Wednesday, May 30, 2012

The Worried Boomer

In the aftermath of the 2008 stock crash, the title of Derek Foster’s latest book The Worried Boomer: No Pension? Not Wealthy? Here’s YOUR Plan is some good marketing. Despite the promise of novel solutions to the problem of not being prepared for retirement, Foster offers sensible but fairly standard advice: spend less, save more, and work longer. Those who don’t like long books will be happy with 170 pages of large text and generous white space.

A couple of the most common themes in the book are a recommendation to invest in dividend stocks and repeated plugs of Foster’s previous books.

An amusing contradiction is that Foster’s web site and a couple of his previous books are called “Stop Working,” but he devotes a chapter in this book to the financial benefits of continuing to work past retirement age.

One interesting fact I learned is that the Saskatchewan pension plan is open to all Canadians and not just Saskatchewan residents. Some people may prefer this as a lower cost option to saving in an RRSP with a mutual fund salesperson.

Foster includes a “Retirement Action Workbook” that takes you through the calculation of your projected retirement income from various sources. He treats both dividends and interest income as retirement income, but this is misleading. With interest income, inflation is eroding your principal. With dividends, your principal typically grows enough to cover inflation (over the long run), but is more volatile. An 80-year old can afford to spend all the (after-tax) interest income, but someone who retires young can’t afford to erode principal in this way.

This book is clearly written and uses language that is accessible to most people, but I suspect that most readers would be mildly disappointed.

8 comments:

  1. I'm not sure what's more astonishing, that Derek Foster keeps churning out new books or that people keep buying them?

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  2. Well said echo. I think the book title should be "The Worried Foster". Punching out yet another book to supplement his own flawed personal investing strategy. It's amazing.

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  3. @Echo: I guess the astonishing actions of buyers makes the writing of new books less astonishing.

    @Paul: LOL - Perhaps "The Worried Foster" will be the next title.

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  4. We recently looked in to the Saskatchewan Pension Plan for a piece in MoneySense, and it's hard to see the appeal. It's essentially a balanced mutual fund with restrictions similar to those of a locked-in RRSP.

    Why would anyone willingly contribute to a locked-in account when there are countless options with much more flexibility?

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  5. @Dan: The Saskatchewan pension plan has no appeal to me, but it may appeal to someone who wants to move his retirement savings beyond temptation and wants to pay less than 2.5% MERs. I agree that there are much better options, but it may be better than what the typical person in Canada is doing right now.

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  6. Frugal Guy with BalanceMay 31, 2012 at 10:59 AM

    A lot of the financial planners, colomnists etc write there own books on the flavorof how your money should be invested.

    I find they all say about the same thing. Don't spend more than you make, put some away for rainy day and invest wisely your money wisely.

    I learn more by reading the blogs like this and others on moneyindex.org.

    Great job and thank you I appreciate the effort even though your not doing this for just your health.

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  7. @Frugal Guy: Thanks. You're right that I don't just do this for my health. The biggest benefit I've received is a better understanding of how to invest my own money. This has been worth far more than my blog income so far.

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  8. Derek is certainly churning out the books.

    A fair assessment Michael. This book is certainly meant for the beginner.

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