“Retirement is not a math problem,” says one leading retirement math expert

If you want to debate whether an investment with a 4.5% return is better than a less risky investment with a 4.2% return, you can usually count on an answer from Christine Benz, who writes a regular column as director of personal finance and retirement planning for Morningstar.

But if you’re expecting that approach from Benz’s new book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement, you’re in for a shock. The book is a departure from the nitty-gritty of investment strategy and into the emotional side of retirement. In the book, Benz has 20 podcast-like conversations with a number of other retirement experts, such as Mary Beth Franklin on Social Security, Ramit Sethi on optimizing happiness, and Jean Chatzky on what women need to do differently.

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“Retirement is not a math problem,” Benz told MarketWatch. “People might be surprised to see a book from me that is half non-financial – maybe not even half. But I feel like people are too focused on the financial and not enough on the non-financial.”

This is a message that enormous numbers of people need to hear as they approach retirement – ​​not just the more than 10,000 a day who will turn 65 in the next few years as baby boomers age, but and the younger generations behind them. Most of these people have had to largely fend for themselves financially over the past 30 years as 401(k)s and other self-directed retirement plans have replaced pensions. Benz has helped people through the ups and downs of the financial services industry for most of her time, and now she’s ready to help them overcome the emotional hurdles as well.

Part of the book’s epiphany came when Benz hosted a conference a few years ago for the John C. Bogle Center for Financial Education, the foundation started by the late Vanguard founder and its website forum dedicated to his investment philosophy, Bogleheads. .org. She was listening to a presentation by Michelle Singletary, the nationally syndicated personal finance columnist, who focused on giving back to people in her community and raising her children. “It was a deep conversation,” Benz recalled. “I was crying, I was laughing – everyone was. It was so funny.”

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Afterwards, someone came up from the audience to ask a question. They said, “I just want to get your take on small-cap stocks. How much should a small portfolio be?” Part of Benz was impressed by the person’s passion, and part was frustrated that he didn’t take the time to let the larger message sink in.

“The more I do this, the more I feel like it’s small ball and we shouldn’t let it take up too much of our time,” Benz said. “So I hope that message comes through in the book.”

Still learning about retirement

What made this project different from previous books Benz had written — such as “30-Minute Money Solutions” or “Morningstar’s Guide to Mutual Funds” — was that Benz found he had to make a step back to see the bigger picture of retirement. and think of things differently than she had been.

She also learned a few things. “That was one part of the process that was just a joy,” she said. “I think probably when I go back and think about the whole project, I probably reduce retirement planning too much to just financial and investment planning.”

It’s only natural that her attention was focused there, of course. But Benz said that as she talked to the experts in her book, she began to understand the importance of the softer aspects of retirement planning, like finding your purpose and thinking about your legacy. “Individual investors underestimate all of these things,” she said.

Benz found some key questions he needed to ask himself, and uses the book to encourage others to ask them:

“We underestimated them as components of a successful retirement,” Benz said. “I struggled too much on the financial side, and the book, I hope, really emphasizes the importance of taking those factors into account.”

One clear way in which her discussions with 20 experts changed her thinking was how Benz thought about what her own retirement would look like. “I assumed I would have a hard break, like my father’s traditional retirement. He sold his business to his partner and basically stopped,” Benz said.

But now that he’s thought more about it, Benz wants something more fluid. That might mean work, technically, but a different kind of work. She’s tried a few things with mini-retirements or sabbaticals from her day job at Morningstar, where she’s been since 1993. “I want to try to continue to do the aspects of my work that make an impact,” she said. “I want to work in education, so I thought more about it. And I think about letting go of the things I don’t enjoy as much.”

Another challenge for Benz is making the transition from a life of saving to spending that nest egg. Figuring out how much is safe to spend—and on what—involves a lot of decisions about what’s important to you and what you expect from the future.

In a chapter of the book, pensions expert Jamie Hopkins talks about adaptability and how you can’t assume that the way you are today will be forever.

“You have to face some of the changes, and that includes thinking about some not-so-happy considerations — like if you’re not going to be able to do stairs, maybe you’re not staying in your big house,” Benz said. .

With the shift from saving to spending, Benz urged people to consider whether you can approach it proactively. She and her husband are starting to think about that piece of the puzzle right now.

“We’re going to look at what we’re going to get from Social Security and we’re moving toward an annuity to offset our cash needs,” she said. “I know it’s going to be a challenge for me to switch to spending.”

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