This is a guide for anyone in the academy – faculty member, administrator or professional staff – at whatever point she or he may be along the career path. Whether you are a newly-minted Ph.D. landing your first job, at mid career, or even already retired and concerned about how long your money might last, Ed Bridges offers you a straightforward, easy-to-grasp, and structured way to think about money, learn how it works, understand the priorities for your stage in life, determine your objectives, and develop a personal plan most likely to achieve them.Why a book specifically for those who work in higher education? The chances are that your retirement funds are mostly invested in TIAA-CREF funds, and that the plans created by the different institutions where you have worked, or will work, impose sometimes conflicting limitations of how you can manage your retirement money. This is potentially complex terrain with which many professional financial advisors are unfamiliar. This book provides ample guidance for you to manage your retirement funds, but if you do prefer to seek professional advice, it sets out the criteria for choosing a reliable advisor, and may even be a book from which your advisor can benefit if he or she is not fully conversant with TIAA-CREF’s offerings, and the quirks of academic retirement plans.What makes this book unique is that Ed Bridges shares with you his self-education about the risky business of investing and retirement planning. As he writes, “In schooling myself, I adopted the mind-set that I had used as a social scientist for the past forty-six years. I distinguished between fact and opinion and scrutinized the evidence behind every author’s claims; moreover, I searched for research that might corroborate or refute these claims. In the process, I learned a great deal about the route I should have taken to retirement from the time I accepted my first academic appointment to the time I submitted my intention to retire. Join me as I relive my long journey so that you may avoid my wrong turns and succeed in reaching your ultimate destination, a worry-free retirement, despite the risks and uncertainties you will surely face when you retire.”The book includes simple questionnaires and worksheets to help you determine where you stand, and think through your options.
Preface Introduction. A Preview of Retirement Part One. Saving for Retirement1 Getting There. A Look in the Rearview Mirror 2 How Much Do I Need to Save? 3 Do Investment Costs Matter? 4 Should I Invest in Index or Actively Managed Funds? 3 5 What Should My Mix of Assets Be? 6 Why Should I Diversify? 7 What Investing Principles Would Serve Me Well? 8 How Do I Build an Investment Portfolio? 9 What Role Should TIAA-CREF Retirement Annuities Play in My Investment Portfolio? 10 What Role Should TIAA-CREF Retirement Class Mutual Funds Play in My Investment Portfolio? Part Two. Preretirement Considerations 11 Can I Afford to Retire? 12 Should I Purchase an Annuity? 13 When Should I Start Taking Social Security? 14 Do I Need Long-Term Care Insurance? 15 How Much Should I Set Aside for Health Insurance? 16 How Do I Put My Financial House in Order? 17 Should We Sell Our Home and Relocate? 18 Is a Reverse Mortgage Right for Me? 19 How Should I Use a Financial Planner? 20 Can I Count on TIAA-CREF’s Financial Services? Part Three. Creating a Pension Plan21 How Do I Maximize My Retirement Income and Financial Security? 22 What Are My Income Options With TIAA-CREF? 23 Should I Incorporate a TIAA Traditional Payout Annuity Into My Pension Plan? 24 Should I Incorporate a TIAA-CREF Variable-Income Annuity Into My Pension Plan? 25 Should I Use Systematic Withdrawal as a Major Source of My Pension Income in Retirement? Part Four. Remaining Solvent26 Mirror, Mirror on the Wall, What Is the Greatest Threat of All? 27 How Can I Protect My Nest Egg Against Huge Losses? 28 How Can I Protect My Nest Egg Against Fraud? Part Five. Beyond Retirement29 What If I Finish in the Black? 30 Money, Happiness, and a Fulfilling Retirement Appendixes A Illustration B Possible Questions to Ask When Seeking Financial Advice C Experiences With Vanguard’s Financial Planning Services D Planning Tools & Calculators E Special Issues for Women F Must Reading for an Informed Investor G Determining Minimum Distribution Requirement H Operating Expenses for CREF Variable Annuity Accounts, 1997–2008 I Total Investment Costs for the CREF Variable Equity Accounts J Publications K TIAA-CREF. Strengths, Shortcomings, and Needed Changes L Formula for Calculating Annual Income Increases/Decreases From Variable Annuities M Historic Returns. Worst Case, One Year N Annual Income Changes for TIAA-CREF Variable Annuity Accounts, 1996–2005 O TIAA-CREF Variable Income Changes, 2001–2003 P Annual Review of Your Savings and Retirement Plan Investing Terms References About the Authors Index
"Strengths of this book include its readability and accessibility to further information. Retirement is approached from the “what you put in is what you will get out” philosophy, encouraging the reader to learn what options are best suited for themselves. TIAA-CREF traditionally has been the retirement choice of many individuals in Higher Education. The detailed discussion of this plan puts retirement into perspective to individuals who use TIAA-CREF’s services. For individuals with a different retirement plan, The Prudent Professor still gives insight to the retirement process and its details... As a young professional, The Prudent Professor is an excellent resource. A crash course in financial planning and what to expect (based on today’s economic situation) when approaching retirement is explained very well."
