look it's great to have fun and believe it's all
going to work out um but uh it's also important to just have the conversations name the fears name
the excitement name all the hopes dreams whatever but then also get down to the nitty-gritty
and how are we going to make that happen hello Darlings and now it's time for your favorite part
of the show our stacking Benjamin's headlines our headline today comes to us from investment news
which is an industry rag for uh people who who help other p
eople with their money and this
piece is written by Steve Randall and Steve writes Americans want to live to 100 but can they
afford a 30-year retirement gentleman let's dive in he says millions of Americans are hoping for
the length of retirement previously enjoyed only by those who could afford to give up work in their
50s or live well beyond the average while official CDC figures show the US life expectancy averages
73.5 years for men and 79.3 years for women a new report shows ambition
to defy the stats raising
the question of how retirees would be able to afford the lifestyle they want specifically
the survey from Corbridge financial and the longevity project reveals that 54% of respondents
say their goals to live to 100 but that does not necessarily mean they plan to work longer to fund
a retirement running to three decades or more with 40% still aiming to retire between 65 and 69 so
guys let's get this let's get this right 40% of people say they're going to retire betw
een 65
and 69 and then they say that hey I'm going to live to 100 I don't know OG you talk about
math all the time not sure math is going to be maybe kind of difficult on that it's it's really
interesting to think about the fact that if you retire when you're in your 60s and you live to be
100 you'll probably spend more time in retirement and and being a kid than you will having spent
uh time working to accumulate the money for all of that other time right the first obviously 18
or 20 year
s or whatever is funded by your folks but but generally speaking like from that point
forward it's on you and uh and 100 I think is uh I think it's light I I think uh I think some
people should aim higher I don't know 100 seems boring Bob Bob hold are you going going to be when
you pass away um I'd like to be 101 I mean because like if I don't want to settle at a 100 that's
like just like that's following the herd it's barely getting your lips above water right it's
like like just one more
chin up it's like one more breath and then at 100 you take up like drinking
faster and all kinds of smoking and all all the drugs all of them everything and then I'll say
that was the key to life yeah that's waiting for that moment It's Gonna Keep me going absolutely
but seriously you know what this this speaks to though Bob is that it sounds like a lot of people
you know thinking about unicorns and rainbows and and life after age 60 we're spending a lot of time
thinking about getting away
but do you think we're spending enough time talking about what we're
going to do after no I like it's amazing how many clients I still have right now who are in
their 50s and 60s saying I should think about saving some money in my IRA or retirement account
wow like you've missed the boat you'll probably have to go to Florida or somewhere where they have
good Senior Care did they have good Senior Care in Florida well they did I don't know anymore they
that's we were sending people to Florida
for a while just go Ju Just go move to the Villages and
put that loofah on your on your thing that that that says that you want a roommate exactly a lot
of roomies for people that have no idea what I'm talking about just go look that up because that's
it's a little creepy in The Villages guys we talk about what the wealthiest retirees know you know
West Moss had this this great book that we have talked about a lot I feel like lately I think that
this idea OG that I'm just going to play gol
f or I'm just going to I'm just going to travel you
for 40 years is that really what you're going to do it's got to get deeper than that I suspect that
there's a couple of different pieces here that you have to consider the first obviously the money
aspect of it right which is like how am I going to fund all of this and having a rising lifestyle
costs throughout retirement you know you get to 60 6570 whatever it is when you you know pull the rip
cord and you're done working you're done earn
ing money but that doesn't mean that your expenses
are stop are going to stop increasing so that's going to continue you know at the at just normal
inflation prices triple every 25 years give or take so it's like it's hard to picture this but
you know go get a gallon of milk right now it's five bucks and in a quarter Century from now it's
going to be 15 and you go n that's not right it's like well yeah it is because it was a dollar and
now it's five and it's going to be 10 and then 20 it's
like that that's going to continue forever
so you need to have obviously a bunch of savings and a bunch of Investments that are going to
keep keep up with inflation but then there's the other aspect of it in terms of what are you
going to do with your time what are you going to do with your health because nobody wants to live
to be 100 or 101 if the last 20 years of their life is uninspiring and full of you know health
issues and all that sort of stuff so you have to dedicate time to that a
nd you have to dedicate
money to that because you have to eat right and you have to exercise and you have to you know
go to the doctor and do all these things that consume capital and consume time to be able to do
the other stuff that you want to do it's not this life of like I just get to wake up at 11:00 in
the morning and you know drink tea on the front porch and and and I'm G to live for 40 years like
that's that's not very inspiring in fact I think a lot of people would argue that that
's probably
a very uninspiring way to spend you know 10 20 30 40 years well and I want to start off with
what you said first which was about investing for it right because what I see are financial
institutions and um and product sellers get get really excited telling us about all the all the
