Well done. Great resource guide.
Thanks for the list. Here are some of my favorite books related to retirement and investing in no particular order.
Safety First Retirement Planning - Wade Pfau (I participated in his Retirement Research on Retirement styles - you probably saw the link in his book)
Your Money and Your Brain - Jason Zwig
The Psychology of Money - Morgan Housel
Stocks for the Long Run - Jeremey J. Siegel
The Power of Passive Investing - Richard A. Ferri
The Investors Manifesto - William Bernstein (I have read others but can't recall titles - he is good) Good Quote: If you have won the game, stop playing.
The Index Revolution - Charles D. Ellis
Winning the Loser's Game - Charles D. Ellis
Thinking Fast and Slow - Daniel Kahneman
Superforecasting - Phillip Tetlock
The Delusions of Crowds - William Bernstein
By the way, one of the best podcasts on retirement I have found is: The Retirement and IRA Show - by Jim Saulnier and Chris Stein
Two more books from my library I forgot to include:
The New Retirement Savings Time Bomb by Ed Slot, 2021.
IRAs, 401(k)s & Other Retirement Plans by Twila Slesnick, 2021 15th Edition.
"Pensionize Your Nest Egg" 2/E by Milevsky is a great conceptual introduction to the key financial risks a retiree faces by an mathematical expert in field. I found this to be not too difficult an most worthwhile read for anyone nearing retirement who wants to consider the risks and tradeoffs in creating a sustainable retirement income. Reviewers are critical that book contains a link to an online calculator that is no longer available which is unfortunately true. Even so, the book is a worthwhile read. The author explains how annuities can play a role increasing the sustainability of ones retirement income.
https://moshemilevsky.com/books-writing/
Money Magic by Larry Kotlikoff -I haven't read this newly published book yet but it looks very promising. An article by Kotlikoff introduced me to the concept of consumption income smoothing which is an important feature of PRC. I used Kotlikoffs Excel based E$Planner before switching to PRC. Kotlikoff replaced E$Planner with a cloud based retirement planning tool call Max-Fi Planner which I have not tried since switching to PRC. I suspect many of the retirement planning observations written about in Money Magic can be explored in PRC.
https://www.amazon.com/Money-Magic-Economists-Secrets-Better-ebook/dp/B08RYKKCHY
McClung's book is excellent. You can get plenty out of it without having to digest all of its arithmetic, much of which concerns backtesting scenarios.
I like the Darrow Kirkpatrick/Chris Mamula books, plus the Bogleheads Guide to Retirement, The Simple Path to Wealth, a few others I'll try to dig up. Be very careful about books that have an agenda though - offbeat or outdated ideas, etc. It's not that complicated. Be careful about books that exist quite subtly to pitch a product, such as annuities - they are a bad idea in almost every case.
Also a big fan of BigERN/Karsten's Early Retirement Now blog and The Retirement and IRA Show podcast with Chris and Jim.
(@hines202) I agree that there are some books that pitch fringe ideas and/or certain product types. I did not list any of those that I have read. I am curious about your comment that annuities are a bad idea in almost every case. I agree that they are not for everyone but if you do not have enough guaranteed income (SS, pensions, etc.) to meet your essential expenses, then they can play an important role especially if your retirement style leans more to "Safety First".
Can you please explain your view.
If you have the time, I would recommend Wade Pfau's Retirement Planning Guidebook. The first chapter explains the research that he and others conducted to come up with a "Retirement Income Strategies" concept. I participated in the research and it was very thorough. One of my main take-aways was that we cannot assume that our preferred retirement income style meets everyone's preferences. You might find the concept useful when you meet with clients.
When I first started following Wade's research, I felt that he did have an agenda to get clients for his Mclean Wealth Management business. However, although he still promotes his business, he shares his research with the public through his books and I have listened to many interviews with him on various podcasts that has convinced me that it is not all a marketing gimmick. "We all need to make a living!"
FYI: I think these two guys also provide valuable research and insights to retirement planning:
- Michael Finke - Professor of Wealth Management at the American College
- David Blanchett - Managing Director and Head of Retirement Research for PGIM DC Solutions
@golich428 An annuity (insurance) company is going to take a big pile of your money, invest it wisely for their profit, and dole out your monthly checks at basically a savings account rate of return. But it's not your money any more. You "bought" an annuity, gave up your huge pile for a promise. Wade Pfau is biased, he gets paid by these folks.
