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Spend 'Til the End
Scott Burns is a nationally syndicated personal finance columnist distributed by the Universal Press Syndicate. He is an M.I.T. graduate and the author or coauthor of three previous books. He is also a founder and the chief investment strategist of AssetBuilder, an internet-based asset management firm that delivers optimized risk-measured index portfolios for investors. His company website is www.assestbuilder.com.
319 pages, Hardcover
First published June 4, 2008
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Displaying 1 - 14 of 14 reviews
October 15, 2023
Some very interesting ideas, mostly centered around the authors’ idea of consumption smoothing. Many of these ideas do not make sense immediately, and I had to do my own calculations to bring myself to believing them. I can’t say the book has completely changed my perspective of spending and retirement planning, but I definitely will be thinking about the notes I took.
April 3, 2016
This book challenges the conventional wisdom of traditional retirement planning (and asset planning in general) in a novel, logical way, which is always interesting to me for challenging my views.
The main premise of the book is that consumption (ie spending) should be smoothed over your lifetime and you should plan your financial future to maximize that (steady) consumption with the least amount of risk. This idea of consuming the same amount throughout your lifetime is a new concept, but really makes sense. I had previously thought (/assumed) that you should live below your means / save / etc with the goal of having a nice, comfortable retirement (and increasing your consumption as you age / increase salary / become more secure financially). However, since consumption should be correlated positively with happiness (if you aren't happier with the more you spend, then you should spend less to be happy and not really have any financial problems), this means you are delaying a good portion of current happiness for future happiness when you are older.
The idea of restraining future happiness in exchange for abundant future happiness is likely not the ideal solution. Since the marginal utility curve for happiness / consumption isn't linear, this implies that the ideal (given a number of assumptions) consumption pattern should be constant over time to maximize happiness (for a given amount of money). While not explicitly outlined in the book, this is pretty straightforward to conceptualize.
This is the basic premise behind the book and the rest goes on to dispelling financial myths (many easy enough to do already), giving (good, but not too relevant for me yet) tips on how to maximize retirement benefits when near retirement age and helping calculate this level of "ideal consumption". This makes the book a quick read (can skip/skim over the less relevant parts), but I also found the book a bit lacking in numerical examples so that one could model the scenarios themselves. Instead the authors (continually) push their product "ESPlanner" which calculates this level for you. There's a free version which I might try out just to see where my consumption lies relative to the "ideal" level.
A downfall is that the book doesn't offer clear ways/suggestions to realize "increased happiness" from increased consumption. After all, if I'm told I need to actually spend 25% more than I currently do to have smooth consumption, there are a lot of ways I could do that, but buying Veuve Cliquot / Silver Oak instead of Prosecco / $15 cabernet aren't going to actually make me meaningfully happier. I'd argue in cases like that, alternative "solutions" to maximizing life happiness (through finances) would be to retire earlier / work less / etc.
I also liked that this book encouraged critical thinking in general. For example, one part is "Putting a price on [x]". Ie how much is that marriage worth, dog worth, etc. While people might not like to reduce feelings and emotions to money, in the end, there is a value there, so it's best to quantify it (sure you love your dog, but is it worth $1mm?). Once you can quantify things like that, you can make better financial decisions to make yourself happy. (I know, I know, it sounds like such a cold, calculated method of making decisions, blah, blah).
I'd recommend this book for anyone who likes thinking critically about financial planning / retirement planning. It's not for beginners, but does offer a compelling viewpoint which should be acknowledged, at the very least.
The main premise of the book is that consumption (ie spending) should be smoothed over your lifetime and you should plan your financial future to maximize that (steady) consumption with the least amount of risk. This idea of consuming the same amount throughout your lifetime is a new concept, but really makes sense. I had previously thought (/assumed) that you should live below your means / save / etc with the goal of having a nice, comfortable retirement (and increasing your consumption as you age / increase salary / become more secure financially). However, since consumption should be correlated positively with happiness (if you aren't happier with the more you spend, then you should spend less to be happy and not really have any financial problems), this means you are delaying a good portion of current happiness for future happiness when you are older.
