This latest book from Harriman House acts as a one-stop, definitive resource to make your later years secure and comfortable, writes Richard Gill, CFA.
Retirement. The supposed state of bliss where we stop working for other people, enjoy the income we’ve built up over our lives and pursue endless leisure activities with family and friends. But that might be a pipedream for many people in the UK. According to a recent report by financial website Unbiased.co.uk, 17% of people in the UK aged 55 and over have no private pension savings. What’s more, the study also found that 45% of all Brits hope for a retirement income of at least £20,000 a year. With the maximum state pension being just over £9,000 right now, many people are going to be disappointed.
While it’s best to start young, it’s never too late to start planning for your retirement. But even those who manage so save a substantial nest egg by their late 60s are still in for some challenges. No one knows how many years they have left on the clock so we don’t know how long our savings need to last. We might have to deal with unexpected expenses as we age, like medical bills or a broken boiler. And of course having a secure retirement isn’t all about making sure we have enough money to cover daily expenses. Other matters like estate planning, insurance and ensuring you actually enjoy your retirement are all going to come up.
If you need advice on this somewhat complex matter, this latest book from Harriman House acts as a one-stop, definitive resource to make your later years secure and comfortable. Your Complete Guide to a Successful and Secure Retirement is the second edition of a book first published at the start of 2019, authored by investment and personal finance experts Larry Swedroe and Kevin Grogan. As well as advising hundreds of clients on meeting their financial goals, they are prolific financial authors too, having written over a dozen books between them and thousands of articles.
Fail to plan, plan to fail
The book is divided into twenty chapters, each covering a specific element important in planning a secure retirement. As discussed, not all of them are about investing per se, but having a sound and well thought out plan to deal with what life brings in your later years. Also, a common theme throughout the book is that plans must be revisited on a regular basis, especially when any underlying assumptions have changed.
In the introduction, Swedroe and Grogan set the scene with current world affairs in mind, encapsulating certain challenges to retirement planning in the form of the so called “four horsemen of the retirement apocalypse”. These are the four powerful forces of historically high equity valuations, low bond yields, increasing longevity and increasing need for expensive long-term health care, all of which can make planning more difficult compared to previous decades. They also cover nine common planning errors to avoid, including underestimating financial needs, overestimating your ability to continue working and becoming too conservative in your financial decisions.
The first two chapters are perhaps the least financial based of the lot, providing practical advice on how to incorporate a sense of purpose into your retirement planning, in other words what you want to do with your new free time to develop relationships, pursue your interests and follow your passions. One specific tool used here is a chart to show things that you will stop, start and continue doing – start learning piano, stop eating chocolate and continue running for example. Your retirement vision can then be used as a basis for developing a financial plan to support it.
Chapter three begins a series of chapters covering the accumulation phase of retirement planning, bringing in the financials and taking a look at asset allocation – investing assets in a manner reflecting one’s ability, willingness and need to take risk. How pre-retirees should allocate their wealth to equities, fixed income and other assets is then discussed within this framework. Chapter four then discusses the importance of having a formal investment policy statement which combines the objectives you have for your financial assets combined with many other factors including planning time horizon, need for liquidity and appetite for risk. Implementing the investment plan is then covered in detail in chapters six and seven.
As well as including the key topics of pensions, health insurance and annuities, some of the chapters in the second half of the book are somewhat unique. Chapter 17 for example looks at the specific issues that women face in their retirement, with the authors identifying 12 headwinds including lower lifetime income, longer lifespan and a tendency to make less aggressive investment decisions. They offer solutions for how to address these issues in a way that leaves women more financially empowered. Chapter 20 meanwhile examines how older people, having substantial financial assets and possibly diminishing mental status, can be exposed to financial abuse in the form of scams and even conniving family members. As part of the whole planning process, advice is given on how to minimise the risks of these things happening.
Finding financial freedom
Your Complete Guide to a Successful and Secure Retirement does what it says on the tin, teaching readers how to develop an integrated plan and maintain its relevance throughout their lives. The detailed and informative tome provides pre-retirees a raft of practical and down-to-earth advice, illustrated with examples and stories from real life situations. Swedroe and Grogan have used their collective wisdom to create an informative and up to date title that also deals with subjects rarely covered in other retirement planning books.
While the book is primarily written for a US based audience, covering topics like Medicare, Individual Retirement Accounts and social security, the fundamental concepts can easily be applied to UK based retirees. It is an essential guide for anyone looking to have a happy and fulfilling time in their golden years.