NEW BOGLEHEADS BOOK

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NEW BOGLEHEADS BOOK

Postby Mel Lindauer » Fri Aug 22, 2008 9:35 am

There is a new Bogleheads book in the works; The Bogleheads' Guide to Retirement Planning. The book will be a Bogleheads community project with many of you helping to write different chapters (details to follow in a few weeks). All proceeds from the book will go to one of Jack Bogle's favorite causes, the National Constitution Center (NCC) in Philadelphia, where he served as Chairman for seven years.

The NCC was chartered by Congress and the land near Independence Hall in Philadelphia was donated for the Center. Jack’s mission was to raise the funds, build the center and get it operating, all of which he accomplished during his seven-year stewardship. When Jack resigned as Chairman, the NCC honored him by dedicating The John C. Bogle Chairman’s Room at the NCC. We want to support this worthy cause in honor of Jack.

Jack has already agreed to write a foreword for the new book. Taylor, Rick Ferri, Laura, and I will oversee the entire project as the book's Editorial Committee members. Wiley is the publisher.

We’d like forum members to examine the outline below and provide comments on both the outline and the chapter structure.

PRELIMINARY OUTLINE:

The Bogleheads’ Guide to Retirement Planning By “The Bogleheads”

Foreword: Jack Bogle

Introduction: Written by the Editorial Committee Members

Chapter 1: Meet the Bogleheads –by Taylor Larimore and Mel Lindauer


SECTION ONE – IT’S NEVER TOO EARLY TO START PLANNING

Chapter 2: Facts about Future Retirement
Overview of the state of retirement in the US
Government statistics on saving
Studies of retirement shortfalls
When Will You Be Able to Afford Retirement?

Chapter 3 Retirement planning process
Overview of the retirement planning process
How to start a retirement plan
Budgeting for retirement savings
The time value of money and other important concepts

Chapter 4 Social Security
Facts about the state of Social Security
Where Social Security dollars go
Minimum age, full retirement age, and mandatory payment
When is the ideal time to start collecting?


SECTION TWO – TYPES OF SAVINGS ACCOUNTS

Chapter 5 IRS Qualified Personal Retirement Accounts (non-taxable)
Personal IRA Accounts
IRA Rollovers
Roth IRAs
Personal 401k

Chapter 6 Personal Savings Accounts (taxable)
Personal accounts
Joint accounts
Trust accounts
Family LLC accounts

Chapter 7 Employee accounts (Defined Benefit plans)
The status and funding of DB plans in America
Who owns the money in a DB plan?
Who directs the investment in DB plans?
What happens when you change employers?

Chapter 8 Employee accounts (Defined Contribution plans)
401(k) plans
403(b) plans
529 plans
Roth 401k plans and others

Chapter 9 Fixed and Variable Annuities
Immediate and deferred annuities
Fixed and variable annuities
Annuitizing a contract
How safe are annuities?


SECTION THREE – INVESTMENT CONSIDERATIONS

Chapter 10 Basic Investment Principles
Diversification
Rebalancing
Low cost
Tax management

Chapter 11 Investing for Retirement
Life cycle investing
Taxable verses non-taxable accounts
Behavioral finance and saving for retirement
Real estate and other assets as part of your retirement nest egg

Chapter 12 Investing in Retirement
Distribution rules, alternatives, and taxation
Lump sum distributions from retirement plans
Income generating investments
Annuity options

Chapter 13 Investing for College
College Savings Plans
529 Plans
UGMA Accounts
Investing CRTs and CITs


SECTION FOUR – PROTECTING YOUR ASSETS WITH INSURANCE

Chapter 14: Life insurance
As a wealth accumulation substitute
As a replacement for estate tax
Types of policies
Fees and expenses

Chapter 15 Health insurance
Personal policies for individuals and self-employed
Employer policies (group medical)
Medicare and Medicaid
Supplemental policies for retirees

Chapter 16 Long-term Care insurance
Benefits and disadvantages
Who should buy and when
Things to look for and look-out for
Self-insuring long-term care

Chapter 17 Property and casualty insurance
Disability insurance
Home insurance
Auto insurance
Other insurance
Chapter 18 Personal liability insurance Who needs it?
How much do you need?
Understanding the policies
Where to shop