The idea of restraining future happiness in exchange for abundant future happiness is likely not the ideal solution. Since the marginal utility curve for happiness / consumption isn't linear, this implies that the ideal (given a number of assumptions) consumption pattern should be constant over time to maximize happiness (for a given amount of money). While not explicitly outlined in the book, this is pretty straightforward to conceptualize.
This is the basic premise behind the book and the rest goes on to dispelling financial myths (many easy enough to do already), giving (good, but not too relevant for me yet) tips on how to maximize retirement benefits when near retirement age and helping calculate this level of "ideal consumption". This makes the book a quick read (can skip/skim over the less relevant parts), but I also found the book a bit lacking in numerical examples so that one could model the scenarios themselves. Instead the authors (continually) push their product "ESPlanner" which calculates this level for you. There's a free version which I might try out just to see where my consumption lies relative to the "ideal" level.
A downfall is that the book doesn't offer clear ways/suggestions to realize "increased happiness" from increased consumption. After all, if I'm told I need to actually spend 25% more than I currently do to have smooth consumption, there are a lot of ways I could do that, but buying Veuve Cliquot / Silver Oak instead of Prosecco / $15 cabernet aren't going to actually make me meaningfully happier. I'd argue in cases like that, alternative "solutions" to maximizing life happiness (through finances) would be to retire earlier / work less / etc.
I also liked that this book encouraged critical thinking in general. For example, one part is "Putting a price on [x]". Ie how much is that marriage worth, dog worth, etc. While people might not like to reduce feelings and emotions to money, in the end, there is a value there, so it's best to quantify it (sure you love your dog, but is it worth $1mm?). Once you can quantify things like that, you can make better financial decisions to make yourself happy. (I know, I know, it sounds like such a cold, calculated method of making decisions, blah, blah).
I'd recommend this book for anyone who likes thinking critically about financial planning / retirement planning. It's not for beginners, but does offer a compelling viewpoint which should be acknowledged, at the very least.
May 30, 2020
Even though this was published in 2008, right before the economy tanked, and well before this current economic disaster, I still feel like there are a couple of useful tips here.
November 20, 2013
This book is based on the ridiculously foolish principle of "consumption smoothing," that is, trying to live your adult life so that you have exactly the same standard of living throughout. The authors say some completely nutty things in support of this idea. They think that young people should borrow, if possible, to raise their standard of living because they anticipate being able to afford more in the future. This book claims that it's irrational to live below your means, particularly when you're young, because you're "wasting your youth." The authors think that everyone's goal should basically be to spend all their resources evenly over the course of their lives, ideally spending their last cent the day they die.
This is crazy for a number of reasons. One obvious one is that life is very unpredictable! One of the authors wrote a computer program that supposedly can figure out how much people should spend every year to "smooth their consumption." Reading the book did make it sound fun to play with the program, which I'm sure is a major goal of the book (boosting sales!), but even a very well-written program still can't come close to predicting the future. I also firmly believe that the ideal consumption pattern is increasing over time, if possible. If I could perfectly predict my lifetime income and expenses, I'd aim for a small standard-of-living increase every year, because every year I'd experience a new pleasure! Increasing your standard of living is enjoyable, but maintaining the same level (even if it's high) isn't as fun. Of course, decreasing your living standard is painful, which is another argument for living below your means. An unexpected drop in income won't hurt as much if you were already living on less than you earn.
The book does acknowledge life's uncertainties, and it attempts to compensate for them by encouraging less risky investments, like TIPs and annuities. They claim that holding stocks long-term is not less risky than holding them short-term, which I find difficult to believe. They say that two economic Nobel laureates, Paul Samuelson and Robert Merton, found this to be true. I tried to look that up online and couldn't find it, but I think that the book must be presenting those economic findings in a misleading way. I'm not an economist, but it seems obvious to me that holding diversified stocks long-term would greatly increase your chances of achieving an average (positive) return, while holding them short-term subjects you to the current whims of the market, which could easily be negative. Anyway, by discouraging stock investing in favor of safer options, the book's authors are encouraging lower lifetime investment growth, in my opinion. If your goal is consumption-smoothing, I suppose safety is more important than total return because you can't tolerate a lower-than-expected return.
