Similar to the annual customer appreciation event with TD, my father attended the local BMO Nesbitt burns event a little while ago. The showstopper of the event was a talk given by Sherry Cooper, the BMO Nesbitt Burns chief economist.
At the end of the event, Ms. Cooper gave away her newest book “The New Retirement” which my father happened to pick up an extra copy for myself. At first glance, I assumed that this book would be another book about retirement which didn’t interest me too much. Despite that, I decided to flip through the book to see what insights Sherry Cooper had to share.
I’m glad I gave the book a chance because it’s one of the better books that I’ve read that explains preparing for retirement.
Who is Sherry Cooper?
Cooper is a M.A and Ph.D in economics from the University of Pittsburgh. After 5 years as an economist at the Federal Reserve board in Washington, D.C, she joined the Federal National Mortgage Association (Fannie Mae) as Director of Financial Economics. Since 1983, she has been the chief economist of BMO Nesbitt Burns.
Needless to say, she knows her stuff!
About the Book
I’ve written about early retirement before and even about the safe 4% withdrawal rule before which this book touches on. The difference being, these concepts are explained by an seasoned veteran who explains the concepts in an easy to understand manner.
The first half of the book explains the baby boomer generation and how retirement is shifting from a deadline to a “transitional retirement”. That is, Canadians are deciding to work part time on enjoyable projects even in their retirement.
The second half, which I’ll get into more detail below, gets into the numbers. Maximum withdrawal amounts, the amount you should have saved etc. As you may have guessed, the second half was my favorite part of the book.
Key Points for Discussion
Without giving away too much about the book, here are some key points that she has concluded:
- Safe Portfolio Withdrawal Rule: 4-5% retirement withdrawal rule for 30 years of retirement assuming an average of 5% equity returns after inflation.
- Retirement Portfolio Asset Allocation: 50% stock/50% bond asset allocation to achieve the above withdrawal rate.
- Savings Rate Required: 15% savings rate is the new 10%. Everyone has heard of the 10% savings rule popularized by “The Wealthy Barber“. Sherry Cooper has come to the conclusion that these days 15% savings of gross income is required for a comfortable retirement whereas the old 10% results in people working longer than expected.
- CPP is safe.. for now: Sherry Cooper shows her research and calculations that show how long CPP should last. From the date of her publishing, CPP is good for 75 years. It’s hard to say how long Old Age Security (OAS) and Guaranteed Income Supplement (GIS) will last as it is paid out of the current tax base.
Even though this book was targetted towards to baby boomer generation, there is a lot of information provided in this book that applies for anyone thinking or planning for retirement. I highly recommend this book as Sherry Cooper has done a great job in explaning the various financial issues around retirement.
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