078 Wade Pfau: Retirement Income Style Awareness

0:04
welcome to fun with annuities with your

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host me stan the annuity man america's

0:09
annuity agent can annuities be fun can

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contractual guarantees be fun

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absolutely they can find out the brutal

0:17
facts about annuities with no sales

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pitches or high pressure nonsense just

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the brutal and factual annuity truth

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which is all you need to hear

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let's have some fun with annuities and

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let's have that fun start right now

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[Music]

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welcome to fun with annuities i'm your

0:41
host stan the annuity man america's

0:43
annuity agent license in all 50 states i

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want to welcome everyone on all the

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major podcast platforms and also on the

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fun with annuities youtube channel where

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you can see me and the guest

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interact and facial expressions and you

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can check out how just utterly fantastic

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fantastically good looking we both are

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which is great um laugh laugh right

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today's

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guest is a

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i'm so happy he's here um just because

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for the consumers that are listening to

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this

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this person is the real deal he's the

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true retirement expert his name is wade

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found

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a p-f-a-u

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is the spelling of his last name

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he's the miles davis and the jimi

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hendrix of retirement research and

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expertise obviously i'm a music guy

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but that's who i i quite equate him to

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he's in rarefied error if there was a

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a mythical annuity mount rushmore his

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face would be on it he is a professor of

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retirement income at the american

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college of financial services in king of

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prussia pennsylvania

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he also hosts the retirement researcher

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website

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and i would encourage you to go there

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retirementresearcher.com we're going to

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have all of his links

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on the site so you can access those etc

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he's the pr he's a principal and

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director for mclean asset management he

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holds a doctorate

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of economics from princeton university

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he's written so much stuff you can't

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even start to count it hundreds of

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articles hundreds of white papers and

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research work he has four books that i

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own all four

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um the first one that he put out was

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called

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safety first retirement planning which

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is an integrated approach for worry-free

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retirement then he did one that was

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fascinating called reverse mortgages how

2:26
to use reverse mortgages to secure your

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retirement third book was how much can i

2:30
spend in retirement a guide to

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investment-based retirement income

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strategies and the fourth one that i

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just got

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retirement planning guidebook book

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navigating the important decisions

2:40
for your retirement success once again

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we'll have links to all of those where

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you can buy them on amazon i would

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encourage you if you're doing any type

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of research on retirement

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he has to be on your bookshelf with that

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being said

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welcome to fun with annuities

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wade

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fowl

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well thank you it's a pleasure to be

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here and thanks for that very nice

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introduction

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you've earned it you've absolutely i

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don't know if you've ever been um

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compared to jimi hendrix and miles davis

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but

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to me that's who you are

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thanks so much

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well let's let's um i want to kind of

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break this interview up into kind of

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three parts and the first part

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i've never really seen done with you but

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it's something that that i selfishly

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want to know which is

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who is the mythical weight foul

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um who are you where are you from what

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what what makes you tick who is wade

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fowl the person

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sure sure so well born in michigan

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raised mostly in iowa

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uh just i became interested in economics

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and that really became my focus in grad

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school

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i i moved to japan and i worked as an

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economics professor in japan mostly on

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pension systems in developing market

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countries but i wanted to move back to

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the u.s and i started trying to find a

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way to be marketable and just sort of

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stumbled into financial and retirement

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planning

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my background in that regard i'm more

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like from the investments world

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just i i was studying for the cfa

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designation as a part of wanting to move

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back to the us and just really steeped

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in

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you know building a low-cost indexed

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investment strategy

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but then as i looked at the retirement

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planning the first article i did kind of

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from with that overseas experience i'd

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heard about this four percent rule of

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thumb

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it's it's from the investment world it's

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kind of the baseline of building a

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retirement strategy you build a

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portfolio of 50 to 75 stocks

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you start taking distributions at four

4:34
percent of the account balance at

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retirement and just keep doing that with

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inflation adjustments that that amount

4:39
that you take out

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and your money should last and i i had

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data on 20 different countries and i was

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curious because that that rule of thumb

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is based on u.s data

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and i found that it did work

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historically in the us and canada but in

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the other 18 countries it did not work

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and the mileage varied in terms of the

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international experience it really

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would mean people think it worked 100

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percent of the time in the u.s it was

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really it worked about two-thirds of the

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time when we look at that in aggregate

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across the world so that really led me

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down a path of thinking maybe

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investments aren't always the right

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solution in every circumstance for

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building a retirement strategy

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and i didn't have any background in

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insurance or annuities but people

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started saying well hey if you yeah you

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know that there are there can be issues

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with investments why don't you have a

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look at annuities

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and that's what then led me down that

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path of looking into more depth and and

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starting to then recognize too that we

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really have completely different

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viewpoints out there of in terms of

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people can ask basic questions about

5:41
retirement and give completely opposite

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answers

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and

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either approach can be valid it really

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what works for you as an individual but

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certainly

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i came to see through the kind of doing

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simulations and so forth that annuities

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definitely have a strong case that can

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be made for them

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in terms of providing a tool to help

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sustain retirement spending over a

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potentially very long retirement and

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that's kind of then just being agnostic

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and and considering all the different

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approaches to retirement income and

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certainly then seeing the value of

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annuities and insurance is part of that

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so the fork in the road was the four

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percent did that just trigger something

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in you to say wait a minute why is this

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such a known and accepted

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um statement because my background i

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work for dean witter morgan stanley

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payne webber and ubs on the stock

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investment side become before i became

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the mythical stand the annuity man

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is that what really said you just kind

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of head slap moment and go wait a minute

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that that didn't make sense let me look

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into that was that the time was that

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really the

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when you just kind of started digging in

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yeah because i didn't really have a

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clear i didn't know a lot about

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financial planning

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in academics it's a new field the first

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phd program in financial planning that

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began at texas tech university in the

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year 2000 it's not

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so when i was in well i was in grad

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school around that time but i it wasn't

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even on my horizon so that's yeah

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starting to look at how this sort of

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practitioner-based approach to

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retirement work

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works and then seeing

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you know the the four percent rule going

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down that path was just looking at it

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with the international data

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that led me down this path of more

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generally seeing issues because some

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people will challenge that international

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data and say well we live in the us i

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mean assuming that's true and we invest

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in the us it doesn't really matter like

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if bill bengan the creator the four

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percent rule had been italian

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and he was looking at italian stocks and

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italian bonds the four percent rule only

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worked about 25 percent of the time

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historically not 100 of the time but who

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the argument would be who cares about

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that we live in the us we have us data

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and this can start getting philosophical

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but i think

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because there's so much uncertainty in

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financial markets there's value at

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looking at a broader international

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experience

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but then that just opened so many other

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doors too like now interest rates are

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lower than they ever were in that

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historical data that gave us the four

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percent rule and that's huge and a

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mathematical certainty if interest rates

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are low

8:07
bond yields our bond returns will be low

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and you can't spend as much from a bond

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portfolio

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we see the same issue with the stock

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market and so forth so i just developed

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all these concerns

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that just having everyone go into

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retirement with 50 to 75 stocks

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and having the viewpoint that it will be

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fine because u.s historical data showed

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that it worked

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i i didn't think that was going to be

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for everyone and yeah that that was

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really the starting point for all that

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that's fascinating because when you

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bring that up i'm now thinking well in a

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in a balanced portfolio where you have

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international exposure in the global

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marketplace where everything's

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interconnected

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and we're on you know we're on a

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real-time basis with everyone yeah the

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four percent rule based upon the

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research that you have have laid out

