Details

The Essential Retirement Guide

A Contrarian's Perspective
1. Aufl.

von: Frederick Vettese
18,99 €
Verlag:	Wiley
Format:	PDF
Veröffentl.:	16.11.2015
ISBN/EAN:	9781119111146
Sprache:	englisch
Anzahl Seiten:	288

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Beschreibungen

Titelbeschreibung

Retirement planning is difficult enough without having to contend with misinformation. Unfortunately, much of the advice that is dispensed is either unsubstantiated or betrays a strong vested interest. In The Essential Retirement Guide, Frederick Vettese analyses the most fundamental questions of retirement planning and offers some startling insights. The book finds, for example that: <ul> <li>Saving 10 percent a year is not a bad rule of thumb if you could follow it, but there will be times when you cannot do so and it might not even be advisable to try.</li> <li>Most people never spend more than 50 percent of their gross income on themselves before retirement; hence their retirement income target is usually much less than 70 percent.</li> <li>Interest rates will almost certainly stay low for the next 20 years, which will affect how much you need to save.</li> <li>Even in this low-interest environment, you can withdraw 5 percent or more of your retirement savings each year in retirement without running out of money.</li> <li>Your spending in retirement will almost certainly decline at a certain age so you may not need to save quite as much as you think.</li> <li>As people reach the later stages of retirement, they become less capable of managing their finances, even though they grow more confident of their ability to do so! Plan for this before it is too late.</li> <li>Annuities have become very expensive, but they still make sense for a host of reasons.</li> </ul> In addition, The Essential Retirement Guide shows how you can estimate your own lifespan and helps you to understand the financial implications of long-term care. Most importantly, it reveals how you can calculate your personal wealth target - the amount of money you will need by the time you retire to live comfortably. The author uses his actuarial expertise to substantiate his findings but does so in a jargon-free way.

Inhaltsverzeichnis

Preface xiii Acknowledgments xvii PART I The Retirement Income Target Chapter 1 The Road to Retirement 3 Detours 6 Chapter 2 Doubts about the 70 Percent Retirement Income Target 9 Niggling Doubts 10 Saving for Retirement Is a Two-Dimensional Problem 14 The Macro Case Against 70 Percent 15 Low-Income Workers 16 Conclusions 16 Chapter 3 Homing in on the Real Target 19 Setting the Ground Rules 19 Howard and Barb 21 Steve and Ashley 1.0 23 Steve and Ashley 2.0 27 Expressing Consumption in Dollars 29 Conclusions 30 Chapter 4 A New Rule of Thumb 33 Guiding Principles 34 Retirement Income Targets under Different Scenarios 35 General Rule of Thumb 38 Conclusions 40 PART II The Wealth Target Chapter 5 Quantifying Your Wealth Target 43 A Rough-and-Ready Estimate 43 A More Actuarial Approach 46 Chapter 6 Why Interest Rates Will Stay Low (And Why You Should Care) 53 The Rise of the Savers 54 The Japan Experience 57 Applicability to the United States and Canada 58 Possible Remedies 59 Implications 61 Chapter 7 How Spending Decreases with Age 65 Doubts 66 Quantifying the Decline in Consumption 68 Why Does Consumption Decline? 72 Next Steps 73 Chapter 8 Death Takes a Holiday 75 Present-Day Life Expectancy 77 Dispersion of Deaths 78 Who Is Benefiting the Most? 79 Why Is Mortality Improving? 80 The Future 82 Conclusions 85 Chapter 9 Estimating Your Own Life Expectancy 87 Conclusions 93 Chapter 10 Is Long-Term Care in Your Future? 95 Long-Term Care (LTC) 95 What Does LTC Entail? 96 What Are the Chances You Will Need LTC? 99 How Long Is LTC Usually Required? 101 Conclusions 102 Chapter 11 Paying for Long-Term Care 103 Typical LTC Insurance Contract 103 Does the Math Work? 105 The Verdict 108 The Consequences of Not Insuring LTC 112 Chapter 12 Putting It All Together 115 New Wealth Targets 120 Buffers 122 Conclusion 123 PART III The Accumulation Phase Chapter 13 Picking a Savings Rate 127 Historical Performance 127 Lessons Learned 129 What the Future Holds 131 Generalizing the Results 133 Chapter 14 Optimizing Your Savings Strategy 137 The Goal 138 Strategy 1: Simple 138 Strategy 2: Simple Lifecycle Approach 139 Strategy 3: Modified Lifecycle 140 Strategy 4: Variable Contribution 141 Strategy 5: The SMART Approach 142 Conclusion 143 The Third Lever 144 Methodology 144 Chapter 15 A Gentler Approach to Saving 147 Path 1: Pain Now, Gain Later 148 Path 2: Smooth and Steady Improvement 150 A Comparison in Dollar Terms 153 Conclusions 154 PART IV The Decumulation Phase Chapter 16 Rational Roulette 159 Call to Action 161 Watch Out for Your Children 163 Chapter 17 Revisiting the 4 Percent Rule 167 The 4 Percent Rule 167 Problems with the 4 Percent Rule 169 A More Rational Spending Rule 173 A Monte Carlo Simulation 176 Conclusions 177 Chapter 18 Why People Hate Annuities (But Should Still Buy One) 179 Why Annuities Should Be Popular 180 The Psychology Behind the Unpopularity 183 Tontines 184 The Insured Annuity Strategy 185 Indexed Annuities? Forget It 188 Conclusions 189 PART V Random Reflections Chapter 19 How Workplace Pension Plans Fit In 195 Why Employers Offer Workplace Plans 196 Getting the Most out of Your Workplace Plan 198 How a Workplace Pension Plan Affects Your Dollar Target 202 Online Forecast Tools 203 Chapter 20 Bubble Trouble 205 Why Worry about Financial Bubbles? 206 Examples of Recent Financial Bubbles 207 Common Characteristics 211 The Everything Bubble 212 Chapter 21 Carpe Diem 215 The Numbers 217 Healthy Life Years 219 Trends 221 Personal Genome Testing 222 Chapter 22 A Life Well Lived 225 Retirement and Happiness 225 Final Thoughts 229 Appendix A Similarities between the United States and Canada 231 Social Security Programs 232 High-Level Comparison of Retirement Vehicles 235 A Tax Comparison 238 Appendix B Social Security in the United States and Canada 241 Name of Social Security Pension Plan 241 Purpose of Social Security 241 Earnings Base for Pension Calculation 242 How Pension Is Calculated 243 How the Plans Are Funded 243 Normal Retirement Age 244 Early Retirement Age 244 Delayed Retirement 245 Indexation 245 Other Government-Sponsored Pension Plans 245 Taxability 246 Appendix CRetirement Income Targets under Other Scenarios 249 Appendix D About the Assumptions Used in the Book 255 Thoughts on Conservatism 255 Assumptions Used to Estimate Personal Consumption 256 Assumptions Used to Calculate Future Retirement Savings 258 Assumptions Used to Estimate the Historical Accumulation of Savings 260 Couple Contemplating Long-Term Care Insurance 260 Assets Needed to Cover Long-Term Care (LTC) 262 About the Author 263 Index 265

