Book review: The 7% Solution: You Can Afford A Comfortable Retirement

For those who believe they might still be able to retire by choice in this economy, financial adviser John H. Graves has written a book detailing how you can take control of your future planning.

Obviously there’s quite a bit of work involved, and while Graves takes somewhat of a dim view of the financial planning industry – a group he considers “nothing more than salespeople for lucrative, prepackaged financial products” – he concedes there are people who would feel more comfortable with professional advice and gives pointers on what to look for in that field. A reader can quickly presume that Graves isn’t all that pleased with the work others in his chosen avocation have done for the millions of Americans who would like to enjoy their sunset years without financial worry.

But the book is so named because Graves believes one can get 7% income from your portfolio, year after year, by being diligent and attuned to opportunities from a variety of sources. Writing that “Mr. Market” shows up at your door every day with a broad spectrum of financial choices, Graves points out that it’s rare you won’t send him away without a sale, but there are times where you can take advantage of him.

A key component of Graves’ strategy lies in value stocks, for studies have shown a vast majority of total stock market returns comes from dividends. Obviously share prices move up and down, but companies which have paid relatively high dividends for long periods of time should be the basis on which a portfolio is built, says Graves. Whether a company’s price per share is $10 or $50, a dividend which continues to increase each year is income that can be counted on towards the 7% solution.

And while stocks are a key component of the strategy, Graves doesn’t discount the role that bonds, mutual funds, annuities, and other more esoteric investments like REITs, master limited partnerships, and business development companies, among others, can play in a well-rounded portfolio.

I have no doubt that someone with the time and a little bit of knowledge gained from this book and other sources Graves cites within can indeed build a reasonable portfolio which can provide income. Given that, The 7% Solution can be termed as a success, and Graves cites a few of his own clients as success stories at the end of the book. But I believe there are a number of flaws within his assumptions.

For one, Graves believes the Baby Boomer generation is a generation of savers. This may have been true at one time, but while many millions had something set aside for their retirement the sad reality is that too many counted heavily on the fallacy of home equity and on maintaining a full-time job for the remaining years until they decided to stop working, figuring those geese would lay the golden eggs while they spent what they earned to keep up an opulent lifestyle, one which outpaced they could truly afford. If a Boomer has seen his job and savings wiped out by the Great Recession and instead finds himself in debt up to his eyeballs, 7% of nothing is – nothing.

And while retirees of today can still rely on Social Security, there’s no guarantee that it will be here for future generations. Unfortunately, while many of Graves’ principles have stood the test of time over the last several decades, there is a wild card that no one can predict and that’s the impact of government policy on retirement. For example, Graves devotes the penultimate chapter in his book to tax policy for retirement planning, but that’s among the most susceptible to change at any time.

Certainly his book is fine for the time being, but there’s another question left unanswered: what happens if we reach a financial Armageddon where, say, the government decides to take over 401.k accounts? Those rumors have floated around occasionally since the 2008 financial crisis and with government holding trillions of dollars worth of unfunded liabilities, anything can happen. And aside from land and improvements thereon Graves only writes about paper assets, a fact which may prove a disservice in difficult times when hard assets like precious metals could be useful in saving for retirement.

Retirement is a phenomenon unique to the last few decades, since our ancestors worked until either they dropped dead or their bodies could no longer bear the strain. With the rise of capitalism, people were finally able to save money and insure themselves a relative life of leisure in their golden years. It’s also provided authors like John Graves a lucrative market for books like The 7% Solution.

The do-it-yourself approach to retirement planning Graves espouses is a sound one, even if it puts people in his chosen line of work out of business. As a primer, you could do much worse than invest in the book and put the ideas Graves suggests to work. But be aware that government interference has been keeping us from realizing the real 7% solution of annual GDP growth, so don’t count on Mr. Market to keep showing up at your door.

Disrupting the obesity narrative

A book by Mike SchatzkiThis is my latest piece for PJ Media, a book review.

For starters, the full title of Mike Schatzki’s The Great Fat Fraud is almost as long as the book. The paperback version of this volume only weighs in (pun intended) at 197 pages, and the conversational tone author Schatzki adapts makes this a book easily read in an afternoon, as I did.

I’ll be up front with you: if you’re a born skeptic who has extra pounds around the middle — a description which fits me to a “T,” unlike those pairs of size 40 pants which mock me from the back of my closet — this book provides the perfect excuse for you to not worry about dieting or strenuous exercise. Next to quitting smoking, losing weight is the most popular New Year’s resolution, so it seems an appropriate time to peruse this book and its message.

(continued at PJ Media…)

It looks like Maryland CAN

Following up on a story that was so last year…love those New Year’s jokes I can make for a few days!

Today I received good news from my blogging friend (Potomac TEA Party Report) Ann Corcoran. She’s helping to organize the first Maryland CAN (Conservative Action Network) conference in Annapolis next Saturday. Alas, I cannot be there due to a previous commitment but she tells me that they’ll break the 100 mark in registrations this week. When we discussed the event, I surmised that “50 is a success and 100 would be huge” – so color it huge!

Among the speakers will be a galaxy of conservative activists from Maryland and beyond, with perhaps the most nationally famous being ACORN whistleblower Anita MonCrief. She now heads up an organization called Emerging Corruption. Bios on many of the remaining speakers can be found here.

Considering we had about 250 for the GOP convention (held in the same building) and they were supposed to be there as elected officials, drawing triple-digits for this conference is a good first step. The idea is to work and plan our moves for the next two to four years in the wilderness (as far as state politics is concerned) and manuever ourselves into position for success in 2012 and 2014. For example, it may be a great stop for those who are considering running against Senator Ben Cardin and for Congress against a slew of Maryland incumbents.