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that doesn't work and i applaud you for

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not just

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you know that's that's your background

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is not to take everything

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at face value is to dig in and make sure

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it's true but i think you've done the

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public a good service because

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you have given validity

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uh from a math and research and um

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just a an educated standpoint on

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annuities because in the annuity

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industry as you know has earned its bad

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reputation

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on some of the sales practices and all

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sales environments have good and bad

9:18
people in it but i think you've you've

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definitely added the foundation that

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when you're talking about it there's no

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sales pitch it's it's math and for you

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it's math um a couple other questions

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before we get dig in

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non-retirement plan guru hobbies what

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what is what does wade foul do when he

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says i don't want to talk about

9:39
annuities in retirement what do you do

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i have three young children now so that

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definitely takes

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a lot of time but

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i mean watching some during the pandemic

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watching shows with them we just we'd

9:52
gone through adventure time i thought

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that was really good cartoon for kids

9:55
and for adults and

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uh with hobbies beyond that i've always

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had an interest in things like amateur

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radio shortwave radio so that's really

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the internet has

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to some extent killed out that entire

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hobby

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uh as an option for people but yeah i

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mean that that's that's me spending time

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with kids that's neat do you consider

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yourself a um

10:15
a lifer in this retirement guru space

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that you that you dominate is this a

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passion do you wake up and does it keep

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you going

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because it really does come from

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real to some extent what started me in

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all this was just curiosity about my own

10:31
saving i've always been a saver and so

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always been interested and then

10:35
understanding how to invest that and i'm

10:37
not yet at the retirement phase myself

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but that naturally extends and if you're

10:41
thinking about saving and planning for

10:43
the future how do you then build a

10:45
retirement strategy around that so that

10:47
that really did

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motivate me with the early research and

10:50
as i've done more and more into it yeah

10:52
all the different aspects of retirement

10:54
income planning like

10:55
even now things like how you medicare

10:57
decisions and everything else i find it

10:59
all very interesting because it all

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interconnects and fits together when

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you're thinking about how do i build a

11:04
complete retirement plan

11:06
and your last book really dives into

11:09
long-term care medicare medicaid and and

11:11
those type of planning which

11:13
a lot of um a lot of people don't go

11:15
into and and work you're working that

11:17
into the whole retirement plan thought

11:19
and process one last personal question

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before we dig into the meat of the

11:22
matter

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um

11:25
how is covid at the time of this taping

11:28
we're still dealing with coven and the

11:30
delta variant

11:31
how has that affected

11:32
your work your outlook

11:35
um

11:36
or has it it might not have has it or

11:38
has it not affected you

11:41
not from a personal basis but just kind

11:43
of how you're viewing retirement

11:45
um and how you're

11:47
speaking with people as you go out and

11:49
and you're speaking in front of either

11:51
agents and advisors or consumers

11:53
has it affected you at all from that

11:55
standpoint

11:57
it has on a few different levels and and

12:00
one is just along with covid we just

12:02
interest rates they were already low and

12:05
they've dropped even lower and it's

12:07
like just shocking that you can't get

12:09
inflation protection anymore without

12:11
taking on market risk

12:13
and so that's been a huge issue of just

12:16
how do retirees transition their wealth

12:18
into income because interest rates are

12:20
just simply so low

12:22
uh yeah i'm at a professional level i i

12:25
moved to i live 10 minutes from dallas

12:27
fort worth airport now because i did so

12:29
much business travel and now

12:31
that's not helpful for me anymore

12:32
because i have not been

12:34
on a business trip at this point since

12:36
the end of february 2020 but

12:39
so so there's that aspect but doing a

12:41
lot more on the internet and

12:43
yeah i mean just yesterday i was doing a

12:45
workshop about budgeting for retirement

12:48
and

12:48
someone was asking me about well i don't

12:50
i haven't been doing this is it okay to

12:52
just use the recent expenses and just

12:55
trying to emphasize i think a lot of

12:56
people did spend less in 2020 it was not

12:59
a normal year for them

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so they have to be careful if if they

13:03
are thinking about well how much did i

13:05
spend in 2020 that might not truly

13:07
reflect their retirement budget excuse

13:09
me because they might want to do a lot

13:11
more travel or a lot more like

13:12
restaurants and things and so the amount

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they spent in 2020 might give them a

13:17
misguided view about what a good

13:19
retirement can be

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and i do worry about like people who are

13:23
at retirement right now and maybe at

13:24
their peak years for doing all those

13:26
things they wanted to do the

13:27
international travel

13:29
and so forth and yeah i mean that's

13:31
that's a concern that

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people aren't getting that opportunity

13:34
to take full advantage of their

13:36
retirements if they're right that's

13:38
where they are right in their life cycle

13:40
when all this is happening

13:41
got it i mean

13:43
interest interesting take on that as i

13:45
said before and we were talking

13:47
previously before the recording

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um the people that are listening to this

