Wade Pfau: Retirement Income Style Awareness (Holiday Regift)

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welcome to fund with annuities where

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[Music]

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it welcome to with annuities I'm your

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host Stan the annuity man America's

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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 anties YouTube channel where

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you can see me and the guest interact in

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facial expressions and you can check out

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how just utterly fantasttic

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fantastically good-look we both are

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which is great um laugh laugh right

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today's guest is a I'm so happy he's

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here um just because for the consumers

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that are listening to this

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um this person is the real deal he's the

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true retirement expert his name is Wade

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fou a pfau is the spelling of his last

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name um he's the Miles Davis and the

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Jimmy Hendricks of Retirement Research

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and expertise obviously I'm a music guy

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but that's who I I qu equate him to he's

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in rarified air if there was a um a

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mythical annuity Mount Rushmore his face

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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 and king

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of

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Pennsylvania he also hosts the

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retirement researcher website and I

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would encourage you to go there

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retirement researcher. comom we're going

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to have all of his links on the site so

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you can access those Etc he's the he's a

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principal and director for mlan Asset

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Management he holds a doctorate of

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Economics from Princeton University he's

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written so much stuff you can't even

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start to count it hundreds of Articles

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hundreds of white papers and research

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work he has four books that I own all

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four um the first one that he put out

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was called uh safety first retirement

2:04
planning which is an integrator approach

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for worry-free retirement then he did

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one that was fascinating called reverse

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mortgages how to use reverse mortgages

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to secure your retirement third book was

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how much can I spend in retirement a

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guide investment based retirement income

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strategies and the fourth one that I

2:20
just got retirement planning guide book

2:22
book navigating the important decisions

2:25
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 typee

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of research on retirement he has to be

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on your bookshelf with that being said

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welcome to fund with annuities Wade foul

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well thank you it's a pleasure to be

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here and thanks for that very nice

2:44
introduction you've earned it you've

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absolutely I don't know if you've ever

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been um compared to jimmi Hendricks and

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Miles Davis but to me that's who you

2:54
are thanks so much well let's let's um I

2:58
want to kind of break this interview up

2:59
and to kind of three parts and the first

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part I've never really seen done with

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you but it's something that that I

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selfishly want to know which is who is

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the mythical Wade foul um who are you

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where are you from what what what makes

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you tick who is Wade foul the

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person sure sure so well born in

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Michigan raised mostly in Iowa uh just I

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became interested in economics and that

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really became my focus in grad school I

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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 US 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 uh my background in that regard

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I'm more 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 you know building a lowcost indexed

3:55
investment strategy but then as I looked

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at the retirement planning the first

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first article I did kind of from with

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that overseas experience I'd heard about

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this 4% rule of thumb it's it's from the

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investment world it's kind of the

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Baseline of building a retirement

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strategy you build a portfolio of 50 to

4:10
75% stocks you start taking

4:13
distributions at 4% of the account

4:15
balance at retirement and just keep

4:17
doing that with inflation adjustments

4:18
that that amount that you take out and

4:20
your money should last and I I had data

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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 us data and I found that it

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did work his ially in the US and Canada

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but in the other 18 countries it did not

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work and the mileage varied in terms of

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the international experience it really

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when we people think it it worked 100%

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of the time in the US it was really it

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worked about two-thirds of the time when

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we look at that and aggregate across the

4:46
world so that really led me down a path

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of thinking maybe Investments aren't

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always the right solution in every

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circumstance for building a retirement

4:55
strategy and I didn't have any

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background in insurance or annuities but

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people started saying well hey if yeah

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you know that there there can be issues

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with Investments why don't you have a

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look at annuities and that's what then

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led me down that path of looking into

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more depth and and starting to then

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recognize too that we really have

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completely different viewpoints out

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there of in terms of people can ask

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basic questions about retirement and

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give completely opposite answers 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 I came to see through the kind

5:29
of doing simulations and so forth that

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annuities definitely have a strong case

5:33
that can be made for them in terms of

5:35
providing a tool to help sustain

5:37
retirement spending over a potentially

5:39
very long retirement and that's kind of

5:42
then just being agnostic and and

5:44
considering all the different approaches

5:45
to retirement income and certainly then

5:47
seen the value of annuities and

5:49
insurance as part of that so the fork in

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the road was the 4% did that just

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trigger something in you to say wait a

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minute why is this such a known and

5:57
accepted um state because my background

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I work for Dean Whitter Morgan Stanley

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pay Weber and UBS on the stock

6:03
investment side become before I became

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the mythical stany anity man is that

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what really said you just kind of head

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slap moment and go wait a minute that

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that didn't makees sense let me look

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into that was that the time was that

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really the when you just kind of started

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digging

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in yeah because I didn't really have a a

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clear I didn't know a lot about

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financial planning in academics it's a

6:24
new field the first PhD program in

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financial planning that began at Texas

6:28
Tech University in the year 2000 it's

6:30
not so when I was in well I was in grad

6:33
school around that time but I it wasn't

6:34
even on my Horizon so that's yeah

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starting to look at how this sort of

6:39
practitioner based approach to

6:40
retirement work works and then seeing

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you know the the 4% rule going down that

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path with just looking at it with the

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international data that led me down this

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path of more generally seeing issues

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because some people will challenge that

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international data and say well we we

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live in the US I me assuming that's true

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we invest in the US

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it doesn't really matter like if Bill

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benan the Creator the 4% rule had been

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Italian and he was looking at Italian

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stocks and Italian bonds the 4 per rule

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only worked about 25% of the time

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historically not 100% of the time but

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who the argument would be who cares

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about that we live in the US we have us

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data and this can start getting

7:18
philosophical but I think because

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there's so much uncertainty in financial

7:22
markets there's value at looking at a

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broader International experience but

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then that just open so many other doors

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too like now interest rates are lower

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than they ever were in that historical

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data that gave us the 4% Rule and that's

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huge and a mathematical certainty if

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interest rates are low bond yields or

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Bond returns will be low and you can't

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spend as much from a a bond portfolio we

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see the same issue with the stock market

7:46
and so forth so I just developed all

7:48
these concerns that just having everyone

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go into retirement with 50 to 75% stocks

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and having the Viewpoint that it will be

7:56
fine because us historical data showed

7:57
that it worked I didn't think that was

8:00
going to be for everyone and yeah that

8:02
that was really the the starting point

8:03
for all that that's fascinating because

8:05
when you bring that up I'm now thinking

8:06
well in a in a balance portfolio where

8:08
you have international exposure in the

8:10
global marketplace where everything's

8:11
interconnected and we're on you know

8:13
we're on a a real-time basis with

8:15
everyone yeah the 4% rule based upon the

8:17
research that you have have laid out

8:20
that doesn't work and I applaud you for

8:22
not just you know that's that's your

8:24
background is not to take everything uh

8:26
at face value is to dig in and make sure

8:27
it's true but I think you've done the

8:29
public a good service because you have

8:32
given validity uh from a math and

8:35
research and um just a an educated

8:39
standpoint on annuities because the

8:40
annuity industry as you know has earned

8:42
its bad reputation on some of the sales

8:44
practices and all sales environments

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have good and bad people in it but I

