401k Books

I read You and Your 401(k) cover to cover in one sitting and loved it. This book gives me hope and direction. I recommend it to everyone with a 401(k).

Current for 2003, Your 401(k) Handbook is an invaluable and "user friendly" instructional guide to investment decisions for employees which authoritatively covers the basic fiscal rules for taking charge of one's 401(k) plan and making personal savings grow. From basic rules such as "diversify" and "ignore fads" to the advantages of a 401(k) including flexibility and tax deferment of contributions to learning how to evaluate investment options and view how they are doing and much more, Your 401(k) Handbook is an extensively detailed financial handbook written especially to be accessible to non-specialist general readers of all experience levels ranging from the novice to the more experienced wage earner in the constantly changing world of finance.

In many ways I feel that this book is underserved by labeling it an investment or personal finance book. Yes, it does offer some solid and original thinking on both topics. But is even better in its wisdom about what matters in life -- i.e. finding and cultivating your Soul Purpose.

Gunderson notes, rightly, that the best investment anyone can make is in herself. Education. Health. Friends. Family. These are what really count in life's balance sheet.

I have struggled with expenses since graduating college and taking on a ton of debt. Gunderson and Killing Sacred Cows helped me realize that my education is one of the best investments I could have made, and well worth the interest payments.

If you are struggling with making ends meet and want to avoid the "cut, cut, cut" advice of most financial advisors, then pick up a copy of this book.

Gunderson and Palmer need to look to their own barnyards before branding the presumably wayward cattle of other farmers. This book is so saturated with New Age sacred tenets that it nearly mooed when I cracked the spine. A mix of the prosperity gospel, New Age exhortations to "be all you can be", with some highflown Victorian sentimental belief in absolutes thrown in; this work is not a book on personal finance, but itself a promoter of various sacred cows masquerading as principles around which to organize your life. Here are a few of the bovine beliefs.

1) You create you own reality.
I do not create reality. I engage in it. If a bird poops on my head, I can smile or I can frown, but I still have guano on my head. I didn't create that reality. Something outside of me did. The belief that I am the instigator of everything good and bad in my life is annoying at best, and callously mean at worst. I am thinking of victims of real abuse, such as assault, rape, murder, and genocide. Did they create their own reality? Is this not the ultimate in blame disguising itself as empowerment?

2) Do what you love and the money will follow.
Some wonderful engaging pursuits are simply not going to make you a living wage and are best pursued outside of the world of work. And this theory doesn't take into account the number of folks who love watching bad TV all day. If they do what they love, will the money follow? There are too many situations where this belief can be refuted for me to take it seriously.

3)Your "Soul Purpose", (read your sole purpose,) will lead you to the perfect vocation that will give your great joy and accomplishment.
If you are going to invoke the word soul and it accordant religiosity, then for the Christian, the sole purpose of your life is to glorify God. But God does not give you only one activity in life to focus on. God wants you to be a good parent, a good friend, a good worker, a good citizen, the list goes on. To think that only one facet of your life is going to fulfill you is not realistic and counter to the multi-faceted wonderful nature of human beings.

4) That you should pursue this "Soul Purpose", vocation, no matter what.
Not everyone is so proficiently selfish as to create a reality that allows them to focus on their needs as primary all of the time. Sometimes conditions in an individual's life makes pursuing one's self-interests unrealistic. Such language in the context of this book implies that this person is a sellout, not that this person has nobly sacrificed for a higher good, such as their family.

If you create your own reality then the above tenets are true and you are a sellout, a chump, a member of the unenlightened masses if you are not 100% of the time, "living the dream," whatever that is for you. But if these principles are not true, and I do not think they are, these are some of the most judgmental unkind attacks we can levy at one another. This work was so uncritical of its own sacred cows that I distrust the advice offered and the credentials of its authors. What little advice was good could have been summed up in a chapter. Instead I was treated to 256 pages of chummy exhortations and shallow examples when I would have preferred the more prosaic, "scarcity mindset" strictures of specific advice.

