This transcript has been automatically generated.

Colin White: If I was gonna have to choose between buying that cottage on the lake or traveling every year, which is more important to me, or can I do both of those in a smaller fashion and let them happen at the same time? Just understand the trade off you’re making. You think you’re not gonna care later in life. News alert, having worked with people later in life, they can care. You know, you can be very cavalier, but when you’re older, you probably wanna go back and beat the shit out of the person who put you there.

Kathryn Toope: Welcome to Barenaked Money, the podcast where we strip down that complex world of finance to its bare essentials. With your hosts, Josh Sheluk and Colin White, portfolio managers with Verecan Capital Management Inc.

Josh Sheluk: where we pull back the shower curtain and talk about money the way that it should be talked about. Plainly, close off, not literally, of course, and without a sales pitch. We’re Josh Shellock and Colin White, portfolio managers at Veracan Capital Management. If you’re looking for straightforward advice from a firm that our only angle is to make you better off and to make you better informed, visit betteradvice.ca to get started. Now on with the show, Colin.

We have some interesting content today. I think we’re going to answer the one question that everybody has, and that’s how much money do I need to retire?

Colin White: The answer.

Josh Sheluk: Why don’t you start it?

Colin White: We’re gonna we’re gonna answer it, really. Josh, this is, I think, as close as we’ve come to clickbait on on any any show we’ve ever put out there. I mean, is rivaling Bitcoin. Yeah. This is probably one of the most pervasive questions that is asked or thought about or secretly thought about or secretly asked.

That’s that’s really out there. And we’re gonna answer it today. Right?

Josh Sheluk: Got it. Yep. The exact dollar amount that every one of our listeners needs to retire.

Colin White: It’s 1,000,000

Josh Sheluk: they want. 1,000,000. They’re here for. I said I said we’re here to better inform people. That’s what they’re here for.

Colin White: Yeah. So the answer is $1,482,786.12. There you go. You can you can now leave the podcast. You know, you now have the number.

Josh Sheluk: It’s like Hitchhiker’s Guide to the Galaxy. It’s like, what’s the answer to the universe or the answer to everything? It’s like 42 or something. I don’t know if I’m quoting that correctly.

Colin White: Absolutely right. Yep. 42. Yeah. No.

It it’s it’s a very it’s a very important question. Like, I will give it that. This is a weighty question. This is something that’s really important to people. So, you know, I’ll take my tongue out of my cheek and stop making so much fun of it perhaps and give people some meaningful stuff to go on.

But this is a very important question because it gets into, you know, someone’s ability to accomplish what they think are the important goals that they’re trying to get done with regards to family and all the rest of it. So yeah. I’ll take my tongue out of my cheek for now. I reserve my right to stick my tongue back in my cheek later. But, yeah, we’ll give some meaningful guidance here on on how to answer the unanswerable question.

Josh Sheluk: Yep. Now the way that I kind of approach this is I have a list of six questions that we get asked relatively frequently that relate to the same idea, kinda how much do I need to retire. And I don’t know if you wanna rate them for how poor the question is or or what. On a scale of one to 10, you you can give it thumbs up, thumbs down, or whatever you want. But

Colin White: Well, let’s try something.

Josh Sheluk: Obvious first one is what we’re to yeah. There you go. The obvious first one here is how much do I need to retire? So maybe start by explaining why that’s such a a a poor question, such a useless question if you wanna call it that.

Colin White: Useless. I will give it useless because it completely depends on expectations. Like, you you don’t this is not a one dimensional question, but it’s not even you’re on one side of the balance sheet. Like you say, how many assets do I need? Well, that’s completely dependent on what you’re trying to get done.

And again, I’ve told the story many many times, but the history of retirement goes back to the late eighteen hundreds where life expectancy was, you know, I think 62, 63 depending on where you were in the world. And and the ruling class was having trouble keeping the worker class happy. So they said, hey, listen. You get to retire at 65. So if anybody made it beyond life expectancy, they got to retire and that that was something to look forward to and it kept the the the plebes in line for a little while longer.

