{"id":26969,"date":"2012-01-30T06:33:16","date_gmt":"2012-01-30T11:33:16","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/01\/30\/book-review-the-big-retirement-risk\/"},"modified":"2012-01-30T06:33:16","modified_gmt":"2012-01-30T11:33:16","slug":"book-review-the-big-retirement-risk","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/01\/30\/book-review-the-big-retirement-risk\/","title":{"rendered":"Book Review: The Big Retirement Risk"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

\"\"<\/a>\"\"
\nThe financial planning industry has no shortage of voices offering advice.\u00a0 Unfortunately, they all tend to say the same thing, and it\u2019s not what most investors need or want.\u00a0 In fact, it\u2019s often the exact opposite.<\/p>\n

Above all, most investors want security.\u00a0 They want to know that the nest egg they\u2019ve spent a lifetime building will be there when they need it.\u00a0 Somewhere along the way, the financial planning industry lost sight of this and turned the profession into something resembling a Las Vegas casino.\u00a0 The retirement hopes of millions of Americans depend on the stock market rising ever higher.\u00a0 Yes, the same stock market that lost half of its value during the 2007-2009 meltdown and had negative returns after inflation over the past decade.<\/p>\n

Erin Botsford is a refreshing voice of prudent common sense, and her new book The Big Retirement Risk<\/em><\/a><\/strong> should be required reading for every financial planner in America.\u00a0 Clients would be well served if their planner used it as an instruction manual.\u00a0 Individual investors\u2014particularly the 77 million American Baby\u00a0 Boomers fast approaching retirement\u2014will also find its insights valuable.<\/p>\n

If there is one dominating focus in Erin Botsford\u2019s financial practice, it is risk.\u00a0 The identification and elimination of risk is something of an obsession for Botsford, and this is not merely an academic exercise for her.\u00a0 As a woman whose early life was marked by tragedy, she has the instincts of a survivor and does a fine job of translating those instincts into actionable financial advice.<\/p>\n

The \u201cbig retirement risk\u201d that Botsford warns against is running out of money before you run out of time<\/strong>, and Botsford\u2019s perspective here is unique.\u00a0 As a young girl, she witnessed it happen to her own family.\u00a0 With the death of her father at the age of 50, Botsford\u2019s family saw her family\u2019s comfortable middle-class lifestyle reduced to one of poverty and constant worry. Tragedy struck a second time when, as a teenager, Botsford was in an automobile accident in which another motorist died.\u00a0 Faced with mounting legal bills, her family nearly lost their home.<\/p>\n

As if these setbacks were not enough, in her early 20s Botsford got firsthand experience with investment risk.\u00a0 After winning a modest windfall as a contestant on Wheel of Fortune<\/em>, she trusted her newfound wealth to a stockbroker.\u00a0 In short order, the broker lost it all by taking risks that were woefully inappropriate.<\/p>\n

Suffice it to say, The Big Retirement Risk<\/em> is written by an author who knows a thing or two about risk and about the disastrous effects that a lack of planning can have on a family.\u00a0 Proper planning can never totally eliminate risk, but it can give you the means to manage it.<\/p>\n

Botsford uses the opening chapters to explode a number of popular myths that dominate the investment profession (the stock market always<\/em> goes up over time, diversification and asset allocation reduce risk, your net worth<\/em> determines your lifestyle, etc.) and instead takes an approach that is a little reminiscent of Rich Dad, Poor Dad<\/em> author Robert Kiyosaki.\u00a0 She focuses on the generation of income, correctly pointing out that \u201cYour net worth has no relevance to your lifestyle if it isn\u2019t in a form that can quickly be converted to cash to provide for your everyday living expenses.\u201d<\/em><\/strong><\/p>\n

Well said, Erin.<\/p>\n

In later chapters, Botsford outlines the investments and strategies employed in her financial practice, including bonds, real estate, options strategies, and investment products that offer guaranteed returns and focuses on her trademarked Lifestyle-Driven Investing.\u00a0 Her focus throughout is not on \u201cbeating the market\u201d or on generating some arbitrary annual return.\u00a0 Instead, her focus is on the preservation of her clients\u2019 lifestyles by guaranteeing sufficient and diverse income streams.<\/p>\n

The Big Retirement Risk<\/em> is a welcome addition to the existing literature on investing and financial planning, and fills in several gaps that sorely needed to be filled.\u00a0 Our compliments to Erin Botsford on a job well done.<\/p>\n","protected":false},"excerpt":{"rendered":"

By The Sizemore Letter The financial planning industry has no shortage of voices offering advice.\u00a0 Unfortunately, they all tend to say the same thing, and it\u2019s not what most investors need or want.\u00a0 In fact, it\u2019s often the exact opposite. Above all, most investors want security.\u00a0 They want to know that the nest egg they\u2019ve … <\/p>\n

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