This book addresses many myths of investing that have been ingrained in many of us for so long that we have deemed them as true. The author Garrett Gunderson, a self made millionaire at the age of 26, has addressed those myths and given insight into what truly makes a person successful. Entertaining and informative, his style of writing captivates the reader and allows for introspective review of what is our Soul Purpose in life and how to capitalize in it.

The book is well written, well organized, and has changed my approach to finding true happiness. This is a paradigm shift from what experts have incorrectly taught and ingrained in all of us.

You will learn many key points:
Understand the importance of stewardship. How the 401(k) that you are investing into your future is a fallacy. Understand true wealth and how net worth is not a true indicator of your financial security. Understand the importance of price versus value. Determine whether you are a producer or consumer. Understand how to invest and mitigate your risks. Liberate yourself for financial freedom.

I highly recommend this book to everyone interested in achieving their financial and personal goals in life.

Quickest way to riches would be a buck for every time you hear the term "soul purpose" in this book. Interesting viewpoints concerning money and investing, but not much meat.

I can summarize the reasons to buy this book:

(1) Financial Institutions, the media, family, friends, and financial advisors hype myths for their own benefit and personal satisfaction.
(2) You can't recognize a myth (a Sacred Cow) when you are in it until it's too late.
(3) The book covers 9 broad-based myths with useful anecdotes, historical examples with repetition of important, useful concepts.
(4) You can destroy the Sacred Cows of financial terrorism, or be destroyed because you don't question them. You'll learn how.

Garrett Gunderson lays out precise principles in this book. He gives you the knowledge to avoid costly mistakes and the reasons why they happen over and over again throughout history. (Does Enron, WorldCom, now Lehman, AIG, Merrill, WAMU, Fannie & Freddie sound familiar?).

The hidden danger of a Sacred Cow is that you don't know it's a myth until it's too late. Like high blood pressure, you don't necessarily know you have it until you get tested.

Please read this book slowly to digest it. I suggest reading it with a high-lighter, and re-reading it at a later date. Why? Dead Cows have "ghosts" that constantly haunt us, being reinforced through toxic "sales hype" and conventional "wisdom".

America's Financial Apocalypse goes far beyond other self-serving 'meltdown' books to thoroughly explain the many factors contributing to our current economic crisis. The author obviously knows his stuff as his predictions are now being played out, one by one. He has done massive amounts of research in this well documented, comprehensive volume and provides a sobering account of what to expect after this mess subsides. He makes the case that America's pain will continue for many years and provides priceless insight on how to best negotiate these turbulent times. Indispensable for anyone who wants to know what's really going on.

Don't rely on mainstream corporate-owned media for accurate financial guidance! Get the facts from an independent source so you can stop being played!

Although over 500 pages, I was glued to this book because of its full coverage and detail of the topics. The real estate bubble chapter alone is better than other books I have read devoted solely to this topic. The same can be said of the debt, Social Security, Pension, and Debt chapters. And although the author does not devote a chapter on the global oil situation, he talks about it extensively in many chapters and covers it in more detail with better insight than any other book I have read exclusively devoted to this topic.

The 3 chapters on investments are brilliant and stem from the analysis and data presented in the previous 15 chapters. I am a very experienced and successful investor and the information within this book has opened my eyes and I plan to send a copy to my local Congressmen as well as my financial advisor. In fact, getting this book is like getting 6 books rolled up into one. The author obviously spent a very long time doing his research and analysis and it shows. This book puts all others related to America's economy and future to shame. And unfortunately, I am afraid the conclusions he has made will come to fruition, but now I will be ready.

Thank you for opening my eyes to the realities of America.