That’s where it came from. So you fast forward to the roaring twenties, I mean, February, and we’re we’re still looking at a retirement age of 65 or 55, life expectancy is now 80. So it’s really an artificial construct, and we’ve decided the last third of our life we shouldn’t expect not to have to work. There’s a lot of math that goes into that. But the bigger part of the equation is what do you plan to spend it on?

Like, what what what lifestyle do you expect to have? What goals do you have with regards to your family? What what unforeseen things are you gonna come across that are gonna change your direction? You know? So asking how much I need absent any really clear understanding on on how much you’re gonna spend is stupid, useless, worthless, a complete waste of time and space.

Josh Sheluk: Yeah. And it’s not only how much, but when as well. When do you

Colin White: need it?

Josh Sheluk: Like, these are the the big, big aspects of answering this question. So you mentioned 65 as the retirement age, but how many people actually wanna retire right at 65 these days? Yep. A lot of people wanna retire early. Like, some people come into the office and say, well, I wanna retire at 55.

Or my company organization says that my retirement date people with public pensions, my retirement date is 01/08/2057. Okay. Great. Well, we’ll plan right for that date. Or I don’t wanna retire at all when I’m 65.

Maybe I’ll work till I’m 75 or 80, or I’m gonna work till I’m dead. Whatever the answer is. Big, big, big variables that are crucial to answering that question.

Colin White: I think if you take a look at how people lean into that as a shortcut. Yeah. I’ve got a pension. When I retire, I get full pension when I’m, you know, 59. That’s a great answer to a different question.

Like that’s you avoiding answering the big question. Like that’s, you know, you’ve been provided with a shortcut. It’s defensible because we’re social creatures and our retirement to our our decision to retire is is as much about social pressure around us as it about what what it is we want. Because there’s people who feel they should retire or they’re a failure if they don’t retire. You know, if I work past 65, obviously, I’m a failure.

There’s all kinds that gets caught up in how people make these decisions. So if I get a nice comfortable pension that I max my pension when I’m 62 and a third years old, that’s when retiring. Why? Because that’s when my pension maxes. There may be no less stupid way to make that decision, but it’s very comfortable.

It’s very defensible. And if somebody asks you why you did that, you can give them a very short answer.

Josh Sheluk: Well, the big thing here, I think what we’re saying is retirement is very goals based. And until you understand exactly what your goals, your objectives are in terms of spending, in terms of when you wanna retire, in terms of what you wanna do, in terms of how much you wanna leave behind, you’re not gonna be able to answer this question. And that’s why you and I chuckle when somebody asks me that question is because we have probably 45 follow-up questions before we can try to answer that for you, and then maybe we’re we’ll kinda sorta get to the right answer. But my follow-up or, I guess, a a closely related cousin to this this first bad question, how much do I need to retire, is how am I going to get to x dollars by the age of 65 or by my retirement age? So this is assuming you have the number, and now you’re trying to figure out how you’re gonna get there.

Colin White: And it lends itself to a nice, comfortable little video game that you can play and watch the little line move on a little graph and, you know, then celebrate when you reach the thresholds. Like, my god. I’m here. I can finally retire. Like, no.

That that that’s not what that’s telling you because the other the other issue we have, you know, the end of history fallacy. Like all of us think, I wanna go into retirement. My retirement’s gonna be this homogeneous thing that’s going to go in a straight line, and I wanna live this idyllic existence. I’m never gonna change my priorities. I’m never gonna deal with any more upheaval.

There’s never gonna be any family issue. There’s never gonna be a health issue. It’s just gonna go in a perfect straight line and all will be good. I, in my entire career, have never met anybody that has lived a life where there was not some curveball thrown at them that they were not expecting. So this idea that somehow retirement can be locked in or guaranteed or I get to do everything I want, shut up and sit down.

Like, you can put yourself in a comfortable financial position, then the world’s gonna happen. Like, again, I keep going. I think I can still use this. Correct me if I’m wrong, Josh. I can still say January 2020, everybody had a plan.

