In what Milevsky calls a “very different book than what I usually write,” The 7 Most Important Equations for Your Retirement: The Fascinating People and Ideas Behind Planning Your Retirement Income () not only looks at financial equations, but those responsible for coming up with them.

The seven people profiled in this book are responsible for shaping modern retirement calculations. Although they are now all dead, having been born as early as 1170 and as late as 1915, they made it possible to calculate things like how long your retirement income will last and how much you can spend every year.

And, although it is a little different from the usual financial how-to guides Milevsky writes, this recently published book has already created some buzz.

calls Milevsky “a rock star on the adviser lecture circuit,” for his approach, making him, “one of the most important educators on retirement finance today.” AdvisorOne published several excerpts from the book.

The 7 Most Important Equations for Your Retirement straddles different genres – financial mathematics, actuarial science, retirement planning and biography, says Milevsky. But as “it’s not really enjoyable to think about finances or to talk about them,” he’s hoping this book will change that by spurring interest in the people who first developed the equations and calculations. “Hopefully, reading about the great scholars in this field will get people thinking about their own financial life.” The financial part, they will “absorb almost by osmosis.”

Who would know they’re learning about financial planning when they’re reading about a “comet-chasing astronomer following his father’s suspicious death and a plot to kill the King of England?”

That was Edmond Halley, the King of England’s personal astronomer, as well as a geophysicist, military engineer, physical geographer and surveyor. He catalogued stars and mapped the Earth’s magnetic fields. Halley's Comet was named after him. He was also publisher and editor of Sir Isaac Newton’s principles. Halley came up with an equation to figure out pension annuities in 17th century England, at a time when many London residents had been promised lifetime pensions. No one knew how much money would be needed to fulfil the promise, and Halley's work provided the first formal model.

Moshe Milevsky. Photo by Finn O'Hara Photography

The goal is to get people talking, says Milevsky. “At a basic level, this book is really about seven different conversations.”  Conversations people should be having when doing retirement income planning. They are important because most of those heading into retirement “are not saving enough money to maintain their current standard of living,” but also “many are financially illiterate,” he writes.

For instance, “You can’t have an intelligent financial plan about retirement income without a conversation about your legacy,” he says. Life insurance becomes part of that discussion. That’s where Solomon S. Huebner comes in with his concept of human life value or human capital value – the present value of all the wages, salary and income a person will earn over their working life. He believed that human life value should be insured like property.

What will draw people in are the interesting people Milevsky brings to life as he shows that the retirement field as a science has solid foundations and an illustrious history. And although there are equations in the book, they are presented as art pieces at the beginning of each chapter.

Another of those people was Leonardo Fibonacci, who created present value analysis to calculate how long capital will last at a certain interest rate and given certain withdrawals. He devised this calculation in 13th century Pisa, Italy, well before calculators were invented. His technique is still taught to first-year business school students with only slight modifications 800 years later, says Milevsky. So if you have $300,000 in savings for retirement – how long will it last?

Benjamin Gompertz achieved scientific immortality. An Englishman who wasn't allowed to attend university because he was Jewish, Gompertz developed the most famous mathematical model of human mortality, answering the question, "How long does the money have to last or how long will a person live?" He studied the odds of living until any given age and came up with the Gompertz law of mortality.

Beyond the financial aspects, Milevsky is interested in fostering the adoption of these seven as heroes of the retirement field. “There’s enormous literature on these people already, but they’re not widely known outside their own narrow areas.

“These are seven key figures in the history of ideas. Anyone who believes themselves an intellectual, or at the very least would like to retire someday, should know about these people,” says Milevsky. “One thing is for certain. Every one of them is fascinating.”

Milevsky has won two National Magazine Awards for his popular writing. He is also the author of Your Money Milestones (FT Press, 2010), Are You a Stock or a Bond? (FT Press, 2009) and The Calculus of Retirement Income (2006). He is a fellow of the Fields Institute for Research in Mathematical Sciences and executive director of its . He received a lifetime achievement award in 2009 from the Retirement Income Industry Association in the United States.

