I’ve read books that are intended to be “all you need to know about personal finance.” And I’ve read books that are intended to be “all you need to know about investing.” But The Bogleheads’ Guide to Retirement Planning is the first book I’ve read that’s “all you need to know about planning for retirement.”
Note the distinction: This book is not about saving/investing for retirement. It’s about planning for retirement (and everything that’s a part of such planning). The best part about the book, in my opinion, is the breadth of topics covered. The chapter-by-chapter table of contents should give you an idea of the scope:
- The Retirement Planning Process
- Understanding Taxes
- Individual Taxable Accounts
- IRAs
- Defined Benefit Plans (written by fellow blogger, The Finance Buff)
- Defined Contribution Plans
- Single-Premium Immediate Annuities
- Basic Investing Principles
- Investing for Retirement
- Funding Your Retirement Accounts
- Understanding Social Security
- Withdrawal Strategies
- Early Retirement
- Income Replacement
- Health Insurance
- Essentials of Estate Planning
- Estate and Gift Taxes
- Seeking Help from Professionals
- Divorce and Other Financial Disasters
- Meet the Bogleheads
Phew!
The chapters average 16 pages in length, so you get a little more than just a high-level introduction to each topic, while at the same time avoiding details that are unlikely to be important to more than a small number of readers. Also, the authors conclude each chapter with suggestions for additional reading, making it easy to research a particular topic further should you so desire.
A Few Discussions I Particularly Enjoyed
(In chapter 11) Social Security strategies: By intelligently planning when to begin taking Social Security payments, you can significantly increase your expected lifetime payout. (This goes double for married couples, as the planning opportunities increase when there are two spouses involved.)
(In chapter 9) How asset allocation should be affected by your other assets: For example, if you have a pension that pays out a fixed amount every year, that’s roughly equivalent to a large bond holding, so perhaps you should have a heavier stock allocation than other investors. Also, if your pension is not indexed to inflation, perhaps your other bond holdings should be in TIPS so as to provide some inflation protection.
(In chapter 7) How to shop for Single Premium Immediate Annuities: SPIAs can be used to offset the risk of outliving your income, but shopping for annuities is tricky business. Being an informed customer helps you avoid getting ripped off.
Would I Recommend the Book?
It depends. If you’re still quite young, there’s a lot of material here that you don’t need to worry about just yet. I’d suggest starting with something different–perhaps some combination of the following:
- The Four Pillars of Investing,
- How a Second Grader Beats Wall Street,
- The Bogleheads’ Guide to Investing,
- The New CoffeeHouse Investor, or
- my latest: Investing Made Simple.
If, however, you’re starting to think seriously about getting all the retirement planning specifics nailed down, then I can’t recommend The Bogleheads’ Guide to Retirement Planning highly enough. It’s the only book I’ve seen so far that covers all of the different topics involved in planning for retirement.
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Thanks for the tip. I’ll have to give this book a read.
Moderator’s note: Rob Bennett posted a comment in reply to this post. I removed it, as I didn’t feel that it was on topic. (It dealt more directly with the Bogleheads forum than with the book or the subject matter of the book.)
For any interested readers: He’s informed me that he’ll be posting on his blog about the topic of his comment later this week.
I just got this book from Amazon this afternoon and looked through it. It looks like a clearly written and pithy coverage of all the topics one needs to plan for retirement. Off hand, I can’t think of another book that covers this much in a single volume.
As one who has muddled through ‘doing it myself’ for a long time, I found this book to be a paragon of information, presented in absolutely dead-simple, but clear and understandable language. I highly recommend it, as well as the companion blog site, BTW, where any specific question you might have that might remains unanswer will almost certainly be addressed by either the authors of the book themselves or others equally as competent. What other product comes with that kind of support scheme?