Right? That’s still as impactful. Like like a lot of people Yeah. So January 2020, a lot of people had a plan. I guarantee you that nobody’s plan on the planet on the planet rolled out the way that they expected it for the year 2020.

Why? There was an act of whatever you wanna call it. There was an act outside of your control, And it required you to be flexible, malleable, maybe change your priorities a little bit. Welcome to the planet Earth. Wish I could sing that song from Monty Python right now about being on a rock traveling through the galaxy at like x number of hundreds of thousands of miles an hour and, you know, how insignificant we all really are and we’re not in control of anything.

I guess I’m not inspiring. This is really bad sales pitch for for retirement planning, but, yeah, it’s all hopeless. So, you know, all you can do is is is put yourself on a path that you think might be sustainable, that’s got reasonable expectations built into it, and then wake up in the morning and see if the sun came up and take it from there.

Josh Sheluk: Yeah. The other reason I added this question was because well, one, a lot of outlets will throw around a specific dollar amount that I think a million dollars was a big one for a long time. Like, you need a million dollars to retire. If you don’t have a million dollars, you can’t retire. So that’s it’s a bit of fear mongering there.

Yep. But also, I think even if you establish that number or or whatever that number is, it’s hard to visualize how you move from here today to that number, even if you have the means and are on track to get it. And the reason that is is because we we think so linearly that it’s hard to think in exponential and compounding growth terms. And I had a client last year, She said, well, I I know I need 1,600,000 to retire. Throw out the the reason or how she got to that that answer first.

But she said, I know I need 1,600,000 to retire. How am I gonna get there? I only have $400,000 invested today. And I said, okay. You’re 45.

When do you wanna retire? She said 65. I said, okay. So it’s reasonable to expect somewhere in the mid to high single digit percentages return on your investments over the next twenty years, I think. And if you got a 7% return per year over that twenty year stretch, your money will double every ten years.

So 400,000 becomes 800,000 in ten years, and 800,000 becomes 1,600,000 ten years later. That gets you to your 1.6 by age 65. Now that’s that that nice, simple, inflexible math that you’re talking about. So it’s not gonna work out that way. But here’s somebody that thinks they’re way off track from where they should be.

And, actually, they’re probably pretty much perfectly in line with where they wanna be, especially when you consider that there’s gonna be ongoing contributions over that twenty year stretch. So the planning process does help people visualize how they’re gonna get there, but it might not be one track that never moves.

Colin White: Twenty years ago, I think, was when the first smartphone came out. Right, Josh?

Josh Sheluk: Was it 2006? I guess it was right around there when the iPhone

Colin White: was released. When people start talking about, like, you know, over the next twenty years, shut up. Like, we could have flying cars by then. Like, the reality that you’re gonna wake up in twenty years from now is gonna not look anything like the reality you’re living in right now. So let’s let’s let’s you and I plot a path forward that begins to build our financial independence.

I think this is a conversation that’s much better looked at from trying to achieve a level of financial independence to over time. Because it’s not gonna be one day you wake up and it’s like I can completely stop earning money. Like you can probably get there, but you were probably there five years before you actually stopped work. You know? So talking about gaining financial independence to give yourself the flexibility to be selective in the kind of work that you do, to live the kind of life that you want that maybe you don’t wanna retire from.

I still had a glorious conversation with a client who stormed in my office one day because I’m gonna retire. I said, oh, awesome. Good for you, Bruce. How are these going? Was like, never had more fun in my life.

I’m working with the best group of guys. I get excited for going to work every morning and, you know, it’s been a long time coming. I’ve been in been in my career a long time and, you know, this is truly one of the better experiences I’ve ever had. It’s like, why are you retiring? Was like, I’ll get back to you.

So he left my office and didn’t come back for three years. You know, three years later he came back. He said, okay. Now I’m not having fun. Alright, Bruce.

Look. We can have this conversation now. So it’s just as just as just as simple as that. Right? You know, you kinda get caught into, I think I should.

And and it you know, again, it’s it’s it’s a very it’s it’s oh, I’ve I’ve seen a squirt as the second most stressful thing you go through is retiring. The only thing more stressful is loss of a loved one, you know, because there’s so much that’s tied up in it. And to try to simplify the second most complicated thing you’ll ever deal with in your life to a number, oh, come on. I love numbers. I love numbers more than most, but there’s no number for this.

