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If retirement was just about money, it
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would be easy, or at least it would be
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easier. Today, we'll go beyond the math
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problem of retirement. We'll talk about
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the life problems of retirement, about
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the parts of retirement that your
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spreadsheet simply can't see. Welcome to
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Personal Finance for long-term
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investors, where we believe Benjamin
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Franklin's advice that an investment in
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knowledge pays the best interest both in
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finances and in your life. Every episode
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teaches you personal finance and
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long-term investing in simple terms.
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Now, here's your host, Jesse Kramer.
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Welcome to Personal Finance for
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Long-Term Investors, episode 136. I'm
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Jesse Kramer. By day, I work at a
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fiduciary wealth management firm helping
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clients nationwide. You can learn more
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at bestinterest.blog/work.
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The link is in the show notes. By night,
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I write the best interest blog and I
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host this podcast. I also put out a
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weekly email newsletter. And all of
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those projects help busy professionals
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and retirees avoid mistakes and grow
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their wealth by simplifying their
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investing taxes and retirement planning.
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Today is well today is a little bit of a
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rewind episode. Uh I'm speaking to you
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right now from from early March. It's
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March 3rd as I speak into this
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microphone. But I know that this episode
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is going to come out in early April and
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I know that between now and then my wife
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and I are welcoming our second child
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into this world. So, to make my life
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just a little less hectic over the
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coming weeks, I made the executive
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decision to replay an old episode, a
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very popular old episode. This is going
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back more than two and a half years ago
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to episode 62 when I sat down with Fritz
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Gilbert from the Retirement Manifesto
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blog. And Fritz is also the author of
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the book Keys to a Successful
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Retirement. And before we play that
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awesome episode, here's a quick review
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of the week, a new review of the week
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from Doug GB. Doug said, "Excellent
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product, five stars. I have listened to
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most of the podcasts and appreciate the
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factual and balanced approach taken. I
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find them very informative and
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thoughtprovoking. Thanks for sharing
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your insights. Well, Doug, thank you for
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the kind words. I'd be happy to send you
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a super soft podcast t-shirt. So, please
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drop me an email to Jesse at
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bestinterest.blog so I can get that
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t-shirt sent out to you. And with that,
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everybody, on with the show. Thank you
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for listening and enjoy the episode. I
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saw a headline recently stating, "Most
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people don't understand life expectancy
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data." Which means they don't understand
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the fundamental aspect of retirement
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planning. How long will you live? After
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all, a 20-year retirement is drastically
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different than a 30-year retirement. So,
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let's answer that question right here
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now. How long will you live? So, first
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we can look at the data. As of 2020, the
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average American male born in 2020 lived
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for or will live for 74.5 years. And the
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average American female, the number is
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80.2 years. So, let's round those for
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the sake of ease. Men live for 75 years.
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Women live for 80 years. But there's
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more to this question today than just
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that plain data. Because let's imagine
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you're 55 years old and let's say you
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are planning your retirement. How long
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should you plan for? Well, we can go
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back and think to those numbers before.
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75 for men, 80 for women. So, if you're
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55 today, then men should plan for a
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20-year retirement. Women should plan
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for a 25-y year retirement. Maybe you
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want to add a few years on there as a
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buffer cuz after all, you know, if those
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are the averages, half of people live
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longer than average. So, maybe you add
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five or 10 years of buffer and that's
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how you get to your retirement timeline.
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But that's actually not quite the right
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approach. Now, I like the buffer aspect
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of it, but if you're 55 today and you
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think that the average 55year-old lives
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to 75, that is not the right way to
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interpret this data. And it's important.
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So, the average death ages 75 and 80, we
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said they account for all deaths at all
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ages, including all of the unfortunate
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deaths that can occur before the age of
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55. Once you've hit age 55, you've
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already avoided all of those premature
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deaths. You've avoided all the deaths
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that drag the average down to 75 and 80.
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Meaning that your most likely age of
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death will actually be above average.
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You've already avoided the premature
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deaths before 55. And that fact, that
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statement that I just made, that's
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backed up when we look at the Social
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Security Administration's actuarial data
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set. And it helps us see this truth in
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action. The average 55-year-old man
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today will live another 24 years to age
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79. That's four years above the the
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average that we talked about for all
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males. The average 55-year-old woman,
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she'll live another 28 years to age 83.
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Again, that's 3 years above the average
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for all women. So maybe you haven't
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planned much and and now you're sitting
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down, let's say you happen to be
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listening to this podcast, you're
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sitting down at age 65 to figure out
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your retirement. 65-year-old men have on
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average another 17 years of life left
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and women another 20. They'll live to 82
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years old and 85 years old,
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respectively. That's huge. Every year
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matters in retirement planning. The
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difference between dying at age 74
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versus 79 versus 82, that's a really big
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difference. And as we already talked
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about before, you might live longer than
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those averages. So, as a really quick
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example, the average 55-year-old
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American man has the following, we'll
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call them death age probabilities.
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There's a 64% chance that that man will
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live to at least age 75. If you're 55
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years old, you have a 64% chance of
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living to age 75. What do you think the
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probability is living to age 80? The
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answer is 48%.
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How about to the age of 85? The answer
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is 30%. And finally, for a 55-year-old
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man, the odds of living to age 90,
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that's about 13%. Now, 13% is small, but
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that's nothing to ignore. That's a 1 in8
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chance. 1 in 8 55year-old men will live
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till age 90. So, in short, the lesson
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here is that you can't look at the
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average life expectancy for all people.
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Instead, you have to look at the average
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life expectancy of people your age and
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then probably bake in some conservatism
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on top of that because there's a 50%
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chance you'll live longer than the
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average. This is just a simple but vital
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financial planning tip. And now on the
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topic of financial planning for
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retirees, we're going to pivot to a
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recent listener question sent in by
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Lawrence. Lawrence wrote, "Dear Jesse,
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my wife is 70 and I'm about to turn 70
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and we've been retired for eight years.
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And even with the tough market in 2022,
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our portfolio is up 40% from when we
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retired from about 3 million to 4.2
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million. I can't bring myself to spend
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more. We spend exactly what we want to
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spend. But now I'm wondering, what if we
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die with these millions instead of
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putting them to some sort of good use?"
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So ask any retiree or any financial
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planner who works with retirees. They
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will tell you that most retirees
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struggle to change from a saver to a
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spender. They've built decades of strong
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savings habits. They have years of
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frugality and budgeting and buy and hold
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investing. And it's hard to flip that
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switch overnight from saving to
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spending. So, as a real example, there's
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a great data set that Michael Kitsus
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published to show retiree savings that
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actually went up during the 2000s. The
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2000s were this famously bad time to be
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invested in the market. And certainly
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some people who were invested did see
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their accounts go down throughout the
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2000s. But what this data set shows is
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that especially for people kind of at
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the middle to the upper end of wealth
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brackets, they gained money during the
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2000s. They they saved more than they
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ever had saved before. Now, another part
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of this particular chart that's scary is
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that the bottom two quartiles or the
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lower 40% of retirees have zero assets.
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They are living exclusively off of
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social security and their pensions. the
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third quartortile. So that's from people
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from 40% to 60%. They have less than
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$100,000 in assets. Those two stats
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right there are pretty scary and pretty
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sad. So a lesson that I take away from
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this that I hope to impart on you guys
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is to save early, save often, and to
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stay the course. We have to go back. Why
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is it the case that at least for the top
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40% of people in this study, their
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portfolios grew during some of the worst
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times in market history? and that for
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the average retiree, portfolios tend to
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grow in retirement. Well, the reason is
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actually pretty simple. It's because
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most of the time standard retirees and
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retirement planners are vastly
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oversaving. They're saving too much and
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they're spending too little. For
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example, we can take a look at the 4%
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rule. The 4% rule was created to avoid
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uh retirement failure. Running out of
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money is retirement failure, and that we
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can all agree is a pretty bad thing. But
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here's an absolutely crazy stat. The 4%
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rule over the course of historical back
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tests has been shown to more likely
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quintuple or 5x someone's retirement
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portfolio than to deplete it by $1.
