Welcome to another episode of the Rational Reminder Podcast! We have a fantastic guest joining us today to talk about annuities, or in more general terms, pensionization. Alexandra Macqueen is certified financial planner, who is also a financial author, editor, York University educator, consultant, and speaker. Alexandra co-wrote a book with Dr. Moshe Milevsky called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life, an incredible resource on our topic today. In this episode, Alexandra talks about the important distinction between financial economics and financial planning, the former being much more rational and quantitative than the latter, which is largely based on folklores and rules of thumb. We discuss the concepts of retirement sustainability quotient (RSQ) and financial legacy value (FLV) and the impact they have on each other, before diving into explaining what annuities are and how they are meant to function. She also advises on the use of the GIC ladder, copycat annuities, and considerations for deferring your CPP. Don’t miss out on this insightful conversation! Key Points from This Episode: 2:38 The distinction between financial economics and financial planning. 4:15 Product allocation and how it relates to pensionization. 6:46 The retirement sustainability quotient (RSQ) and what it measures; How the RSQ affects your financial legacy value (FLV). 9:39 The idea of eliminating the probability of ruin from your portfolio. 10:15 What exactly is an annuity and how does it work?; The type of person and age group that annuities appeal to; Why allocating to an annuity can allow you to spend more on your overall capital. 19:47 The problem with the folklore rules around appropriate withdrawal rates. 23:08 Suggestions for annuities for wealthy people under 50. 26:04 Why a GIC ladder is not a guaranteed stream of income. 30:57 Defining copycat annuities and their accompanying issues. 33:52 CPP and the impact of deferring it at retirement. Books From Today’s Episode: Pensionize Your Nest Egg - https://amzn.to/3gTGOAI Links From Today’s Episode: Rational Reminder Website - https://rationalreminder.ca/podcast/59 York University — https://www.yorku.ca/index.html Moshe A. Milevsky — https://moshemilevsky.com/ Alexandra Macqueen — https://www.pensionacuity.com/ Wade Pfau on Twitter — https://twitter.com/WadePfau?ref_src An Efficient Frontier for Retirement Income — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2151259 Why the 17% drop-out rule is key to your CPP entitlement — https://www.moneysense.ca/columns/ask-moneysense/17-percent-drop-out-rule-cpp/ You can find the Rational Reminder podcast on 🍏 Apple Podcasts: https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582?mt=2 🎤 Spotify Podcasts: https://open.spotify.com/show/6RHWTH9iW7hdnA7eAg7ukO?si=hjZNfLKuSjSeWX38GPqhVA 🕵️‍♂️ Google Podcasts: https://podcasts.google.com/?feed=aHR0cHM6Ly9yYXRpb25hbHJlbWluZGVyLmxpYnN5bi5jb20vcnNz as well as on all major podcatchers You can follow Cameron Passmore and Ben Felix on Twitter: ➡️ https://twitter.com/CameronPassmore ➡️ https://twitter.com/benjaminwfelix Check out Ben's YouTube channel. 📺 https://www.youtube.com/benfelixcsi Catch up on the latest in wealth management and investing insights from the Passmore-Felix Team at PWL Capital. https://www.pwlcapital.com/teams/passmore-felix/?utm_source=youtube&utm_medium=copy&utm_campaign=rr&utm_content=rrvideo The Rational Reminder is presented as an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. The funds and portfolios discussed are examples only and may not be appropriate for your individual circumstances. #investing #podcast #business