SECTION FIVE – ESTATE PLANNING CONSIDERATIONS

Chapter 19: Essential Estate Planning
Current status of estate law
Characteristics and consequences of property titling
Methods of property transfer at death
Probate
Avoiding probate

Chapter 20: Estate planning documents
List of assets and insurance
Wills, Powers of Attorney (also see Incapacity Planning)
Trusts (types, owners, beneficiaries)
Business Buy-sell agreements

Chapter 21 Estate Taxes
Estate tax compliance and tax calculation
Estate tax filing requirements
Defining what goes in the gross estate
Sources for estate liquidity for taxes

Chapter 22 Gifting
Gifting Appreciated property
Annual exclusion and Applicable credit amount
Tax implications and filing requirement
Generation-skipping transfer tax (GSTT)

Chapter 23 Incapacity Planning
Powers of attorney; health care; asset management
General or limited powers
Advance medical directives (e.g. living wills)
Guardianship and conservatorship


SECTION SIX

Chapter 24 Seeking help from professionals

Understanding professional acronyms
Understanding how professionals are paid
Questions to ask during an interview
Knowing when to take the advice or walk way

Chapter 25: Pearls of Wisdom from the Bogleheads
Pearls from experienced retirees
Pearls from the newly retired
Pearls from those still working and accumulating
Pearls from young Bogleheads

APPENDIX
Investment Gems
Book Recommendations
Website Recommendations

Best regards to all,

Taylor, Rick, Laura & Mel
Last edited by Mel Lindauer on Fri Aug 22, 2008 7:29 pm, edited 4 times in total.
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Postby gkaplan » Fri Aug 22, 2008 9:37 am

This looks great.
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Postby stratton » Fri Aug 22, 2008 9:55 am

I can think of a few issues:

1. Consumption smoothing versus the "regular" way.
2. Zvi Bodie, Burns & Kotlikoff "lots of TIPS" versus typical target fund type asset allocation.
3. Income investing versus total return.

Paul
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SECTION FOUR – PROTECTING YOUR ASSETS WITH INSURANCE

Postby stratton » Fri Aug 22, 2008 9:57 am

Disability Insurance?

Not sure how this fits in since this is a retirement book. It does reduce risk if someone cant work the last few years before retirement.

Paul
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Postby rwwoods » Fri Aug 22, 2008 10:01 am

Should an "Emergency Fund" be discussed?
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Postby zhiwiller » Fri Aug 22, 2008 10:06 am

I'd love to help on this.

I definitely think there should be a chapter on common investing mistakes: chasing performance, boutique funds/products, trusting fortune tellers, appropriate time horizons, overconfidence, etc.

Perhaps there should also be a chapter on special considerations for your starting age. People in their twenties like me have different issues with saving for retirement than someone starting in their fifties like my father.

Otherwise, it is a fantastic outline and should be a great book with all the superstars on the board. I'd volunteer for the section on common investing mistakes or starting an investing voyage in your 20s if the editors will have me. Keep in touch, I don't check every day anymore.

Zack
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Postby Flashes1 » Fri Aug 22, 2008 10:08 am

I'll buy it so long as it's reasonably priced like the first book.
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Postby Mel Lindauer » Fri Aug 22, 2008 10:22 am

zhiwiller wrote:I'd love to help on this.

......

Otherwise, it is a fantastic outline and should be a great book with all the superstars on the board. I'd volunteer for the section on common investing mistakes or starting an investing voyage in your 20s if the editors will have me. Keep in touch, I don't check every day anymore.

Zack


Hi Zack:

Forum members (like you) who'd like to volunteer to work with us on the book should be on the lookout for another post I'll be making in about two weeks. That post will give full details on how to go about volunteering.

In the meantime, we're gathering ideas/comments/suggestions on the preliminary book outline before finalizing it.

