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How to Retire with Enough Money: And How to Know What Enough Is
Here is a single-sit read than can change the course of your retirement. Written by Dr. Teresa Ghilarducci, an economics professor, a retirement and savings specialist, and a trustee to two retiree health-care trusts worth over $54 billion, How to Retire with Enough Money cuts through the confusion, misinformation, and bad policy-making that keeps us spending or saving poorly.
It begins with acknowledging what a person or household actually needs to have saved—the rule of thumb is eight to ten times your annual salary before retirement—and how much to expect from Social Security. And then it delivers the basic principles that will make the money grow, including a dozen good ideas to get current expenses under control. Why to “get rid of your guy”—those for-fee (or hidden-fee) financial planners that suck up valuable assets. Why it’s always better to pay off a loan or a mortgage.
There are no gimmicks, no magical thinking—just an easy-to-follow program that works.
It begins with acknowledging what a person or household actually needs to have saved—the rule of thumb is eight to ten times your annual salary before retirement—and how much to expect from Social Security. And then it delivers the basic principles that will make the money grow, including a dozen good ideas to get current expenses under control. Why to “get rid of your guy”—those for-fee (or hidden-fee) financial planners that suck up valuable assets. Why it’s always better to pay off a loan or a mortgage.
There are no gimmicks, no magical thinking—just an easy-to-follow program that works.
128 pages, Hardcover
First published December 15, 2015
320 people are currently reading
1084 people want to read
About the author
Teresa Ghilarducci
17 books29 followersTeresa Ghilarducci is an economist, author, and labor economist, and retirement security expert. Her widely circulated New York Times op-ed "Our Ridiculous Approach to Retirement" brought attention to her fresh and comprehensive critique of the America way of provisioning for retirement. Her book, When I'm 64: The Plot Against Pensions and the Plan to Save Them, presents her cutting-edge policy recommendations for restructuring the United States’ deteriorating retirement income security system. Her book Labor’s Capital: The Economics and Politics of Employer Pensions won an Association of American Publishers award in 1992. For the past five years, she has served as a court appointed trustee of the $50 billion retiree health care fund for ford, GM, and Chrysler retirees. Before coming The New School she was a professor at the University of Notre Dame. Dr. Ghilarducci was the 2006–08 Wurf Fellow at Harvard Law School; her research has been funded by the Rockefeller Foundation, the Alfred P. Sloan Foundation, U.S. Department of Labor, Ford Foundation, and Retirement Research Foundation.
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Displaying 1 - 30 of 146 reviews
June 13, 2016
Personal Finance is a classic case of “simple but not easy”. Like the book “The Index Card”, it provides a few basic tips, and the principles are all the same.
- Pay off debt first
- After paying debt, save as much as you can in 401k and Roth IRA
- Invest in low-cost index fund
- Live with less money, consume less (house, car, etc.)
In today’s consuming-centric culture, be disciplined about what to consume is crucial. Stay simple, and stay disciplined on those few tips.
Great quotes
The bottom line: Too many people are facing a future in which they’ll have to keep working indefinitely. They’ll be dependent on an uncertain job market and on government programs perpetually threatened by budget cuts. They’ll be living on someone else’s terms.
To retire at a standard of living similar to the one he or she has during their working lives, the average person with no other retirement plan besides Social Security will need eight times his or her annual salary in retirement accounts.
If you’re like most people, in retirement you’ll need 70 to 80 percent of your pre-tax, pre-retirement income.
What’s important about this short history lesson is this: The 401( k) was originally supplementary in nature, a way for highly compensated executives to get a tax break on money set aside for retirement. This humbly named plan was never meant to be a replacement for traditional pensions. If it had been, it wouldn’t have been given the dull name 401( k). It would have been called the Great American Pension Plan.
The biggest factor in whether you can live comfortably on 70 percent of your previous income is where you stood on the income ladder most of your life. Wealthy people who are willing to cut non-necessary expenses can get by fairly easily on 70 percent. The working poor, however, can’t.
It’s the classic matchup: Age and Experience versus Youth and Energy. Older workers have solid résumés and years of practical know-how, but young job applicants are willing to work for lower pay to get experience. They have few medical problems that’ll interfere with productivity, and health insurance costs less for young people. Many can pull all-nighters because they have no children to care for. Finally, they’re usually up to speed on the newest forms of technology. It’s easy to see why they’re so attractive to the human-resources department.
Good Idea #1: Downsize now; live on 70 percent of your income. As I’ve discussed, very few people will have retirement income that equals what they were making during their working lives. Seventy percent is approximately the highest rate most people can hope for.
Good Idea #2: Have a nice home in a modest neighborhood.
Good Idea #3: Rethink life insurance. If you don’t have kids, you almost certainly don’t need it. But if you do have life insurance, make sure it’s term, not whole. Term life insurance is insurance pure and simple: You pay premiums and get a lump sum if the insured dies.
Good Idea #4: Don’t carry a mortgage any longer than you have to. A 7- or 15-year option, rather than the high-priced 30-year standard, will certainly raise your monthly payment, but you’ll save money in the long run— partly because of a lower interest rate, but largely because you’ve halved the time the loan is racking up interest. A good rule of thumb is that your home’s price should be about 2.5 times your annual income, and saving up that amount is a daunting prospect.
The bottom line: The math never works in an interest payer’s favor, but the person with the highest income gets the most help from the government to buy a house and pay the bank interest. If you want better housing for the money, buy a less expensive house, one with a mortgage that you can pay off in two to seven years.
Good Idea #5: Low-fee index funds are all you need. Vanguard Funds is a one-stop shop in this area. I have no connection to or interest in Vanguard; they just offer an excellent product. You can buy directly from their website.
Multibillion-dollar funds, like the Norwegian sovereign wealth fund, are so big that if they make a move, the world moves with them.