13:51
primarily are consumers yes there are

13:52
some agents and advisors that listen

13:54
because i'm standing annuity man they

13:55
want to see what i'm doing

13:57
but 99 of consumers and they are either

14:00
retired getting ready to retire thinking

14:01
about retirement trying to spell

14:03
retirement planning for retirement and

14:05
as you know there's a demographic tidal

14:07
wave happening right now 10 000 baby

14:08
boomers reaching age 65

14:11
um every single day so it's it's you

14:14
know the annuity industry is in front of

14:17
um

14:18
you know that demographic tidal wave and

14:20
they have products that can transfer

14:22
risk and guarantee income and

14:24
and address long-term care and principal

14:26
protection those type of things you know

14:29
from a broad definition standpoint

14:31
of say retirement success and i know

14:34
we're kind of getting to the end of the

14:37
of the book

14:38
and missing the start but we'll get

14:39
there what's your definition of a

14:41
person's retirement success

14:44
to be able i think you know partly like

14:47
what does retirement mean and it doesn't

14:49
have to mean just not working it's

14:51
really like having the financial

14:53
independence to do what you want

14:55
and and to be who you want to be and you

14:57
know if that involves working that's

14:59
fine

15:00
you can still be retired but you're

15:02
you're not driven by the need for income

15:04
necessarily from work you have other

15:07
assets that can can do that for you so

15:10
it's really about finding your your

15:11
passion and your purpose

15:13
and feeling comfortable that you have a

15:16
plan that will last for you a lot of

15:18
people are worried about market

15:19
volatility they're worried what if i

15:22
live to 95 or 100. so having a plan in

15:25
place that gives you the comfort that

15:26
your you will be protected in that type

15:28
of circumstance

15:30
and having them the comfort to really

15:32
take advantage of your retirement

15:34
fulfill your purpose and your passion

15:35
and

15:36
do what really motivates you and makes

15:38
you happy and gets you up in the morning

15:40
i think that's that's a big part of it

15:43
one of the things i applaud you on that

15:45
you've done well

15:47
is to

15:48
amongst tons of things but the one that

15:50
jumps out to me is is

15:52
understanding a person's retirement

15:55
income style and why that's important

15:58
in fact it's risa is kind of the acronym

16:01
you you use which is retirement income

16:03
style awareness

16:06
and it really is that's helping in

16:08
essence that the english version of that

16:09
is helping people to position

16:12
annuities if they fit and are suitable

16:14
and appropriate in retirement planning

16:16
can you

16:17
give us that thirty thousand foot view

16:20
and and help the the listeners and

16:21
viewers understand

16:23
why having a person personal retirement

16:26
income style is important and what those

16:28
are

16:29
yeah yeah absolutely and we we call it

16:31
resa the retirement income style

16:33
awareness it it means smile in spanish

16:36
and it's really been something

16:39
kind of percolating for a long time i

16:41
think in general we've known for a long

16:43
time there are different well we've

16:44
already been talking about it like for

16:46
some people a retirement strategy is

16:48
this kind of let's invest a total return

16:50
investing strategy 50 to 75 percent

16:53
stocks take distributions that's one

16:55
kind of strategy

16:57
another one is it's called either time

16:59
segmentation or bucketing which is where

17:01
we think about let's build bonds and use

17:04
bonds to cover our short-term expenses

17:06
and then that gives us a window where we

17:08
can invest the rest in the stock market

17:10
and if the market goes down we have this

17:12
time to wait for the recovery and

17:14
hopefully have our stocks recover before

17:16
we have to have to sell them and so

17:18
that's another kind of retirement

17:19
strategy

17:20
then we have the different kinds of

17:23
essential versus discretionary or it

17:25
goes by different names like flooring

17:26
but it's thinking about

17:28
for my core retirement expenses i may

17:30
not be comfortable taking a lot of

17:31
market risks so that's where an annuity

17:34
can play a role and you have social

17:35
security and then if you still like to

17:37
have some additional protected income

17:40
different types of annuities can fill

17:41
that role

17:42
and that's as well as you know of course

17:44
like simple kinds of income annuities

17:47
and then possibly the different types of

17:48
deferred annuities with the the living

17:50
benefits that give you the protected

17:52
income also with some upside potential

17:55
and and some well having liquidity for

17:58
so you can still get access to those

17:59
funds you're not signing away that money

18:01
forever necessarily mm-hmm and those so

18:04
the styles are that it's do i want to

18:06
take that total return investing

18:08
strategy do i want a bucketing strategy

18:10
or do i want a strategy where i build a

18:12
floor of reliable income through an

18:14
annuity

18:15
and in the past we've never really had a

18:17
way to help guide people towards one of

18:20
those strategies or to understand what's

18:21
best for them it's

18:23
so many different like speakers whether

18:26
it's the consumer media financial

18:28
advisors who may have websites or radio

18:30
shows

18:31
personal finance bloggers

18:33
they have a particular style in mind

18:34
that they tend to think works best for

18:37
everyone and that can lead to a lot of

18:39
mismatching or failed plans or people

18:42
doing something and then later doing

18:43
something different

18:45
and so with alex mcgee as a part of a

18:47
retirement researcher

18:49
we did this study of could we

18:51
figure out how to ask people questions

18:54
in a way

18:55
that will help guide them towards a

18:57
style that that resonates with them that

18:59
works with them because at the end of

19:01
the day an annuity is not right for

19:03
everyone but it's going to be right for

19:04
some people and also

19:06
a total return investment strategy is

19:08
not going to be right for everyone but

19:10
it's going to be right for some people

19:12
and we need to figure out what works for

19:14
who

19:15
and in the process of doing that study

19:17
we were able to identify really there's

19:19
six factors that help to explain a style

19:23
now two of them are the most important

19:25
the other

19:26
four are helping to tell the story but

19:28
but the most important ideas are

19:31
we call it probability based or safety

19:32
first

19:33
am i comfortable relying on the stock

19:35
market to fund my retirement or would i

19:37
prefer some sort of contractual

19:39
protection to help support my retirement

19:42
and then the other big factor is

19:44
optionality versus commitment

19:46
do i want to keep my options open as

19:48
much as possible to make any sort of

19:50
change that i want to or am i more

19:52
comfortable committing to a strategy

19:54
that i know will work that i can kind of

19:56
check it off my list don't have to be as

19:58
worried about it at that point and

20:00
and just enjoy my retirement not i can

20:03
give up some of the potential

20:04
flexibility because i know i have a

20:06
strategy that will work

20:08
and then when you look at those

20:09
combinations it's what really shocked us

20:12
when we were doing that was how well

20:13
they fit into

20:15
our existing retirement strategies and

20:17
how well even the stories behind those

20:19
strategies

20:20
makes sense

20:21
so

20:22
people who are probability based relying

20:24
on market growth

20:26
also there's a correlation with they

20:28
also tend to be more optionality focused

20:30
they want to keep their options open

20:32
and that's that's a total return

20:34
