At The Money: Planning Your Retirement?

Summary

Masters in Business: At The Money – Planning Your Retirement

Host: Barry Ritholtz
Guest: Christine Benz, Director of Personal Finance and Retirement Planning at Morningstar
Release Date: July 2, 2025

---

1. Introduction

In this episode of At The Money, Bloomberg Radio host Barry Ritholtz delves into the intricacies of retirement planning with Christine Benz, a seasoned expert in personal finance and retirement strategies. The discussion aims to equip listeners with the knowledge and tools necessary to navigate the complexities of retirement, ensuring a fulfilling and financially secure future.

---

2. Defining Purpose in Retirement

Timestamp: [02:46]

Christine Benz emphasizes the critical role of defining one's purpose in retirement. She argues that retiring from a fulfilling career can leave a void, as many derive significant purpose from their work.

Christine Benz: "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."

Benz advises individuals to proactively identify activities that provide a sense of purpose, whether large-scale endeavors or simple daily joys. She references Jordan Grummet's concept of "small p purpose," which includes activities like bird watching, gardening, or cooking for family—highlighting that finding fulfillment doesn't necessarily require grand undertakings.

Christine Benz: "Find those things that bring you joy, that give you that animating force for your day."

---

3. The Importance of Early Planning

Timestamp: [04:32]

Barry Ritholtz critiques the traditional notion of retirement as a distant, fixed point, advocating instead for early and continuous planning.

Barry Ritholtz: "The idea of retirement has a hard stop where we're not really thinking about it except for the months leading up to retirement. It's a terrible model."

He recommends initiating retirement planning around age 50, encouraging individuals to gradually transition by assessing and adjusting their current work activities. This gradual approach helps in reducing the abruptness and stress often associated with retirement.

Barry Ritholtz: "Take an inventory of the things that you still enjoy. Taking an inventory of the things you don't enjoy as much."

---

4. Generating Retirement Income

Timestamp: [06:07]

Christine Benz discusses the various sources of retirement income, emphasizing the importance of diversifying beyond traditional portfolio income like dividends and bond yields. She warns against relying solely on these as it can lead to portfolio construction traps.

Christine Benz: "I think retirees love the idea of subsisting on organically generated income. I think that can be actually a huge trap from a portfolio construction standpoint."

Benz advocates for a dynamic approach to income generation, where retirees actively manage their portfolios to adjust to market fluctuations and personal financial needs annually.

Christine Benz: "It's a dynamic approach. It's not a one and done."

---

5. Social Security Strategies

Timestamp: [08:04]

The conversation shifts to Social Security, where Benz highlights the benefits of delaying claims to maximize monthly income.

Christine Benz: "Delaying is a really good strategy for people who can afford to do that... You get a guaranteed pickup in benefits for every year that you're able to delay past your full retirement age."

She suggests that high earners, particularly the primary earners in a household, can significantly benefit from postponing Social Security claims, thereby increasing the overall household income.

Christine Benz: "For a lot of couples, it's maybe kind of divide and conquer where one claims at full retirement age and the other waits until age 70."

---

6. Investment Portfolio Structuring

Timestamp: [09:51]

Barry Ritholtz introduces the "bucket approach" to retirement portfolio planning, which Christine Benz strongly supports. This method involves dividing investments into distinct "buckets" based on time horizons and risk levels.

Barry Ritholtz: "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 in a globally diversified equity portfolio."

Benz elaborates that this strategy not only provides peace of mind during market downturns but also enhances long-term portfolio stability. She differentiates "cash" as pure, non-volatile assets like money market funds or high-yield savings accounts, ensuring they remain untouched during market fluctuations.

Christine Benz: "I think of it as kind of a zero risk portion of the portfolio."

---

7. Working Part-Time in Retirement

Timestamp: [12:56]

The discussion explores the benefits of continued employment, even in a part-time capacity, during retirement. Christine Benz cites data showing that ongoing work correlates with better health and financial stability.

Christine Benz: "People who are able to work later in life do tend to be healthier and wealthier."

She advises individuals to negotiate flexible work arrangements, such as reduced hours or specific days off, to ease the transition into retirement while maintaining a sense of purpose and social interaction.

Christine Benz: "Maybe you can transition where you're taking Wednesday off at first or working three days a week."

---

8. Conclusion

Timestamp: [15:40]

Barry Ritholtz wraps up the episode by reiterating the paramount importance of comprehensive retirement planning. He underscores the necessity of early preparation, dynamic financial strategies, and open communication with family members to ensure a smooth and satisfying retirement journey.

Barry Ritholtz: "Planning goes a long way. The sooner you start planning, the better."

---

Key Takeaways

• Purpose is Crucial: Define what gives your life meaning beyond work before retiring.
• Start Early: Begin retirement planning around age 50 to allow gradual adjustments.
• Diversify Income Sources: Rely on a mix of non-portfolio and portfolio income to avoid financial traps.
• Optimize Social Security: Consider delaying claims to maximize benefits, especially for high earners.
• Adopt a Bucket Approach: Structure your investment portfolio into segments based on timeframe and risk tolerance.
• Consider Part-Time Work: Continue working in a flexible capacity to maintain financial stability and personal fulfillment.

---

This episode provides a comprehensive guide to retirement planning, blending expert insights with practical strategies to help listeners navigate their post-career lives confidently and purposefully.

Transcript

[Barry Ritholtz]

This is an iHeart podcast.

