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The Essential Retirement Guide: A Contrarian's Perspective
Retirement planning is difficult enough without having to contend with misinformation. Unfortunately, much of the advice that is dispensed is either unsubstantiated or betrays a strong vested interest. In The Essential Retirement Guide, Frederick Vettese analyses the most fundamental questions of retirement planning and offers some startling insights. The book finds, for example In addition, The Essential Retirement Guide shows how you can estimate your own lifespan and helps you to understand the financial implications of long-term care. Most importantly, it reveals how you can calculate your personal wealth target - the amount of money you will need by the time you retire to live comfortably. The author uses his actuarial expertise to substantiate his findings but does so in a jargon-free way.
288 pages, Hardcover
First published December 14, 2015
63 people are currently reading
186 people want to read
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Displaying 1 - 23 of 23 reviews
May 23, 2016
This is one of the best retirement planning books I've read. It is logical, well thought out and very well presented. Could be because I like numbers, graphs, and tables. The book dispels some of the financial planning myths such as what percentage of pre-retirement income is required in retirement. The book walks the reader through what their required wealth target should be but doesn't loose sight that we all need to live our lives along the way.
A great retirement/financial planning. Very highly recommended!
A great retirement/financial planning. Very highly recommended!
August 6, 2019
Curiously moving. The most striking sections involve not the dispensation of sage actuarial advice—of which there is plenty—but a plea to consider what is of value to us in our lives. Vettese quotes Tennyson ("As though to breathe were life!") and notes, amid sobering morbidity statistics, that we may have less time and health to do these things than we might think. Better to focus on that than to obsess about accumulating a retirement portfolio for doddery senility.
August 22, 2017
There is nothing more scary then the statement that one needs 70 % of our final income when we retire. Frederick Vettese explodes this myth and shows us how we can lead a happy retirement with far less. He takes us through the quagmire of retirement savings step-by-step and at the end of the book most of us will have a contented feeling that we are not going to be below the poverty level in our old age. The age group that this book is suitable for? I would say anybody who is working a steady job can start reading the book as that gives the savings plan a head start. At the other end even those who are already retired can read the book and benefit from it. A wonderful book for your personal library - yes, whether you are in America or Canada.
February 19, 2016
I had to DNF it a few chapters in. Not because of what he said, but how he said it.
He has charts, diagrams, and huge amounts of information that unless you can do math in your head, understand the basics of accounting, your income taxes, insurance and how the world works in general... it makes no sense.
Even though I understand those things, I cannot take a book of charts etc and "get it" without pencil, paper and the ability to ask questions and make sense of it. All I am doing is nodding my head and going "yep, sure, I think I get that....".
It's not written for you and I, but IMO it's written for his peers in the financial planning world.
He has charts, diagrams, and huge amounts of information that unless you can do math in your head, understand the basics of accounting, your income taxes, insurance and how the world works in general... it makes no sense.
Even though I understand those things, I cannot take a book of charts etc and "get it" without pencil, paper and the ability to ask questions and make sense of it. All I am doing is nodding my head and going "yep, sure, I think I get that....".
It's not written for you and I, but IMO it's written for his peers in the financial planning world.
January 17, 2021
Well, here goes the good, the bad, and the ugly. The good is that this book offers great clarity when it comes to the numbers one ought to consider as one saves for retirement. On that score, compared to traditional wisdom, the news is also good. Vettese suggests that the old "you have to replace 70% of your preretirement income" is outmoded, and especially for the middle-class and even-better-off people he is writing for, perhaps way too high. The book was very helpful in explaining basic concepts, pot holes I might run into on the way, and so on. It (or something very much like it) should be read by everyone in their thirties (as inspiration) and at retirement age (for the nuts and bolts of the many options we must consider).
The bad is that the book gave no consideration at all to the desire that many readers will have to engage in charitable giving or meaningful/spiritual life choices other than consumption. No mention was made of charitable bequests (the assumption being you either want to spend it all yourself or leave some--but not too much--to your kids), nor of budgeting/giving to charities while earning or retired. This mirrored the constant stress on consumption as the be all and end all of life. The more consumption at every stage must be better!