Certainly I’m sure Ann and other Maryland conservative bloggers will be taking up my slack in covering this event. I’ll keep my ear to the ground and see what develops.

Circling back around

Back in March I reviewed a book by Terri McCormick about rough-and-tumble Republican politics called What Sex Is A Republican? and while I give the book a fairly decent review I honestly didn’t think anything further of it until last night. (It’s probably got my record for longest post title since I placed the whole thing in the headline.)

However, it just so happened that my review was linked by Aaron Biterman at the Republican Liberty Caucus blog – unbeknownst to me Terri had tossed her hat back into the ring for the Wisconsin’s Eighth Congressional District seat she sought in 2006, losing in the primary.

I’m going to quote a small portion of Biterman’s remarks in the post, then come back around and ask a question.

(Eventual 2006 Republican nominee John) Gard and the National Republican Congressional Committee spent $2 million to defeat her in the primary. McCormick received 32 percent of the vote and established herself as a Republican maverick. The 32 percent she received represented the segment of Wisconsin voters frustrated with George W. Bush’s policies, pissed that the Republican Party Establishment refused to allow the independent-minded voters of the district decide the primary, and excited about Terri McCormick’s message.

Establishment Republican John Gard lost the General Election to Steve Kagen in 2006 and 2008. Some Wisconsin Republicans incorrectly blame Terri McCormick for his defeat in both election cycles.

Now, if I substituted the name Bob Ehrlich for John Gard, Brian Murphy for Terri McCormick, and Martin O’Malley for Steve Kagan and the results were similar, how much do you want to bet (rhetorically, of course, since they don’t allow internet gambling) that Brian Murphy will be a scapegoat too? I think Brian Murphy could very well get 32 percent or more, at least in some areas of the state.

In truth, I didn’t percieve in my reading of McCormick’s tome that she was exceptionally conservative – and perhaps it was because she was writing it to a more general audience of people who are at the beginning stages of getting politically involved – but in light of the fight she put up to bring charter schools to Wisconsin she at least came down on the right side of a key issue.

In the meantime, I may have another book review to write. In truth, the purpose behind writing the first one was twofold: one, I was asked to, and secondly I intended it for publication at Liberty Features – but apparently they stopped doing book reviews just as I read McCormick’s book. But someone saw it and I suppose that’s what counts.

Perhaps once the primary season wears down and I have fewer campaigns to track I’ll have a review of the book I just got from fellow Red County writer (and Marylander) Ron Miller. I’ve read the beginnings of it and the book is promising. In the meantime, it looks like sort of a day off from campaign stuff as it’s Friday the Thirteenth so I’ll enjoy it.

Book review: What Sex Is A Republican?: Stories from the Front Lines in American Politics and How You Can Change The Way Things Are, by Terri McCormick, M.A.

Perhaps Terri McCormick didn’t have those who became politically attuned thanks to their local TEA Parties in mind when she started to write her book, but it comes at an opportune time for those who would like to expand their newly-minted political involvement into a bid for seeking elective office.

While TEA Parties weren’t being contemplated yet in the early 1990’s, Terri McCormick was leading a grassroots effort of her own. After becoming involved in her children’s school, Terri worked for change within the system but was stymied by the powerful teacher’s unions. She was forced to build a broad coalition and take her fight to the statewide level – through her leadership the state’s legislature finally adopted the necessary reforms and allowed the formation of charter schools.

At times, What Sex Is A Republican? does read like a how-to textbook for would-be politicians, including a short summary of bullet points after each chapter. It’s a method of giving some of the nuts-and-bolts of campaigning from a woman who has been there: after spearheading the drive leading to charter schools and educational reform in Wisconsin, Terri McCormick ran for and won a seat in Wisconsin’s state legislature in 2000.

But even more telling in the story is McCormick’s heavy emphasis on the political gamesmanship once a candidate wins office and arrives ready to serve constituents. Her book talks at length about the treatment she encountered while in the Wisconsin House, couching the dealing and backbiting she witnessed in Machiavellian terms.

And while she decries the “vertical silo” of radical partisanship exhibited by many in both parties, her most bitter venom comes at the expense of what Terri calls “front row politicians,” the party leadership which controls how the legislative game is played. Those who have that sort of political power determine which bills are moved, which amendments are added, and even select the staffers who work with their inferiors, who are relegated to the back benches.

Yet the political shenanigans didn’t stop there. In 2006 McCormick opted to leave the Wisconsin legislature to make a bid for Congress, only to find out after she’d made the decision that she was not the “chosen” candidate in the race and that Beltway Republicans had already decided to back her opponent. Terri noted during a campaign appearance afterward that, “I am running for the Eighth Congressional District against George W. Bush.”

In writing What Sex Is A Republican?, Terri McCormick manages to reinforce practically every stereotype of the person we’ve come to expect as a career politician: arrogant, vainglorious among his peers, and exhibiting an insatiable lust for power. Sadly, she also correctly points out that most regular folks are drummed out of the political business because they just have too many morals to get along in such a system.

Still, McCormick obviously believes that, despite its faults, there is a place for good people in our political system. Moreover, she feels that, with the assistance of a populist campaign built upward from the grassroots, it is possible for people who want to be there for the right reasons to run and win despite today’s political climate. While her book could have been tightened up a little bit, Terri McCormick’s case for convincing a would-be candidate he or she can make a difference is strong and those who aspire to political office, particularly women, may well find this a helpful guide to read and follow.

Perhaps Terri McCormick didn’t have those who became politically attuned thanks to their local TEA Parties in mind when she started to write her book, but it comes at an opportune time for those who would like to expand their newly-minted political involvement into a bid for seeking elective office.

*****

Disclosure: I was asked by The Cadence Group to review the book and they sent it along to me to do so.