Steve Vernon: Don’t Go Broke In Retirement

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Welcome to new Retirement Podcast. Today we're going to be talking with Steve Vernon, a writer and research scholar at the Stanford center on Longevity. He's a former consulting actuary at Watson Wyatt Worldwide. He's also worked at Mercer and he also works closely with the Society of Actuaries. We're going to be talking about two main topics. The first is the Spend safely in retirement strategy that he came up with. And secondly, his new book, don't Go Broke in Retirement. So with that, Steve, welcome to our show. It's great to have you join us.

Well, and Steve, thanks for asking me to speak and I hope we can help your listeners.

Yeah, no, I appreciate your time. So we'd just love to hear kind of why you wrote this book and who the main target audience is.

Well, Steve, the main target audience are older workers, people in their 50s and early 60s or even retiring. So pre retirees and retirees who are approaching their retirement years and they're wondering when should they retire and how should they deploy their savings in retirement? Maybe they don't work with a financial advisor because they don't have millions of dollars. And maybe if they were in a prior generation they might have had a pension plan, but now they just have a 401k balance and Social Security. So what do they do? And I'm really trying to address that audience and it's really, it's people who have under a million dollars in savings, which just about everybody. But I'm trying to get at those middle income people who are approaching retirement and just wondering how the heck are they going to retire?

Yeah. What do you think? What are some of the big questions that are the most common questions that you hear from those folks as they approach retirement?

Well, I'll talk about common questions, but I also want to talk about the questions they should be asking because a lot of times I hear what should I be investing in as I approach retirement? And yes, investing is important, but a lot of people confuse investing advice with planning advice. And I have a list of the top retirement decisions that people should make, and only one of them involves investing. Let me go through that list if that's okay. The first one is when and how to retire by when. It's like when do you pull the plug and retire? And that has a tremendous influence on your ultimate retirement income. But by how to retire is are you going to work part time for a while, which a lot of people say they want to do, or are they just going to quit cold turkey and not work for income at all? So that's the number one decision, doesn't involve investing. Closely followed by the number two decision is when to start Social Security. Because for the target audience, people with under a million dollars in savings, Social Security is going to be delivering two thirds, three quarters of their total retirement income. And so you need to maximize that. And again, that's nothing to do with investing. It's, it's all about when to take Social Security only. The third step, which is deploying your savings to generate income to supplement Social Security, that step involves investing. And so that's the third step is that how do you deploy your savings? Do you invest it and draw it down or do you buy an annuity or maybe a little bit of each, or do you use your savings to fund the Social Security bridge payment, which we can talk about? So that's the third step. The fourth step is making smart choices for Medicare and medical insurance. And then the fifth step is which living expenses are you going to reduce? Because the vast majority of people are going to be retiring on income that's lower than what they were enjoying while they were working. So those are the top five steps that have the most impact on retirees. And only one involves investing. And yet I hear so many people say, what should I be investing in?

Yep, right. Well, it's probably thanks to the financial services industry, which is very focused on having people accumulate lots of money since that's how they're paid, essentially that they make their money on a percent of assets. Well, let's, I'd love to talk about the first, first of those steps. You know, a lot, a lot of folks, I think I saw some data. You know, people think that they're going to work into their 60s, but the actual average retirement age is late 50s. For many folks, they might get downsized, laid off, or there's ageism. Do you have data around when people typically stop working and whether or not they continue working part time or able to?

Well, we have some data. Basically what we're seeing is that more and more people want to work longer. As you correctly identified, the average reported age, however, that they actually retire at has plateaued and has remained stuck at like 62 or 63. What we don't know is for those people who report themselves as retired, are they still doing gig work or part time jobs? And we do have evidence that, yes, that's happening now. The pandemic is making this harder than ever. So when I say, you know, it's better off if you can delay retirement or at least work part time, I have to acknowledge in the next breath it's harder to do that now. And that's just the reality that some people are facing.

Yeah, for sure. And how about Social Security? So 2/3 to 3/4 of total income for people with less savings? I mean, that's a huge dependency on this one source of income. What are the best practices that you recommend for Social Security?