I did appreciate his insistence on not killing yourself early in your career to save for later, since we need quality of life early as well as late. But consumption and money--at least for those who have neither too much nor too little--is not where one finds the meat of life and it didn't seem this ever really occurred to Vettese. There was no ugly in this book, though. I recommend it!
The bad is that the book gave no consideration at all to the desire that many readers will have to engage in charitable giving or meaningful/spiritual life choices other than consumption. No mention was made of charitable bequests (the assumption being you either want to spend it all yourself or leave some--but not too much--to your kids), nor of budgeting/giving to charities while earning or retired. This mirrored the constant stress on consumption as the be all and end all of life. The more consumption at every stage must be better!
I did appreciate his insistence on not killing yourself early in your career to save for later, since we need quality of life early as well as late. But consumption and money--at least for those who have neither too much nor too little--is not where one finds the meat of life and it didn't seem this ever really occurred to Vettese. There was no ugly in this book, though. I recommend it!
January 23, 2020
The big take away the author tries to convey in this book is that you don’t need 70% of your pre-retirement income to retire. He thinks it’s more like 40 to 60%. Honestly I feel that this could have been an article but not enough for a whole book. Sure, some folks save too much and more save too little, and he advocates a moderate sensible approach. Still, every person’s financial situation is different and even though I am not in the financial field a session with a good fee only hourly financial planner could be much more beneficial than the general knowledge in this book. The author is a man in his 60’s and spends many pages giving statistics that although we may be living longer, those added years are not necessarily healthy years ( males 60-70 have a 35 % chance of developing a serious illness such as heart disease, cancer..). Depressing stuff indeed..thanks, I just wanted to read a book on retirement
February 26, 2016
Both long-term planners and those that have started saving later than desired will find value in the book’s pages. Vettese provides the framework in which readers can think sensibly and effectively plan retirement based on their own unique situation. While the Kindle – my preferred format – price ($10.99) is a tad higher than I would like to see, readers would be well served by moving this book to the fore of their ‘must read’ list.
January 6, 2018
This is hands down the best book I have read on retirement. Every other book I’ve read on the subject, leaves me with the same burning question: “Yes, but how much do I really need to retire?”
Vetesse’s book answers that question in spades.
He shows, all the time backing up his claims with data neatly presented in tables and charts, that many of us don’t consume a high percentage of our incomes; rather, we invest sizable sums in the future. These investments take the form of paying down a mortgage, raising children, and saving for retirement. When these uses of our income are subtracted, along with taxes and employment type expenses, a homeowner typically only lays down 40 to 50% of income on things that might be regarded as forms of personal consumption.
Since the goal in retirement, at least for most, is to maintain one’s consumption, we only need about half of our income to succeed, not the 70% that is brandished around by the investment community.
Social security such as the Canada Pension Plan further reduces the amount of savings we need to accumulate over our working lives.
All in all, Vetesse figures we only need to save 7 to 10% of our incomes to comfortably accumulate enough money to retire.
He’s not overly concerned about inflation either. Due to the aging population in most of the rich world, there is an abundance of savers (the 50 to 75 year olds) and a dearth of borrowers (the under 50’s). With the prevailing low interest rates, the aging population reacts by saving even more to make up for the low rates, thereby ensuring they will stay low.
Another interesting point reinforcing the above is a comparison of the basket of goods bought by a 35 year old versus a 70 year old. The baskets contain very different goods, say a boys-night-out, and airline tickets in the former, and hearing aids and prescription drugs in the latter. The data he submits suggests that our nest eggs will diminish in the early years of our retirement, but may actually rise as our spending levels off and then declines in our 70’s and 80’s.
This observation supports Vetesse’s assertion that most Canadians are probably too conservative when it comes to saving: too ant-like says Vetesse, referring to Aseop’s fable that contrasts the approaches of the Ant and Grasshopper in preparing for the long winter ahead.
And a long winter it is! Vetesse presents a bleak view of aging in terms of the creeping mental and physical decline that starts at age 50.
