Latest / Financial Survival Network / Not Your Father's Retirement -- Walter Young #5893

Transcript

Not Your Father's Retirement -- Walter Young #5893 · Financial Survival Network

• 0:00
  A lot of retirement people now are shifting towards some sort of secondary career.
• 0:05
  It could be something that they consulting in a business that they were part of,
• 0:08
  our industry they're part of. It could be as simple as uber.
• 0:11
  Remember, we're just living a lot longer now too, so retirement lasts a
• 0:15
  lot longer than it ever has for generations in the past. And I think
• 0:19
  people are more active, healthier, and are more capable of having a secondary
• 0:23
  career. You are listening to carry Lets's Financial Survival Network, where you get
• 0:28
  valuable information you just can't find anywhere else to thrive in today's trying times.
• 0:34
  You need the Financial Survival Network now more than ever. Go to Financial Survival
• 0:40
  and Network dot com and get your free newsletter and gift. Financial Survival Network
• 0:46
  now more than ever, and welcome. You are listening to and watching the
• 0:55
  Financial Survival Network. I'm your host carry Loves Well. If you're a bo
• 1:00
  or an exer, you're thinking about retirement, what it's going to be like,
• 1:06
  will you ever be able to do it? Well? This is not
• 1:08
  your father or your grandfather's retirement. You need to go to this website.
• 1:14
  You need to buy this book, The Fifth option dot com Retirement solutions for
• 1:19
  a modern economy. And I think you're going to really enjoy hearing from Walter
• 1:26
  Young, my next guest. The book is Fifth Option Your Retirement and why
• 1:34
  your retirement plan won't work the way you think it will. Walter, great
• 1:38
  to have you on the show. And why oh first, if you got
• 1:45
  a question for Walter and myself, I urge you to send me an email.
• 1:48
  I read them all. I'm caught up on everything now because I scaled
• 1:52
  back asking you for emails. Send me your email k l at kreluts dot
• 1:57
  com. Walter, pleasure, honor to have you on the show. So
• 2:02
  retirement ain't what it used to be. So you're not going to get a
• 2:07
  gold watch from your employer because you worked there twenty five or thirty years and
• 2:12
  a retirement bash. Although I'll tell you my friend retired as a pilot from
• 2:17
  United Airlines. I don't think they gave him a gold watch, but they
• 2:22
  did shoot his plane with water cannons at Newer Airport on his last flight.
• 2:29
  There are a few bastions where perhaps you can celebrate a long career like that.
• 2:35
  Yeah, so what's different now? How did it happen? What do
• 2:38
  you do about it? Yeah, great question. So you kind of hit
• 2:42
  the nail on the head, which is really we're moving from what once was
• 2:46
  a pension in society into a pension less society. Maybe a few of the
• 2:50
  boomers still work for cities or states or something like that where there are some
• 2:53
  pensions, but by and large, what's happening now is that we are probably
• 2:57
  more responsible than ever for our retirement outcomes. And I could also argue that
• 3:02
  we may be the least prepared for that in terms of education and understanding of
• 3:07
  how retirement really works. And so I decided to write a book that really
• 3:10
  helps take some of the latest research from the academic world and turn it into
• 3:15
  a story form so that it's a little more accessible to all of us,
• 3:19
  so we don't just get lost in the charts and grass. And the idea
• 3:22
  behind the fifth option is that we are now moving into a time frame where
• 3:28
  we have to deal with two unknown questions, and I deal with this in
• 3:31
  the form of a story, which is simply this. Imagine you are on
• 3:36
  a desert island and you recognize that there's no way off this island, and
• 3:39
  in front of you is a barrel of water, and that water represents all
• 3:45
  the water you have to drink on the island. Carrie, how much water
• 3:49
  would you drink each day? Well, I wouldn't be overdoing it because I
• 3:54
  don't want to get rid of my supplied So the minimum require to keep me
• 4:00
  hydrated and in good health. Right, that's exactly right. So I asked
• 4:04
  this question, you know, as I speak around the country and lots of
• 4:09
  groups, I asked that question. But there would be two other pieces of
• 4:12
  information that would be helpful. One is how long am I going to stay
• 4:15
  on this island for? Well, I can't know that necessarily. Second,
• 4:18
  will it ever rain? Will it ever replenish my bucket? I can't necessarily
• 4:23
  know that answered either. And so if I don't know the answers to those
• 4:27
  two questions, then what you said is absolutely correct. I must take the
• 4:30
  least amount of water outs each day just to stay alive, hoping for some
• 4:34
  sort of a rescue. But now let's change the scene a little bit.