Sure, folks buy them because it's "guaranteed income." But it's not. If they fail, you're left to the mercy of your state's bailout fund, if there is one. Those funds are limited, and there will be a long line. Check your state's page and you'll see the insurance companies who have failed recently. It happens all the time. Maybe you bought it from a "big name" company like Prudential and feel good because of that. Well guess what? Prudential has been selling their annuities off to other smaller companies. You have no control anymore. If the company gets in trouble and behind in their fund due to a bad economy, they can just say "whoops, we're bankrupt" and you're out. Nobody thought Lehman Brothers or Washington Mutual could ever go bankrupt, but they did.
The contractual language in these annuity contracts is terrifying. I've read them for my clients. It's complex (by intention) and full of carve-outs for the insurance companies. If you buy riders to try to leave a death benefit or other "features" or protection, you're going to pay through the nose. Most of my clients liked theirs, until I exposed what was really happening. Most had no idea how much was being bled out in fees, because all that is very cleverly hidden in the statements, if it's shown at all. One woman thought she was buying one that would start paying her when she turned 65, but the salesperson wrote it up so that it would pay out when the younger of her or her spouse turned 65, and he was ten years younger than her. She was so angry, and she cried. They work for commission, which again comes out of your pot of money. There's way too much shady business, but even without that, they're a bad deal in my opinion.
I've always found the best thing financially is simplicity. Things that are easy to manage and understand. Complexity is expensive. For example, managed/active funds vs passive index funds. Last year only three out of a very long list of hedge funds beat the S&P 500. it's very common. In the "lost decade" 1999-2013 when stocks were flat and two big crashes/recessions in 2000 and 2008 guess what made money? Basic, simple aggregate bond funds returned 7.5%, pretty good. Get your asset allocation and location right, and you should be just fine. Much better chance than annuities, I think. You still own and control your money!
I will say that later in life, if one has as short trajectory, where they don't want any more market risk due to not a lot of remaining years to recover, there's nothing wrong with going to the simplest form of annuity - a single premium immediate annuity (SPIA). Like term life insurance, they're simple, inexpensive, and solve a targeted problem.
But, back to my original comments, if the insurance company is going to take a big pile of your money, invest it for their profit and dole out crumbs, why not just cut out the middleman and invest your big pile of money conservatively and wisely through a good, ethical, honest fee-only fiduciary advisor, or Vanguard's Personal Advisory Service, or a robo-advisor, or do it yourself with a little knowledge? Keep it simple. Keep it manageable. Keep it inexpensive.
Then you get to leave it all behind to the kids, as it will likely grow far beyond what you need. Or go buy a beach house or nice RV.
Does Wade get paid by insurance companies? I know he talks about situations where annuities can help, particularly SPIAs, depending on the person/situation/personality, but I didn't think (realize?) he was paid by them.
Here are a couple of links to bio info on Wade:
https://societyspeakers.cfainstitute.org/speaker/wade-pfau
https://www.theamericancollege.edu/our-people/faculty/wade-pfau
His SEC page is at: https://adviserinfo.sec.gov/individual/summary/6344036 - he is listed as an Investment Advisor, and not a broker so he is not licensed to sell securities, not sure about Insurance products.
Wade has been kicked around some in this forum and I am not sure it is warranted. I personally have never met the man so I can't speak to his character. I would assume that no one else on this forum knows the man personally either. I do have friends that have transitioned from academia (professors at universities) to the business world, and their good character did not transform into money grubbing zombies 😊. I have read many of his books and white papers and found them to be very good. He is up front about his recommendations about annuities and Insurance products and I don't think he is tiring to slip them in for his profit. Thoughts?
Stretching resource "books" to videos, I find Andy Panko's site on YouTube to be excellent information. Scroll to the bottom of his list and you'll see plenty of topics that may apply to you. He explains well with great examples. He has a corresponding Facebook page called Taxes in Retirement. The posts from followers can get somewhat repetitive but be sure to check out the "Files" header for more great resources. https://www.youtube.com/c/RetirementPlanningDemystified/videos
Not all annuities are sold by insurance companies. Most pensions provide a non-volatile lifetime income stream as a monthly annuity. At todays low interest rates, pensions may even provide a better alternative to allocating a lump sum to bonds. Having a guaranteed income stream allows one to take more risk and earn higher returns on their investments. I suspect you know this but other readers may not.
