The message of “The Number” is simple: If you find financial planning for your retirement to be confusing, discouraging or difficult, you’re not alone; if you’re not saving for your retirement, or you’re not saving enough, you’re not alone.
The author is not a scold. He writes that for most of his life he was such a person, too. He understands why people are this way. He contends it is because uncertainties abound: defined-benefit retirement plans are disappearing; Social Security seems shaky at best; the dot-com bust makes the stock market look riskier than it did just a few years ago; and anyway, who can understand all those products your stockbroker is trying to sell you?
The tone is friendly and helpful. The writing is crisp and entertaining. The author cites approvingly the books of financial writer Andy Tobias who “… was a wisecracking New Yorker clever enough to understand that dry and earnest wasn’t how you talked money management to a generation that (a) had never known financial adversity, and (b) didn’t take managing it very seriously.” I think he succeeds in writing about money as well as Tobias does.
Here are three sample passages:
“This book is about money, but ultimately it’s about the life you want, the life you don’t, and the costs of each.
“Most people think financial planners and accountants are the most boring people on Earth, but they’re not. They hold backstage passes to our psyches. Some of what planners hear is heartbreakingly sad, some of it is ridiculous and delusive. If you ever think it would be fun to be a shrink but you can’t hack medical school, let alone being awakened in the middle of the night by a frantic patient, you might consider a career in financial planning.
“Translation: we may be adding years to life, but not life to years, to invert the motto of the Gerontological Society of America. Adding years to life adds expense. Adding expense demands a bigger Number. A bigger Number requires a financial plan, and long before that, a determination to save diligently and buy selectively. You’d think dread of years in a nursing home would be motivation enough.Not.”
The author provides some interesting information. Stockbrokers, banks and financial planners won’t treat you really well until you become a HNWI (High Net Worth Individual). To be a HNWI you need about $1 million invested. But the real fun starts if you are an Ultra High Net Worth Individual. Unfortunately, that requires a minimum portfolio of about $5 million.
And he recites sound, if perhaps familiar, advice: Start saving early, save a lot, invest a lot of those savings in the stock market, diversify but don’t over-diversify, emphasize value stocks and funds rather than growth stocks and funds, believe in an investment’s fundamentals. He offers the mandatory-for-a-book-of-this-type four-page discussion the reader can use to address the questions “How Am I Doing? Will I Make It?”
Bottom line: Even if you are someone who has thought about retirement and has tried to save for it, this book would still be an entertaining read. But if you haven’t, or you have a child, or other relative, or a friend who isn’t doing those things, I think this book would be a fine gift.
Professor Craig Newmark teaches economics at North Carolina State University.
