Getting a reading on retirement plan fees, expenses, and elder care issues
Good books spur discussions, and July and August are a splendid time to have casual talks about family-finance issues - subjects we may dodge the rest of the year. Retirement, saving, and elder care top my list. I'm always on the lookout for simple, well-written books on parental-care issues, and I found two.
"Elder Care: What to Look For, What to Look Out For" (New Horizon Press, $14.95), by Thomas Cassidy, a former investigator for the New York attorney general's office, tells how to vet assisted living and nursing homes.
Julie Hall's "The Boomer Burden: Dealing With Your Parents' Lifetime Accumulation of Stuff" (Thomas Nelson, $14.99) starts out with dividing estates and provides helpful advice on clearing a lifetime's worth of junk from your parents' home.
Have you looked in your parents' attic or basement lately? How about your own?
Speaking of clearing out junk, have you peered at your 401(k)? It may be bursting with obnoxious fees and poorly returning funds. Daniel Solin's "The Smartest 401(k) Book You'll Ever Read" (Perigree, $14.99) will provide boiled-down tips on how to get your 401(k) up to speed through diversification and lower costs.
Here's a nugget: "If your 401(k) plan does not give you the option to invest in at least three, broad-based low-cost index funds and a range of Target Retirement Funds, it's subpar."
A good companion to Solin's book is David Loeper's "Stop the 401(k) Rip-off!" (Bridgeway, $15.95). He targets excessive plan expenses and provides more than 90 pages of appendices that give examples of how to identify and cut costs. It may be the most practical 401(k) book on the market.
As is often noted in this column, 401(k) plans don't disclose all of their fees and the added expenses - mostly unnecessary - that devour your total return over time. "Remember," states Loeper, "even if you are in a very small company and your employer needs to pass on all or most of the cost of your plan, if you are paying more than 0.75 percent per year in expenses, it is probably excessive."
It's also high season for taking a look at some new ideas in personal finance. An essential read is "Nudge: Improving Decisions About Health, Wealth and Happiness" (Yale University Press, $26), an entertaining book by Richard Thaler and Cass Sunstein.
They examine "choice architecture," or the emerging science of how people can make better decisions. The book isn't only humorous, it's loaded with good ideas that financial-service executives, policy makers, Wall Street mavens, and all savers can use.
Fostering what they call "libertarian paternalism," or making informed choices with a little outside guidance, the authors say the current US mortgage mess could have been blunted if lenders had simplified disclosure, spelling out all fees and rate adjustments so that customers could easily understand and compare the loans. Amen to that.
John F. Wasik is a Bloomberg News columnist. 