The Aleph Blog » Blog Archive » Book Review: The Bogleheads’ Guide to Retirement Planning

Book Review: The Bogleheads’ Guide to Retirement Planning

This was a book that I did not ask for.  Wiley has been sending some books unsolicited.  I’m not glad on all of them, but I am glad they sent this one.

Much as I admire Jack Bogle, I am not a Boglehead.  Low fees?  Yeah.  Diversification without overdiversification?  Sure.  Asset allocation?  Top priority.  Passive investing?  Best for most of us, but not me.  Quantitative methods don’t work?  Sorry, they do, if done right.  And aside from all that, I think (unlike Jack) that unhedged foreign bonds are a core part of asset allocation, especially if used tactically.  (Buy them when little looks good in domestic fixed income, like now.)

But in skimming/reading this book, I came away impressed with the acumen of those that call themselves “Bogleheads.”  They are not just dittoheads, but people who have thought hard about the retirement planning process for average individuals.

There is a decent amount of advice on tax planning.  What sorts of vehicles will make sense for most people?  How much can be contributed?

There is a decent amount of data on the usefulness of insurance, and it tends to follow my understanding of matters:

  • Avoid combination products unless you have a specialized tax planning need.  Keep savings separate from protection.
  • Don’t forget disability and health insurance.
  • Immediate annuities can be a useful replacement for some of the bonds in a retiree’s portfolio.

A small amount of the book deals with investing proper, but what is there is good, if simple.  It posits fund investing and passive investing, which again, is best for most people.

Another part of the book deals with the neglected liquidation phase.  How to do it?  What to tap first?  When should one file for Social Security, and what games can be played there?

Finally, the book considers what can go wrong in life (divorce and other disasters), and how to bounce back; also, how to find a good professional to help you with your specific needs, which “one size fits all” does not cover.


The book really does not deal with the troubles that will come in Social Security, Medicare and federal/state/corporate pension plans.  Also, by its nature, tax law is ephemeral in the US — in an era of rising structural deficits due to entitlement programs, who can tell what the tax situation will be 20 years out?  23 years ago, after the passage of the Tax Reform Act of ’86, who would have thought that we would create something materially worse in complexity terms than what TRA ’86 replaced?  Rates are lower, though, but I don’t see it staying that way for long.  We can look at Roths, but will the government preserve the tax-free treatment if things really get tight?

Also remember that this is a single purpose book — retirement, though they have some good sections on insurance and investing.  For a good, short, all purpose book on personal finance, consider Easy Money: How to Simplify Your Finances and Get What You Want out of Life.


That said, I found it to be a useful guide for average people that might not be up on the nuances of strategy for retirement that an average person might use.  Wealthy people should retain specialized advisors, because they will be aware of strategies that would not make sense for average people.

This was a book that I skimmed half and read half, because I’m familiar with the material and would just check aspects of sections that I was familiar with to see if they got it right.  If you want to buy it, you can find it here: The Bogleheads’ Guide to Retirement Planning.

Full disclosure: If you enter Amazon through my site and buy anything, I get a small commission.  Your costs remain the same.

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6 Responses to Book Review: The Bogleheads’ Guide to Retirement Planning

  1. q says:

    thanks for the book review. it sounds like something that i could use to get the conversation started with my wife as she is generally smart but has little tolerance for this sort of thing.

    > unhedged foreign bonds are a core part of asset allocation

    i agree in principle — it would be really helpful though to have a roadmap for this. how can i know what is what?

  2. JK says:

    I second that request for help in accessing unhedged foreign bonds – Maybe a post topic?

  3. “We can look at Roths, but will the government preserve the tax-free treatment if things really get tight?”

    I’ve been using that point to argue in favor of traditional, deductible IRAs (assuming one is eligible for the deduction) for years. The upfront deduction is a bird in the hand.

  4. VennData says:

    Any “Quant model” that outperforms will eventually stop outperforming.

    If it provides better non-risk adjusted returns, it will eventually have a huge drawn down.

    If you’ve got some “quant model” that can beat a “Bogglehead” Asset Allocation with re-balancing, publish it and let’s see in ten years. Heck, you can even make ex-ante changes.

  5. Venn — it’s not that simple. I use models as guides, but I try to look at what is overplayed. Different models go in and out of favor. I don’t have one single model — I have models, and I apply them when I think they have validity, like a repairman with a bag of tools.

    No one tool is *the* tool. I tried to describe this in my piece Risks, Not Risk. Even with semi-scientific tools, it remains an art and a science. Look for where risks are getting more than fair compensation — take those risks. Where risks are not rewarded, avoid them. That’s my method; it is a poor version of what Jeremy Grantham does.

  6. Rick Ferri says:

    Thanks for reviewing the book. As you know, this book was written entirely by individual investors. It is a testament to the individual investor that they can absorb, understand, and articulate back complex financial concepts. These ‘Bogleheads’ decided on their own what is important and what is hyped product pushing. The had no financial incentive and no hidden agenda as do so many book authors as well as bloggers. The
    ‘Bogleheads’ are genuine people who are offering genuinely great advice.


David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures.

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