Book recommendation
Retired + Free
Hello Financial Healers,
It was a chilling 45 degrees as Colleen and I stepped out of our Acura, returning home from a last minute trip to the mall. As we unpacked our belongings and brought our baby inside, I texted Dad, “Do you have any more books for me to read?”
I had just finished The Richest Man in Babylon, and I was eager to digest even more financial wisdom.
Dad was busy working in his office, but he had time to text me a few ideas. The one that stood out to me was Pedro Adao’s Retired + Free. I’m so glad I picked it up.
Retiring with strength
It’s strange for a millennial to be thinking about retirement, but once you go bankrupt (unofficially), you start to think about the future. Hopefully, I’ll make some changes to avoid experiencing that same pain again.
I found Pedro’s book to be packed with money-saving information. It gave me lots to think about, and I hope it does for you, too.
Unfortunately, I can’t find Pedro’s book anywhere online (it says currently out of print on Amazon), so I’ll share a few sections here that stood out to me. My hope is that this information kicks off your brain to start thinking about retirement options that are beneficial for your future.
Disclaimer: before I continue, I should state that this email should not be taken as investment advice. If you want to explore options for yourself, please consult with a licensed professional.
On Mutual Funds
I enjoyed how Pedro covered the pros and cons of certain financial products. Among those he explored were IRAs, pensions, 401Ks, and annuities. But the most eye-opening section in his book was his breakdown of the average mutual fund.
What’s a mutual fund?
According to Investopedia, a mutual fund is an investment that is “managed by a professional money manager… [it] provides individuals with a portfolio that is structured to match the investment[’s] objectives.”
Mutual funds are one of the most popular investment vehicles in America, so having an idea about them is helpful.
Pedro makes some heart-wrenching discoveries about the fees that come with mutual funds. Jordan Belfort, the Wolf of Wall Street, (yes, that guy they made a movie about starring Leonardo Dicaprio), is also harping on this same subject.
Here’s Pedro’s breakdown of an average mutual fund, which I found fascinating:
According to a Forbes article, “The Real Cost of Owning a Mutual Fund,” Ty A. Bernicke’s research shows that the average mutual fund investor is paying 3.17% in fees annually… fees are charged and come out of your account even when the market is down and your account is going down. Take a look at this chart to see why Fees represent one of the Three Thieves.
Yikes! That’s a lot of fees racked up in 10 years. Pedro’s breakdown gives me pause to look at all the information before making an investment decision. This sounds obvious, but when considering financial products, read the fine print and ask lots of questions.
On Social Security
This information isn’t new, but Pedro explained it in such a plain way. I’ve heard some messages before on how Social Security is struggling, but no one has explained it so well.
Although I think Social Security is helpful for retirees, it’s good to be aware of the challenges facing the program. Here are Pedro’s thoughts:
When social security was established in 1935, there were 42 people working an contributing to Social Security for every 1 person who was drawing money out. If 42 people are putting $1 into a bucket, and if only one person is taking $5 out, that math will work forever. Today the ratio is 3:1 and by 2020 it will be closer to 2:1. Now, all of a sudden, two people putting in $1 and one person removing $5—that math simply won’t work for long. In 1935, the year Social Security came into existence, life expectancy of the average American male was 63 years old, and people couldn’t even qualify for Social Security benefits until they reached 65.
Today, benefits van begin as early as 62 and life expectancies have increased to approximately 83 years old. In fact, the fastest growing segment of the US population are centurions, people living to be 100 or more. So, not only are there significantly fewer people putting money into Social Security than taking money out, the people taking money out are living 20 years longer than was anticipated when the plan was created.
And here’s where it gets really interesting.
By 2020, it is projected that 92% of the entire federal budget will be needed to just fund Social Security, Medicare, Medicaid, and pay the interest on the federal debt. No wonder David Walker and so many other leading economists are alarmed and warning of the real risk of taxes needing to be significantly increased.
I doubt Social Security is going anywhere soon. It’d take a gutsy politician, who didn’t care about nuking their own career, to get rid of the program. The government will probably raise the retirement age again before making drastic changes.
Eventually, there will be some kind of reckoning, which is why at my age, it’s good to be seeking alternatives to supplement this future income.
Dad talks about Social Security often, and still considers it a useful option for many Americans. He even recommends you look into your Social Security benefits and calculate what your funds will be when you retire. Note: If you want to meet with Stephen and walk through your Social Security Benefits, you can do so here. (Just click the link and scroll down to this meeting option.) 👇
And that’s it!
Overall, I enjoyed Pedro’s book. Sadly, I can’t find it online, but I hope this email gave you some things to consider. It’s important we educate ourselves on the possibilities available to us. Dream about what your future looks like as a Prosperous Soul.
P.S: Pedro is a licensed insurance professional in the state of California, and is the founder of Fortress Financial Group. If you want to check out more about Pedro’s company, you can do so here.
Saving for retirement,
Cory De Silva
About: Cory De Silva is an American poet, singer/songwriter, screenwriter, actor, and filmmaker. He has released two studio albums, acted in three films, and published a small book of poetry. He is a graduate of CSU Long Beach, and lives in Northern California with his wife, Colleen, and their son, Bryght.