After reading their investing book Yes, You Can Time The Market! and liking their writing style and slightly different view on things, I decided to read Ben Stein and Phil DeMuth’s book on retirement – Yes, You Can Still Retire Comfortably!
Even though this book is targetted at Baby Boomers worried about their impending retirement, and I’m still in my 20s, it was an interesting read. First, they scare you with (true) tales of underfunded pension plans, a shaky Social Security system, and rising healthcare costs. Obviously, you need to do something about it!
Given your current salary, savings, and time to retirement, they will propose the needed percentage of income that you need to save regularly to reach the estimated nest egg amount that you need. As for investing, they recommend a low-cost portfolio of 50% stocks and 50% bonds basically forever. It’s a bit simplistic, but it would still probably work for many people.
My favorite part of the book gets into things that a worried retiree really wants to know: how should I draw down my nest egg, and what if I don’t have enough. In fact, the entire third section of the book is entitled “If Everything You Have Isn’t Enough”. This is something I think is really lacking in most discussions about retirement. Sure, everyone wants to be able to live off the interest or dividends from their savings, leaving a fat wad to our family upon exit. But a ton of people are going to have to make some hard choices just to maintain their standard of living.
One option is to purchase an immediate annuity, where you fork over a lump sum in exchange for a lifetime stream of steady payments. As a rough example, you may give a company $100,000 in exchange for $8,000 a year, forever. Doesn’t matter if you live for 10 more years or 50. I would imagine this stability can provide a lot of peace of mind. Other alternatives include relocating to a more affordable area like Ocala, FL, or taking a reverse mortgage out on your house.
Conclusion
Overall, this book is accurately self-described as a “survival guide to retirement”. It’s not perfect, and I’m not going to follow all their advice, but it’s still infinitely more practical than the other book for Baby Boomers I’ve read – The Number by Lee Eisenberg, which is more like the “daydreamer’s guide to retirement”. If retirement is on your horizon and your biggest question isn’t Where should I buy my vacation house?, then I would recommend reading this book.
Overall Rating: 
(ratings explained)
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I actually read this book when it first came out and I wasn’t as impressed as you were with the book. Their asset allocation for investing was very weak in defense and if they do not believe in age based asset allocation, I’d have to argue that 60% equities and 40% fixed-income is a better asset allocation than 50/50. Almost all pension plans use 60/40, even though if I recall they say they don’t care if you go with 60/40 over 50/50, but I feel if I had to only pick on set of allocation I’d pick 60/40 over 50/50. The other thing they touched bases on more than a lot of other books was rebalancing, but out of the 4 common strategies on rebalancing they prefer percentage tolerance.
Truth of the matter I’m not sure if you remember from reading the book all about asset allocation, but Ferri recommends annual rebalancing as the prefered choice, but he does indicate that using tolerance parameters in some cases has actually increased return slightly and lowered risk slightly when compared to annual rebalancing.
To be honest though I did enjoy reading the book and as you’ve said the writing style is pretty good. Their selected lazy portfolio though would be probably my last pick out of 12 common lazy portfolio’s out there.
I also disagree with their asset allocation advice (this is obvious for those that have seen my portfolio), but of course who knows who will be right 🙂 They don’t think stocks will keep up their performance premium over bonds in the next century. They did do a ton of Monte Carlo simulations with that 50/50 mix so I wonder if it wasn’t more for convenience as well.
If I recall, Ferri ends up recommending annual rebalancing because it’s just simpler and he feels the benefits of tolerance balancing were not worth the extra effort needed to constantly monitor percentages. I don’t think he quantified how much that extra benefit is, though.
yeah, I wished ferri would have gotten into more depth about rebalancing strategies, but I agree with ferri and I personally do annual rebalancing, it’s easier to be more consistent.
As far as the book not believing that stocks will not keep up with their time, I think it’s what a lot of investors seem to think, which is pretty conviencing. You’re right though who knows will be right as far as which asset classes to pick. Their advice though is pretty straight forward and simply. I enjoy reading your book reviews.
I want to purchase a copy of Benjamin Graham’s Security Analysis. I notice there are a few different editions available. (ex. The classic 1940edition, The classi 1934 edition, and The classic 1951edition) Does anyone know the difference among them?