By Sandra McLean, YFile deputy editor

Republished courtesy of YFile– 91��ɫ’s daily e-bulletin.

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Honoured are 91��ɫ Professors Joanne Magee and Chris Robinson, grad Alan Golhar and course director Jury Kopach for their contributions to the financial planning profession in Canada. 

The FPSC governs the examination and conferral of the Certified Financial Planner (CFP) mark in Canada, under license from the Financial Planning Standards Board in the US. 

Magee, who is cross-appointed to both SAS and the School of Public Policy & Administration, is an authority on income tax in Canada and has written and lectured extensively on various topics in income tax law and tax policy. She has conducted free tax clinics and trained her students to work in them for many years as a public service. She is a member of the Certification Scheme Committee of the FPSC.

Robinson teaches finance in SAS. He has taught all three financial planning courses, security valuation, ethics for investment managers and financial statement analysis. His financial planning textbook, co-authored with SAS Professor Kwok Ho, is used across Canada in universities and community colleges. He has won numerous awards for his financial planning research papers.

Alan Goldhar (BAS ’85) is the chief investment officer of the Ontario Office of the Public Guardian and Trustee, where he is responsible for a staff of planners and social workers managing $1.2 billion in trust accounts. He teaches introductory and professional financial planning at SAS, mentors our students and also teaches at Ryerson University. He is on the board of the FPSC Foundation.

Jury Kopach has worked for 38 years at increasingly senior levels in National Trust and T.E. Financial as a fee-for-service planner, manager and educator. Just when he thought he had retired, Robinson persuaded him to teach in SAS. Now a course director, Kopach teaches all three levels of the planning courses, as well as mentoring many students and teaching at Seneca College. He is on the board of the FPSC Foundation.

In addition to the four current members, a former financial planning course director at SAS, Peter Volpé, has also been named a fellow. Volpé is the senior vice-president of Integra Capital and chairperson of the FPSC Foundation.

Republished courtesy of YFile– 91��ɫ’s daily e-bulletin.

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Economists compared the market meltdown to a nuclear accident – totally unpredictable and hugely devastating. Like many, (MA '92, PhD '96) began to question the roulette-wheel approach – determining the odds – to investing. If nothing is predictable anymore, how do you decide what to invest in? he wondered.

The answers lie in the Schulich School of Business professor's latest book, , released early this year. In it, Milevsky gives advice and tools (calculators at ) for when reaching life’s “money milestones” – going to school, getting married, having children, buying a home, buying insurance, filing your income tax each year, investing and managing your portfolio, planning for retirement, deciding on a pension.

To make good decisions, you need to understand the hidden assets and hidden liabilities on your holistic personal balance sheet, writes Milevsky in his introduction. That means factoring in your human capital, or ability to earn income, which most overlook. Yet human capital is “the most valuable asset class for most people during most of their working years,” he writes.

“One of the things that prompted me to write the book was the way we teach personal finance,” says Milevsky. “We present it as a collection of independent topics – Week 2 might be on retirement, Week 4 on income taxes, Week 5 on pensions – with no unifying theme.” In the book, he challenges readers to think about smoothing their income and their consumption over their entire life cycle.

Left: Moshe Milevsky

The 198-page book is full of simple, statistically sound, even controversial, advice – don’t let debt deter you from investing in an education, wait until you’re 50 to buy a house, realize children cost a lot of money ($180,000) but could be your pension plan, consolidate your debt, avoid trivial insurance such as extended warranties, buy a pension plan if you don’t already have one.

Critics might object to placing a monetary value on having children or getting married or going to university, acknowledges Milevsky. He’s not disregarding or disrespecting the non-financial reasons, but “ignoring the monetary implications of our decisions can lead to financial regret,” he writes.