• 4:38
  Let's pretend, instead of being on a desert island, that we're actually in
• 4:41
  your office on the last day of work, and your office provided you a
• 4:46
  big barrel of money, and that is the money that you have that's going
• 4:48
  to last for the rest of your lifetime. So Kara, ask you again,
• 4:53
  if you're driving home with your barrel of money, how much money can
• 4:56
  you spend each day? How much money can you spend each day? Well,
• 5:00
  again, you want to conserve it because you don't know how long it's
• 5:02
  going to have to last. So the minimum amount that you require for your
• 5:08
  needs, plus whatever pleasures you want to engage you in, so you can
• 5:15
  see that it. Interestingly, it's the same kind of question, right,
• 5:16
  So we want to ask now we want to know two more pieces of information
• 5:19
  to be able to dial this in, which is one how long am I
• 5:21
  going to live? You can't know that, and two what rate of returns
• 5:26
  will the market provide you? You can't know that either. And so when
• 5:30
  we are unable to answer those two questions, the default in financial planning is
• 5:34
  to take out the least possible so that it can last a thirty or thirty
• 5:39
  five year period of time. And in fact, the study was done in
• 5:42
  the nineteen nineties that asked that simple question, which is what is the maximum
• 5:46
  withdraw rate I can take out of a portfolio so that it lasts thirty years?
• 5:50
  And the answer to that question. Back in the nineties was four percent,
• 5:55
  So a lot of your listeners may have heard of the four percent rule
• 5:57
  or the safe withdrawal rate rule, and that was its origin. Today,
• 6:00
  you might have some arguments. Some folks like doctor Wade foul for the American
• 6:05
  College of Financial Services would argue that it's closer to two point eight percent.
• 6:09
  Others like Vanguard might tell you that it's three point five percent. But the
• 6:13
  whole point of the conversation is that it's a much smaller number than you're expecting.
• 6:17
  So what does that mean? In reality? It means that if I
• 6:20
  actually can save a million dollars, then I should be budgeting somewhere between thirty
• 6:26
  and forty thousand dollars of income to live on. And for most of us
• 6:30
  that's just not enough money to live on well. But also a million dollars,
• 6:33
  there's a lot of money to save, right plus your social Security you
• 6:38
  got to throw into the obsivation you're going to get some and you know,
• 6:42
  I think the maximums forty three forty five hundred dollars a month now in that
• 6:47
  neighborhood, depending on your work record. And so what people are starting to
• 6:51
  wake up and realize is that that the amount of money that you're going to
• 6:56
  save is not going to generate as much income as you would hoped. And
• 7:00
  so traditional financial planning will give us four options. I call them the four
• 7:02
  frustrating options. The first option, I'll tell you is what you have to
• 7:05
  save more, We'll save it. More money always solves a financial problem,
• 7:09
  but it's not easy to do. And the other thing, Carrie that's interesting
• 7:12
  is that when I have to save more, I'm sacrificing today's lifestyle hoping for
• 7:17
  a better tomorrow lifestyle. And so we have these two lifestyles that are kind
• 7:21
  of at war with each other. Right, every dollar that I save today
• 7:24
  is a dollar I don't get deaf fund with today, but it also means
• 7:27
  that perhaps I can use that dollar later in retirement. The second option is
• 7:31
  take more risk. Right, I could try to take more risk in the
• 7:34
  markets, hoping for a better return that would improve my pile of money at
• 7:39
  retirement. The third option is like it work longer. Right, Maybe I
• 7:43
  have to work to age seventy Maybe I have to work at age seventy two.
