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Retirement: Saving Funds for Your Future (Collection)

Book Description

You must be aware of the value, potential return and risk of your human capital: your job, career and what you do for a living. Human capital is the most valuable asset that you will own over your lifecycle. You need to balance financial decisions with the characteristics of your human capital. The key trends identified in Are You a Stock or a Bond? include the decline of Defined Benefit (DB) pension provision, the continued increase in human longevity and the risk of personal inflation, and they are as relevant today as they were five years ago. The financial crisis has taught us that all types of capital -- human, financial and even social -- are key to a secure financial future. If your career has "stock-like" growth and risk characteristics, Milevsky helps you balance your "portfolio" by tilting investments towards safer "bonds."


Saving for Retirement will relieve confusion and barriers to action. It acquaints readers with people like them, and step-by-step addresses what's likely confusing them. Instead of starting with some lofty financial planning theory, it walks individuals through the process everyone goes through with IRAs and 401 (k)s -- leaving no basic questions unanswered. Instead of telling readers to open an IRA-as many books do-it tells them how to open one: where to go, what the forms mean, how to decide how to invest, the essential first steps. The book removes everything from the reader's path that typically trips people up and hits the sweet spot for everyone from aged 18 to 60. Using new figures (including troubling new projections of healthcare and long-term care costs), she helps readers calculate exactly how much money they'll need. Next, she presents optimal asset allocations for each stage of life -- and shows how these allocations would've protected typical investors through the past five tumultuous years. Packed with her readers' personal stories, this book teaches powerful professional financial planning principles -- but makes them simple enough for anyone to apply on their own.

