I’ve Paid For This Twice Already…

Archive for the ‘books’ Category

My 34th birthday is tomorrow, and although birthdays don’t usually bother me like they do many people, I’ll admit, this one is getting under my skin a little bit. I attribute that to the fact that I’ve started in the past year to become very serious about our financial situation and about our future financial health, so a birthday is an indication that I’m another year older and time is ticking away that I haven’t taken full advantage of in saving for the future. Probably the same reason many people don’t enjoy their birthdays once they pass a certain age, but with a little financial twist. I’m fine with getting older, physically, so far, but I’m impatient to get my money in order completely and start truly saving for a comfortable retirement.

Although the emphasis in my mind lately about saving for retirement is valid, I do once in a while think about what if I don’t even make it to retirement, why am I worrying about saving for it? I know that for some people, this thought is what keeps them from saving as much as they feel they should. But just like life insurance and auto insurance and homeowners insurance, I have those things in case I need them. In those cases, I hope I *don’t* need them, in the case of retirement, I hope I *do* need the money I save.

This past week, I have been reading a book called Alive and Kicking: Legal Advice for Boomers. I was offered a review copy of the book a while back by the publisher, and I accepted it not because I’m a boomer, but because my parents are, and as they approach retirement, I think more about if they’re prepared and how they will manage. I thought, when deciding to accept a copy of the book, that if I didn’t find the book personally useful, I would at least find some information for my parents and could pass it on to them. I’m not all the way through the book yet, but I have found it an entertaining read so far, and have learned a few things along the way. Although I’m not quite sure if I want to continue doing my Friday book reviews (the first two books had a really positive response, the last one seemed not to interest people generally) I am going to review this book hopefully next week in a one-post review. And now you know why retirement has especially been on my mind this week.

I wonder why it is so hard for some of us, me included, to talk to our parents about money. I actually bit the bullet over our Christmas vacation and broached the subject of retirement with my parents, and they seem to think they are prepared for it, which I hope is true. I didn’t ask for any specifics as to amounts saved or anything like that. My parents will both get social security, at least at first, for they are close enough to retirement that the system won’t have gone bankrupt yet, and I know my father has a 401K. He talked about aggressively saving in their 40’s in their 401K, and I hope they’ve saved enough. But one of the nice things, for us, about the fact that we’re getting our financial house in order is that the idea of them coming to live with us eventually if they needed to, for whatever reason, doesn’t completely frighten me from a financial standpoint like it used to.

Although I’d rather they were doing fine and could choose to do whatever they want.

Apparently, the combination of reading a book geared towards retirement-aged individuals and an impending birthday has made me reflective and a bit tangential. Happy last day of being 33 to me.

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This is the fifth and final installment of a 5 part review of Lee Eisenberg’s The Number. The first installment can be found here, the second installment here, the third installment here, and the fourth installment here. The reviews appear every Friday afternoon.

So now we’ve finished The Number, and what have we learned? For those who, like me, were expecting to make some sort of number calculation at some point, the appendix does indeed have a formula to do a quick and dirty calculation of your personal “number”, based on the 4% rule with some more fine tuning, but encourages you not to use it. Centering your calculations around income and not around what you actually plan to and aspire to do is not going to give you a good picture. Ask yourself - what is it you want to do, accomplish, be? Examine your life, and decide based on that.

Which, really, has been the overall message of the book. There isn’t a magic formula or a simple calculation that tells you what you need for the rest of your life. You need to examine what is important to you,what you want out of your retirement, what your goals and dreams and hopes are. Then you can make strides towards meeting those goals through financial security.

Although I enjoyed the book as a whole in its style and conversational tone, I found it more than a a little unsatisfying by the end. I was expecting more meat and less theory, I think. I also thought it was really geared towards those in the upper 10% or maybe even 1% of income. This wasn’t apparent to me from reading the cover, but there was a sort of tone throughout the book to me in that regard. Which is a valid audience to aim at, I just wish I had known about the target audience before I started reading. The book did have some cleverly packaged ideas I found interesting and amusing, but as a whole, if you’re looking for solid retirement advice, for me this isn’t where to find it. If you are looking for someone to scare you into starting to plan for retirement though, you hopefully would get that out of this book. I found the first section the best, for me, and the third section wasn’t in my eyes really geared towards me at all.

I am still deciding on the next book I am going to look at, I have a few now sitting on my shelf, either promotional copies I was sent or ones I won in contests. I am going to read the beginning of a few over the next week and see what I come up with. They look promising though. And hopefully relevant!

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This is the fourth installment of a 5 part review of Lee Eisenberg’s The Number. The first installment can be found here, the second installment here, and the third installment here. The reviews appear every Friday afternoon.

