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Book summary and concept additions since publication
Nominated for many awards as well as a research paper submission. The link will take you to that section of the website for more information. Objective: Remove the mystique and apprehension of personal financial planning through a user friendly map that helps people prioritize their finances better and to visualize the way, i.e. where to start and how to proceed in general, so more people will take the steps to begin their journey with confidence.
Audience: Wealth Odyssey is
a
- written in an easy-to-read manner for those who are somewhat intimidated by personal finance, and for those who are not; - written to provide everybody with the central perspective of Net Worth and what that means in the 21st Century with changing pension plans and Social Security; - written for those who know they don’t know much about finance, or for those who do, but want to see the larger picture of how the elements fit together; - written for the very people who want to become more comfortable with financial planning in order to better visualize their future.
(click on cover to browse inside) Premise of the story:
Brief Synopsis of Story (with key story terms and concepts in bold): Wealth Odyssey discusses a simple way to determine how much you need to retire so you know when you can retire. Wealth Odyssey shows you how to track your progress, make quick and easy adjustments due to market or other changes, and how to factor in Social Security and its possible changes. Wealth Odyssey shows you how the various financial topics relate to each other so you can make better, more balanced, financial decisions and choices. Wealth Odyssey makes your financial journey easier. The Wealth Odyssey Road Map (WORM) helps them relate to the purpose of money — to support their standard of living today and to build wealth to support standard of living tomorrow.
Wealth Odyssey provides invaluable insight in order to address and understand the critical impacts of changing Social Security and Pensions and how to easily visualize the adjustments the reader can make in their personal planning now and in the future. By shifting your point of view just a little from income-centric to net worth-centric, the process of financial planning, and how all the financial solutions fit together, becomes much clearer.
(click on cover to browse inside) |
I place this press release here because it is also a good summary of the book, written by an independent source announcing the nomination for the Independent Book Publisher's Award (IPPY): (Link to pdf file)
Financial Planning Book Lays Out Big Picture
Lincoln, NE—December 9, 2005—Personal finance has become increasingly difficult with Social Security and pension reliability up in the air. Wealth Odyssey: The Essential Road Map for Your Financial Journey: Where Is It You are Really Trying to Go With Money? by Larry R. Frank Sr., MBA, CFP®, discovers a way to look at financial planning as a whole and finds that success is asset-based.
Written for newcomers and old pros alike, Wealth Odyssey measures success and progress through your net worth instead of your salary. Using the Wealth Odyssey Road Map (WORM), you can visualize where your money is spent and where it is going. Wealth Odyssey tracks your money from today’s living expenses, to your debts and assets, to your retirement and subsequent vacation to the Bahamas.
Wealth Odyssey covers the common misconceptions about personal finance like relying solely on a retirement plan to fund the second half of your life or avoiding economic and market impact by not participating in them. You'll also find out how your 401K plan relates to your health insurance and why knowing this can increase your long-term wealth.
Wealth Odyssey gives you a goal before you invest, a map for objective evaluation as you go along, and the knowledge that with or without Social Security, you'll enjoy retirement.
Wealth Odyssey is a nominee in the Finance, Investment, Economic category of the 2006 Independent Book Publishers Awards (aka the IPPYs). The IPPY rewards those who exhibit the courage, innovation, and creativity to bring about change in the world of publishing.
About the Author:
Larry R. Frank Sr., MBA, CFP®, has spent twenty-six years of financial research focused on teaching people to make smart decisions to grow and protect their net worth. He holds a BS cum laud in physics and an MBA in finance.
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Additions to the concepts since publication
Retirement expense and income category discussion. Survival, Desired and Supplemental separation of expenses to help better plan retirement income requirements. This was not discussed in the book.
More detail on the application and use of SOIL, Wealth Rule, Progress Line - expands Chapters 3, 5, 12 and Appendix B. The research paper .pdf discusses the application of these concepts in detail. See also "Author Interview" Q#'s 6 - 9. for a discussion on these topics.
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Social Security is a source of income that reduces your net unfunded retirement SOIL. For Social Security Publications and a lot of information see http://www.socialsecurity.gov/pubs/englist.html. The Social Security Benefit planner website is http://www.socialsecurity.gov/planners/ . Some key search terms that address common questions people have are: "earnings test" , "spousal benefits" , (especially if they take their spousal benefit at their age 62 versus waiting until their full retirement age), "break even age."
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College and/or Career Planning. This fits into the Chapter 3 discussion of Intermediate Goals and Aspirations. One approach to college planning is to determine the student's interests first. A good website for this is the US Department of Labor's Kids' Page Career Information for Kids. (Note: this would also be helpful for adults who have certain academic interests as a starting point - or use the other links on that site to find career and job information). Discover yourself with these tools through the link here. Once you know yourself, then you can find a college or university that best matches you. Students who take the PSAT/NMSQT will have free access to MyRoad—the College Board's online majors, college, and career exploration program. An online program to explore career choices is available through The Career Key.