Josh Sheluk: Yep. So the third question, this is probably one of my favorite questions. This when we’re actually going through the retirement planning process with people. And we’re talking about, okay, well, like, what are your goals? What are your spending goals?

And they ask me, well, what’s the average person like me spend in retirement?

Colin White: Right. So what’s the average person spend? What’s our favorite expression of what averages, Josh?

Josh Sheluk: Yeah. If your head is in the in the oven and your feet are in the freezer on average, you’re the perfect temperature.

Colin White: You’re not comfortable. Right? So which is one of the biggest thing that goes into I need a million dollars to retire. Well, that depends on how much of a pension do you have, how much of a mortgage are you carrying, you know, how much of a, you know, do you plan to support the kids? Right?

Averages don’t matter. In fact, they probably matter less in this sphere than any other sphere. And and and averages don’t matter a lot of the time. You know, the the whole idea that you’re trying to catch up to an average, but just stop. And it it’s probably that it’s it’s it’s such an important thing.

It’s it’s it really is. It it it’s very emotional. It’s very impactful, and it it affects everything that you you think is important. Right? You know, how what kind of lifestyle you can have retirement.

And part of it is people, you know, don’t like working and they live their whole life. It’s like, I retire, I’m gonna get to have fun. Well, we can talk about how sad that is on another podcast. But, you know, the idea that you only get to have fun in retirement. No.

If if wait your whole life to have fun in retirement, it’s not gonna be fun. You know, try to have fun along the way and and and set yourself up for a lifestyle. The other comment I always make to people is retire to something. Don’t don’t stop something. Start something.

You know, so if you frame this as like I’m gonna go do something. Cool. What are you gonna go do? Alright. Now you’ve given me something I can start to do math with.

Alright. If you wanna do that, then here’s what the expenses could look like and here’s the kind of financial situation you need to put yourself into to do that kind of thing. But that doesn’t mean you get to do it forever. There could be something that happens where we need to make a change five years from now. You’re not gonna be able to do that either financially or otherwise.

So it there’s there’s no such thing as a guarantee.

Josh Sheluk: Yeah. I think the the way I usually answer this question, which is a 100% true when people ask me what’s the average they need, I’d say, I know people. We have clients that spend $20,000 a year or less, and we have clients that can’t live on $200,000 a year. And both of those things are true. So where do you fit on that spectrum?

How could I tell you what the average is when we have both of those people here that maybe as human beings aren’t really all that different? So that’s why that question is impossible to answer.

Colin White: In people that can’t live on 500,000 a as and that’s

Josh Sheluk: Now that’s a lot. That’s impressive.

Colin White: You know what? I hats off. Like, you know, you you really have to have skill if if you’re gonna be able to piss that much money up against the wall. Like, that takes a a serious commitment to being fiscally irresponsible.

Josh Sheluk: So I I this question might be more anxiety ridden than any other question on this list. What’s the average savings for someone my age?

Colin White: Yes. These are the numbers the industry turns out to try to convince you you need to save more because they’re gonna more money if they manage more money for you. That’s where a lot of this comes from because they will using seemingly very sane, very reasonable assumptions create a 5,000,000 nut that you’re supposed to crack and try to make you save $5,000,000 so that they can manage $5,000,000 for you. And then, you know, make money off managing $5,000,000 for you because this is what you needed to retire on. So any anytime somebody comes to you with a number saying, here’s the number you need to retire on.

No. Like, literally, I can unless you spend two or three meetings or four meetings with somebody who knows all your situation very well, who’s put some thought into it, who has come back to you with a kind of a range that kind of makes sense, you don’t have anything meaningful. And for the love of God, the current version of ChatGPT is not gonna give it to you. You know, as long as it’s still hallucinating entire stock indexes and and the ETFs and some of the hallucinations that are going on, ChatGPT can be a really good tool right now just to have a conversation with somebody to maybe frame your thinking to go talk to a real human being and say, does this make sense? But again, it the the process of figuring out how financially stable you are.