NACADA Journal - National Academic Advising Association
"The Prudent Professor: Planning and Saving for a Worry-Free Retirement from Academe is a pick for any professor considering the pros and cons of varied plans offered by TIAA-CREF, one of the largest financial institutions serving education and non-profit employees. This offers professors easy ways to think about money and financial planning at different stages of life, offering worksheets, questionnaires, and specifics for those who work for higher education and non-profits. Any collection catering to professors and nonprofit workers needs this excellent, specific reference."
"A guide to retirement planning and investment management; includes frank discussion of working with TIAA-CREF that draws on the experience of the senior author, a professor emeritus at Stanford University."
The Chronicle of Higher Ed
"Bottom Line: Do I wish I had this book early in my academic career and at the beginning of my retirement? Absolutely! Should those who have thus far ignored retirement planning study its contents and then act? You bet! The sages on this Forum are already familiar with much of the book's advice and TIAA CREF's offerings, but as they are all financial literature and TC junkies, they would still enjoy reading and referring to it."
Stan "Economic Man"
"In The Prudent Professor, Edwin Bridges, professor emeritus of Stanford, has provided an incredibly helpful guide to investment success. Targeted to members of the academic community, the book draws on his own careful research and long personal experience in building -- and protecting -- his retirement funds. He describes with candor where he went right--avoiding potholes--and where he went wrong--falling into them. His blunt appraisals of working with TIAA-CREF and with Vanguard (I should know!) are invaluable, indeed priceless."
John C. Bogle, Founder
The Vanguard Group
"The Prudent Professor is a welcome gift to every academic and professional who wants to prepare for retirement, and not just let it happen. It should be required reading for all of us who seek to invent our futures rather than simply try to predict them. The authors provide their readers with the analytic and judgmental tools to navigate through the dangerous reefs of retirement. By alternating valuable principles of investment and disbursement with Ed Bridges' own personal experiences of problem solving and critical reflection on his decisions, we come to understand our present and future choices with clarity, empathy and confidence."
Lee S. Shulman, President Emeritus, The Carnegie Foundation for the Advancement of Teaching
“There is so much in this book, that any brief statement falls short in doing it justice. Most professors feel too busy to actively plan the finances of retirement, and instead they put most of their trust in TIAA or other private or state pension plans to get it right. Professor Bridges shows that neglect courts financial disaster in the golden years and provides a readable narrative of practical guidance to avoid pitfalls and get it right."
Henry M. Levin, Professor Emeritus, Stanford University, and William Heard Kilpatrick Professor of Economics and Education, Columbia University
“If you’re like me, planning for retirement is right up there with going to the dentist and doing taxes on the enjoyment index. The Prudent Professor, however, is a great read on a tough topic. The writing is simple, direct and persuasive. The tone is conversational. The examples are clear, and thorny problems are discussed in a straightforward manner. Ed Bridges clarifies all of the issues in a patient way that left me wishing I had this book a decade ago.”
William G. Tierney, University Professor & Director, Center for Higher Education Policy Analysis, University of Southern California
“A well-written, jargon-free approach to self-directed financial health. The short, concise chapters provide both the rationale and methodology to identify your personal goals at each stage of your life; and the simple steps needed to achieve them – with an emphasis on keeping the cost of investment down to increase long-term returns. Any investor can benefit from using this guide as a reference, and is likely to make it dog-eared from frequent handling.”
Nicolet V. Evans, President, the Financial Planning Corporation of McLean, and Past President, National Capital Area Financial Planning Association
“Professor Ed Bridges takes his personal story and brilliantly extrapolates it into many different issues in retirement planning. His experiences guide the reader effectively towards doing the ‘right thing’ for his or her retirement. Every baby-boomer and financial advisor can benefit from The Prudent Professor.”
Jim C. Otar
Certified Financial Planner (CFP), and Founder, retirementoptimizer.com