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That's just crazy. the the average
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retiree using the 4% rule, if they
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retire with a million bucks, they're
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more likely to die with $5 million than
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they are to die with less than $1
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million. That 4% rule, and I've said it
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here on the podcast before, it is
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outrageously overconervative about 90%
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of the time. It just so happens that
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like 2% of the time the 4% rule has
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actually been shown to be too
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aggressive, which that's a whole other
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different conversation about why the 4%
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rule is a a coarse tool, but certainly
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not a fine tool. But anyway, let's get
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back to today's topic. The required
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conservatism to avoid retirement failure
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that is vital in about 5% of test cases.
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if you saved less. So, if you use say a
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a 5% rule where you you retire with 20
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times your annual spending needs instead
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of the 4% rule where you retire with 25
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times your spending needs, you are more
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likely to fail. You're more likely to
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fail if you use the 5% rule instead of
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the 4% rule. So, for better or worse,
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retirement planners first rule of thumb
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is the 4% rule. And what we're talking
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about here today with Lawrence with his
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question, Lawrence, who's now lived off
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of retirement funds for eight years and
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he's seen his nest egg grow from 3
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million to 4.2 million. He's an example
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of that overconervatism,
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but he's the example of someone who
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maybe could or should have been using
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the 5% rule or the 6% rule instead of
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the 4% rule. Or at the very least,
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Lawrence could have retired a few years
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earlier and used the 4% rule to great
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success. But now, as we sit here, eight
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years into Lawrence's retirement, it's
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too late for that. It's time that
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Lawrence can't get back. Let's pause
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that little diet tribe for now and
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really go to address the meat of
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Lawrence's excellent question. What if
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he dies with these millions of dollars
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instead of putting them to good use?
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Now, first and foremost, Lawrence should
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go work with a fiduciary, CFP, financial
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planner, and an estate attorney.
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Lawrence should discuss his options and
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his preferences for this money while
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he's alive, but then also after he
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passes away. Questions like, how do you
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want your assets to positively change
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the world? Who in your life is most
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important to you, and do you want to
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leave some of your assets to? Are there
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any charities that you want to leave
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assets to in some way or a bequest to
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your university to your alma mater and
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to leave a scholarship to future young
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bright minds? These are the types of
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questions to ask and then answer. The
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next point I would make to Lawrence is
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to not let society force you into
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spending your money on yourself. If you
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derive joy from helping others, I'm sure
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there are terrific philanthropic uses
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for your money while you live. The next
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one, Lawrence, if you have children or
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grandchildren, remember Warren Buffett's
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thoughts. Leave them enough money so
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that they feel they could do anything,
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but not so much that they could do
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nothing. In other words, if you leave
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your kids, say, $500,000 each, that's
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enough money that they could do a lot of
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interesting things with it, but that's
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not enough money so they could sit
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around for the rest of their life and do
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nothing. Leave them enough money so that
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they would feel they could do anything,
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but not so much that they could do
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nothing. And the next one is something I
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call running the McDonald's tests on
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your favorite things. So, the McDonald's
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test, real quickly, as a quick aside, it
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comes from a story of a client who I'm
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actually working with at work, where one
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of his favorite things to do is uh
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literally to go eat burgers and fries.
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It's like his favorite meal. We were
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talking about it one time, and this
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gentleman is a multi-millionaire. So, I
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asked him, I said, 'Oh, cool. Are there
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any like, you know, great burger and fry
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restaurants that you've been to
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recently? And his answer was, "No, not
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really. I just I like McDonald's." My
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response to this gentleman was, "Well,
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that's totally fine if if you like
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McDonald's, if you like the flavor, if
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it's convenient for you, I mean, I'm not
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going to talk you out of it, but you're
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sitting on a couple million dollars. So,
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if you want to, you could take a road
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trip to any burger and fry restaurant in
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upstate New York and spend an afternoon,
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spend a weekend getting there and go
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have a terrific five-star burger and fry
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meal and maybe that would actually be
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more enjoyable to you than McDonald's.
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So, this gentleman thought about it. We
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ran the numbers and I showed him how it
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was totally within his financial plan to
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do so. And it ended up being a terrific
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recommendation for him. He really enjoys
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the fact that now he takes these road
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trips on a regular basis to go eat
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burgers and fries all over upstate New
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York. I call that running the McDonald's
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test where you take something in your
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life that you really enjoy and you ask
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yourself, do I have the financial means
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to actually pursue this passion even
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more than I already am? To Lawrence who
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asked today's question, to Lawrence who
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is worried about dying with millions of
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dollars, run the McDonald's test on your
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favorite things in life. Trust me, one
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of the principal duties of financial
00:14:36
professionals, albeit a subjective and
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hard to measure duty, is to imbue
00:14:40
confidence in their clients to spend
00:14:43
money. It's called cash flow planning.
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When you do cash flow planning for a
00:14:47
client, you're telling them that they
00:14:49
should be confident in a certain amount
00:14:51
of income, but for retirees, it's really
00:14:54
a certain amount of expenses that
00:14:55
they'll be making throughout their
00:14:56
retirement. You should spend money. You
00:14:59
should enjoy the fruit of your labors.
00:15:01
You should trust the math. You should
00:15:03
trust your portfolio and enjoy your
00:15:05
life. Now, if you do that and you still
00:15:07
have lots of money left over, you need
00:15:09
to determine while you're alive and
00:15:12
while you're mentally spry, you need to
00:15:14
determine what you want to do with that
00:15:16
leftover money. So, Lawrence, work with
00:15:18
a CFP, work with a estate attorney, and
00:15:22
enjoy these golden years of your life.
00:15:25
Here's a quick ad, and then we'll get
00:15:26
back to the show. I love getting your
00:15:28
questions and some of you ask me
00:15:29
questions about the wealth management
00:15:31
firm I work for in Rochester, New York.
00:15:33
Others ask about the Best Interest blog
00:15:34
and this podcast, Personal Finance for
00:15:36
Long-Term Investors, which operate
00:15:37
without advertising, without pushy
00:15:39
sales, and with no payw walls. How can
00:15:41
the blog and podcast stay afloat without
00:15:42
me dumping my own money into it? Well,
00:15:45
to answer both those questions, I want
00:15:46
to point you to episode 78 of Personal
00:15:48
Finance for Long-Term Investors. I
00:15:50
intentionally recorded episode 78 to
00:15:52
shine light on those topics and inform
00:15:54
you how you are actually helping and can
00:15:56
continue helping these projects carry
00:15:57
forward. So if you've ever been curious
00:15:59
about the business of my blog and
00:16:01
podcast or if you're curious about my
00:16:03
day job in wealth management, please
00:16:04
check out episode 78 and let me know
00:16:06
what you think. All right, so now let's
00:16:09
throw it over to a really fun
00:16:11
conversation with a really fun guy,
00:16:13
Fritz Gilbert, who I mentioned before.
00:16:15
Fritz Gilbert is the creator and author
00:16:18
of The Retirement Manifesto, widely
00:16:20
considered one of the best retirement
00:16:22
blogs on the internet and winner of
00:16:25
numerous awards and accolades. Fritz
00:16:27
also wrote the book Keys to a Successful
00:16:30
Retirement, which is a top-selling
00:16:32
financial book on Amazon. I really enjoy
00:16:35
Fritz's ability to cover both the the
00:16:37
hard financial topics, but also the soft
00:16:39
lifestyle topics for his retiree
00:16:42
readers. And I'm really excited to share
00:16:45
his fun viewpoints here today on the
00:16:47
Best Interest Podcast.
00:16:54
>> Fritz, I was listening to you on a a
00:16:56
recent Morning Star podcast. Excellent
00:16:58
podcast. We will throw a link in the
00:16:59
show notes for everybody. But Fritz, you
00:17:01
mentioned a statistic that had to do
00:17:03
with how pre-retirees tend to focus on
00:17:07
financial matters, but that postretirees
00:17:10
end up thinking a lot more about
00:17:12
lifestyle matters in retirement. So, I'm
00:17:14
just curious, how did you first learn
00:17:17
about that? And and when you first
00:17:18
learned about it, how did you react? And
00:17:20
then, what exactly are the the main
00:17:24
issues that you think that postretirees
00:17:27
really are thinking about?
