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The Value of Debt in Retirement: Why Everything You Have Been Told Is Wrong

Book Description

Increase the odds you won't run out of money in retirement - using debt!

Conventional wisdom is wrong - being debt free in retirement may actually increase your risk. The Value of Debt in Retirement teaches you how incorporating debt into your retirement strategy may increase your return, lower your taxes and actually lower your risk. You read that right. If handled correctly, debt—that thing we've all been taught to avoid—can play an integral role in your life, especially in retirement. New York Times Best Selling Author and nationally acclaimed financial expert Tom Anderson shows you how to use the time tested strategies of the best companies and the ultra rich to retire comfortably, minimize taxes, buy the things you have always wanted to have and do the things you have always wanted to do.

Thought provoking and against the grain, Anderson explains why your risk tolerance doesn't matter, why being debt free may actually increase your risk and why rushing to pay off your mortgage may be a financial disaster. Full of shocking revelations and tricks high- net-worth individuals have used for years, The Value of Debt in Retirement opens the world to a new approach to wealth management in retirement, one that factors in both sides of the balance sheet as an integrated ecosystem.

Real-world case studies illustrate how informed debt strategies can lead to a happier, healthier retirement. See how an individual with a net worth of more than $5 million can spend $20,000 per month - after taxes - and pay less than $5,000 per year in taxes, how it is possible to increase your rate of return by 50%, and how a lower risk portfolio with debt could increase the chances you do not run out of money.

Specifically written to Baby Boomers, practical guides and checklists show how to use debt strategies to fund primary and secondary properties, refinance credit card debt, and finance hobbies, such as cars and boats and recreational vehicles. Additional guides show how you can help your children, help your parents and leave a bigger legacy for your heirs and favorite charities. Regardless of your net worth, The Value of Debt in Retirement provides tools to use to apply these concepts to your personal situation.

There is no free lunch: the book delivers a balanced perspective focusing on the potential risks and benefits of the strategies discussed. A discussion on economic history highlights some of the shocks the economy may face and provides important warnings that you should factor into your retirement plan. Anderson not only shows that your life expectancy may be longer than you think, but also illustrates that many investors may be on track to average returns well under 4% for the next ten years - a potentially devastating combination. Irrespective of your beliefs about debt, The Value of Debt in Retirement proves risk is more important than return for retirees and provides suggestions on ways to minimize that risk.

Not all debt is good and high levels of debt are bad. The Value of Debt in Retirement is about choosing the right debt, in the right amounts, at the right time. Perhaps most importantly, this book isn't for everybody. This book requires responsible actions. If you can't handle the responsibility associated with the ideas then this book then it isn't for you. If you need a rate of return under 3% from your investments then you may not need this book. But if you can handle the responsibility and if you need a return above 3%, this book may offer insights into the best (and potentially only) way to achieve your goals.

