At The Money: At The Money: Planning Your Retirement? (July 2, 2025)
Thinking about retirement? Do you know what you will actually do? How will you spend your time? And perhaps most significantly, how much retirement can you afford?
Full transcript here.
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About this week’s guest:
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.
For more info, see:
Book: How to Retire: 20 lessons for a happy, successful, and wealthy retirement
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TRANSCRIPT: Christine Benz on Retirement
Intro: Out of the tree of life, I just picked me plum. You came along and everything started into hum. Still it’s a real good bet. The best is yet to come.
Have you thought about retiring? Do you know what you’ll do, how you’ll spend your time and income? I’m Barry Ritholtz, 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 Benz. She’s the Director of Personal Finance and Retirement Planning at Morningstar. She’s published numerous books on the subject, most recently, how to Retire. For a happy, successful, and wealthy retirement.
Let’s start with the basics. Christine, in your book you talk about “You need to define your purpose in retirement;” explain.
Christine Benz: Purpose is super important to us throughout our lives, Barry. Um, and that’s true as we age. Uh, the problem is, is that a lot of people do, uh, receive some sense of purpose from their jobs. And so when they step away from work, they’re. Stepping away from, from part of themselves. So the, 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 Grumet, who is the last chapter of the book, has a whole book about purpose called “The Purpose Code.” And his point is, there’s a lot of purpose anxiety out there. Find a purpose and people think really big. They think, oh, I need to write a book or start, 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, which is that small P purpose, he calls it like birdwatching or gardening or you know, cooking meals for your family. Smaller things that bring you joy. Those are just fine too. While, so, while you’re trying to cook up what your big P purpose might be, just.
Find those things that bring you joy, that give you that animating force for your days.
Barry Ritholtz: So daily goals and activities for sure. That bring fulfillment, not just Kilimanjaro.
Let’s talk a little bit about planning. How important is it, when should people start planning? Is this something you do five months before you retire, or is this something you do 15 years before you retire?
Christine Benz: I’ve really concluded that this idea of retirement as 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!
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, really been able to envision anything besides like Netflix or traveling or whatever. And those things are all great, but you should ideally Start – age 50 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 in trying to direct the work that they do.
Taking an inventory of the things that you still enjoy, taking an 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 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.
Barry Ritholtz: 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 dividends or bond yields. How do most people generate the sort of income they need to enjoy a retirement?
Christine Benz: I think it starts with non-portfolio sources of income. So being thoughtful about how you are maximizing social security, potentially.
I’ve warmed up to the idea of using simple income annuities to augment what someone might get from Social Security. The idea is that you’re trying to address your basic living expenses with those non-portfolio 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, and certainly retirees. Love the idea of subsisting on organically generated income.
I 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, well, 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 gonna source my income through the portfolio and never think about it again.
Barry Ritholtz: I like the idea of the dynamic, approach. We’re gonna 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 the maximum monthly income?”
How do you answer that question?
Christine Benz: 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 afford to do that, who can afford to subsist on their portfolio income prior to social security starting – everyone’s heard the reasons, but you get a guaranteed pickup in benefits for every year that you’re able to delay past your full retirement age, and that benefit is also inflation adjusted. Even if you haven’t yet claimed the benefit that you eventually receive will be 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 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 it’s maybe, you know, kind of divide and conquer where one claims at full retirement age and the other waits until age 70. I often recommend the “open social security tool” as kind of a good basic and free tool for people.
Barry Ritholtz: Since you brought up portfolios earlier, let’s talk about, I, I like do like the idea of being dynamic and flexible where you can look at, “Hey, we’re up 20% in equities. I could peel that off rather than draw something else down.”
But how do you advise people, organize and structure their investment portfolios for maximum cash flow during retirement?
Christine Benz: I’ve become a huge evangelist for the bucket approach to retirement portfolio planning.
I remember talking to Harold Devinsky, the financial planner, probably 20 years ago, and I was asking him how he source his cash flows for his C clients, and basically he said, I run a total return portfolio and I bolt on this cash bucket, and he noted. That having that cash earmarked 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 they knew in a down market, they could pull from the cash. So I love that idea of having very liquid reserves, maybe 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 using buckets, it’s a wonderful client illustration tool. My sense is that people really get it and they’re on board with the asset allocation. It doesn’t seem so black boxy to them.
Barry Ritholtz: 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 5% some form of investment grade corporates or treasuries.
And then, depending on the tax bracket and the state people live in, Munis. How do you think about quote unquote cash?
Christine Benz: 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, I would kind of stair step, stair step at my risk level, where maybe I have very short-term bonds just to kind of a step beyond, um, cash, and then moving into intermediate-term bonds.
Muni certainly if, if, uh, pulling from the taxable portfolio is, is part of the equation, you would wanna think 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 a muni money market fund for higher-income folks.
Barry Ritholtz: We started out talking, um, about. What actually retirement is and how people should define their purpose. What about those who wanna keep working part-time? How does, how does that transition go from full-time to part-time or even from full-time to fully retired? It seems like that’s a challenging time period.
Christine Benz: It’s a beautiful model FT to PT. 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. 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.
It’s important to note that the spoils of being able to work longer, are not falling equally in our population. 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 of their jobs. So Barry, I think you’re probably a perfect example. I’m a good example of this where I really like a lot of what I do and wanna 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 for a while.
Barry Ritholtz: The idea of retiring at 65 or 70 is an anathema to me at the same time. What was Warren Buffett when he announced he retired earlier this year? 94? That’s like, that’s like incredible. I don’t know if I got another 30 plus years in me, but he clearly loves his job.
If you’re in a situation where you can keep working, find it not only remunerative, but fulfilling and, and bringing you some degree of purpose. Is there a reason not to retire?
Christine Benz: Absolutely not. I mean, you do wanna check that you are able to continue to do the job. I was recently on a panel with Carol McClanahan, 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. You’d wanna have a feedback mechanism in place so that people could tell you if you’re not really delivering, 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, I like my job, I just don’t like it 40 hours a week. Maybe you can transition where you’re taking Wednesday off at first or, um, you know, maybe just, just working three days a week, whatever (Friday off Three day weekends) Exactly. Move into it very gradually.
Barry Ritholtz: To wrap up like so much else involving our financial life planning goes a long way. The sooner you start planning. Uh, the better. You have to think through where your revenue’s gonna 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 the markets do or what inflation looks like.
Outro: The Best is yet to come. Come the day you’re mine.
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