00:17:28
>> Yeah. Wow. What a great leadoff
00:17:29
question, Jesse. First of all, happy to
00:17:31
be on your show. I love your content and
00:17:33
uh I I really enjoy being on. But it's
00:17:35
interesting. You know, I've gone through
00:17:36
the retirement transition. I've been
00:17:38
retired 5 years now. I've been writing
00:17:39
for eight. So, I started writing three
00:17:41
years before I retired. And at the time,
00:17:43
like everybody else, I was very much
00:17:45
focused on the financials. And if you
00:17:47
read the first year of my posts, almost
00:17:49
every one of them were financially
00:17:50
related, right? It's it's what you're
00:17:52
focused on in your working years. You're
00:17:54
just when can I retire? Don't obsess on
00:17:57
when you can retire. enjoy the journey
00:17:59
as well. You know, that's my biggest
00:18:00
caution to the fire community, which I I
00:18:02
was a member of, I'd say. I was 55 when
00:18:04
I retired, so I was kind of late fire,
00:18:06
but still fire. And the one concern I
00:18:08
have with that lifestyle is you can get
00:18:10
so obsessed on when can you achieve fire
00:18:12
that you forget to enjoy the present.
00:18:14
So, that's just a a word of
00:18:16
recommendation or advice, I guess, to
00:18:18
the younger folks that are on the
00:18:19
journey. But regardless, you're focused
00:18:21
on the financials. you have to be
00:18:23
because you know you're not going to be
00:18:24
able to retire until you get the
00:18:26
financials in order and you're looking
00:18:27
at the retirement calculators and you're
00:18:29
trying to figure out the, you know, 4%
00:18:30
safe withdrawal rate and all that kind
00:18:32
of stuff. That's natural. And what I say
00:18:35
is that's necessary, but it's not
00:18:37
sufficient. So, when did I first
00:18:39
discover that reality that you have to
00:18:42
focus on the non-financial as well? And
00:18:44
I would say that was probably about a
00:18:46
year or two before I retired. I'd been
00:18:48
writing for about a year, paying a lot
00:18:50
of attention to the topic, doing a lot
00:18:52
of research, writing a post every week.
00:18:54
The more I read from people who had
00:18:56
traveled the journey before me, I
00:18:58
started seeing more and more about the
00:19:00
importance of the non-financial stuff.
00:19:01
I'm like, "Yeah, yeah, yeah, okay,
00:19:02
okay." You know, you it takes a while to
00:19:05
be convinced, but I listened to the
00:19:07
stuff I was reading and I I applied it
00:19:09
and I started writing posts about the
00:19:11
non-financial side. You know, we moved
00:19:12
to a cabin up in the mountains, so we
00:19:14
had a pretty major lifestyle change. And
00:19:16
we started thinking about it quite a bit
00:19:18
about a year before I retired. We really
00:19:20
knew, okay, we're good to retire. June
00:19:23
of 2018, you know, this was like in 17.
00:19:26
Okay, June of 18, we're out. We know
00:19:27
we're good. But I still had a year to
00:19:29
go. So rather than just continue to
00:19:31
refine the numbers, they're they're kind
00:19:32
of what they are at that point. Yeah,
00:19:34
you're still investing. You're looking
00:19:35
at returns. You're trying to build up
00:19:36
your cash, you know, for the transition,
00:19:39
but essentially it doesn't get you a lot
00:19:42
more benefit to continue to grind on the
00:19:44
numbers. So, I spent that last year
00:19:46
starting to really focus on the
00:19:47
non-financial stuff, which we can talk
00:19:49
about. But what it really hit home is as
00:19:52
I went through my retirement transition,
00:19:54
it was incredibly smooth. And I started
00:19:57
reading more and more research about the
00:20:00
highest correlation they found for
00:20:02
people that have a successful transition
00:20:03
to retirement. It's a huge transition.
00:20:05
You know, don't underestimate how big of
00:20:07
a change it really is, and a lot of
00:20:08
people struggle with it. But the
00:20:10
research has shown that the people that
00:20:11
have the most successful transition are
00:20:14
those that have spent the most amount of
00:20:15
time planning and not just planning on
00:20:17
the financial stuff, but they've
00:20:19
recognized the need to focus on this
00:20:21
non-financial area. So that's really and
00:20:23
that's what my book's all about. It's
00:20:24
the, you know, keys to a successful
00:20:26
retirement. And it really focuses on the
00:20:28
things you should think about as you're
00:20:30
preparing for retirement that will help
00:20:32
you have a better transition. It's a
00:20:34
hugely important topic and it's not
00:20:35
something most people realize and
00:20:37
eventually you will, right? If if you
00:20:39
don't think about it at all, you hit
00:20:40
retirement, you'll go through what what
00:20:42
I like to call it, Eric Waggle came up
00:20:43
with the term or he used it in his book,
00:20:45
the messy middle, you will have a rocky
00:20:48
transition, it's not uncommon. And
00:20:50
that's what that article in the the
00:20:52
Morning Star podcast was about, these
00:20:54
blind spots that we discovered, right?
00:20:55
>> And a lot of people struggle with that
00:20:57
transition. And most of the reason that
00:20:59
they struggle is because they didn't
00:21:00
realize the importance of this
00:21:01
non-financial stuff. You figure it out
00:21:03
in time, but it's a lot easier if you
00:21:04
think about it on the front end. Yeah,
00:21:06
you you just mentioned a term there,
00:21:07
Fritz, blind spots that I I want to come
00:21:10
back to and see if there are any
00:21:11
specific blind spots that that you and
00:21:13
Eric have found. It's an interesting
00:21:15
concept because I'm 33, so I've got some
00:21:18
time ahead of me, but I think of it as,
00:21:20
you know what, I know what a weekend
00:21:22
feels like. Transitioning into a weekend
00:21:24
isn't a big deal. I've taken some even
00:21:26
two week vacations before. Maybe a
00:21:28
little planning goes in there, but
00:21:29
really transitioning to a vacation then
00:21:31
transitioning back to work, not that big
00:21:33
of a deal. So, it's like what what would
00:21:35
the big deal with retirement be? All it
00:21:37
is it's a transition into free time. I I
00:21:39
don't see what the big deal is. I've
00:21:40
done it before, but obviously there's
00:21:42
there's more to it, right?
00:21:44
>> Yeah. And how do you summarize it? I I
00:21:46
talk about how it's kind of like
00:21:47
marriage or having a kid or, you know,
00:21:50
some of these major transitions in life,
00:21:51
you can't really appreciate it until
00:21:53
you've actually gone through it. And I
00:21:54
was obsessively curious about what it
00:21:56
was going to be like. I I really was.
00:21:58
>> Now I'm retired five years. And I guess
00:22:01
the biggest thing I would say is nothing
00:22:03
at all like a vacation. And and the
00:22:05
reason is because it never ends. You
00:22:08
know, vacations, you're always thinking
00:22:09
about going back to work. You know, it's
00:22:10
a little break, so you're really
00:22:11
enjoying it. You're savoring every
00:22:13
minute cuz, you know, you've been
00:22:14
looking forward to this for six months
00:22:15
and you booked your flights, you know,
00:22:17
six months ago and blah blah. But
00:22:19
retirement is day after day after day
00:22:22
after day after day after year. you
00:22:24
know, it's years and years of this
00:22:27
>> and initially, yeah, it's like a
00:22:28
vacation and there's that honeymoon
00:22:30
period where it's just euphoria. You
00:22:31
don't have the alarm clock. You're
00:22:33
ecstatic. You know, I never have to go
00:22:34
back to work. This is amazing. And
00:22:36
that's really a nice period. And almost
00:22:38
everybody experiences that. But when the
00:22:40
reality sets in is is after you've been
00:22:42
retired, it varies for most people. I'd
00:22:44
say 6 to 18 months is pretty much the
00:22:46
norm. And you start realizing this is my
00:22:49
life now. You you start losing
00:22:52
appreciation for the freedom. I losing
00:22:55
is probably too strong a word, but you
00:22:56
start recognizing that there's more to
00:23:00
life than just being free. And you have
00:23:02
to find those things that really keep
00:23:03
you motivated and and you know, feel
00:23:06
good about yourself and productive. And
00:23:08
a lot of those things you get from work
00:23:09
that you don't realize you're getting
00:23:11
from work, you start missing. And you
00:23:14
start realizing how important they are
00:23:15
in your life. And that's when that quest
00:23:17
to kind of fill in these non-financial
00:23:20
areas really becomes important because
00:23:23
it's those areas that really turn it
00:23:25
into a a really enjoyable phase of life.