He devotes a long section to Long term Care which is a great worry of many but he ultimately assuages those concerns with a number of well-reasoned points. For example, it is unlikely we will spend more than a few years needing round-the-clock care or taking up residence in a top flight care facility, and homeowners have the ability to mitigate this risk by unlocking some of their equity.
Vetesse goes on to evaluate the 4% rule in terms of the Safe Withdrawal Rate that can be carved off our wealth each year, and finds it is too conservative. A withdrawal rate of 5% to 7% - or the expected long-term nominal return on your savings - is well within the realm of realistic without running out of money. After all, he quips, you don’t want to be the richest person in the cemetery.
Other pearls of wisdom include:
- don’t put off big projects for our retirement years, as they probably won’t get done
- be mindful of the costs of managed money as higher fees do not equate to higher returns
- buy an annuity from a life insurance company no later than age 75, as our ability to manage our financial affairs deteriorates and annuities take away a lot of others risks such as the possibility that we may live “an embarrassingly long time”
Vetesse’s book answers that question in spades.
He shows, all the time backing up his claims with data neatly presented in tables and charts, that many of us don’t consume a high percentage of our incomes; rather, we invest sizable sums in the future. These investments take the form of paying down a mortgage, raising children, and saving for retirement. When these uses of our income are subtracted, along with taxes and employment type expenses, a homeowner typically only lays down 40 to 50% of income on things that might be regarded as forms of personal consumption.
Since the goal in retirement, at least for most, is to maintain one’s consumption, we only need about half of our income to succeed, not the 70% that is brandished around by the investment community.
Social security such as the Canada Pension Plan further reduces the amount of savings we need to accumulate over our working lives.
All in all, Vetesse figures we only need to save 7 to 10% of our incomes to comfortably accumulate enough money to retire.
He’s not overly concerned about inflation either. Due to the aging population in most of the rich world, there is an abundance of savers (the 50 to 75 year olds) and a dearth of borrowers (the under 50’s). With the prevailing low interest rates, the aging population reacts by saving even more to make up for the low rates, thereby ensuring they will stay low.
Another interesting point reinforcing the above is a comparison of the basket of goods bought by a 35 year old versus a 70 year old. The baskets contain very different goods, say a boys-night-out, and airline tickets in the former, and hearing aids and prescription drugs in the latter. The data he submits suggests that our nest eggs will diminish in the early years of our retirement, but may actually rise as our spending levels off and then declines in our 70’s and 80’s.
This observation supports Vetesse’s assertion that most Canadians are probably too conservative when it comes to saving: too ant-like says Vetesse, referring to Aseop’s fable that contrasts the approaches of the Ant and Grasshopper in preparing for the long winter ahead.
And a long winter it is! Vetesse presents a bleak view of aging in terms of the creeping mental and physical decline that starts at age 50.
He devotes a long section to Long term Care which is a great worry of many but he ultimately assuages those concerns with a number of well-reasoned points. For example, it is unlikely we will spend more than a few years needing round-the-clock care or taking up residence in a top flight care facility, and homeowners have the ability to mitigate this risk by unlocking some of their equity.
Vetesse goes on to evaluate the 4% rule in terms of the Safe Withdrawal Rate that can be carved off our wealth each year, and finds it is too conservative. A withdrawal rate of 5% to 7% - or the expected long-term nominal return on your savings - is well within the realm of realistic without running out of money. After all, he quips, you don’t want to be the richest person in the cemetery.
Other pearls of wisdom include:
- don’t put off big projects for our retirement years, as they probably won’t get done
- be mindful of the costs of managed money as higher fees do not equate to higher returns
- buy an annuity from a life insurance company no later than age 75, as our ability to manage our financial affairs deteriorates and annuities take away a lot of others risks such as the possibility that we may live “an embarrassingly long time”
January 29, 2020
This is a financial planning book focused on middle-income or upper-income workers. Low-income people, defined here as at the bottom of 30 percent or so of the workforce, definitely need retirement target income exceeding 70 percent of their final pay. They’ve already been well taken care of with pensions from government programs.
The keynote of The Essential Retirement Guide:
Financial plans must be taken before we are getting older.