And I use that as another way of describing, you know, your progress towards goals. Your what I like to do for somebody is to work with them to say, listen, your expectations given your financial means and patterns are reasonable. You have a reasonable opportunity. You should be able to manage and and accomplish the expectations you’ve set out for yourself. I reserve the right to change my mind next year.

We’ll talk next year.

Josh Sheluk: Yeah. That that average that people always like to hang on to for someone their age, again, very, very different. If you graduated from college and built a trades business, it’s gonna be very, very different from if you are gonna be a a surgeon, neurosurgeon, and you’ve gone to school for twelve years and have a bunch of debt at the age of 35. That doesn’t make one more or less on track than the other, but the level of savings specific age is gonna be very, very different for one versus the other. And, again, that that the idea of averages for anything that is specific and unique to an individual is gonna be very problematic.

And to your point, I think this idea of this is how much you should have at this age, used to encourage people to save more in the benefit of a financial organization that’s, you know, may not be in your best best interest or or needed really for your financial situation.

Colin White: Absolutely. And and, again, my favorite analogy that I’ve come up with that I was exposed to, can’t remember. I guess I should look up where I got this from, but money is like gas. You know, you don’t you don’t build up gas for the sake of having gas. You build up gas so you can drive a car.

Now how much gas do you need? Well, it depends what car you’re driving and where you’re trying to go. So until you know what kind of car you’re driving or where you wanna go, it doesn’t matter about how much gas you have. Right? So but I understand people’s desire to simplify this because it’s it’s deeply important and very very difficult to understand.

And we’ll and the human mind loves a shortcut. I I I need to be able to tick this box as done. I don’t wanna be living my life with all of this chaos, with all of this unknowingness. I wanna be able to say, yep. I’m safe.

Why? Because I have a million dollars. I am good. Well, look. If that’s what gets you through the night, if that’s what keeps you off medication, then maybe that’s okay.

But, you know, just be honest with yourself at some point that that’s not the real answer.

Josh Sheluk: So I’m glad you mentioned shortcuts because the next question I have that get asked a lot, what’s the safe withdrawal rate for me so I don’t run out of money?

Colin White: Yes. There is one. That will be safe under most circumstances that we can envision based on history that are likely to repeat themselves in patterns going forward, notwithstanding on the great pandemic or another world war. It’s funny because off the throat, and you know what? There’s there’s some honesty to it.

So you could throw out, you know, I retire at 65. I spend, you know, four four or 5% of my money a year. Then I’m gonna live for another twenty years. You know, five times 20, that’s a 100% of my money. You know what?

I’ve seen worse shortcuts. I’ve seen worse things. Right? But is that accurate? No.

Because it does take into account taxation, doesn’t take into account inflation, doesn’t take into account the fact that, you know, money is options. And trying to manage your finances so that you’re ordering a takeout pizza with your last $50 being delivered to your hospital deathbed, well, you know, has a certain from an accomplishing my goals perspective. It’s probably not comfortable because later in life is when you feel most vulnerable. Later in life is where money can provide some comfort. So to plot running out of money entirely, yeah, I wanna enjoy my money while I’m healthy.

Okay? But you’re also gonna wanna enjoy your money if you’re facing eviction from your house and wanna live there for another year or two. You know, that that’s not a fun position to leave yourself in either. So, you know, there’s lots of shortcuts thrown around and like, I will subscribe and I will I have thrown it to somebody. It’s like, yeah, you probably you probably could maybe spend four or 5% of your money after age 65.

And, you know, that’s not a a bad ballpark to play in, but you really it’s behooves you to put some effort in and and put a little bit more color around it because there can be some learning in there for you as to what the trade offs are. And that’s the big thing, trade offs. Right? Because some people come to me as like, wanna retire at 55. I’m gonna buy a cottage.

I wanna educate my kids. It’s like, okay. If you’re gonna educate your kids or work to 60, which of those would you pick? Right? Because that’s what financial planning will do.