This Book Really Delivers

Unlike other books that discuss America's problems, this one does not focus on one or two problems but presents all of the major issues America is facing from economic, social and global political issues, to all of the financial issues. Rather than focusing on America's national debt as a primary issue, the author realizes that no one problem is strong enough to take down the greatest nation on earth. Instead, the book discusses the two biggest problems in America--the healthcare crisis and free trade, which have accelerated America's declining competitiveness. The author also explains the misconceptions of the state of Social Security, the global oil shortage, continued presence in Iraq and growing tensions in the middle east, the real estate bubble, the pension problems and many more topics; all of this in addition to the growing record national debt and trade deficits. And he relates all of this together to the Baby Boomers.

He also makes an excellent case for Alan Greenspan, or the "Great Bubble Maestro" as the author labels him as a primary cause of much of America's stock market and real estate bubbles. Perhaps the greatest achievement of this work is that the author presents exhaustive data to back his points, something I have yet to be seen elsewhere. It is easy for someone to say that healthcare needs to be fixed or that America's living standards are in decline, but the author shows all of the date to support almost everything he mentions.

He also makes very reasonable but adverse predictions for the dollar, long-term interest rates, and explains why America has a major economic correction that is inevitable. He points out well that we never recovered from the recession thought to have ended in 2001-2002, and Americans have been using credit to fuel the economy. The author goes at lengths to prove this and he even illustrates how the most critical economic numbers such as GDP and inflation have been manipulated by the government.

Even if this book did nothing more than to point out these issues, it would be a great achievement. But the author goes further to predict a major depression and he pays out very rational low-risk recommendations for investments.

I could see this book being useful for everyone--working Americans, activists, politicians, economists, and citizens concerned about America's future, as well as investors at all levels. It is truly a critical read.

SYNOPSIS: The illusion of over two decades of economic greatness in America was created in large part by Greenspan's bubble economy. But the author paints a different picture of America and makes chilling predictions for its future. Only those who can see through the smoke signals created by Washington will be able to avert and/or profit from America's next depression. And this book definitely allows one to see through the smoke screen.

CONTENTS
The author begins by briefly summarizing America's history, noting key events. Only later are some of these events revisited (monetary policy, wealth disparity, oil, pre-depression conditions) when appropriate to emphasize their significance within modern day America. Next, he discusses the economic effects of free trade. Finally, he reviews America's declining edge in education and innovation, ending Part 1 of the book with an overview of America's future.

Part 2 discusses the major problems today--with chapters on U.S. debt, healthcare, Social Security, pension plans, and the real estate bubble. Part 3 opens with a tutorial of how the government manipulates economic data such as the GDP and inflation. He then extends earlier discussions on the credit bubble, the economic consequences of the baby boomers, fraud and control by corporate America, and the effects of peak oil. He concludes with 3 chapters devoted to short and long-term forecasts in the stock market and provides a very sound investment strategy to profit both before and during America's Next Great Depression.

OPINION & REVIEW
This is by far the most informative investment book I have read this year and the very best on this topic. The author is clearly an expert on investments and economics. The book is as well-organized as a college text book but reads much better, is easier to understand, and you will learn more. If you like to see actual data to back up statements you will love this book, as it has been extremely well researched. The author's command of the subject matter is impressive in both depth and coverage...exactly what I needed to be convinced of a coming depression.

I especially enjoyed the chapters on the real estate bubble, health care, retirement, and the one showing how the government manipulates economic numbers. The investment advice is very valuable and rational and is fully supported by the previous 16 chapters.

When you read this book, it will be nearly impossible to disagree with the author's conclusions and investment advice because of the enormous amount of supporting evidence. It will cause you to rethink dozens of issues and introduce many others you probably weren't aware of.

And if you are like me, the book will motivate (or scare) you to demand politicians address these issues instead of ignoring them. The main reason they don't deal with difficult issues is because (as the author points out) they don't want to risk losing a reelection. Corruption serves as a motivation for other politicians. As long as voters are not fully aware of the problems challenging America's empire, they will continue to avoid engineering effective solutions. If all voters read America's Financial Apocalypse, they would force politicians to confront these difficult issues. That would be the only way to avoid a depression.

To the author: Thank You for this essential, eye-opening book!