• 7:46
  Maybe I have to have a part time job in retirement. And the
• 7:47
  fourth option is a capitulation, which is I will just have to live on
• 7:53
  less in retirement. And that is the one that is the most heartbreaking because
• 7:56
  that's when you see people's eyes all of expectation of all the things they want
• 8:01
  to do in retirement, realize that maybe they don't get to go on some
• 8:03
  of these trips, maybe they don't get to go visit their grandchildren, maybe
• 8:07
  they don't get to go out to dinners as much as they thought. And
• 8:09
  they begin to tell me when I interview them, of all the things they
• 8:13
  don't need to do now in retirements instead of all the things they want to
• 8:16
  do in retirement. But there's a fifth option, and that's what the book
• 8:20
  is about. There's a fifth option that helps us put together strategies that unlocks
• 8:24
  this minimalist thinking that will give us a much more robust income into the future.
• 8:31
  And it is based on the latest academic findings of some of the folks
• 8:33
  that study this and is a way to unlock better income with the same dollars.
• 8:39
  And it really takes advantage of some of the old philosophies like pensions and
• 8:45
  things that gave us retirements back when we actually could retire with confidence and we
• 8:48
  bring them back into today's world in a modern economy. Okay, well there's
• 8:54
  actually a sixth option. It's called the Smith and Wesson retirement plan. Right,
• 9:00
  Yeah, so we used to call that up here at the doctor Vorkin
• 9:01
  plan. We fly down to Portland and he will he'll end it all for
• 9:05
  you there. Yeah, but we don't advocate, and I think is generally
• 9:09
  short sighted, bad idea. But look, you want to retire, but
• 9:15
  you don't have to fully retire. If you have control of eighty percent of
• 9:20
  your time, whereas before retirement you had control of fifty percent of your time
• 9:24
  or even less, then you're still retired. May maybe you're doing a gig.
• 9:31
  Like I met a guy the other day. He lived in the same
• 9:35
  town as me. He seemed to be fairly well off, but he was
• 9:39
  doing uber in his spare time. I think, honestly, he probably wanted
• 9:41
  to get out of the house and away from his wife was probably part of
• 9:46
  the motivation. But he was making another I would guess tomate twenty thirty forty
• 9:52
  thousand a year on top of his Social Security and on top of his savings.
• 9:56
  So what's wrong with that? There's nothing wrong? In fact, A
• 10:00
  lot of retirement people now are shifting towards some sort of secondary career. It
• 10:05
  could be something that they consulting in a business that they were part of,
• 10:07
  our industry they were part of. It could be as simple as uber.
• 10:11
  Remember, we're just living a lot longer now too, so retirement lasts a
• 10:15
  lot longer than it ever has for generations in the past. And I think
• 10:18
  people are more active, healthier, and are more capable of having a secondary
• 10:24
  career. The point of the fifth option is simply to introduce efficiencies of retirement
• 10:30
  income planning so that you don't need to use as many dollars to create the
• 10:33
  same income. I think of the one of the areas that people are becoming
• 10:39
  educated in, and I use this quick analogy, is that there's personal finance
• 10:43
  and there's corporate finance, and they both share the same word finance, but
• 10:46
  they manifest themselves in a completely different way. Corporate finance is all revolving around
• 10:52
  cash flow, income earnings. But unfortunately, in the personal financial ward,
• 10:58
  we talk about balance sheets, how much, how much right? And unfortunately
• 11:01
  you cannot go You cannot take your former case statement or a brokerage account statement
• 11:05
  to any safe way even though it might have a million dollars account balance,
• 11:09
  you can't buy milk with it until you turn it into some sort of cash
• 11:11
  room. And we have to understand the efficiencies and the strategies of how to
• 11:16
  do that well so that when you are an uber or you are doing a
• 11:20
  second career, it's more because you have a passion or an interest or a
• 11:22
  curiosity as opposed to having a mandate that you can't make ends meet. Okay,
• 11:28
  so obviously you've given this a lot of thought. People own a real
• 11:33
  estate, rental income, passive income. Is it worth getting into that in
• 11:43
  your sixties seventies to do that? Or well, yeah, I don't know
• 11:48
  if the question is it worth it as much as what's your what's your preference?