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think you've you've definitely added the

8:50
foundation that when you're talking

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about it there's no sales pitch it's

8:54
it's math and for you it's math um

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couple other questions before we get

8:58
digging again um non-retirement plan

9:02
Guru Hobbies what what is what does way

9:05
fou do when he says I don't want to talk

9:06
about annuities and retirement what do

9:08
you do I have three young children now

9:11
so that definitely takes a lot of time

9:14
but I mean watching some during the

9:17
pandemic watching shows with them we

9:18
just we'd gone through Adventure Time I

9:20
thought that was really good cartoon for

9:22
kids and for adults and uh with Hobbies

9:25
beyond that I've always had an interest

9:26
in things like amateur radio and short

9:29
radio but that's really the internet has

9:31
to some extent killed out that entire

9:34
HBY as an option for people but yeah I

9:36
mean that that's spending time with kids

9:39
that's neat do you consider yourself a

9:41
um a lifer in this retirement Guru space

9:44
that you that you dominate is this a

9:47
passion do you wake up and does it keep

9:48
you

9:50
going because it really does come from

9:53
really to some extent what started me in

9:54
all this was just curiosity about my own

9:56
saving I've always been a saver and so

9:58
always been interested and then

10:01
understanding how to invest that and I'm

10:03
not yet at the retirement phase myself

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but that naturally extends and if you're

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thinking about saving and planning for

