Episode 281: Lifecycle Asset Allocation, and Retiring Successfully with Justin King
Nov 30, 2023
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Justin King, an expert in lifecycle asset allocation and retiring successfully, joins the show to discuss the optimal mix of assets in a portfolio, understanding risk tolerance, and the nine accelerators for a successful retirement. The hosts also delve into the tax implications of insurance policies in corporation ownership and the importance of actively preparing for a fulfilling retirement.
Retirement should be seen as a new beginning with purpose and fulfillment.
Retirement offers opportunities for personal growth, learning, and embracing new challenges.
Scientific research can guide individuals to live healthier and longer lives in retirement.
Taking action and implementing healthy habits is crucial for well-being in retirement.
Staying informed about dementia research and providing support is important in retirement planning.
Proper planning, financial management, and embracing technology are essential for a comfortable retirement.
Deep dives
Redefining Retirement
Retirement is no longer just about receiving a pension and living a few years of leisure. It is a significant shift that requires individuals to redefine what retirement means to them and envision a fulfilling and purposeful life during this period.
Having a Purpose
Retirement should not be seen as an end, but as a new beginning. It is important for individuals to have a sense of purpose and identify what activities, goals, or contributions will bring them joy and fulfillment in retirement.
It's Never Too Late
Retirement is an opportunity for personal growth and exploration. It is never too late to learn new skills, pursue passions, or start a new business. Individuals should embrace their ability to take on new challenges and make the most of their retirement years.
Science of Living Better for Longer
Scientific research and knowledge can guide individuals to live healthier and longer lives. Understanding the importance of exercise, nutrition, and maintaining muscle strength can help individuals achieve vitality and improve their overall well-being.
Taking Control of Your Health and Well-being
It is not enough to simply have knowledge about health and well-being. Individuals must take action and implement healthy habits into their daily lives. This includes physical exercise, social connection, and addressing aspects of mental health and loneliness.
Dealing with Dementia
Dementia is a concern for many individuals, but there are ways to potentially reduce the risk or manage its impact. Staying informed about dementia research, understanding the signs and symptoms, and providing support to loved ones are important aspects of planning for retirement.
Planning for a 30-Year Retirement
With increasing life expectancies, retirement can last for several decades. Proper planning and financial management are crucial to ensure a comfortable and secure retirement. Individuals should consider factors such as healthcare costs, inflation, and maintaining a sustainable income throughout the retirement period.
Embracing Technology and Innovation
Advancements in technology and innovation can greatly enhance the retirement experience. From staying connected with loved ones to accessing new opportunities for learning and creativity, embracing technology can help individuals stay engaged and reap the benefits of a rapidly evolving world.
Seeking Professional Advice
Navigating the complexities of retirement planning can be overwhelming. Seeking advice from qualified professionals, such as financial planners, can provide individuals with personalized guidance, strategies, and peace of mind as they make important decisions about their retirement.
Main Idea 1
The podcast episode discusses the importance of taking risks with investments and avoiding common financial advice, like investing only in index funds. It emphasizes the need to be cautious of high fees and complex investments that can offset potential benefits. The episode also explores the limitations of certain investment strategies, such as fixed income series and cap-weighted equity funds. The main takeaway is that a portfolio consisting of domestic and international stocks, with a home country bias for non-US investors, can outperform other investment approaches.
Main Idea 2
In the latter part of the episode, the focus shifts to insurance and the consideration of owning various types of insurance policies personally or within a corporation. The episode explores the tax implications of owning life insurance, disability insurance, and critical illness insurance. It highlights the benefits of using pre-tax dollars to pay for insurance premiums through a corporation and the tax-free nature of life insurance payouts. The discussion also acknowledges the need to evaluate personal circumstances and specific business requirements when determining whether insurance policies should be held personally or within a corporation.
Today, we take a closer look at asset allocation through an empirical lens, by drawing on the work and data of Scott Cederburg and his new article ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice’. We unpack what the research tells us about how to establish the optimal mix of assets in a portfolio, the challenges of making the right decisions when you have volatile assets, and why it’s critical that you understand your level of risk tolerance. Next, in our Mark to Market segment, we unpack different types of insurance — like life, disability, and critical illness — and when you should own them personally versus making them the property of your corporation. We then review Justin King’s new book The Retirement Café Handbook: Nine Accelerators for a Successful Retirement before sitting down with the author himself to discuss the content of his latest work and his long-held interest in helping others optimize for retirement. Tuning in you’ll hear Justin share his thoughts on the role of choice, vitality, and joy when it comes to having a successful retirement, the nine accelerators he lays out in his book, and how to become the hero of your retirement story. In our final section, we wrap things up with some wonderful reviews from listeners and our book recommendations. To hear all of the captivating takeaways from today’s episode, be sure to tune in!
Key Points From This Episode:
Breaking down asset allocation through an empirical lens; finding the right mix of assets in a portfolio, common challenges, and measuring risk. (0:02:12)
The role of government pensions when considering asset allocation over one’s life. (0:09:10)
Investigating whether volatility is risk; modeling the lifecycle of an investor and determining if (and when) it makes sense to shift into bonds over time. (0:11:27)
Analyzing the data, modelling, and findings from the paper, ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice’. (0:14:02)
The challenges of behaving well with volatile assets; advice on how to assess your risk tolerance, your ability to endure short-term declines, and more. (0:23:10)
Our Mark to Market segment: unpacking different types of insurance and when you should own them personally or inside your corporation. (0:29:50)
A quick look back at our conversation with Dr. Anna Lembke on the subject of dopamine. (0:37:58)
This week’s book review: Justin King’s The Retirement Café Handbook: Nine Accelerators for a Successful Retirement. (0:39:33)
Our conversation with Justin King on how to retire successfully. (0:41:19)
Unpacking the nine accelerators in Justin’s book and where they come from. (0:45:44)
How to get the most out of The Retirement Café Handbook. (0:55:47)
Sharing some of the wonderful reviews we’ve gotten recently, plus our book recommendations. (0:59:28)