It’ll allow you to to to to make informed decisions. You know, based on the math, you can’t retire at 55 and still educate your kids. Which one of those is more important to you? Well, I wanna do both. Okay.

So how much are you gonna cut your expenses by? You’re gonna sell your house and live in a smaller house? No. Again, can’t do it. You’re the math is gonna math.

Like, I don’t care what you want. Math is gonna math. Well, what if I get a better rate of return? Not available. Next question.

Right? There’s a certain point of planning should be to educate somebody on the trade offs that they’re looking at to give themselves a better opportunity to be successful in accomplishing their expectations and disavow people of having unrealistic expectations. That should be the goal.

Josh Sheluk: Yeah. This is the the withdrawal rate. The withdrawal rate of 4% specifically gets quoted back to us quite frequently. And I I hadn’t read the the book or the financial research that was done to derive this, so I just did a bit of research before the podcast on where this came from. And a study that was originally done in the nineties based a 100% on historical US data and assumed a thirty year time horizon with a specific asset allocation, I should mention.

So there’s a whole bunch of variables that were taken as a given, taken as a constant in this research. So that’s where again, relying on any one number becomes quite problematic because if you retire 80, it’s gonna be a lot different than if you were potentially potentially.

Colin White: It’s also path dependent too if you have a lot of your assets tied up in markets and end up cashing out when things are down and stuff like that. Can there be lots of real important details in there that can change the outcomes that, you know, that are unknowable. And this is the this is the is the tough part. The future’s unknowable, but the markets aren’t the biggest variable. Oh, I’m gonna wait to finish your questions.

I’ve I’ve got the biggest variable. So if you don’t if it’s not in your questions, I’ll drop it at the end. How’s that?

Josh Sheluk: Well, won’t be in the questions because the last question I have is very much related to some of the l some of the other questions, but the last one is at what age can I retire? Right? This is kind of the inverse of some of the other questions, but not how much do I need, but what when can I retire? Like, I have what I have. When can I retire?

When am I good? And for all the same reasons, we don’t need to rehash them all here. But for all the same reasons, that’s an impossible question to answer without more context.

Colin White: Forget that question and say today. You can retire today. What about this? Oh, wait. Wait.

Wait. What do mean? No. No. No.

I you asked me, could you retire? I said yes. I think we’re done. Oh, you want more detail around that? Oh, okay.

Well, okay. Now it gets complicated. And again, it it’s comes from such a genuine place, which is why I’m holding back on really making truly making fun of it. Because it comes from a very genuine place and it’s a very complicated question. As soon as somebody goes out looking for professional advice, they get sold to.

Here’s the perfect ETF for your TFSA. Oh my god. That makes me closer to my retirement? Now here’s the insurance policy you need. That puts me closer to my retirement?

I I doesn’t feel like it. Right? Here’s here’s the house you need to buy because houses always go up in value. It’ll be part of your retirement. Oh, good.

My house is part of my retirement. I get it. It is a very, very uncomfortable spot to walk around in. So but, Josh, you know, let me ask you the question. From your perspective, sitting in your chair with your vast experience, what’s the largest variable that anybody deals with in retirement that can cause the most problems to anybody above everything else combined?

I love when I make Josh think. I can smell it from here.

Josh Sheluk: I I can go more more here. Let let let me let me say this because I think that this is the biggest variable even though this is may maybe not what you’ve the way that you’ve approached it or thought about it but I think the biggest variable is changing one’s own goals or objectives.

Colin White: You see, Josh, and for everybody, this was completely unscripted, unprompted, and it just came to me during this podcast, and Josh nailed it. It’s the two pounds of meat between your ears. Because when I sit down and talk to you one year and you tell me that you’ve got these creepy plants for traveling and you come back the following year because you’re buying a cottage because you’re gonna have grandkids and you wanna have a boat on a lake, you know, that’s the biggest change. It’s the two pounds of meat between your ears. That’s what’s gonna change and that’s what’s gonna cause you the most issues going forward during in somewhat control of it.