10:08
the future how do you then build a

10:10
retirement strategy around that so that

10:12
that really did motivate me with the

10:14
early research and as I've dug more and

10:16
more into it yeah all the different

10:18
aspects of retirement income planning

10:19
like even now things like how you

10:22
Medicare decisions and everything else I

10:24
find it all very interesting because it

10:25
all interconnects and fits together when

10:28
you're thinking about how do I build a

10:29
complete retirement plan and your last

10:31
book really dives into long-term care

10:34
Medicare Medicaid and and those type of

10:36
planning which a lot of um a lot of

10:38
people don't go into and and work you're

10:40
working that into the whole retirement

10:42
plan thought and process one last

10:43
personal question before we dig into the

10:45
meat of the matter um how how is co at

10:50
the time of this taping we're still

10:52
dealing with Co and the in the Delta

10:53
variant how has that affected your work

10:56
your

10:57
outlook um or has it it might not have

11:01
has it or has it not affected you not

11:04
from a personal basis but just kind of

11:06
how you're viewing retirement um and how

11:09
you're speaking with people as you go

11:11
out and and you're speaking in front of

11:13
either agents and advisers or consumers

11:16
has it affected you at all from that

11:18
standpoint it has on a few different

11:21
levels and one is just along with covid

11:24
we just interest rates they were already

11:26
low and they've dropped even lower and

11:28
it's like just shocking you can't get

11:31
inflation protection anymore without

11:33
taking on Market risk and so that's been

11:36
a huge issue of just how do retirees

11:38
transition their wealth into to income

11:40
because interest rates are just simply

11:42
so low uh yeah I'm at a professional

11:45
level I I moved to I live 10 minutes

11:48
from Dallas Fort Worth airport now

11:49
because I did so much business travel

11:51
and now that's not helpful for me

11:53
anymore because I have not been on a

11:55
business trip at this point since the

11:57
end of February 2020 but so so there's

12:00
that aspect but doing a lot more on the

12:02
internet and yeah I mean just yesterday

12:05
I was doing a workshop about budgeting

12:07
for retirement and someone was asking me

12:09
about well I don't I haven't been doing

12:11
this is it okay to just use the recent

12:13
expenses and it's just trying to

12:15
emphasize I think a lot of people did

12:17
spend less in 2020 it was not a normal

12:19
year for them so they have to be careful

12:22
if if they are thinking about well how

12:24
much should I spend in 2020 that might

12:26
not truly reflect their retirement

12:28
budget excuse me because they might want

12:30
to do a lot more travel or a lot more

12:32
like restaurants and things and so the

12:34
amount they spent in 2020 might give

12:35
them a misguided view about what a good

12:38
retirement can be and I do worry about

12:41
uh like people who are at retirement

12:43
right now and maybe at their Peak years

12:44
for doing all those things they wanted

12:46
to do the international travel and so

12:48
forth and and yeah I mean that's that's

12:50
a concern that people aren't getting

12:52
that opportunity to take full advantage

12:54
of their retirements if they're right

12:56
that's where they are right in their

12:57
life cycle when all this is happening

13:00
got it I mean interest interesting take

13:02
on that as I said before and we we were

13:04
talking previously before the recording

13:07
um the people that are listening to this

13:09
primarily are consumers yes there are

13:10
some agents and advisers that listen

13:12
because I'm standing nity man they want

13:13
to see what I'm doing but 99% of

13:16
consumers and they are either retired

13:18
getting ready to retire thinking about

13:19
retirement trying to spell retirement

13:21
planning for retirement and as you know

13:23
there's a demographic tidal wave

13:24
happening right now of 10,000 Baby

13:25
Boomers reaching age

13:27
65 um every single day so it's it's you

13:31
know the annuity industry is in front of

13:34
um you know that demographic TI wave and

13:37
they have products that can transfer

13:38
risk and guarantee income and and

13:41
address long-term care and principal

13:42
protection those type of things you know

13:45
from a broad definition standpoint of

13:48
say retirement success and I know we're

13:51
kind of getting to the end of the of the

13:53
book and missing the start but we'll get

13:55
there what's your definition of a

13:57
person's retirement success

14:00
to be able I think you know partly like

14:03
what does retirement mean and it doesn't

14:04
have to mean just not working it's

14:06
really like having the financial

14:08
Independence to do what you want and and

14:11
to be who you want to be and you know if

14:13
that involves working that's fine you

14:15
you can still be retired but you're

14:17
you're not driven by the need for income

14:19
necessarily from work you have other

14:22
assets that can can do that for you so

14:24
it's really about finding your your

14:26
passion and your purpose and feeling

14:28
comfortable that you have a plan that

14:31
will last for you A lot of people are

14:33
worried about Market volatility they're

14:35
worried what if I live to 95 or 100 so

14:38
having a plan in place that gives you

14:39
the comfort that you you will be

14:41
protected in that type of circumstance

14:44
and having then the Comfort to really

14:46
take advantage of your retirement

14:47
fulfill your purpose and your passion

14:49
and do what really motivates you and

14:52
makes you happy and gets you up in the

14:54
morning I think that's that's a big part

14:55
of it one of the things I applaud you on

14:58
that you've done well is to among tons

15:02
of things but the one that jumps out to

15:04
me is is understanding a person's

15:07
retirement income style and why that's

15:10
important um in fact it's Raisa is kind

15:13
of the acronym you you use which is

15:14
retirement income style

15:17
awareness um and it really is that's

15:19
helping in essence that the English

15:21
version of that is helping people to

15:23
position annuities if they fit and are

15:26
suitable and appropriate in retirement

15:28
planning can you give us that 30,000

15:31
foot View and and help the the the

15:33
listeners and viewers understand why

15:36
having a person personal retirement

15:37
income style is important and what those

15:40
are yeah yeah absolutely and we we call

15:42
it Risa the retirement income style

15:44
awareness it it means smile in Spanish

15:47
and it's really been something that kind

15:50
of percolating for a long time I think

15:52
in general we've known for a long time

15:54
there are different well we've already

15:55
been talking about it like for some

15:57
people retirements strategy is this kind

15:59
of let's invest the total return

16:01
investing strategy 50 to 75% to stocks

16:04
take distributions that's one kind of

16:06
strategy another one is it's called

16:09
either time segmentation or bucketing

16:11
which is where we think about let's

16:12
build bonds and use bonds to cover our

16:14
short-term expenses and then that gives

16:17
us a window where we can invest the rest

16:18
in the stock market and if the market

16:20
goes down we have this time to to wait

16:23
for the recovery and hopefully have our

16:25
stocks recover before we have have to

16:27
sell them and so that's another kind of

16:28
retirement strategy then we have the

16:31
different kinds of essential versus

16:33
discretionary or it goes by different

16:34
names like floring but it's thinking

16:36
about for my core retirement expenses I

16:39
may not be comfortable taking a lot of

16:40
Market risks so that's where an annuity

16:42
can play a role and you have social

16:44
security and then if you still like to

16:46
have some additional protected income

16:48
different types of annuities can fill

16:50
that role and and that's well as you

16:52
know of course like simple kinds of

16:54
income annuities and then possibly the

16:56
different types of deferred annuities

16:57
with the the living benefits that give

16:59
you the protected income also with some

17:01
upside potential and and some well

17:04
having liquidity for so you can still

17:06
get access to those funds you're not

17:08
signing away that money forever

17:10
necessarily and th so the styles are

17:12
that it's do I want to take that total

17:14
return investing strategy do I want a

17:16
bucketing strategy or do I want a

17:18
strategy where I build a floor of

17:20
reliable income through an annuity and

17:22
in the past we've never really had a way

17:25
to help guide people towards one of

17:27
those strategies or to understand what's

17:28
best for them it's so many different

17:31
like speakers whether it's the consumer

17:33
media financial advisers who may have

17:35
websites or radio shows personal finance

17:38
bloggers they have a particular style in

17:41
mind that they tend to think works best

17:43
for everyone and that can lead to a lot

17:45
of mismatching or or failed plans or

