By Tim McMahon, editor
When planning for retirement, most financial planners make a lot of assumptions about financial trends and how much money you will spend per year. They estimate the average inflation rate, the average return on your investments etc. all in order to estimate how much you will need in order to retire. The problem is that they are all guesses… and it is hard enough to guess what the inflation rate will be next year let alone five, ten or even fifty years from now.
In his book, “How Much Is Enough to Retire?”, Todd Tresidder takes retirement one step further and develops a “confidence interval”, that simply means that he shows you how to plug in various case scenarios so you can see what happens if you are wrong and to determine a range of possibilities. In the process he pokes and prods the typical assumptions like life expectancy and the idea that you can even pick a number for how much you will need a year to live on. Twenty years ago, a good retirement income might have been $30,000 while now it is at least twice that.
In his book, Todd provides a great deal of food for thought. And we often don’t give enough thought to our retirement and whether we will have enough to retire or if we need to change our current direction in order to even be able to retire.
This is a great book to get you thinking. The first half helps define the basic concepts while the second half helps even the expert work out real numbers and come up with good workable projections. And finally he shows you how to plan your retirement based your own personal income requirements, pensions and net investment return.
Finally, Todd covers safety and diversification while attacking common assumptions that can get you into serious trouble. What if your pension goes bust? Or Social Security fails? Or Inflation eats your bond portfolio? Fortunately by looking at these possibilities you can come up with reasonably good projections of how much you need to retire and by applying some of the non-conventional methods in this book you may even be able to retire sooner than you think.