Regards,

Mel
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Postby henry » Fri Aug 22, 2008 10:25 am

Awesome! I can't think of a better group of authors. I am looking forward to reading it.
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Postby runthetrails » Fri Aug 22, 2008 10:50 am

Maybe a survey/comparison of various safe withdrawal strategies.
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Postby bob90245 » Fri Aug 22, 2008 11:48 am

From your outline, it's not immediately clear in which chapter(s) the description of investment asset classes appear. For example, I see this:

Chapter 10 Basic Investment Principals
Diversification
Rebalancing
Low cost
Tax management

But before you discuss diversification, I would think that stocks, bonds and cash should be reviewed. Also, will "alternative" asset classes like REITs and commodity futures be included along with traditional investments?
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Another "Gem" In the Making for the Suggested Read

Postby Grandma » Fri Aug 22, 2008 12:03 pm

What a great collaboration! I will be anxious to purchase my copy. Any rough idea yet of an expected publishing date?
Best, Grandma
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Postby retiredjg » Fri Aug 22, 2008 12:11 pm

This is a terrific idea. I wish it had existed 20 years ago! Nevertheless, I'll buy at least 1 copy.

I would ask that some attention be given in Chapter 5 to the federal TSP. Federal employees frequently don't understand the TSP, underestimate it, and don't know how to fit it in with their other investment vehicles. I'm not asking for a whole chapter. A few paragraphs would do - just enough so that folks will understand what it is and how to use it. The TSP is usually completely ignored by investment books and that is unfortunate.

I don't envy you guys - this is a big project. But I'm looking forward to the finished product! jg
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Postby EmergDoc » Fri Aug 22, 2008 12:21 pm

Mel Lindauer wrote:
In the meantime, we're gathering ideas/comments/suggestions on the preliminary book outline before finalizing it.

Regards,

Mel


My first suggestion is that you/we spell "too" correctly in the title to section one.

i.e. It is never too early to start planning.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: Another "Gem" In the Making

Postby Taylor Larimore » Fri Aug 22, 2008 12:35 pm

Grandma wrote:What a great collaboration! I will be anxious to purchase my copy. Any rough idea yet of an expected publishing date?
Best, Grandma


Our publisher, Wiley & Sons, is offering a $5,000 bonus to the National Constitution Center (in addition to all royalties) if we submit a completed manuscript by April 15, 2009. That's our goal.

We expect the "The Bogleheads' Guide to Retirement Planning" will be published and available for sale before the end of 2009. It will be a great Christmas present for friends and relatives--especially if you are one of its contributors.

Best wishes.
Taylor
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Postby mptfan » Fri Aug 22, 2008 12:35 pm

I think "asset allocation" should be the first consideration under Chapter 10.

I also think that there should be a chapter devoted to withdrawal strategies. Most people have a variety of potential income sources and a variety of types of accounts to fund their retirement, e.g., tax deferred accounts, Roth IRA accounts, savings accounts, taxable accounts with deferred capital gains, regular earnings, social security income, etc., and the timing and amounts of income from each source in any given year can have a significant impact on taxes. For example, one should withdraw enough from tax deferred retirement accounts to fill up the lower tax brackets, and then use other sources of funds, such as Roth IRAs or return of capital, to manage the taxes owed. Another example is whether to take social security early or defer, and how this impacts the taxation of other income by bumping income into higher tax brackets.

P.S. "Basic Investment Principals" should be "Basic Investment Principles"
Last edited by mptfan on Fri Aug 22, 2008 12:44 pm, edited 1 time in total.
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Postby Mel Lindauer » Fri Aug 22, 2008 12:38 pm

EmergDoc wrote:
Mel Lindauer wrote:
In the meantime, we're gathering ideas/comments/suggestions on the preliminary book outline before finalizing it.

Regards,

Mel


My first suggestion is that you/we spell "too" correctly in the title to section one.

i.e. It is never too early to start planning.


Hi ED:

It's been changed. Just wanted to see if you (and others) were paying attention, since we'll be looking for proofreaders in addition to writers! :D

Best regards,

Mel
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Even small suggestions help.

Postby Taylor Larimore » Fri Aug 22, 2008 12:39 pm

Hi Emerg Doc:

My first suggestion is that you/we spell "too" correctly in the title to section one.