When coming to the financial abilities, people in their 80s were generally more confident than those in their 60s, even though the older ones scored barely half compared to the highest. While older test subjects scored quite poorly by any absolute or relative measure, their confidence in their financial abilities was actually higher than that of their younger counterparts. Preemptive measures need to be taken. We should handle this while we are still young enough to use whatever insights we have at our disposal.
2. Your financial strategy should be simple.
Keeping your financial strategy simple may not be an optimal choice, but it is better than varying the mix for the wrong reasons. There is no correlation between high fees and high returns.
3.Exposing yourself unduly to downside risks is irrational if the only upside is to produce a windfall gain that you do not really need.
4.Long-term care insurance is not an effective choice
Insurance is most effective when
The potential losses from which you are seeking protection are easily understood and quantifiable.
The cost of the insurance seems reasonable relative to the coverage.
Any losses over a given threshold would be fully reimbursed by the insurance
However, Long-term care insurance doesn’t meet the criteria.
5. Don’t overspend
In a consumerist society, our reach tends to beyond our grasp. If you make $80,000 a year, pretend as if it were just $70,000 and save the rest.
In summary, the author, Frederick Vettese, specializes in actuary and has spent his whole career in retirement consulting and workplace pension plans. He provides a lot of insights about retirement planning using his actuarial expertise. In addition, he uses a lot of contextual scenarios in explaining concepts such as wealth target and workplace pension plans. It’s a highly recommended book.
https://writingbeing.com/book-review-...
The keynote of The Essential Retirement Guide:
Financial plans must be taken before we are getting older.
When coming to the financial abilities, people in their 80s were generally more confident than those in their 60s, even though the older ones scored barely half compared to the highest. While older test subjects scored quite poorly by any absolute or relative measure, their confidence in their financial abilities was actually higher than that of their younger counterparts. Preemptive measures need to be taken. We should handle this while we are still young enough to use whatever insights we have at our disposal.
2. Your financial strategy should be simple.
Keeping your financial strategy simple may not be an optimal choice, but it is better than varying the mix for the wrong reasons. There is no correlation between high fees and high returns.
3.Exposing yourself unduly to downside risks is irrational if the only upside is to produce a windfall gain that you do not really need.
4.Long-term care insurance is not an effective choice
Insurance is most effective when
The potential losses from which you are seeking protection are easily understood and quantifiable.
The cost of the insurance seems reasonable relative to the coverage.
Any losses over a given threshold would be fully reimbursed by the insurance
However, Long-term care insurance doesn’t meet the criteria.
5. Don’t overspend
In a consumerist society, our reach tends to beyond our grasp. If you make $80,000 a year, pretend as if it were just $70,000 and save the rest.
In summary, the author, Frederick Vettese, specializes in actuary and has spent his whole career in retirement consulting and workplace pension plans. He provides a lot of insights about retirement planning using his actuarial expertise. In addition, he uses a lot of contextual scenarios in explaining concepts such as wealth target and workplace pension plans. It’s a highly recommended book.
https://writingbeing.com/book-review-...
August 22, 2023
Not what I was hoping for, to be honest. Mr. Vettese has taken a contrarian stance, as promised, but there's not as much justification for his suggested tacks as I'd've liked. While I appreciate that we may not want to use a blanket "you need 70% of pre-retirement income in retirement" rule, he seems oto make many assumptions about how we're either now spending all our money on kids, houses, and I guess fancy clothes for work, or completely blowing the money any excess.
The recommendations seemed a little too optimistic (and I realize that this was written 8 years ago, when inflation wasn't what it is now), ending up with fairly aggressive plans with little contingency.
I did appreciate the sections on annuities, including "the insured annuity strategy".
The recommendations seemed a little too optimistic (and I realize that this was written 8 years ago, when inflation wasn't what it is now), ending up with fairly aggressive plans with little contingency.
I did appreciate the sections on annuities, including "the insured annuity strategy".
February 4, 2018
Author is former Canadian investment / insurance actuary. Gives updated views on savings and income targets. Explains common misconceptions and backs up assertions with statistics. Also uses anecdotal stories to help understand points being made. Discusses pros and cons of taking different directions with annuities, 401k, pensions, insurance (e.g. life and also long term disability).