“My point is,” he says, “you should think about things.”

Milevsky, 43, is the father of four daughters. He waited until he had tenure at 91��ɫ before buying a house, reluctantly, under pressure from his family. Otherwise, “I practise what I preach.”

He never planned on a career as a professor specializing in financial risk management and personal wealth management over the human life cycle – until he experienced a kind of seismic shift in his family life. Milevsky was a master’s student in mathematics and statistics at 91��ɫ when his father was diagnosed with colon cancer and died six months later. As the eldest, he suddenly became responsible for the family finances, and soon changed course. Instead of pursuing a PhD in mathematical physics, he pursued one in administration. However, his math and stats training has continued to guide his research – sometimes in collaboration with 91��ɫ faculty – ever since.

Your Money Milestones is Milevsky’s seventh book for the individual investor. His sixth book, Are You a Stock or A Bond? Create Your Own Pension Plan for a Secure Financial Future, came out in September 2008 (see YFile, July 14, 2008). Milevsky revisits its central message – if you have a secure job with benefits and pension plan, you can take investment risks, otherwise stick to a safer, more conservative portfolio – in Your Money Milestones.

Milevsky has written two books for finance specialists and five for individual investors on insurance, investments and retirement income planning, including the 1999 Canadian bestseller, Money Logic: Financial Strategies for the Smart Investor.

A speaker and consultant on retirement wealth management, he has been interviewed by BusinessWeek, The Wall Street Journal, The New 91��ɫ Times, Barron's, Fortune and Money magazines and major Canadian media.

At 91��ɫ, Milevsky is executive director of the , a non-profit corporation affiliated with 91��ɫ’s Schulich School of Business and devoted to research in strategic financial planning for individuals. He also heads the  (Quantative Wealth Management Analytics) Group, a propriety software company.

He is the founding co-editor of the . In 2003, he won a National Magazine Award for a series of articles he wrote for the National Post.

By Martha Tancock, YFile contributing writer. Republished courtesy o f YFile – 91��ɫ’s daily e-bulletin.

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, associate professor of finance in the , recently published : A Guide to Making the 9 Most Important Financial Decisions of Your Life, as noted in this article by Michael Posner which appeared in .

Moshe Milevsky never intended to write another book about financial planning. But then the 42-year-old 91��ɫ finance professor in the Schulich School of Business watched in horror as his family’s net worth shrank by nearly 50 per cent in the great market crash of 2008.

It wasn’t because he was highly leveraged or had taken unnecessary risks. A cautious investor, he had stacked his portfolio with stock in some of the biggest, supposedly safest, most successful American firms – GM, AIG and Lehman Brothers, among them.

To help recoup some of his losses, the industrious Milevsky…returned to writing. Within a matter of months, he had produced Your Money Milestones: A Guide to Making the 9 Most Important Financial Decisions of Your Life (FT Press,2010). It’s his seventh book and a timely one, especially for those contemplating their annual contributions to retirement savings plans.

Written during an academic sabbatical which saw Milevsky lecturing at the University of Pennsylvania's Wharton School and in Sydney, the book incorporates some of the lessons he learned from the market meltdown. Central among these is the that the old paradigm – the stock market as a casino game in which savvy investors carefully calculate the odds of any particular wager succeeding – must be discarded.

In its place is the nuclear paradigm, so-called because no historical data would be of any value in predicting the next nuclear reactor accident. It therefore abandons all possibility of determining odds. In the new investing environment, a nuclear accident can occur at any time, without warning, making bets on stocks, even blue chips, inherently unpredictable.

So what are the milestones?

1. Education
2. Real estate
3. Debt
4. Income taxes
5. Investments
6. Saving
7. Insurance
8. Children and marriage
9. Retirement

For the , visit the Globe & Mail.

Posted by Elizabeth Monier-Williams, with files courtesy of YFile – 91��ɫ’s daily e-bulletin.

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