• 11:52
  Right? When when people have real estates, what they're really trying to
• 11:54
  do is create their own pension to some degree. Right, they want predictable
• 11:58
  income, but that's coming through income that's coming through Right. If I can't
• 12:01
  replace my active income with passive income, I never retire, right, And
• 12:05
  so we have to figure out how it is that I can create this income
• 12:09
  that's going to replace the income that I used to work for real Estate's a
• 12:13
  very powerful way of doing that. We know lots of people with lots of
• 12:16
  wealth have done that. It's just a question of whether you want to be
• 12:18
  a landlord or have the capacity to have someone help management manage a portfolio properties.
• 12:24
  So it really comes what I call the PETA factors, more of a
• 12:26
  pain in the ass factor is whether or not it's a good investment. Right,
• 12:31
  So everybody has their own preferences what they're comfortable with, and real estate
• 12:35
  certainly can be a good one. You know. I always say there's two
• 12:37
  types of retirements, the retirement that you have to take health career ends,
• 12:43
  you're obsolete, whatever, and the retirement that you want to take, the
• 12:50
  voluntary retirement where hey, you could work a little bit myself. Hey,
• 12:56
  I'm getting to that age, but I'm not offer and most of my entertainment
• 13:03
  is nocturnal in nature. Not to put a kind of devious cast to it,
• 13:09
  but you know, I have fun at night, so during the day,
• 13:13
  you know, I guess I could be taking courses, which I do
• 13:16
  and other things, but I'm just as happy doing something that kicks off a
• 13:20
  little bit of cash flow, keeps my gray matter active, and keeps me
• 13:26
  relevant. I guess yeah, I think that's right. And part of that
• 13:30
  is just that we have a much more vivacious aging group maybe than past generations
• 13:35
  where there is curiosity. We do have the physical capacity and we have the
• 13:39
  longevity to be able to have interests that go beyond a normal working career.
• 13:43
  And I think also we don't have a normal working career anymore. Right,
• 13:46
  There isn't such a thing as the thirty year gold watch more mortgage burning party.
• 13:52
  You know, most of people today, especially the youth, really at
• 13:54
  more free agents. It's almost like we all are free agents for companies for
• 13:58
  periods of time, and it's some point either the company or ourselves decided that
• 14:01
  ten years old and we'd move on. And so you know that that kind
• 14:05
  of pattern it could certainly well persist into our retirement ages, where we have
• 14:09
  small stints of jobs, maybe a break kid between them, and then we
• 14:13
  pick it up again as we have interest. So I'll just give you an
• 14:16
  example, because this is from my son, but it's something that many of
• 14:22
  you out there could probably do. He was working in a ski shop tuning
• 14:26
  up bindings and skis and stuff in high school and he said, you know,
• 14:31
  he really don't want to do that job anymore. And I say,
• 14:33
  hey, don't do it. You know, you don't have to do it.
• 14:37
  I'm not forcing you to get a job. I think it's good that
• 14:41
  you have a job, and then your own source of income for gas,
• 14:46
  money or fun or whatever, over and above what I give you. And
• 14:50
  he wound up writing content doing research on the internet. It was something called
• 14:58
  the textbroker dot com. And he would they have five levels of writing.
• 15:03
  He was a number four fifth being the highest, probably you know, post
• 15:07
  graduate type. And the kid was making a hundred bucks a week, working
• 15:13
  maybe five hours ten hours a week, doing it five to ten hours,
• 15:18
  and that was that was almost twenty years ago, and it really worked for
• 15:24
  him. So there's a lot of those opportunities out there, Well, there
• 15:26
  aren't there. There's tons of opportunities. As as daunting as it is for
• 15:30
  the youth right talked to the people in the gen millennial gen zs areas,
• 15:35
  and as daunting as it is for them to try to get their head around
• 15:37
  how does this fiance going to work? There's also perhaps more opportunities than there
• 15:41
  ever has been. And you know, and the proverbial side hustle that once
• 15:46
  it used to be something that meant that you weren't really making ends meet.