The author shows how America has changed economically. It also discusses critical changes to the nation's social and educational fabric. Although first written in 2006, it predicted both the extent and severity of the real estate shakeout including devastation to the banks.

But as the author points out, this is only the beginning. As the baby boomers retire and peak oil is reached, many other problems will surface. Specifically, Medicare and Medicaid threaten to bankrupt the nation. While Social Security can be fix with little pain if the apprpriate changes are made now, the real problem is not so much with solvency as it is with diminished buying power and the reliance on this program as the primary income during retirement.

The author emphasizes the top 2 problems with America - health care and free trade. He discusses why America continues to mortgage off its most critical assets to foreign interests in exchange for non-essential imports. The results of these trends have already registered, with most foreign currencies posting huge gains compared to the dollar. And without a uniform playing field, America can not expect to compete in a global free market system since all other developed nations provide health care and pensions by the government. As a result, jobs have been sent overseas. While some companies have shutdown permanantly, most have benefited from corporate migration to Asia. As a result, corporate profits reached a 60-year high over the past 4 years, accounting for the surge in the stock market in 2007. But as the author points out, the stock market has been in a bearish correction mode since 2001. He predicts that during this 2001-2012 time frame, the market will yield average annual returns of around 3%. Thereafter, things will get worse, as the effects of the baby boomers and peak oil will cause a global slowdown in the economy.

Soaring inflation and interest rates are expected, as well as soaring gold and oil prices. The analysis and predictions contained within this book are supported by an enormous volume of data, unlike anything I have ever seen. This is a very unique book and was well-thought out, unlike most out there. For readers who want to get through the material in a couple of days, I recommend the Condensed Edition, released in early 2007 and updated in certain spots. It is also considerably less expensive I highly recommend either editions. I own both editions, and I expect to refer to them for years to come.

Great information if you want to make the most of your 401(k) plan.

Joshua P. Itzoe, Author of Fixing the 401(k): What Fiduciaries Must Know (And Do) to Help Employees Retire Successfully

Great book. I wish I would have had this information 20 yrs ago. Well written and well organized. Follow the advice, and you'll do better in the long run. I'm giving it to my working kids to read.

i like this book ... but it really assumes you know a little bit about investing. the clear " take home" message is accentuated at the end of every chapter, which is nice.. but i still felt a bit stupid as i read it.
i think it is a good book.... easy to read... but not the " omg" i had hoped for.

Very helpful. Concrete information, easy to understand. I've recommended it to several friends. Good info for teachers w/403b accounts.

I really enjoyed Solin's little Smartest Investment book, so I decided to check out his 401K book also.

Solin is a DFA advisor so he promotes DFA index funds. He cites some papers which show that investing in DFA funds gives higher returns than using Vanguard Index funds. He forgets to mention that DFA advisors usually charge a 1% ER, so the return of DFA funds must be incrementally higher by 1% over the return of Vanguard index funds invested by the do-it-yourselfer.

Solin correctly rails that 403B's are terrible investment plans for teachers. He cites the case where the NEA was sued for collecting $50M in fees from investment providers.

Solin also points out that the Supreme Court said it was ok for Congress to retroactively change the tax laws for 10 years! This could be the justification Congress needs to begin taxing your IRA's, 401K's, and Roth IRA's not only on the current date, but 10 years retroactively! Very interesting food for thought.

Solin also correctly advocates that 401K funds should have to divulge actual expenses incurred versus hiding them so the investor can't find them.

One thing that Solin did not provide was a rule of thumb for deciding whether to invest in a high cost 401K investment or use a low cost taxable investment. I have seen some rules-of-thumb saying that if the 401K investment has total expenses over about 2% ER, then skip the 401K and go to a low cost taxable investment in index mutual funds.

Other than recommending DFA funds over Vanguard funds, I don't disagree with any of the 401K advice Solin gives in his book. If a DFA advisor with the 1% fee is what you need to control your behavioral finance tendencies to sell low and buy high.......then the 1% fee is probably worth it.

All in all, a very educational and short read for 401K investors.

