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'Save Your Retirement'

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[December 02, 2009]  "Save Your Retirement: What to Do if You Haven't Saved Enough or if Your Investments Were Devastated by the Market Meltdown." Frank Armstrong III and Paul B. Brown, Financial Times Press, 2009, 207 pages.

Review by
Richard Sumrall

"There's hope!" That's the good news from financial experts Frank Armstrong and Paul Brown. In their new book, "Save Your Retirement," they outline five different scenarios for replanning your retirement, for those of us 15, 10 or five years away from retirement or those of us who have reached retirement age or five years beyond. One option is to reconsider your date of retirement. Perhaps you do not want to remain at your current job and instead are thinking about a second career.

Whatever your employment decision, the authors emphasize that your retirement rescue efforts should not make the situation worse. The pitfalls to avoid include quick investments that are too good to be true, credit cards dangerous to your financial health, not maintaining the tax advantages in your IRA, ignoring your estate plan, succumbing to the lure of annuities and failing to keep an emergency fund.

"Working With the Scenario That's Right for You"

Part Two of the book contains expert guidance and advice for those of us approaching retirement in the future or considering retirement at this moment. As the authors point out, the more time you have until you retire, the more options you have to ensure success. Part of those options revolves around the authors' "six magic dates." They are as follows: age 50 (you start using the catch-up provisions in pensions); age 55 (some retirement plans allow early withdrawals without a penalty); age 59 1/2 (certain IRS retirement rules become applicable); age 62-70 (when you can start your Social Security benefits); age 65 (welcome to Medicare); and age 70 1/2 (you must take minimum distributions from your tax-deferred accounts).

"(Dramatically) New Thinking"

You have done everything to improve your retirement options and secure your future. But what happens if other assumptions or guarantees that you are counting on fail to materialize? What happens if there is a problem with Social Security? What will you do if your level of risk proves to be hazardous to your financial health?

In that case you may have to reconsider your planned retirement date. You may have to think about whether a time-tested plan to spend 4 percent of your money each year creates the danger of outliving your money.

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Assessing risk is an essential part of any retirement portfolio. The authors remind us that the secret is to assume the right amount of risk at each stage of your investment life. Remember their admonition: "If you take too little risk in your portfolio, you will never accrue enough to meet you goals. If you take too much risk, a market downturn could deplete your accounts to the point where you might never recover." The secret to managing risk is to divide your portfolio into a risky part and a risk-free part. Risk-oriented investments include stock and other equities, while risk-free investments include financial instruments such as CDs, Treasury bills and bank deposits. It is this attention to risk and its influence on your financial decisions that will ultimately determine when you can retire and at what level of financial comfort.

The authors write that "retirement should not start until you have that capital in place." They explain: "If you reach your target retirement date and don't have your target capital, you are not at your retirement date."

As for the carnage of the stock market collapse of 2008-2009? Armstrong and Brown are bullish on the long-term viability of stocks and their place in your portfolio; in fact, they believe that "down the road, the current economic situation will be a distant bad memory. ... It's hard to imagine that we won't look back on this as a great buying opportunity. Why wouldn't you want to take advantage of that?"

"Save Your Retirement" is a timely and welcome addition to the new books on retirement management and how to recover from the financial meltdown. Josh Hyatt of Money Magazine writes: "Convinced the sinking economy has dragged your retirement plans down with it? ‘Save Your Retirement' shows there's still treasure inside that wreckage -- and provides a map to help you find it." This book is recommended to anyone contemplating retirement or seeking solutions to rebuild their retirement portfolio after the recent collapse of the financial markets.

[Text from file received from Richard Sumrall, Lincoln Public Library District]


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