It's done. Every suggestion helps--no matter how small :)

Best wishes.
Taylor
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Postby mptfan » Fri Aug 22, 2008 12:48 pm

Also, at the end of Section 2 which summarizes the types of savings accounts, I think it would be a good idea to add a chapter which discusses the order of investment priorities, in terms of which types of accounts should be used and in which order, based upon a person's income and tax bracket, etc., and that discussion can also include a reference to when it is better to pay down high interest debt before investing.
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Postby Gresh » Fri Aug 22, 2008 12:50 pm

In Section 3 I think a separate chapter on withdrawal methods, or at least a detailed look at various methods, would be very useful (Maybe just because its what I'm researching now :wink: ). Also, I am not sure exactly where asset allocation would go as listed above, but think it deserves as big a place as diversification, costs, etc.

I think this is a great project.

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Postby mptfan » Fri Aug 22, 2008 12:54 pm

There should also be a chapter on debt during retirement. For example, should you pay off a mortgage before retirement? Should you have a HELOC?
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Postby Sam2 » Fri Aug 22, 2008 12:55 pm

Taylor,


just in case if it's not covered, but it's very useful to explain AA goal for people who have 20 years, 10 years and 5 years till retirement, so is early retirees and in retirement.

Sam
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Postby Rodc » Fri Aug 22, 2008 12:57 pm

I'd be happy to chip in as an editor. Easier to nit pick other people's work than to actually do the work. :)

I think getting all these ideas is great. But then sometimes getting the question right of what to cut out is as important as what to put in.

I think a great deal of work (and you may already have done this) needs to be done early on to figure out who exactly is your audience. If you want to reach people who are not sophisticated investors you may do them the most good by keeping it to a core body of knowledge, as opposed to being encyclopedic. Or putting off some details for later in the book or in appendices.

It sounds like a fabulous book. Can I get an autographed copy?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Postby gkaplan » Fri Aug 22, 2008 1:06 pm

Based on all these suggestions, perhaps you should consider writing an encyclopedia.
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NCC

Postby Grandma » Fri Aug 22, 2008 1:14 pm

Dear Taylor/Mel:
Thanks for the link to the NCC. Here's to you meeting the April 15th goal to support this very worthy cause!
Best wishes, Grandma
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Postby Rodc » Fri Aug 22, 2008 1:17 pm

It seems heavy on investing and light on planning, although of course I haven't seen the text.
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Withdrawal Strategies

Postby krumw » Fri Aug 22, 2008 1:25 pm

I would like to chime in with the need for a detailed discussion of withdrawal strategies. Hopefully this would include the alteration of strategies should personal or market conditions change.

A good example of this would be the recent T. Rowe Price Article Entitled “Strategies for Coping After Retiring Into a Bear Market”. This article can be found as part of a TRP Publication entitled “Tracking Stock Market Performance Through Past Economic Recessions.”

http://www.troweprice.com/gcFiles/pdf/Q ... .pdf?ft=MS

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Postby Rick Ferri » Fri Aug 22, 2008 1:42 pm

Rodc wrote:It seems heavy on investing and light on planning, although of course I haven't seen the text.


There is no text, yet.

At this point we are hoping for specific chapter suggestions to improve on the proposed outline above. The main focus of this book is retirement planning rather than investing. The second Bogleheads book should complement the first Bogleheads book, not replace it.

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Book/s

Postby Judsen » Fri Aug 22, 2008 1:52 pm

What a terrific and appropriate project for Bogleheads. I am delighted at our Laura's involvement oversight and contribution! I encouraged her to do something bookwise a while back.
In my view, a book from those interested and excited about this book project could easily stretch into a multi volume series.
Just a consideration of principles and values beneficial to a foundation for a lifestyle of prudent stewardship could merit a few paragraphs.
I greatly appreciate the endeavor and will help in any way I can.
Ploofreading??
Seriously, if anything can be misunderstood it seems to grab my attention.
Regards, Jud
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Postby Rodc » Fri Aug 22, 2008 1:55 pm

Rick Ferri wrote:
Rodc wrote:It seems heavy on investing and light on planning, although of course I haven't seen the text.


There is no text, yet.

At this point we are hoping for specific chapter suggestions to improve on the proposed outline above. The main focus of this book is retirement planning rather than investing. The second Bogleheads book should complement the first Bogleheads book, not replace it.

