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The Value of Debt in Retirement: Why Everything You Have Been Told Is Wrong


Increase the odds you won't run out of money in retirementusing debt!

Conventional wisdom is wrong – being debt free in retirement may actually increase your risk. The Value of Debt in Retirement teaches you how incorporating debt into your retirement strategy may increase your return, lower your taxes and actually lower your risk. You read that right. If handled correctly, debt—that thing we've all been taught to avoid—can play an integral role in your life, especially in retirement. New York Times Best Selling Author and nationally acclaimed financial expert Tom Anderson shows you how to use the time tested strategies of the best companies and the ultra rich to retire comfortably, minimize taxes, buy the things you have always wanted to have and do the things you have always wanted to do.

Thought provoking and against the grain, Anderson explains why your risk tolerance doesn't matter, why being debt free may actually increase your risk and why rushing to pay off your mortgage may be a financial disaster. Full of shocking revelations and tricks high- net-worth individuals have used for years, The Value of Debt in Retirement opens the world to a new approach to wealth management in retirement, one that factors in both sides of the balance sheet as an integrated ecosystem.

Real-world case studies illustrate how informed debt strategies can lead to a happier, healthier retirement. See how an individual with a net worth of more than $5 million can spend $20,000 per month - after taxes - and pay less than $5,000 per year in taxes, how it is possible to increase your rate of return by 50%, and how a lower risk portfolio with debt could increase the chances you do not run out of money.

Specifically written to Baby Boomers, practical guides and checklists show how to use debt strategies to fund primary and secondary properties, refinance credit card debt, and finance hobbies, such as cars and boats and recreational vehicles. Additional guides show how you can help your children, help your parents and leave a bigger legacy for your heirs and favorite charities. Regardless of your net worth, The Value of Debt in Retirement provides tools to use to apply these concepts to your personal situation.

There is no free lunch: the book delivers a balanced perspective focusing on the potential risks and benefits of the strategies discussed. A discussion on economic history highlights some of the shocks the economy may face and provides important warnings that you should factor into your retirement plan. Anderson not only shows that your life expectancy may be longer than you think, but also illustrates that many investors may be on track to average returns well under 4% for the next ten years – a potentially devastating combination. Irrespective of your beliefs about debt, The Value of Debt in Retirement proves risk is more important than return for retirees and provides suggestions on ways to minimize that risk.

Not all debt is good and high levels of debt are bad. The Value of Debt in Retirement is about choosing the right debt, in the right amounts, at the right time. Perhaps most importantly, this book isn't for everybody. This book requires responsible actions. If you can't handle the responsibility associated with the ideas then this book then it isn't for you. If you need a rate of return under 3% from your investments then you may not need this book. But if you can handle the responsibility and if you need a return above 3%, this book may offer insights into the best (and potentially only) way to achieve your goals.




Part I: Basic Ideas and Core Concepts

Chapter 1: A Better Path

A Successful but Controversial Debut

The Fifth Indebted Strength

Who Can Benefit from this Book? Not Just Millionaires! (But They Can, Too)

Everyday Example # 1: Immediately Better Credit Card Debt

Getting Beyond the ABLF and Focusing on Retirement


Chapter 2: Debt in Retirement: Conventional Wisdom, Right and Wrong

What Some Popular Retirement Books Get Right—and Wrong—About Debt

The “Good vs. Bad” Debt Camp

Bach Where We Started: The Irresolutely Against Debt Camp

The (Very Small) Sometimes It’s Okay to Have Debt Camp

Everyday Example # 2: A Bridge Loan over Troubled Quarters


Chapter 3: Why and Whether to Adopt a Holistic Debt-Inclusive Approach in Retirement

A First Look at the Three Main Types of Debt: Oppressive, Working, and Enriching

Seven Rules for Being a Better Debtor

In the Company of Longer Life Spans

Winging Your Way to a Successful Retirement: The Whole Chicken Approach

Everyday Example # 3: A Holistic Business Recipe for Success


Part II: The Power of DebtTM in Reducing Taxes, Increasing Return, and Reducing Risk

Chapter 4: Returning to the Return You Need

Cash Flow and Incoming Money: The Ultimate Key to Resource Management

You Have to Get Your Numbers Right!

Regardless of Your Net Worth: Distributions Are Rarely Constant Over Time in Retirement

How Much Can You Safely Take Out?

How You May Be Able to Increase Your Rate of Return

How This Is Possible? A Big Picture Overview

Risks and Problems

Everyday Example # 4: Retiring the Loan Survivor


Chapter 5: The Power of DebtTM Meets Our Ridiculous Tax Code: $5.5 million net worth, $240,000 income and $4,000 in taxes!