Autorenportrait

FREDERICK VETTESE is the Chief Actuary of Morneau Shepell, one of the largest human resources consulting and technology companies and one of the top five defined benefit pension plan providers in North America. Fred has spent his entire career providing retirement consulting and actuarial services in respect of workplace pension plans. Much of his professional time these days is spent in the public eye, speaking at professional conferences and writing on retirement issues for the national newspapers and other media. In his spare time, Fred struggles enthusiastically with both his golf game and his piano. He was born and raised in Toronto, Canada, where he continues to reside with his wife Michelle. The Essential Retirement Guide is Fred’s second book. In 2012, Bill Morneau and Fred co-authored The Real Retirement, a book that explained why Canada was not suffering a retirement crisis. Fred can be reached at fvettese@morneaushepell.com.

Back cover copy

Retirement planning is difficult enough without having to contend with misinformation. Unfortunately, much of the advice that is dispensed is either unsubstantiated or betrays a strong vested interest. In The Essential Retirement Guide, Frederick Vettese analyzes the most fundamental questions of retirement planning and offers some startling insights. The book finds that: <ul><li>Saving 10 percent a year is not a bad rule of thumb if you could follow it, but there will be times when you cannot do so and it might not even be advisable to try</li> <li>Most people never spend more than 50 percent of their gross income on themselves before retirement; hence their retirement income target is usually much less than 70 percent</li> <li>Interest rates will almost certainly stay low for the next 20 years, which will affect how much you need to save</li> <li>Even in this low-interest environment, you can withdraw 5 percent or more of your retirement savings each year in retirement without running out of money </li> <li> Your spending in retirement will almost certainly decline at a certain age so you may not need to save quite as much as you think </li> <li>As people reach the later stages of retirement, they become less capable of managing their finances, even though they grow more confident of their ability to do so! Plan for this before it is too late</li> <li>Annuities have become very expensive, but they still make sense for a host of reasons</li></ul> In addition, The Essential Retirement Guide shows how you can estimate your own lifespan and helps you to understand the financial implications of long-term care. Most importantly, it reveals how you can calculate your personal wealth target—the amount of money you will need by the time you retire to live comfortably. The author uses his actuarial expertise to substantiate his findings but does so in a jargon-free way.