A Failsafe Plan for Retirement Income

September 21, 2009 by  
Filed under Retirement Planning

Regular readers know that Mr. ToughMoneyLove is a baby boomer and that I write a lot about retirement planning at my Go To Retirement blog. That blog has garnered some substantial publicity lately, having been mentioned in both the New York Times and the October issue of Money Magazine.

Readers may also recall that I have been studying the work of Zvi Bodie, a professor of finance at Boston University.   I first mentioned Prof. Bodie in my post on How Long Can this Bear Market Last and later read his book on Worry Free Investing.  I’ve used Prof. Bodie’s ideas in our retirement income plan and now I’ve developed a system to help others do the same.

Reconsidering Equity Investing for Retirement Income

Prof. Bodie is an investing contrarian. The retail investment industry doesn’t like him. Why? First, because his research proves that equity investing does not get less risky over the long term. According to Bodie, that’s a myth perpetuated by the investment community as a matter of self-preservation.

Second, Bodie believes that equities are not where you should put money that you will need to live on when you retire. The investments that Bodie recommends you can buy yourself – without a broker – with no transaction costs. That also makes the investment community unhappy. You might enjoy reading this recent interview of Bodie in Money Magazine, titled You Can’t Handle the Truth About Stocks.”

There have been serious debates about Bodie’s conclusions. Perhaps you are a doubter of his theories of retirement investing compared to conventional buy-and-hold strategies. If so, I encourage you to read this in-depth article about a Retirement Portfolio Showdown between Bodie and Prof. Jeremy Siegel of the Wharton School. Siegel is a well known buy-and-hold proponent.

Also check out an article about the risks of equity investing for retirement and the possible development of a new government “R” bond. If the government is really moving in this direction, it signals official recognition of the untenable risks of using equities for retirement income security.

When I finished re-designing our new retirement income plan, I thought that others might be interested in doing what I did but with greater efficiency. Therefore, I expanded the worksheets I used into a system for retirement income planning. I call it the FAILSAFE RETIREMENT™ System. I even started a new blog dealing with retirement income planning called Failsafe Retirement.

If your are interested in learning more about the system and why it was created, read my post over at Go To Retirement called Creating a Plan for Guaranteed Retirement Income. There is even more information at the Failsafe Retirement site.

Reader Giveaway

I want to thank all of my readers for their support of Tough Money Love. If you will leave a comment on my Go To Retirement post prior to September 23 saying that you would like to own a copy of the FAILSAFE RETIREMENT™ System, you will be automatically entered in a random drawing for a free download. (Other comments will be deleted before the drawing.) Six random numbers will be generated by random.org on September 23. If your comment number is one of the six random numbers generated, I will email you a coupon code for a free download. (Be sure your comment uses a working email address.) The decision of Mr. ToughMoneyLove as to the winners will be final.

I also want to thank Mike at Four Pillars, John at the Mighty Bargain Hunter, Evan of My Journey to Millions, and Pinyo at Moolanomy for evaluating a beta version of the System and for sending me some helpful feedback.

If you have any suggestions for improvements to the FAILSAFE RETIREMENT™ System or site, please let me know.

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3 Responses to “A Failsafe Plan for Retirement Income”
  1. MasterPo says:

    That link doesn’t give much info on R bonds. It basically just slams all other investments, then, along comes the gov to save the day! (again)

    Here’s a link to a June 7th article that gives more details: http://www.investmentnews.com/article/20090607/REG/906059955

    Frankly, this sounds like a hidden TAX! Yes, I said TAX!

    Who is selling these “bonds”? The government!
    Who is buying them? Everyone will be required to (it’s being called an “auto-IRA”).

    WHat if I don’t want to participate? No can do.

    If it walks like a tax and sounds like a tax and smells like a tax…

  2. MasterPo says:

    That article doesn’t say much about the R bond. It mainly just slams stocks and then, once again, GOVERNMENT comes to the rescue of the poor abused citizen.

    This smells like a tax.

  3. Doug says:

    The big problem I have is TIPS and I-bonds are tied to the government’s cpi. A more believable cpi is found at shadowstats.com. It is normally 3% to 4% higher than the gov’t cpi (e.g. cpi = 1%, sgs cpi = 5%).

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