How IRS and retirement funds work
A rollover, sometimes called a trustee-to-trustee transfer, is not considered a withdrawal and is not subject to tax. However, you pay more fees and you lose a lot of fiduciary protection, so keep your 401( k) in a 401( k). Do not roll it over into an IRA.
The IRS allows a variety of tax-penalty-free withdrawals from both IRAs and 401( k) accounts, including a $ 10,000 IRA withdrawal for first-time home buyers. There are restrictions, of course; if you take this option, you’ll probably want to check in with a tax adviser to make sure you’re playing safely by IRS rules.
Manage Your Portfolio
Which brings up this point: Your circumstances are going to change over time, which means you’ll need to rebalance your portfolio from time to time. That means changing the proportion of risky and relatively safe vehicles. As you get older and retirement approaches, you should be shifting toward safer vehicles; generally, that means more in bonds and less in stocks. However, in many years, the best thing to do will be nothing. Once you’ve set up a solid portfolio according to my advice— or a fee-only adviser has set one up for you— it’ll be good for a number of years.
Your annual portfolio review is about balancing risk and return, not about reacting to market fluctuations.
I look over my investments every November. There’s no profound reason behind my choice of month, except that going over my finances just before the holidays keeps me from going overboard when buying gifts.
According to economist Eugene Steuerle and his colleagues at the Urban Institute, a single man who retires in the year 2020 after a full career earning a median wage (about $ 44,000) can expect to receive $ 536,000 in Social Security and Medicare benefits.
Five of the ten highest-paid CEOs in 2013 were in health care. Only one in the top ten was from Big Oil, the industry that many Americans would associate with rampant profiteering.
- Pay off debt first
- After paying debt, save as much as you can in 401k and Roth IRA
- Invest in low-cost index fund
- Live with less money, consume less (house, car, etc.)
In today’s consuming-centric culture, be disciplined about what to consume is crucial. Stay simple, and stay disciplined on those few tips.
Great quotes
The bottom line: Too many people are facing a future in which they’ll have to keep working indefinitely. They’ll be dependent on an uncertain job market and on government programs perpetually threatened by budget cuts. They’ll be living on someone else’s terms.
To retire at a standard of living similar to the one he or she has during their working lives, the average person with no other retirement plan besides Social Security will need eight times his or her annual salary in retirement accounts.
If you’re like most people, in retirement you’ll need 70 to 80 percent of your pre-tax, pre-retirement income.
What’s important about this short history lesson is this: The 401( k) was originally supplementary in nature, a way for highly compensated executives to get a tax break on money set aside for retirement. This humbly named plan was never meant to be a replacement for traditional pensions. If it had been, it wouldn’t have been given the dull name 401( k). It would have been called the Great American Pension Plan.
The biggest factor in whether you can live comfortably on 70 percent of your previous income is where you stood on the income ladder most of your life. Wealthy people who are willing to cut non-necessary expenses can get by fairly easily on 70 percent. The working poor, however, can’t.
It’s the classic matchup: Age and Experience versus Youth and Energy. Older workers have solid résumés and years of practical know-how, but young job applicants are willing to work for lower pay to get experience. They have few medical problems that’ll interfere with productivity, and health insurance costs less for young people. Many can pull all-nighters because they have no children to care for. Finally, they’re usually up to speed on the newest forms of technology. It’s easy to see why they’re so attractive to the human-resources department.
Good Idea #1: Downsize now; live on 70 percent of your income. As I’ve discussed, very few people will have retirement income that equals what they were making during their working lives. Seventy percent is approximately the highest rate most people can hope for.
Good Idea #2: Have a nice home in a modest neighborhood.
Good Idea #3: Rethink life insurance. If you don’t have kids, you almost certainly don’t need it. But if you do have life insurance, make sure it’s term, not whole. Term life insurance is insurance pure and simple: You pay premiums and get a lump sum if the insured dies.
Good Idea #4: Don’t carry a mortgage any longer than you have to. A 7- or 15-year option, rather than the high-priced 30-year standard, will certainly raise your monthly payment, but you’ll save money in the long run— partly because of a lower interest rate, but largely because you’ve halved the time the loan is racking up interest. A good rule of thumb is that your home’s price should be about 2.5 times your annual income, and saving up that amount is a daunting prospect.
The bottom line: The math never works in an interest payer’s favor, but the person with the highest income gets the most help from the government to buy a house and pay the bank interest. If you want better housing for the money, buy a less expensive house, one with a mortgage that you can pay off in two to seven years.
Good Idea #5: Low-fee index funds are all you need. Vanguard Funds is a one-stop shop in this area. I have no connection to or interest in Vanguard; they just offer an excellent product. You can buy directly from their website.
Multibillion-dollar funds, like the Norwegian sovereign wealth fund, are so big that if they make a move, the world moves with them.
How IRS and retirement funds work
A rollover, sometimes called a trustee-to-trustee transfer, is not considered a withdrawal and is not subject to tax. However, you pay more fees and you lose a lot of fiduciary protection, so keep your 401( k) in a 401( k). Do not roll it over into an IRA.
The IRS allows a variety of tax-penalty-free withdrawals from both IRAs and 401( k) accounts, including a $ 10,000 IRA withdrawal for first-time home buyers. There are restrictions, of course; if you take this option, you’ll probably want to check in with a tax adviser to make sure you’re playing safely by IRS rules.
Manage Your Portfolio
Which brings up this point: Your circumstances are going to change over time, which means you’ll need to rebalance your portfolio from time to time. That means changing the proportion of risky and relatively safe vehicles. As you get older and retirement approaches, you should be shifting toward safer vehicles; generally, that means more in bonds and less in stocks. However, in many years, the best thing to do will be nothing. Once you’ve set up a solid portfolio according to my advice— or a fee-only adviser has set one up for you— it’ll be good for a number of years.
Your annual portfolio review is about balancing risk and return, not about reacting to market fluctuations.
I look over my investments every November. There’s no profound reason behind my choice of month, except that going over my finances just before the holidays keeps me from going overboard when buying gifts.
