Wes Moss * McGraw-Hill Education * June 3, 2014 * 288 Pages
You Can Retire Sooner Than You Think is made up of four parts: 1) what makes a happy retiree, 2) the 5 money secrets of happy retirees, 3) minimizing investment risk, and 4) all the cool stuff you can (and should!) do in retirement. It was easy to read, for the most part–though I suspect the complexity of Part Three would overwhelm beginner investors. (I don’t consider myself a beginner, but it overwhelmed me!)
One of my favorite parts of the book is when Moss describes his Bucket System, a system for allocating your investment income. He says investors should have 4 metaphorical buckets:
1) Cash Bucket. The most stable and liquid, this bucket is all cash and FDIC-insured accounts. It includes your emergency fund and any other cash you might need in the next two years. Very low interest rates.
2) Income Bucket. This bucket is for various types of bonds that earn income for you, hopefully around 3 to 4 percent. Diversification of this bucket is important.
3) Growth Bucket. This is all stocks, but you choose which stocks based on your age and risk tolerance. You want to try to have a 5 to 7 percent rate of return in this category. Retirees may want to focus more on dividend-paying stocks. I really enjoyed reading his take on this category (i.e., stocks).
4) Alternative Income Bucket. I understood this bucket the least, but this is for “everything else” that doesn’t fit into the other buckets. Moss gives examples such as Energy Royalty Trusts (publicly traded oil and gas trusts) and MLP stocks (energy storage companies), both of which don’t pay traditional dividends or interest. You should earn a 2 to 4 percent return in this category.
You balance your buckets according to your needs, but you should rebalance them every 6 to 12 months. The Bucket System is an interesting way to categorize investments, and I found it made complicated subject matter easier to understand.
Overall, there was a lot of simple and useful financial information in this book. I was also surprised by (and appreciative of) how much Moss focused on the psychological factors of happiness in retirement–factors like keeping busy and having hobbies, going on vacations, maintaining a strong social network, etc. He took a holistic approach to post-retirement happiness, and I thought that was a refreshing perspective.
Advanced Reader Copy provided through Amazon Vine.