Today, retirement planning is more important - and more
anxiety producing - than ever. Americans are becoming
increasingly responsible for funding their own retirement and
no longer rely on the company pension of years ago
, and this is making them nervous.
BlackRock's first-ever Global Investor Pulse
, 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
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
help people save and invest wisely for
, 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 (
, 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
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
You can find more of her posts