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68 of 71 people found the following review helpful:
5.0 out of 5 stars
Great information and resources for getting a handle on financing your retirement, August 29, 2005
Ben Stein and Phil DeMuth have done us a real favor by speaking the unvarnished truth about what needs to be done by everyone who will face retirement. They have provided a clear and sensible approach that can be easily adapted whether you are planning on retirement in five years or in fifty. Obviously, the more time you have until retirement, the better you can prepare.
What I particularly like about the approach taken here is that it doesn't pretend that if everyone followed their advice that society would be rid of the problem of the Baby Boomers moving into their retirement decades (nowadays, retirement lasts much longer than most of us realize). This is a book for YOU. As the authors admit, the idea that everyone will follow the advice offered in this book is roughly nil. However, it is a book about each of us taking responsibility for our own future and rescuing our elderly self. I like the notion the authors put forward about our common fantasy of wishing we could help our younger self do better with what we have learned in life. However, the past cannot be changed. We do have ability to help our future self live better if we will take the proper steps now. When Stein and DeMuth say, "now", they mean today, not sometime when you finally have extra money to sock away. Somehow that time of future affluence never seems to materialize by itself.
Stein and DeMuth take away all our comforting delusions about Social Security and the inevitable choices the government will have to make someday. In all their calculations they also warn us about tax assumptions that can change as future politicians need access to our savings and wealth to fund their programs. The overall point of their warnings is that you need to prepare for your future as if you had to pay for it by yourself.
They help us think through our home, different kinds of investments to store our savings (and hopefully earn some more as well), thinking carefully about how and where we live, how long we should (need to) work, how to keep earning during retirement, and urge us to realize that any pain we think we would incur with the level of savings needed to fund our retirement will not go away if delayed. It will simply be pain that will be saved and collect interest and will make our future self more impoverished and miserable than he needed to be.
There are many worksheets so we can learn the principles by thinking carefully about our own situation. The book also has some helpful principles that are easy to commit to memory. I also liked the section of the book that takes us from our teenage years to retirement and what we should be accomplishing financially during those years.
The way Stein and DeMuth focus on doing prudent things with an emphasis on steady behavior, low cost investing, with rebalancing every five years (so you don't spend too much rebalancing every year, or finding your portfolio seriously out of whack current market realities), and taking as few risks with money you must preserve for your future, I think is extremely helpful. They warn against hoping that there is some kind of lottery win or stock market miracle that will come and provide for your future. The only person one who will care for the older you is the present you. Please do yourself a favor and read this book and then get to work.
The authors use that old joke about outrunning the bears. You don't have to be faster than all the bears, just the guys running next to you. And the truth is the YOUNGER you are when you start this marathon, the easier it will be to outdistance the bears. So, YOUNG PEOPLE will benefit from this book as much as or even more than those near retirement.
Fine book, and very much needed. Don't forget their other books on related topics "Yes, You Can Time the Market" and "Yes, You Can Become a Successful Income Investor".
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37 of 41 people found the following review helpful:
4.0 out of 5 stars
Good book, but may scare the weak of heart, March 22, 2006
Let me first say that I have the utmost respect for these two authors and have read their various published financial articles/books for the past 20 years. They present well researched information that the young investor should take to heart: Save like mad, invest in index/ETF portfolios based on modern portfolio theory, and live below your means. Now, after saying all that, after reading this book, especially the first part, I felt like slashing my financial wrists. The bleak pictures they paint for the retirement of the baby boomers, (god forbid the children of the baby boomers) leaves even myself (a multi-millionaire) wondering if eating Alpo is in my future. Really, the scare tactics to get one to save is really over the top. I've been studying the demographics of the baby boomers for over two decades and have made millions based on projecting what services/housing they would be needing in the future. Therefore, while I recommend this book to those interested in obtaining freedom in retirement, if you want the real story on baby boomer demographics, why not go to the direct source? That is, why not see what the U.S. Census Bureau is forecasting for the baby boomer's retirement. To do this, simply Google: 65+ in the United States: 2005. Another excellent source (but slightly dated) is "Demography is not Destiny" put out by the National Academy on an Aging Society http://www.agingsociety.org/agingsociety/publications/demography/index.html. To summarize many of the wonderful demographic gold nuggets, 7 out of 10 future retirees are doing just fine. Furthermore, yea BB number 76 million but that is only 18% (12.3 million) more children than the number of children that would have been born if fertility rates had remain at pre-World War II rates. It is also interesting to note, that there were almost as many children (72 million) born in the same timeframe (18 years) between 1977 to 1995. Next, if you include the number of children and elderly as a group, they represent "dependents". In 1960, there were 90 "dependents" for every 100 non-dependents (i.e. workers/or those of age that could work), in 2040 that rate will drop to 65.2 "dependents" to 100 non-dependents. Are raising children less expensive than helping our Moms/Dads? Ok, it is 38% more expensive than putting Jr through college? Finally, and this is a biggy, economic growth must average 1.6% over the next 25 years in order for us to afford Social Security and Medicare beneficiaries at today's equivalent expenditures (costs). In the past +32 years, real economic growth has average at or above 2.9%. Bottom line: If your reading this critic for this type of book, you no doubt are going to do just fine. But, then again, that's assuming you save like mad, invest in index/ETF portfolios based on modern portfolio theory, and live below your means.
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11 of 11 people found the following review helpful:
5.0 out of 5 stars
Full of sound advice, December 3, 2006
I was very impressed with this book. It is full of sound advice for both the accumulation phase and distribution phase of investing.
The author's simple 2 Index Fund approach will probably beat most active fund approaches plus you can do other things besides managing your portfolio full time.
The authors also allowed up to a 50:50 split in the stock portion of their asset allocation between domestic and foreign stocks.
I also enjoyed their comparisons of alternative withdrawal strategies during the distribution phase.
The book has an excellent explanation of why companies can give a higher payout ratio to immediate annuity investors versus investors self-annuitizing their portfolio. This magic is due to insurance companies being able to pool their risks and plan for an average lifetime where investors must plan for their maximum versus average lifetime.
I found no flaws in their methodology for planning how much you need to save for retirement. The combination of tables (with spreadsheets on their web site) is a little complex to follow. It would have been nice if they put it together into one financial planning program on their web site.
Last, the authors have reached the same conclusion I have based upon the net worth and US savings rates data: Most Boomers will not save and invest enough to retire when they want to. The only choices that will be left to them are work longer, buy immediate annuities, sell your house using a reverse mortgage, or sell your house and trade down to a smaller house in an area with a lower cost of living.
I would suggest companion books to supplement this book including:
The Richest Man in Babylon
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
The Millionaire Next Door
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
The Bogleheads' Guide to Investing
Wealth: Grow It, Protect It, Spend It, and Share It
All About Asset Allocation.
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