Product Description

Product Details

• Amazon Sales Rank: #149613 in Books
• Published on: 2006-04-01
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 370 pages

About the Author

Customer Reviews

An Important Book for Financial Advisers
This collection of twenty essays on retirement planning shifts the focus of much of the current literature from the accumulation of assets to their distribution. "Retirementality" - how we think about and live out retirement (Anthony) - is being redefined by a generation who are living years longer than their predecessors. Indeed, "longevity risk" is one of the central themes of this book. As defined benefit pension plans disappear and the viability of social security is debated, the net reality is that longer living retirees are left with fewer streams of guaranteed life-time income. Making that nest egg last is a challenge. Failure to do so is "the probability of ruin" - to use Milevsky's indelicate phrase.

A number of these contributors see annuities as integral to generating a guaranteed life-long stream of cash. Carey and Dellinger (and Milevsky elsewhere) maintain that investment returns produced by an annuity will always be superior to identical investments outside an annuity because of the "mortality credits" from other terminated annuity policy holders which are factored into the projected income. A chapter on reverse mortgages presents an evenly balanced discussion of this additional source of income for retirees. Considering that half the population who reach 65 may need some form of expensive institutional care (Greenwald), supplemental streams of income may also prove useful to pay for a long-term care insurance policy.

"Sustained Withdrawals" (Benge) seeks to determine a "safemax" - the maximum, annual withdrawal percentage rate from a retiree's accumulated wealth during this "decumulation" (Katz) phase. Determining this rate is another key theme in this collection. The rub is that relying solely on historical average rates of return and conservative withdrawal percentage rates mean little to a portfolio's survival if the sequence of market returns is negative in the early years of retirement. Benge's research looks at different withdrawal rates, asset mixes, various timing strategies, and adjustments to the withdrawal rate when it is a goal to leave nest egg assets as a bequest. Meanwhile, Stanaslovich in "Creating Portfolios With Lower Volatility" raises the bar with a gloomy projection of low returns for a variety of asset classes into the next decade.

This book should be read by financial planners, brokerage advisers working with retiring clients, and informed investors who want to manage their own affairs.

Money Well Spent
I have read over two dozen books on investing and retirement planning and this is among my favorites. First, there are few books which talk to the subject of distribution (as opposed to accumulation) strategies. Second, the authors have chosen to allow other experts to contribute to their book - 25 of them to be precise. So you are not just getting the advice of one or two people, but the opinions of over two dozen renowned experts in the field. There is a tremendous amount of wisdom contained in the chapters.

As anyone who is a student of investing and retirement planning will know, Harold Evensky is quoted routinely and widely recognized as an expert in his field. Simply getting his advice is more than worth the price of admission. An example is the Evensky & Katz Cash Flow Reserve Strategy (E&KS) which is discussed in chapter 11. I have no doubt I will use this strategy in my own distribution planning.

Also not to be missed in the work of Bill Bengen on sustainable withdrawals, which is presented in chapter 13. Anyone who is contemplating managing their own cash flows in retirement (and even those who entrust this to others) should not miss Bill's views and opinions. He is arguably the leading expert on sustainable withdrawal rates in the financial planning business. I would highly recommend that you also consider purchasing his book, Conserving Client Portfolio's During Retirement, in addition to this fine work. Fortunately that book has recently become available on Amazon so it is now easy to find and obtain. I purchased my copy about 9 months ago and had to order it directly from the Financial Planning Association.

While you may not agree with every opinion expressed in this book, it will certainly get you to thinking (perhaps outside the box) and pressure testing what you think you know.

I'm sure I will use it as a constant guide in managing my own finances.

Excellent Technical Discussion
As a recent retiree, who is not a professional financial planner, I found this book very helpful in understanding the "technical" details of various financial planning tools. I was particularly interested in Monte Carlo analysis (which I use) and how this tool can be used to objectively (albeit not in the most easily understandable form for a lay person) quantify my investment portfolio risk.

It was also very interesting in how the Monte Carlo tool is being misused to evaluate risks other than simple investment portfolio risk. I would agree with the authors conerns about how certain financial planners are trying to use Monte Carlo analysis to evaluate risk far beyond the investment portfolio.

Traditional financial planning advice would suggest an ultra-conservative investment strategy high in fixed income securities. For those willing and able to accept the variablity of the stock market, a significantly higher level of income can be generated with little additional risk. Monte Carlo is the tool (properly used) to evaluate investment strategies.