Book review: Cash-Rich Retirement
Do you need a kick in the pants to get you saving for retirement? Do you need someone to wave their arms and run around screaming that your whole future is at risk, in order to motivate you to put some serious money aside and take the time to learn how your 401(k) works? If so, this is the book for you.
It's fascinating to read this book in conjunction with Work Less, Live More, which I checked out of the library the same day.
Where that book goes way beyond the classic notion of retirement at age 65, suggesting that not just retirement, but early retirement, is readily available to almost anyone--if they're willing to live frugally and maybe keep on doing a bit of work on the side--this book is the complete opposite.
Schlagheck scarcely talks about early retirement, and it doesn't even seem to imagine that anyone might do any work to earn money after they retire. It's all about straight-up retirement: You work to retirement age, and then you quit. And, it warns, if that's your plan, you may be in for an unpleasant surprise. Not only is your retirement in "grave danger," the whole system of retirement is on the verge of being a failed experiment.
Schlagheck sees two sources of danger.
The first is the "coming demographic storm" of baby boomers all getting set to retire at once. Not only are they all going to want to get their social security payments at once, they're also going to be taking their pensions (from old-line businesses and from state and local governments) at once. Plus, they're all going to stop accumulating investments, and switch to selling them instead. With everyone trying to get their money at once, Schlagheck sees a real danger that they won't all succeed.
The second is a set of foolish ideas about investing. You cannot, he says, safely rely on capital gains for your investment returns; reliable long-term returns are largely going to come from income: dividends, interest, and rents. In addition, you can't get adequate diversification simply by dividing your investments among American companies of different sizes (a generous helping of S&P 500 seasoned with some mid-cap and small-cap funds). You need to diversify both internationally and among asset classes (stocks, bonds, REITs, etc.).
I actually agree with most of what Schlagheck says, especially about his focus on income in your investment portfolio and on the kinds of investments you ought to be focusing on. In addition to the excellent chapters on investing, he's got a good chapter on health insurance, some interesting thoughts on long-term care insurance, and lots of good detail about complicated subjects like annuities (that aren't so well covered other places).
Where I have a problem is in the way he's trying to work the reader up into a tizzy. The book could not have been printed before the digital age, because in the days of metal type the printer would have used up his entire supply of exclamation points before getting halfway through the manuscript. Every page is splashed with italics warning you of a threat or urging you to action. The repeated exhortations to "save, save, save" become wearisome, and the drumbeat warning that your retirement is in danger don't become more compelling with repetition.
Still, if you or someone you know is just blithely assuming that retirement will take care of itself, a wake-up call like this may be just what you (or they) need. The information is right on, even if I got an unusually vigorous workout for my eye-rolling muscles as I plowed through the cautions, dangers, perils, warnings, and urgent urgings.
For the right person, though Cash-Rich Retirement by Jim Schlagheck is a fine book. Excellent content. Just a little strident for my tastes.