Your Money Ratios, 8 Simple Tools for Financial Security by Charles Farrell, J.D., LL.M.

This book details a savings strategy to help you progress from your early years as a laborer to your retirement years as a capitalist where you live off the income from your savings.

Starting at age 25 and ending at age 65 he specifies what your ratios should be in the following areas based on age 65 & 80% income replacement.

• Capital to income ratio
• Savings ratio (He recommends saving 12-15% of your income, using 401k, then IRA, then taxable investment account.)
  
• Mortgage debt to income ratio (Own an affordable home in an affordable area. Use a fixed mortgage. Pay off your home mortgage before you retire so you have a cheap place to live.)
  
• Education debt to average income ratio (don't incur an education debt of more than 75% of your next 10 years predicted income. Parents fund your retirement before funding your kids education. Can always gift the money to them later.)
  
• Investments split between stocks & bonds
• Disability insurance as % of monthly income
• Life insurance to income ratio
• Projected income to LTC (Long term care costs) (start looking for LTC insurance at age 55)
  

These ratios could help you manage the what he calls the 4 core areas of personal finance; Savings, Debt, Investments and Insurance.

He believes that Social Security will exist in some form but with changes. The sooner the changes are made the less painful they may be. Need to be fair and not penalize high earners. You should get out what you put in or otherwise it is a welfare program.

Discusses good debt such as for house & education versus bad debt such as car loans and credit cards. Credit card debt causes you to pre-spend income not yet earned and at a higher cost due to interest.

He uses stocks such as an S&P index fund to help grow your savings and bonds such as US treasurer to maintain your savings. Need the combination to keep up with inflation and taxes yet not lose everything when the stock market dips. He notes that the stock market cannot be predicted by mathematical models because humans are not rational based on history. He has plan A- stocks, plan B-bonds, plan C-dividends from stocks and plan D is dollar averaging since you investing the same amount over time instead of on how the market is performing. Ignore Wall Street. Manage the investing risk by being balanced and patient.

Look for the following in a financial advisor; technical competence, independence & strong ethics. An independent third party custodian should hold your investments, not your advisor.