Rick Ferri


Hi Rick,

I know there is no text yet (that is one reason I have not seen it! :)) The point was just that having only chapter heads leaves a lot to the imagination, so I don't really know what you guys are thinking, that is level of detail etc.

If the focus is on planning, it looks to me like you have chapters for many or most of the pieces, but I don't see much on putting them all together into a plan per se. Lots of trees, but not much forest, as they say. That putting it all together part may be included in one of the chapters and I just did not pick up on that from the titles alone.

I think getting a handle on what pieces you might include, that is the total possible set of topics, as you are doing now is good. But then you might want to step back and figure out fairly precisely who the target is, what they need to know, what they don't need to know, and how they are going to get the "forest", as it is really easy to lose people in the weeds.

Just some early thoughts on a fine project.

I wish you great success.
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Postby nisiprius » Fri Aug 22, 2008 2:03 pm

The outline covers soup to nuts.

I'd observe that there are a gazillion books on accumulation, and very darn few on decumulation (apparently a real word), and, in general managing investments and personal finance after retirement. IMHO that's where the need is, and I wonder whether it would make sense to tilt the coverage in that direction.

(There was a book entitled Investing During Retirement, authorship credit to "The Vanguard Group," 1996, Irwin Professional Publishing. Title page says "Vanguard contributors: Author: Craig Stock; Editor: Jaes Norris; Research and Production: Maria Bruno, Karen Chesky." I'm not quite sure why it went out of print. Had to buy it second-hand. It's OK, not great).
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Saving for College?

Postby dharrythomas » Fri Aug 22, 2008 2:17 pm

This may not belong in a retirement oriented book.

Harry
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Postby guest42 » Fri Aug 22, 2008 2:18 pm

Just my 2 cents worth;

It struck me last night (nightly news) that basic financial wisdom has somehow gotton lost in recent years, such as:
Living within or below your means
Saving 10% right off the top of your paycheck
Your mortage payment should not be larger the 30% of your take home pay

Disability Insurance IS important - disabled at 42, I could never have predicted this in my 20's

Withdrawal strategies ought to be a chapter all in itself -- too little is said about this anywhere ... this falls into a category I think is too little covered in retirement planning ... along with - Retirement is not just about money, it is about friends, and family and meaningful activities. Most literature is how to get there, very little written about what to do, once you're there. Retirement is not some magic number, although figuring out what that number is, and how to get there, is important also. Sorry, this might be "out of scope", but I wish this had been in "investing for retirement" books I had read along the way.

Great idea! I don't know if I can help? I'm not really a gifted writer.
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Wiki content:

Postby Barry Barnitz » Fri Aug 22, 2008 2:34 pm

Rick requested "the Wiki and this book should send a consistent message". I am providing the Wiki pages that correspond to the subject matter outlined in the proposed book.

Retirement Planning

College Savings.

Charitable Giving.

regards,
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Postby savermike » Fri Aug 22, 2008 2:36 pm

I can probably kick in with proofreading and editing. Does the publisher have a house style guide? Does the project?

Probably isn't fair to start chiming in at this early stage. Nonetheless: worth pointing out that you don't have to retire if you don't want to.

Mike
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Postby Rick Ferri » Fri Aug 22, 2008 2:46 pm

savermike wrote:I can probably kick in with proofreading and editing. Does the publisher have a house style guide? Does the project?

Probably isn't fair to start chiming in at this early stage. Nonetheless: worth pointing out that you don't have to retire if you don't want to.

Mike


Mike,

This first post is a simply introduction to the project and a request for thoughts on improving the outline and chapter titles. In the coming weeks, Mel will be posting more information on how to potentially get involved with this project as an author or as a technical expert including proofreader.

Thanks!

The Book Committee
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Fantastic Project

Postby BarbInSD » Fri Aug 22, 2008 3:07 pm

What a fantastic project!

I would like to second the suggestions to have a chapter on withdrawal strategies during retirement; both from taxable and non-taxable accounts.

Also, I may have missed this; but I thought it may be helpful to discuss HSA's.

I wondered if you planned to have some discussion and input for the project while in San Diego.