The third and final section of The Number is called Finding It, which, since Figuring It didn’t really go into the actual mechanics of figuring out your retirement number in any sort of detail, I kind of thought that this section might. But this book is a book about how to think, and what to think about, much more than it is a book about math. So Finding It turns out to be more metaphorically about “What do you want your retirement to be?” rather than “How to plan for the retirement you want.”

The section basically has two sets of stories - discussing retirement planners and retirement workshops, and the things that are talked about there, and discussing a company that created one of the first “retirement” communities in Arizona, and has become a conglomerate of creating entire cities devoted to seniors. The book questions if that’s what we really want - and obviously, it is what some people want, but it is what you want? Is “the number” about downshifting your life, or is it about finding meaning in your life?

I honestly didn’t really find this section as engaging as the first two sections. I found some of the examples interesting, but I wasn’t very invested in the stories or the outcomes. There were a lot of questions that didn’t seem to ever be answered, and some that I just didn’t feel any connection to. I don’t exactly think this section was necessarily aimed at a higher income bracket than we are in, like I did with previous sections, I guess for me, it just wasn’t asking the questions I needed answered.

Many of my regular readers know I am somewhat of a numbers geek. I like to play with numbers, I enjoy working with numbers, and honestly, it is something that I was born with. I can remember when I was a very small child (about 4 or 5) I would add numbers all day long if left to my own devices. 1 + 1 = 2, 2+ 2 = 4, doubling and doubling to see how high I could get. Okay, so I am somewhat of a nerd. Or a geek. I’m not sure what the difference and distinction is. But, back to the book. The lack of a defined calculation tool beyond the 4% rule discussed in the previous session kind of set me aback a bit. For me, I wanted… well… a number.

Next week, I’ll wrap the book up, including information from the Appendix (could it finally be a calculation tool?) and my thoughts about the book as a whole. Did I take anything away from it? Do I understand why I’m chasing a number any more clearly? And maybe by then I’ll have another book picked out. Maybe.

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This is the third installment of a 5 part review of Lee Eisenberg’s The Number. The first installment can be found here and the second installment here. The reviews appear every Friday afternoon.

In the last review, we talked about chasing the mythical number you need for a comfortable retirement. There are those who ignore it, those who worry about it but don’t do much about it, and those who plan for it, on a obsessive detail scale or a life goal scale. But how do we know how much is enough? Today we move on to Figuring It, which may give us some insight into the answer to that question.

This section emphasizes two things over and over again - that people are living longer than ever and that they are failing to plan adequately for this increased life expectancy. It is one thing to die without anything to pass on to your heirs - it is a whole other thing to die broke and in poverty. Eisenberg uses some fictional case studies that he calls Crash Test Dummies to illustrate these points, and the majority of the section revolves around using the Crash Test Dummies to show how retirement is more expensive than you think, and aging is expensive.

I’m not going to go into a long detailed explanation of the Crash Test Dummies, just a short overview - but I did find this a very entertaining and enlightening way to look at things. I love a good story, and I found myself getting a little attached to these fictional people, even when they did boneheaded things. I rooted for them to make good choices and figure things out. I guess, in hindsight, the best thing about the Crash Test Dummies is they made me realize what good choices were. They consisted of a 85 year old widowed woman who lived on her late husband’s pension and retirement investments, and their three children and spouses. Some of the children made smart choices, others made poor ones (let’s take $400,000 and retire at 60 and work part-time at consulting and go to the mountains with my new young girlfriend every weekend!), and all in all, I found the entire scenario an engaging and interesting read.

The section also talks about the history and background to the 4% rule - which is the idea that when you retire, you should only withdraw 4% of the principal of your assets every year to live on to make sure they will last you the rest of your life. I’d heard of the 4% rule before but I enjoyed learning some background behind it. This piece of advice and information actually did make me start thinking about real numbers - not that I’ve figured out my number yet (I’m starting to think we need more per year to live on in retirement just because of medical expenses than we needed before retirement, and that scares me) but the idea that I want assets equal to an amount I can withdraw 4% to live on per year is a concrete one I can wrap my head around. Not new information, but presented in a way that made it accessible to my thoughts.

The last part of the section discusses different types of financial planners - from fee-only to commission-only and everything in between (I learned that fee-only and fee-based are not the same thing) and then does an “under the hood” exploration of Fidelity as an example of how far retirement planning has evolved, including the evolution of the 401(K), and the movement from a planner doing the work for you to you doing things yourself. This part of the section leans a little more towards the higher-income bracket, in that, for example, there’s a sentence that says something like “If you only have $1 or $2 million in investable assets…” Okay then - we have much less than a tenth of that right now, but, we soldier on. Heh. The information is useful to anyone, and it is not only wealthy people that need to plan for retirement, obviously! But I do overall get the tone from the book that its target audience is really aimed at more upper-income people than I am, but I’m still learning from and enjoying the book as a whole.