Table of Contents

  1. About This eBook
  2. Title Page
  3. Copyright Page
  4. Contents
  5. Are You a Stock or a Bond?: Identify Your Own Human Capital for a Secure Financial Future, Updated and Revised
    1. Copyright Page
    2. Dedication Page
    3. Praise for the Previous Edition Are You a Stock or a Bond?
    4. Acknowledgments
    5. About the Author
    6. Preface to the Second (Revised) Edition
      1. How Much Risk Are You Really Handling?
    7. Introduction: Pensions Are Dying; Long Live Pensions
      1. How Do Pensions Work, Exactly?
      2. The Florida Pension Experiment
      3. Agenda for this Book
      4. Endnotes
    8. 1. You, Inc.
      1. What Are You Worth?
      2. Summary
      3. Endnotes
    9. 2. Insurance Is a Hedge for Human Capital
      1. The Odds of Living and Dying
      2. How Much Does Life Insurance Cost?
      3. How Much Life Insurance Do I Need?
      4. Can We Put a Value on What a Life Is Worth?
      5. Types of Life Insurance Policies
      6. Summary
      7. Endnotes
    10. 3. Diversification over Space and Time
      1. Why Does Diversification Work?
      2. Decomposing Risk: Systematic Versus Non-Systematic Risk
      3. The Importance of International Investing
      4. Correlations: The Magic Behind Asset Allocation
      5. How Does Time Impact Financial Risk and Volatility?
      6. Should I Take More Risk When I’m Younger?
      7. Diversification and the Financial Crisis
      8. Summary
      9. Endnotes
    11. 4. Can Debt Be Good at All Ages?
      1. The Good, the Bad, and the Ugly of Leverage
      2. Is Debt Good?
      3. Putting It All Together
      4. Summary
      5. Endnotes
    12. 5. Personal Inflation and the Retirement Cost of Living
      1. Back to Basics: Inflation’s Impact
      2. Summary
      3. Endnotes
    13. 6. Sequence of Investment Returns
      1. Retirement Income Trigonometry
      2. A Statistical Perspective
      3. Placebos and Mirages
      4. Summary
      5. Endnotes
    14. 7. Longevity Is a Blessing and a Risk
      1. Life Expectancy Is Not That Meaningful
      2. Do People Understand the Odds?
      3. Summary
      4. Endnotes
    15. 8. Spending Your Retirement in a Risky World
      1. Conducting a Needs Analysis
      2. Summary
      3. Endnotes
    16. 9. Annuities Are Personal Pensions
      1. Times and Products Are Changing
      2. The Pros of Annuitization
      3. The Cons of Annuitization
      4. Back to My Research on Variable Annuities
      5. Summary
      6. Endnotes
    17. 10. Product Allocation Is the New Asset Allocation
      1. Introduction to Product Allocation
      2. Guarantees Make People Feel More Comfortable
      3. Summary
      4. Endnotes
    18. 11. Conclusion: Plan for Managing Your Retirement Risk
      1. Retirement Income Planning Is the Goal
      2. Last Words: Developing and Protecting Your Personal Balance Sheet
    19. Appendix: Additional References and Notes
      1. The Oldest Stage of Age
    20. Index
    21. FT Press
  6. Saving for Retirement (Without Living Like a Pauper or Winning the Lottery) Updated and Revised
    1. Copyright Page
    2. Dedication Page
    3. Praise for Saving for Retirement (Without Living Like a Pauper or Winning the Lottery), First Edition
    4. Acknowledgments
    5. About the Author
    6. Introduction
      1. How to Use This Book
    7. 1. Start Investing Early or Start Now
      1. Feeling Incompetent
      2. Shared Ignorance
      3. Get Real
    8. 2. Know What You’ll Need
      1. The Retirement Difference: Pensions
      2. Today’s Responsibilities Are Yours
      3. Confusion Reigns
      4. What Do You Need?
      5. How Financial Planners Evaluate Your Needs
      6. Saving Enough?
      7. Don’t Let Fear Sidetrack You
      8. Don’t Save Too Much
      9. Doing a Retirement Calculation Like a Pro
      10. Imagine Your Life at 65 and 75
      11. Health Costs Are a Black Hole
      12. When Will You Retire?
      13. Nursing Homes
      14. How Long Will You Live?
      15. Women Live Longer, Need More Money
      16. Dig Out These Records
      17. How Much Security Is Social Security?
      18. Olden Days with Old-Style Pensions
      19. 401(k), 403(b), 457, and Profit Sharing
      20. IRAs and Other Savings Accounts
      21. The Big Guess Numbers
      22. The Easy Calculation
      23. Two Easy Rules of Thumb
      24. How Do You Turn $25 a Week into $1 Million?
      25. Using Your Calculation: The Advanced Lesson
    9. 3. Savings on Steroids: Use a 401(k) and an IRA
      1. The Hard Way
      2. What’s the Difference?
      3. Get the Match
      4. The Power of Warding Off Taxes
      5. Mutual Funds Get Taxed
      6. An IRA Instead?
      7. How to Use Your 401(k) or 403(b)