Regards,
Barbara
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Re: NEW BOGLEHEADS BOOK

Postby venard5 » Fri Aug 22, 2008 3:12 pm

We’d like forum members to examine the outline below and provide comments on both the outline and the chapter structure.

I'll third or fourth the suggestion regarding discussion of "decumulation".

I also suggest considering the possibility of discussing Special Needs Trusts, perhaps in Chapter 22, and making gifts to those on SSI, perhaps in Chapter 23.

This new Bogleheads book is a great idea.

Best wishes,

Bill
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Postby SoonerSunDevil » Fri Aug 22, 2008 3:23 pm

What about a table showing all Vanguard Mutual Funds and their respective ETF versions?

Also, I think it would be great if there was a chart that listed all of the funds and ETFs by asset class along with some suggestions for that asset class. For example, U.S. SCV; one might consider VBR (Vanguard), IJS (iShares S&P 600), IWN (iShares Russell 2K). This chart could serve as a reference guide for those who need to do tax-loss harvesting by giving them a clear alternative to their original security. It's clear that IJS and IWN are not identical securities, but their correlation to one another is still close to 1. I think a chart with this information could serve as a quick and valuable tool for all investors.
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Postby stratton » Fri Aug 22, 2008 3:25 pm

We need a section on "Working in retirement." Especially tax issues related to social security, but that ought to fit in with IRA withdrawls effecting social secuirty taxation.

AMT might be beyond the scope of this book. Mortgage deductions are one of the few things not touched by phase outs.

Paul
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Retirement Planning vs Retirement Living

Postby JoeBob » Fri Aug 22, 2008 3:32 pm

I think that a book such as The Bogleheads' Guide to Retirement Planning is a very good idea. Also given the authors and subject areas, it should be an excellent reference book and one which I will certainly buy. One observation; given all the subject areas and a need to address many of them in-depth, there is a danger of the book becoming too lengthy and perhaps fragmented through cross-referencing other sections. As one in retirement, while I look forward to thoughts and ideas involving "retirement planning"; At my stage in life, I'm really more interested in "Retirement Living" and the financial considerations such as income, taxes, withdrawal rates, where to live, etc. than in planning how to get to retirement 30 years hence. I do recognize that Retirement Planning and Retirement Living are co-joined and many "Retirement Living" issues will be included in the proposed book. However, I think it might be more readable if the book were divided into two major Sections, one a "Guide to Retirement Planning" and the other a "Guide to Retirement Living". Perhaps even two books.

Just my thoughts and I wish the very best for this endeavor.

Bob H.
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Chapter or Section on Transitioning To Retirement

Postby ruralavalon » Fri Aug 22, 2008 4:02 pm

Perhaps you have already thought of this, and plan on discussing in the Chapters already listed. I think a separate Chapter or Section on "Transitioning To Retirement" would be appropriate.

When I go to the book store I almost always check for books or parts of books on transitioning from accumulation to retirement, that is--what changes to make (or not make) in the last few years before retirement and the first few years after retirement. There is really nothing out there, at least that I can find.

There is unfortunately already some brokerage advertising about this (eg. --"the retirement red zone") , which I see as a scare tactic, playing to worry about the dangers of wrong decisions in this period, and attempting to lure the unwary. I would expect more such advertising as more boomers reach this stage. I am a pre-boomer, born 1945, and am just a couple of years from retirement, so I can attest that there is a vacuum which needs to be filled. I would rather have the vacuum be filled by the Bogleheads than by the brokers. A good Chapter or Section from the Bogleheads could be a great help to the many (like myself) who are in the midst of struggling with these decisions, and a good counterweight to the ads.

Transition-type issues that occur to me are: (1) to change asset allocation or not?, If so how much, and why?; (2) to Roth or not to Roth a portion of the IRA? How to do this?; (3) to annuitize or not to annuitize a part of the portfolio?; (4) withdrawal stategies (from which account first?); (5) tax strategies in withdrawal; and (6) withdrawal rates. I see that you already plan to address some transition-type issues, eg. when to take social security, medicare supplements etc., but do feel that a separate Chapter or Section pulling together the discussion of all these troubling questions would be very helpful to a lot of people in this stage.