Well, for the majority of people, the best practice is to delay Social Security as long as you can, but no later than age 70. And that's for most people. And I acknowledge not everybody wants to delay till 70, but if you're in your early 60s, even if you delay it till 66 or 67, you still have a big advantage. So I like to just say delay it as long as you can or you feel like you can. Now, that's the advice for either a single worker or the primary wage earner of a married couple. And the advice for a married couple where both of them were working becomes a lot more complex because there are a lot of different possibilities. And that's where you really want to find some kind of Social Security optimizer program that can you feed in your data and it just tells you what's the best strategy that would work best for you. And so I know it's a long winded, but that's the best practice in Social Security.

I mean, we've definitely seen some data that people used to claim way too early, and it seems like they're getting smarter and delaying it. Do you feel like people are a lot closer in general to claiming in a more optimal way, or is it still like, are they forced to take it earlier? Should people choose to take it earlier?

Well, up until the pandemic, I was seeing evidence that the average age of claiming Social Security was inching up year after year after year. And I like to think that people are listening to you and I and others, and that's having an effect. It might have also been. We do see that Social Security claiming is influenced by the economy, and so a lot of people claimed early during the last recession. I'm a little concerned it's going to happen again now. I think the word is getting out that the delaying is a good idea and people are trying to figure out if they're going to do that.

Yeah. Yeah. Do you, do you worry or have concern that Social Security benefits will get cut in the future?

Well, that's obviously a concern because you read the headlines. It says the Social Security trust fund is going to run out in 2034 or 35. That was before the pandemic, now might run out in 2029. And so some people think they're not going to get anything from Social Security, which is just wrong because the trust fund is only a supplemental source of funding Social Security. And most of the benefits, about three quarters of them, are funded by the taxes that are collected by workers. In the worst case scenario, somewhere in 2029-2034, if the Social Security trust fund runs out and Congress hasn't acted to restore it, then people would still get a 25 to 20% cut, cut in their benefit. Now, some people use that as justification. I better get that, start that Social Security as soon as I can. And I've done analyses that says that delaying Social Security is such a good deal that even if you delay and it gets cut back, it was still a smarter strategy than starting early. When you think about it, delaying Social Security makes your monthly benefit bigger. I'd rather have a bigger benefit be cut than a smaller benefit be cut, because you're not going to escape that cut by starting your benefits early. It's still going to get cut if you believe that. So I happen to believe that. I have faith in our politicians. They're going to restore Social Security. But even if you're so pessimistic, which that you think our leaders won't restore it, and I understand pessimism, then it's still delaying Social Security is still the right strategy. So it comes to me, I'm going to figure out how to delay Social Security as long as I can until age 70.

Great. Well, I hope to join you in terms of the kind of third step, deploying your savings. I know a lot of people talk about the 4%. There's also you could potentially annuitize. What do you see folks doing to create. Create income from their savings?

Well, there's two questions. What we recommend people do and what we see folks doing. And what you see folks doing is it's hard to get good data on that. We really don't know how people are investing and drawing down. It's hard to get good administrative data on that. And we all know that the percentages of people who buy annuities is relatively low. So I'm going to say what we know people are doing, there's just not a lot of good data out there. Now, if it's okay with you, I want to suggest at least what I think people should do is build a portfolio of retirement income. And the first thing you should do with your savings is, is optimize Social Security. So if you aren't going to work until you start Social Security, you don't need to start Social Security then. And so I've done analyses that show the very best use of your money, your savings, is to fund a Social Security bridge payment. Suppose you retired age 65, for example, but you decide age 70 is the best age to start Social Security. Then you pay yourself from your savings five years worth of Social Security benefits. And that generates more income than any other way of deploying your savings. Investing, buying an annuity. From a pure math perspective, it's a no brainer. It's even a better use of your money if you believe Social Security will be cut. It's still the best use of your money. So I say to people, use your saving a portion of your savings to optimize your Social Security benefits and then look at how much guaranteed income that'll create because you've got think about Social Security. It doesn't go down. The stock market goes down. It goes up for inflation, lasts the rest of your life. You don't have to worry about outliving your benefits. It's got survivor benefits, it's got tax benefits because a portion of Social Security isn't taxed. So optimize Social Security first, and then if you have enough guaranteed income, you might be done. You could just invest and draw down the rest of your savings. But some people might say, no, I'd feel more comfortable if I have more guaranteed retirement income. So then go search for a cost effective annuity. And I have to say that very clearly because there are a lot of annuities out there that are expensive. And then once you've developed enough guaranteed income so you can sleep at night and ride out stock market declines, then you would invest and draw down the remainder. Our work suggests the IRS required minimum distribution works just fine. And you can put it on AutoPilot because most IRA and 401k providers can do that for you. But yeah, you could do 4%, you could do 3%. Our research says you could do either 5 or 6%. But there's a big caveat. The best practice in investing and drawing down is to adjust your withdrawal amount to reflect whether your assets have earned money or lost money. And so that's not the classic 4% rule. That's kind of a modified 4% dynamic rule. So if you just have a percent of your assets that you're taking down each year, our work says it could be 3, 4 or 5%. It just depends on how fast you want to draw down your savings. And you want to preserve capital either for a legacy or to protect yourself against long term care expenses late in retirement. So I know I've been rambling on, but those kind of the key of what we're advocating people do.