Additional websites that provide insight into helping the student discover themselves and fit their strengths with a compatible college or university are http://greaterexpectations.org/ (see for Students & Parents link);
National Survey of Student Engagement (NSSE) (see Student & Parents link - and their guide for Parents and Students Making College Decisions: "A Pocket Guide to Choosing a College: Are You Asking the Right Questions?" );
National Center for Education Statistics (NCES) located within the US Department of Education;
EDFund, a financial aid and college planning tool.
Finally, seek out the college or university that provides the degree in the area of career interest through the www.collegeboard.com website (this website also walks you through planning, finding, applying and paying for a college education). This is also a helpful approach for career or job changes as well. Other "walk you through the process" sites are
Peterson's - College and Graduate School Planning, Test Preparation, Financial Aid, Career Advancement,
FastWeb: Scholarships, Financial Aid and Colleges, and
Savingforcollege.com - The internet guide to funding college and Section 529 college savings plans.
Additionally, you may also use the US Department of Labor's Bureau of Labor Statistics' website to research job opportunities in those career fields of interest - to answer the question: What are the various college degrees that apply to the jobs in the area that I have interest in? Then match those degrees with colleges and universities that provide that degree and best matches you.
There are many ways to approach how to determine the college, university and degree. But, they all should first begin with a good understanding of yourself.
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Scenic Side Trip 4.2: Budgeting. See Chapter 11 addition right below. Also see the PowerPoint presentation in that section that illustrates how to approach budgeting.
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Scenic Side Trip 5.2: The Economy as Source of Wealth. A website where an overview of the US Economy is available from the US Department of Commerce Bureau of Economic Analysis. Another helpful website is the National Bureau of Economic Research. To keep up with Social Security policy issues, which have a big impact on how much of your SOIL is funded, see the Social Security's Office of Policy website. Also good: http://www.economy.com/dismal/ and http://www.census.gov/econ/www/ . Finally, the Federal Reserve's education site is helpful at http://www.federalreserveeducation.org/fred/ with many different short explanations about many different topics about the economy and saving and investing.
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Scenic Side Trip 6.1: How should someone approach paying off all their debt?
Before a person wraps them self into details, they should step back and develop an overall payment strategy from a financial planning point of view. Often people lump all debt into the same category. Recall that there are three kinds of debt. First, bad debt – which is consumer or credit cards; they are still paying months or years later on consumption that occurred long ago, this is the first debt that they should pay off through extra dollars. Out of control, this category leads to bankruptcy.
The second is necessary debt. This includes education loans and transportation or auto loans. Both can be considered necessary. The first, for them to enhance the potential to earn more and improve their living standards; as compared to their not having further education. The second to travel to the work site for the same reason, to earn more than transportation costs to enhance their living – long commutes today illustrate this. While they pay more on consumer credit, they should continue with minimum payments on necessary debt. Why? Education loans accumulate interest when in deferral status when they are no longer a student, making payoff harder; autos are repossessed when not paid for – and people often over consume transportation by buying more car than they need only to be parked at home or at work. Once they have paid off consumer debt then they can allocate more dollars to these debts.
The third is good debt. This is debt on an asset that grows in value over time – the home, and its mortgage. Only after they have paid off the other two kinds of debt should they consider paying additional dollars to repay the mortgage. Here is where they should evaluate paying extra towards their mortgage, or put these dollars towards retirement instead. Nothing worse than one being retired in a paid off home and little money to pay for groceries, utilities, and the rest of life’s expenses.
The Federal Reserve's website has a number of educational credit links, with this link (http://www.federalreserveeducation.org/pfed/indextext.cfm#Loans & Credit) taking you to just one of many areas about credit on their site.
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Scenic Side Trip 9.1: The Great Modeling Debate
Here is a recent great research article which illustrates the point of this Scenic Side Trip. Click on link to read the pdf file; or click on photo to read article online:
Will The True Monte Carlo Number Please Stand Up?
by Moshe A. Milevsky and Anna Abaimova
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Chapter 10. A very good discussion of immediate annuities (fixed and variable) can be found in a work by Ben Stein and Phil DeMuth (additional reading listed below in Appendix E). New since their and my book written: An income stream can be obtained from annuities today through "Living Income Benefits" (a very recent development at the end of 2005) without irrevocably turning the money over to the company. The pro's and con's of this type of rider should be compared to the traditional methods as well.