17:47
people doing something and then later

17:49
doing something different and so with

17:51
Alex margee as a part of a retirement

17:54
researcher we did this study of could we

17:57
figure out how to ask people questions

17:59
in a way that will help guide them

18:02
towards a style that that they resonates

18:04
with them that works with them because

18:06
at the end of the day an Anu is not

18:08
right for everyone but it's going to be

18:09
right for some people and also a total

18:12
return investment strategy is not going

18:13
to be right for everyone but it's going

18:15
to be right for some people and we need

18:17
to figure out what works for who and in

18:20
in the process of doing that study we

18:22
were able to identify really there's six

18:24
factors that help to explain a style now

18:27
two of them are the most important the

18:30
other four are helping to tell the story

18:32
but but the most important ideas are we

18:35
call it probability based or Safety

18:36
First am I comfortable relying on the

18:39
stock market to fund my retirement or

18:41
would I prefer some sort of contractual

18:43
protection to help support my retirement

18:46
and then the other big factor is

18:48
optionality versus commitment do I want

18:50
to keep my options open as much as

18:52
possible to make any sort of change that

18:54
I want to or am I more comfortable

18:56
committing to a strategy that I know

18:58
will work that I can kind of check it

18:59
off my list don't have to be as worried

19:01
about it at that point and and just

19:04
enjoy my retirement not I I can give up

19:06
some of the the potential flexibility

19:08
because I know I have a strategy that

19:10
will work and then when you look at

19:12
those combinations it's what really

19:13
shocked us when we were doing that was

19:15
how well they fit into our existing

19:18
retirement strategies and how well even

19:20
the stories behind those strategies make

19:23
sense so people who are probability

19:26
based relying on market growth also

19:28
there's a correlation with they also

19:30
tend to be more optionality focused they

19:32
want to keep their options open and

19:34
that's that's a total return investing

19:36
strategy rely on market growth keep your

19:38
options open and then the other big one

19:40
though would be the the opposite of that

19:42
someone who's more safety first wanting

19:44
contractual protections and is more

19:47
comfortable committing to a strategy and

19:49
we call that the income protection style

19:51
and that's the world of really looking

19:53
at like simple income annuities building

19:56
a lifetime income floor having that

19:57
reliable income and then using the

20:00
Investments on top of that for

20:01
discretion for more like discretionary

20:03
types of expenses but having that

20:06
secured lifetime protected income floor

20:08
to cover your Basics and those are the

20:10
two core strategies and this is where

20:12
it's like really interesting so

20:13
something like time

20:14
segmentation it's more of a behavioral

20:17
strategy in that it's not really

20:20
rational but it was designed to help

20:23
provide for certain concerns that don't

20:25
necessarily correlate with each other

20:27
and those were somebody who wants

20:28
contractual protections but also wants a

20:30
lot of optionality you don't uh if

20:33
you're going to sign a contract you

20:35
don't really think you're going to get a

20:36
lot of optionality but that's what that

20:38
bucketing strategy does it's I use

20:41
individual bonds to get contractual

20:43
protections for the short term it's not

20:45
giving me any lifetime income but then I

20:47
have that growth portfolio to cover me

20:49
over the long term and I keep all that

20:51
optionality for that growth portfolio

20:54
and then the other one is as you know

20:55
since the 1990s we've developed this

20:57
entire ire Universe of deferred

21:00
annuities with the living benefits and

21:02
we call that risk RP it's people who are

21:05
more comfortable with market growth but

21:08
also want to have some more commitment

21:09
to a strategy and and to really flesh

21:11
that out too with some of the secondary

21:13
factors they also they're they're more

21:16
worried about outliving their wealth so

21:17
they want to more backload or protect

21:19
their future spending they're thinking

21:21
in terms of the technical liquidity that

21:23
the asset just an important aspect of

21:27
retirement is you have to match assets

21:29
to their expenses and even though like a

21:31
brokerage account is liquid it may not

21:33
be truly liquid if you've earmarked it

21:34
to cover your future spending and that

21:36
kind of mindset is the same with an

21:38
annuity where technically it's liquid

21:40
but you you're marking that asset to

21:42
cover the future spending and and that

21:44
but all these characteristics that's

21:46
describing a deferred annuity with a

21:48
living benefit and and so now we can

21:50
really understand based on how someone

21:52
ranks with these two primary factors now

21:56
we have a starting point for a

21:57
discussion

21:58
is are you going to resonate better with

22:01
a total return investing strategy are

22:02
you going to resonate better with an

22:04
income protection strategy that builds

22:05
that lifetime protected income floor

22:07
with an annuity are you someone who

22:09
might think more in terms of that the

22:11
Deferred annuity so you can combine the

22:13
the protection with the upside potential

22:15
in the same annuity product are you

22:18
someone who likes that bucketing

22:19
approach that that resonates with you

22:21
that you feel comfortable with the idea

22:23
that if I can just hold on to my stocks

22:25
for long enough they should go up before

22:27
I actually have to tap into them and

22:29
that becomes a starting point for the

22:31
conversation that now we know which

22:33
strategy resonates with you and how can

22:36
we then best serve that strategy and get

22:38
you a strategy that will work for what

22:39
you want makes total sense and you and

22:42
mosha meski have been a very um you've

22:45
been a motivator for how I've built my

22:46
business in sight which is trying to

22:49
match people with the correct

22:50
contractual guarantee I've kind of

22:52
narrowed it down to two questions asked

22:53
people what do you want the money to

22:54
contractually do and when do you want

22:56
those contractual guarantees to start

22:58
then from there I can either determine

23:00
whether they either need an annuity and

23:02
if so what type will provide the highest

23:04
contractual guarantee which comes back

23:06
to what you're talking about which is

23:08
how can people find the right plan for

23:10
their specific situation it comes down

23:12
to and I think you're correct figuring

23:14
out who you are as the consumer because

23:16
annuities are not one siiz fits all even

23:18
though people think they are

23:20
correct right right and there's so much

23:22
like variation with annuities and I know

23:24
from reading your work that you're very

23:26
focused on look at just what is the

23:27
minimum downside guarantee the the

23:30
upside potential may or may not happen

23:32
don't definitely don't count on it right

23:34
and certainly that's a very valid view

23:36
but I I think then of course those

23:39
annuities with that upside potential are

23:41
still popular and it's it's more that

23:43
how I view that with the retirement

23:45
income style awareness the more you lean

23:47
towards the safety first side and this

23:49
is all you're on the commitment side

23:51
already but then the more you lean

23:52
towards Safety First the more you

23:54
emphasize the downside protections this

23:57
the single premium immediate annuities

23:58
the Deferred income annuities the uh

24:00
sure fixed index annuities that that

24:02
sort of thing sure and then as you shift

24:05
you're still in the commitment part but

24:06
as you shift to the uh probability base

24:09
side that's where you may be open to

24:11
like the variable annuity that might

24:13
have less downside guaranteed protection

24:16
but as a trade-off gives you more upside

24:19
potential that of course may or may not

24:20
happen agre but you're more comfortable

24:22
kind of then rolling the dice thinking

24:24
you will get some of that upside

24:26
potential and that's because you're more

24:28
comfortable relying on market growth I

24:31
mean we on average we certainly think

24:33
the stock market will outperform the

24:34
bond market it's just we never know for

24:36
anyone's retirement if that's actually

24:39
going to happen for them the way they're

24:40
they're hoping and so that's how we have

24:42
to decide what are we going to do in

24:44
that regard I always ask people do you

24:46
need lifetime income Insurance some

24:48
people need life insurance some people

24:49
don't some people need lifetime income

24:51
Insurance some people don't but that's

24:53
the Monopoly that an the annuity

24:54
category has which is that transfer risk

24:57
pinion like payment um I really wish the

24:59
annuity industry would would lean a

25:01
little bit more heavily from the

25:02