According to economist Eugene Steuerle and his colleagues at the Urban Institute, a single man who retires in the year 2020 after a full career earning a median wage (about $ 44,000) can expect to receive $ 536,000 in Social Security and Medicare benefits.
Five of the ten highest-paid CEOs in 2013 were in health care. Only one in the top ten was from Big Oil, the industry that many Americans would associate with rampant profiteering.
March 19, 2016
Pretty interesting read. While most of the advise is for things I'm already doing, it is nice to be affirmed that I'm on the right path. It also appears that I am decades younger (and have saved more) than the target audience, but it's never too early to start planning!
I would definitely recommend reading this book, no matter what your age, financial situation, or goals are. It's a quick read too, which is nice.
I would definitely recommend reading this book, no matter what your age, financial situation, or goals are. It's a quick read too, which is nice.
June 11, 2016
Short, sweet, and not shying away from how the way you vote might affect your pocketbook in retirement. I manage my own retirement accounts and consider myself pretty savvy about mutual funds and other financial products, but I found good actionable information in this book. It's also good about social security, which I generally find more mysterious. In a world in which retirement financial planners are fighting a new rule that they have to actually (gasp) show a fiduciary regard for their clients' best interests, you need a book like this -- and it won't take you long to read it, so it might not just sit on your shelf looking authoritative. (It can't look authoritative, frankly -- it's so short and small that it's really kinda cute instead.)
April 22, 2020
While I appreciate what Suze Orman does (especially for women) regarding saving for old age, this tiny book packs a lot of useful information in an easy-to-understand style. I learned new things about index funds as well as the history and value (and appreciation) of Social Security, Medicare, and Medicaid. If you don't know where to start, begin with this book.
March 11, 2016
It was an okay book, not something I will want to read again though.
The book's premise revolves around how to plan for retirement. As an early 30-something year old, why am I planning for retirement as early as now? Surely I can do this later on when I'm old(er) and wiser?
The thing is, myself and Peter are aiming to become Financially Independent as soon as we can, just so we can be "retired" and we can use that spare time in pursuing other interests, like traveling the world and building businesses that we are passionate about. So, picking up this book is adding to my agenda of learning more about retirement, and properly preparing for it.
First off, this book is catered to the US setting - so, sorry if you live in another region, you may not be able to relate much to the tips, such as:
1. Putting the maximum yearly in your 401k.
2. Maximizing your contributions to IRA (if you don't have a 401K)
3. Investing in low-fee funds (hello Vanguard)
4. Hacking away at your debt (in our case, we only have a mortgage which we are starting to hack away slowly by putting a quarter of our side hustle money in it)
5. Having an emergency fund of at least 3 months to tide you over (in our case, we are saving 6 months of our home emergency fund as a couple. I already have my own personal emergency fund, and we're working on Peter's) - having an emergency fund is a lifesaver!
6. Saving for a car as early as now - because where we live (Jacksonville, FL), it's almost impossible for us to get anywhere without a car. We are going to do the bicycle route eventually when our workplace moves closer to our home, but I'll need to learn how to cycle first (yes, I don't know how to bike) and we'll also need to buy bikes, which is an additional expense.
7. Being more frugal and only living within our means
While those tips seem great, we've already been putting them into action for the past two years, so I'm not sure how the book changed my mind or convinced me to do a change in lifestyle otherwise.
However, the book is fairly thin and is a quick read, so might be worth perusing over.
I'd give this book 3/5 stars because it may help other people, but I for one, don't find it so useful or life changing to entail a 5/5 stars.
The book was borrowed from my local library (Jacksonville Public Library)
The book's premise revolves around how to plan for retirement. As an early 30-something year old, why am I planning for retirement as early as now? Surely I can do this later on when I'm old(er) and wiser?
The thing is, myself and Peter are aiming to become Financially Independent as soon as we can, just so we can be "retired" and we can use that spare time in pursuing other interests, like traveling the world and building businesses that we are passionate about. So, picking up this book is adding to my agenda of learning more about retirement, and properly preparing for it.
First off, this book is catered to the US setting - so, sorry if you live in another region, you may not be able to relate much to the tips, such as:
1. Putting the maximum yearly in your 401k.
2. Maximizing your contributions to IRA (if you don't have a 401K)
3. Investing in low-fee funds (hello Vanguard)
4. Hacking away at your debt (in our case, we only have a mortgage which we are starting to hack away slowly by putting a quarter of our side hustle money in it)
5. Having an emergency fund of at least 3 months to tide you over (in our case, we are saving 6 months of our home emergency fund as a couple. I already have my own personal emergency fund, and we're working on Peter's) - having an emergency fund is a lifesaver!
6. Saving for a car as early as now - because where we live (Jacksonville, FL), it's almost impossible for us to get anywhere without a car. We are going to do the bicycle route eventually when our workplace moves closer to our home, but I'll need to learn how to cycle first (yes, I don't know how to bike) and we'll also need to buy bikes, which is an additional expense.
7. Being more frugal and only living within our means
While those tips seem great, we've already been putting them into action for the past two years, so I'm not sure how the book changed my mind or convinced me to do a change in lifestyle otherwise.
However, the book is fairly thin and is a quick read, so might be worth perusing over.
I'd give this book 3/5 stars because it may help other people, but I for one, don't find it so useful or life changing to entail a 5/5 stars.
The book was borrowed from my local library (Jacksonville Public Library)
November 16, 2016
Most of these “here comes retirement, are you ready?” books are pretty similar. This is another one, with a few things going for it.
- It is very short and concise
- Despite the shortness of the book, it is very readable
- Covers motherhood and apple pie of retirement – work longer if you can, save and invest, be frugal
- Suggests fee-only planner help and explains why
- Includes a few case studies that are informative in their differences
- Includes a chapter on voting…The author learned from the Grey Panthers to know what is in your self-interest and to use the democratic process to make sure you don’t lose expected benefits. The author lobbies the reader here on her idea for a kind of forced pension funded through payroll deductions. She has another book about this idea.
