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Jun 22, 2016Lord_Vad3r rated this title 2 out of 5 stars
This book starts off with some startling facts that are not too surprising when you think about it. Approximately half of the middle class will retire to near poverty levels. Why? There are several reasons. Companies ditched pensions in favor of the cheaper alternative, the 401k. Employees, especially young ones, frequently neglect to put aside money for retirement because, “hey, it’s like a million years away.” Add to this that some 401k plans are just bad products with high management fees. If your employer doesn’t offer matching funds you should try to find something else. So, Americans in their golden years are staring at some trouble unless they take action. But what action should you take? Ghilarducci’s answers to these questions are a little vague: calculate your life expectancy, how long you’ll be able to work, and aim to have 8-15 times your annual salary in savings by the time you retire. Some of the advice is stock: when you invest do so in index funds, as you near retirement shift your allocations to favor more secure bond products, pay off debt as soon as possible as the interest you save will far outweigh any return you can get on investments, if you get a money guy then make sure he has fiduciary responsibilities. It’s all sound advice. The only thing I’d take issue with here is the argument that you should always pay off debt before you start saving. You need to have some liquid cash built up in case of emergencies (Dave Ramsey’s plan for getting out of debt is a good “boots on the ground” type approach that incorporates an emergency fund.) Also, research and investigate a lot of fiduciaries before you settle on one. Just because they have fiduciary status doesn’t necessarily mean that they will have integrity. Most people have a price. I do like Ghilarducci’s stance on being politically active and preventing Congress from making cuts to programs like Social Security and Medicare. They were never meant to be the sole source of a person’s retirement income (neither was the 401k for that matter). Regardless, it is all that some people have. We do need to keep the pressure on our elected officials to do things that benefit the country as a whole, not just small segments of it. The middle class used to be the backbone of the country and it is slowly being eroded and broken down. Perhaps the best idea outlined in the book is Ghilarducci’s plan for a Federal-level Guaranteed Retirement Account. It would be a mandatory Federal pension plan that both employers and employees have to contribute to and would follow you from job to job. Social Security would continue like normal but would assume the responsibility of collecting these funds which would then be managed by America’s best fiduciaries. This is the subject of another of Ghilarducci’s books, When I’m 64, not only the title of a book I intend to read but also that of great Beatles tune. The financial world has been made deliberately convoluted and confusing, especially when it comes to investing, but we could all stand to educate ourselves on it.