Book Review: How Much Can I Spend in Retirement? by Wade Pfau, Ph.D., CFA

This is why you should have a Financial Advisor…………to read books like this on your behalf and provide you with a summary!! Seriously, a great new book on retirement planning is out!

Wade Pfau has written a new book; How Much can I spend in Retirement? For those of you unfamiliar with Mr. Pfau,…….he is a highly respected figure in the financial planning industry. He is a Professor of Retirement Income in the PhD in Financial and Retirement Planning program at The American College of Financial Services. A very solid academic and practitioner in the financial planning community.

As you might suspect from an author with a Ph.D. and a CFA, this 345 page book is technical and precise. Some might say dry. In fact, Mr. Pfau is not going to completely answer his primary question. 345 pages for a partial answer. He is planning a companion volume that will try to answer the question using insurance (safety-first) products. This book is “a Guide to Investment-based Retirement Income Strategies.”  It will only approach the problem using investment oriented solutions. I think you get the picture……a very thorough examination of a topic that seems simple on the surface yet is really quite involved. It will take another volume to finally get to a more complete conclusion.

I am about 75% of the way through and am really enjoying the book. I will admit it is not for everyone. Wade provides a historic look at what is currently called the 4% Rule. He then moves forward by relaxing some of the assumptions used in the initial research, and what that would mean in today’s market environment. A plethora of additional topics are discussed all relating to the central premise of generating income from an investment portfolio that will cover your expenses in retirement. The degree of precision and attention to detail cannot be over-emphasized.  This is the real deal if you are a financial planner type.

The big takeaway from a read like this, is that investing and retirement planning are more complex than portrayed in popular culture. Service providers and our political types would like you to think it is all quite doable on your own. I would beg to differ, but naturally I have a bias in this direction.

If you only read one chapter from this book, head to the back, and read Chapter 9 :  Value of Good Decision-making in Retirement. These last 20 pages will probably have as large an impact on your retirement as the 325 pages that preceded it!  Or like I said at the beginning, have your Advisor read it and give you a summary!