standpoint of promotion to tell people

25:04
you know you already own an annuity type

25:07
which is social security because it's a

25:08
lifetime income stream so you just can't

25:10
cavalierly say you hate all annuities

25:12
which makes me laugh um let's talk a

25:14
little bit about the long-term care

25:17
Medicare Medicaid portion of that

25:20
because most um most advisers either

25:24
don't talk about that shy away from that

25:26
I was so happy to see that you address

25:28
that in detail in your latest book um

25:32
can you dig into that for us sure sure

25:34
when it comes to long-term care there's

25:37
really four ways you can think about

25:39
funding long-term care uh you can build

25:42
up additional reserves to try to self

25:44
fund that I just say okay I'm GNA

25:46
earmark or say I want this much

25:49
additional money as part of my

25:50
retirement assets before I'm comfortable

25:53
retiring just in case I experience some

25:55
long-term care event in the future so

25:58
that would be self-funding a lot of

26:00
Americans don't really have enough

26:02
financial assets to self-fund their um

26:05
long-term care should they experience a

26:07
need to spend like several years living

26:09
in a nursing home or other institutional

26:12
setting so that's where Medicaid can

26:14
step in and that's not not Medicare

26:16
because Medicare does not cover

26:17
long-term care sure but Medicaid is once

26:21
I've spent down all my well there's a

26:24
whole lot of rules around it but sure

26:25
effectively once I spent down my assets

26:27
in income then Medicaid will help to

26:30
pick up bills for long-term care

26:32
expenses and if I am somewhere in the

26:35
middle where or even if I could

26:37
potentially sell fund but I can see the

26:39
value of you know with thinking ahead

26:42
about the inheritance I'm going to leave

26:44
not wanting to be worried about whether

26:46
I get care because I'm worried I'm

26:47
spending the child's inheritance or

26:49
something long-term care uh Insurance

26:52
can step into the picture and there's a

26:54
traditional long-term care insurance

26:56
which has made made a lot of people

26:58
uncomfortable because there's a lot of

26:59
aspects of it that are um challenging in

27:02
terms of rising premiums and and lapsing

27:05
with the policies where it's you're no

27:07
longer holding it when you actually need

27:09
it and so forth but then now we're

27:10
seeing more and more growth with the

27:12
like they're called hybrid it doesn't

27:14
have a clear name but different types of

27:16
hybrid products right either with an

27:18
annuity and and I don't know a lot about

27:20
the different hybrid annuity products

27:22
but more so on the life insurance side

27:24
sure that you can have permanent life

27:26
insurance that either allows you to

27:28
spend down the death benefit of the

27:30
insurance for a long-term care need or

27:32
may even go above and beyond that and

27:35
provide some sort of well first you

27:36
would spend down the the death benefit

27:38
portion but then you might have an

27:39
additional continuation of benefit

27:41
writer to support additional long-term

27:44
care and those are the four basic

27:46
options self fund Medicaid traditional

27:48
insurance and hybrid life insurance

27:51
long-term care or annuity long-term care

27:54
and the hybrid that Wade's talking about

27:56
we call that asset based long-term care

27:58
a lot of people are under the assumption

28:00
that you know they pay they pay they pay

28:02
and if they don't use it money goes poof

28:04
um with the asset based coverage for

28:06
long-term care which I applaud the

28:07
industry for pivoting and listening to

28:09
the consumer um you're not gonna you're

28:12
not going to lose that asset you you're

28:13
going to have the coverage and somebody

28:14
in your family is going to get it which

28:16
I think is fantastic their second book

28:18
kind of blew me away when it came out

28:21
because I thought it was Brave and I

28:23
thought it was so outside the box

28:26
because at the time you wrote it um

28:29
reverse mortgages was the Wild Wild West

28:32
and it might still be we don't see as

28:34
many ads for it we sees the Joe namus of

28:36
the world you know or some celebrity

28:38
that's no longer a big celebrity is

28:42
pushing that the that the the 65 year

28:45
olds understand and recognize pushing

28:47
reverse mortgages or at least looking at

28:48
it like a Tom celic yeah he's I think

28:51
Joe neth is Medicare Advantage okay I'm

28:54
getting all mix I'm getting all mixed up

28:56
okay uh you know 20 years from now it'll

28:59
be Wade and I sitting on the couch going

29:00
you ever thought about an annuity um but

29:04
the reverse mortgage thing is

29:06
interesting I want you to kind of dig

29:07
into that because a lot of the you know

29:09
the people listen to this they're

29:10
sitting on a big asset which is their

29:13
home and I thought you were just Brave

29:16
as heck to just say okay let's talk

29:18
about this from a mass standpoint from

29:20
an asset standpoint from a retirement

29:22
planning standpoint Wade let's talk

29:25
about let's get your take on reverse

29:27
mortgage sure sure and it's really the

29:29
same story as annuities in terms of the

29:31
the consumer perception isn't always

29:33
incredibly positive so I do get a lot of

29:36
tomatoes thrown at me but it's the same

29:39
story though it's it's about retirement

29:42
planning risk changes in retirement

29:44
people now have to support their

29:46
lifestyle over an unknown period they

29:48
don't know whether they'll live five

29:49
more years or 45 more years I mean I

29:52
guess depends on their retirement age

29:53
but they don't know how long they're

29:54
going to live and then the market vol

29:57
ility and the way they thought about

29:58
investing changes when they start to

30:01
spend from their assets there's this

30:03
idea called sequence of returns risk

30:05
that if if you're spending from your

30:07
Investments and the market goes down you

30:09
have to sell a bigger percentage of

30:11
what's left to meet your spending need

30:13
and that digs a hole for the portfolio

30:15
that can be very difficult to to dig

30:16
yourself back out of and so the way

30:19
people think about investing when

30:20
they're saving for

30:21
retirement that that that volatility we

30:24
experience with investing really gets

30:25
Amplified in retirement

30:28
and and so that's where it just opened

30:30
the door about okay let's look at this

30:32
in terms of annuities first and then I

30:36
reverse mortgages later it was a very

30:38
interesting tool for me to look at

30:39
because it has how did you land there

30:41
how did that I mean was it just natural

30:43
and you or you saw you saw um Tom celic

30:46
or whoever that was on I mean did you go

30:48
wait why is Tom celic talking to me why

30:49
is why is Magnum PI talking to me how

30:51
did this happen uh it was something I'd

30:54
already I had always been meaning to

30:56
look at and then okay well there's a a

30:59
research team at Texas Tech University

31:00
John Suter hsky Sean feifer um John

31:04
Suter and Dina CS don't forget Dena yeah

31:07
she she's part of absolutely uh he sent

31:09
me a stack of articles about reverse

31:11
mortgages and invited me to a meeting

31:13
where they were going to be talking

31:14
about it and as I was on the flight to

31:15
that meeting just reading through that

31:17
stack of Articles it's the the first

31:19
time I'd really paid much attention at

31:21
all of to reverse mortgages but I

31:23
thought it was just really fascinating

31:25
and then I started writing programs to

31:27
test the the results of the past

31:28
research studies in that area found that

31:31
all that played out I mean there was

31:32
there was truth to the idea it can help

31:34
manage sequence of returns risk and it's

31:37
you see this a parallel conversation

31:39
sometimes in the time segmentation world

31:41
as well where when the markets are down

31:45
if I can spend from my reverse mortgage

31:47
line of credit that will kind of give me

31:49
a bridge or a buffer to allow more time

31:52
for my portfolio to recover and I found

31:54
that that really does help manage

31:55
sequence of returns risks so reverse

31:57
mortgages can be expensive to set up

31:59
it's true but in the long run what I

32:02
find is you can increase the the the

32:05
chances that your financial plan will

32:06
work and it doesn't really eat into your

32:09
legacy in the long term that like kind

32:11
of these two metrics are will I meet my

32:13
spending goals in retirement and then

32:15
how much money will I have at the end so

32:17
the reverse mortgage you're borrowing

32:20
from your home equity but you're better

32:23
protecting your other assets so that at

32:25
the end your other asset plus your home

32:27
equity minus your loan or plus your home

32:30
value minus the loan that is due on the

32:33
reverse mortgage can be higher than if

32:36
you just simply didn't do anything or

32:38
waited the The Last Resort option is if

32:40
you just simply wait until everything

32:41
else has failed and then open reverse

32:43