Yeah, no, it's great to hear. I mean, one of our users, and I'll point people to this, Glenn Nakamoto, he designed his own retirement paycheck and essentially that's what he did. He optimized Social Security by delaying it. Then he set up kind of a bridging function to fund his RMDs, which he used to pay well. Sorry. He optimized Social Security, then he bought a layer of SPIAs for his guaranteed income. Then he created a bucket of money to pay his RMDs, which he used for his discretionary income. And that was about half of his money that did all that. And he took the remaining half and he invested it more aggressively for inflation protection in an 8020 portfolio and then was essentially planning to draw that down if he needed it and also put it into Roths for his estate. I mean, this was a much more, you know, he's, he's, you know, super nerdy about this stuff. But you know, he did actually implement it. And I think it's been, he's, he definitely sleeps well at night and feels good about his decision making. So.

Yeah, and that sounds like a very solid plan. And for your listeners, I would encourage them take the time to put together a plan like that or something close to it, because what you've described isn't that hard to do if you just pay attention and spend a little bit of time on it. And the way I like to say it is that if you're in your late 50s, early 60s, you could be living another 30 years. You want to set up a plan that will last that long. And it's worth it. I mean, to be financially secure for another 30 years, it's worth it. It's worth spending several hours of your time.

Totally. So I'd love to go to the next step. You talk about health care. I think that's another complicated issue. And people have kind of the health care they get when they're working, then usually there's a period of time when their career is over. But pre Medicare, and then there's what you're doing in Medicare or with traditional or Medicare Advantage. How do you suggest people think about that and build a plan for that?

