Monday, March 19, 2012

What Color is your Parachute? (For Retirement) by Richard N. Bolles and John E. Nelson

Saving for retirement is often presented as a strictly financial question. In this interesting book, the authors make the point that a happy retirement contains multiple elements, (e.g. where you plan to live; how to have strong friendships; what hobbies / activities will you continue to do once you retire) that should also be taken into account along with financial concerns.

Notwithstanding the strong thesis of the authors, as I am only 36 and nowhere near retirement, I skimmed through the more "holistic" parts of the book and concentrated on the sections that deal with financial advice, in particular the first six chapters. In a very convincing discussion, the book begins by pointing out that the traditional pillars of retirement -- i.e. social security, employer pension plans and personal savings -- are becoming increasingly wobbly. The metaphor that is used is of a formerly solid three-legged stool whose legs are consistently being cut-out from underneath. Though this book is from the United States, this analysis will ring true for many Canadians.

This book offers good advice on how to better prepare for retirement in the future. This includes suggestions on how to become a more efficient saver, to tips on how to avoid many of the marketing tricks that are used in the retirement "industry".

4 out of 5 stars

Smoke and Mirrors by David Trahair

This is an excellent book that should be read by all Canadians who are interested in saving for retirement. Offering practical and straightforward advice, David Trahair tackles several myths that are put forward by the financial industry. Among the most important is the ubiquitous mantra that you should: a) start making RRSP contributions as young as possible; and b) maximize your contributions throughout your life. However, as convincingly argued out in the book, this strategy has important financial consequences that could actually cost you money by the time you retire. That is why instead of maximizing your RRSPs, the author advocates a strategy of optimization, i.e. calculate the right amount of money that you should put away in RRSPs, and then use the rest to pay down such things as consumer debt.

Another good section of the book explains why tax shelters can often cause more harm than good, and why trying to escape the tax man can sometimes be counter-productive. Then there is the discussion on why you may not need as much money as you think to retire, as well as an excellent chapter on why paying down your mortgage quicker is something that all homeowners should do. Some people, the author notes, think that by cutting down on restaurants, lattes or indulgences they can add to their bottom line. In reality, paying down your mortgage faster is not only a better move economically, but it could also allow you to continue enjoying the little things in life.

With practical exercises and honest advice this book is a must read. I throuroughly enjoyed it and highly recommend it.

5 out of 5 stars

Squirrel Seeks Chipmunk by David Sedaris

This book could have been brilliant. Similar to the classic Aesop's Fables, this collection of short stories contains a series of tales involving animals. Written with wonderful humour and at times brilliant insight, this book -- like the famous stories of Aesop -- is a study of human nature told through the form of animals. One story that particularly stands out is "Squirrel seeks chipmunk," which not only serves as the title of the book, but also offers a delightful analysis on relationships, and how the reality of past romances can turn into myth in our own heads with the passage of time.

Unfortunately, the brilliance contained in this book starts to fade by the end. For instance, in "The Grieving Owl," the second last story in the book, the narration devolves into sheer stupidity. Instead of insight, we are left with juvenile scatological humour -- and not even funny scatological jokes at that -- that undermine the first few wonderful stories. This lamentable progression soured me on this collection and left me shaking my head in disappointment. This could have been a delightful book, which is why the final portion was so upsetting.

3 out of 5 stars