investing strategy rely on market growth

20:36
keep your options open

20:37
and then the other big one though would

20:39
be the the opposite of that someone

20:41
who's more safety first wanting

20:43
contractual protections

20:45
and is more comfortable committing to a

20:46
strategy and we call that the income

20:49
protection style

20:50
and that's the world of really looking

20:52
at like simple income annuities building

20:55
a lifetime income floor having that

20:56
reliable income

20:58
and then using the investments on top of

21:00
that for discretion for more like

21:02
discretionary types of expenses

21:04
but having that secured lifetime

21:06
protected income floor to cover your

21:08
basics

21:09
and those are the two core strategies

21:11
and this is where it's like really

21:12
interesting so something like time

21:14
segmentation

21:15
it's more of a behavioral strategy in

21:18
that

21:19
it's not really rational but it was

21:21
designed to help

21:23
provide for certain concerns that don't

21:25
necessarily correlate with each other

21:27
and those were

21:28
somebody who wants contractual

21:29
protections but also wants a lot of

21:31
optionality

21:32
you don't

21:34
if you're going to sign a contract you

21:35
don't really think you're going to get a

21:37
lot of optionality but that's what that

21:39
bucketing strategy does it's

21:42
i use individual bonds to get

21:44
contractual protections for the short

21:45
term

21:46
it's not giving me any lifetime income

21:48
but then i have that growth portfolio to

21:50
cover me over the long term and i keep

21:52
all that optionality for that growth

21:54
portfolio

21:55
and then the other one it's as you know

21:57
since the 1990s we've developed this

21:59
entire universe of deferred annuities

22:02
with the living benefits

22:04
and we call that risk wrap it's people

22:06
who

22:07
are more comfortable with market growth

22:09
but also want to have some more

22:11
commitment to a strategy and and to

22:13
really flesh that out too with some of

22:15
the secondary factors

22:17
they also they're they're more worried

22:18
about living their wealth so they want

22:20
to more backload or protect their future

22:22
spending

22:23
they're thinking in terms of the

22:24
technical liquidity that

22:26
the asset just

22:29
an important aspect of retirement is you

22:31
have to match assets to their expenses

22:33
and even though like a brokerage account

22:35
is liquid it may not be truly liquid if

22:37
you've earmarked it to cover your future

22:39
spending and that kind of mindset is the

22:41
same with an annuity where technically

22:43
it's liquid but you're marking that

22:45
asset to cover the future spending

22:47
and and that but all these

22:48
characteristics that's describing

22:51
a deferred annuity with a living benefit

22:53
and and so now we can really understand

22:55
based on how someone ranks with these

22:58
two primary factors

23:00
now we have a starting point for a

23:01
discussion

23:02
is

23:04
are you going to resonate better with a

23:05
total return investing strategy are you

23:07
going to resonate better with an income

23:09
protection strategy that builds that

23:10
lifetime protected income floor with an

23:12
annuity

23:13
are you someone who might think more in

23:15
terms of the deferred annuities so you

23:17
can combine the protection with the

23:19
upside potential and the same annuity

23:21
product

23:22
are you someone who likes that bucketing

23:24
approach that resonates with you that

23:27
you feel comfortable with the idea that

23:28
if i can just hold on to my stocks for

23:30
long enough they should go up before i

23:33
actually have to tap into them

23:35
and that becomes a starting point for

23:36
the conversation that now we know which

23:39
strategy resonates with you

23:41
and how can we then best serve that

23:43
strategy and get you a strategy that

23:45
will work for what you want

23:47
makes total sense and you and moshe

23:49
milevsky have been a very um you've been

23:51
a motivator for how i've built my

23:53
business in sight which is trying to

23:55
match people with the correct

23:57
contractual guarantee i've kind of

23:58
narrowed it down to two questions ask

24:00
people what do you want the money to

24:01
contractually do

24:02
and when you want those contractual

24:04
guarantees to start then from there i

24:06
can either determine whether they either

24:07
need an annuity and if so what type will

24:10
provide the highest contractual

24:11
guarantee which comes back to what

24:13
you're talking about which is how can

24:16
people find the right plan for their

24:17
specific situation it comes down to and

24:20
i think you're correct figuring out who

24:22
you are as the consumer because the

24:24
annuities are not one size fits all even

24:26
though people think they are correct

24:29
right right and there's so much like

24:30
variation with annuities and i know from

24:32
reading your work that you're very

24:34
focused on look at just what is the

24:35
minimum downside guarantee

24:38
the the upside potential may or may not

24:40
happen don't definitely don't count on

24:42
it right certainly that's a very valid

24:44
view but i i think then

24:47
of course those annuities with that

24:48
upside potential are still popular and

24:50
it's it's more

24:52
how i view that with the retirement

24:53
income style awareness

24:55
the more you lean towards the safety

24:57
first side and this is all you're on the

24:59
commitment side already but then the

25:00
more you lean towards safety first

25:02
the more you emphasize the downside

25:05
protections so this the single premium

25:07
immediate annuities the deferred income

25:08
annuities the uh

25:10
fixed index annuities that that sort of

25:12
thing

25:13
and then as you shift you're still in

25:15
the commitment part but as you shift to

25:16
the

25:17
uh probability based side

25:19
that's where you may be open to like the

25:21
variable annuity that might have less

25:24
downside guaranteed protection

25:26
but

25:27
as a trade-off gives you more upside

25:29
potential that of course may or may not

25:30
happen

25:31
but you're more comfortable kind of than

25:33
rolling the dice thinking you will get

25:35
some of that upside potential

25:38
and that because you're more comfortable

25:40
relying on market

25:41
i mean we on on average we certainly

25:43
think the stock market will outperform

25:45
the bond market it's just we never know

25:47
for anyone's retirement

25:49
if that's actually going to happen for

25:51
them the way they're they're hoping and

25:52
so that's how we have to decide what are

25:55
we going to do in that regard

25:56
i always ask people do you need lifetime

25:58
income insurance some people need life

26:00
insurance some people don't some people

26:01
need lifetime income insurance some

26:03
people don't

26:04
but that's the monopoly that in the

26:06
annuity category has which is that

26:07
transfer risk pension like payment

26:10
um i really wish the annuity industry

26:12
would lean a little bit more heavily

26:14
from the standpoint of promotion

26:16
to tell people you know you already own

26:18
an annuity type which is social security

26:20
because it's a lifetime income stream so

26:22
you just can't cavalierly say you hate

26:23
all annuities which makes me laugh

26:26
let's talk a little bit about

26:28
the long-term care medicare medicaid

26:31
portion of that because

26:33
most

26:35
most advisors either

26:37
don't talk about that shy away from that

26:39
i was so happy to see that you addressed

26:41
that in detail in your latest book

26:45
can you dig into that for us

26:47
sure sure when it comes to long-term

26:49
care

26:50
there's really four ways you can think

26:52
about funding long-term care

26:54
you can build up additional reserves to

26:57
try to self-fund that i just say okay

26:59
i'm gonna

27:00
earmark or say i want this much

