I’m reading up on retirement planning both because I’m trying to rationalize why I bought a vacation property (it’s part of my retirement portfolio! Really!) and because I’m supposed to be making a living counseling people on financial matters. (Perhaps I should be quiet about the cottage.)
I’ve recently read three books that say the same thing in vastly different ways.
The first is “The New Coffee House Investor: How to Build Wealth, Ignore Wall Street, And Get On With Your Life” by Bill Schultheis. To say that this book is fluffy is putting it mildly. He’s supposed to be inspirational as he gives you his simple message. Hmmm. I mostly just noticed a simple message. Very simple message. Really really really simple message. “Save some money and put the stock portion of your savings in index funds.” I wish I could say that the 192 page book expands on that somewhat, but it really doesn’t. There are two pages in which he says, “Hmmm, you should probably get some bonds, too.” And there’s one page where he says, “You might want to add up what you’re spending now.” But then he talks about his golf game and his mountain climbing and how much he likes pumpkin pie and to sit with his friends and drink coffee in the coffeehouse. His credential for writing this book is similar to Suze Orman’s: he was a failed stockbroker who made a bunch of mistakes in his life and wants to tell you about them, possibly to help him feel less dumb. I guess I could recommend him for anyone who would aspire to read Suze Orman but is put off by her aggressively X chromosomes. Personally, I’m keeping it on my shelves because I like the pumpkin pie recipe he puts in it.
The middle version of this theme is “The Investor’s Manifesto: Preparing for Prosperity, Armageddon and Everything in Between” by William J. Bernstein. It’s not too light and not too heavy, just right for most people. It’s a pro-indexing book that talks more about asset allocation and talks about the value of your human capital in your asset allocation, the annuity value of your social security and the value of delaying taking it. and about the burn rate you choose.
His idea of Armageddon is decidedly different than mine, though: he appears to mean the Dow might drop 30%. He says, “Gold and gold stocks have also become an asset class du jour, with high recent returns and a good deal of publicity. Unless you are going on the lam, buying gold bullion itself, gold coins, or an ETF that invests in them is rearely a good idea. The long-term, real return of the yellow metal itself is zero – an ounce of it bought a fine men’s suit in Shakespear’s time, and still does today.” He says that like it’s a bad thing. I wonder how much a men’s suit costs in Confederate Dollars?
The seriously heavy book is “Getting Started in a Financially Secure Retirement: Pre- and Post-Retirement Planning In a Time of Great Uncertainty” by Henry Hebeler. Apparently Hebeler hung out in the coffeehouse with Bill Schultheis and got frustrated and wrote the book Bill Schultheis couldn’t. Oddly, the forward to this book is by Bill Schultheis and his two page forward has more actual content than Schultheis put in his entire 192 page book mentioned above.
The Hebeler book is really wonkish. It keeps throwing in worksheets and annuity tables and references to websites and his own online worksheets. It’s *GREAT*. This is the book I was waiting for, the one written by one of the smartest people I’ll ever meet who just cast his attention to this subject when he got old enough to have it be his top priority. (He has three degrees from MIT and spent his career being a rocket scientist and economic advisor on citizen advisory counsels.)
The only down side to this book is the sternness of his lecture. He is really adamant that you aren’t saving enough. He doesn’t know how much that is, but save more! Much more! Doom is coming! No matter how much you plan it will NOT be enough, so step to it and do more! Now! It’s a bit off-putting, really, except it comes from someone who actually *is* retired and reporting from the trenches. He reports on the unexpected things in realistic ways.
For example, one of the main threats to people’s retirements is turning out to be their forty year old children who are out of work and asking for hand-outs from their “rich” parents who are only “rich” because they saved up so they could stop working for the next 30 years and probably haven’t saved near enough. Oh, and real estate taxes, utility bills and travel expenses to go see family are likely to be a lot more than you expect, too. Not to mention medical expenses. Which he does mention. This man mentions everything. How’s your roof, he asks? Got a replacement fund going for those 20 year shingles?
I kind of love Henry Hebeler. I’m going to spend a lot more time with his website and then use this to teach my own clients. I just have to figure out how to make the message sound a bit more fun, to inspire people to do this rather than drive them to it out of fear.
I’ve also got the Boglehead guides I’m picking my way through chapter by chapter. I like that about them: they are a series of articles that are well-written and well-edited on subjects I want to read on. I have a couple of books by Jack Bogle but I find him annoying to read. I much prefer the works of his acolytes. Honestly, I wouldn’t need to buy the books if I had an iPad and could just browse the webforums. But I still read books. Which, by the way, is why I get to make money teaching people this stuff.
Originally published April 24, 2011 at ProsperiTeaPlanning.blogspot.com