This book (available here on Amazon) makes a valuable contribution to the individual investor's bookshelf. It has some unique content on some extremely important topics like the frequency of health problems and their potential costs during retirement. It also provides a lot of common sense on the issues of how and how much to save for retirement, including the old bugbear rule of thumb on what percentage of working age income one should aim to replace in retirement.
The "Contrarian Perspective" in the book's subtitle is not explicitly stated but I would presume arises from key points that depart from the mainstream of advice, namely:
- the 70% income replacement target is far too high for most people, especially the middle income earners who are constantly being hectored to save more to stave off retirement disaster; author Vettese makes a pretty good case too, showing with examples how major portions of pre-retirement expenses usually go away, such as mortgage payments, child raising expenses and retirement saving itself; instead he says, reasonable targets that maintain lifestyle are often closer to 50%; he usefully provides enough detail to allow readers to figure in variations for their own circumstances.
- retiree spending declines with age, and at an accelerating pace, after age 70 or so, such that maintaining an inflation-adjusted constant real return overdoes the need; furthermore, he cites sources explaining that this decline is due to falling interest and capability to spend; thus, he believes that inflation at the government's 2% target rate is not as serious an issue as commonly stated.
- buying an annuity, which only a tiny minority of retirees actually do, is a wise move to counter the risk of out-living your money if you do not have a defined benefit pension plan, which fewer and fewer people do.
- How long will you live and how much of that will you likely be healthy?
- What are the most threatening health problems or diseases during retirement and how likely is it you will need to go into Long Term Care (LTC)?
- What is the cost of LTC and what are the odds for average years in LTC and worst case?
- Is it worth buying LTC insurance and might you be ineligible anyway? (which I discovered is my situation so I don't even need to fuss about LTC insurance)
There is also no discussion of the dangers of poor investment returns early in retirement, termed sequence of returns risk. This is a critical risk (see this simplified example of how much sequence of returns can influence outcomes), one that finance professor and pensions expert Moshe Milevsky has found (in his book Are You a Stock or a Bond?) to be more important than inflation or longevity as a threat to successfully living off a portfolio during retirement.
Bottom line: This book is not the complete answer but it is well worth buying. Four out of five stars.