27:02
additional money as part of my

27:04
retirement assets before i'm comfortable

27:06
retiring

27:08
just in case i experience some long-term

27:10
care event in the future so that would

27:12
be self-funding

27:14
a lot of americans don't really have

27:16
enough financial assets to self-fund

27:19
their long-term care should they

27:21
experience a need to spend like several

27:23
years living in a nursing home or other

27:26
institutional setting so that's where

27:28
medicaid can step in and that's not not

27:31
medicare because medicare does not cover

27:32
long-term care

27:35
but medicaid is once i've spent down all

27:37
my

27:38
uh well there's a whole lot of rules

27:40
around it but sure effectively once i

27:41
spent down my assets and in income

27:44
then medicaid will help to pick up bills

27:46
for long-term care expenses

27:48
and if i am somewhere in the middle

27:51
where or even if i could potentially

27:53
self-fund but i can see the value of

27:56
you know with thinking ahead about the

27:58
inheritance i'm going to leave not

28:01
wanting to be worried about whether i

28:02
get care because i'm worried i'm

28:04
spending the child's inheritance or

28:06
something

28:07
long-term care

28:08
insurance can step into the picture and

28:10
there's the traditional long-term care

28:12
insurance which has made a lot of people

28:15
uncomfortable because there's a lot of

28:16
aspects of it that are

28:18
um challenging in terms of rising

28:20
premiums and lapsing with the policies

28:23
where it's you're no longer holding it

28:25
when you actually need it and so forth

28:27
but then now we're seeing more and more

28:29
growth with that like they're called

28:30
hybrid or it doesn't have a clear name

28:33
different types of hybrid products right

28:35
either with an annuity and and i don't

28:37
know a lot about the different hybrid

28:39
annuity products but more so on the life

28:41
insurance side sure that you can have

28:43
permanent life insurance that either

28:45
allows you to spend down the death

28:47
benefit of the insurance for a long-term

28:49
care need

28:50
or may even go above and beyond that and

28:53
provide some sort of well first you

28:54
would spend down the the death benefit

28:56
portion but then you might have an

28:58
additional continuation of benefiter to

29:00
support

29:01
additional long-term care

29:03
and those are the four basic options

29:05
self-fund medicaid traditional insurance

29:08
and hybrid life insurance long-term care

29:11
or annuity long-term care and the hybrid

29:14
that wade's talking about what we call

29:16
that asset-based

29:17
long-term care a lot of people are under

29:18
the assumption that you know they pay

29:20
they pay they pay and if they don't use

29:22
it money goes poof

29:24
with the asset-based coverage for

29:26
long-term care which i applaud the

29:27
industry for pivoting and listening to

29:29
the consumer

29:30
um you're not gonna you're not gonna

29:32
lose that asset you you're gonna have

29:33
the coverage and somebody in your family

29:35
is gonna get it which i think

29:36
is fantastic their second book kind of

29:39
blew me away

29:40
when it came out because i thought it

29:42
was brave and i thought

29:45
it was so outside the box because at the

29:47
time you wrote it

29:49
reverse mortgages was the wild wild west

29:53
and it might still be we don't see as

29:55
many ads for it we see the joe namaste

29:57
of the world you know or some celebrity

29:59
that's

30:00
no longer

30:02
a big celebrity is pushing uh that the

30:04
the 65 year olds understand and

30:07
recognize pushing reverse mortgages or

30:09
at least looking at it like a tom

30:11
selleck mm-hmm yeah and i think joe

30:13
namath is medicare advantage okay

30:15
i'm getting them all

30:17
i'm getting all mixed up okay uh you

30:19
know 20 years from now to be way nice

30:21
sitting on the couch going you ever

30:23
thought about an annuity

30:26
but the reverse mortgage thing is

30:28
interesting i want you to kind of dig

30:29
into that because a lot of the you know

30:31
the people listen to this they're

30:32
sitting on

30:34
a big asset which is their home

30:37
and i thought you were just brave as

30:39
heck to just say okay let's talk about

30:40
this from a mass standpoint from an

30:43
asset standpoint from a retirement

30:45
planning standpoint

30:47
wade let's talk about let's get your

30:49
take on reverse mortgages sure sure and

30:51
it's really the same story as annuities

30:54
in terms of the consumer perception

30:56
isn't always incredibly positive

30:58
so i do get a lot of tomatoes thrown at

31:00
me but

31:02
it's the same story though it's

31:04
it's about retirement planning risk

31:06
changes in retirement people now have to

31:09
support their lifestyle over an unknown

31:11
period they don't know whether they'll

31:13
live five more years or 45 more years i

31:16
mean i guess depends on their retirement

31:17
age but they don't know how long they're

31:18
going to live and then

31:20
the market volatility and the way they

31:22
thought about investing

31:24
changes when they start to spend from

31:26
their assets there's this idea called

31:28
sequence of returns risk that if

31:30
if you're spending from your investments

31:32
and the market goes down

31:34
you have to sell a bigger percentage of

31:36
what's left to meet your spending need

31:38
and that digs a hole for the portfolio

31:39
that can be very difficult to to dig

31:42
yourself back out of

31:43
and so the way people think about

31:44
investing when they're saving for

31:46
retirement

31:47
that that that volatility we experience

31:50
with investing really gets amplified in

31:51
retirement

31:53
and so that's where it just opened the

31:56
door about okay let's look at this in

31:58
terms of

31:59
annuities first and then i

32:02
reverse mortgages later it was a very

32:04
interesting tool for me to look at

32:05
because it happened

32:06
there how did that i mean it was it just

32:08
natural and you or you saw you saw um

32:12
tom selleck or whoever that was on i

32:14
mean did you go wait why is tom selleck

32:15
talking to me why is why is magnum pi

32:17
talking to me how did this happen

32:19
uh it was something i'd already i had

32:22
always been meaning to look at and then

32:23
uh but

32:25
there's a research team at texas tech

32:27
university john salter hail davinsky

32:29
sean pfeiffer

32:31
john salter deana katz don't forget dina

32:34
yes she she's parted absolutely

32:36
he sent me a stack of articles about

32:38
reverse mortgages and invited me to a

32:40
meeting where they were going to be

32:41
talking about it and as i was on the

32:42
flight to that meeting

32:44
just reading through that stack of

32:45
articles is the the first time i'd

32:47
really

32:48
paid much attention at all up to reverse

32:50
mortgages but i thought it was just

32:51
really fascinating and then i started

32:54
writing programs to test the results of

32:56
the past research studies in that area

32:59
found that all that played out i mean

33:01
there was truth to the idea it can help

33:03
manage sequence of returns risk

33:05
and it's you see as a parallel

33:07
conversation sometimes in the time

33:09
segmentation world as well where

33:12
when the markets are down if i can spend

33:15
from my reverse mortgage line of credit

33:17
that will kind of give me a bridge or a

33:19
buffer to allow more time for my

33:21
portfolio to recover

33:23
and i found that that really does help

33:24
manage sequence of returns risk so

33:26
reverse mortgages can be expensive to

33:28
set up it's true

33:30
but in the long run what i find is you

33:33
can increase the the chances that your

33:35
financial plan will work and it doesn't

33:38
really eat into your legacy in the long

33:40
term that like the kind of these two

33:42
metrics are

33:43
will i meet my spending goals in

33:44