An entirely reasonable read on preparing your finances for retirement.
- It is very short and concise
- Despite the shortness of the book, it is very readable
- Covers motherhood and apple pie of retirement – work longer if you can, save and invest, be frugal
- Suggests fee-only planner help and explains why
- Includes a few case studies that are informative in their differences
- Includes a chapter on voting…The author learned from the Grey Panthers to know what is in your self-interest and to use the democratic process to make sure you don’t lose expected benefits. The author lobbies the reader here on her idea for a kind of forced pension funded through payroll deductions. She has another book about this idea.
An entirely reasonable read on preparing your finances for retirement.
January 9, 2016
A useful and concise (only 116 pages) overview of retirement saving. Only provides simple formulas, then points to where you can find online calculators. I liked the inclusion of a chapter on the importance of voting now and in the future. If you are intimidated by the subject (you know you've got to do it, right?), give this one a try. Also recommended, Jane Bryant Quinn's Smart and Simple Financial Strategies for Busy People, even though it's from 2006.
October 16, 2016
An easy to digest, well written, fairly idiot-proof description of the future -for USAians. As we have basically no safety net except Social Security and MediCare, she does a nice job of explaining how to maximize your return on investment in those programs. Lots of resources. Types of investments, returns.
Recommended for anyone who needs a wee kick to start thinking about.....then.
Recommended for anyone who needs a wee kick to start thinking about.....then.
October 25, 2019
Good and simple.
Simple, clear, and to the point.
A good read, and the final chapter is very important because a lot of people vote based on sensational news without taking into account how their votes will affect their present lives and future.
Simple, clear, and to the point.
A good read, and the final chapter is very important because a lot of people vote based on sensational news without taking into account how their votes will affect their present lives and future.
March 16, 2017
informative, but with a unmistakable socialist bias.
June 23, 2022
The shortest book about retirement I've ever read. It gives you the basics in simple language with solid examples. This is the book to read if you want the bottom line.
August 13, 2024
Gonna need to read this every 5 years or so!
December 30, 2017
straightforward and practical, conservative advice.
June 21, 2020
Easy to read, basic advice geared toward an American system. Decent read, but most isn’t applicable to a non-American audience
March 4, 2025
Author has the most optimistic assessment of Social Security's long-term viability that I've read.
September 4, 2022
Not worth my time.
1. Nothing new to me. Read a few Vanguard or even those articles google offers on your cellphone, and you've got the content.
2. Basic 4% withdrawal plan. Nothing new added to that.
3. Repeats the same sentences over and over. In 116 pages, not sure how she ran out of content in order to put out the same simple idea often for multiple pages. Overall the book needs editing. Ideas pop up over and over mixed in with others, rather than a streamlined read. Made it hard to skim.
An example:
On page 26 is a box explaining how SS is calculated using SS's internal complicated formula. Instead you can just go onto SS's site and it will tell you your amount. Also there's calculators on the internet where you can enter variations on salaries and see the results.
Meanwhile that box is titled "How delaying benefits helps" but that info isn't in that box! Then in many spots, she repeats that amount you get varies on when you start collecting, but without detail. (From other books, it's about 8% gain per year for each year you delay initiating SS. How much you earn after retirement age also influences whether you want to start taking since in some scenarios, SS adjusts it's payment for your earned income.)
4. At points it looked like she was going somewhere in a paragraph, only to switch to another topic rather than answer the questions raised or flesh out some difficult topic.
5. Somewhat arrogant, angry, and snarky attitude throughout. Unnecessary & off putting.
6. A lot of political opinion about IRAs, Medicare, Social Security and the USA that's negative. If you want to do political diatribes, write it as a separate book for those interested. Or at least say so in the book description. Her comments are too simplistic to be a thoughtful assessment on these complicated topics. There's little data with references to back up her views.
For example,
Yes we pay more in health care. We also invest more in development resulting in more newer treatments which the rest of the world uses. We also have more access to those treatments sooner. So how do we figure that into fixing all of this?
7. Daily lattes. I guess I missed the book this viral concept came from. Buy $3 latte, 5x a week =$15 x 50 weeks = $750 a year. So decide if you can afford that, or want it in savings compounding interest for 30 years until retirement for about $60,000. It's a luxury and for some people it's affordable and for others it isn't.
Meanwhile, if it sets a tone that $3 is a trivial pay no matter how often, that can make it harder to save up. Early in my 20s I found if I didn't buy small items freely and was cautious about every $10 expense, every few months I had $2000 to put to savings. If I bought freely on small items, I had no excess to put to savings. I've been more cautious ever since.
---
Overall she adds some psychological explanation to a the basic plan that can be interesting but in no way is useful to my planning. For example if you have the money, buy in a less affluent rather than high upscale neighborhood so you don't find yourself spending more as you see what's around you.
That's true, but it ignores other factors like how much do you want invested in real estate? A more expensive house increases value more over it's lifetime. If you want 15% of your portfolio in RE, then you may want a less expensive house and a rental to reach that.
Bottomline:
So if you know nothing it will give a hodge podge of basic concepts to mull over. But if you know even a small amount, it will seem superficial, lacking details that matter to those ideas, and disorganized. Plus there's the going off topic to the political realm but too simplistically to be accurate.
1. Nothing new to me. Read a few Vanguard or even those articles google offers on your cellphone, and you've got the content.
2. Basic 4% withdrawal plan. Nothing new added to that.
3. Repeats the same sentences over and over. In 116 pages, not sure how she ran out of content in order to put out the same simple idea often for multiple pages. Overall the book needs editing. Ideas pop up over and over mixed in with others, rather than a streamlined read. Made it hard to skim.
An example:
On page 26 is a box explaining how SS is calculated using SS's internal complicated formula. Instead you can just go onto SS's site and it will tell you your amount. Also there's calculators on the internet where you can enter variations on salaries and see the results.
