Washington Post Book Review

The Washington Post

By Nancy Lloyd
Sunday, June 15, 2008; Page BW11

SPEND 'TIL THE END The Revolutionary Guide to Raising Your Living Standard -- Today and When You Retire By Laurence J. Kotlikoff and Scott Burns | Simon & Schuster. 319 pp. $26

With a different view of spending, economics professor Laurence J. Kotlikoff and financial writer Scott Burns stress that what matters is not how much one spends but rather the standard of living that it enables. In their new book, Spend 'til the End, they argue that most people could achieve and sustain a higher standard of living throughout their lives.

This book's greatest contribution may be the inclusion of often overlooked topics, such as the timing of payouts and deductions. The authors analyze when, how and in what order to start taking payouts from various retirement savings plans, as well as when and whether to choose your own or spousal Social Security benefits. Making the wrong choice could significantly increase your tax bill and reduce the tax benefits of charitable contributions and other deductions now and for years -- or decades -- to come.

Another neglected topic they cover is the problem of outliving your money. Kotlikoff and Burns advocate making spending decisions based on the maximum age to which you might live, not the lower, average life expectancy that most financial planners use.

How can a consumer optimize his standard of living? Kotlikoff and Burns tout their software program "ESPlanner," which is available online for a fee. They claim that the late Nobel Prize-winning economist Franco Modigliani endorsed it. Whether their software lives up to the authors' promises is never proven. What is shown is that Kotlikoff "is president of the company and has a financial stake in the software."