mortgage that doesn't work as well as

32:45
setting it up earlier you become

32:47
eligible at age 62 and so setting it up

32:50
earlier once you're in a home that you

32:52
think you will stay in and and continue

32:54
to live in the the secret sauce is this

32:57
idea of a growing line of credit

32:59
that it's an it's an extra special

33:02
advantage of reverse mortgages that

33:03
really helped to explain why setting it

33:06
up early and letting that line of credit

33:07
start to grow and it's it's a

33:10
non-recourse loan this is where doing

33:11
the research about it is interesting

33:14
even if the loan balance grows to be

33:16
higher than the value of the home you're

33:18
not forced to pay back more than 95% of

33:21
the appraised value of the home at the

33:22
time the loan becomes due and you're

33:25
paying the the reason why we talk about

33:27
reverse mortgages being expensive it's

33:29
primarily the mortgage insurance

33:31
premiums that you're paying as a part of

33:33
that but that provides one of the the

33:35
benefits it provides you is the

33:36
protection of this that it's a

33:38
non-recourse loan you don't have to pay

33:40
back more than the home is worth and so

33:43
when you build that into the simulations

33:45
about retirement too it's a really

33:47
powerful strategy Ju Just Like an

33:49
annuity just it's a way to help manage

33:51
these retirement risks that people

33:53
aren't always thinking about because

33:54
they're they're used to the accumulation

33:57
pre-retirement

33:58
investing and not to what happens

34:00
postretirement and it speaks to why a

34:03
reverse mortgage could help or why an

34:04
annuity can help and and why you really

34:06
have to think more holistically about

34:08
all the household assets and not just

34:10
get too focused on on some sort of

34:12
investing strategy

34:14
alone fascinating and and I think it's

34:17
interesting that both annuities and

34:21
reverse reverse mortgages I mean the the

34:23
misconceptions misperceptions out there

34:26
are just horrific in a lot of cases so

34:28
you're saying at age 62 you should at

34:31
least be thinking about or visiting or

34:34
looking under that rock to see if that

34:37
makes sense and at least establishing

34:39
that am I right yeah it's definitely

34:42
worth having a look at it and if you are

34:44
planning to move in the next couple of

34:45
years it's probably worth waiting until

34:47
you're in a home that you anticipate

34:49
staying in because of the there's a

34:51
large upfront cost to set it up so it

34:53
works better if you're planning to stay

34:54
in the home a long time and then also so

34:57
for couples if you're close to the same

34:59
age you have to be at least 62 to be a

35:02
borrower on the loan so there could be

35:04
value to waiting until both member both

35:06
individuals reach age 62 first but then

35:10
yes absolutely

35:12
even as a part of a responsible

35:14
retirement income plan so even if you

35:16
have a sufficient amount of assets that

35:18
you're unlikely to run out of money the

35:20
reverse mortgage can still help to

35:21
improve your outcomes so that you can

35:24
meet your spending goals but also then

35:27
in the end leave a larger Legacy behind

35:29
as well by being more strategic in how

35:31
you approach the retirement planning

35:33
process it's an unknown retirement

35:36
Insurance lever that you can access that

35:39
most people don't feel like accessing

35:41
and I think or don't even know um if you

35:44
were going to explain setting up a

35:46
reverse mortgage to a nine-year-old no

35:47
offense to nine-year-olds of course how

35:49
would you explain that because I know a

35:51
lot of people on here on this have heard

35:54
of it not thought of it and now Wade

35:56
foul

35:57
and they found out you wrote a book on

35:58
it is saying hey you might want to look

35:59
into this explain 30,000 foot view just

36:02
what you're doing with the home so when

36:05
you set it up and if you set it up

36:07
around age 62 based on where like

36:10
interest rates are right now and you'll

36:12
you get access to about 40 to 50% of the

36:15
home value that then becomes a line of

36:18
credit that will grow over time

36:21
throughout your retirement and you can

36:23
just spend from it as you wish and it's

36:25
it's proceeds from a loan so it's not

36:27
taxable income it also that can help

36:29
with some tax management strategies too

36:31
where if you're going to go into a

36:32
higher tax bracket you might tap into

36:35
the reverse mortgage as a spending

36:36
source that won't push you into the

36:38
higher tax bracket and so forth but it's

36:40
a way to just create liquidity for your

36:42
home equity so that you can also spend

36:45
just like you spend from your Investment

36:46
Portfolio you can also spend from your

36:49
reverse mortgage and and balance those

36:51
or coordinate them in a way that like

36:53
when the stock market's doing well go

36:55
ahead and spend from your Investment

36:56
Portfolio but if the stock market has a

36:58
downturn maybe tap into the reverse

37:00
mortgage that year and and by being able

37:02
to better manage that it's just helping

37:04
you better manage the overall retirement

37:06
situation and better manage the the

37:09
sequence of returns risk this idea that

37:11
a market downturn can impact you more in

37:14
retirement if you're forced to continue

37:16
spending from the the declining

37:17
Investment Portfolio in those

37:20
circumstances and when you say grow for

37:22
the listeners and viewers they're

37:23
yelling I'm sure they're yelling at the

37:25
the speaker going grow what does that

37:27
mean way tell me what grow means right

37:30
so probably everyone can understand that

37:32
if I borrow money the the loan balance

37:34
will

37:35
grow the cool planning aspect of the

37:38
reverse mortgage and I think it was an

37:40
unintended Consequence the Assumption

37:42
was if you open a reverse mortgage you

37:44
were probably borrowing from it and so

37:46
then this growth would just be the

37:47
growth of your loan balance the cool

37:50
planning aspect of the reverse mortgage

37:52
is you can open it up but you don't well

37:55
you have to keep like a $50 balance

37:56
bance at least or maybe $100 with some

37:58
company you have to have some minimal

37:59
balance but otherwise you don't have to

38:01
borrow from it and so you have this

38:04
principal limit which is what you've

38:06
borrowed Plus what's left over in the

38:08
line of credit and that's the thing

38:10
that's really growing at at some rate

38:12
over time so if if you open it and you

38:15
don't borrow from it your line of credit

38:17
is growing like the loan balance would

38:19
have been growing and that that's what

38:22
grows and so then later you have more

38:25
line of credit that you can tap in to

38:27
and and at some point there was a big it

38:31
so something happened with Social

38:32
Security that then happened with reverse

38:34
mortgages in the early 2010s people

38:37
figured out all these cool planning

38:38
strategies where you could get extra

38:40
spousal benefits out of Social Security

38:42
and then the government shut that down

38:44
in 20 or started phasing it out in 2015

38:47
well this line of credit growth was

38:49
amazing I I'd written an article

38:51
probably in 2015 about how there's like

38:54
a 50% chance that line of credit could

38:57
be worth more than the value of the home

38:58
in about 20 years and then in 2017 the

39:02
the government caught up and and changed

39:03
some of the parameters around that so

39:05
everything I'm talking about is still

39:07
true it's just not not as shockingly

39:09
amazing as it was pre 20107 I had to

39:13
there's a second edition of my reverse

39:14
mortgage book because I had to entirely

39:16
rewrite it after that 2017 will change

39:19
but everything I'm talking about right

39:20
now is thinking more in terms of the

39:21
current rules which is still it it's not

39:24
as likely that that line of credit will

39:25
grow to be worth more more than the home

39:27
but it does grow and and it does speak

39:29
to the the value of opening it sooner

39:32
and letting that line of credit grow

39:34
rather than waiting till later and

39:35
opening it and and missing the line of

39:38
credit growth during that period what a

39:40
great strategy I think that um a lot of

39:43
a lot of the the Baby Boomers out there

39:45
grew up in a world where they were told

39:47
you it's good to have no debt and a lot

39:50
of the clients that that certainly work

39:52
with me a lot of people I talk to they

39:53
have no debt and they're proud of that

39:55
and I think maybe one hesitation for

39:57
everyone would be you know why would we

39:59
do that we don't want more debt but

40:01
you're this isn't in you're not

40:02
incurring the debt you're setting it up

40:05
as part of the plan as a oh just in case

40:09
oh by the way I might need this and why

40:12
wouldn't you because you know the house

40:13
is I don't know what the stat is I'm

40:15
sure you do which is the the primary

40:18
asset for most people if they just look

40:21
at it what it's worth am I correct about

40:23