Meanwhile that box is titled "How delaying benefits helps" but that info isn't in that box! Then in many spots, she repeats that amount you get varies on when you start collecting, but without detail. (From other books, it's about 8% gain per year for each year you delay initiating SS. How much you earn after retirement age also influences whether you want to start taking since in some scenarios, SS adjusts it's payment for your earned income.)
4. At points it looked like she was going somewhere in a paragraph, only to switch to another topic rather than answer the questions raised or flesh out some difficult topic.
5. Somewhat arrogant, angry, and snarky attitude throughout. Unnecessary & off putting.
6. A lot of political opinion about IRAs, Medicare, Social Security and the USA that's negative. If you want to do political diatribes, write it as a separate book for those interested. Or at least say so in the book description. Her comments are too simplistic to be a thoughtful assessment on these complicated topics. There's little data with references to back up her views.
For example,
Yes we pay more in health care. We also invest more in development resulting in more newer treatments which the rest of the world uses. We also have more access to those treatments sooner. So how do we figure that into fixing all of this?
7. Daily lattes. I guess I missed the book this viral concept came from. Buy $3 latte, 5x a week =$15 x 50 weeks = $750 a year. So decide if you can afford that, or want it in savings compounding interest for 30 years until retirement for about $60,000. It's a luxury and for some people it's affordable and for others it isn't.
Meanwhile, if it sets a tone that $3 is a trivial pay no matter how often, that can make it harder to save up. Early in my 20s I found if I didn't buy small items freely and was cautious about every $10 expense, every few months I had $2000 to put to savings. If I bought freely on small items, I had no excess to put to savings. I've been more cautious ever since.
---
Overall she adds some psychological explanation to a the basic plan that can be interesting but in no way is useful to my planning. For example if you have the money, buy in a less affluent rather than high upscale neighborhood so you don't find yourself spending more as you see what's around you.
That's true, but it ignores other factors like how much do you want invested in real estate? A more expensive house increases value more over it's lifetime. If you want 15% of your portfolio in RE, then you may want a less expensive house and a rental to reach that.
Bottomline:
So if you know nothing it will give a hodge podge of basic concepts to mull over. But if you know even a small amount, it will seem superficial, lacking details that matter to those ideas, and disorganized. Plus there's the going off topic to the political realm but too simplistically to be accurate.
April 6, 2019
This is a very good book on retirement planning and one that anyone from their late 40's onward should read. The discussion applies to everyone but most of the focus is on people in middle age.
I work on quantitative models of retirement planning and have done so for 15 years. As such, I have a few quibbles with the author. First and foremost, she concludes that people's low retirement savings are not their fault at all. She blames the shifting economic and societal trends. There is plenty of responsibility to go around, but personal discretionary consumption is certainly an issue.
I also find some of the negative positions on IRAs and other self-directed plans to be odd. You can set up an IRA ar any major brokerage firm extremely cheaply. With a few low cost index funds this is often superior to most corporate retirement plans. Even better are Solo 401(k) plans which are also available at all major brokerage firms.
Overall, this is a great book and one that will benefit almost anyone.
I work on quantitative models of retirement planning and have done so for 15 years. As such, I have a few quibbles with the author. First and foremost, she concludes that people's low retirement savings are not their fault at all. She blames the shifting economic and societal trends. There is plenty of responsibility to go around, but personal discretionary consumption is certainly an issue.
I also find some of the negative positions on IRAs and other self-directed plans to be odd. You can set up an IRA ar any major brokerage firm extremely cheaply. With a few low cost index funds this is often superior to most corporate retirement plans. Even better are Solo 401(k) plans which are also available at all major brokerage firms.
Overall, this is a great book and one that will benefit almost anyone.
January 7, 2018
As I read this, I felt like this was written by someone who doesn't understand how much money the average Southern person makes in their 30s. The examples (even the examples of a person in their 20s and the working-class cab driver) were of wealthier people. There also seemed to be a presumption that the reader would not move around or change jobs often. Statistically, especially for my generation, that simply isn't the case (and that plays a big part in financial decisions). While there are a few good tips and things are broken down relatively clearly, it all could be distilled in a post, on a blog that targets people in their 50s and 60s. The AARP Retirement Survival Guide is far better at relating to all stages of life.
March 25, 2016
I picked up an advanced reader's copy of this little book at the American Library Association conference. I thought it might be good to get some advice on investing for retirement. The book was a quick easy read and definitely confirmed my views that the current retirement system in the US is screwed up, but it didn't really help me much in the way of making me feel like I am properly preparing myself for retirement. It was all pretty basic advice. This book would not be very useful to anyone who has spent even a little bit of time thinking about their retirement. I guess it might provide some assistance to people who really never have, but it really didn't do me much good.
January 31, 2018
Good for basic advice, but not for someone with more intermediate/advanced knowledge regarding retirement planning. A short and easy read. Some of the concepts are oversimplified with the goal of driving home basic concepts. In a few cases, I outright disagree, but I understand trying to keep things basic. Definitely a good book for those just starting their careers, or just digging into the details of saving for retirement.
December 23, 2019
This book has some solid advice mixed in with some terrible advice. I wouldn't read it again.
The best things I learned were the differences in ending balances for accounts/funds with different fees (although the calculator they reference doesn't match their math).
Her bad advice includes paying off your mortgage ASAP no matter what, even if your mortgage is 5% or less interest, and you could be making 10%+ in the stock market.
The best things I learned were the differences in ending balances for accounts/funds with different fees (although the calculator they reference doesn't match their math).
Her bad advice includes paying off your mortgage ASAP no matter what, even if your mortgage is 5% or less interest, and you could be making 10%+ in the stock market.
April 28, 2018
Terrible financial advice. You can't do it and it's not your fault!
May 18, 2019
Pretty average advice, nothing really new. Geared towards beginners...political slant at the end. Picked it up looking for deeper guidance. This is not the book for that.