The authors give the following example of the problem with investing in stocks: a man named Bill, who has $500,000 to invest. He puts it all in stocks and has three terrible years in a row (1999-2001), losing more than half of his investment. Then he takes all the money out of stocks and buys TIPs, but now his standard of living based on this investment has dropped dramatically. This is their example of why stocks are too risky. But the problem in their example isn't that stock values dropped - it's that Bill had no tolerance for risk and sold his stocks! Now, in 2013, the stock market is at record highs. If Bill had waited it out, he would have regained his investment. Since he was living off this money, I agree that at least part of it should have been somewhere safer. But if he had been 25 years old and didn't need the money for another 40 years, he could have waited. Either way, this is an example of a guy making pretty much the worst stock decisions possible - buying high and then panicking and selling low - and that's the reason the book gives for choosing lower-yielding investments. Better advice would be to consider an investor's risk tolerance and the length of time he has to invest. (The book does discuss risk tolerance.)
Despite my major criticisms, there were some positive things about this book. There are some decisions in life that are benefited by computer modeling, such as when to take Social Security benefits. These parts of the book were informative and useful. They gave good general advice about how to hedge against inflation, higher taxes, and changes in government policy. They pointed out a few counterintuitive things that are true, like the fact that mortgages don't always offer tax benefits. (They also pointed out lots of counterintuitive things that are false, like their claim that it's "risky" to save too much. That's based on their idea that if you live below your means, you're "wasting your youth.")
I found this book interesting but very foolish. It was kind of like a book about how to drive to work going a constant speed the entire time (no stopping at stoplights or speeding up on the freeway). It's a terrible idea, but I'd probably read that book! I just hope nobody follows the authors' advice!
This is crazy for a number of reasons. One obvious one is that life is very unpredictable! One of the authors wrote a computer program that supposedly can figure out how much people should spend every year to "smooth their consumption." Reading the book did make it sound fun to play with the program, which I'm sure is a major goal of the book (boosting sales!), but even a very well-written program still can't come close to predicting the future. I also firmly believe that the ideal consumption pattern is increasing over time, if possible. If I could perfectly predict my lifetime income and expenses, I'd aim for a small standard-of-living increase every year, because every year I'd experience a new pleasure! Increasing your standard of living is enjoyable, but maintaining the same level (even if it's high) isn't as fun. Of course, decreasing your living standard is painful, which is another argument for living below your means. An unexpected drop in income won't hurt as much if you were already living on less than you earn.
The book does acknowledge life's uncertainties, and it attempts to compensate for them by encouraging less risky investments, like TIPs and annuities. They claim that holding stocks long-term is not less risky than holding them short-term, which I find difficult to believe. They say that two economic Nobel laureates, Paul Samuelson and Robert Merton, found this to be true. I tried to look that up online and couldn't find it, but I think that the book must be presenting those economic findings in a misleading way. I'm not an economist, but it seems obvious to me that holding diversified stocks long-term would greatly increase your chances of achieving an average (positive) return, while holding them short-term subjects you to the current whims of the market, which could easily be negative. Anyway, by discouraging stock investing in favor of safer options, the book's authors are encouraging lower lifetime investment growth, in my opinion. If your goal is consumption-smoothing, I suppose safety is more important than total return because you can't tolerate a lower-than-expected return.
The authors give the following example of the problem with investing in stocks: a man named Bill, who has $500,000 to invest. He puts it all in stocks and has three terrible years in a row (1999-2001), losing more than half of his investment. Then he takes all the money out of stocks and buys TIPs, but now his standard of living based on this investment has dropped dramatically. This is their example of why stocks are too risky. But the problem in their example isn't that stock values dropped - it's that Bill had no tolerance for risk and sold his stocks! Now, in 2013, the stock market is at record highs. If Bill had waited it out, he would have regained his investment. Since he was living off this money, I agree that at least part of it should have been somewhere safer. But if he had been 25 years old and didn't need the money for another 40 years, he could have waited. Either way, this is an example of a guy making pretty much the worst stock decisions possible - buying high and then panicking and selling low - and that's the reason the book gives for choosing lower-yielding investments. Better advice would be to consider an investor's risk tolerance and the length of time he has to invest. (The book does discuss risk tolerance.)