downturns that we could have all the bad things and so Bob I don't know how often you see it when
you're doing taxes for people but I gotta believe you see people getting into some of these products
th
at historically underperform because they're so worried that the Bottom's going to fall out of
the stock market and they're not going to keep up oh I have clients older clients that will tell
me and not even just older clients oh I just took all my money out of the stock market and I put it
in a bank account because I'm worried but when it starts going up again I'm going right back in
of course people are mostly are not thinking logically about what they need to do with their
money they're
thinking emotionally and I think they are thinking about unicorns and I think they
are pie in the sky without tangible planning and tangible real conversations about how to plan
for it but is it is okay though Bob to feel the emotions like I think you're not telling people
not to feel the emotions but just understand where it's coming from yeah absolutely I mean look it's
great to have fun and believe it's all going to work out um but uh it's also important to just
have the conversations na
me the fears name the excitement name all the hopes dreams whatever
but then also get down to the nitty-gritty and how are we going to make that happen let's also
dive into this idea that I'm getting out of the stock market because it's going down yeah and
I'm gonna get back in when it starts going back up Bob you're laughing I'm laughing O's laughing
why is that not feasible you're always going to lose I mean if you're go if you're buying as it
was Rising you're you're it's it's it's a los
ing proposition I mean I know emotionally people are
like this is worrisome that's when it's going down like start buying start buying start buying
more um you got to be able to tolerate your emotions I actually did this when I was younger
and cerebrally I knew better but but emotionally I uh I went and pulled some money just because
I thought it was quote high stuff was high right and then one of two things happened either a
kept going up and then I'm like well I can't get back in now and
then what I'm H you know
what I'm hoping for then OG I'm hoping for the stock market to fall so that I can get back in
like screw the rest of my money that's still in I'm hoping that this particular thing goes down
which if the market you know what roughly 70% of the time goes up I'm kind of screwed there well I
think what you talked about at the very beginning of this little section here was most important
it's like the sales people and the product sales people are the ones that are drivin
g these sorts
of belief systems that are unrealistic for a 30 or I mean heck even a 20-y year you know retirement
period of time because I mean how many times do we know these rules of thumb like you should
have your age in bonds or you know or Target day funds right that what you pick the day that
you're going to retire or the year you're going to retire and they get conservative as you get
close to retirement as if you need all of your money on the day you retire if you retire when
you'r
e 60 you need money obviously when you're 61 you need money that year you need money when
you're 62 but you need the vast majority of your money somewhere beyond 65 to Infinity right and
so why would you invest your money or have a product or or you know a solution which is hardly
the answer here but or hardly the the right word why would you have one of these things that is
specifically designed mind to make it so that your money doesn't grow over a long period of
time when you really only
need short-term money for short-term time you still need 30y year money
and 40- year money ask a 25-year-old how they're investing for retirement and they go oh I've got
you know I've got forever well when you're 65 you also have forever you just have a little bit
that you need right now and that's really the big difference if you're taking all of the risk
off the table you're taking all of the return off the table there is no product in the universe
of financial products that gives you no
ne of the risk and all of the return that doesn't exist in
real life period full stop and anybody who says that they that they have that solution is full
of full of something that we'd have to beep out anyway which brings up the second so if the market
goes up I have to I have to fight it off but these product people OG to your point you know they're
like hey safety when I pull my money out and the market goes down after I pull it up a I feel
brilliant which is completely stupid and it's go
ing to wreck me because I'm going to make bad
choices in the future but then number two I feel really safe while I'm in cash and you know how
that feels Bob I mean these people when you're like no no no you got to get back in they're like
hey but I'm safe where I'm at I am very look at the market around me is going down what could be
the problem well you know what's so interesting people love to feel safe and they love to just
here's my favorite thing at tax time um I lost money in the stoc
k market I get to write it off
it's a write off and I'm like so you lost money it's great that we're going to get a benefit from
your loss but you lost or they'll come in and go oh my God I made money this sucks I have to pay
oh that's terrible oh you're making money um and so like it feeds right into this piece about not
being logical I've got so many clients that are so upset they have capital gains and so many clients
excited that they lost money they get to write off prior orties priori
ties well and this is this
it's an interesting uh vein here Bob that you opened up because when I was talking about these
products that o OG you're kind of mentioning too are these half exlained products Equity index
annuities right they're going to get a portion of the stock market gains in exchange for you
can't lose money hey you get to participate in the stock market which is a crazy way to phrase
that and a perfect way to sell it you're going to get a portion of the stock market G gain
s and
you're not going to get any of the downturn and I want to get back Bob to that being a tax strap but