January 3, 2017
Easy to read and shows concrete steps to save for retirement--but lacks depth
And perhaps that's the point? That saving enough for retirement really is as easy as she says it is? I have my doubts that anything I'm able to save (even though I follow all the "simple" rules of personal finance) won't be anywhere near the amount needed for retirement... Ghilarducci notes, "So if you’re worried, that’s a positive sign: It means you haven’t retreated into denial and magical thinking. You’re doing something smart. You’re getting real and facing facts, and that’s the first step forward." (Loc. 253) So...my feelings are normal?
That being said, Ghilarducci breaks down the steps people should take to set themselves up for a decent retirement—and doesn't shame people for where they are on their retirement-planning journey. “If you’re inadequately prepared for retirement, it’s likely not entirely your fault. The money-management industry is not on the side of the average American.” (Loc. 212) Ghilarducci notes that many personal finance books “shame the reader, suggesting that the current mess was created solely by average people who lack financial literacy and who buy venti lattes instead of carrying a Thermos to work. (As if only your thirst for gourmet coffee stands between you and a secure retirement!)” (Loc. 101) “Although personal responsibility is an important part of retirement planning, the looming crisis isn’t all being caused by individuals who can’t deny themselves electronic sports watches and designer handbags. We’ve been convinced that the jam we’re in is our own fault. But it’s not. This isn’t just a personal problem, it’s a national problem.” (Loc. 128) (I always get a thrill whenever I see repudiation of the "Latte Factor"—while frugality definitely has a place, not spending $3 on coffee isn't going to do as much when the big-ticket items [housing, healthcare, education, retirement needs] are increasing faster than incomes are.)
Also, Americans tend to have higher costs than other nations on a number of services: “It isn’t the faulty American character that causes us to have less in retirement savings than we need. Americans pay more for medical care, child care, education, costs of unemployment, disability, and nursing home and at-home care for older folks than most people in the 36-member club of rich nations, the Organization for Economic Cooperation and Development (OECD). And Americans have less affordable and reliable public transportation than most OECD nations.
Although cutting spending is obviously a subject of great interest to us in America, and I’m not going to discourage you from trimming your budget, most likely hyper-consumerism is not the cause of inadequate retirement savings. The lack of basic public services, social insurance, and inadequate retirement vehicles is.” (Loc. 725)
Additionally, even when you’re able to use Medicare, “Congress has specifically legislated [see subsection (i) relating to noninterference] that Medicare cannot negotiate special deals with the pharmaceutical industry. So put this in your tickler file: The next time anyone tells you that Medicare is too expensive, politely agree, and then recruit them to lobby Congress to give Medicare the ability to negotiate the cost of drugs. That would certainly lower the cost of Medicare.” (Loc. 1305) While members of Congress continue to introduce bills to change this, there's precious little chance of anything changing in the near future.
Ghilarducci explains the history of 401(k) plans and how they “favor top earners the most, and puts too much risk on the individual.” (Loc. 174) 401(k) plans were “originally supplementary in nature, a way for highly compensated executives to get a tax break on money set aside for retirement.” (Loc. 161)
“And the tax breaks that make these plans so attractive? They work out much better for higher earners, who can comfortably set aside the maximum contribution, thereby getting a bigger tax break and the largest possible employer match. Eighty percent of retirement account tax breaks go to the wealthiest 20 percent of taxpayers. The move to 401(k) plans shifted most risk from the company to the worker, who now found himself the manager of a pension fund for one. Employees didn’t ask for this change; neither did unions. The shift to 401(k) plans was spearheaded by big business, which was more than happy to relinquish responsibility for sending its retirees a fixed pension check every month. The tax break and the employer match were the spoonful of sugar that eased this bad medicine down the throats of the regular employees, for whom the 401(k) was a poor substitute for a defined-benefit plan.” (Loc. 179)
The downsides of this plan? “The DIY system works only if average people save voluntarily—sometimes at very high levels—and are savvy enough to find low-risk investments with low management fees. It requires people to keep their heads and not withdraw money during financial downturns or during personal or family emergencies. Thus, the theory goes, they’ll retire having saved enough money to last the rest of their lives, regardless of how long that is or of the health problems they have in their final years. To put it mildly, this hasn’t happened. What would you expect if we were all asked to cut our own hair, install our own toilets, and do our own electrical wiring? A few of us would succeed at one of the three. But there’d be an awful lot of bowl haircuts, flooded bathrooms, and smoldering houses out there.” (Loc. 204)
As for the retirement age,
Final thought: “The best day to start planning and saving for your retirement is today.” (Loc. 1116)
And perhaps that's the point? That saving enough for retirement really is as easy as she says it is? I have my doubts that anything I'm able to save (even though I follow all the "simple" rules of personal finance) won't be anywhere near the amount needed for retirement... Ghilarducci notes, "So if you’re worried, that’s a positive sign: It means you haven’t retreated into denial and magical thinking. You’re doing something smart. You’re getting real and facing facts, and that’s the first step forward." (Loc. 253) So...my feelings are normal?
That being said, Ghilarducci breaks down the steps people should take to set themselves up for a decent retirement—and doesn't shame people for where they are on their retirement-planning journey. “If you’re inadequately prepared for retirement, it’s likely not entirely your fault. The money-management industry is not on the side of the average American.” (Loc. 212) Ghilarducci notes that many personal finance books “shame the reader, suggesting that the current mess was created solely by average people who lack financial literacy and who buy venti lattes instead of carrying a Thermos to work. (As if only your thirst for gourmet coffee stands between you and a secure retirement!)” (Loc. 101) “Although personal responsibility is an important part of retirement planning, the looming crisis isn’t all being caused by individuals who can’t deny themselves electronic sports watches and designer handbags. We’ve been convinced that the jam we’re in is our own fault. But it’s not. This isn’t just a personal problem, it’s a national problem.” (Loc. 128) (I always get a thrill whenever I see repudiation of the "Latte Factor"—while frugality definitely has a place, not spending $3 on coffee isn't going to do as much when the big-ticket items [housing, healthcare, education, retirement needs] are increasing faster than incomes are.)