Despite my major criticisms, there were some positive things about this book. There are some decisions in life that are benefited by computer modeling, such as when to take Social Security benefits. These parts of the book were informative and useful. They gave good general advice about how to hedge against inflation, higher taxes, and changes in government policy. They pointed out a few counterintuitive things that are true, like the fact that mortgages don't always offer tax benefits. (They also pointed out lots of counterintuitive things that are false, like their claim that it's "risky" to save too much. That's based on their idea that if you live below your means, you're "wasting your youth.")
I found this book interesting but very foolish. It was kind of like a book about how to drive to work going a constant speed the entire time (no stopping at stoplights or speeding up on the freeway). It's a terrible idea, but I'd probably read that book! I just hope nobody follows the authors' advice!
November 8, 2021
A different take on common financial advice
It gets very economically at points, but it makes a case for thinking differently about your financial future. I like it’s breadth.
It gets very economically at points, but it makes a case for thinking differently about your financial future. I like it’s breadth.
December 24, 2022
Even though some of the information is a little bit out of date now, it is still worth reading since the theory of smoothing your retirement income is revolutionary.
October 14, 2024
Since I had recently read the book (Die with Zero), I found this book to be somewhat dated and redundant.
July 10, 2013
This book is somewhat like Freakonomics applied to your various possible personal financial lives. As such, it's pretty interesting in places and definitely offers some unique and valuable perspectives.
The core concept the book revolves around is "consumption smoothing", the goal of setting yourself up to be able to spend at a constant rate throughout your live without going broke before you die and also without leaving considerable assets to your heirs. (If you DO want to leave a substantial inheritance, the authors do cover that as part of your annual spending plan.) The value being expressed here is that you are shortchanging yourself if you underspend on yourself (i.e., underconsume), and the authors treat that as a risk. Extreme cases excepted, I'm not buying into that construct. If I'm content spending $30,000 per year, for example, and the model shows I could spend $40,000, I don't see that as a problem. I'm already content. The extra $10,000 per year won't make me more so. However, in this case, the authors might point out that I could increase my charitable giving by $10,000 a year without altering my lifestyle, which indeed I might find more satisfying. The more important case would be if I were spending $30,000/year but find out I should only be spending $25,000... that's something I would want to know about.
The good thing is that the reader doesn't have to buy into the consumption smoothing model to get a lot out of this book. Many of the points they make are valid just on their own.
The other thing I wanted to note is that you COULD read this book as a lengthy advertisement for the authors' product, ESPlanner. They don't hide their involvement, and they are not the first authors that write about what they sell. I have no problem with that, but prospective readers deserve to know where the authors are coming from.
The writing style is too cutesy for my own tastes and some of the references are a little dated as the book is 7 years old. Nonetheless, I thought the book was a worthwhile read. It's one of those books where you might take away just one or two things that justifies your time spent with the entire book.
The core concept the book revolves around is "consumption smoothing", the goal of setting yourself up to be able to spend at a constant rate throughout your live without going broke before you die and also without leaving considerable assets to your heirs. (If you DO want to leave a substantial inheritance, the authors do cover that as part of your annual spending plan.) The value being expressed here is that you are shortchanging yourself if you underspend on yourself (i.e., underconsume), and the authors treat that as a risk. Extreme cases excepted, I'm not buying into that construct. If I'm content spending $30,000 per year, for example, and the model shows I could spend $40,000, I don't see that as a problem. I'm already content. The extra $10,000 per year won't make me more so. However, in this case, the authors might point out that I could increase my charitable giving by $10,000 a year without altering my lifestyle, which indeed I might find more satisfying. The more important case would be if I were spending $30,000/year but find out I should only be spending $25,000... that's something I would want to know about.
The good thing is that the reader doesn't have to buy into the consumption smoothing model to get a lot out of this book. Many of the points they make are valid just on their own.
