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The Number: A Completely Different Way to Think About the Rest of Your Life Hardcover – January 3, 2006
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About the Author
- Item Weight : 1 pounds
- ISBN-10 : 0743270312
- ISBN-13 : 978-0743270311
- Hardcover : 268 pages
- Dimensions : 6.25 x 1 x 9 inches
- Publisher : Free Press; 1st edition (January 3, 2006)
- Language: : English
- Best Sellers Rank: #1,550,674 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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While not perfect, I would recommend this book over most like it. It at least prods the reader to ask the right questions.
This book is a 200 page rant about the waste and fraud in the retirement financial planning industry. According to the author, the industry is set up to take advantage of boomers who are too dumb to know what to do when they retire.
Yet, the book provides no useful retirement information itself. On the the last page of 200+, he finally gets around to telling you that there is no Number anyway. It's a illusion, for all you suckers who bought this book. Too late now, no returns are available.
If, in the author's opinion, you're a real stooge, you can actually calculate your retirement number. Take your expected retirement income and take 4%. Live on that, he says. But it's more important to find your meaning in life. Money doesn't matter.
It seems rather odd that the author calls other retirement planners frauds. Talk about "the Pot Calling the Kettle Black".
Two basic questions go unexplained.
1. The basis for calculating the number is using a 60/40 investment mix of stocks to bonds. However he does not explain what the assumption is for the historial return for that investment mix.
2. In the back of the book a component of the formula to calculate your 'number' is to include the equity in your home by dividing the number of years you expect to live after retirement into your equity and using the number as a component for the amount of money you can spend each year after you retire. No where does he explain the rationalization for using your equity as part of the calculation of the 'number' and why the equity is included in the first place. You are left to guess on your own.
For me the book yielded no new news, but that is good as I used it as a sanity check for my own retirement planning and confirmed that I am on the right track.
Basically the book says if you want to live on a $100K a year (todays dollars), subtract your annual pension, and SS income from $100k. What is left is amount of income you need from your 'number'. Assume you are getting $50K a year from your pension and SS. You therefore need $50K income from your 'number'. Your pension income, SS income and income from your 'number' now add up to $100k. To make your savings last a life time (25-30years)with a confidence factor of 90% or greater you should only take out 4% (another magic number well known in financial planning circles) a year, not including inflation, from your 'number', i.e. nest egg. That means your number or nest egg needs to be $1.25 million from your 401K or other savings. 4% of $1.25million is $50K. Now that is scary stuff. Now you see why so many people will not have enough money for retirement.
What! You have no pension or your pension is now frozen. You will need to grow a bigger 'number' by working longer or winning the lottery or inheritance or robbing a bank or all of the above. The alternative is to learn how to retire on less income.
The value of the book is showing how much money you need to have for retirement for the lifestyle you want. It is not a how-to investment book. I feel most of the reviews are missing the point of the book.