00:23:27
I'm I'm loving retirement. Best years of
00:23:29
my life, but it's because I've been very
00:23:32
diligent in in the way I approached it.
00:23:34
And all the research I've done since,
00:23:36
probably by accident as much as
00:23:38
anything, but the things I've focused on
00:23:39
have turned out to be pretty important
00:23:41
things to help with the transition.
00:23:42
Fritz, I was telling you before we
00:23:44
recorded that I've I've listened to
00:23:45
maybe six or eight podcasts that you've
00:23:47
been on in the last in my last week
00:23:50
podcasts that you've been on over the
00:23:51
last couple years. And for what it's
00:23:53
worth, it sounds like you love
00:23:55
retirement. Your your your joy comes
00:23:57
across in your voice on every podcast.
00:23:58
But I think it's important to emphasize
00:24:00
that what you had just said is that it
00:24:02
didn't come without work. It didn't come
00:24:04
without preparation. you you had to sit
00:24:07
down and think about it, prepare, and
00:24:09
and maybe now we can transition back
00:24:10
into some of the blind spots that many
00:24:13
retirees have going into retirement.
00:24:16
Blind spots that it sounds like for the
00:24:17
most part you thankfully prepared around
00:24:20
and and they weren't blind to you, but
00:24:22
what are some of these common blind
00:24:24
spots that can affect retirees?
00:24:26
>> Yeah. And and probably a little bit of
00:24:28
context would be would be of value, I
00:24:30
guess, to the listener. Eric approached
00:24:31
me. He's another blogger and he's he's
00:24:33
an author. he's written a book and he's
00:24:34
more of a financial coach I guess for
00:24:36
retirees and he said hey I'd like to do
00:24:38
a survey you've got a big audience can
00:24:40
can we reach out to your audience and do
00:24:41
a survey and what his goal was was to
00:24:44
get a population of pre-retirees and a
00:24:47
population of retirees postretirees ask
00:24:50
them the same questions and compare the
00:24:52
results I was like I love that Eric what
00:24:53
a great concept and let's see where they
00:24:55
differ you know so there's a whole
00:24:57
article about it there's there's a
00:24:58
there's actually like a 50page study
00:25:00
that you can link to on my blog if you
00:25:01
just look up blind spots on my blog
00:25:03
you'll find you. You can put a link in
00:25:04
the show notes.
00:25:04
>> We'll do. Yeah, we will link that.
00:25:06
>> Yeah. But the two biggest takeaways if I
00:25:08
think about it now without looking at
00:25:09
the study, but just what's stuck in my
00:25:11
mind now, you know, several months after
00:25:13
we've completed the work. The first one
00:25:15
is the um reality that a lot more people
00:25:20
struggle with the transition than they
00:25:21
think they will. If you ask
00:25:23
pre-retirees, I'm rounding the numbers.
00:25:25
I don't know the exact ones. I could
00:25:26
look them up. Doesn't matter. roughly 25
00:25:29
30% of pre-retirees think yeah it's
00:25:31
going to be a pretty major transition
00:25:32
you know whatever but let's say 70% are
00:25:34
like yeah it's going to be a piece of
00:25:35
cake or you know I'm not worried about
00:25:37
it
00:25:38
>> compare that to the people that have
00:25:39
gone through the transition and over 50%
00:25:42
of them say boy that was a tough
00:25:44
transition so and that goes to my
00:25:46
earlier point recognize how big this
00:25:48
transition really is and prepare for it
00:25:50
because that's one of the things that
00:25:52
people that haven't done it yet tend to
00:25:55
underestimate how big of a change it'll
00:25:56
be in your
00:25:58
The second one I would say that sticks
00:26:00
in my mind, and this goes to the
00:26:03
non-financial benefits that you receive
00:26:05
from work. People don't tend to
00:26:08
recognize this. You know, you think
00:26:09
about your paycheck. Oh, my paycheck's
00:26:11
going to be over. I've got to be
00:26:12
financially independent. Absolutely
00:26:14
true. But there are also probably five
00:26:17
or six non-financial benefits that you
00:26:20
get from work that most people don't
00:26:22
really think about. One is obviously you
00:26:24
got your relationships at work. You
00:26:26
know, even even when you're working from
00:26:27
home, you're still on Zoom calls. You
00:26:28
have a relationship. You're texting your
00:26:30
co-workers. You know, you you're
00:26:31
involved with other people every day,
00:26:33
common interests, you're working on the
00:26:35
same projects, whatever. You've got a
00:26:37
sense of purpose, you've got objectives
00:26:38
from your boss, you've got deliverables,
00:26:40
you get achievements, you you nail a
00:26:42
presentation, you feel good about it,
00:26:43
you get some feedback, maybe, you know,
00:26:45
it's rewarding. You have a sense of
00:26:47
identity. You know what what do you do,
00:26:48
right? Everybody asks, you know, oh, I'm
00:26:50
a X, right? You're you relate to what
00:26:52
your job is as your sense of identity.
00:26:54
It's those types of things. The biggest
00:26:56
blind spot that surfaced in the study
00:27:00
was not too many people that were still
00:27:03
working expected that they'd miss their
00:27:04
co-workers. You know, maybe again 20
00:27:07
30%. But if you look at the people that
00:27:09
actually retired, almost 60% actually
00:27:13
missed those relationships. And as much
00:27:15
as you think, oh, we'll keep in touch,
00:27:16
the reality of it is you really don't.
00:27:18
You might have one or two particularly
00:27:20
close people that you keep in touch with
00:27:21
a little bit, but everybody says, "Oh,
00:27:23
we'll keep in touch." And nobody does,
00:27:25
right? It's just a reality. So, the
00:27:27
importance of building relationships
00:27:29
with people outside of your workplace
00:27:31
that will continue postretirement is
00:27:33
probably one of the biggest lessons that
00:27:34
I took away from study. the social
00:27:37
aspect, the identity aspect, the
00:27:38
positive feedback aspect, but that is
00:27:40
loneliness in retirement is is kind of
00:27:43
what you just touched on there that we
00:27:45
get these friendships, these social
00:27:46
bonds at work that often times disappear
00:27:49
in retirement and transitioning from
00:27:51
loneliness. There's actually some
00:27:52
interesting data when it comes to
00:27:55
depression in retirement, which I found
00:27:57
surprising. What What is that data?
00:27:59
>> Yeah. And and this is kind of
00:28:00
surprising. I I wrote about this when I
00:28:02
was getting ready for the transition. I
00:28:04
think I've written three posts about
00:28:05
depression in retirement. My most recent
00:28:07
one was a couple weeks ago and and it
00:28:08
was why 28% of retirees are depressed
00:28:11
and it focused on some studies that were
00:28:13
done that really tried to quantify it.
00:28:15
28% is a pretty legitimate number. Yeah.
00:28:17
>> Which is high. You know, if you look at
00:28:18
somebody asked me, well, what's how's
00:28:20
that compared to the population as norm?
00:28:21
I was like, oh gez, I missed that one. I
00:28:22
should have put it in the post. So, I
00:28:23
did some Google searches. Looks like
00:28:25
it's about maybe 10%.
00:28:27
>> So, 10% of the general population are
00:28:29
depressed. 28% of retirees are
00:28:30
depressed. That's a huge number, right?
