The Humans vs Retirement Podcast

Summary David is Managing Director, Portfolio Manager, and Head of Retirement Research for PGIM DC Solutions. In this role, he develops solutions to help improve retirement outcomes for investors with a specific focus on defined contribution plans. Prior to joining PGIM he was the Head of Retirement Research for Morningstar Investment Management LLC and before that the Director of Consulting and Investment Research for the Retirement Plan Consulting Group at Unified Trust Company.  In this episode David and I discuss retirement planning and income generation. He emphasizes the importance of understanding the cost of retirement and the need to start planning early. Retirement is a complex and individualized process, and the traditional concept of retirement is evolving, David suggests using the term 'financial independence' instead.   He also challenges the 4% rule for retirement withdrawals, suggesting that a personalized approach is necessary because flexibility in retirement income planning is crucial, as it allows for adjustments in spending based on changing circumstances. He also talks about why holding cash can provide both economic and behavioural benefits in retirement portfolios.   Other highlights of our conversation are where we discuss the need for advisors and coaches in retirement planning, the importance of understanding and addressing regret risk, the value of spending money on experiences and giving during retirement, the impact of longevity risk on retirement confidence, the benefits of guaranteed lifetime income in retirement planning and Davids famous Retirement smile concept.   Takeaways Understanding the cost of retirement and starting planning early are crucial for financial security in retirement. The traditional concept of retirement is changing, and 'financial independence' may be a more appropriate term. The 4% rule for retirement withdrawals may lead to underspending and regret, and a personalized approach is necessary. Flexibility in retirement income planning allows for adjustments in spending based on changing circumstances. Holding cash in retirement portfolios can provide both economic and behavioral benefits. Advisors and coaches play a crucial role in retirement planning by providing accountability and helping individuals understand their blind spots. Regret risk, or the regret of not doing more during retirement, is an often overlooked risk that can impact the fulfillment of the second half of life. The fear of spending money in retirement and the transition from a savings mindset to a spending mindset can hinder individuals from enjoying their retirement and lead to inefficient spending. Longevity risk, or the risk of outliving one's savings, is a significant concern in retirement planning, and there is a need for greater longevity literacy. Guaranteed lifetime income can help address longevity risk and provide individuals with the confidence to spend money on experiences and give during retirement. The retirement smile, where real-time spending falls during the early years of retirement and may increase slightly in later life, challenges the assumption that spending increases with inflation every year. Sound Bites "Retirement is the most expensive purchase most people will ever make." "Retirement is radically changing for everyone, what it means to retire, what it means to keep working, how long you're gonna live, what your activity level is gonna be." "The 4% rule will lead people into a retirement of underspending and regret." "We are not the person that's receiving the advice or coaching, right?" "If we create one of those [retirement plans] that's got a hundred percent success rate, i.e. we're telling you that you're never going to run out of money. That to me is a hundred percent failure on living a fulfilled second half of life." "It's just really, really hard to spend down this pool of assets when you don't know how long you're gonna live, you know what the markets are gonna do and you don't wanna go back to work." Chapters 00:00 Introduction and Background of David Blanchett 03:02 Understanding the Cost of Retirement 08:12 The Changing Nature of Retirement 12:33 Challenging the 4% Rule for Retirement Withdrawals 19:49 The Benefits of Holding Cash in Retirement Portfolios 26:56 The Role of Advisors and Coaches 28:19 The Overlooked Risk of Regret 30:06 Overcoming the Fear of Spending 35:28 Understanding and Addressing Longevity Risk 39:39 The Benefits of Guaranteed Lifetime Income 47:01 The Retirement Smile: Challenging Assumptions