Well, it's a good question. It's a critical question for most people. And just to get people's attention. I like to call healthcare expenses the big bad wolf of retirement, because you've got to prepare for that big bad wolf. And I purposely draw on that nursery fable. We all know what happened to the first two little pigs who didn't prepare. They had a sad fate. Only the third wolf, I'm sorry, pig, built a wall to protect themselves against the big bad wolf. And so I just, you know, think of yourself as that third little pig just to be inspired. And then once you're inspired to spend some time on, because it's going to take some time. That's the thing I emphasize a lot, is that all this planning takes time and it's worth it. So you've got to distinguish between before Medicare at 65 and Medicare 65 and after. And those are two different periods that require different strategies. And so pre 65, you've got to find medical insurance somewhere. And it might be expensive because if you were covered by a health plan at work, chances are your employer is subsidizing 2/3, 3/4 of the cost. And yet you don't see it because all you do is pay the other smaller portion. So you've got to find out how much it costs because it might be a big part of your budget. And then it might say, maybe I should delay my retirement a little bit because it's not uncommon for health insurance before age 65 to cost $1,000 a month per person. And you've just got to factor that in to your budget because $1,000 a month, there's nothing to sneeze at. Exactly. And so then it might lead you to say, well, okay, maybe I find some part time work. You know, I work at Home Depot or Starbucks or somebody that offers health insurance. That's one possibility. If you're married, maybe your spouse works and you can go off their plan. But beyond those two possibilities, now you're talking about going to an exchange, which, depending on what state you live on, may or may not be very robust. You could go on Cobra for a while. Cobra enables you to continue your employer's plan for 18 months. But there's a trap for the unwary there, because you only get 18 months in most states. In California you get 36 months, by the way. But suppose your spouse was covered by your health insurance at work, and as long as you're within 18 months of Medicare, you might be okay. But if your spouse is younger, your spouse is going to have a period of no coverage. So these are just little details. I call them Traps for the unwary. But well that was pre 65. Do you want me to talk about post 65? There are more traps for the unwary post 65 because people think, oh, I finally made it to age 65 Medicare. And Medicare is called medical insurance. So it must be like what I had while I was working. Well, wrong, wrong, wrong. Medicare, first of all, it doesn't cover dental, doesn't cover vision, doesn't cover hearing, it doesn't cover acupuncture and some chiropractic. So it's bare bones. It also has significant deductibles and co payments. And so it's not like the insurance you had while you were working. And so you've got to find some insurance to fill in the holes. And there are two ways of doing that. One is through what's called a Medicare supplement plan, also known as Medigap or Medicare Advantage plan. And each of those has their pros and cons. It's not really one's perfectly right for everybody. So Medicare supplement plan or Medigap just pays the deductibles and co payments that Medicare has. And it gives you the most freedom in choosing your health care providers. So it's kind of the most complicated because you got to piece together Medicare, Medicare supplement, you've got to buy a standalone prescription drug plan and so you've got to do a little bit of work but then you piece it together and then you have the most flexibility with choosing providers. Whereas Medicare Advantage is more of a managed care situation. You're with a Kaiser or Humana or somebody like that. And that's kind of like a one stop shop for your insurance and your providers and they take care of everything. You just pay the premium and then you're pretty much either restricted to the providers in the network or incented to use the providers in the network. I think that's better for some people who just want to keep their lives simple. But the trade off is they'll have to use the providers in the network. And so take some time to figure that out and it's worth it because now you're talking about the health for the rest of your life and keeping you healthy and alive. So it's a good use of your time.

Any good resources that you like to point people to for thinking through healthcare?

Well yes, actually my last book, Retirement Game Changers has a whole chapter on these issues that I'm talking about. But then you can also get good books on Medicare. Andy Landis book, Social Security and Medicare and there are a number of good books out there that cover actually both Social Security and Medicare. And then they get into the issues about Medicare supplement versus Medicare Advantage. The other thing I want to say though is that a good use of your time and money is that there's a college industry out there of consultants on Medicare and buying some kind of medical supplement or Medicare Advantage plan. For example, one's called 65 Incorporated and they specialize and that's a good use of your time and money, particularly if you take a lot of prescription drugs because the prescription drug coverage is really complicated and they do a good job of paying for generics. But once you get into the non generics, some drugs are covered and some drugs aren't, and some have a good payment schedule, others don't. And it really, you can really save money by spending a little bit of money with a knowledgeable healthcare consultant.

I mean, how do you find those folks? Because it feels like there's a lot of folks that could be preying on older Americans trying to scam them. And I think a lot of people do worry about getting misled. Are there good ways to identify the good providers, the good actors in the space?

That's a good concern, Steve. And one thing I'd do is start with your local area Agency on Aging, which is a part of the government, federal government, and they serve seniors locally and they, you know, they've got everybody's best interest at heart. So they're, they're good actors there. And they may either provide those services because some senior senators will provide that kind of service, or they can refer you to someone. But this is also an area that you don't need to be local. I mean, the. I've worked with that 65 Incorporated that I've talked about. They're in Minnesota, I'm California. You know, it's all done on the computer, so ask around. And also more and more financial advisors are well aware of this. I did a training the other day, virtual training for financial advisors on these issues. And they are more and more like they're kind of like now kind of the coordinator for you. They might invest your money and do other things, but they might refer you to a good healthcare consultant. So if you've got an advisor you trust, that's another source. But pay attention, Go shopping for a good advisor.

We'll definitely point to these resources that you're listing off here in the show notes. And the last thing you mentioned was cutting expenses. So we'd love to kind of get your take on things. People should look at as they head into retirement and their budget.