Also, Americans tend to have higher costs than other nations on a number of services: “It isn’t the faulty American character that causes us to have less in retirement savings than we need. Americans pay more for medical care, child care, education, costs of unemployment, disability, and nursing home and at-home care for older folks than most people in the 36-member club of rich nations, the Organization for Economic Cooperation and Development (OECD). And Americans have less affordable and reliable public transportation than most OECD nations.
Although cutting spending is obviously a subject of great interest to us in America, and I’m not going to discourage you from trimming your budget, most likely hyper-consumerism is not the cause of inadequate retirement savings. The lack of basic public services, social insurance, and inadequate retirement vehicles is.” (Loc. 725)
Additionally, even when you’re able to use Medicare, “Congress has specifically legislated [see subsection (i) relating to noninterference] that Medicare cannot negotiate special deals with the pharmaceutical industry. So put this in your tickler file: The next time anyone tells you that Medicare is too expensive, politely agree, and then recruit them to lobby Congress to give Medicare the ability to negotiate the cost of drugs. That would certainly lower the cost of Medicare.” (Loc. 1305) While members of Congress continue to introduce bills to change this, there's precious little chance of anything changing in the near future.
Ghilarducci explains the history of 401(k) plans and how they “favor top earners the most, and puts too much risk on the individual.” (Loc. 174) 401(k) plans were “originally supplementary in nature, a way for highly compensated executives to get a tax break on money set aside for retirement.” (Loc. 161)
“And the tax breaks that make these plans so attractive? They work out much better for higher earners, who can comfortably set aside the maximum contribution, thereby getting a bigger tax break and the largest possible employer match. Eighty percent of retirement account tax breaks go to the wealthiest 20 percent of taxpayers. The move to 401(k) plans shifted most risk from the company to the worker, who now found himself the manager of a pension fund for one. Employees didn’t ask for this change; neither did unions. The shift to 401(k) plans was spearheaded by big business, which was more than happy to relinquish responsibility for sending its retirees a fixed pension check every month. The tax break and the employer match were the spoonful of sugar that eased this bad medicine down the throats of the regular employees, for whom the 401(k) was a poor substitute for a defined-benefit plan.” (Loc. 179)
The downsides of this plan? “The DIY system works only if average people save voluntarily—sometimes at very high levels—and are savvy enough to find low-risk investments with low management fees. It requires people to keep their heads and not withdraw money during financial downturns or during personal or family emergencies. Thus, the theory goes, they’ll retire having saved enough money to last the rest of their lives, regardless of how long that is or of the health problems they have in their final years. To put it mildly, this hasn’t happened. What would you expect if we were all asked to cut our own hair, install our own toilets, and do our own electrical wiring? A few of us would succeed at one of the three. But there’d be an awful lot of bowl haircuts, flooded bathrooms, and smoldering houses out there.” (Loc. 204)
As for the retirement age,
Currently, there are calls for the retirement age to be raised to age 70, again citing gains in average longevity. According to supporters of this idea, people can easily work longer because they are living longer.
Things just aren’t that simple. Yes, on average, life expectancies in America are rising. But averages aren’t everyone. Almost all the gains in longevity have gone to higher-than-average-income earners. In addition, those educated, affluent people are the ones most likely to be welcome in the workplace late in life, as part-time consultants or emeritus professors. Of course, highly educated people also are the least likely to need work at that age, since they usually had the means to save enough for retirement.
For people who spent their lives farther down the income scale, the prospects aren’t nearly as shiny. Former line cooks don’t usually set up successful consulting firms on line-cooking issues, and I don’t think I’ve ever seen a 70-year-old ‘bricklayer emeritus’ spreading mortar two mornings a week just to keep himself busy. Many elders are forced to take poor-quality jobs in retail and service; most employers won’t train older workers, and in soft labor markets, age discrimination is rampant. In short, it’s a catch-22: Those most likely to need work late in life are the least likely to find it. (Loc. 622)
Final thought: “The best day to start planning and saving for your retirement is today.” (Loc. 1116)
May 15, 2020
I highly recommend this book. Short and to the point. There's Alot of math and percentages but its well written and really puts everything in an easy to understand perspective. Its probably the best book I've read so far on money and retirement.
If your like me and couldn't or didn't start saving in your 20s and even 30s then you should read this to get a better understanding on how savings effect retirement. It's never too late to start preparing no matter what age you are even if you're like me and late to the game!
Some things that stuck out to me were:
Whereas a pension is a defined-benefit plan, a 401(k) is a defined-contribution plan.
Eighty percent of retirement account tax breaks go to the wealthiest 20 percent of taxpayers.
A fiduciary money manager can be sued if he or she doesn’t give you financial advice that’s solely in your interest.
A passively managed fund that tracks the S&P 500, will mirror the general performance of the stock market overall.
Personally, I'll probably work well into retirement but in the last few years tried to make decisions that have positive long term effects such as working non profit for student loan forgiveness, sinking 13% yearly into a 403b (6% of that employer matching), buying stocks outside of retirement, and the next goal is buying a house that is in a region where market prices constantly rise.
Yes, that's a little personal but if your reading books like this and your older just know your not alone and please keep reading and learning how hopefully help make decisions that will allow you to live off more than ramen by the time your a senior citizen.
We live in a 2nd rate country with a virtually non existent social safety net, wage stagnation, a decline of well paying jobs, and careers that don't allow one to move up so easily. Personally I think even betting on social security in the future may be foolish so it's best to learn as much as possible and prepare.
Read this book!
If your like me and couldn't or didn't start saving in your 20s and even 30s then you should read this to get a better understanding on how savings effect retirement. It's never too late to start preparing no matter what age you are even if you're like me and late to the game!
Some things that stuck out to me were:
Whereas a pension is a defined-benefit plan, a 401(k) is a defined-contribution plan.