If you are interested in learning more about index funds and investing, check out some of the books below.

Index Mutual Funds: How to Simplify Your Financial Life and Beat the Pro's
The Richest Man in Babylon
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
The Millionaire Next Door
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
The Bogleheads' Guide to Investing
Wealth: Grow It, Protect It, Spend It, and Share It
Retirement Income Redesigned: Master Plans for Distribution: An Adviser's Guide for Funding Boomers' Best Years

If you have read any book on America's financial crisis, you don't need to read this one. This book is written more like a catalogue of current financial and economic issues. The issues discussed in this book are very broad (see other reviews), but none is discussed in depth. After reading "Empire of Debt", "Demise of the dollar", and several other titles in the same category, I didn't find anything new or different in this book. The investment advice in this book is also very general and basic.

Although lack of depth, this book is informative and packed with charts and tables, which makes this title a valuable introductory course for anyone with no prior knowledge about American financial problems.

The author provides a comprehensive and fairly easy-to-understand discussion about how the U.S. got into the current economic mess (I'm writing this in November 2008) and the many failings of the Bush administration to correct a disastrous course of events. He also has a good deal to say about how the greed of Wall Street Bankers, Corporate CEOs, and consumers who are willing to live beyond their means all contributed to the crisis. He also points the finger at NAFTA and free trade. There is plenty of blame to go around and Stathis doesn't pull any punches. Despite an excellent explanation of how we dug ourselves into this hole, his "how to profit" solutions are somewhat general. Prudence would dictate that readers use his cautious recommendations as a starting point for additional research into the profitability of precious metals, bond funds, alternative energy companies, mutual funds and equities.

This is the best book on America's problems hands down. I am puzzled why I never heard of it before since the long edition was released in 2006. Stathis does not stop at his elaborate and very intelligent assessment of America's problems. This feat is alone monumental and has not been tackled by any other authors.

He understands that a depression involves a long period of socioeconomic decay and backs this up with societal, educational and other factors in addition to the pure financial waste and mismanagement that has plagued America for many years.

He makes some very bold predictions, many of which have already surfaced, such as the collapse of Fannie Mae and Freddie Mac, very high inflation, record prices for oil and gold, problems with the dollar, etc. He also predicts a decline in real estate prices of 30% from the peak (it is already over 23%). He makes too many credible predictions to list here and backs them all up.

His investment guidance is excellent (the previous reviewer obviously did not read the last 2 chapters). He advises to keep cash, buy gold, oil, healthcare and invest in China. The really great thing about this book is that he creates a general investment strategy for different types of investors. And he makes predictions about the stock market which have already come true.

In conclusion, this book is priceless. It will be valuable for a long time since he covers what happens to America after the real estate and banking problem. It is remarkable that the book was first written in 2006. I hope he writes a new one for 2009.

For now, I am reading his updates online. They're the most insightful I have come across. You should check them out

http://www.marketoracle.co.uk/UserInfo-Mike_Stathis.html

I've read this book several months ago and forgot about it. With the current crisis I read it for the second time. Mike has properly explained why we found ourselves in this economic debacle. The author is a visionary. Period. A must read.

This Book tells you literally nothing of any value on "How to Profit from the Coming Depression". It's a catchy title designed to sell books. The author doesn't deliver on that promise. My advice is to save your money or get it from the library.

This is a very good basic informational book that helps to clarify some of the rules of this type of investment. Recommend it to people who just want some basic knowlege.

Excellent reference on how to extract money from retirement plans. Gives specific requirements necessary to receive penalty free withdrawals. I highly recommend this easy to understand, plain english book.

The book is well organized. I was able to use it, immediately, to answer 'basic questions' to help a relative avoid a costly mistake and, more importantly, to learn 'options' that could help. Though I am an insurance agent, I've had little exposure to the 401(k), IRA, etc., market. This book is quickly moving me to the 'top 20% group' of informed agents and financial advisors. I highly recommend it, thanks to Ed Slott!

