Cash Rich Retirement – Book Review

Cash Rich-Retirement was written by Jim Schlagheck, who is a private banker and investment advisor, and the co-producer of Retirement Revolution, a PBS show covering retirement preparation. He has also held senior wealth management positions with some of the world’s leading financial institutions in multiple countries and continents.

I was very impressed with his background and when I sat down to read this book, I was even more impressed with it’s sound advice and information. Schlagheck isn’t selling a fund or an investment plan – his concern is to get readers to prepare for retirement. He does this through solid examples, historical references, and hard facts. This isn’t a book about number crunching, so much as it is a book about how to change your current financial lifestyle to prepare for a long life and a period when your investment income will likely be your sole source of income.

Cash-Rich Retirement is organized into three parts:

Part I: Your Retirement is In Grave Danger!

Many people have a preconceived notion of retirement, but unfortunately, they aren’t prepared for it. And the problem is not getting better. Schlagheck gives a brief overview of the history of retirement and how it has evolved to the present day.

Many Americans who are nearing retirement age are finding they do not have the pensions or other defined benefit plans (pensions) that were common only a decade or two ago. In their place now are defined contribution plans such as 401(k)’s, IRA’s, and profit sharing plans. This is a big cultural change from previous years, and many people are not prepared for it. Other institutions that Americans have long relied upon are Social Security and Medicare, which are facing problems of their own. Relying upon these may lead to financial difficulties in retirement.

The other topics covered in this section are busting certain assumptions about wealth and the coming demographic change when the Baby Boomers retire. I’ve seen this a lot where I work – as approximately 60% of the workforce will be eligible to retire within 5 years, and 75% will be eligible to retire within 10 years. This is a very interesting chapter.

Part II: Six Steps to Bulletproof Your Retirement

The six steps are:

• Change your automatic pilot: recognize how much money you will actually need and put a plan in place to achieve that (automatic saving/investing), etc.
• Diversify your holdings in radically different ways.
• Build out your investment plan with funds, indexes, and objective research.
• Get all the professional help you can.
• Build income streams with a ladder of annuities.
• Invest in health care insurance (by this the author refers to buying insurance for yourself – healthcare will not get any cheaper!).

Part III: The Care and Feeding of Your Nest Egg

Once you have begun saving and investing for retirement, you will need to do periodic tune-ups to ensure your holdings are balanced and in appropriate investment vehicles. The author also gives a few alternate methods for ensuring your financial future as you age, such as tapping your home’s equity with a reverse mortgage. There are also times when you need to be more careful with your retirement funds – especially when you will be needing them in a few years. In times of a recession, it may be best to invest in defensive type holdings, some of which are outlined in the book.

What I liked: Cash-Rich Retirement is a solid book about preparing for your future. It is straight forward and easy to understand, and does not involve crunching numbers (which many people prefer not to deal with). This is not a dry book by any means, and is not selling another product. This is just great information.

I enjoyed the writing style and a few interesting historical references that were included to explain the current state of our economy or how retirement works in the US. Each chapter also ends with a short “plan of action” that neatly summarizes the main point of the chapter and gives the reader a quick way to implement the ideas discussed.

My thoughts: This book is good for just about anyone – from the beginning investor to someone who knows about investing, but hasn’t really planned much for retirement. While this book does not tell you which plans to invest in, it does something even more important – it gives you the reasons you need to invest. Blindly investing without a plan won’t do much for you other than put numbers on paper. Having a plan means you can measure progress and will have motivation for following through.

Buy or Don’t Buy: Cash-Rich Retirement is good book, and I can’t find anything wrong with the principles it teaches. If you are planning on beginning your retirement planning soon (it’s never too early!), then I think this is a good place to start. I think borrowing it from the library would work, but this is a book you may wish to have around for reference. Either way you can’t go wrong.

Oh, and I’d offer to give you my copy, but I gave it away already!