Feeling Anxious about your Golden Years? “The Truth About Retirement Plans and IRAs” May Help

By Sue Thompson,

retirement Sue

Today, retirement planning is more important - and more anxiety producing - than ever. Americans are becoming increasingly responsible for funding their own retirement and can no longer rely on the company pension of years ago , and this is making them nervous.

According to BlackRock's first-ever Global Investor Pulse Survey , a survey of 17,500 respondents globally, including 4,000 Americans, investors feel some anxiety about whether they're saving enough for their golden years and making the right decisions regarding their retirement investments. And I admit - I too feel anxious about whether I have all of my ducks in a row for my future retirement .

Whenever I feel uncertain about a topic, my first instinct is to read books about it. So in the spirit of our aim here at BlackRock to help people save and invest wisely for retirement , my latest book review focuses on a book that aims to dispel the mystery surrounding retirement saving - " The Truth About Retirement Plans and IRAs " by financial advisor Ric Edelman.

In fairness, I should let you know up front that I've known Ric for years.  What I appreciate about Ric is his ability to take topics and break them down into easy-to-understand concepts. So, even if I didn't know Ric, this book still passes my "Mom test" with flying colors - meaning that if I gave this book to my mother to read, she would be able to understand it and put the concepts into action.  Of course she still probably wouldn't calculate her own required minimum distributions ( RMD ) , but amusingly, at the beginning of the chapter on that subject, there's a warning sign that states "Dense Chapter Ahead."

So, what do I think are some of the most valuable parts of the book?  Specifically, Chapter 4, "The Cost of Not Participating Right Now in Your Retirement Plan," is a great chapter for the procrastinator in all of us.  Using humor and plain talk, Ric emphasizes the importance of investing as early, and as much, as you can in your retirement plan (regardless of whether it's a 401(k) or IRA ).

He calculates the cost of procrastinating and gives it to us with hard dollar examples. And good thing he does it with humor. Otherwise, there's a bit of sting when you realize that the years you took to finally getting around to investing in your 401(k) might cost you $250,000 over your working life!  The book also has some quick shortcuts to calculate what you'll need in retirement savings, although Ric does give this caveat: If you want a real answer that is more reflective of your personal situation, you should meet with a financial planner.

The book's plain talk on behavioral finance - and key behavioral biases - was also very well done, and it has a great section on putting news media articles on retirement into perspective, with tips on how to separate hype from reality.  In fact, if I could get my husband, "the Pilot," to read just one section of the book, it would be this one. The section's basic gist: When you're investing for a very, very long time, don't get caught up in responding to the daily news grind. In other words, as Larry Fink pointed out in a recent post, " Tune Out the Noise ."

Lastly, Chapter 22 really hit home for me.  The chapter's "six realities you must acknowledge" get to the heart of why many people are anxious about retirement. For instance, we all really will have a "finite amount of money" in our retirement accounts, and the amount of money we start retirement with is likely the most money we'll have from then on.

Once we acknowledge these realities armed with Ric's advice (I'd mention all the realities if I had room), our anxiety might lessen just a bit.  At least, that's what happened to me. So, if you're feeling nervous about your retirement, I would encourage you to take a look at Ric's book and stay tuned - I'll see if I can interview him for a future post.

Sue Thompson, CIMA, Managing Director, is Head of the Registered Investment Advisor Group, overseeing the firm's iShares and 529 sales efforts with registered investment advisors, family offices and asset managers. Sue is a regular contributor to The Blog.  You can find more of her posts here.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Retirement
Referenced Stocks: RMD

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