The book is a great idea. The forum and Wiki are very helpful , as was the first Guide. I am already looking forward to buying and reading the new book.

Edit: I am a very slow typist and see that others have made some of these suggestions while I wrote this, and am happy to be the 2d or 3d voice on many of these points.
Last edited by ruralavalon on Fri Aug 22, 2008 4:07 pm, edited 2 times in total.
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Postby Lauren Vignec » Fri Aug 22, 2008 4:05 pm

Hello All,

This is really wonderful news. I remember a long time ago hoping that there would be a second Boglehead's book. Or maybe it wasn't so long ago--time crawls when you're having fun. Anyway, I am very glad to see that this book looks like it would not merely rehash the first one.

I think the outline is very good and, for the most part, not much needs to be added. As many people have already pointed out, a chapter on withdrawals in retirement would probably be useful in the "Investment Considerations" section. Or perhaps the Chapter 12 on "Investing in Retirement" could be partly taken over by such a discussion. Annuities already have their own chapter.

The outline is currently clear, focused and covers most of the questions most investors have about retirement. Further, without criticizing anyone's suggestions, it looks to me like much of what has been suggested already fits in the present outline. The book looks like it would be useful both as a guide for beginners and a reference for experts.

L
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Postby bob90245 » Fri Aug 22, 2008 4:08 pm

Looks like you're getting lots of good ideas for your book proposal, Mel. With plenty to spare for another. :wink:
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Postby gordo » Fri Aug 22, 2008 4:14 pm

Great idea! I'd be happy to edit and contribute where ever I can.

One word of caution to the authors though: Keep an ever watchful eye on the scope of this book. Browsing through the wide variety of suggestions in this thread leads me to believe that if you were to let this book be designed by committee, you'd no doubt accumulate an encyclopedic volume of information, but there is a danger that readers will find it difficult to read.

I encourage you to spend a few minutes building one or more user personas (http://en.wikipedia.org/wiki/Personas) before you get too deep into the writing process, as this will help you focus in on the most important topics to cover.
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Postby bac573 » Fri Aug 22, 2008 4:34 pm

Great idea for a book. I would be honored to help proofread it. I'll let those who are much smarter than me do the writing.

One suggestion: in Chapter 8, mention the Thrift Savings Plan and maybe give a nod to our military members.


Best,
Chris
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Postby bobcat2 » Fri Aug 22, 2008 4:46 pm

It seems to me that the Bogleheads are wading into unsettled territory here. Financial economists have some disagreements among themselves about the best way forward on retirement planning. However, there is a huge gap between how economists have approached retirement planning over the past quarter century and how financial practitioners have approached financial planning. As Nobel Laureate Bill Sharpe puts it:
What is striking is the gulf that exists between how financial economists approach the problem of finding optimal retirement strategies and the rules of thumb typically utilized by financial advisors.

In particular, economists focus on household financial planning by optimizing the household’s standard of living thru spending as much as they can afford, while avoiding major reductions in their living standard over time, from now until the death of the last surviving adult. This is known as the life-cycle model of household saving and insuring and has been the economic workhorse model of analyzing household financial behavior over the past quarter century. Practitioners instead focus on maximizing financial wealth at future points in time, conditional on the amount of portfolio risk the household is willing to bear. This approach does not have a formal name, although it is clearly investment centric and based on the modern portfolio theory of investments, which was developed by economists over fifty years ago.

These differing outlooks lead to different retirement strategies and typically quite different retirement outcomes. How are these differing viewpoints to be bridged in the book? It makes little sense to try to split the difference. So does the book go down one path and ignore the other, or does it carefully layout both approaches and then clearly describe why one approach is superior to the other?

Looking at the proposed book outline, I see examples of controversy beginning with Chapter 2 - Government Statistics on Savings

In the popular press there has been much consternation over the fact that in the National Income Products Account (NIPA) the savings rate has gone from about 5% of GDP in the 1970’s and early 1980’s to effectively zero percent today. But much of this decline is illusionary. As William Gale wrote in 1999.
Government data released on July 29 show that over the past six months personal saving has averaged a negative 0.9% of gross domestic product—the lowest level since the Depression, and the latest step in a long decline from 8% in the 1960s to 5% in 1990-94 to 0.5% by 1998. Although alarms of a crisis in savings have been sounded repeatedly over the past 20 years, the data are poorly understood, and the latest downturn has led to an astonishing variety of contradictory views....