• 15:50
  Now really becomes a passion project for people of all ages, right where people
• 15:54
  have a secondary interest that they're either just using as a hobby or maybe they're
• 15:58
  really trying to build it up into a career over time, and they're really
• 16:03
  using corporate jobs or just kind of traditional ninety five jobs to pay the bills
• 16:06
  until he gets there. And so you know, when you know, as
• 16:10
  much as there is around anxiety around how am I going to buy a home
• 16:12
  or how am I going to retire, I think there's endless amounts of options
• 16:15
  now that we could take advantage of that didn't exist even ten years ago.
• 16:21
  All right, So, like what you're saying, opening your mind up,
• 16:26
  not being locked into the traditional retirement paradigm. Like my friend I told you
• 16:30
  about senior pilot, the most senior pilot at a major airline, you know,
• 16:38
  sixty five mandatory retirement. You win, and now he's flying private.
• 16:44
  He doesn't make anywhere near what he used to, but he lose to fly
• 16:48
  and you could easily support his family just on the earnings he's making as a
• 16:53
  private pilot. So so life doesn't end at sixty five. And and you
• 17:00
  know, I think that the definition welter of work, the way we relate
• 17:07
  to it has changed quite a bit. Because it used to be, you
• 17:11
  know, you worked in a factory, busted your hump for twenty years whatever
• 17:17
  to make money, and then that was it. There wasn't like a lot
• 17:21
  of personal development involved in careers, especially the more worker oriented careers. But
• 17:30
  now our relationship to work is completely different. We realize that it satisfies certain
• 17:36
  needs in our psyche, like like the idea of interacting with other people,
• 17:44
  of challenging yourself, of the self esteem, so many other things. So
• 17:49
  as the definition of work has expanded, and as it's become more understood as
• 17:56
  to why we work, and it's not just for money, recognition, gratification,
• 18:02
  personal growth. There's so many factors involved in your career. So it
• 18:07
  makes the idea of retirement, retiring from a job you really hated to go
• 18:11
  to for twenty five years every day to now it's it's it's a mixed bag.
• 18:18
  You know, you might be very well working in a job that you
• 18:21
  hate, but you know that there could be other things out there that you
• 18:23
  like to do that are better. Yeah, there's a wonderful Japanese philosophy called
• 18:29
  iky Guy that is becoming very popular, and an iky Guy is kind of
• 18:33
  this kind of the the mix of what I'm good at doing, what the
• 18:38
  world needs, what I can get paid to do, and when I'm passionate
• 18:41
  about and when you operate in the center of that iky Guy Van diagram,
• 18:47
  the Japanese will tell you never work a day in your life. And so
• 18:51
  for those books, there is no such thing as retirement because you are at
• 18:53
  the place of happiness when when those pieces all come together. And like you
• 18:59
  mentioned, and you know, some of us may may make more money,
• 19:02
  but we may have less pleasure from the job. And so I think part
• 19:06
  of the pursuit, especially amongst our young, is really defined that centerpiece,
• 19:11
  that place where their passions come together, as they really are interested in making
• 19:15
  a difference in the world rather than just making a buck for an owner.
• 19:19
  And so we'll see a little bit of shift and philosophy, I think in
• 19:22
  the next couple of generations to really get into place where you know, the
• 19:27
  enjoy your work. It's something that means is meaningful, and it's something that
• 19:30
  the world really needs. And you might have a very very long career doing
• 19:33
  it that way. All right, Well, hey, we appreciate you coming
• 19:37
  on. Just tell us again the name of the book and where we find
• 19:40
  it. Yeah, so you can go to Amazon is called the Fifth Option
• 19:42
  by Walter Young. Can certainly buy it on any Amazon outlets. You could
• 19:47
  also visit my website which is the Fifth Option dot com and has certainly been
• 19:52
  a pleasure speaking with you any likewise, appreciate it. Got a question Walter
• 19:56
  myself again, email address kl carry Lutz dot com and you'll find a link
• 20:03
  to the book on our website, Financial Survival Network dot com. While you're
• 20:08
  there, make sure you sign up for your free newsletter. Walter truly a
• 20:11
  pleasure. Good luck on the book and we'll talk to you again soon.
• 20:15
  Thank you, thanks for listening to carry Lets's Financial Survival Network your solution to
• 20:22
  today's trying times. For the latest, go to Financial Survival Network dot com.
• 20:26
  Financial Survival Network now more than ever,