg's
at the Money.
Speaker 2 (14:58):
The best is yet to come. Come the day you might.
Speaker 3 (15:05):
Come.
Speaker 2 (15:06):
The day
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.