Yeah. Let me give you some background on that. Stanford center longevity. Two years ago, we looked at the assets and debts of the boomers as they were approaching and entering into retirement. And when you look at the assets and debts they have, it's real clear to me that the vast majority of older workers have not saved enough money to retire full time at age 65 under their current standard of living. This is profound. So if you don't mind, I'm going to repeat it. The vast majority of older workers have not saved enough money together with Social Security, so that they can retire full time at age 65 under their current standard of living. Now, that statistic, it was work that we did. But you can see other people who do these retirement readiness assessments. They're coming up with the same conclusion. And so these folks are either going to have to work longer or reduce their standard of living or some combination. And so what I encourage people to do is assess what your income will be, your retirement income. And that gives you a target for how much you might need to reduce your living expenses. Because the problem I see is that people, they retire and they might have a couple hundred thousand in their 401, and they just keep spending their money on whatever they were spending their money on without really a plan to make it last the rest of their life. And once they realize, oh, here's my monthly paycheck, this is what I got to reduce my living expenses to. That's the process when I conduct retirement planning workshops and I go through this and I ask them, ask the workshop attendees, how would you cut your living expenses? Well, I hear, okay, we'll eat out less and I won't go to Starbucks and I'll cut cable. And so I say, well, that's nice. I mean, I'm not going to criticize you. That's okay. But if you have a big gap, you're going to have to find a bigger target. And that's where I really point people, to housing. Because housing is still the largest expense for most people when you consider utilities and property taxes and homeowners and maintenance. And so to me, it's a possibility for a win, win situation because you might be able to downsize your home and move to somewhere that's actually more enjoyable and more manageable in retirement. You know, if you raised your family, if you had a family and you had a home out in the suburbs that's isolated and big, why not move somewhere where you can walk to your local hobbies? Or local coffee stores or whatever. So I think that's something I think people should explore is downside. In fact, you can do a triple win. I'm making this up. But what if you could downsize and move to a place where you could walk to lots of your daily activities or take public transportation? And we will do that again sometime after the pandemic, maybe get by with one car instead of two cars. And so because transportation and cars are another big expense, again, this will take some time, like I've been saying, but it's well worth it. And so really take a good hard look at how much do you really need to meet your basic living needs and be happy? And that's really what it's all about.

Yep. Yeah. In our product, we help people kind of think through the must haves and the nice to haves and build a budget and forecast it forward. And yeah, for, you know, when we started this company I was at, we actually helped my mom think through this situation where they had a house that had, you know, 4,000, 5,000 square feet, 10 acres of land and out in the country. And it was like, do you really need this? And she ended up downsizing and moving to a walkable area near town for a cheaper house and therefore lower taxes and yeah, same thing. Less need for transportation. So it had a big ripple effect and made her a lot more secure and just less house to maintain. I mean, you know, the reality is if, you know, did two people need to live in a 5,000 square foot house? You know, probably not, right? I think the data is that like, people, people, no matter how big your house is, they always live in the same 5 to 600 square feet of it.

Yeah, actually, let me add to that, I agree with totally with what you said about your mother and let me add to that is that all too often I see people stay in that big house and wait and all of a sudden eventually they get some kind of crisis where someone has a health issue or maybe dementia is kicking in and they're forced to move from that big house and make it too quick. They have to make these emergencies decisions because they're too frail now maybe to move and they're really stuck. And this has happened with a number of my older friends and relatives. And so really the best time to make that kind of decision, like your mother did is somewhere in their 60s or early 70s when they still have the vitality and the energy to make such a movement. Because in the late 70s and 80s, it's just harder and harder to make that move and then you get your back up against the wall.

Yeah, I hear you. I mean, that's exactly what you did. You did it in our 60s, and it was a good decision. So how about you? I mean, so we kind of went through those steps. Are the main steps for the spend safely in retirement strategy, correct?

Right.

Have you applied this to yourself?

Oh, yeah. So let me just say I'm age 67 and as you mentioned in the introduction, a long career as a consulting actuary. It's kind of fun. I've been working in retirement plans since I was age 23, and now it's my time to retire. And I like to say all the strategies that I'm talking about, either I do for myself or some version of it, because I don't want to come up with some strategy that I don't think is good enough for our family. And so in our case, I'm delaying my Social Security till age 70. My wife worked, and so it made sense for her to start at her full retirement age, which was 66. And we're delaying. Well, we're not drawing down our savings yet because I'm working not at the same intensity that I used to work at as my career, but I'm working enough so that I don't have to have Social Security and I don't have to draw off my savings. And I'm planning to start drawing down my savings when RMD kicks in for me, which is now going to be 872. And we'll see how it goes. Work is fine.