But you are gonna be the master of your inevitable your inevitable fate as to whether or your retirement is comfortable or not based on how often you change your mind. Because if you think at 55, you know how you’re gonna think as a 65 year old, you’re a moron. You’re not. You can claim you’re not gonna be your parents. You can claim you’re not gonna be one of those crotchety old people.

You can claim all of those things, but you don’t know till you get there. So you are the biggest variable. All the math that goes into figuring out whether you’re gonna run out of money or not is way easier to do than it is to try to have enough money on hand to do whatever crosses your mind because that is the biggest variable. And all good financial planning can do and retirement planning can do is try to manage those expectations. The current iteration of what the shit is that just came out of your mouth, yeah, you might have a good shot at getting that done.

Or no, shake your head. Something’s loose. You need to change your your opinion here and and go in a different direction.

Josh Sheluk: Yeah. Well, I I started thinking about it from a financial planning perspective. Like, hey. All the variables that we can actually tweak in the financial plan is like, yeah. We can we can make reasonable assumptions and and and tweaks and adjustments to life expectancy because that’s an unknown.

We can make reasonable adjustments to rate of return. That’s an unknown. We can even run something called the Monte Carlo analysis, which is really fun for the statistics nerds out there. We can make assumptions and tweaks to your expenses for health care or travel or whatever else it is. But, yeah, we can’t we can’t predict or really even model the 180 degree turn in your financial circumstances when you’re planning to retire to your place up in Muskoka, then all of a sudden, you’re moving to BC because your son’s out there with your grandchildren.

Colin White: And Mhmm.

Josh Sheluk: And and now everything’s just totally blown up.

Colin White: Yeah. My we’re getting divorced and I’ve got a girlfriend and, you know, this is what I’m gonna go do or, you know, I just and it’s one of those ones that’s perspective teaches. Right? So if you take the course on how to be a financial planner and and you do all the you really you really double down on the math. Like, we go four decimal points deep on the math.

Math’s good math. Honestly, it’s it’s managing your emotional roller coaster and your reality and you’re changing priorities, and it’s all legit. You should be able to change priorities. And the encouragement is to try to live your life with a degree of slack in it so that financially, you have as many options open to you as you can and not be riding the ragged edge because that’s where you can wake up really uncomfortable one day.

Josh Sheluk: So what question should people be asking? Like, we we ran through a lot of questions that aren’t useful, but what what questions do you think people should be asking when they’re retirement planning?

Colin White: I think asking the the the the the prioritization questions. Like, if I was gonna give if I was gonna have to choose between buying that cottage on the lake or traveling every year, which is more important to me? Or can I do both of those in a smaller fashion and let them happen at the same time? Even if you don’t know that that’s the question. Even if you you think, I can do all this.

I will just stop for a second. If I had to pick one, like which would I pick? And kinda give yourself that fallback position. So if you wake up one day and for whatever reason, it looks out of reach that you’re prepared to well, if I wait another year to do that trip. And oftentimes that’s all it is.

I’ll do that trip next year. Now there are those others like, I might not be around next year. I’m spending all my money this year. Okay. If you’re in that camp, knock yourself out.

You know? But, you know, just understand the trade off you’re making. And you think you’re not gonna care later in life. News alert, having worked with people later in life, they care. You know, you can be very cavalier, but when you’re older, you’re probably gonna go back and beat the shit out of the person who put you there because again, money is options and there’s there’s no version of life that is not made better by having options.

And, you know, that’s it. So begin to to to frame things in your own mind as trade off and prioritization. Like, is the most important to me and I would be willing to give up other things in order to accomplish this goal. Or I’m only willing to accomplish these goals in concert. So to whatever level I can accomplish all of these goals at the same time, I’d be willing to travel less expensively or buy a smaller cottage or support the kids to a lower amount.

You know, you know, that kind of flexible thinking. You know, train yourself to be a little bit flexible in your thinking rather than, okay, here are the list of my demands. Like a hostage negotiation or a union negotiation. Here are my demands. These are what I must accomplish.

What do I need to do? Okay. You know, we can do that, but, you know, nothing’s going in a straight line from here. And, you know, the the world is going to frustrate you because life is often about, you know, those those compromises or those trade offs. You know, I I I wanna get as much as what I can, but I’m not willing to give up other things.

