Customer Reviews

The New Rules of Retirement: Strategies for a Secure Future

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As someone who has recently retired, I have read a number of books and magazine articles on financial issues in retirement, and I have consulted a financial planner. Now I find that much of what I was seeking in a number of different places can be found in Bob Carlson's new book on retirement. He does an excellent job of describing the effect that baby boomer retirement will have on many different financial areas.His advice also considers a number of different options (for example, on where and whether one might relocate during retirement), so he does not advocate a "one size fits all" pattern for what he calls the "retirement process." His investment advice is sound on constructing a simple core portfolio before thinking of adding a managed portfolio or an aggressive portfolio. He is critical of some of the classic advice for retirees to transfer most of their investments to bonds for safety; that advice, he notes, was fine for the times in which retirees might expect to live in retirement for about five years, rather than the 20 to 30 years that is more typical today. In short, Carlson discusses and considers much of the traditional advice for retirees and then evaluates that advice in view of current demographic trends. Most people planning to retire or planning in advance for retirement can benefit from this book.

If you only read one sentence,let me say this -- this book is a straightforward description of what anyone needs to think about when investing in the new environment, and it isn't a gimmick book with a quick answer.

This book is clear, solid, thorough and sensible on what faces investors today, whether you are in retirement or planning for retirement. The environment is different now -- we live longer, interest rates are lower, the stock market will see ups and downs, and most of us don't have adequate pension plans -- and Carlson clearly explains why the simple rules of thumb and simple strategies from the past just don't fit anymore. For example, he is persuasive in laying out why index investing is not appropriate for many investors. Also, he makes it clear you need to make your own retirement spending budget, not rely on rules of thumb. He also discusses the risk of "buy and hold" strategies. In short, the background to make your critical decisions -- whether about investing, what type of IRAs, annuities, or health care -- is all here.

A final note -- personally, I like the tone of this book. It's very clear and very informative, but it is not a gimmick book oversimplifying things, which is good, because investment and planning for retirement is a serious topic.

Over-all, this is a very thorough review of the rules of retirement.

I am a believer in the passive index fund approach to investing as opposed to the actively managed approach.

Carlson advocates 3 levels of investments for the accumulation phase, and all 3 are based on an active versus passive management approach. The first level is his Core level and he recommends actively managed value stock funds.....or actively managed balanced funds (stocks and bonds) like Vanguard's Wellington. I think most investors would be better
served using a combination of Vanguard's Total Stock Market and Total Bond Market funds for this core portfolio. The ratio of stocks to bonds depends on the investor's risk tolerance, as well as their need to take risk. Using Vanguard's passively managed index funds versus Carlson's actively managed approach should result in higher returns to the investor because of the lower annual expenses of the index funds.

Carlson recommends large cap value funds because his theory is that in retirement....retirees can give up some returns in exchange for lower chances in the portfolio declining with value stocks. The Fama-French 3 factor study would suggest that large cap value stocks will outperform all large cap stocks....if history repeats itself in the future. If you believe that history will repeat itself, you could choose a Vanguard large cap value index fund instead of the Total Stock Market fund.

Carlson's other 2 levels of portfolios focus on trying to pick in advance, which asset classes are currently not over-valued.....or be really aggressive and take on high risks with private equity funds. These two strategies are high risk and I know of no long term data which supports this approach performing better than a simple index fund approach. I don't believe either of these 2 strategies is appropriate for most investors.

Bengen's and Bierwirth's studies back in 1994 were seminal events in financial planning in that they found 4% was the maximum SWR (Safe Withdrawal Rate). If the stock market experiences a prolonged drop early in a retirement period, SWR's higher than 4% will cause the retiree to exhaust his portfolio before this death.

In 1998, the Trinity Study also found the same basic results as Bengen and Bierwirth.....and recommended a maximum SWR of 4%.

I have read about some mechanical rules which suggest that you can withdraw more than 4% if you spend less money in years the stock market is down, and more money when it is up. Carlson suggests the Yale distribution rule....in which 30% of the annual distribution is based upon portfolio value. I had not heard of this specific rule before, and I will have to do some Monte Carlo analysis to determine its effectiveness.


I found the book easy to read.....and I agree with his recommendations except for the construction of his investment portfolios.

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I'm getting down to the specifics about my retirement plans, eg--how much do I need in investments, what do I need to do about health insurance, where should my investments be, which investments do I withdraw and when, can I reduce my income before I retire & still make it, etc. I've read several books and so far this is by far the best. It's extremely readable, very specific, covers the big questions well, and takes a common-sense approach. I have a great financial planner but I want to educate myself, too--and I'm recommending this book to my financial planner!

This book had more detail on taxes and its effect on planning consequences then I have seen in other books. It have useful information on retirement calculators, and health coverage. Overall this book was more usable to me than some others I have read. It's easy to read and understand. It enlightened me on some points that I had not thought of such as doing your homework on moving to a different location, living and renting in a location where you want to go. You might end up not wanting to move there.

Retirement and retirement planning are changing. Life expectancy is longer, healthcare costs are going up, and Social Security and Medicare may not be enough. All these changes require a different approach to retirement planning. This is what this book is all about.

The author argues that to meet new challenges people will need to save more than past retirees did, take investing more seriously, and plan for health care expenses. The investment strategies also need to be different. In the past, retirees were told to shift their investment dollars away from the stock market and into safer investments because of the stock market's volatility. Because today's retirement can be 20 or 30 years long, this advice is not as applicable anymore. I thought the author did a great job explaining new challenges facing retirees and how to prepare for them. I highly recommend this book to anyone planning for retirement.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

As the author of a similar book entitled, "When Can I Tell My Boss, I Quit!," I offer Mr. Carlson the highest compliment: I used his book in the research for my book. He alerts the reader to impending problems facing the new retirees but also offers many solid and creative solutions. Mr. Carlson's book is well researched and thorough but easy to read. I've re-read it several times to answer questions I have.

as a subscriber to author's newsletter, i was disappointed in the content. i would have preferred that he provide portfolio models in greater detail!