This book contains must have information for anyone owning an IRA. I had a previous version and wanted to keep current as I approach the magic age. This book tells you how to avoid fines and penalties from the dastardly IRS. Keep as much of your hard earned savings as possible for as long as possible by reading this book several times then saving it for future reference. I also marked many pages for my beneficiaries just in case. Do yourself a favor and invest in this book.

The reviewer plugging the "MarketBuster" book has totally missed the point of this NOLO book, which is given in the subtitle: Taking Your Money Out. The reviewer is talking about strategies for growing your account.

When you're in the savings/growing mode you're in a whole different situation than you're in when you're having to withdraw and/or live off your account. Going from one to the other requires a major change in strategy and, more important, a MAJOR change in mindset and, often, life style.

You're confronted with a whole new set of regulations, whether the reason for the change is retirement, inheriting an account, etc. The biggest change in mindset is that instead of the pleasant pre-retirement situation of watching the money accumulate, you have to recognize that you're now going to be watching it DECLINE. And unless you've got a tremendously more than sufficient account, you're going to have to live with the knowledge that you could outlive the account, possibly due to your own mistakes, some of which this book can help you avoid.

Four years ago I was confronted with making this shift a whole lot sooner than I'd planned, and with getting control of my retirement accounts under conditions where I had little help. Without the previous edition of this NOLO book, I would have been totally lost and probably made serious mistakes.

Now, one caveat: This book does not tell you how to MANAGE your withdrawals and account so as to produce INCOME; as one should expect from NOLO press as a LEGAL advice publishing house, it deals with the nuts, bolts, traps and hazards of the PROCESS of getting the money out.

In my situation I also found that there is not a whole lot of good material out there on the subject of managing your money and account IN the WITHDRAWAL stage, and this subject is affecting more and more people, as the country shifts from defined benefit (pensions) plans to plans like 401Ks and IRAs that place the job of investing and managing on the individual.

It is a whole lot more complex, risky, and stressful than most people realize, especially considering the general abysmal education (lack of) even young people receive on the subject, let alone people my age who were raised to count on pensions, etc. (And thank goodness for Social Security, which while far from adequate, can still supply a firm base of about 30 to 50% of a retirement income; although that's another issue)

So I recommend this book as essential for the basic procedures, but you will also need additional information on how to manage your income account(s). Personally, in addition to a good fee based financial planner, I found invaluable help from folks who have actually been doing the job for years, especially in the forums of Morningstar, for example. But you have to be on constant alert for scamsters and the whole "how to be a billionaire" publishing crowd. You're going to have to invest some serious time and effort in educating yourself for a the whole new job of retirement, and this book is an excellent place to start, preferably BEFORE you actually have to start TAKING YOUR MONEY OUT.

I never saved much because I didn't believe my small savings could make any difference and I never knew what to do with my money. Read this book to learn why saving is key and time (and compound interest!) are your best friends. The book also suggests money allocation strategies as you get nearer to your goals.

If you are looking at a quick, easy way to learn about 401(k) plans, then pick this up.

Knute Iwaszko does a good job of simply describing what it takes have a successful 401(k) plan. Through "Knutes Knotes" and good commentary, novices to retirement plans will benefit and enjoy. The moral of the book is save as early and as much as you can. As an added bonus, Knute demystifies some of those investing terms that many of us are afraid to ask about.

I wouldn't recommend this book for anyone who is knowledgable with 401(k) plans and investing. This book will just be filled with obvious common sense for them. I feel like I knew a decent amount, and still feel like I took a good deal of information out of it.

Your retirement just may depend upon it.

I write as a retired individual who started investing toward the end of my career. When I was young I was advised to save $20 a month, but to someone who was earning $27.50 a week it was not in the cards. Much later when my company came out with a plan to match up to 10% of my contribution I started saving. Unfortunately travel enticed me more and I routinely dipped into these funds. With all of this, I was still, in retrospect and un-knowingly, following his plan. It does work. Too bad for me, that I did not have sufficient discipline and was not satisfied with reading about "Far-away Places". All in all, everything worked out for the best. Give it a chance and you will be very pleased with the results. Way to go Knute!