retirement and then how much money will

33:46
i have at the end so the reverse

33:48
mortgage

33:50
you're borrowing from your home equity

33:52
but you're better protecting your other

33:54
assets so that at the end your other

33:57
assets plus your home equity minus your

33:59
loan or plus your home value minus the

34:02
loan that is due on the reverse mortgage

34:05
can be higher

34:06
than if you just simply didn't do

34:08
anything or weighted the the last resort

34:10
option is if you just simply wait until

34:12
everything else has failed and then open

34:13
reverse mortgage

34:15
that doesn't work as well as setting it

34:17
up earlier you become eligible at age 62

34:20
and so setting it up

34:21
earlier once you're in a home that you

34:24
think you'll stay in and continue to

34:26
live in

34:27
the the secret sauce is this idea of a

34:29
growing line of credit

34:30
that

34:32
it's a it's an extra special advantage

34:34
of reverse mortgages that really help to

34:36
explain why

34:37
setting it up early and letting that

34:39
line of credit start to grow

34:41
and it's a it's a non-recourse loan this

34:43
is where doing the research about it is

34:45
interesting

34:46
even if the loan balance grows to be

34:48
higher than the value of the home

34:50
you're not forced to pay back more than

34:52
95 of the appraised value of the home at

34:55
the time the loan becomes due

34:58
and you're paying the the reason why we

35:00
talk about reverse mortgage as being

35:01
expensive it's primarily the mortgage

35:03
insurance premiums that you're paying as

35:05
a part of that

35:06
but that provides one of the the

35:08
benefits it provides you is the

35:10
protection of this that it's a

35:12
non-recourse loan you don't have to pay

35:14
back more

35:15
than the home is worth

35:16
and so when you build that into the

35:18
simulations about retirement too

35:20
it's a really powerful strategy

35:22
just like an annuity just it's a way to

35:24
help manage these retirement risks

35:26
that people aren't always thinking about

35:28
because they're they're used to the

35:30
accumulation pre-retirement

35:32
investing and not to what happens

35:34
post-retirement

35:36
and it speaks to why a reverse mortgage

35:38
can help or why an annuity can help and

35:40
why you really have to think more

35:41
holistically about all the household

35:43
assets

35:44
and not just get too focused on some

35:47
sort of investing strategy alone

35:50
fascinating and i think it's interesting

35:52
that

35:54
both annuities and reverse reverse

35:57
mortgages i mean the the

35:59
misconceptions misperceptions out there

36:01
are just horrific in a lot of cases

36:04
so you're saying at age 62 you should at

36:07
least be

36:08
thinking about or visiting or looking

36:10
under that rock to see if that makes

36:13
sense and at least establishing that am

36:15
i right

36:17
yeah it's definitely worth having a look

36:19
at it and if you are planning to move in

36:21
the next couple of years it's probably

36:23
worth waiting until you're in a home

36:24
that you anticipate staying in because

36:26
of the there's a large upfront cost to

36:28
set it up

36:29
so it works better if you're planning to

36:31
stay in the home a long time

36:33
and then also for couples

36:35
if you're close to the same age you have

36:37
to be at least 62 to be a borrower on

36:39
the loan

36:40
so there could be value to waiting until

36:42
both members both individuals reach age

36:45
62 first

36:46
but then yes absolutely even

36:50
as a part of a responsible retirement

36:52
income plan so even if you have a

36:54
sufficient amount of assets that you're

36:56
unlikely to run out of money the reverse

36:58
mortgage can still help to improve your

37:00
outcome so that you can

37:02
meet your spending goals but also then

37:05
in the end leave a larger legacy behind

37:07
as well by being more strategic in how

37:09
you approach

37:10
the retirement planning process

37:12
it's an unknown retirement insurance

37:15
lever

37:17
that you can access that most people

37:18
don't feel like accessing and i think or

37:21
don't even know

37:22
um if you were going to explain setting

37:24
up a reverse mortgage to a nine-year-old

37:26
no offense to nine-year-olds of course

37:28
how would you explain that because i

37:30
know a lot of people on here on this

37:32
i've heard of it not thought of it and

37:34
now wade fowl

37:36
and they found out you wrote a book on

37:37
it is saying hey you might want to look

37:39
into this explain

37:40
30 000 foot view just what you're doing

37:43
with the home

37:44
so when you set it up and if you set it

37:46
up around age 62

37:48
based on where like interest rates are

37:50
right now and

37:52
you'll you get access to about 40 to 50

37:55
percent of the home value that then

37:57
becomes a line of credit

37:59
that will grow over time throughout your

38:01
retirement

38:03
and you can just spend from it as you

38:04
wish and it's it's proceeds from a loan

38:07
so it's not taxable income and also that

38:09
can help with some tax management

38:10
strategies too where

38:12
if you're going to go into a higher tax

38:14
bracket you might tap into the reverse

38:16
mortgage as a spending source that won't

38:18
push you into the higher tax bracket and

38:20
so forth but it's a way to just create

38:22
liquidity for your home equity

38:24
so that you can also spend just like you

38:26
spend from your investment portfolio

38:29
you can also spend from your reverse

38:30
mortgage and balance those or coordinate

38:33
them in a way that like when the stock

38:35
market's doing well go ahead and spend

38:37
from your investment portfolio but if

38:38
the stock market has a downturn

38:40
maybe tap into the reverse mortgage that

38:42
year and by being able to better manage

38:45
that it's just helping you better manage

38:47
the overall retirement situation

38:49
and better manage the the sequence of

38:52
returns risk this idea that a market

38:54
downturn can impact you more in

38:56
retirement

38:57
if you're forced to continue spending

38:59
from the the declining investment

39:00
portfolio

39:02
in those circumstances

39:04
and when you say grow for the listeners

39:06
and viewers they're yelling i'm sure

39:07
they're yelling at the the speaker going

39:09
grow what does that mean way tell me

39:11
what grow means

39:12
right so probably everyone can

39:14
understand that if i borrow money the

39:16
the loan balance will grow

39:19
the cool planning aspect of the reverse

39:21
mortgage and i think it was

39:23
an unintended consequence

39:26
the assumption was if you open a reverse

39:27
mortgage you are probably borrowing from

39:29
it

39:30
and so then this growth would just be

39:31
the growth of your loan balance

39:33
the cool planning aspect of the reverse

39:35
mortgage is you can open it up

39:38
but you don't well you have to keep like

39:40
a 50 balance at least or maybe a hundred

39:42
dollars with some company you have to

39:43
have some minimal balance but otherwise

39:45
you don't have to borrow from it

39:47
and so you have this principle limit

39:50
which is what you've borrowed plus

39:51
what's left over in the line of credit

39:54
and that's the thing that's really

39:55
growing at some rate over time

39:58
so if if you open it and you don't

40:00
borrow from it

40:01
your line of credit is growing like the

40:04
loan balance would have been growing

40:06
and then that's what grows and so then

40:09
later you have more line of credit that

40:11
you can tap into

40:13
and at some point there was a big

40:16
it so something happened with social

40:18
security that then happened with reverse

40:20
mortgages

40:21
in the early 2010s people figured out

40:23
all these cool planning strategies where

40:25
you could get extra spousal benefits out

40:27
of social security

40:28
and then the government shut that down

40:30
and 20 started phasing it out in 2015.