Right. Did you take a break after your main career ended, before you started consulting, or did you just kind of flow right into consulting? And I'm curious, when you ended your main career and started consulting, what age was that?

Okay, well, I was age 53 when I left the main job, and that was a little early. But actually what had happened is that I could see I had enough money in the bank for my youngest child's college education, and I just thought, why not pull a plug? It's earlier than I think a lot of people would want to, but I did have some consulting gigs lined up. And so I had kind of a bridge, and I just thought, I'm going to take the plunge. And that was 14 years ago. And so I didn't take a big break like you, to answer your question, but the first couple of years was kind of a break because I was doing some consulting, but also just kind of flopping around trying to figure. Figure it out. And I was fortunate Enough. My employer that I retired from Watson Wyatt did have retired medical insurance pre 65. And so that was, I couldn't have done it without that. And so I acknowledge that's unusual now.

Yeah, for sure. That's a huge problem.

I'm just answering your question.

No, it's great. No, it's interesting. You know, we've had some, another of our guests, Scott McGlory, he retired from Allianz, I think at 48 or something. It was pretty early. I mean, feels so early. But you know, he's making it work. I mean, and he actually is completely managing his assets. But he has concerns around health care as well, like how to fund it. And I think it's a much bigger, it's a much bigger deal. Okay, awesome. So you know your book Don't Go Broke in Retirement that expands upon this strategy. What, what additional things does it cover? Or is it, is there more about the book that you think our audience should know?

Yeah, I could say a couple things. First is with respect to investing, because we talked about that earlier in this show, is that when you think about it, if 2/3 or 3/4 of your income comes from Social Security and you're now looking at that one third or one half or whatever it is, do you really need elaborate investing strategies? And I think for that group that has under a million, a common low cost balanced fund like the Vanguard Balanced Index fund or a Target date fund, that'll work just fine. Actually, our analyses supports going 100% in stocks, which I don't think everybody's going to do. But think about it. If you've already got 2/3 or 3/4 of your income coming from risk protected sources, that could justify taking more investment risk. And our analyses, which I talk about in the book, show this is the investing dilemma that all retirees face, is that investing in stocks most of the time, but not always will generate more income for you. And it's that but not always issue that people get worried about. But, but when I look at different projections, I projected out retirement incomes for various scenarios and there have been historical periods of time where the stock market has generated way more income than investing in bonds. And then there are times when it doesn't. And most of the time it does more, but not always. And that's the, and that's why I really think you've got to invest in the market and use that money to cover your discretionary living expenses, your wants, as you would say. I think that's what you said. So anyway, I go into that issue in the book. And then also there's a chapter out on my website that contains more details on investing in stocks that I didn't put in the book. That's one thing. But you said what are the other things we haven't talked about? Is that I do have some refinements to the strategy to cover some situations. And so, for example, I hear commonly people say I want to travel in my early years of retirement where I'm still healthy and vital to do that. But how do I do that responsibly? Because I don't want to use all my money up and then be poor later on. So I put out the concept of a travel fund bucket and say I'll just give you an example. Suppose you think you're going to spend $5,000 per year on travel for the first 10 years of retirement. So five years times 10 is $50,000. Set aside that $50,000. That's going to be the money you're going to spend on travel. The rest of your savings, invest it and draw down like we've talked about, either annuities or whatever. And if that money of money, if the money you invest and draw down or the annuity and Social Security is enough to cover your regular living expenses, not counting the extra travel, then you've set up a good plan to spend extra money in your retirement and not feel like you're jeopardizing your financial security. So the travel fund bucket is one situation and I'll just name the other. I won't go into detail. But how do you help your kids? Sometimes people want to help their kids with a down payment on a house. What if you're in poor health? These are the kinds of things that I have refinements and adjustments to the strategy that I talk about.