The other thing I wanted to note is that you COULD read this book as a lengthy advertisement for the authors' product, ESPlanner. They don't hide their involvement, and they are not the first authors that write about what they sell. I have no problem with that, but prospective readers deserve to know where the authors are coming from.
The writing style is too cutesy for my own tastes and some of the references are a little dated as the book is 7 years old. Nonetheless, I thought the book was a worthwhile read. It's one of those books where you might take away just one or two things that justifies your time spent with the entire book.
December 21, 2021
This book was recommended by others in one of the retirement clubs I am in.
This was a good book with a lot of good information and views that are different (but still valid and well thought out) from the standard investing advice that you hear. HOWEVER, the book was published in 2008 and a good part of the book is giving statistics and examples (tax, income, credit cards, and other study information) from years prior to 2008. So the book is EXTREMELY DATED and because so much of the book is based on such old information it is rather useless.
It took me quite a few months to read this book so I cannot return it. This means I paid $15.99 dollars for a book that is almost useless. If the author is going to continue to sell a book that is so outdated, it shouldn't be sold at full price. I looked back at the sales page and had to search a bit for the published date. I do feel totally ripped off. Given I bought a kindle version of this book, it could have been updated.
The other thing is the writers are selling their own retirement calculators. Note the calculators are a few hundred dollars (not thousands) and given what is said in the book (the easy calculators by investment firms are there to sell you investments, are too simplistic, and don't make sense) this makes sense but...
With that said I will probably buy their next book when it comes out in January, after investing so much time in learning about their theories it would be nice to see some updated numbers.
Other notes about the Kindle version.
(1) the charts and graphs were sized too small to read and I could not click on them or increase the font to increase the size of the charts. This is a formatting issue that the author should have addressed.
(2) the footnotes or in this case the * should have been footnotes and NUMBERS so you can match the pages at the end of the book with the notes.
(3) each of the * was on its own page... making them a pain to scroll through at the end of the book. For goodness sake take a moment to convert these to numbers and list them on a few pages at the end of the book instead of 50 pages with a small note on each page.
This was a good book with a lot of good information and views that are different (but still valid and well thought out) from the standard investing advice that you hear. HOWEVER, the book was published in 2008 and a good part of the book is giving statistics and examples (tax, income, credit cards, and other study information) from years prior to 2008. So the book is EXTREMELY DATED and because so much of the book is based on such old information it is rather useless.
It took me quite a few months to read this book so I cannot return it. This means I paid $15.99 dollars for a book that is almost useless. If the author is going to continue to sell a book that is so outdated, it shouldn't be sold at full price. I looked back at the sales page and had to search a bit for the published date. I do feel totally ripped off. Given I bought a kindle version of this book, it could have been updated.
The other thing is the writers are selling their own retirement calculators. Note the calculators are a few hundred dollars (not thousands) and given what is said in the book (the easy calculators by investment firms are there to sell you investments, are too simplistic, and don't make sense) this makes sense but...
With that said I will probably buy their next book when it comes out in January, after investing so much time in learning about their theories it would be nice to see some updated numbers.
Other notes about the Kindle version.
(1) the charts and graphs were sized too small to read and I could not click on them or increase the font to increase the size of the charts. This is a formatting issue that the author should have addressed.
(2) the footnotes or in this case the * should have been footnotes and NUMBERS so you can match the pages at the end of the book with the notes.
(3) each of the * was on its own page... making them a pain to scroll through at the end of the book. For goodness sake take a moment to convert these to numbers and list them on a few pages at the end of the book instead of 50 pages with a small note on each page.
December 12, 2018
Very interesting read that challenges a lot of traditional financial advice out there. I have already intuitively been following these precepts (e.g. consumption smoothing, others) but this book gave me some new ideas also. I rated it a little lower only because of the detail examples that I found hard to follow. I think for some people it may be helpful though. Also liked the summaries at the end of each chapter.
November 3, 2008
Really good insights into financial planning decision choices. Liked it alot
December 16, 2012
Excellent intro to Life-Cycle Finance Theory.
March 9, 2013
Highly recommend. Easy read.
July 17, 2021
mostly good advice but not really applicable to own situation
Displaying 1 - 14 of 14 reviews