Book Review
Ray Hoger | Member , ARTA Pension & Financial Wellness Committee
The Rule of 30 : A Better Way to Save for Retirement by Frederick Vettese , Published by ECW Press . © 2021 . 224 pages .
This is not a book for you or me ; we have already retired . This book is for your children or grandchildren . Many of us may remember the struggles of balancing conflicting financial demands — saving the suggested ten to fifteen per cent , paying off a mortgage , handling childcare , paying off student loans — all the time feeling that we were failing . In his recent book , Frederick Vettese presents a new idea to alleviate the stress of all these simultaneous expenses .
Vettese spent his career as an actuary focused on retirement in the Canadian context . He spent twentyseven years as the chief actuary for Morneau Shepell , a leading Canadian human resources company focused on pension and benefits administration . He wrote the # 1 ranked retirement book in Canada , Retirement Income For Life and his first book , The Essential Retirement Guide . In this , his fourth book , Vettese presents “ A better way to save for retirement .”
In The Rule of 30 , Vettese uses a story approach ( think of The Wealthy Barber by David Chilton ) in three parts . The proposition is to save thirty per cent of gross pay , less what one pays for mortgage or rent , child-raising , and other short-term major expenses . As these expenses decline and disappear , more funds are directed to savings . The idea is to smooth out spending over one ’ s working life , pushing a higher savings rate to later years .
In part 1 , we attend a fictitious meeting with the young neighbours ( Brett and Megan ) and hear the common question : “ How much should we save for retirement ?” Questions about saving , paying off a mortgage early , investing in stocks and bonds , or dabbling in real estate are discussed . Renting versus owning and target date funds ( TDFs ) are discussed . A TDF “ starts with a heavy weighting in equities and then slowly increases the weighting in bonds
over a period of many years .” Vettese presents numerous tables and figures to support his meticulous research as he walks his young neighbours through the intricate world of finance , inflation , and financial forecasts , all in support of his new rule .
Part 2 looks at what the future may hold , with predictions on how bonds , stocks , and interest rates may fare . Through all the possible outcomes , the Rule of 30 weaves its magic . Vettese goes beyond just detailing how to make the Rule of 30 work . In part 3 , we read a discussion of when to use RRSP versus TFSA savings contributions . The Rule of 30 can be adjusted if either spouse gets a job with a defined benefit pension plan with mandatory employee membership .
The Rule of 30 is a book for a younger generation : those aged 25 to 40 . If you know someone in that age range who is struggling with savings goals , this book would be a great recommendation — or gift .
Ray Hoger used to teach high school business education . He has two daughters currently back in university to enhance their futures . Around the next corner for them are many financial challenges including , in due course , retirement . He trusts that this book will help them plan for that eventual corner ! news & views SPRING 2022 | 25