Like a good diet or fitness book, The 401(k) Millionaire is a terrific inspiration to get started now, not just saving for retirement but working your money smart. Iwaszko makes it really hard to resist finally getting serious about your 401(k)--I guess because he's got a million good reasons why you should! In fact, excuse me, I need to go max out right now. The 401(k) "makeovers" in the book may be the best part about it. Totally worthwhile read.

In Coming Up Short: The Challenge Of 401(k) Plans, co-authors Alica H. Munnell and Annika Sunden collaborate in exploring the emergence and impact of 401(k) plans, the fastest-growing type of employer-sponsored pensions, with respect to the American public and national economics. Written with an especial eye toward the risks and challenges of a post-Enron scandal nation, Coming Up Short covers the special case of company stock, leakages from 401(k) plans, withdrawing from 401(k) funds at retirement, how to make pension plans do their job, and much more. Researched in-depth and filled with charts and graphs revealing its findings, Coming Up Short is a highly practical resource for not only financial service professionals, students and policymakers, but also lay individuals planning their own retirement. Highly recommended.

In this concise volume, the authors first lay out a bleak assessment of the future of private retirement funding in the United States, and then provide a clear roadmap to reform with straightforward remedies that will lead to better funding and more secure futures for retirees. This is not a diatribe against 401(k) plans, but rather a clear explanation of the shortcomings both in current law and in the strategies (or lack thereof) employed by individuals in such retirement savings vehicles. A good choice for an anyone with a 401 K plan, a great choice for anyone interested in the public policy of retirement.

Dire predictions over the future of social security divert attention from a more immediate reality. The fact is that social security benefits only replace about forty percent of pre-retirement earnings for the average worker retiring at sixty-five. Future retirees, our current generation of baby boomers, will need to develop other sources of reliable income to maintain their standard of living. The obvious supplemental program for workers atempting to build wealth is the voluntary 401(k) salary reduction plan. Technically this is a "defined contribution" plan, different from a defined "benefit" plan, with greater potential to accumulate wealth. Unfortunately a quarter of eligible workers fail to sign-up for it. Many do not begin to seriously save until they are fifty. Fewer than ten percent contribute to their maximum permitted level. And those who do contribute make basic investment errors at every step of the way according to the authors.

Among the authors' other findings:

Many employees expose themselves to excessive risk by aggressively stuffing their plans with their company stock. A misplaced sense of worker loyalty or a desire to emulate the success of their corporate leaders may partially explain why participants ignore the first rule of risk reduction, diversification. On the other hand a recent study concluded that twenty-eight percent of all participants had no stock exposure despite the undisputed historical outperformance of stocks over bonds.

Few employees buy an annuity with their plan assets. But an annuity contract addresses the biggest risk faced by retirees, namely that they will outlive their nest egg. It is telling that the main purchasers of annuities are large sponsors of defined benefit pension plans whose paramount purpose is to guarantee retirees a life-long stream of income. Surrendering control of a significant sum of money after years of accumulation is a wrenching decision. The choice of an annuity is particularly difficult for those who believe they are skilled at managing their money or who want to maximize their bequests once they pass on. Retirees may also fear extraordinary healthcare expenses that would not be covered by an annuity. My guess, however, is that participants who have never considered an annuity might be swayed here to consider a partial commitment to one.

The authors see the need for a set of default choices based on sound financial planning experience that addresses each of the shortcomings they discuss. Participants overwhelmed by their options need some structured simplicity in the process. These are choices that can be confirmed or declined. Workers can only benefit from more professional guidance and education, but employers should not risk liability if the desired investment results are not achieved. COMING UP SHORT has a grasp of the current research on its subject and clearly (albeit dryly) outlines the issues. Experienced financial planners will find this book sobering but will not likely be surprised by its findings. Policy makers will find this a balanced and objective study. Lastly, 401(k) participants who just skim it will be motivated to do more on their own behalf.