To start with, the data on personal savings are part of a broader national income accounting framework whose goal is to measure production and the income arising from that production. This measure is fine for national income accounting, but not very useful for the other purposes for which it is so often used. For instance, personal saving is a poor measure of how much the nation as a whole is saving….

Nor is personal saving even a good measure of how much households are saving. The official measure does not correct for inflation; it treats housing differently from other durable goods; it treats private and government pensions differently, and it does not adjust fully for taxes. The distinction between personal and corporate saving is also arbitrary: Dividend payments and share repurchases both involve corporations shifting funds to households, but they have different effects on personal saving.

These seeming technicalities make a big difference. John Sabelhaus and I recently found that while personal saving fell from 5.7% of GDP in the 1970s to less than zero at present, a measure that conformed more closely to economic concepts of saving by including businesses and households and adjusting for the other factors above showed saving at 9% of GDP in the 1970s and 7% in 1998. These findings indicate that although saving has declined, the dropoff is much smaller, and the current level of saving is much higher, than the official figures show.

The official figures also omit capital gains...
But should gains be included as saving? In some contexts, the answer is obvious. For an individual contemplating his retirement account, it makes perfect sense to include accruing capital gains as individual saving.
Which has lead Scholz and others to conclude:
It seems clear to us from the discussion in Gale and Sabelhaus (1999) and elsewhere, that one should not make inferences about the saving behavior of individual households based on the aggregate NIPA or Flow of Funds personal saving rate. Thus, they are badly flawed indictors of the degree to which Americans are adequately preparing for retirement.
How will the Bogleheads book decide about this controversy about measuring the decline in the US savings rate? Has it declined from 5% to less than zero, or has it declined from roughly 9% to 7%? Or has it declined even less than that because of the omission of capital gains? It makes a big difference.

Here’s another source of controversy while remaining in chapter 2
Studies of Retirement Shortfalls
First of all the title seems to bias whatever analysis follows. A current thread, however, has been discussing this very topic. Here is a link to that discussion.
http://www.bogleheads.org/forum/viewtopic.php?t=22118
Here is a short synopsis of the results. Studies done using the best retirement data bases available and the most rigorous analytic tools generally show that most Americans are well prepared for retirement. Studies using inferior data bases and substituting rules of thumb for analytical rigor show households in general are not that well prepared for retirement. How will the Boglehead book handle this controversy? This is not a small matter.

There are also the controversies over whether SWR’s and RIRR’s make any sense, much less should they be used as part of prudent retirement planning. I could go on, but I believe I have already established that very careful thinking has to go into the structure of such a daunting project, before Bogleheads begin merrily word processing away on proposed solutions to sound retirement planning.

Bob K
In finance risk is defined as uncertainty that is consequential (nontrivial).

The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.
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Postby Alex Frakt » Fri Aug 22, 2008 5:02 pm

I'd like to see Chapter 12 include a section on a "two bucket" approach or other methods for dealing with down markets. It might be just a psychological ploy compared to looking at the portfolio as a single entity, but we shouldn't overlook the importance of piece of mind.

Also somewhere there needs to be suggestions on how to check up on your progress and and, if necessary, make adjustments if things don't work out to plan.
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Postby Ted Valentine » Fri Aug 22, 2008 5:03 pm

I imagine a growing product for retirees will be reverse mortgages due to many having the majority of their life savings in their homes. Don't know where this fits, but think it should be included.


We expect the "The Bogleheads' Guide to Retirement Planning" will be published and available for sale before the end of 2009. It will be a great Christmas present for friends and relatives--especially if you are one of its contributors.


Outstanding. Already planning to give it to my parents.
Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
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Postby nonnie » Fri Aug 22, 2008 5:15 pm

Great idea for a book. I hope you will include charitable annuities either in Chapter 9 or perhaps Chapter 22.

Best,
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