      8. Changing Your Mind
      9. Getting Started
      10. More Tax Help Than You Imagined
      11. Take Baby Steps
      12. Can You Spare a Dime?
      13. Finding Cash
      14. Qualifying for the Match
      15. Procrastination—Not Money—Hurts
      16. Leaving Your Job
      17. Emergency Bailout
    10. 4. An IRA: Every American’s Treasure Trove
      1. More on the Magical Power of Compounding
    11. 5. IRA Decisions: How to Start and Where to Go
      1. Married, with No Job
      2. Where Do I Go? What Do I Do?
      3. Can’t I Wait Until I File My Taxes?
      4. The Choice Between a Traditional IRA and a Roth IRA
      5. The Choice Between a 401(k) and a Roth IRA
      6. Rules You Must Live By
      7. Last-Minute Regrets: I Want My Money Back
      8. Special Help for Low-Income People
      9. Help for Affluent People
      10. What Comes First: College or Retirement Saving?
      11. If You Operate a Small Business
      12. The Next Step
    12. 6. Why the Stock Market Isn’t a Roulette Wheel
      1. Taking Control of Cycles
      2. The 1990s: From Stock Lovefest to Disaster
      3. Everyone Played the Game
      4. The Game’s Up
      5. Taming the Herd
      6. What to Expect from the Stock Market
      7. Stocks Provide Risks and Rewards
      8. Bear Markets Maul Investors
      9. Novices Choosing Stocks Are Gamblers
      10. Making Money Takes Time
    13. 7. What’s a Mutual Fund?
      1. Your Fund Is Designed for a Purpose
      2. What Happens in a Mutual Fund?
      3. What’s in Your Fund?
      4. Cycles Take Stocks for a Ride
      5. Good Funds Can Be Losers
    14. 8. Making Sense of Wacky Mutual Fund Names
      1. Avoid the Traps
      2. The Three Main Choices: Stocks, Bonds, and Cash
      3. Why You Need Bonds
      4. What’s a Bond?
      5. How to Lose Money in Bonds
      6. The Trade-Off Between Seeking Safety and Making Money
      7. An Easy Bond Fund Choice
    15. 9. Know Your Mutual Fund Manager’s Job
      1. The Cost of Ignorance
      2. Focus on the Right Words
      3. Stocks Come in Three Sizes: Know Your Size
      4. Recognizing the Tortoise and the Hare: Growth Versus Value
      5. International Stock (Equity) Funds
      6. Balanced Funds
      7. REITs (Real Estate Investment Trusts)
      8. Gold
      9. Sector or Specialty Funds
      10. Stable Value Fund
      11. Company Stock
      12. Bond Funds
    16. 10. The Only Way That Works: Asset Allocation
      1. Why Star Funds Fade
      2. The One Proven Way to Success: Asset Allocation
      3. Forget Heroes—Just Match
      4. Start the Sorting—It’s Asset Allocation Time
      5. Getting the Proportions Right
      6. The Logic Behind “Diversification”
      7. This Isn’t About Math
    17. 11. Do This
      1. Asset Allocation Is Simply Matching
      2. Picking Within Categories
      3. You Don’t Need to Use Every 401(k) Fund
      4. What’s Your Age: 20, 30, 40, 50, or 60?
      5. Doing Your Gut Check
      6. A Reality Check for Fear: The Losses of the 2007–2009 Crash
      7. The Easy Rule of Thumb
      8. Starting an IRA
      9. Avoid Market Timing
      10. The Impact of Market Timing
      11. Dollar-Cost Averaging
      12. Rebalance
      13. What You Can Control
    18. 12. How to Pick Mutual Funds: Bargain Shop
      1. Tiny Percents Have a Huge Impact
      2. Mind Your Money: Your Broker Might Not
      3. Cheap Funds Work
      4. Watch Out for Loads
    19. 13. Index Funds: Get What You Pay For
      1. What’s an Index Fund?
      2. What’s the Stock Market, and What’s a Stock Market Index?
      3. Using Index Funds in a 401(k)
      4. Tweak Your Portfolio Once a Year: Rebalance
      5. Using Index Funds in an IRA
      6. Indexes Come in Many Varieties: An Advanced Lesson
      7. Exchange-Traded Funds
      8. Some Exchange-Traded Fund (ETF) Ideas
      9. Tinkering with ETFs: For Advance Investors
      10. Beginning Investors: Starting an IRA with Pocket Change
      11. Warning: Not All Index Funds Are Good
      12. Is Your Fund Good or Bad?
      13. Advanced Comparison Lesson
      14. How to Analyze a Fund
    20. 14. Simple Does It: No-Brainer Investing with Target-Date Funds
      1. Look for a Date
      2. Tweaking As You Age
      3. What to Do When 401(k) Funds Lack Target-Date Funds
      4. How to Select a Target-Date Fund
      5. Other Similar Choices
      6. Old-Style Life-Cycle Funds
    21. 15. Do You Need a Financial Adviser?
      1. Does the Financial Adviser Focus on People Like You?
      2. Does the Financial Adviser Have a Conflict of Interest?
      3. Get Limited Advice
      4. Finding an Adviser
      5. Advice at Your Workplace
      6. The Bottom Line
    22. Index
    23. FT Press