The authors, currently academic economists, trace and bemoan the demise of traditional defined benefit pension plans and make the case that 401(k) plans, which have significantly supplanted the "DB plan" on the employee benefit plan menu, will not, without a number of changes, adequately take the DB plan's place in providing retirement income for an important number of today's American workers. Citing a broad range of studies and the developing literature on 401(k) plans, the book explains in a workmanlike way the legal underpinnings of 401(k) plans (accurately enough for the authors' purposes), how 401(k) plans might operate, in theory and, most importantly, how they seem to operate in practice. (I say "seem" because, as the authors point out more than once, good data is hard to come by.) There is a large gap.

That is, there is a gap between what 401(k) plans could, theoretically, provide in the way of retirement income and what it looks like they will in fact provide. Employees (and, it is fair to say, employers) don't contribute enough to 401(k) plans in the first place. Employees, who are almost invariably asked to decide how to invest their 401(k) plan accounts, don't invest wisely. (In the case of investments in "Company Stock," the employer's own stock, employees often aren't even given the chance to invest wisely.) Finally, at the end of the road, premature withdrawals and the failure to annuitize account balances means that the opportunity to maximize what there is of the 401(k) plan's retirement benefit potential is often squandered. The discussion of annuitization, that is, the conversion of a single sum account balance into a fixed stream of income for life, may be the most useful material in the book.

Although the Munnell and Sunden offer several suggestions for "reform" of the pension system ("change" would have been a more appropriate word to use here), they conclude that their real goal is "to stimulate a debate that we hope will generate other ideas and options." To the extent that the book accomplishes this purpose it will be useful. However, long on data and data analysis and short on thought provoking discussion, I'm not sure that's going to happen.

Another difficulty I have is that I uncertain who is going to read "Coming Up Short." What's the market? It is certainly not written for the typical employee who wants practical information that he or she can use in understanding and making the most of his (or her) employer's 401(k) plan. (Not that we need another book on that subject right now.) Moreover, the politicians, bureaucrats and other inside players in the employee benefit plan game -- actuaries, accountants, lawyers, consultants, record keepers and the financial industry, primarily mutual funds and insurance companies -- are already well aware of the shortcomings of 401(k) plans as retirement plans. After all, neither by law are 401(k) plans required, nor by employer choice and design (except in rare instances) are they intended, to be retirement plans. The challenge for those of us who are interested in pension or retirement income politics is to first take one step backward and to acknowledge that 401(k) plans are not retirement plans.

This is an amazing book - it clearly explains how you can plan for your retirement and help you to actually calculate the numbers yourself without depending on a planner. The book made me feel very empowered with my own finances. Thanks for writing this book - its awesome.

Wow! Julie Stav is really a financial writer for our times. She speaks in clear language and provides a special (and easy!) system for you to figure out how to plan for retirement, save for a college fund, or even just get the most out of your 401(k). My favorite part was the exercise she had us go through to find "hidden assets" that I didn't even know I had! I would recommend this to anyone who is numbers shy but who knows that it is time to take their financial future into their own hands!

I found the book clearly written but was surprised to find no index.

I too am a hispanic woman. I was quite intimidated by stocks and expecially that scary stock page in the newspaper. I could not believe it. I am a college graduate and a bank employee and here I am completely baffled by investments. I work in a bank. But I caught the last 15 minutes of her PBS special and was captivated as to how simply she explained it without being condisending. I needed someone to explain how to take control of my own finances and all of those dummy books were not as helpful as I had hoped. I truly felt like a dummy!! I especially liked the road lane analogy. Because now I know in what lane and what speed to go. Even though I am 27 and the recommended/investing age starts at 25. I am confident that my retirement will be smoother than most of today's retirees. I thank you very much Julie, you improved my life by allowing me to understand it more clearly. Thanks again. If you are ever in Chicago, look me up. I owe you a cup of Starbucks mochaccino or something!!