So, you know, this this is where I this is where I live. This is a space of me.

Josh Sheluk: Yep. Any final thoughts, final suggestions for people that are grappling with these questions?

Colin White: The and the strongest thing I said everybody is retire to something. Like, have something you’re going to. Like, if you want to to to screw your retirement up, just stop work one day and go home. Then you’re screwed. You’re hooped.

I don’t care who you are. Like, money don’t matter. You know, financial planning doesn’t matter. Make sure you’re retiring to something. Have an idea and treat it with respect.

Like, it’s you you have to replace certain amount of your identity. You’ve got to replace your social circle. You’ve got to replace your purpose and those that all can be done, but you have to think about it in those terms. So make sure you’re retiring to something as much as retiring from something. And money is options.

You know, the the more that you’re living within your means, the more options that you have. And I I say glibly that having more options is always good. Sometimes it’s stressful. I have dealt with clients that have too many choices and it really stresses them out, so that’s a thing too. But that’s where a good advisor can hopefully help prioritize and give somebody purpose.

But that goes back to retire to something.

Josh Sheluk: Yeah. And I would really encourage people to think about their retirement plan like Google Maps. It’s not a written set of instructions on how to get there. It’s something that’s adaptable. And if an accident shows up, it’s gonna reroute you.

And if you decide that you need gas halfway through, it’ll reroute you. And if you decide that, oh, I’m not going to this restaurant anymore, I’m going to restaurant B, you can reroute on the fly. That type of adaptability and flexibility is is much more what your financial plan is these days than anything that’s prescriptive or an exact step by step set of instructions on how to get there.

Colin White: It’s a danger in a straight line because you bring up the Google Maps thing. I was rocketing towards catching a ferry in Horseshoe Bay in Vancouver coming over the driving from Nelson. So that’s seven and a half hours across a couple of mountain chains. And my Google Maps was telling me I was gonna make the ferry as I’m coming over the mountain pass. But all of a sudden, unlike normally when you’re driving, you you you shave time off of the time you’re supposed to get there.

So I was gonna be there early. All of a sudden, I started falling behind. I’m like, I’m going over a mountain pass. I’m going, well, shit. I must not be driving fast enough.

So I need to drive faster. So I start speeding up and like you’re going through switchbacks in the mountains and a legit mountain pass. And I slid around one of the corners going, oh, no. That that I shouldn’t be doing this. Well, sure enough.

I get into Abbotsford and traffic is all backed up. So I had nothing to do. I wasn’t driving fast enough. So my solution trying to hurl myself off of mountain to to to stick to the Google plan that was laid out for me was the wrong take. I needed to take a break and realize I didn’t put slack in the system to allow me to make that particular ferry, and that was gonna be okay.

Hurling myself off the mountain, chasing a time that was unattainable was not the best solution.

Josh Sheluk: Yeah. Wouldn’t have exactly solved the problem for you. You you wouldn’t have arrived on time if that were the case.

Colin White: Hey. But missing the ferry wouldn’t have been my biggest problem.

Josh Sheluk: There you go. Well, thanks for listening to today’s episode of Barenaked Money. If you’re starting to wonder whether your current financial advice is clear, disciplined, and conflict free, as clear, disciplined, and as conflict free as it should be, that may be a conversation worth having. We’re portfolio managers with Verecan Capital Management, and our team is always open to new client conversations. Visit betteradvice.ca to get started.

Kathryn Toope: Have you ever wondered why your financial adviser is making a recommendation? In an industry where conflicts of interest are everywhere, it’s important to understand how they affect you. For more info, contact us at Verecan. You can find us at annoyingthecompetition.com. For more information on the subject of today’s podcast or any other financial topic, please visit us online at verican.com.

That’s verecan.com. There’s plenty of information there, or you can reach out to someone on the team. Thanks for listening. Please note, the information provided in this podcast is for general information purposes only. It is not intended as financial investment, legal tax, accounting, or other professional advice.

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