00:28:32
One of the biggest factors, which is
00:28:33
kind of outside of your control, is
00:28:36
those that are forced into retirement
00:28:38
earlier than they planned tend to have
00:28:40
the highest rate of depression. So,
00:28:42
okay, what are you going to do about
00:28:43
that? You could argue it, but the
00:28:45
takeaway to me, and I put this in the
00:28:47
article I published today about why 72%
00:28:50
of retirees are happy, right? In that
00:28:52
study, I include or in that article, I
00:28:54
included a study that showed 56% of
00:28:57
people are forced into retirement
00:28:58
earlier than they plan. Huge number. So
00:29:01
you're naive if you think I can work
00:29:03
till I'm 65. I'll be fine. I don't have
00:29:05
to worry about it. 56% of people don't
00:29:08
get to the date that they wanted to get
00:29:10
to.
00:29:11
>> So the takeaway from that is be prepared
00:29:14
earlier than you have to be just in
00:29:16
case. And if you still love your job and
00:29:18
you want to keep working for a while,
00:29:19
that's fine. But to be dependent on your
00:29:22
job and suddenly lose it can be a real
00:29:25
trigger into depression in retirement.
00:29:28
The other thing that I found article I
00:29:30
published today was the nine traits that
00:29:33
the happiest retirees tend to have in
00:29:36
common that aren't as common among the
00:29:38
depressed retirees. And those are things
00:29:41
like we're talking about now. A lot of
00:29:42
them are focused. There were three that
00:29:43
were financial and from the top of my
00:29:45
head it was having at least $500,000 in
00:29:47
assets, having your house paid off and
00:29:50
having multiple sources of income. Okay,
00:29:52
those are those are, you know, we could
00:29:53
talk about those, but to me, the more
00:29:54
important ones were the six
00:29:55
non-financials,
00:29:57
and they were actually shown in some
00:29:59
studies to have a higher correlation to
00:30:01
retirement happiness than your economic
00:30:04
situation. So, again, it goes back to
00:30:06
the importance of these non-financial
00:30:08
ones. And the characteristics of the
00:30:10
happy retirees were um a sense of
00:30:12
curiosity. You know, they're they're
00:30:14
really willing to try new things. They
00:30:15
they they are exploring a sense of
00:30:17
purpose. a lot of reference to Wes Moss'
00:30:20
work, which he's done a lot of work on
00:30:21
happiness and retirement and you know
00:30:24
the difference between happy retirees
00:30:26
have an average of 3.6 core pursuits and
00:30:29
depressed retirees have like 1.9, right?
00:30:31
So it's it's double the number of things
00:30:33
that you're you found that keep you
00:30:35
engaged. Friendships, relationships, we
00:30:37
talked about that. The happiest retirees
00:30:40
have close to four close friends. The
00:30:43
unhappier ones have less than two. So,
00:30:45
you know, it it's really good research
00:30:47
and it and it helps people that are
00:30:49
planning for retirement think about what
00:30:51
are the drivers that I need to be
00:30:53
working towards in addition to the
00:30:55
financial elements to maximize my
00:30:58
chances of falling into the happy camp
00:31:00
as I call it. Fritz, let me just take a
00:31:02
step back because I'm thinking to myself
00:31:04
and I'm thinking of some of our younger
00:31:05
listeners when you were saying earlier
00:31:07
that a lot of times it was 56% of
00:31:10
retirees actually were forced to retire
00:31:13
earlier than they desired to. What are
00:31:16
some of those forcing functions? Is it
00:31:18
is it a mean boss who pushes them out or
00:31:20
is it is it something else?
00:31:22
>> Well, there's there's I would say three
00:31:24
main things. One is, you know,
00:31:25
downsizing. People go through
00:31:26
downsizings at work and that happens
00:31:28
unfortunately. So that that's a
00:31:29
percentage. That's kind of the one you'd
00:31:31
think of immediately. But the other two
00:31:33
are a bit more surprising. And one is,
00:31:35
and they're both kind of related.
00:31:37
They're they're health related. One is
00:31:39
either you you've got a parent that you
00:31:41
need to take care of that is taking more
00:31:43
time than you can afford, so you have to
00:31:45
quit to take care of a a spouse or a a
00:31:48
parent. The other one is personal
00:31:50
health. You know, you get into a health
00:31:51
situation and you're and you're no
00:31:52
longer able to work. So those three
00:31:55
probably account for 80 90% of the
00:31:58
reasons. Unfortunately, the downsizing
00:32:00
one is a risk to everybody. You know,
00:32:02
you can argue the health one is somewhat
00:32:03
inside your control. I know you focus on
00:32:05
exercise. I focus on exercise. Do what
00:32:07
you can do.
00:32:08
>> And the reality is most of us as you get
00:32:10
into your later working years have
00:32:14
parents that are getting older. And a
00:32:16
certain percentage of parents require a
00:32:17
lot of care. And you know, some kids
00:32:19
just my my wife, she was a stay-at-home
00:32:21
mom fortunately, but she ended up giving
00:32:23
full-time care to her mom. We were lucky
00:32:25
that we were in a position to be able to
00:32:27
do it. some people aren't so fortunate.
00:32:29
So yeah th those are probably the
00:32:31
biggest factors and again let me let me
00:32:34
address your earlier your earlier you
00:32:35
started talking about younger listeners
00:32:37
and and one thing I would encourage
00:32:38
younger listeners to do on the whole
00:32:41
topic of retirement is focus on
00:32:44
maximizing your savings rate automating
00:32:46
everything and every year that you get a
00:32:48
raise let's say you get a 3% raise
00:32:51
increase your savings 2% you know in
00:32:53
your 401k or in outside mutual funds
00:32:56
whatever but schedule that so that
00:32:58
that's automated and it happens on the
00:33:00
same date that you get that increase in
00:33:02
pay. So what happens? Okay, you get 1%
00:33:04
more in your take-home pay. You feel
00:33:06
like you got a little bit of a bump. You
00:33:07
know, feels pretty good, but you just
00:33:09
increase your savings rate by 2%. So if
00:33:12
you do that year over year and force
00:33:14
those savings and live on the rest,
00:33:17
minimize debt, obviously how you
00:33:18
prioritize your money, you know, pay off
00:33:20
your debt, build your emergency fund,
00:33:21
those are all good pieces of advice. But
00:33:23
the biggest thing is find a way to
00:33:26
gradually over time increase your
00:33:27
savings rate every year and just don't
00:33:30
worry about it. You know, track your net
00:33:31
worth once a year. That's all I did and
00:33:33
it was fine. Track your net worth. Don't
00:33:35
obsess on this stuff. Enjoy life as you
00:33:36
live it and and just give it time
00:33:38
because you know you got anybody can
00:33:40
retire in 15 years. Mr. Money Mustache
00:33:42
got a great article on that depending on
00:33:44
your savings rate. But that's 15 years,
00:33:47
right? That's a long time even for a
00:33:48
more aggressive saver. Don't spend your
00:33:51
whole life in your late 20s, early 30s
00:33:54
through your 40s thinking about
00:33:56
retirement. Enjoy it now. Enjoy your
00:33:57
family. Enjoy your kids. Take nice
00:33:59
vacations every year. Use all your
00:34:00
vacation time. Right? That was one of my
00:34:02
big things I was working. So many people
00:34:04
burn burn vacation days. Don't do that.
00:34:06
They give them to you for a reason. They
00:34:07
don't, you know, they don't care. Take
00:34:09
them. It's self-imposed. If you feel
00:34:11
like you can't take your vacation, so
00:34:12
take it and and enjoy life and and save
00:34:15
as much as you can save. find a way to
00:34:17
increase it and you know wake up in your
00:34:19
late 40s and start looking at the
00:34:20
numbers.
00:34:21
>> I like that for a couple reasons, Fritz.