first let's talk about OG why that construct 99.9% of the time maybe 100% of the time doesn't work
why does the equity index annuity not work well I mean I hate to just pick on a particular product
and say it's not great because you know like we've talked about over let's do it anyway you know I
mean here's the thing there's a purpose for every Financial product that's out there the pr
oblem
with most Financial sales people is if if that's all that they're focused on or if that's where
the commission is at or whatever the case may be you can spin whatever you need to spin to make
it sound like you need to make it sound so you can put food on the table you know so there's a time
and a place for something like an annuity or a whole life policy or something like that it's just
they get applied so incorrectly over long you know over hundreds and hundreds of thousands of peopl
e
and any sort of financial product this goes back to you know whether it's an index annuity or a uh
whole life policy or or an in or an investment you know we see people who say like oh I you know this
investment pays me 177% dividend that's how that's awesome it's like well what's the other end of
that stick like that doesn't mean it's awesome it just means that they're you know spending all
their cash flow right now and not reinvesting in in in the market I mean or reinvesting in their
product so an index annuity works very very simply in that the insurance company will write
a contract with you and guarantee that you're going to get a certain percentage of the overall
return of a specific index whether it's the S&P or any other number of indexes that you pick and
in exchange for that they will make sure that the account value doesn't go down well they're
ensuring that the account value doesn't go down because they're taking all the upside Beyond a
certain amount so they
might say well we'll give you 40% of The Upside and 0% of the downside well
doesn't take a what what do you call Joe Rocket drivers rocket driver it doesn't take a rocket I
know if you know that term Bob but a rocket driver is like a rocket scientist but they actually drive
the rocket they're driving the rocket yeah I love it I actually heard a financial planner who was
an idiot in my early days of financial planning I was getting ready to go home and I could hear
him in the conference room
with a client of his saying well it doesn't take a rocket driver to
understand on this and that was totally something Frank would say none of us could figure out how
Frank ever got a client by the way but it doesn't take a rocket driver doesn't take rocket driver
he was a Salesman yeah I mean at the end of the day there is no such there is no free lunch you
know if you if you need market returns which you need to have for long-term spending ability that's
the only thing that outpaces infla
tion is equity Returns the ownership of businesses period that's
it so if you're going to have those things you have to be okay with the ups and downs of being a
business owner being a business owner at a grand scale like owning you know apple or Amazon or
whatever is part of your Investment Portfolio you're still a part business owner and they have
good years and not so good years but that's the exchange that you get for having a return that's
greater than the money sitting in cash and um
into a company like uh like apple and just going do you
know who I am I don't know if you know this but I own a big piece of this company I own 0.00 64% of
right of this Bob have you tried that yeah I have not do you know who I am Joe does it all the time
Tex Arcana I do it doesn't in Hollywood that just doesn't work everybody's like yeah whatever uh
who hasn't who doesn't have an Oscar and a HBO special get over yourself oh you only oh you only
have a podcast we all have those wow everybod
y has one this idea OG though the equity index annuity
to be clear when you talk about the participation rate you can go back and do that math and usually
doesn't just a fixed annuity rate often beat with that participation would be every product's
different but yeah I mean if if you're going to use it for uh an investment a part of your
Investment Portfolio you have to assume that it's going to be something like cash or something like
fixed income it's that's the that's the long-term rate
because when you cap the upside even though
you're taking away the negatives the average goes way way way way down so we see that most of the
average returns are three maybe four uh percent over long periods of time um and that's much
more like a cash return or much more like a fixed income return not an equity return and and
then Bob the second thing about annuities and to your point people going oh I had to pay taxes I
read a thing recently this is why people don't take money out of annui
ties is because it is uh
it's it's last in first out meaning that that interest inside the annuity is going to then build
up and you've got to pull out all of the interest before you before you actually spend the money so
you must see people that go I'm just not going to spend any money because I don't want to pay the
tax which is kind of ridiculous yeah no it's crazy I I just had a client in the rmd is 250,000
a year the rmd 250,000 wow very annoyed that they're believe it or not their eff
ective rate
is about uh 18% because of some other stuff going on hold on a second before you get to the rest
of that story I want to Define for people what because Bob what you just said went over a lot
of people's head oh okay the rmd is the required Min of distribution you have to take this uh uh
later in retirement we'll just leave it there and it's based on your age but but a requirement of
distribution of $250,000 means there's probably some number like a bajillion dollars in this Ira
yeah and I'm thinking your rmd is 250 and you're complaining that you're paying you're not even
in the highest tax bracket and they're older so and they're but I love that they're planning
for their kids you know at 89 years old they're still upset about paying tax with all that money
coming in they are set for the next three years right but how do you tell somebody like that to