Some Brief Preliminaries: Income vs. Incoming Money

The Websters: A Tale That Taxes the Imagination

Your De Facto Tax Advisor

An Inconvenient Truth

A Few More Examples: How to Pay Almost No Taxes in Retirement

Everyday Example # 5: “Auto” You Not Be Sure You Are Getting the Best Loan?


Chapter 6: Risk Matters More Than Return

Why Your Personal Risk Tolerance May Not Matter

A Simple Understanding of Risk

An Overview: “What Time It Is”

A Detailed Understanding: “How the Watch Works”

Proof that Debt Can Reduce Your Risk in Retirement

Everyday Example # 6: A Lot to Think About? Not Really.


Part III: How to Get There – A Glide Path

Chapter 7: The World is Full of Risk – Especially Now

Not Your Usual Serious Caution

Learning from What Companies Do – Value Liquidity!

What about Interest Rate Risk? Fixed versus Floating Rate Debt

Investment risks: It isn’t the debt that matters – it is the quality of your investment decisions!

Asset Allocation and Investment Considerations

A Six-Step Approach to Diversified Investing in Retirement

Lessons from Math and History Suggest Caution

Be careful what you watch!

My Opinions on Asset Allocation


Chapter 8: The Sooner the Better: Moving from Oppressive to Working to Enriching Debt

Understanding the Implications of These Ideas on Your Life

Getting a Handle on Whether You Should Adopt a Strategic Debt Approach

The Want-Need-Have Matrix

Watch Those Ratios! A First Glide Path into Retirement

What if You Are Not Optimal Today?

Dying with Debt?

Final Mortgage Considerations


Chapter 9: Conclusion: Lots of Tricks and Tools

A Checklist Review

Brining It All Together – A Strategic Debt Strategy in Action

A Last Word: The Value of Debt in Retirement


Part IV: Guides

Guide A: Leaving a Legacy

General Giving Philosophy

The Benefits of Giving While You’re Working

Giving to Create Income


Guide B: Managing the ROI of Retirement

Retirement “ROI”: Resources, Inner Dynamics and Outer Pragmatics

Retirement Is Coming: A Holistic Roadmap of the Territory Before You Retire

Meta-Management against a Background of Accelerating Change

Staying Effective & Informed Over Time

Resource Management for the Long Haul

Partial Retirement/Partial Income

You Can Test Run Retirement

Real Estate, Small Business Ventures and Personal Guarantees


Long-Term Care Insurance

Thoughts on Life Insurance

Reverse Mortgages

How You Should (or Should Not) Factor in Inheritance

Outer Pragmatics: Real World Concerns, Issues, and Details

Legal Planning

Medical Planning

Residency Planning

Life Planning

Inner Dynamics: Meaning, Purpose, and Pleasure in Retirement

Sharpening the Saw

Particular Considerations on Retirement and “ROI” for the LGBT Community


Guide C: How to Help Your Family and Buy the Stuff You Want and Need – Reference Guide

Act Like a Company/Think Like a CFO

Principles When Financing the Purchase of a Desired Item

Managing Credit Card Debt

Helping Your Kids with Their Credit Card Debt

Helping Your Parents

Buying a Luxury Car

Buying a Boat/Airplane Art/Antiques/Jewelry, Paying for a Dream Vacation, Financing a Hobby (Horseback Riding, Car Racing)

Paying for Fractional Ownership (Home/Plane/Boat)

Helping Out Our Kids and Student Loans

Homes: Downsizing/Moving/Building

Purchasing a Second Home: Pluses and Minuses

Rent versus Buy a Second Home

100 Percent Financing: The No Down Payment Real Estate Purchase Option


Part V: Appendices

Appendix A: About – A Resource for More Information

Appendix B: Chapter 4 Detail

Understanding the Ideas of Chapter 4 with Charts and Tables


Appendix C: Chapter 5 Detail

Understanding RMDs

The Liger at Work Again

Understanding Cost Basis and a Step-up in Basis

More Detail on ABLF


Appendix D: Chapter 6 Detail - Withdrawal Rates in Retirement

Background: How the 4% rule came to life

The Difference between the Trinity Study and Bengen

Trinity Study Results

Trinity Study: Unfortunate Timing


Appendix E: A More Detailed Discussion on Risk, Return, and Correlation


Appendix F: Risk Details and Official Statement of Disclosure and Understanding

Statement of Disclosure and Understanding

With Respect to ABLFs

Additional Important Notes




About the Author