[Christine Benz]

This episode is brought to you by Charles Schwab. When is the right time to sell a stock? How do you protect against inflation? Financial decisions can be tricky. Your cognitive and emotional biases can lead you astray. Financial Decoder, an original podcast from Charles Schwab can help [e-mail] financial decoder Every business has an ambition. PayPal Open is the platform designed to help you grow into yours with business loans so you can expand and access to hundreds of millions of PayPal customers worldwide. And your customers can pay all the ways they want with PayPal, Venmo pay later and all major cards so you can focus on scaling up when it's time to get growing. There's one platform for all business PayPal open grow today at paypalopen.com loans subject to approval in available locations.

[Unknown]

Did you know using your browser in incognito mode doesn't actually protect your privacy? Take back your privacy with IPVanish VPN. Just one tap and all your data, passwords, communications, browsing history and more will be instantly protected. IPVanish makes you virtually invisible online. Use IPVanish on all your devices, anytime you go online, at home, and especially on Public Wi Fi. Get IPVanish now for 70% off a yearly plan with this exclusive offer at IPVanish.com Audio.

[Christine Benz]

Bloomberg Audio Studios Podcasts Radio.

[Jordan Grummet]

News out of the tree of life I just picked me a plum. You came along and everything started in to hum.

[Barry Ritholtz]

Still, it's a real good bet.

[Jordan Grummet]

The best is yet to come. 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 is the Director of Personal Finance and Retirement Planning at Morningstar. She's published numerous books on the subject, most recently how to retire 20 lessons for a Happy, Successful and Wealthy Retirement. So let's start with the basics. Christine, in your book, you talk about you need to define your purpose in retirement. Explain.

[Barry Ritholtz]

Purpose is super important to us throughout our lives, Barry, and that's true as we age. The problem 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. 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 Grummet, who is the last chapter of the book, 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, maybe you do things like that. But his point, I think is really comforting, which is that small p 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. 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 day.

[Jordan Grummet]

So daily goals and activities that bring fulfillment, not just Kilimanjaro. So 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? Is this something you do 15 years before you retire?

[Barry Ritholtz]

I've really concluded that this idea of retirement has a hard stop where we're not really thinking about it except for the months leading up to retirement. It's a terrible model. And I know why it happens that the way we work in this society is so intense. People show up in retirement totally depleted, and they haven't really been able to envision anything besides like Netflix or traveling or whatever. And those things are all great. But you should ideally start, I think 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.

[Jordan Grummet]

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 dividends or bond yields. How do most people generate the sort of income they need to enjoy a retirement?

[Barry Ritholtz]

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. So 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, Barry, 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 going to source my income through the portfolio and never think about it again.

[Jordan Grummet]

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 the maximum monthly income? How do you answer that question?

[Barry Ritholtz]

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. And everyone's heard the reasons. But you know, 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. So 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 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 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 is kind of a good basic and free tool for people.

[Jordan Grummet]

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 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?

[Barry Ritholtz]

I've become a huge evangelist for the bucket approach to retirement portfolio planning. I remember talking to Harold Davinsky, the financial planner probably 20 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 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 advisory 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.

[Jordan Grummet]

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?

[Barry Ritholtz]

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 I would kind of stair step it by 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 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.

[Jordan Grummet]

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 a challenging time period.

[Barry Ritholtz]

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 the staff 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 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 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 for a while.

[Jordan Grummet]

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 bringing you some degree of purpose is There a reason not to retire?

[Barry Ritholtz]

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 Carolyn 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. And 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, I like my job, I just don't like it 40 hours a week. And so maybe you can transition where you're, you know, taking Wednesday off at first or, you know, maybe just working three days a week, whatever this might be. Yeah, exactly.

[Jordan Grummet]

Three day weekends.

[Barry Ritholtz]

Move into it very gradually.

[Jordan Grummet]

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, adaptability, no matter what 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 Ritholtz. You're listening to Bloomberg's at the Money. The best is yet to come come the day you're mine.

[Unknown]

Did you know using your browser in incognito mode doesn't actually protect your privacy? Take back your privacy with IPVanish VPN. Just one tap and all your data, passwords, communications, browsing history and more will be instantly protected. IPVanish makes you virtually invisible online. Use IPVanish on all your devices anytime you go online, at home, and especially on public wi fi. Get IPVanish now for 70% off a yearly plan with this exclusive offer at IPVanish.com/audio the data that matters for your investments.

[Christine Benz]

The entire auto sector is higher today.

[Unknown]

And analysis on the companies making news on Wall Street.

[Barry Ritholtz]

Tesla has been a stock that's been in focus.

[Christine Benz]

Years have really been all over the map this morning.

[Unknown]

Listen to this stock movers report from Bloomberg.

[Christine Benz]

Let's talk about some other decliners.

[Unknown]

It's your short audio report on the day's winners and losers in the stock market second biggest driver in terms of points for the S&P 500. Subscribe to the Stock Movers Report on Apple podcasts, Spotify or wherever you listen.

[Christine Benz]

Join us in Seattle July 14th and 15th for Bloomberg Green, two days of powerful conversations and meaningful connections. We'll explore what's next in the climate, economy, clean tech policy and greener living. Featured speakers include Jane Fonda, Brian Gellert and Vinod Khosla. The title sponsor is Amazon. Official airlines are Alaska and Hawaiian Airlines. Learn [e-mail] GreenSeattle that's bloomberglive.com GreenSeattle this.

[Barry Ritholtz]

Is an iHeart podcast.