@morlock103 Non-volatile? I think not. That's my pet peeve when folks talk about things like pensions and annuities being "safe" or "guaranteed." Basically in these cases you're giving the money to someone else, i.e. "buying the annuity" is a real thing. You turn over your lump sum in return for a "promise" to return a fixed amount over time, usually *not* adjusted for inflation.
I do sometimes, in certain late-in-life conditions, think a SPIA is a simple and acceptable solution. I don't agree with Jim and Chris in the Retirement and IRA Show that early retirement annuities should be purchased to fill out the non-discretionary expenses as if you couldn't depend on any small safe withdrawal from your nest egg at all. Certainly if you require the full 4% (if you're relying on that metric) to fund non-discretionary, you're in trouble and an annuity won't solve that anyway because they typically yield less than 4% and aren't adjusted for inflation annually like the 4% rule is. The insurance company has to invest that money and make a profit, after all.
You can lose it all in both cases if the employer or enterprise managing the pension go bankrupt, or if the insurance company promising to pay you the annuity bankrupts, or sells the annuities to another company who then goes bankrupt. Yes, there are state bailout funds, get in line with the many others for that limited pool, and good luck!
Below are some spectacular pension failures. Familiar names, big companies! The problem is that often management of the investments is done in typical corporate or union style - folks get the positions due to their donation history, country club friends, nepotism, etc. There's rampant fraud, malfeasance, etc in the management of pension funds. For that reason I prefer folks (in most cases, after the math is done and circumstances factored in!) take the lump sum, learn the basics or get some guidance to learn their individual proper asset allocation and location, and invest accordingly in low-cost index fund ETFs, or hire a fee-only fiduciary advisor to mentor them and show them how for a year or two before taking the reins themselves. Tough to beat it, having full control and keeping possession of your own money.
I realize that sometimes you don't get a choice, as with the professor client I have whose university cut a deal with TIAA to not allow any lump sums. I analyzed their proposal and the monthly sum they were being pitched as "guaranteed" consisted of quite a bit of money that wasn't really - some part of their payment was "loyalty bonus" and "additional amounts" that say in the fine print they aren't guaranteed.
| Firm and Year Terminated | Total Claims | Vested Participants | Average Claim Per Person |
|---|---|---|---|
| 1. United Airlines (2005) | $7.4 billion | 123,957 | $60,033 |
| 2. Delphi (2009) | $6.1 billion | 69,042 | $88,475 |
| 3. Bethlehem Steel (2003) | $3.7 billion | 91,312 | $40,021 |
| 4. US Airways (2003) | $2.8 billion | 55,770 | $49,337 |
| 5. LTV Steel (2002, 2003, 2004) | $2.1 billion | 83,094 | $25,694 |
| 6. Delta Air Lines (2006) | $1.6 billion | 13,291 | $123,473 |
| 7. National Steel (2003) | $1.3 billion | 33,737 | $37,811 |
| 8. Pan American Air (1991, 1992) | $0.8 billion | 31,999 | $26,285 |
| 9. Trans World Airlines (2001) | $0.7 billion | 32,263 | $20,717 |
| 10. Weirton Steel (2004) | $0.6 billion | 9,410 | $68,064 |
the professor client I have whose university cut a deal with TIAA to not allow any lump sums.
Can you explain this a tad further? If by "lump sum" you mean cashing out TIAA Traditional or Real Estate, which are long-term investments that can only either annuitize or cash out in payouts over 10 years, then there's no secret about that. Some retirees take the 10-year as a tax strategy while they wait to take Social Security. If you mean a "lump sum" cash out of everything, it is possible to do this at TIAA if your investments are in an IRA there and the TIAA Traditional in it is "closed." You can roll over the entire contract to an outside rollover IRA.
I'm no fan of TIAA and at the first opportunity I chose another custodian for my academic retirement contributions. But I'm interested in this "deal" you're referring to.
Peter