40:33
well this line of credit growth was

40:35
amazing i had written an article

40:38
probably in 2015

40:40
about how there's like a 50 chance that

40:43
line of credit could be worth more than

40:44
the value of the home in about 20 years

40:47
and then in 2017

40:49
the government caught up and changed

40:50
some of the parameters around that

40:52
so everything i'm talking about is still

40:54
true that's just not as shockingly

40:56
amazing as it was pre-2017 i had to

41:00
there's a second edition of my reverse

41:02
mortgage book because i had to entirely

41:04
rewrite it after that 2017 rule change

41:06
but everything i'm talking about right

41:08
now is thinking more in terms of the

41:09
current rules which is still

41:11
it's not as likely that that line of

41:13
credit will grow to be worth more than

41:14
the home

41:15
but it does grow and and it does speak

41:18
to the the value of opening it sooner

41:20
and letting that line of credit grow

41:22
rather than waiting until later and

41:24
opening it

41:25
and and missing the line of credit

41:27
growth during that period

41:28
what a great strategy i think that um a

41:31
lot of

41:32
a lot of the the baby boomers out there

41:34
grew up in a world where they were told

41:37
it's good to have no debt and a lot of

41:39
the clients that that certainly work

41:41
with me a lot of people i talk to they

41:42
have no debt and they're proud of that

41:44
and i think maybe one hesitation for

41:46
everyone would be you know why would we

41:48
do that we don't want more debt but

41:50
you're this isn't you're not incurring

41:52
the debt you're setting it up

41:54
as part of the plan as a

41:58
old just in case oh by the way i might

42:00
need this and why wouldn't you because

42:03
you know the house is i don't know what

42:04
the status i'm sure you do

42:06
which is the the primary asset

42:09
for most people if they just look at it

42:12
what it's worth am i correct about that

42:14
yeah at the like the average for the

42:16
average american reaching their 60s

42:19
the home equity plus it's like twice as

42:22
much as the investment portfolio or when

42:24
you like look at their investments in

42:25
their home

42:26
the home is worth about two-thirds of

42:28
that total so it's a bigger asset than

42:30
the investments for most people

42:32
approaching retirement age and and yeah

42:34
the the default the advice is

42:37
ignore the home it's not really part of

42:39
the retirement plan

42:41
and that's where like the the push with

42:43
the reverse mortgage concept is no this

42:45
actually provides a way to incorporate

42:46
the home

42:47
into the retirement plan and definitely

42:49
there is a psychological

42:51
hurdle to the reverse mortgage as you're

42:53
saying like people it is it's a it's a

42:55
mortgage so you if you borrow from it it

42:59
is a loan

43:00
it works a little bit differently than

43:02
most loans people are used to because

43:03
there's no fixed payment obligation

43:06
you can wait until the end like the

43:08
reverse mortgage terminates when you've

43:10
either passed away uh moved out of the

43:12
home for at least a year

43:14
and or don't make uh do your basic

43:16
homeowner obligations like very basic

43:19
home maintenance uh paying homeowners

43:21
insurance and property taxes

43:23
but as long as you're meeting the

43:24
requirements you don't have to make any

43:26
sort of payment until

43:28
one of those things happens

43:30
and so

43:31
while it is a loan it

43:33
because it doesn't have that fixed

43:35
repayment schedule

43:36
it works different than how people are

43:38
mostly thinking about the way loans work

43:41
definitely when i turn age 62 i'm going

43:43
in that direction just because it makes

43:44
total sense have advisors masters of the

43:47
universe

43:49
however they want wealth architects and

43:51
the people that you talk to about this

43:52
has there been good reception to that or

43:55
is there an initial reflex from people

43:58
about reverse mortgages based upon just

44:00
the bad

44:01
information that a lot a lot of people

44:03
have gotten about reverse mortgages what

44:04
has been the reception well more people

44:06
are becoming open to it but yeah i think

44:09
there's still this it's almost like a

44:10
universal misconception that you somehow

44:13
hand over the home to the bank when you

44:15
initiate the reverse mortgage and we're

44:17
talking about like more than 90 of

44:19
reverse mortgages are the home equity

44:20
conversion mortgage program it's

44:22
administered through the government

44:24
there's a whole set of rules and you no

44:26
one ever handed over the title to their

44:28
home so i think everyone just starts

44:30
from that misconception

44:32
and that that makes it a struggle from

44:34
the very beginning because it does

44:36
require taking some time to understand

44:38
how it actually works

44:40
so it's a it's a slow process and then

44:44
i have seen a lot of financial advisors

44:46
become more open to it

44:48
but then the problem they have is their

44:50
clients may not be open to it and so got

44:53
it and the client might think hey what's

44:55
going on why are you talking about a

44:56
reverse mortgage are you trying to scam

44:57
me so it's a very sensitive conversation

45:00
well you're doing it you're doing a good

45:02
job of giving it validity which is what

45:04
you've always done but it's eerily

45:05
similar to when people call me up and

45:07
say

45:08
i'll never buy an annuity because when i

45:10
die the evil annuity company keeps the

45:11
money and that and a lot of people think

45:14
that that's true

45:15
i mean you both know that's just one of

45:17
40 different ways to maybe structure an

45:19
immediate annuity or deferred income

45:21
annuity but it doesn't apply in most

45:23
cases but that's what people believe and

45:25
if that's what people believe and that's

45:26
what they heard and then they hear you

45:28
know i hate annuities or i hate reverse

45:30
mortgages they're not open to it i'm

45:32
hoping that people will hear you

45:35
because the next topic i kind of want

45:37
you to speak about

45:39
and i know it's basic for you but once

45:41
again our listeners and um and viewers

45:45
need to understand risk pooling

45:48
and what that means from the standpoint

45:50
of

45:50
life insurance and annuities when we're

45:52
talking about implementing these

45:54
strategies if they are suitable and

45:56
appropriate for them so can you kind of

45:58
give us a basic uh view of risk pooling

46:01
sure yeah and risk pooling

46:04
the

46:05
so we we had traditional company

46:06
pensions especially in the post-war era

46:09
in the united states the

46:11
you work for 30 years and then 60

46:13
percent of your i mean however work but

46:15
like 60 of your salary gets replaced and

46:17
it lasts for the rest of your lifetime

46:19
that traditional company pension

46:22
pools both market risk and longevity

46:24
risk and what that just means is

46:27
i'm not taking any risk about what the

46:29
financial markets are going to do or how

46:31
long i'm going to live the my employer

46:34
is taking that risk

46:36
over time they're going to be investing

46:37
to pay these

46:39
payments to me

46:40
but

46:41
they can because different workers are

46:43
starting their careers and ending their

46:45
careers at different times

46:46
the employer can focus more on providing

46:48
a pension that matches the average

46:50
market return over time

46:52
and then also they know as well some

46:54
people will not live very long in

46:55
retirement other people will live longer

46:58
so if i'm trying to manage that risk on

47:00
my own i have to be worried well what if

47:02
i retire when markets go down and what

47:04
if i retire and then it's good that i

47:05
live a long time but it's just then it's

47:07
a lot more expensive for me to fund my

47:09
retirement

47:10
well the the employer could pool that

47:12
risk because they they can pay everyone

47:14
the pension based on an average lifetime

47:17
it's like your pension's based on you'll

47:18
get an average market return and live an

47:20
average length of time

47:22
and it doesn't really matter what

47:23
happens in your individual circumstance

47:25
you're protected even if

47:27
you're

47:28
like if you had been investing that

47:29
money on your own you would have got

47:30
really poor returns and you end up

47:32
living a really long time and can't

47:34
afford to to pay for the retirement the

47:36
employer took on all that risk

47:38
but that traditional company pension

47:40
for most people i mean they they still

47:42
exist but they're much rarer these days

47:45
and an annuity is a way to build that

47:47
pension

47:48
on your own through an insurance company

47:50
where the insurance company will pool

47:52
that risk

47:54
and especially the it's the longevity

47:56
risk

47:57
i if i'm 65 years old i might live to 68

48:01
i might live to 98. i don't know

48:03
i have to

48:05
worry if well if i am worried about this

48:07
that plan more what if i do live to 98

48:10
and then i have to spend less to stretch

48:11
that money out for longer

48:14
the insurance company though has the

48:15
actuaries who are figuring out well if

48:17
the average person lives to 86

48:20
then i can pay everyone who buys that

48:22
annuity a higher level payment because i

48:25
can pay everyone like they're going to

48:26
lift to 86.

