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Excerpted from Does This Make My Assets Look Fat? By Susan L. Hirshman.Copyright © 2010 by the author and reprinted by permission of St. Martin's Press, LLC.

By Susan L. Hirshman



The word conjures up different emotions. One is dread. We know dieting isn't fun. A piece of chocolate is so comforting, the smell of a steak on the grill so enticing, a scoop of ice cream so satisfying. There's no way around it, it's difficult to give up the short- term gratifications of eating.

But the other emotion the word can bring to mind is satisfaction. That's how we feel when we see the results of a diet. Drop a couple of dress sizes and you feel better about everything-- the way you look, the way you feel, the way others look at you. Life is better. I know what you're thinking: If this is a book about investing, why am I reading about dieting?

You may not realize it yet, but there are many dieting principles that are applicable to investing. Both require discipline, both take time, and, if we're successful, both provide us with substantial rewards. The parallels are uncanny. I promise that you will find the concepts of investing and personal finance a lot more familiar than you think. As you read this book, try to approach it with the same level of interest and focus you would use exploring an exciting new diet. Here's the truth: You don't need an MBA in finance to understand and take control of your financial life any more than you need a Ph.D. in nutrition to work toward your health and fitness goals. Understanding the basic concepts and tools of investing is attainable-- anyone can do it.

The world is changing and a big part of that change is financial. In the past, a financially secure retirement was based on personal savings supplemented by Social Security and your employer's pension. As an individual, you had little risk and even less responsibility for planning your financial future; we didn't need to do much or make many decisions. But those days are gone forever. Today companies are reducing or eliminating guaranteed pension plans and politicians are talking about reductions in future Social Security benefits. Increasingly, we are being forced, whether we like it or not, to assume the burdens of planning and acting to ensure our future self- sufficiency. The risk and the responsibility are becoming ours. No longer is it enough to work hard, today we have to make conscious decisions to save, invest, and manage our assets.

Why have these changes occurred? In short, over the past twenty years or so corporate America has come face- to- face with new economic, demographic, and regulatory challenges. Business has become much more competitive. Severe cost pressures have forced companies to operate more efficiently by cutting costs and reducing overhead. At the same time the average American is living longer and using more resources in his or her retirement years. When traditional retirement plans that put the risk and responsibility on a company began, the average person spent somewhere between two and five years drawing retirement benefits before passing away. Today the time spent in retirement can be more than thirty years. Do you think companies want to keep paying you money for more than thirty years after you worked for them for maybe twenty years? Of course not.

Some of you may think I'm being a little overoptimistic when I talk about retirement lasting more than thirty years. Our perceptions and expectations play a big part in financial planning and the sad fact is we're usually wrong! Here's a fact: According to the U.S. Census Bureau, centenarians, people one hundred years old or older, are the fastest- growing segment of our population.

The second fastest is the age group eighty-five or older. Currently, there are about 40,000 people at least one hundred years old in the United States. That's more than one centenarian for every 10,000 Americans. Of those, 85 percent are women. More important, it's estimated that 40 percent of women who reach the age of fifty this year will live to be one hundred years old. (If you wantto get an idea of your own life expectancy, go to www .livingto100 .com .) Now, remember the results of these kinds of exercises are based on averages and are not an exact science. So if the Web site tells you that based on your lifestyle you will live only live to sixty- five, don't bet on it!

You still need to save as if you had a longer life expectancy.