Okay, that's awesome. Well, that people should definitely check out your book. Yeah. A couple of quick thoughts on the expense side. One thing we like to remind people of is that the data shows that the average real spending declines 1% a year. So this is inflation adjusted dollars in retirement. So every decade it's down 10%. So if you had in retirement, you think you're spending $80,000 a year. Well, 10 years later you're spending 72,000. This is on a real basis so that it's actually, it'll appear more material to you. And then 10 years after that it's going to be down again in the end of the $60,000 range. So you kind of need to think about that. And people talk about the go go the slow go and the no go years. I think reminding folks that hey, you only live once, you're only healthy once and it's good to take advantage of that. Time is important because you can save a bunch of money and then get to be 80 years old and if you can't really get out and about then you're not going to be able to take advantage of it.

Right. And I've seen that data you're talking about. I agree with it. And the only thing to add onto it is that a lot of people will see their spending decline in retire and then it spikes up in the last year or two for long term care. And I think a responsible person would plan for that time. It doesn't mean long term care insurance necessarily, but maybe it's setting aside some money or holding your home equity in reserve. Anyway, that's the only exception to the phenomenon. But it's actually, it's more of an exception. It's a scare tactic that long term care insurance agents will scare you on. But the odds of bankrupting yourself in long term care expenses are low. They're still positive, but they're pretty low.

Right, right. Well, I think also on the investing side, there are so many ways to invest and then draw down your money that we're thinking about how to make it conceptually simpler. There's like the paycheck thing that Glenn did. There's your spend safely strategy. Some people use a bucket strategy, some people do the 4% drawdown. But it is good for folks to get familiar with these different methods, understand the risk with each, arrive at a strategy for themselves so that they can feel like, hey, I've got a game plan for how I'm going to generate income. I can sleep well at night, especially with this market. It's going up and then today it's diving. So if you're kind of if you're fully invested and you need that money, it can definitely be something that keeps you up at night.

Right. And I think if you have a plan, you will feel better, you'll sleep better at night. I keep coming back to your listeners. You'll feel better if you make a.

Good plan for sure. So for you, Steve, you know what, any huge lessons that you take away as you kind of, you've been working in retirement and planning like your whole career, you've seen this for decades. Do you feel like it's getting worse or better for folks? Where do you think it's going to go in the future?

Well, good question. At least for me personally, I feel like we're. This is some of the best years of our lives just because we aren't worried too much about finances, you know, we pay attention, but between what's going to happen with Social Security and all that, you know, we feel fairly secure. We're the lucky ones in this pandemic because our Social Security or Medicare, we don't worry about losing our health insurance. We don't have kids in the home that are schooling. You know, we don't. We have grandkids who are at their home. So, you know, your 60s and 70s, if you do a good job, can be a period of amazing freedom and independence and live how you want to live, meaning spend, you know, if you want to take a trip, take a trip. If you want to learn to play the ukulele, my wife and I have ukuleles we bought and we're learning how to play. We're still working, like you say, so it can be a really nice time, but you've got to spend the time to put it together really. Now I gotta say, though, the pandemic's making it worse. It's harder to work part time for a lot of folks if they aren't in a job that lets them work virtually. And so we're in tough times. But the strategies that I talk about in don't go broke in Retirement, in my last book, Retirement Game Changers, are designed to go through tough times because when you think about it, you're in your 50s or 60s and you live another 30 years. How many stock market crashes are you going to experience? Several. A handful. So by design, we need to get through these. And it was very gratifying to me. In March and April, I was getting emails from attending to my workshops and readers from books saying, the world's melting down right now. I feel pretty good. So thank you. So if you spend the time and do it right, it'll help you feel a lot better and then you have that freedom to go enjoy your life.

Yeah, I think that's right. It's a great point too. When you have a plan and you kind of know that it can handle the good times and the bad times, when the bad times invariably come, you'll be like, okay, well, I set out the strategy and here's what we're going to do to. Or we'll do nothing because we feel confident about the situation. And yeah, you're exactly right. I mean, we are seeing this volatility in our lives. Doesn't seem like it's going to go away. Volatility is going to be here. Right.

And you've probably seen the analyses that I've seen is that the worst thing you can do in a stock market crash is panic and sell and get out. And so you've got to have a strategy to ride it out because when it's going down, it doesn't feel very good. I can tell you from experience at someone my age. And yet you've got to think, okay, but I got a plan. That's the plan. I'm going to stick to my plan.

