Author Topic: Retire Secure by James Lange  (Read 1204 times)

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Retire Secure by James Lange
« on: May 26, 2019, 06:52:08 PM »
I just read James Lange's  (2015) Retire Secure! A Guide to Getting the Most Out of What You’ve Got. Lange is a trained CPA and attorney and draws upon a long history of experience advising clients regarding their estate plans. The book is from start to end written with people with high incomes (never defined) on a traditional career path in mind, and indeed I'm struck in retrospect that apparently none of his clients have been early retirees in the sense it is used by the FIRE community. According to Amazon, the edition I borrowed via interlibrary loan was the latest available, which is a real shame in that so much of the book is focused on minimizing income taxes and presumably should be updated in light of the 2017 tax cuts.

The book is divided into three parts, with a fourth part serving as a place for numerous appendices. Part One is devoted to strategies you should pursue while working; Part Two as you approach and start to take distributions from retirement accounts; and Part Three, to estate planning. Lange is a big fan of Roth IRAs--he goes so far as to say they are almost always better than traditional IRAs. He advocates that you try to convert as much money from the IRA you contribute to via your employer into a Roth, provided you pay the associated income taxes associated with the rollover with additional after tax dollars. (An interesting irony here is that one of his arguments in favor of Roths is that he regards it as very unlikely federal taxes would ever go down. I'd be curious to learn when he updates the book if he has become less sanguine about Roths.) During the distribution phase he interestingly points out that while people are typically advised to spend from IRAs first before touching their Roth accounts, it may be wise when confronted with an unexpected large expense (e.g. a medical bill) to strategically spend from Roth accounts to avoid paying higher income taxes.

Part Three of the book was to my mind the most illuminating, and I'm sure this reflects the fact I haven't read any books on estate planning. He draws attention to how a stretch IRA can be created when for instance an grandfather designates a granddaughter as the beneficiary of an IRA, with the child adhering to Required Minimum Distributions based on her own life expectancy rather than her grandfather, thus greatly extending the time that the money remains and grows without being subjected to federal income tax. He has a section devoted to discussing how incredibly wealthy people shift assets to younger generations without taxation by means of life insurance policies. He also discusses the strategic use of disclaimers (the beneficiary disclaims part or all of his inheritance) and trusts to avoid taxes.

The book as a whole is an advanced discussion and the third part of the book in particular has led me to recognize that I probably should read something more geared to a novice. Finally, I will say that throughout the book he does make a point of drawing the reader's attention to the importance of hiring people like him to help them with the specific details of their situations, particularly with reference to estate planning documents.