We write a lot here at AAC about the gear and skills we need to go cruising. And there are many books available that do the same. But all of that is dreaming (nothing wrong with that) if we can’t figure out a way to manage our lives so as to actually accumulate enough money to buy a boat and fund cruising.
For many of my generation (boomer) that was relatively easy:
- Get a reasonable education.
- Go to work for a reputable company.
- Pay into their defined benefit pension plan (usually required).
- Pay into our government’s old age security plans (always required in most countries).
- Save enough to buy a boat.
- Retire on a good pension, indexed to inflation and managed by professionals.
- Go cruising.
(By the way, this was not Phyllis’ and my financial route to cruising.)
Even better, the whole life course was so easy and secure for most of us boomers (at least in comparison to pretty much any other generation) that many of us could even afford to take some time off in our working years to go voyaging, without worrying that our old age would suck big time.
But for those under around 55 years of age today, things are far more complicated:
- We have developed a star system in employment where a small percentage of any given cohort get huge wealth, often for doing little that’s useful to society—yeah, I’m looking at you, Zuck & Co—and the rest are left with an ever shrinking piece of the pie.
- Employment is no longer secure—almost everyone, at least in the private sector, is vulnerable to sudden layoff.
- Except for public service workers in wealthy countries, the defined benefit pension plan indexed to inflation is a thing of the past, replaced by defined contribution with no inflation protection.
- And defined contribution plans require beneficiaries to make their own investment decisions, both while saving and in retirement, usually without any training at all on how to do that.
- While there are many good financial advisors available, it’s extremely difficult to separate them from the untrained and/or charlatans.
- The financial advisory business is rife with conflicts of interest.
- Most people need to save seemingly unattainable amounts to have a secure retirement, let alone buy a boat and go cruising.
It’s not a pretty picture, particularly for those who want to do something other than work all the hours in a year trying to stay secure, and it’s not getting any prettier.
And even for us boomers who don’t have one of those great indexed pensions, like Phyllis and me, managing our finances has got a lot more difficult for many reasons, the most notable being that our expected life span has increased far more than we thought it would, so suddenly we need to worry about what life will look like if, as is perfectly possible for those who have lived to 60+, we live well into our nineties, with the attendant risk of needing very expensive longterm care—now there’s a first world problem.
Sadly, I don’t have a silver bullet to solve these problems.
But what I can do is suggest two very different books that may help, at least a little.
The first book is for all of us without indexed defined benefit pensions who are trying to figure out how to manage our money through our older age, hopefully with some cruising thrown in, as well as for those with good jobs still trying to save for cruising and/or retirement.
And the second book lays out a framework that might just hold the key to making the world a better place.
The one is full of practical advice, the other is more philosophical, but no less important.
Let’s start with the hard actionable information book:
The Essential Retirement Guide: A Contrarian’s Perspective by Frederick Vettese
This is quite simply the best book I have ever read on how to:
- save for retirement (and maybe cruising too),
- and then manage our finances in our older age (retired or not).
That’s a pretty sweeping statement, so it will probably be more meaningful if I share that I have been self-managing and investing our assets for nearly twenty years. This is a task that I take extremely seriously, particularly because the woman I love is ten years younger than I am and therefore we have a much higher longevity risk (Phyllis outliving our savings) than many couples do.
As part of that task, I spend an average of 10 hours a week (~500 hours a year) reading about finance, economics and investment management—now you know why I don’t watch TV! The point being that I have read a lot to compare this book to and it’s simply the best, at least of those I have read.
Before I go any further, a quick aside. While it has worked reasonably well for us, I’m not advocating for investment self-management. It’s a lot of work to do right and fraught with opportunities to let our emotions drive us into costly mistakes—I have made a couple of doozies.
Back to the book. What is so good about it? Three things:
#1 Based on Hard Math
I’m not a mathematician, but my Dad was, and one thing I learned from him, and have had reinforced throughout my life, is that good decisions are based on doing the math.
Sure, that seems obvious when I write it, but the sad fact is that much (maybe most) investment and money management advice is based on rules of thumb, poorly executed extrapolation of history, and plain old bullshit, often mixed with a heaping helping of conflict of interest.
This book is different. Vettese is one of the smartest actuaries ever to open a spreadsheet, and he also has access to the resources of one of Canada’s foremost pension management consulting companies—bit of a controversy around that company right now, but that dosen’t alter the fact that they know what they are doing and have huge data sets to analyze.
The book also brings that mathematical rigour to bear on little talked about subjects like what is the real likelihood that we will need round-the-clock care, and for how long, and at what cost, as we age.
#2 He Can Write
Of course none of that math would help most of us (least of all me) if it was served up raw. But the author also has an almost miraculous ability to explain the complex in simple terms, without talking down to his readers or leaving them without essential understanding.
And believe me, as someone who makes his living explaining technical issues in writing, I can tell you that doing it as well as Vettese does is extremely rare, hard to do, and priceless.
#3 Good News
It seems, particularly since the great recession, that most writing about retirement, investing and pensions is of the “we are all screwed and are going to end up eating dog food during our old age” genre.
Vettese does not fall into that trap. Although he does warn that investment returns going forward from here are likely to be lower than the averages of the past, he then uses hard math to show that many of us are way better off than we think we are. That’s the contrarian part.
In fact, the whole tone of the book is generally upbeat, focusing on the positive things we can do to improve our lives, rather than on doom and gloom scenarios.
Why It Matters To Cruisers
And that brings me to why the book is applicable to going cruising. If we are, in fact, better off than we think we are, and with Vettese’s help can put a viable financial life plan in place, it will be at least a bit more likely that we will be able, and feel secure enough, to go voyaging at some point in our lives.
Who’s It For?
If you have a secure defined benefit pension plan indexed to inflation that will, together with your government’s social security, cover your retirement needs, leaving you with just the need to save to buy a boat, you probably don’t need this book.
But for most others, reading this book is simply the only sane thing to do. Not making the time to do so is…let me just say…ill advised.
The book is aimed at residents of the USA and Canada, but I still think that a good three quarters of it will be of use to pretty much anyone who lives in a developed country. (I just don’t know enough about living in a developing country to say whether or not the book would be useful.)
That said, sadly, there is a second group who probably don’t need to read this book: Those of you (far too many) just struggling to keep your heads above water, often working in the so-called “gig economy”.
Telling you to read this book about how to save for retirement would be downright cruel (particularly coming from a well-situated boomer). How the hell are you going to save for your old age, let alone go cruising, when you have no job security and are not even sure you can make next month’s rent?
Sadly, I can’t do a damned thing to fix that, except perhaps recommend a book and an idea that just might be the longterm solution. And that’s what Part 2 is about.
If you have any suggestions for other books on personal finance that will help the rest of us manage our money better so we can get out there cruising, please leave a comment.
The link to this book is not to any affiliates program, and neither I nor AAC will receive any benefit if you buy the book.