spend their money you know how do you convince them because the reason they got that money in
the first place Bo
b was that they you know they were natural Savers and not Spenders well it's
really hard I've got a client that now it's been six or seven years that he's got about6 s million
all just sitting won't spend a dime won't remodel the house won't take a trip won't just in case
because something could happen yeah and and I I try to force clients I'm like you must spend
this much money by the time I talk to you next year next year they're like I didn't do it I
couldn't it's it's if you're saving y
our whole life at some point have a little fun with it but
it just it puts a pit in my stomach I mean oh gee there's two sides of this you know somebody wants
a 40-year retirement and you can't get them to save any money because they're busy yellowing
it up today and then they're going to yell low themselves out of money by the time they're 80
when they when they are going to live to 100 but and then on the other side you get the person
who's the Uber saver who can easily do it and then the
y get to retirement and they forget to have fun
which means that they probably won't live to 100 I mean all the studies show if you've no purpose
no Hobbies no nothing you're probably not GNA make it that far Bob I've got a real great solution
for this by the way the next time that you meet with these folks you just uh adjust your bill to
the inverse of their spending I will charge you whatever you don't spend you just go like look I
need you to spend 400k this year on whatever you want the
y go I couldn't do it just go no problem
I understand here's my invoice 350 to me 50 to you see how this is going to work and then they go oh
wait a second I like it I'm gonna spend 400 you go mission accomplished you know there go I like it
just talking about planning and not planning I I recently had somebody die unexpectedly they have
amassed $30 million worth of real estate and all this stuff and the family who could care less in
nine months has liquidated everything just so they can ge
t to their cash and theirs now the person
who spent their whole life working so hard in LA to be able to buy 20 pieces of real estate with 15
units and 10 like to just watch it all go in nine months somebody's whole life and people just don't
want to plan or don't want to think that they're going to die so let's just not talk about it did
you actually just use the phrase die unexpectedly like isn't that like 97 well that is most of us
right I mean we're going to die people freak out when I
tell them that but uh yes it but he was
younger then and even though they were telling him hey your health is taking a turn it's like
it'll be fine so there's a little denial oh that's horrible that is that is horrible well and even
worse is he's he's he spends a Lifetime Building it and it just all gets torn down quickly yeah
probably then wasted on stuff because you feel like a lottery winner oh yeah these people didn't
have to feel an ounce of sweat to get this money and most people I th
ink will spend right back to
the comfortable balance and so if they're used to 5,000 bucks they'll blow through two or three
million bucks just to get back to that number they're really comfortable with I I just spend
a little time crapping all over uh annuities but but but realistically OG I mean I think
if somebody is going to live to a 100 isn't this something cfps point to is that maybe some
longevity Insurance might be something we might think about the latest uh uh Financial products
in the annuity space are on these uh lifelong annuities which which are basically the concept
is is that you don't start them until you're in your 80s and 90s versus you you know have saved
money you put it in you know now you turn on this stream of income when you're 65 and you're ready
to retire instead it's the opposite it's like this is your longevity Insurance uh of of like oh crap
I live too long long how do I have some money when I'm in my 90s then then you turn on this uh this
this
final bucket so to speak and it produces an income but the reality is is again it's the same
thing you're you're paying for a guarantee well what happens when you pay for a guarantee you
take some return off the table because that's just how that that's just how that works you can't
have both the guarantee and all the upside at the same time you could do this on your own and with
your own you know trunch of money and figure out and do the math and well I'm going to need X doll
between 90 a
nd 100 and I'm 60 today I need to set aside you know a bucket and this is my age 90
money which is what you should be doing anyway so you can go buy a product and have an insurance
company do this guarantee for you and it costs you some money or you could just do it yourself if
you can do the math and and trust yourself not to you know pop said blow through two million
in a couple years you know for for for fun um although that does sound like a pretty enjoyable
if anybody can do that you c
an do it o well trust me I've I've modeled that behavior I I assure you
there's I've already spent the next two million in my mind that's the downside that's nothing's
new for me because I'm like oh I've already I've already consumed all that but I mean one thing to
think about though like if you're 90 you're may you may not be in your best thinking days those
last five to 10 years you really need to have that stuff set up ahead of time absolutely you may
be needing Home Care you may need a
ssisted living there's like so many things where you're not going
to have a lot of choice uh it's going to be made for you at a certain point and I think a lot of
people just don't take that into consideration you don't have a lot of choices at that point
B I'm 56 they say that about me now you might not be your that about you for years Joe I don't
know if you know this but you're on a podcast what the hell are you thinking it's all downhill from
here that's right what's going on halfway to
11 Joe then they H me a jelly donut and I'm good
just very happy talking in the microphone Joe
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