00:34:23
One reason why is I I'm slowly making
00:34:25
that transition personally from from if
00:34:27
I look at myself 5 years ago where I
00:34:29
was, you know, looking at my
00:34:31
spreadsheets or looking at my budget
00:34:33
multiple times a week, you know,
00:34:34
tracking, paying attention and tweaking
00:34:37
savings rates, rerunning spreadsheets to
00:34:39
see if I could increase it here or
00:34:40
there. It did get a little obsessive. It
00:34:42
got a little tiring. And in the long
00:34:43
run, did it give me any benefit? Not
00:34:46
really.
00:34:46
>> Yeah, there's nothing I can do. There's
00:34:48
nothing you can do about what the stock
00:34:50
market is doing. All we can do is choose
00:34:52
to whether we whether we buy on a
00:34:54
monthly basis or not. I mean, that's all
00:34:56
the decision-m we have in our power. But
00:34:58
the choice to increase your savings rate
00:35:01
every time you get a raise, that's a
00:35:02
phenomenal choice. It's well within your
00:35:04
power,
00:35:05
>> but it only comes up once a year. So, so
00:35:08
there's no need to obsess over it.
00:35:09
Personally, I do uh end of the month.
00:35:11
I'll just look at my budget, make sure
00:35:13
everything's good, we're good to go. But
00:35:14
if someone said quarterly, a couple
00:35:16
times a year, once a year, whatever,
00:35:17
that's fine. Yeah.
00:35:18
>> As long as you're it's somewhere in the
00:35:20
background and you realize that at some
00:35:22
future date you're going to kind of sit
00:35:23
down and put in some work.
00:35:24
>> Yeah. And and you know, in fairness, I
00:35:26
think probably most of the people that
00:35:27
listen to your content, listen to, you
00:35:28
know, read blogs, etc. They they they
00:35:30
pay attention to this stuff. The the
00:35:32
caveat I would say is if you don't pay
00:35:33
attention to this stuff and you've got a
00:35:34
big debt problem and you can't get out
00:35:36
and you're, you know, you're spending
00:35:37
more than you make year on year, month
00:35:39
on month, you're just digging yourself
00:35:40
deeper. Those aren't the people we're
00:35:41
talking to, right? These are people that
00:35:43
are responsible that are that are
00:35:44
working their way through the journey
00:35:45
and they're saving and they're being
00:35:47
responsible. Those are the people that
00:35:49
don't get caught up in the obsession
00:35:50
about it. It's easy to do. I I did it
00:35:52
myself at times and uh and I learned to
00:35:55
your point other than keeping an eye on
00:35:57
your asset allocation. You think of a
00:35:59
bare market, a bare market of your age,
00:36:01
best thing that could possibly happen.
00:36:02
You want the doubt to fall 90%. You want
00:36:04
it to crater, right? It would be it
00:36:06
would be death to me, but it would be it
00:36:09
would be nirvana for you. You want a
00:36:11
bare market, right? So, you got to get
00:36:13
your head out of thinking about, oh, my
00:36:14
net worth, my net worth growing. No, you
00:36:16
just want to buy by by continue to buy
00:36:18
every month. I had a couple bare markets
00:36:20
later in my career and I I doubled down.
00:36:22
I said, you know what? I can take I can
00:36:24
take four months and just jack it to my
00:36:26
savings because I know the market's
00:36:27
really down right now. Right? You've got
00:36:29
to counterintuitive against that fear. A
00:36:32
bare market is a great thing. A a big
00:36:34
long-term rally is not really what you
00:36:36
want right now. You want to buy cheap
00:36:38
and give it 30 years until you need it.
00:36:40
So
00:36:40
>> totally I I I was trying to preach that
00:36:42
to the all the, you know, the 24 year
00:36:43
olds out there who in 2019 were so
00:36:46
excited that their two-year investment
00:36:49
track had had such positive returns. And
00:36:52
it's it's good that they got
00:36:53
enthusiastic for investing. It's good
00:36:55
that they could see that simple
00:36:58
investing strategy into index funds was
00:37:00
yielding these big returns for them. But
00:37:02
it was also to important to point out a
00:37:05
this is pretty abnormal. you know, 20% a
00:37:07
year for four years in a row is pretty
00:37:09
abnormal.
00:37:10
>> And then B, if you actually zoomed out
00:37:12
to the time you retired, this wouldn't
00:37:15
be what you wanted in terms of when you
00:37:18
were buying. Exactly.
00:37:19
>> Here's a quick ad and then we'll get
00:37:21
back to the show. I send a free weekly
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>> But Jesse, I don't want another email.
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at bestinterest.blog.
00:38:09
But it's interesting, Fritz, so you're a
00:38:11
big DIYer.
00:38:12
>> Yeah,
00:38:13
>> I was and still am a a really big DIYer.
00:38:16
So much so that now I'm kind of doing
00:38:18
some of this work professionally and and
00:38:20
helping people who don't want to be
00:38:21
DIYers do some of their financial
00:38:23
planning work. But I understand that at
00:38:25
least once kind of as you were gliding
00:38:27
into retirement and it might have been
00:38:29
more than once you did sit down with a
00:38:31
CFP simply to doublech checkck some of
00:38:33
your numbers, some of your thought
00:38:35
process. So I'm just wondering
00:38:37
>> what was that process like for you in
00:38:39
terms of the decision to sit down with a
00:38:41
CFP and just get everything
00:38:42
double-checked and then actually
00:38:44
logistically what was it like you know
00:38:46
to have that help? I have been a DIYer
00:38:49
my whole life and and I've always been a
00:38:50
I call it a passionate hobbyist in this
00:38:52
stuff. You know, I back when they had
00:38:54
real magazines, I used to read Money
00:38:56
Magazine and Kiplingers and all, you
00:38:57
know, all the print magazines. I mean,
00:38:58
I've studied this stuff for for decades
00:39:00
now.
00:39:01
>> So, I I was knowledgeable about it and I
00:39:02
just enjoyed it as a hobby. And that was
00:39:04
fine, you know, for the first well I I
00:39:06
started 22 and I retired at 55. So, 33
00:39:09
years and for, you know, the first 30
00:39:11
years that was fine. It was sufficient.
00:39:14
My reason for reaching out to a CFP as I
00:39:17
got close to finalizing my decision on
00:39:20
when to retire was, you know, let's be
00:39:23
humble and let's not assume we know
00:39:25
everything. You know, CFPs and
00:39:28
professionals that do this for a living,
00:39:29
they see hundreds, if not thousands of
00:39:32
clients. They they have a process. They
00:39:34
they go through it with a different set
00:39:36
of perspectives than than you and I
00:39:39
possibly can. There's value in that,
00:39:41
right? and and having somebody look over
00:39:43
what you've done. And and I should say
00:39:45
earlier in my career, we had a we had a
00:39:47
thing with Vanguard, a 401k, and you
00:39:49
could do a once a year check up with a
00:39:50
CFP. So, I did that a couple times and
00:39:52
they were always like, "Yep, you're on
00:39:53
track. You're doing well." You know, and
00:39:55
allocation looks good. Savings rate
00:39:56
looks good. You know, the basic stuff
00:39:57
was was good. But my concern was the
00:40:00
transition from accumulation and
00:40:03
building your wealth through the career
00:40:06
into positioning yourself for the
00:40:08
withdrawal of those assets in
00:40:10
retirement, which is something obviously
00:40:12
I'd never done before. So, it wasn't an
00:40:15
area that I had experience. It wasn't an
00:40:17
area that I'd gotten feedback from
00:40:18
Vanguard that I was in good shape. And I
00:40:21
felt like having a guy that walked many
00:40:24
people through this transition is worth
00:40:26
the effort. So, the process was good.
00:40:27
you know, they they have I think all of
00:40:29
them kind of have the same process. You
00:40:30
know, you send them all your assets. You
00:40:32
send them your spending estimates. You
00:40:34
know, they work through their they
00:40:35
always have kind of a little
00:40:36
presentation they do at the end that
00:40:37
shows if you're on track or whatnot. And
00:40:39
my biggest thing was, am I missing
00:40:41
anything? I I knew I could retire 54 or
00:40:44
55. And I was leaning towards 54, but I
00:40:48
also kind of had in the back of my mind,
00:40:50
I wouldn't mind doing one more year just
00:40:52
to kind of pad everything. I'm a
00:40:53
conservative guy, you I always estimate
00:40:56
a little high in my expenses and
00:40:58
estimate a little low on my returns. I
00:40:59
always try to get some padding in there.