Eighty percent of retirement account tax breaks go to the wealthiest 20 percent of taxpayers.
A fiduciary money manager can be sued if he or she doesn’t give you financial advice that’s solely in your interest.
A passively managed fund that tracks the S&P 500, will mirror the general performance of the stock market overall.
Personally, I'll probably work well into retirement but in the last few years tried to make decisions that have positive long term effects such as working non profit for student loan forgiveness, sinking 13% yearly into a 403b (6% of that employer matching), buying stocks outside of retirement, and the next goal is buying a house that is in a region where market prices constantly rise.
Yes, that's a little personal but if your reading books like this and your older just know your not alone and please keep reading and learning how hopefully help make decisions that will allow you to live off more than ramen by the time your a senior citizen.
We live in a 2nd rate country with a virtually non existent social safety net, wage stagnation, a decline of well paying jobs, and careers that don't allow one to move up so easily. Personally I think even betting on social security in the future may be foolish so it's best to learn as much as possible and prepare.
Read this book!
January 25, 2023
short, straightforward primer with a lot of the same history (e.g., switch from high prevalence of defined-benefit pensions to 401k (or 403b --shoutout to teachers) defined-contribution plans has not worked out well for lots of Americans) and a lot of the same advice (start early to take advantage of the miracle of compound interest, paying off mortgage gives you a guaranteed return, delay taking social security till 70 if you can, withdraw no more than 4% per year in retirement........) as can be found many places.
It would be fair to ask why i keep reading books doling out basic information I've seen before, but that's tangential for our current purposes and leads down a rabbit hole of considering whether reading can be a dysfunctional reassurance-seeking mechanism. Let's not go there.
In any case, one unusual feature (at least among the books i've read on retirement) is the chapter at the end encouraging people to vote for politicians who endorse, and lobby lawmakers to advocate for, supplemental (to social security) guaranteed retirement accounts, at state level if it can't be accomplished federally. Gives a thumbnail sketch of her proposal, detailed in a different book, for making this work to fill in the gap between what SSA provides and what people need in retirement. I couldn't entirely follow why this would be preferable to just changing the parameters of social security itself (increase employee and employer contributions along the way; increase benefits later), but perhaps I need to read her other book for more depth on it.
It would be fair to ask why i keep reading books doling out basic information I've seen before, but that's tangential for our current purposes and leads down a rabbit hole of considering whether reading can be a dysfunctional reassurance-seeking mechanism. Let's not go there.
In any case, one unusual feature (at least among the books i've read on retirement) is the chapter at the end encouraging people to vote for politicians who endorse, and lobby lawmakers to advocate for, supplemental (to social security) guaranteed retirement accounts, at state level if it can't be accomplished federally. Gives a thumbnail sketch of her proposal, detailed in a different book, for making this work to fill in the gap between what SSA provides and what people need in retirement. I couldn't entirely follow why this would be preferable to just changing the parameters of social security itself (increase employee and employer contributions along the way; increase benefits later), but perhaps I need to read her other book for more depth on it.
February 7, 2020
Randomly checked this book out from the local library, and i am very happy I didn't spend money on it. It does have some good advice on saving more and figuring out how much you may need in retirement. However, all of it heavily relied on social security supporting a large chunk of retirement, and even encouraging the government to take more taxes from people to supply more social security which may sound good, but it just makes Americans ever more dependent on the government to survive rather than having the freedom to forge their own future. She also belittled IRA (especially the lack of information of how powerful a ROTH IRA can be).
It started off really doom and gloom. She states a lot of numbers and assumptions where "most experts advise against...." such as on page 10. I wish she would have included more sources for the statements she was making. What experts? how do you quantify most? Just because she is a professor of economics, it does not give her an excuse not to site sources when she uses exact numbers and percentages with generalized statements. Also, even though this suggested "A clear answer in 116 pages," there were a lot of topics that were reworded and redundantly stated again and again, that I think this could have actually been a lot shorter.
It started off really doom and gloom. She states a lot of numbers and assumptions where "most experts advise against...." such as on page 10. I wish she would have included more sources for the statements she was making. What experts? how do you quantify most? Just because she is a professor of economics, it does not give her an excuse not to site sources when she uses exact numbers and percentages with generalized statements. Also, even though this suggested "A clear answer in 116 pages," there were a lot of topics that were reworded and redundantly stated again and again, that I think this could have actually been a lot shorter.
Read
November 8, 2021This is a short and clearly written book covering a range of aspects of retirement prep--mainly but not solely financial. It makes clear that while the US currently has structural inequalities baked in, there are specific things that workers of even relatively modest means can do to ensure a more secure retirement. Much of the information was not new to me, but it was well presented. Of the books on retirement planning that I've read so far, this might be the one I would recommend people start with, since it is quick to read, does not assume the reader has lots of money/a high income (or the opposite), and emphasizes that our votes can improve the system (rather than that the stock market will save us individually).
July 17, 2020
This a good self-help financial, retirement book. It's considered a quick read but took me few months to get to it (got pile of TBR books), however this actually took me a week to finish the book. I like how the author explained quite detailed and boldly how Social Security, conventional Pension and 401K works. It's a actually a great read, however as I come to almost to the end of this book, I found this book very political and obviously the author is on liberal side. I didn't like how she seemed to pushes the readers to rely on Social Security. Though she explained how 401K works, I just didn't like how she was biased siding on the the Social Security and other government retirement agencies. Nonetheless it's still a good read, I think it's still better first to be aware and have the ideas about retirement before reading this, as this can be really biased book. If you're a politically liberal and wanting to read a retirement book, this might be for you.
August 15, 2021
If you've put off thinking and saving for retirement, this concise book is exactly what you need to read right NOW. You will be forced to confront the reality of what your retirement will look like based on your current financial situation. This might be a hard pill to swallow. However, after facing reality, you can then take action to ensure that you'll at least have some type of nest egg to draw upon during retirement. You don't want to end up old and broke. Read this book and start taking action NOW.
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