that yeah at the like the average for

40:26
the average American reaching their 60s

40:29
the home equity plus it's like twice as

40:31
much as the Investment Portfolio or when

40:33
you like look at their investments in

40:34
their home the home is worth about

40:36
two-thirds of that total so it's a

40:38
bigger asset than the Investments for

40:41
most people approaching retirement age

40:43
and and yeah the the default devic is

40:46
ignore the home it's not really part of

40:47
the retirement plan and that's where

40:50
like the the push with the reverse

40:51
mortgage concept is no this actually

40:54
provides a way to incorporate the home

40:56
in into the retirement plan and

40:57
definitely there is a psychological

40:59
hurdle to the reverse mortgage as you're

41:01
saying like people it is it's a it's a

41:03
mortgage so you if you borrow from it it

41:07
is a loan it it works a little bit

41:09
differently than most loans people are

41:10
used to because there's no fixed payment

41:12
obligation you can wait until the end

41:15
like that the reverse mortgage

41:16
terminates when you've either passed

41:18
away uh moved out of the home for at

41:20
least a year and or don't make uh do

41:23
your basic home or obligations like B

41:25
very basic Home Maintenance uh paying

41:27
home owners insurance and property taxes

41:30
but as long as you're meeting the

41:31
requirements you don't have to make any

41:33
sort of payment until one of those

41:35
things happens and so while it is a loan

41:39
it because it doesn't have that fixed

41:41
repayment schedule it works different

41:43
than how people are mostly thinking

41:45
about the way loans work definitely when

41:48
I turn age 62 I'm going in that

41:49
direction just because it to makes total

41:51
sense have advisers Masters of the

41:54
Universe however they want wealth

41:56
Architects and the people that you

41:57
talked to about this has there been good

41:59
reception to that or is there an initial

42:01
reflex from people about reverse

42:04
mortgages based upon just the bad

42:06
information that a lot lot of people

42:08
have gotten about reverse mortgages what

42:10
has been the reception well well more

42:11
people are becoming open to it but yeah

42:14
I think there's still this it's almost

42:15
like a universal misconception that you

42:17
somehow hand over the home to the bank

42:19
when you initiate the reverse mortgage

42:21
and we're talking about like more than

42:23
90% of reverse mortgages are the the

42:24
home equity conversion Mortage program

42:26
it's administered through the government

42:28
there's a whole set of rules and you no

42:30
one ever handed over the title to their

42:32
home so I think everyone just starts

42:34
from that misconception and that that

42:37
makes it a struggle from the very

42:38
beginning because it does require taking

42:41
some time to understand how it actually

42:43
works so it's a it's a slow process and

42:46
then I have seen a lot of financial

42:49
advisers become more open to it but then

42:52
the problem they have is their clients

42:54
may not be open to it and so got it and

42:56
the client might think hey what's going

42:58
on why are you talking about a reverse

42:59
mortgage are you trying to scam me so

43:01
it's a very sensitive conversation well

43:04
you're doing you're doing a good job of

43:05
giving it validity which is what you've

43:07
always done but it's eerily similar to

43:09
when people call me up and say I'll

43:11
never buy an anity because when I die

43:12
the evil annuity company keeps the money

43:14
and that and a lot of people think that

43:16
that's true and me and you both know

43:18
that's just one of 40 different ways to

43:21
maybe structure an immediate annuity or

43:22
deferred income annuity but it doesn't

43:25
apply in most cases but that's what

43:26
people believe and if that's what people

43:28
believe and that's what they heard and

43:29
then they hear you know I hate annuities

43:31
or I hate reverse mortgages they're not

43:33
open to it I'm hoping that people will

43:35
hear you because the next topic I kind

43:38
of want you to speak about um and I know

43:41
it's basic for you but once again our

43:44
listeners and um and viewers need to

43:47
understand risk pooling and what that

43:49
means from the standpoint of life

43:52
insurance and annuities when we're

43:53
talking about implementing these

43:55
strategies if they are suitable and

43:57
appropriate for them so can you kind of

43:58
give us a basic uh view of risk pooling

44:02
sure yeah and risk pooling the so we we

44:06
had traditional company pensions

44:07
especially in the post-war era in the

44:09
United States the you work for 30 years

44:12
and then 60% of your I mean however it

44:15
worked but like 60% of your salary gets

44:16
replaced and it lasts for the rest of

44:18
your lifetime that traditional Company

44:20
pension pools both Market risk and

44:23
Longevity risk and what that just means

44:26
is I'm not taking any risk about what

44:28
the financial markets are going to do or

44:30
how long I'm going to live the my

44:32
employer is taking that risk over time

44:35
they're going to be investing to pay

44:37
these um payments to me but they can

44:41
because different workers are starting

44:42
their careers and ending their careers

44:44
at different times the employer can

44:46
focus more on providing a pension that

44:48
matches the average Market return over

44:50
time and then also they know as well

44:52
some people will not live very long in

44:54
retirement other people will live longer

44:56
so if if I'm trying to manage that risk

44:58
on my own I I have to be worried well

45:00
what if I retire when markets go down

45:01
and what if I retire and then it's good

45:03
that I live a long time but it's just

45:05
then it's a lot more expensive for me to

45:06
fund my retirement well the the employer

45:09
could pull that risk because they they

45:11
can pay everyone the pension based on an

45:13
average lifetime it's like your pension

45:15
is based on you'll get an average Market

45:17
return and live an average length of

45:18
time and it doesn't really matter what

45:21
happens in your individual circumstance

45:22
you're protected even if you're like if

45:25
you had investing that money on your own

45:27
you would have got really poor returns

45:29
and you end up living a really long time

45:30
and can't afford to to pay for the

45:32
retirement the employer took on all that

45:34
risk but that traditional Company

45:36
pension for most people I mean they they

45:39
still exist but they're much rarer these

45:40
days and an annuity is a way to build

45:43
that pension on your own through an

45:45
insurance company where the insurance

45:47
company will pull that risk and

45:50
especially the it's the longevity risk

45:53
the I if I'm 65 years old I might live

45:56
to 68 I might live to 98 I don't know I

45:59
have to worry if well if I am worried

46:02
about this that plan more what if I do

46:04
live to 98 and then I have to spend less

46:06
to stretch that money out for longer the

46:09
insurance company though has the

46:10
actuaries who are figuring out well if

46:12
the average person lives to

46:14
86 then I can pay everyone who buys that

46:17
annuity a higher level payment because I

46:20
can pay everyone like they're going to

46:21
live to 86 and then for those who end up

46:23
not living as long that money doesn't go

46:26
to the insurance company it goes to the

46:28
other members of that risk pool who do

46:30
live longer there you go and so if you

46:31
live a long time it's great from the

46:33
perspective of you you got your money's

46:35
worth out of the annuity but given that

46:37
people don't know in advance which group

46:38
they're going to fall in it helps to

46:40
raise the standard of living for

46:41
everyone in the risk pull because

46:43
everyone can now spend like they're

46:44
going to live to 86 or just however that

46:47
the life expectancy rather than being

46:49
worried well what if I am the one who

46:50
makes it to 95 or Beyond I I can enjoy a

46:54
much higher standard of living because I

46:55
pull that risk through the insurance

46:57
rather than accepting and taking on that

46:59
risk on my own and being forced to spend

47:01
less as the only method I have to manage

47:03
that type of risk and I I am always

47:06
breaking things down uh to a very

47:08
simplistic level because people always

47:09
say well what's my return on investment

47:11
or something like that I'm like there's

47:12
no Roi until you die up until that point

47:14
it's a transfer of risk um last part of

47:18
the segment uh I want to transition you

47:20
know and I appreciate you going into the

47:21
details of that and once again for

47:23
everyone listening and viewing we're

47:24
going to have all of Wade's his his

47:26
website retirement research.com you know

47:28
access to his books where you can buy

47:30
them on Amazon I would encourage you to

47:32
do that um I want to close with a few

47:35
questions about just some some other

47:37
things when it comes to retirement the

47:41
non-financial aspects that are that you

47:43
would deem important in retirement as