00:41:01
So having a a professional look at and
00:41:04
say, you know what, you can make it out
00:41:05
by 54 if you want. You'd be able to do
00:41:07
that. I still decided to go to 55, but
00:41:10
having a professional that kind of
00:41:12
looked over everything and and could
00:41:14
talk to me about some of the things that
00:41:15
maybe I hadn't thought about. Turns out
00:41:16
I I hadn't really missed much. I mean, I
00:41:18
was pretty on track, but having a third
00:41:21
party verify that is is money well
00:41:24
spent. I recently saw just a really
00:41:26
quick social media post from a gentleman
00:41:29
named Peter Lazerov who's a kind of
00:41:31
young upand cominging I think he's a CFA
00:41:34
so he's more on the investing side than
00:41:35
maybe the planning side but one of the
00:41:38
things he said is like just this this
00:41:39
kind of hidden value in doing what you
00:41:42
did is what he called objectivity and
00:41:44
the fact is you know Fritz you're you're
00:41:46
so into your own personal situation as
00:41:49
you should be as we all hopefully should
00:41:50
be but sometimes it is nice to have a
00:41:52
third party come in with fresh eyes with
00:41:55
no sort of personal relationship to you
00:41:57
and just say, "Hey, I'm an objective
00:41:59
third party here. Here's what I see and
00:42:01
maybe it's a little different than what
00:42:02
you see."
00:42:03
>> Yeah. And and I think the other the
00:42:04
other value you can get and not not so
00:42:06
much from a one-off, but why in my mind
00:42:09
it justifies paying somebody to to, you
00:42:11
know, help you on your financial
00:42:12
planning is really more on the
00:42:14
behavioral psychology side of it. If you
00:42:16
panic in a down market, if you have
00:42:19
total stress is market volatility, which
00:42:21
is a reality, there's always market
00:42:23
volatility. I was always like, "Hey, the
00:42:25
market's down. Great. I'm going to
00:42:26
increase my investments," right? I never
00:42:28
worried about that. But human nature is
00:42:30
to worry about it. And the worst thing
00:42:31
you can do is sell after a downturn,
00:42:33
right? And then you got to figure out
00:42:34
when you're going to get back in and you
00:42:35
lose the upturn and it's it's suicide.
00:42:38
And having a professional guide you
00:42:40
through those market downturns if they
00:42:42
make you really uncomfortable can save
00:42:44
you a ton of money over the long term
00:42:47
because that's when you'll get
00:42:48
slaughtered if you make a big mistake in
00:42:50
your asset allocation due to market
00:42:52
volatility. That's probably the biggest
00:42:54
individual mistake people can make and a
00:42:56
professional will typically help you
00:42:58
avoid making those kind of mistakes.
00:43:00
>> Exactly. Another quote that I recently
00:43:01
heard is that behavioral finance is the
00:43:04
last frontier in terms of if you look at
00:43:08
the various services that a a good
00:43:10
financial planner will provide a client
00:43:13
like financial planning has been solved,
00:43:16
right? Like we know what the tax code
00:43:17
is, we know how spreadsheets work, there
00:43:19
might be some complicated math involved,
00:43:21
but there's nothing new happening there.
00:43:24
portfolio management diversification. We
00:43:25
all know the studies on active versus
00:43:27
passive management and and why sometimes
00:43:30
you know why a certain stock or bond
00:43:31
allocation makes sense. That math has
00:43:33
been solved. But behavioral finance is
00:43:35
something that
00:43:36
>> as far as we can tell human brains will
00:43:38
remain irrational for from now to the
00:43:41
end of time. Exactly. And there will
00:43:43
always be a need for an objective, calm
00:43:45
professional to step in and say, "Hey,
00:43:48
now's not the time to panic."
00:43:49
>> Yeah. And and I I guess the last thing I
00:43:51
would think about on this side, one of
00:43:53
the things that brought value to me
00:43:55
doing this, I guess just a confirmation
00:43:57
that we were ready was for my spouse,
00:43:59
right? She she knew I was doing this
00:44:01
stuff and and she kind of pays the bills
00:44:02
and I do the longer term stuff. It works
00:44:04
well, but you know, she trusts me and
00:44:06
she's like, "Yeah, good." But, you know,
00:44:07
getting confirmation from an expert
00:44:11
brings confidence to those that aren't
00:44:13
really managing it day-to-day as well.
00:44:14
So there's, you know, you got to think
00:44:15
about the relationship and the whole
00:44:17
household, not just you as an individual
00:44:18
if you're managing your investments.
00:44:20
>> Totally. And that that happens to me
00:44:22
once in a while, too. It happens to us.
00:44:25
A DIYer will come to us and they say, if
00:44:28
I get hit by a bus tomorrow, just so you
00:44:30
know, I've informed my spouse to come
00:44:32
talk to you. So, you know, here's here
00:44:34
are my numbers. Here's my plan. Here's
00:44:36
what I've done. Sometimes they they want
00:44:39
to sign on and work with us. Sometimes
00:44:41
they just say like as an FYI, if I get
00:44:43
hit by a bus, you're going to get that
00:44:44
next phone call. And it's important to
00:44:46
have that backup plan in place. So,
00:44:49
let's talk about that glide into
00:44:50
retirement one more time. I love this
00:44:52
quote from your book, Fritz. You
00:44:54
encourage your readers to make a
00:44:56
decision early in the process that
00:44:59
you're going to approach retirement with
00:45:01
optimism, curiosity, and gratitude.
00:45:04
>> Real quick, can we dive into those those
00:45:06
three words? Optimism, curiosity,
00:45:08
gratitude. I know you've already you've
00:45:09
already mentioned curiosity a couple
00:45:10
times in this episode so far.
00:45:12
>> Yeah. And and really this came from 3
00:45:14
months before I retired. I I wrote the
00:45:16
ten commandments of retirement. It's
00:45:18
actually hanging on my wall back there.
00:45:19
And and they were really kind of my
00:45:22
guiding principles on how I wanted to
00:45:24
live life in retirement. And the
00:45:26
interesting thing as I looked as I
00:45:27
thought through it and wrote the post
00:45:28
and wrote the ten commandments and and
00:45:30
look at it even now 5 years later. The
00:45:33
interesting thing to me is how many of
00:45:34
those are mindset related. And really
00:45:36
having a positive mindset going into
00:45:39
this, it it's almost a self-fulfilling
00:45:41
prophecy like many things in life,
00:45:43
right? And and the good thing is all
00:45:46
those those three things you just
00:45:47
mentioned, those are all mindset related
00:45:49
items. And the mindset is something that
00:45:52
for the most part we have control over,
00:45:54
right? We can choose to be negative or
00:45:56
we can choose the glass is half empty,
00:45:57
the glass is half full. It's your
00:45:59
choice. And making a decision that
00:46:02
you're going to look at things from the
00:46:04
optimistic and not polyiana unrealistic,
00:46:07
but just choose to look for the good in
00:46:09
life can go a long way. Right? So that
00:46:13
was kind of the basis for those for that
00:46:15
quote. And then the specific things
00:46:17
about curiosity.
00:46:19
You've got to fill your time with things
00:46:21
that bring you purpose and bring you how
00:46:22
are you going to find those? Right? You
00:46:24
you're suddenly 100% responsible for it.
00:46:27
You've always had somebody telling you
00:46:28
since you were four or five years old.
00:46:30
You've always had somebody telling you
00:46:31
what to do and how to fill your day.