Great perspective. A book to read in your 20s/30s, don't wait till your 50s.
Great perspective. A book to read in your 20s/30s, don't wait till your 50s.
July 29, 2018
Written by an experienced actuary, this is a statistical approach to planning your retirement finances well in advance. The author mines data and employs a wide variety of statistical simulations to predict how much cash you're going to need in the future. Even if your retirement is as far away as mine, it's important to start planning now!
March 11, 2018
Argues that we're not in as bad shape as some would say. Lots of Canadian examples. Worth coming back to and reading the chapter on LTC down the road.
April 29, 2018
A simple, intelligent and wonderful guide to planning your retirement. Answers many tough questions. Backed by years of experience. Definitely recommend!!!
August 19, 2018
Had to skim parts that read like my college statistics class, but appreciate the descriptions that led to the author's thoughts on retirement, ltc, and annuities.
August 29, 2018
A comprehensive retirement guide that every Canadian should be forced to read.
February 3, 2019
Useful info for youth, predicated on a consumptive model I don't and haven't subscribed to.
April 17, 2022
Some good information about retirement strategies
August 15, 2022
Good book to have another thinking about the 70% needed retirement income. And some other good points.
June 29, 2022
Perhaps this is to be expected for retirement-focused books, but this is a pretty dry and boring read. Vettese spends the entire first part of the book making a pretty basic point, which is that 70% annually of highest pre-retirement income isn't going to be the right retirement target for everyone because that % will vary by personal consumption levels. No big revelation there and I thought all the math and examples were unnecessary to make this point. The chapter on low interest rates is similar to what you would read in any dry economics 101 textbook.
Vettese seems quite confident that most people will spend less with age. In my case... I kind of hope that NOT to be the case, as I'm making sacrifices re: personal consumption now in order to have a comfortable retirement. Vettese does seem to acknowledge the value of annuities, which is good, but a better and more entertaining book that focuses on this subject is "Pensionize Your Nest Egg".
Rereading this in 2022 and this prediction from Vettese certainly didn't hold up well: "Interest rates will almost certainly stay low for the next 20 years" (circa 2016)... he also seems quite certain that significant inflation won't happen again any time soon. Well, both happened again in a big way about six years after this book was published. A lesson in humility, perhaps--you can't predict the future.
Vettese seems quite confident that most people will spend less with age. In my case... I kind of hope that NOT to be the case, as I'm making sacrifices re: personal consumption now in order to have a comfortable retirement. Vettese does seem to acknowledge the value of annuities, which is good, but a better and more entertaining book that focuses on this subject is "Pensionize Your Nest Egg".
Rereading this in 2022 and this prediction from Vettese certainly didn't hold up well: "Interest rates will almost certainly stay low for the next 20 years" (circa 2016)... he also seems quite certain that significant inflation won't happen again any time soon. Well, both happened again in a big way about six years after this book was published. A lesson in humility, perhaps--you can't predict the future.
February 8, 2017
One of the most down-to-earth retirement advice books that I've read. Takes the practical approach that most people do not need to have as much income in retirement as when working and, in fact, can retire very comfortably on quite a bit less. This book will calm your fears about not saving enough for retirement.
May 13, 2022
Read/scanned it a bit six years ago, then resumed it after retiring.
Turns out that we did all/many things pretty well, leading into my retirement.
It has a good take on "critical illness" and "long term care" insurance and self insurance.
And the benefits or value of at least some of our funds coming from an annuity in the future.
Will also pass this on to Dan.
(owned book)
Turns out that we did all/many things pretty well, leading into my retirement.
It has a good take on "critical illness" and "long term care" insurance and self insurance.
And the benefits or value of at least some of our funds coming from an annuity in the future.
Will also pass this on to Dan.
(owned book)
September 3, 2016
A great book for anyone hoping to retire one day. Written in language that is pretty easy to follow and backed by solid analysis and research. Even though I was in a related field, and once worked for its author, I learned many new things helpful to securing a good future (at least financially)!
Displaying 1 - 23 of 23 reviews