So, by the end of this section, I’m honestly not a lot closer to figuring out what my retirement number is, but at the same time, I am more comfortable with thinking about it critically and facing the reality that we are nowhere near prepared to retire - ever. It also makes me want to call my parents and tell them they can come live with us when they retire if they need to, because I’m afraid they aren’t ready to retire ever either - and they’re less than a decade away from the magic age, unlike me. Time is not on my side as much as it was ten years ago, but time is still on my side. For now.

Next week I’ll review the final section of the book- Finding It - and maybe, just maybe, by the end I’ll have some sort of semblance of a number to shoot for. Just need to finish beating down the debt monster so we can start to get back on track. Finally. At least there’s a track to get on.

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This is the second installment of a 5 part review of Lee Eisenberg’s The Number. The first installment can be found here. The reviews will appear every Friday afternoon.

In last week’s review, I explained that I chose to review this book based on a sentence that gripped me from the back cover: “The Number will help you think about the kind of life you want, and the kind of help you need to achieve it.”

And that sentence still has me sold. Retirement is a scary, confusing idea for me, and I need all the help I can get in figuring out how to realistically plan for it. So this week I’ll be examining the first section of the book, aptly titled “Chasing It”. Are we all chasing some mythical number? Do any of us know what number we’re chasing and have an actual reason why? I think I’ve heard “$1 million” tossed around so many times I just think that’s the number to shoot for, and have no idea what $1 million means in regards to actual income in retirement. Let’s see if most people are as clueless as I am.

Chasing It begins with a series of scary, yet to me not surprising, statistics. In a nutshell, most people aren’t saving enough for retirement, most have inadequate savings up to this point, and no one seems to outwardly care if they are saving enough or not. The few people who do think about concrete numbers in regards to retirement (those of Wall Street and the like) are constantly adjusting their number upwards. And no one is really talking about it.

Retirement savings remains one of the last taboos of discussion - but why is that? Eisenberg presents the idea that the “Number” is tied up in self-worth and validation. Validation that all the years spent in your career were worth the effort, validation that you are not a failure. There is a fear that we aren’t doing enough, but surprisingly, that fear, in most cases, doesn’t actually motivate action. I can see that, because I’ve carried a number of money-related fears that I really did nothing to address for a very long time.

Eisenberg breaks down Number Chasers (and we all are one, even if we don’t know it) into four groups:

• Procrastinators - haven’t gotten to it
• Pluckers - pluck a number to shoot for out of thin air
• Plotters - number crunchers with graphs and tables
• Probers - number is a means to achieve dreams and goals

Obviously, we don’t want to be a procrastinator or a plucker. I’d think there should be a balance of plotter and prober in all of us, at least, a little bit. They are presented rather equally here, with Plotters being more left-brained and Probers being more right-brained.

There are many reasons why we as a culture are not saving enough for retirement, or even understanding what “enough” is, and Eisenberg talks about the reasons in what he terms “Eisenberg Uncertainty Principles”. They embody the uncertainty around things that if we knew how, we would change:

• Little social pressure to get our financial house in order
• Not understanding how money works
• The old retirement supports are withering away
• Immense doubts over what future benefits are
• Failure to see larger picture
• Not understanding what matters

Because of these factors, we are lulled into inaction over the uncertainty of what we should be doing and what we really can do to make a significant difference.

The rest of the Chasing It section is devoted to exploring a number of factors that keep us from being able to adequately plan for our “Number”, even if we knew what it was. Those include the Debt Warp - that debt feels like a normal state of being and so we accept it as part of existence, the Lost Years - the years spent not bothering to learn anything about finances and saving, and the confusion between the “Old” rest of life and the “New” rest of life - that in the past, social security and pensions took care of you, but now, we must be more proactive ourselves and make our own plans. Why do these things hold us back? To embody that, this quote has stuck with me the entire week since reading this section:

Even intelligent human beings would just as soon avoid information that causes distress.

So true. Avoidance is not a good strategy but it is such an ingrained part of human nature.

All in all, so far, I still have somewhat mixed feelings about the book. I think there is a lot of great “thinking” information - ways to look at and think about things that I hadn’t quite thought of before. For example, the types of Number Chasers. I know I used to be a procrastinator, and now I am more of a plucker but I am trying to work towards being a plotter. And there are a number of great one-liner quotes in the book that stay with me. But a lot of the book is aimed at people in a different world from me - a lot of the information is written about the top 1% or 10% and how they feel broke too even if they aren’t on paper - and I accept that, but it isn’t really relevant to me or my life right now. A lot of the book seems to be trying to convince the “rich” that they need to care about their Number, too. So I might not be the target audience here. We’ll see as the book continues.

Next week, we’ll look at Figuring It - and maybe I’ll learn how to understand what my Number is. It’ll probably scare me if I do. But reality is better than ignorance.

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