Right. So how about you? What's on your forecast as you look forward in your life? Seems like you've, I mean, I see you doing the Society of Actuaries work and you know, obviously working with Stanford and writing books. I was also just as an aside, interested to see that you have a third degree black belt in aikido. That was a surprise. But any big things you're planning for.

Well, we talked about it. But I appreciate the question is that I continue planning to continue working in the way I've been doing. I mean, my passion really is helping older workers figure this out, this out, meaning to retire and all that, because it is a challenge. When I talked about the situation of most older workers. And so I'm just passionate about helping people with these very real challenges. And I plan to keep doing that at least till age 70 and then I'll have to reassess at that point. But I do, as I mentioned, I've got time to pursue other interests. We've got grandkids, but they live on the other side of the country, so I got to go see them. But that's basically the plan right now, is to keep doing that. Yeah.

Nice. Well, hey, it's good. It's good to have that purpose and stay engaged. It's definitely super important for your mental and emotional health to have that idea of something you're going to retire to or something that you're planning to take up as you leave your main career. And you had that and continue to have that.

Yeah. And let me add what's also very gratifying is if you have the financial freedom like we're talking about, you can spend time helping your adult children. And if you have grandchildren and some of my friends who are in a similar position that live close by, they're babysitting right now, which is very helpful if the kids are home schooling. We've actually done some virtual schooling with our kids across the country. But to be there for your adult children and your grandchildren and be Kind of that senior mentor to them and be the example that they can aspire to when they get to this age. You know, it's very gratifying to help that next, the next two generations, our adult children and then their children. It's very gratifying.

So are you doing Zoom calls like this with them or FaceTime when they're across the country? Yeah, right.

And it's, it's interesting to watch the four year old really can't spend a lot of time in front, you know, from the screen. But the six and nine year old are spending time with us and we will read to them and interact just with them. Not the parents don't have to be around at that point. And what's, what's really sobering is because of the pandemic, a lot of kids now are very a joint now at working with Zoom and computers, which is a mixed blessing, but I think that is actually a role for seniors to play. This pandemic has been a whack over the head, but now we know the power of being there virtually, and that's a good thing as long as it doesn't get overused. Yeah, and that's actually for seniors. They don't have to get on the airplane or in the car. They can still be of value to their family by spending time with them virtually. It'll be a mix. It's in person and virtual, but, you know, it's another tool.

Yeah, no, it's interesting to hear that you're doing that. I mean, we have one kid in college, one kid in high school and one kid in middle school, and the ones in secondary school are Zooms all day long or Zoom is part of the day and then kind of trying to get them to work. And definitely they need the attention. They need to have the live interaction. You can't just give a kid a worksheet and be like, hey, go teach yourself math. Interacting with their peers is important anyway. That's cool. All right, well, look, as we wrap this up, any last resources that you would suggest? I mean, we'll definitely have a link to your book Don't Go Broke in Retirement and to the work you're doing at Stanford and with the SOA and some of the other stuff that you've mentioned. But anything else you want to call out or people you want to call out that are good resources?

Well, I think we've kind of covered it. Both my book Don't Go Broke in Retirement and Retirement Game Changers, they have lists of resources in there that I think are good. Your website is there on the list because I respect your website and I list websites where annuity bidding platforms, for example, where you can get annuity quotes cost effective. A couple different Social Security analyzers, which I respect. Open Social Security is one of them. So in my books I list the resources that I respect and you know, it's. There's a lot of resources out there, for sure. Yeah.

Okay, we'll point to that stuff. And yeah, I appreciate it. So look, I'm going to wrap it up then. So thanks Steve for being on our show and thanks Datto Robeson for being our sound engineer. Anyone listening, thanks for your time. Hopefully you found this useful. Our goal at NewRetirement is to help anyone plan and manage their retirement so they can make the most of their money and time. And if you made it this far, I encourage you to check out a couple things. One is our Facebook group. So just Facebook New Retirement and also our site and planning toolswhretirement.com and then finally, we are looking for reviews. We are reading them and trying to adjust what we're doing here on the podcast based on them. So if you have the time to leave us a review, that'd be really appreciated. So with that, thank you and have a great day.