Note: This is also an excellent work that explains how to invest through a diversified portfolio to implement your plan - the implementation step once you have developed the plan. Mr. DeMuth goes into great detail explaining the withdrawal research methodology, however he makes the application of it harder than it needs to be. He also uses an "old fashioned" percentage of current income estimate that Wealth Odyssey makes obsolete - whereas you can determine the dollars today using SOIL - which is much closer to the truth than picking some estimated percentage of income from a range of possibilities (typically planners in the past suggested 70-85% of current income); the SOIL concept helps you more precisely determine your income requirements. By understanding the concept of SOIL and the Wealth Rule, you become more aware of the impact of spending and saving choices you make today on retirement feasibility tomorrow.
Chapter 10. Frailty and Long Term Care.
See The disappearing inheritance by
This website can be helpful in determining issues and options to help pay for yours or a parent's care: http://www.weissratings.com/LTC_plan_intro.asp
To find a nursing home, here are three sites: http://www.mynursinghomes.com/ , http://www.medicare.gov/LongTermCare/Static/Home.asp and Medicare's Nursing Home Compare engine.
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Chapter 11. (And Scenic Side Trip 4.2) More About Budgeting.
The book All Your Worth (details below in Appendix E resources) has an extremely good point of view and approach to developing a budget. The point of view is working with the big picture and the large items ("Dollars are worth more than pennies!") in three major categories. Their exercises fit the philosophy of Wealth Odyssey - budgeting is not an exercise in denial but more one of liberation and discovery.
Budgeting is simply learning how to manage your cashflow - making sure money-out does not exceed money-in. Wealth Odyssey approaches cashflow from the perspective that you already have a decent handle on your cashflow. If this is not true, then All Your Worth, The Ultimate Lifetime Money Plan will assist you to get a handle on your cashflow, so you can apply the concepts in Wealth Odyssey more effectively.
Once you understand the larger issues related to budgeting and cashflow, you may have accumulated past debt you would like to clear up first (as suggested in All Your Worth); this calculator (debt advisor - what's the fastest way to pay down your loans?) found at bankrate.com.
PowerPoint presentation that illustrates overall budgeting concepts. This PowerPoint illustrates a cashflow model where you send THIS month's income to savings. This month's expenses are being paid by LAST month's income that were in savings, but are now flow to your checkbook. The method also reserves money in savings for expenses that do not occur monthly. This method always has money to pay for the coming month's expenses. The presentation also provides a sneak peak at the underlying concept in the book referenced above, All Your Worth.(Click here for pdf version).
Free software online for your budgeting ... simpler to use than Quicken or Money www.expensr.com
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Dynamic online capability to understand Credentials of advisors - Appendix D.
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Additional Reading resources - Appendix E:
All Your Worth. The Ultimate Lifetime Money Plan. Elizabeth Warren and Amelia Warren Tyagi. Free Press, New York NY. 2005.
Calculus of Retirement Income. Moshe A. Milevsky. Cambridge University Press, New York, NY. 2006.
College Unranked. Ending the College Admissions Frenzy. Essays edited by Lloyd Thacker. Harvard University Press, Cambridge MA. 2005.
Conserving Client Portfolios During Retirement. William P. Bengen. FPA Press, Financial Planning Association, Denver CO. 2006.
Deflation. What Happens When Prices Fall. Chris Farrell. HarperCollins Publishers, New York NY. 2004.
The Financially Intelligent Parent. 8 Steps to Raising Successful, Generous, Responsible Children. Eileen Gallo, PhD. and Jon Gallo, JD. New American Library, New York NY. 2005.
The (Mis)Behavior of Markets. Benoit Mandelbrot. Basic Books, New York NY. 2004.
The Origin of Wealth: The Radical Remaking of Economics and What It Means for Soceity. Eric D. Beinhocker. Harvard Business School Press. 2007.
The Retirement Savings Time Bomb. And How to Defuse it. Ed Slott. Penguin Books. 2003.
Yes, You Can Still Retire Comfortably! The Baby-Boom Retirement Crisis and How to Beat It. Ben Stein and Phil DeMuth. New Beginnings Press, Carlsbad CA. 2005.
There are many other "money" books with links to descriptions at Dr. Laura Schlessinger
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Additional information for Appendix F - dynamic and ongoing research into sustainable withdrawal rates. Note that the Wealth Rule combined with SOIL is the practical application as to how to make such research useful in our everyday lives.
Appendix F - www.early-retirement-planning-insights.com is an excellent website into safe withdrawal research and the issues and factors present. More readable than the academic oriented articles of the previous link. Again, it is research like this that forms the basis behind the "Wealth Rule" and its' application to your SOIL to simplify retirement planning for you.
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You may also read more detail and examples how to apply the concepts in Wealth Odyssey on these website pages: Author Interviews Changing Retirement Planning Story Ideas
Page updated 15 Oct 07
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