Bogleheads' Guide to Retirement Planning

This book was a collaborative effort by the members of the Bogleheads forum and covers the entire spectrum of retirement planning, including: investing, taxes, retirement plans, personal finance, insurance and estate planning issues. The book is an invaluable aid in helping understand and plan out the confusing array of financial options that we all face all the way through retirement.

=Description= Filled with valuable advice on a wide range of retirement planning issues-including some pearls of wisdom from John Bogle himself-The Bogleheads' Guide to Retirement Planning:
 * Explains the different types of savings accounts and retirement plans
 * Offers insights on managing and funding your retirement accounts
 * Details efficient withdrawal strategies that could help you maintain a comfortable retirement lifestyle
 * Addresses essential estate planning and gifting issues

=Authors= The Boglehead's Guide to Retirement Planning was written by members of the Bogleheads community (see individual chapter headings) and edited by Taylor Larimore, Mel Lindauer, Rick Ferri and Laura Dogu.

=Corrections to the Printed Edition= Below are corrections to the printed edition as suggested in this thread: Guide to Retirement Planning - Post Feedback Here

Chapter 1: The Retirement Planning Process (Thomas L. Romens)

 * Page 8, under Tax-Advantaged Savings, has a typo: "tax-tree Roth IRA" should be "tax-free Roth IRA"

(OK by Mel Lindauer, Peter Foley): Page 15 has an incorrectly spelled city.
 * From: "Moving to another town may also reduce costs. For example, moving from Chicago to Champagne-Urbana, Illinois . . ."
 * To: "Moving to another town may also reduce costs. For example, moving from Chicago to Champaign-Urbana, Illinois . . ."

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CHANGED IN THE PAPERBACK EDITION (Mel)=='''====

Chapter 2: Understanding Taxes (Norman S. Janoff)

 * tomd37: State sales taxes do exceed 6.25 percent. Here in Tennessee the state sales tax is 7.00 percent, to which the local sales tax is added. We pay a total of 9.25% in my locality. As mentioned in the book, we do not have an income tax, but rather a tax on certain interest and dividend income. (concurred by author AzRunner)


 * From Barry Barnitz: p. 24, Interest Income: Stock, bond and taxable money market mutual funds refer to income as dividends. (omitted taxable money market funds). See discussion page (tab at top). (concurred by author  AzRunner)


 * From David Grabiner: p. 25: If you have a stock mutual fund which pays dividends, both you and the fund must satisfy the 61-day rule for the dividend to be qualified. (This is correct on p. 39 in Chapter 3.) (concurred by author  AzRunner)

From Barry Barnitz: (OK'd by Mel Lindauer) Printers errors:
 * p.22: ...relates toyour...; should be ...relates to your...
 * p.24: ...depending on yourmarginal tax rate; should be ...depending on your marginal tax rate.

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CHANGED IN THE PAPERBACK EDITION (Mel)=='''===

Chapter 3: Individual Taxable Savings Accounts (Dan Kohn)
(pending author concurrence) From tfb:
 * p.36 says TLH is an advantage of taxable accounts. It's way to mitigate the disadvantage, but it's not an advantage by itself. In other words, you don't forego a tax deferred account in favor of a taxable account because you can TLH.
 * p.38 Ticker symbol for Hewlett-Packard is HPQ, not HP ==CHANGED IN THE PAPERBACK EDITION (Mel)==
 * p.40 gave the impression if you want to invest in stock funds you should buy it in a taxable account and not contribute to a tax deferred account.
 * p.41 Tax-Managed International is mentioned without context. Bogleheads know it's a Vanguard fund. Others don't.==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 4: Individual Retirement Arrangements (Jim Dahle a.k.a. EmergDoc)
(pending author concurrence) From Barry Barnitz: Page 52, the lead-in paragraph for the section on Self-Employed IRAs. The solo 401(k) and designated solo Roth 401(k) account are 401(k)s and not IRAs. Change the word IRAs to accounts or plans.
 * There are four types of accounts/plans that a self-employed investor might consider: a solo 401(k), a Roth solo 401(k), a SEP-IRA, and a SIMPLE IRA.

(pending author concurrence) From tfb: ==CHANGED IN THE PAPERBACK EDITION (Mel)==
 * p.50 confuses income limit for contribution with income limit for taking a deduction. 2nd paragraph leads off with income limit for contribution, continues with income limit for taking a deduction, and returns to saying there is no income limit for contribution.
 * p.50 $53k-63k limit for "those filing separately" -- should be single. Numbers are for 2008. Other numbers are for 2009.
 * p.51 Roth income limits are also for 2008 tax year.
 * p.59 numbers in the table are for 2008 tax year although the title of the table says 2009

Chapter 6: Defined Contribution Plans (Dan Kohn)
(pending author concurrence) From Peter Foley, page 83, 457 Plan Issues. The second to last sentence of the first paragraph begins: "Many 401(k) plans offer no index funds..." Suggest a change to:
 * Many 457 plans offer no index funds...