48:28
and then for those who end up not living

48:29
as long

48:30
that money doesn't go to the insurance

48:32
company it goes to the other members of

48:34
that risk pool who do live longer there

48:36
you go so if you live a long time it's

48:38
great from the perspective of you you

48:40
got your money's worth out of the

48:41
annuity

48:42
but given that people don't know in

48:43
advance which group they're going to

48:45
fall in

48:46
it helps to raise the standard of living

48:47
for everyone in the risk pool because

48:49
everyone can now spend like they're

48:51
going to live to 86 or just however that

48:53
the life expectancy rather than being

48:56
worried well what if i am the one who

48:57
makes it to 95 or beyond

48:59
i can enjoy a much higher standard of

49:01
living because i pull that risk through

49:03
the insurance

49:04
rather than accepting and taking on that

49:06
risk on my own and being forced to spend

49:08
less as the only method i have to manage

49:10
that type of risk

49:12
and i i am always breaking things down

49:15
to a very simplistic level because

49:16
people always say what's my return on

49:18
investment or something like that i'm

49:19
like there's no roi until you die up

49:21
until that point it's a transfer of risk

49:24
um

49:25
last part of this segment i want to

49:27
transition you know and i appreciate you

49:28
going into the details of that and once

49:30
again for everyone listening and viewing

49:32
we're going to have all of wade's his

49:34
his website

49:35
retirementresearcher.com you know access

49:37
to his books where you can buy them on

49:38
amazon i would encourage you to do that

49:41
um

49:42
i want to close with a few questions

49:43
about just some some other things when

49:46
it comes to

49:47
retirement

49:49
the non-financial aspects that are that

49:51
you'd would deem important in retirement

49:54
as you're also looking at these other

49:57
mathematical views into retirement what

50:00
are the the non-financial

50:02
items you would like people to focus on

50:04
yeah and i do focus mostly on the

50:06
finances so i had to

50:08
do some a lot of background reading on

50:10
that when i was writing the chapter and

50:12
the guidebook about the non-financial

50:14
aspects but

50:15
they're as important as the financial

50:16
aspects and maybe even more important

50:19
because at the end of the day people can

50:20
adjust to their finances and

50:23
even if it's just a social security

50:24
benefit in the end people can adapt but

50:27
the non-financial aspects are a lot

50:30
harder to adapt to and kind of a rule of

50:32
thumb is

50:33
you want to have something that you're

50:34
retiring too rather than something that

50:36
you're retiring from like you don't want

50:38
to retire because you hate your job you

50:40
want to retire because you have

50:42
something else you'd rather be doing

50:44
that will give you purpose and passion

50:45
wait repeat that again

50:47
yeah it's not that you want you want to

50:49
retire to something not retire from

50:51
something there you go and that we can

50:54
think about so work

50:57
of course provides us income but but it

50:59
does a lot more than that other aspects

51:01
or other like positive life experiences

51:04
we get through work

51:05
it's a source of social engagement

51:07
friend friendship

51:09
camaraderie

51:10
uh it's

51:12
a structure for the day like

51:14
i know i have these hours of the day i'm

51:16
going to work a routine and structure

51:18
that can be important to some people

51:21
it's a sense of identity for some people

51:23
that like when someone asks who you are

51:26
if your response is your career like i

51:28
am an accountant or i am a lawyer

51:30
that can be a big part of your identity

51:32
and so retirement can take away that

51:34
that identity and also people can feel

51:36
like they're valuable contributors to

51:38
society through their work

51:40
and if they don't have a replacement for

51:42
that they might also then have less of a

51:44
sense of self-worth

51:46
when when they don't have that career as

51:48
part of who they are so working provides

51:51
all these positive attributes

51:54
that need to be replaced as part of

51:56
retirement

51:57
and that's a big aspect of the

51:58
non-financial side of how are you going

52:01
to spend your days how are you going to

52:02
continue to mean social engagement and

52:05
like it's if you don't have anything

52:06
that forces you to get out of the house

52:09
it can become a hurdle for you

52:11
and

52:12
you're going to be spending more time

52:13
potentially with a partner or spouse and

52:15
how are you going to manage that and to

52:16
make sure that grey divorce is on the

52:18
rise and

52:20
and spouses or partners need to

52:22
communicate with one another to make

52:23
sure there's an understanding about what

52:25
are you going to do together as a couple

52:26
what will you do separately

52:28
and how you manage

52:30
the extra eight hours of the day that

52:32
you're spending together that you

52:33
weren't necessarily used to doing and

52:35
especially now that the children have

52:36
grown

52:37
you don't have that child rearing as the

52:40
source of what you're talking about or

52:42
what you're doing together as well

52:44
so that that's kind of a nutshell of the

52:46
non-financial aspects the the things

52:49
that are really important to be thinking

52:50
about and also i mean health taking care

52:53
of your health and mental health

52:55
and just the risk of people becoming

52:58
depressed when they leave work

53:00
because they're just losing all these

53:01
benefits of work above and beyond the

53:04
income

53:05
that

53:06
can can lead to negative feedback loops

53:08
and and it's just important to

53:10
really be thinking about and to prepare

53:12
for what's going to give you purpose and

53:15
passion and make you have that

53:17
retirement that you really want to have

53:19
and not just fall into the inertia of

53:22
the days just wasting away and a lot of

53:24
people will have a honeymoon period at

53:26
the start of retirement that could last

53:28
a month or a year even but at some point

53:31
sitting on the couch all day or going

53:33
golfing every day there's got to be

53:35
something else to really sustain a

53:37
successful happy retirement experience

53:40
definitely um wayne gretzky hockey

53:43
player always said i don't skate

53:45
after the puck i skate to where the puck

53:47
is going to be

53:49
for wade fowle where's the puck

53:52
going wade where are you where are you

53:54
trying to get to

53:56
um from a you know the annuity industry

53:59
from a life insurance industry from a

54:01
product standpoint and you

54:03
where do you see the future for the

54:05
industry products and where's that puck

54:07
gonna be

54:08
well i've been really excited at a

54:10
personal level about one of the topics

54:12
we we discussed was that retirement

54:14
income style awareness idea

54:16
and like my dream is i think there's so

54:19
much potential value there that if every

54:21
one of those 10 000 baby boomers

54:23
reaching age 65 every day like if

54:25
everyone just started by taking

54:28
the the visa the retirement income style

54:29
awareness understanding their visa

54:32
profile which is just the starting point

54:34
of what retirement strategy resonates

54:36
with them

54:37
i think that could provide so much value

54:39
and service as a starting point for

54:41
people to then think about

54:43
how to build their retirement strategies

54:45
so kind of what's driving me right now

54:46
is

54:47
getting that message out there and

54:49
trying to build that momentum that the

54:52
the risa really is the starting point

54:55
we've had we have risk tolerance

54:57
questionnaires and maybe a lot of the

54:58
listeners have taken one even which is

55:01
you know for your investment portfolio

55:03
what stock allocation should you use

55:05
that's not really all that relevant for

55:08
retirement or it's still important but

55:09
it's only for the investing piece it

55:11
doesn't speak to

55:13
and this is what we showed in the

55:14
research like a traditional wrist honest

55:16
questionnaire doesn't have anything to

55:18
say about

55:19
are you concerned about meeting your

55:21
core expenses over a long retirement

55:23
like are you concerned about living your

55:24
money

55:25
it doesn't speak to liquidity concerns

55:28
which is do i have reserves what if i

55:30
like have a big long-term care bill do i

55:32
have sufficient funds to help cover that

55:35
the risk tolerance questionnaire doesn't

55:36
help with that it can kind of describe

55:38
lifestyle concerns which is the overall

55:40
kind of the accumulation investing

55:43
process of just how can we maximize our

55:45
lifestyles as much as possible

55:47
but it's not a good starting point for

55:49
the retirement conversation

55:51
first people need to understand their

55:53
style

55:54
then they can take a risk tolerance

55:55
questionnaire and i'm just trying to

55:57
help build the momentum to to get this

55:59
idea out there that

56:01
understand your style it simplifies the

56:03
conversation it provides a vocabulary

56:06
my website gets so many questions from

56:08
people and now the vocabulary is

56:09
changing instead of somebody asking me

56:12
should i do this or that they say

56:15
i'm time segmentation should i do this

56:17
or that nice and then it's easier to

56:19
to answer the question

56:21
of course the question still always it

56:23
depends but now one of the big it

56:24
depends

56:25
is less i mean there's less uncertainty

56:28
now we can have that conversation is

56:30
building a bond ladder right for

56:32
somebody who has time segmentation it's

56:34
much more likely to be correct for that

56:36
type of person than for for someone who

56:38
has a different style

56:40
great answer wait foul true thought

56:42
leader in the industry an icon

56:44
as you can tell by just

56:46
listening to him he's a good person and

56:48
he's trying to help and he's trying to

56:52
create a foundation of facts

56:54
and insight that will help the retirees

56:57
pre-retirees post retirees whatever you

56:59
want to call yourself baby boomers

57:01
and um it has been an absolute pleasure

57:04
for you to be on the fun with annuities

57:06
podcast hope you're going to join us in

57:07
the future i wish you the best on this

57:09
new book yeah it's fantastic i do

57:11
recommend all four of his books but um

57:14
wait any last thoughts before we close

57:16
this thing out

57:17
no i've admired your work for a long

57:18
time and so it's a pleasure to talk with

57:20
you about it thank you well great

57:22
hopefully we can meet one of these days

57:24
i'll buy you dinner in a post covered

57:26
world i hope um but i want to thank

57:28
everybody on all the plot podcast

57:30
platforms and the fun with annuities

57:31
youtube channel don't forget i also have

57:33
a stanley nude man youtube channel that

57:35
has over 400 videos at the time of this

57:37
taping that are informative and

57:39
non-salesy so with that i will see you

57:42
next week on fun

57:43
with annuities

57:49
thanks for listening to fun with

57:51
annuities please hit the subscribe

57:52
button and make sure to go to my site at

57:55
the annuityman.com

57:57
where you can run your own spea dia and

57:59
q lat quotes and see a live feed of the

58:02
best micah fix rates in the country and

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even get indexed and income writer

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quotes as well you can also sign up for

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my six annuity owner's manual books and

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i'll ship them for free and under no

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obligation i also encourage you to

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schedule a one-on-one call with me stan

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the annuity man so we can have a full

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discussion of your specific situation it

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will be the best brutally factual and

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truthful advice you will ever get and

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that's one guarantee you should

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definitely take advantage of so join me

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next time for the number one annuity

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podcast on the planet fun

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with annuities

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[Music]

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you