Book Review: The Big Retirement Risk

I have a pretty good collection of books about financial planning and investing. So I’m usually not surprised or impressed by new books coming out about the subject. That was not the case with Erin Botsford’s, The Big Retirement Risk.

The financial planning industry has a plethora of peddlers offering advice. Most all of them tend to say pretty much the same thing, and most of the time it is not what investors are clamoring for. In fact, since 2008 investors really want security. They want someone to tell them how to secure that nest egg they have spent a lifetime saving. Somewhere along the way, my industry lost site of that fact.

While Botsford’s strategies are not for every planner or investor, both would do well to read her book. Most of the strategies are based on common sense and controlling risk. Identifying and eliminating risk is a common theme throughout the book.

Her early life was marked by tragedies. Her father died at 50 and left her and the family in a very difficult position. As a teenager, Botsford was in an accident and hit and killed a motorcyclist. So these two events really shaped the way she runs her practice and consults clients. As if these issues were not enough, Botsford was a contestant on Wheel of Fortune. She won a modest amount, and invested with a stockbroker. The broker proceeded to lose it all by taking risks that were very inappropriate.

The “big retirement risk” that Botsford warns against is running out of money before you run out of time.  One of the main strategies she suggests is using a guaranteed investment to provide you with your needs-based income. Her strategy further suggests that the money you need for day-to-day expenses should not be exposed to risk. You should be able to count on this money coming in no matter what. Money for wants, such as travelling, can be invested with more risk.

The first few opening chapters try to expose a number of myths in the investment world. Including, the stock market always goes up over time, diversification and asset allocation reduce risk and your net worth determines your lifestyle. Later chapters outline the investments and strategies she uses in her financial planning practice.

Financial planning is very important. Proper planning never completely eliminates risk, but it can help you effectively manage it. The Big Retirement Risk does a wonderful job covering what investors worry about most. It is a welcome addition to my library. You should give it a read!