The topic is 457 plans, suggest that the author intended 457 plans instead of 401(k) plans.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 7: Single-Premium Immediate Annuities (Dan Smith)
(pending author concurrence) From Barry Barnitz, on Chapter 7 :
 * The chapter never considers a Variable SPIA, and furthermore continually misappropriates the term SPIA to mean a Fixed SPIA. Suggest substituting "Fixed SPIA" for all mislabeled "SPIA" attributions.
 * Please see discussion page.

(pending author concurrence) From tfb:
 * p. 103, "The payout for CFA ..." should be CGA, not CFA.
 * p. 112, "Weiss Research ratings are available at no cost" -- I can't find it on www.thestreet.com. There's a thestreetratings.com but it only gives the 10 strongest and the 10 weakest companies. Otherwise it doesn't appear to be free.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 8: Basic Investing Principles (Bob Davis)
From David Grabiner: p. 128: The spread on an ETF does not represent the spreads of securities in the fund; it represents the liquidity of the ETF itself.

From tfb: pp. 129-130: $1,000 investment in an ETF with 0.1% expense ratio after two $9.99 commissions makes actual expense look like 2.1% only if the holding period is assumed to be one year.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

From CyberBob: Figure 8.1, p. 123, the graph showing the efficient frontier curve between U.S. and International stock investments has an incorrect Compounded Return (vertical axis) scale. During transcription from my original data to a format suitable to the publisher for printing, some numbers got jumbled. Note: this only affects the axis labeling. The curve itself is correct, and, in fact, the actual shape of the curve is what is essential to the efficient frontier topic.

Figure 8.1 - Incorrect vertical scale



Figure 8.1 - Corrected vertical scale



Chapter 9: Investing for Retirement (David Grabiner and Alex Frakt)
From Mel Lindauer: Page 142, Figure 9.1. The title "Equity to Maximum Loss Starting with $100,000" is misleading and should be "Equity to Tolerable Loss Starting with $100,000".

From David Grabiner: Page 144, Table 9.1 (3rd row, 3rd column). The worst 5 years for stock real returns should be 1916-1920, not 1916-1928.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 10: Funding Your Retirement Accounts (David Grabiner and Ian Forsythe)
From David Grabiner: From petrico (concurred by David Grabiner): From obliviousinvestor (concurred by  David Grabiner):
 * Table 10.1 on p. 153: Withdrawals from a non-qualified annuity are partly tax-free; only the gains are taxed.
 * Table 10.2 on p. 161: Last column in third row of data should be $1,000 instead of $1,333.
 * Last line on page 155 should state that Social Security and Medicare taxes total 7.65% rather than 7.85%.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 11: Understanding Social Security (Dick Schreitmueller)
From petrico (concurred by the chapter author, rschreit):
 * Table 11.3 on p. 175: Middle column in last two rows, higher base amount should be $44,000 instead of $34,000 to match the text on p. 176 and Table 11.4 on p. 177.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Supplemental information is available on the discussion page (tab at top).

Chapter 12: Withdrawal Strategies (Carol Tomkovich)
(pending author concurrence) From tfb:
 * p. 191 "your benefits depends on ... how much you put into Social Security ..." contradicts with Chapter 11, p. 171, which says "The amount of your Social Security retirement benefit is based on ... -- not on the amount of taxes you paid."
 * p. 191 "your effective tax rate can go from ..." should be your marginal tax rate.

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 13: Early Retirement (Jeff McComas)
(pending author concurrence) From tfb:
 * p. 203 "employees are not fully vested in ... until they turn 60 or 65" -- vested is probably not the right term here. Vesting in a retirement plan is by years of service, not age.
 * p. 209 Reference to Chapter 8 in 2nd last paragraph should be Chapter 7. ==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 14: Income Replacement (Lee E. Marshall)
Supplemental information is available on the discussion page (tab at top).

Chapter 15: Health Insurance (Lee E. Marshall)
Further discussion, as well as supplemental information, is available on the discussion page (tab at top).

Chapter 16: Essentials of Estate Planning (Robert A. Stermer)
(pending author concurrence) from LH: Further discussion regarding this potential correction is available on the discussion page (tab at top).
 * pg 268, near the bottom: "A trust in which the settlor is the source of the assets contributed is known as a self-settled trust".
 * The word settlor should be replaced by the word "beneficiary"?

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 18: Seeking Help from Professionals (Dale C. Maley and Lauren Vignec)
Further discussion regarding equity indexed annuities is available on the discussion page (tab at top).

==CHANGED IN THE PAPERBACK EDITION (Mel)==

Chapter 19: Divorce and Other Financial Disasters (David Rankine)
(pending author concurrence) From tfb: p. 307, "A spouse may only get survivor's benefits based on the other spouse's employment and income." That's not true. If it means "A divorced spouse ..." it contradicts with Chapter 11, p. 171, "A divorced spouse ... may start benefits at age 62 ..." and what SSA says.