From the library: How to Retire with Enough Money and How to Know What Enough Is, a Clear Answer in 116 Pages, by Teresa Ghilarducci

Last updated on: August 16, 2016 at 9:54 am by Jane the Actuary

From the library: How to Retire with Enough Money and How to Know What Enough Is, a Clear Answer in 116 Pages, by Teresa Ghilarducci 2016-08-16T09:54:53-06:00 Jane the Actuary

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

This is the sort of book that reminds me that sometimes what determines whether a book is published or not is not the quality of the writing or the information contained within it, but the reputation or status or credentials of the author.

Here’s the sum total of the instructional part of the book:

Go to the AARP retirement calculator, pluck in your information, and see how much money it tells you you need to save. (Actually, the AARP calculator is pretty poor — it tells you a dollar amount but doesn’t help you back into a retirement savings percentage. She also recommends dinkytown.net but this site isn’t especially user-friendly. And neither of these sites factor in the risks involved — of a market crash, for instance, or healthcare expenses.)
Save that money. Just spend less money than you earn. In particular, “have a nice home in a modest neighborhood” — which misses the fact that most middle-class readers are likely to perceive that as what they’re already doing.
Invest in index funds, and don’t get suckered into anything else. Allocate this 50/50 stocks/bonds, or go with 70% or even 100% stocks if you’re younger. (No, she doesn’t give any more concrete advice than that. Nor does she discuss Target Date funds that are likely offered by your employer.)
Maybe buying a home doesn’t make sense for financial reasons, but it probably does for other reasons.
Pay off your debts before putting your available funds into savings — this holds true, she says, for mortgages as well (she greatly simplifies here — there are significant reasons not to do this as well).
Try to avoid taking Social Security until age 70. (She’s right, here, since deferred-to-70 Social Security is the best value you can get in terms of a lifetime annuity that adjusts with inflation. I would go further and say that even if you retire before then, you should spend down other assets first.)
Once you retire, spend down your assets at a rate of 3 – 5% per year, or use the IRS Minimum Required Distribution tables, or guess your life expectancy and work backwards.

That’s it. I could have written that.

But that’s not what the book is about, really. Here message is this:

Employers used to be good-hearted and provide pensions for their employees. Now you’re on your own because they’re mean. (She misstates how prevalent, and how generous, DB pensions were in the past, to make her point, as well as treating the rise of 401(k) plans as a blatant cost-saving measure rather than recognizing that there are multiple reasons for their rise — DB plans became more costly, due to new funding regulations and rising longevity, there’s a much bigger focus on risk in the corporate world than in the past, and, in the end, a job-hopping employee benefits much more from a DC plan than a half-dozen partial DB plan accruals.)
Virtually all financial planners stand ready to rip you off, so watch out.
The real way to have enough retirement income is to get involved politically, fighting for politicians to keep and enhance Social Security, funding this by eliminating the wage base (she neglects to mention that this quashes fully the notion that Social Security benefits are “earned” and “insurance” and transforms it into a simple welfare/redistribution program), keep and strengthen Medicare and Medicaid, and implement her Guaranteed Retirement Accounts, which she touts as, well, guaranteed. (Her GRA proposal, which she described in a book, When I’m Sixty-Four, has similarities with my proposal for pooled accounts, except that, without explicitly saying so, she seems to presume that the government would directly guarantee rates of return by making up the difference, and she doesn’t provide specifics on how generous a rate of return, or how conservative an annuity conversion assumption, she expects.)

So, basically, this book is a bait-and-switch, to persuade the reader of her policy proposals. But at least it’s priced at only $12.95.

Sigh. Someday I’ll write my own book.

Image by Raysonho @ Open Grid Scheduler / Grid Engine (Own work) [Public domain], via Wikimedia Commons

Actuarial/Retirement Issues

retirement savings

Previous Post

April 18, 2016

What makes a hero? A small gripe on a Vox article

Next Post

April 20, 2016 Why did pensions die?

Browse Our Archives

Select a Category Actuarial/Retirement Issues Politics Uncategorized

Select a Month September 2026 August 2026 July 2026 June 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 July 2025 June 2025 May 2025 April 2025 March 2025 February 2025 January 2025 December 2024 November 2024 October 2024 September 2024 August 2024 July 2024 June 2024 May 2024 April 2024 March 2024 February 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 December 2022 September 2022 August 2022 July 2022 June 2022 May 2022 February 2022 January 2022 December 2021 August 2021 June 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013

TAKE THE

Religious Wisdom Quiz

What does "Pentecost" mean?

Select your answer to see how you score.

Firstfruits Fiftieth Twelve Forty