The Number: A Completely Different Way to Think About the Rest of Your Life [Hardcover]

The book is very well written, easy to read, informative, yet really unpractical. The author is bent on rendering a not so complex issue really Byzantine. The amount of money you need to retire so your lifespan does not exceed the one of your retirement portfolio is not that complicated of an issue. Let's say you want to retire on $100,000 a year. Assuming that you and your spouse will pull $30,000 a year from Social Security, and $20,000 a year from old defined benefit pension plans; you have a gap of $50,000. As a short cut, you can use the Dividend Discount Model to value stock. Using a conservative after tax investment return of 7.5% and a long term inflation rate of 2.5%, by dividing $50,000 by (7.5% - 2.5%) you need $1,000,000 in your own retirement funds (401K, IRAs) to retire. In reality, you need a bit less because the Dividend Discount Model assumes you live forever.

However, the author ponders on the above number for over 250 pages. What if the Social Security system is semi-privatized as the Bush administration is talking about? If you are over 55, the current system is grandfathered. Given Bush momentum, Social Security reform as of now is not forthcoming anyway. How about if your employer goes bust, and your pension evaporates. Depending on who is your employer this may be an unlikely outcome. Otherwise, the Government picks up the tab and typically pays you at least 50 to 75 cents on the dollar. If this is a concern, use just 50% to 75% of your expected pension income in the calculation mentioned above. The author mentions other complications including the fallacy of using average returns in your calculations and instead using Monte Carlo simulation method. Now some mutual fund companies have included Monte Carlo engines within their retirement advice section of their websites. This is however not for the faint of heart from a quantitative standpoint. A nifty short cut around it, is to use different scenarios with overly conservative investment returns (within the calculation shown in above paragraph) to explore some "what if" worst cases.

The author has also a very strange idea of what the middle class is. He clearly confuses the Easterners top deciles with annual income over $200,000, net worth in the millions, and very self-actualized and successful careers with what the middle class really is. Well, people like that really don't have to worry much about the numbers. For the author and this group, it is pretty easy to say retirement planning is a lot more than just about the numbers.

If you want practical advice on retirement planning and investing, let me recommend a far superior book: "The Random Walk Guide to Investing" by Burton G. Malkiel.

Eisenberg's premise in "The Number" is at first blush sound. He defines "the number" simply as "How much money do you need to secure the rest of your life?" Focused squarely on the Baby Boomer generation, although the dust jacket expands the audience to include "...every man and woman over thirty," the reader becomes acutely aware of a looming financial crux. With unsustainable spending rates and little or no preparation for retirement, many Baby Boomers find themselves at the crossroads of their retirement woefully unprepared and asking the question just how much is really enough. The concept of condensing retirement simply to "the number" is intriguing, but unpractical as a financial solution.

Fortunately, "The Number" reads well and quick. Delivered in three parts (Chasing It, Figuring It, and Finding It) through 17 chapters, "The Number" tries grappling with a nearly insurmountable topic and one that is hard-tested by even suggesting a rote method of dealing with it. Indeed, it is not until the reader reaches page 156 that the author advises "developing a realistic lifetime income plan" as a potential solution! In very next chapter, however, Eisenberg dully provides the reader with the flip side of the coin. The reader is indulged with a protracted discourse into the theory that perhaps, just maybe, the oft-termed "number" is not numerical dollars, but rather "...meaning, fulfillment, and life's true calling?"

The author's use of selective statistics is superb. Consider:

"Of workers fifty-five and older, only one in four has invested assets of more than $100,000; one in three has less than $50,000."

"1 percent of the population--nearly three million people--currently has as much money as the hundred million people at the bottom of the ramp."

"...one of every 125 Americans is today a true millionaire..."

"Roughly 80 percent of those eligible do indeed put some money into a 401(k) plan--typically 5 to 6 percent of their pay."

The statistics are eye-opening and woven seamlessly into Eisenberg's work--but why not cite them with the appropriate source to add further credibility to their substance?

In addition to the total lack of citations on the statistics, the author probably should have partnered with several respected Financial Advisors to contribute or even co-author the book. I had trouble putting credence in the author's qualifications to write a work so many Boomers will probably take as financial advice verbatim. Barring his generational fit and Rolodex of peers, this is a tough sell if the reader is looking for practical, no-kidding experience from the field. On a marketing and sales standpoint, however, this book IS a phenomenon and perhaps the author primarily wanted to bring to light, in the form of this work, discourse on what he considers one of the least talked-about subjects for the Baby Boomers. If that is the case, then this book has indeed succeeded. It brings to light the many assumptions, conflicts, and unspoken conversations about the unique challenges each Boomer is faced with when developing a very personal "number." Well marketed!

I picked up The Number hoping for some practical tips--maybe formulas and exercises to help me plan for the future. But halfway into the book, I was so depressed I could barely muster the energy to turn the page.

People with many millions more than me are worried to death that they don't have enough for retirement. And here I was thinking we were pretty well prepared to retire comfortably.

Clearly, I'm completely out of touch--or else Eisenberg is.

Eisenberg's world is downright unpleasant--he says people are more willing to talk about what kinds of animals they are, uh, cozying up to than they are to talk about how much is in their retirement savings. All the top-earners he writes about either support mistresses, or would be suicidal to have to give up their Paris chateaus in retirement. And, he says, there are only four types of people when it comes to retirement planning--all of them hopelessly naive or stupid.

He goes on in fine Chicken Little style (he is a journalist, after all) to tell us how unprepared baby boomers are to retire, how unprepared everyone is. This is helping me how?

In fairness to Eisenberg, I'll admit that I didn't read to the end. Maybe it gets a lot better in the last 50 pages. But just as I wouldn't sit and listen to someone's narcissistic complaining for hours on end, I just couldn't hold out long enough to get to whatever reward might be at the end of this book.

This book appears to be selling well--and maybe that was the point. Although I'm no better off for buying it, at least Eisenberg is closer to his Number.

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