You're not doing "it" wrong if "it" is what you actually asked for. You asked how to declare the variable and you're doing that just fine right here:
The rest of it is inefficient and/or wrong. Firstly, why read the data from the file that way when you can simply call File.ReadAllBytes? Secondly, why read all the Bytes from a file and then use an Encoding object to convert that to a String when you can just call File.ReadAllText?
With regards to the SecureString, this line here:
password = Encoding.Unicode.GetString(bytes).DecryptString();
is passing a Byte array to Encoding.GetString, which will return a String, and then trying to call DecryptString on the result and assign the result of that to the `password` variable, which is type SecureString. For that to work, you'd have to have DecryptString declared as an extension method that extends the String type and returns a SecureString. Have you declared DecryptString like that?