47:45
you're also looking at these other um

47:48
mathematical views into retirement what

47:51
are the the

47:52
non-financial items you would like

47:54
people to focus on yeah and I I do Focus

47:57
mostly on the finances so I had to do

47:59
some a lot of background reading on that

48:01
when I was writing the chapter and the

48:03
guide book about the non-financial

48:04
aspects but they're as important as the

48:06
financial aspects and maybe even more

48:09
important because at the end of the day

48:10
people can adjust to their finances and

48:13
even if it's just a social security

48:14
benefit in the end people can adapt but

48:17
the the non-financial aspects are a lot

48:19
harder to adapt to and kind of a rule of

48:22
thumb is you want to have something that

48:24
you're retiring to rather than something

48:26
that you're retiring from like you don't

48:27
want to retire because you hate your job

48:29
you want to retire because you have

48:31
something else you'd rather be doing

48:33
that will give you purpose and passion

48:35
wait repeat that again yeah it's not

48:37
that you want you want to retire to

48:39
something not retire from something

48:41
there you go and and that we can think

48:44
about so work of course provides US

48:46
income but but it does a lot more than

48:48
that other aspects or other like

48:51
positive life experiences we get through

48:52
work it's a source of social engagement

48:55
friend friendship cam

48:57
camaraderie uh it's a a structure for

49:01
the day like I know I have these hours

49:03
of the day I'm I'm going to work a

49:05
routine and structure that can be

49:07
important to some people it's a sense of

49:10
identity for some people that like when

49:11
someone asks who you are if your

49:14
response is your career like I am an

49:16
accountant or I am a lawyer that can be

49:18
a big part of your identity and so

49:20
retirement can take away that that

49:21
identity and also people can feel like

49:24
they're valuable contributors to Society

49:26
through their work and if they don't

49:27
have a replacement for that they might

49:30
also then have less of a sense of

49:32
self-worth when when they don't have

49:34
that career as part of who they are so

49:36
working provides all these positive

49:39
attributes that need to be replaced as

49:42
part of retirement and that's a big

49:44
aspect of the non-financial side of how

49:47
are you going to spend your days how are

49:48
you going to continue to M social

49:50
engagement and like it's if you don't

49:52
have anything that forces you to get out

49:53
of the house it can become a hurdle for

49:56
you and uh you're going to be spending

49:58
more time potentially with a partner or

50:00
spouse and how are you going to manage

50:01
that to make sure that gr divorce is on

50:04
the rise and and spouses or Partners

50:07
need to communicate with one another to

50:08
make sure there's an understanding about

50:10
what are you going to do together as a

50:11
couple what will you do separately and

50:13
how will you manage the extra eight

50:16
hours of the day that you're spending

50:17
together that you weren't necessarily

50:19
used to doing and especially now that

50:20
the children have grown you don't have

50:23
that child rearing as the source of what

50:25
you're talking about or what you're

50:27
doing together as well so that that's

50:29
kind of a nutshell of the non-financial

50:31
aspects the the things that are really

50:33
important to be thinking about and also

50:35
I mean Health taking care of your health

50:37
and mental health and and just the risk

50:40
of people becoming depressed when they

50:42
leave work because they're just losing

50:45
all these benefits of work above and

50:47
beyond the income that can can lead to

50:50
negative feedback loops and and it's

50:52
just important to really be thinking

50:54
about and and to prepare for what's

50:57
going to give you purpose and passion

50:59
and make you have that retirement that

51:01
you really want to have and not just

51:03
fall into the inertia of the days just

51:06
wasting away and and a lot of people

51:07
will have a honeymoon period at the

51:09
start of retirement that could last a

51:10
month or a year even but at some point

51:14
sitting on the couch all day or going

51:16
golfing every day there's got to be

51:18
something else to really sustain a

51:20
successful happy retirement experience

51:22
definitely um Wayne Gretzky hockey

51:25
player always said I don't skate after

51:27
the puck I skate to where the puck is

51:29
going to be for Wade foul where's the

51:33
puck going Wade where are you where are

51:36
you trying to get to um from a you know

51:39
the annuity industry from a life

51:41
insurance industry from a product

51:42
standpoint and you where do you see the

51:45
future for the industry products and

51:47
where's that puck going to be well I've

51:50
been really excited at a personal level

51:52
about one of the topics we we discussed

51:54
was that retirement income Style

51:55
awareness idea and like my dream is I

51:59
think there's so much potential value

52:01
there that if every one of those 10,000

52:02
Baby Boomers reaching age 65 every day

52:05
like if everyone just started by taking

52:08
the the Resa the retirement income style

52:10
awareness understanding their Rea

52:12
profile which is just the starting point

52:14
of what retirement strategy resonates

52:16
with them I think that could provide so

52:18
much value and Service as a starting

52:20
point for people to then think about how

52:23
to build their retirement strategies so

52:24
kind of what driving me right now is

52:27
getting that message out there and and

52:28
trying to build that momentum that the

52:32
the reisa really is the starting point

52:34
we've had we have risk tolerance

52:36
questionnaires and maybe a lot of the

52:37
listeners have taken one even which is

52:40
you know for your Investment Portfolio

52:41
what stock allocation should you use uh

52:44
that's not really all that relevant for

52:46
retirement or it's still important but

52:48
it's only for the investing piece it

52:50
doesn't speak to and this is what we

52:52
showed in the research like a

52:53
traditional rist hunts questionnaire

52:55
doesn't have anything to say about are

52:58
you concerned about meeting your core

52:59
expenses over a long retirement like are

53:01
you concerned about outliving your money

53:03
it doesn't speak to liquidity concerns

53:06
which is do I have reserves what if I

53:08
like have a big long-term care bill do I

53:10
have sufficient funds to help cover that

53:12
the risk hence questionnaire doesn't

53:13
help with that it can kind of describe

53:15
lifestyle concerns which is the overall

53:18
kind of the accumulation investing

53:20
process of just how can we maximize our

53:22
lifestyles as much as possible but not a

53:25
good starting point for the retirement

53:27
conversation first people need to

53:29
understand their style then they can

53:31
take a risk tolerance questionnaire and

53:33
I'm just trying to help build the

53:34
momentum to to get this idea out there

53:37
that understand your style it simplifies

53:39
the conversation it provides a

53:41
vocabulary in my website get so many

53:44
questions from people and now the

53:45
vocabulary is changing instead of

53:46
somebody asking me should I do this or

53:49
that they say I'm time segmentation

53:52
should I do this or that nice and then

53:54
it's easier to

53:55
to answer the question of course the

53:57
question still always it depends but now

53:59
one of the big it depends is less I mean

54:02
there's there's less uncertainty now we

54:04
can have that conversation is building a

54:06
bond ladder right for somebody who has

54:08
time segmentation it's much more likely

54:10
to be correct for that type of person

54:12
than for for someone who has a different

54:14
style great answer wait fou true thought

54:17
leader in the industry and icon um as

54:19
you can tell by just listening to him

54:21
he's a good person and he's trying to

54:23
help and he's trying to

54:25
um create a foundation of facts um and

54:29
insight that will help the retirees

54:31
pre-retirees post- retirees whatever you

54:33
want to call yourself baby boomers and

54:36
um it has been an absolute pleasure for

54:38
you to be on the fun with the new's

54:40
podcast hope you're going to join us in

54:41
the future I wish you the best on this

54:43
new book yeah it's fantastic I do

54:45
recommend all four of his books but um

54:47
wait any last thoughts before we close

54:49
this thing out no I've admired your work

54:51
for a long time and so it's a pleasure

54:53
to to talk with you about it thank you

54:55
well great hopefully we can uh meet one

54:57
of these days I'll buy you dinner in a

54:58
postco world I hope um but I want to

55:01
thank everybody on all the pl podcast

55:03
platforms and the fun with anties

55:04
YouTube channel don't forget I also have

55:06
a sty nudy Man YouTube channel that has

55:08
over 400 videos at the time of this

55:09
Taping that are informative and nons

55:12
salesy so with that I will see you next

55:14
week on fun with

55:21
annuities