00:46:33
Suddenly, you're responsible for it. And
00:46:36
the best way to do that is to listen to
00:46:38
your curiosity, pursue things that
00:46:40
interest you, take the first step. And
00:46:43
I've got just a myriad of examples of of
00:46:46
people that have done that. And you just
00:46:48
start. My blog is one, you know, I just
00:46:50
started writing a blog just out of
00:46:51
curiosity. And it's turned into a major
00:46:54
purpose in my retirement. That purpose
00:46:55
now is bringing fulfillment and reward
00:46:57
and recognition and sense of purpose and
00:46:59
all those things we talk about. But it
00:47:01
all started with pursuing curiosity. You
00:47:04
know the other thing I would say about
00:47:05
gratitude, you know, recognize if you're
00:47:07
able to retire earlier than average,
00:47:10
you're a very blessed person, right? I
00:47:13
mean, how can you not be thankful for
00:47:14
that? And what I found is as you make
00:47:18
that transition from your working years
00:47:20
to what am I going to do with my time?
00:47:22
finding a way to take that time to help
00:47:24
other people and and be gracious that
00:47:27
you're in a position where you don't
00:47:28
need anybody else's help, but guess
00:47:30
what? Now you're free. You can help
00:47:31
other people. So, we started a charity,
00:47:33
my wife and I, and Freedom for Phto. We
00:47:35
build fences for free for low-income
00:47:38
families that have dogs on chains. and
00:47:40
the reward of not only being outside
00:47:42
with a group of volunteers doing the
00:47:44
physical labor and having that sense of
00:47:46
community of like-minded volunteers, but
00:47:48
more importantly seeing the help that
00:47:50
you can inject in a community is
00:47:52
rewarding beyond work. Again, that comes
00:47:54
from the mindset and pursuing things and
00:47:56
seeing where they lead. That's awesome,
00:47:58
Fritz. That's awesome. You might know
00:48:00
this by now, but my wife and I, we
00:48:02
foster dogs, so we're big dog people.
00:48:04
>> Yeah, I saw that in your email. Yeah, I
00:48:05
was going to mention that. Yeah. Yeah,
00:48:06
that's awesome. We're both dog guys, so
00:48:08
yeah, that's cool. Well, first, this has
00:48:10
been excellent, and I I'd love to put a
00:48:11
a stamp on this last question for you,
00:48:15
and it's very much in line with what
00:48:16
we've been talking about, but my typical
00:48:18
listener is probably in that 25 to 40
00:48:21
range, but that means that their parents
00:48:23
are in that 50 to 70 range. So, if you
00:48:27
had one quick tip to give to a child of
00:48:30
a pre-retire and then a second quick tip
00:48:34
to give to a child of a postretire,
00:48:37
what would those tips be?
00:48:39
>> You know, I've done hundreds of podcasts
00:48:41
and I've never had that question. That's
00:48:42
that's a very good question. The first
00:48:44
thing that came to my mind when you said
00:48:46
that is when I talked about depressed
00:48:47
versus happy retirees. The chances of
00:48:50
depression are four times higher if
00:48:52
you're divorced than if you're married.
00:48:53
Now, if you get remarried one time, the
00:48:56
odds are the same. You're okay. But if
00:48:58
you're if you're divorced, the odds go
00:48:59
up. What changes the odds for a divorced
00:49:03
person is how strong their social
00:49:05
network is. And as a child, you are a
00:49:09
key piece of that social network for
00:49:11
your parents. So, number one, support
00:49:14
them. You know, be encouraging, show an
00:49:16
interest, ask them what they're going to
00:49:18
be doing. You know, share a podcast with
00:49:20
them. Say, "Hey, I just listened to this
00:49:21
guy. You know, you might be interested
00:49:22
in him." You know, share resources. help
00:49:23
them find they're struggling with the
00:49:25
journey whether they tell you about it
00:49:26
or not. Everybody's anxious about
00:49:28
retirement. So try to find a way to have
00:49:31
that discussion with them. And the other
00:49:33
thing is, you know, I'm thinking now
00:49:36
more people that are into retirement,
00:49:38
encourage whatever they're discovering
00:49:39
and whatever they're, you know,
00:49:41
experimenting with, encourage them to
00:49:43
continue to pursue their dreams and and
00:49:45
live a great life. The other thing at
00:49:47
some point as they start getting older,
00:49:49
make sure you have the discussion with
00:49:50
them about legacy and estate planning
00:49:52
and things like that. A lot of kids
00:49:53
don't. I had it with my dad before he
00:49:56
passed and it was very helpful because I
00:49:57
heard directly from him what his wishes
00:49:59
were and after he passed. Having his
00:50:03
input on what, you know, he would like
00:50:05
us to do with the estate and things like
00:50:07
that gives you freedom after the fact to
00:50:11
like we we built a uh we built a
00:50:13
warehouse. We bought four acres next to
00:50:15
our property and we bought a big barn.
00:50:16
But I did that because I know my dad was
00:50:18
saying, "Look, you I know you're
00:50:19
financially set. If you receive any
00:50:21
money from me, you might not, right? We
00:50:22
might have spent it all. Who knows? But
00:50:24
if you get any money from me, I want you
00:50:25
to spend it. I want you to do it for
00:50:26
something that brings good purpose in
00:50:27
your life." And hearing his voice in the
00:50:30
back of my head, even after he was gone,
00:50:32
was really helpful, you know, to help
00:50:35
encourage you that that's an okay thing
00:50:38
to do. That's what he would have liked.
00:50:39
So have that discussion with them about
00:50:41
their wishes for you, you know, after
00:50:43
they're gone at some point. So yeah,
00:50:45
stay engaged with them. If you've had
00:50:47
arguments with them and you've kind of
00:50:48
got a distraught relationship, get over
00:50:51
it. You know, once they're gone, you're
00:50:52
going to regret it if you don't. So, you
00:50:54
know, bury the hatchet, find a way to
00:50:56
make amends, take them out to a nice
00:50:57
dinner and say, "Look, I know we've had
00:50:58
some rough patches, but you know what? I
00:51:00
really want to reestablish our
00:51:01
relationship together." Because to a
00:51:04
parent, there aren't too many things in
00:51:06
life that matter more than your kids.
00:51:08
And based on my experience, I've been a
00:51:10
child and I've been a father. Parents
00:51:12
probably love their kids more than the
00:51:14
kids realize. So give your parents a
00:51:16
break and and make the first step in
00:51:18
reestablishing a rapport if it's, you
00:51:20
know, gotten week and and make the
00:51:21
effort to call them every week. Take the
00:51:23
time. Yeah, I know it's a hassle. It's
00:51:24
Sunday. I'm off work. I don't want to
00:51:25
talk to mom and dad. Talk to mom and
00:51:27
dad. Take the time to call them after
00:51:29
you listen to this podcast. Call mom and
00:51:31
dad and just touch base with them. It
00:51:33
It's worth it.
00:51:34
>> I love that answer, Fritz. on a couple
00:51:36
of the estate planning things listeners
00:51:38
you can go back to episode 55 the title
00:51:40
was conversations with aging parents and
00:51:43
was all about that kind of topic
00:51:45
>> but uh I really like that Fritz where
00:51:47
you know most of those tips most of
00:51:49
those conversations had to do with the
00:51:50
non-financial side of retirement and
00:51:52
that really is such an important thing
00:51:54
so Fritz Gilbert of the Retirement
00:51:56
Manifesto thank you for coming on the
00:51:58
Best Podcast
00:52:00
>> hey Jesse I really appreciate it love
00:52:01
your show and love what you're doing and
00:52:02
I'm really honored to be on it I
00:52:04
appreciate it very much
00:52:05
>> thanks for tuning in to this episode of
00:52:07
Personal Finance for Long-Term
00:52:08
Investors. If you have a question for
00:52:10
Jesse to answer on a future episode,
00:52:12
send him an email over at his blog, The
00:52:15
Best Interest. His email address is
00:52:17
00:52:19
Again, that's jessevestinterest.blog.
00:52:23
Did you enjoy the show? Subscribe, rate,
00:52:25
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00:52:27
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00:52:29
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00:52:32
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00:52:34
on the next episode of Personal Finance
00:52:36
for Long-Term Investors. Personal
00:52:38
Finance for Long-Term Investors is a
00:52:40
personal podcast meant for education and
00:52:43
entertainment. It should not be taken as
00:52:45
financial advice and it's not
00:52:46
prescriptive of your financial
00:52:48
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