Table of Contents

  1. Foreword
  2. Acknowledgments
  3. Introduction
    1. Caution: You Could Burn Your House Down Baking a Cake!
    2. Notes
    1. Chapter 1: A Better Path
      1. A Successful but Controversial Debut
      2. The Fifth Indebted Strength
      3. Who Can Benefit from This Book? Not Only Millionaires! (But They Can, Too)
      4. Everyday Example #1: Immediately Better Credit Card Debt
      5. Getting beyond the ABLF and Focusing on Retirement
      6. Notes
    2. Chapter 2: Debt in Retirement
      1. What Some Popular Retirement Books Get Right—and Wrong—about Debt
      2. The “Good versus Bad” Debt Camp
      3. Bach Where We Started: The Irresolutely “Against Debt” Camp
      4. The (Very Small) “Sometimes It’s Okay to Have Debt” Camp
      5. Everyday Example #2: A Bridge Loan over Troubled Quarters
      6. Notes
    3. Chapter 3: Why and Whether to Adopt a Holistic Debt-Inclusive Approach in Retirement
      1. A First Look at the Three Main Types of Debt: Oppressive, Working, and Enriching
      2. Seven Rules for Being a Better Debtor
      3. In the Company of Longer Life Spans
      4. Winging Your Way to a Successful Retirement: The “Whole Chicken” Approach
      5. Everyday Example #3: A Holistic Business Recipe for Success
      6. Notes
    1. Chapter 4: Returning to the Return You Need
      1. Cash Flow and Incoming Money: The Ultimate Key to Resource Management
      2. You Have to Get Your Numbers Right!
      3. Regardless of Your Net Worth, Distributions Are Rarely Constant over Time in Retirement
      4. How Much Can You Safely Take Out?
      5. How You May Be Able to Increase Your Rate of Return
      6. How Is This Possible? A Big-Picture Overview
      7. Risks and Problems
      8. Everyday Example #4: Retiring the “Loan” Survivor
      9. Notes
    2. Chapter 5: The Power of Debt Meets Our Ridiculous Tax Code
      1. Some Brief Preliminaries: Income versus Incoming Money
      2. The Websters: A Tale That Taxes the Imagination
      3. Your De Facto Tax Advisor
      4. An Inconvenient Truth
      5. How to Pay Almost No Taxes in Retirement: A Few More Examples
      6. Everyday Example #5: “Auto” You Not Be Sure You Are Getting the Best Loan?
      7. Notes
    3. Chapter 6: Risk Matters More Than Return
      1. Why Your Personal Risk Tolerance May Not Matter
      2. A Simple Understanding of Risk
      3. An Overview: “What Time Is It?”
      4. A Detailed Understanding: “How the Watch Works”
      5. Proof That Debt Can Reduce Your Risk in Retirement
      6. Everyday Example #6: A Lot to Think About? Not Really
      7. Notes
    1. Chapter 7: The World Is Full of Risk—Especially Now
      1. Not Your Usual Serious Caution
      2. Learning from What Companies Do—Value Liquidity!
      3. What about Interest Rate Risk? Fixed versus Floating Rate Debt
      4. Investment Risks: It Isn’t the Debt That Matters, It Is the Quality of Your Investment Decisions!
      5. Asset Allocation and Investment Considerations
      6. A Six-Step Approach to Diversified Investing in Retirement
      7. Lessons from Math and History Suggest Caution
      8. Be Careful What You Watch!
      9. My Opinions on Asset Allocation
      10. Notes
    2. Chapter 8: The Sooner the Better
      1. Understanding the Implications of These Ideas for Your Life Plans
      2. Getting a Handle on Whether You Should Adopt a Strategic Debt Approach
      3. The Need-Want-Have Matrix
      4. Watch Those Ratios! A First Glide Path into Retirement
      5. What If You Are Not Optimal Today?
      6. Dying with Debt?
      7. Final Mortgage Considerations
      8. Notes
    3. Chapter 9: Conclusion
      1. A Checklist Review
      2. Bringing It All Together: A Strategic Debt Strategy in Action
      3. A Last Word: The Value of Debt in Retirement
      4. Notes
    1. Guide 1: Leaving a Legacy
      1. General Giving Philosophy
      2. The Benefits of Giving While You’re Working
      3. Giving to Create Income
      4. Notes
    2. Guide 2: Managing the ROI of Retirement
      1. Retirement “ROI”: Resources, Outer Pragmatics, and Inner Dynamics
      2. Retirement Is Coming: A Holistic Roadmap of the Territory before You Retire
      3. Meta-Management against a Background of Accelerating Change
      4. Staying Effective and Informed over Time
      5. Resource Management for the Long Haul
      6. Partial Retirement/Partial Income
      7. You Can Test-Run Retirement
      8. Real Estate, Small Business Ventures, and Personal Guarantees
      9. Medicare
      10. Long-Term Care Insurance
      11. Thoughts on Life Insurance
      12. Reverse Mortgages
      13. How You Should (or Should Not) Factor in Inheritance
      14. Outer Pragmatics: Real World Concerns, Issues, and Details
      15. Legal Planning
      16. Medical Planning
      17. Residency Planning
      18. Life Planning
      19. Inner Dynamics: Meaning, Purpose, and Pleasure in Retirement
      20. Sharpening the Saw
      21. Particular Considerations on Retirement and ROI for the LGBT Community
      22. Notes
    3. Guide 3: How to Help Your Family and Buy the Stuff You Want and Need
      1. Act Like a Company/Think Like a CFO
      2. Principles When Financing the Purchase of a Desired Item
      3. Managing Credit Card Debt
      4. Helping Your Kids with Their Credit Card Debt
      5. Helping Your Parents
      6. Buying a Luxury Car
      7. Buying a Boat/Airplane/Art/Antiques/Jewelry, Paying for a Dream Vacation, Financing a Hobby (Horseback Riding, Car Racing)
      8. Paying for Fractional Ownership (Home/Plane/Boat)
      9. Helping Out Our Kids and Student Loans
      10. Homes: Downsizing/Moving/Building
      11. Purchasing a Second Home: Pluses and Minuses
      12. Rent versus Buy a Second Home
      13. One Hundred Percent Financing: The No-Down-Payment Real Estate Purchase Option
      14. Notes
    1. Appendix A: About the Companion Website
    2. Appendix B: Details for Chapter 4
      1. Understanding the Ideas of Chapter 4, with Charts and Tables
      2. Notes
    3. Appendix C: Chapter 5 Detail
      1. Understanding RMDs
      2. The Liger at Work Again
      3. Understanding Cost Basis and a Step-Up in Basis
      4. Notes
    4. Appendix D: Details for Chapter 6— A Study of Withdrawal Rates in Retirement
      1. Background: How the 4 Percent Rule Came to Life
      2. Trinity Study Results
      3. Trinity Study: Unfortunate Timing
      4. Notes
    5. Appendix E: A More Detailed Discussion on Risk, Return, and Correlation
      1. Notes
    6. Appendix F: More Detail on ABLF, Risk Details, and Official Statement of Disclosure and Understanding
      1. More Detail on ABLF
      2. Statement of Disclosure and Understanding
      3. With Respect to ABLFs
      4. Additional Important Notes
      5. Notes
  9. Glossary
  10. Bibliography
  11. About the Author
    1. Note
  12. Index
  13. EULA