Summary Today’s conversation is with the Dr of Happiness, Dr Andy Cope. Andy is a wellbeing expert, best-selling author and in his words a recovering academic. He specialises in positive psychology and the science of human flourishing. The reward for grinding out his Loughborough PhD is that he gets to call himself a Dr of Happiness. If you put the cheesy title to one side, Andy believes there has never been a more important time to focus on mental health and wellbeing. He has been described as a ‘wellbeing revolutionary’ and his mission is to change the narrative and re-focus psychology away from what’s wrong with people to what’s right. His messages act as a gentle nudge towards people taking charge of their own mental health. Andy’s books are frequently on the best-sellers list. ‘The Art of Being Brilliant’, ‘Shine’, and ‘Zest’ have all topped the personal development charts. ‘The Little Book of Emotional Intelligence’ and Leadership: Multiplier Effect’ are riding high in the business charts and ‘Happiness Route Map’ was nominated as The Independent’s best self-help book of the year. Andy also moonlights as a children’s author. His ‘Spy Dog’ series has sold in excess of a million copies worldwide. In this conversation Andy and I discusses the importance of focusing on wellbeing and happiness, especially during retirement. He explains that traditional psychology has primarily focused on fixing mental health issues rather than promoting wellness. Andy emphasises the need to shift the focus to happiness and flourishing, and shares insights from positive psychology. He highlights the significance of living in the present moment and finding contentment in simple experiences and positive relationships. Andy also challenges the notion of retirement as a destination for happiness and encourages individuals to prioritize their wellbeing throughout their lives. Andy emphasises the need to focus on mental wealth and living one's best life. Andy shares his journey of accidentally stumbling upon the science of living a happier life and the intentional strategies that happy people employ. They also discuss the power of reframing internal and learned beliefs and the challenge of unlearning bad habits. He highlights the importance of saying yes to growth and new experiences, as well as saying no to things that don't bring joy. They also touch on the significance of quality relationships, being present, and the negative impact of social media on happiness. Takeaways Traditional psychology has primarily focused on fixing mental health issues rather than promoting wellness. Positive psychology emphasizes the importance of happiness and flourishing. Finding contentment in simple experiences and positive relationships is key to living a fulfilling life. Retirement should not be seen as the sole destination for happiness; it is important to prioritize wellbeing throughout life. Wellbeing and happiness should be prioritized in retirement, as they contribute to a fulfilling life. Positive psychology can help reframe internal and learned beliefs, leading to a happier mindset. Unlearning bad habits and letting go of negative thoughts and behaviors is essential for personal growth and happiness. Saying yes to growth and new experiences, and saying no to things that don't bring joy, can enhance happiness in retirement. Quality relationships and being present in the moment are key determinants of happiness. The negative impact of social media on happiness should be recognized, and time spent on it should be reduced. Sound Bites "There are people out there with a smile on their face and a spring in their step." "Positive psychology is about equipping people with the knowledge and skills to take care of their own mental health and wellbeing." "The happiest moments in life are often simple experiences with loved ones." "They don't talk about wellbeing in a way that they should absolutely talk about wellbeing." "Living your best life and being your best self wasn't a thing." "The biggest barrier to me feeling amazing was actually me." Chapters 00:00 Introduction and Andy's Journey to Becoming the Doctor of Happiness 09:03 The Importance of Wellbeing and Happiness 16:02 Shifting the Focus to Happiness and Flourishing 23:06 Retirement: A Journey of Wellbeing and Happiness 24:25 Prioritizing Wellbeing and Happiness in Retirement 28:12 The Power of Reframing Beliefs and Unlearning 32:08 Saying Yes to Growth and No to Unwanted Obligations 36:48 The Importance of Quality Relationships and Being Present 40:54 The Negative Impact of Social Media on Happiness Links The Art of Brilliance Humans Vs Retirement  Let's talk about your retirement!  

About Stephanie Stephanie founded Sofia Financial in 2011 after 14 years as a financial advisor, with the goal to empower women to make wise financial decisions and reduce their money stress. In her early years she encountered too many women who found finances and investing so intimidating that they either outsourced money decisions to a man in their lives (sometimes with disastrous consequences), or relied on “professionals” who too often focused more on their own paycheck than providing true education and guidance. Financial planning plays into Stephanie’s love of hearing people’s stories, and understanding and explaining complex topics clearly. She is passionate about helping more women find and succeed on this career path. Summary Stephanie McCullough, founder of Sophia Financial and host of the Take Back Retirement podcast, discusses the challenges women face when planning for retirement. She shares her journey of entering the financial industry and focusing on helping women with their retirement planning. Stephanie emphasizes the importance of empowering women to take control of their finances and make informed decisions. She highlights the unique challenges women face in retirement, such as the dominance of the male spouse in financial decisions and the need for women to take the reins after divorce or the death of a spouse. Stephanie encourages open conversations and non-judgmental support to help women navigate these challenges and create a fulfilling retirement. In this conversation, Stephanie and I discuss the challenges women face in the financial planning industry and how they can take control of their retirement. We explore the dominance of men in financial meetings, the importance of meaningful money conversations, and the need for both spouses to be involved in financial planning. They also discuss the impact of social connections on retirement happiness and how women can build and maintain strong social networks. The conversation concludes with advice for women to pay attention to their feelings around money and find a money buddy to share and learn together. Takeaways Women often face unique challenges when planning for retirement, such as the dominance of the male spouse in financial decisions. Divorce and the death of a spouse can significantly impact a woman's retirement plans and financial decisions. Open conversations and non-judgmental support are crucial in helping women navigate these challenges and make informed decisions. Empowering women to take control of their finances and plan for retirement can lead to a more fulfilling and secure future. Women often face challenges in the financial planning industry, with men dominating meetings and focusing on investments rather than meaningful money conversations. Both spouses should be involved in financial planning to ensure transparency and avoid financial abuse. Social connections and networks are crucial for retirement happiness, and women are often better at building and maintaining these connections. Women should pay attention to their feelings around money and find a money buddy to share and learn together. Women can take control of their retirement by being intentional, exploring different opportunities, and finding their own identity and purpose. Sound Bites "There's got to be a way to have a more meaningful conversation with women." "Retirement is the opportunity to figure out exactly what you want to do with your time and go do it." "Open up conversations about retirement between couples to ensure both partners' needs and desires are considered." "There's often a dominance about... the man has done this and they often kind of... dragged them along to the meeting and... they open up the meeting and they're dominant in it." "How can we have a different money conversation? How can we have something that's actually meaningful and relatable? How can we make this money actually interesting?" "A lot of women have that impression because that's the experience they've had in the financial advisor offices." Chapters 00:00 Introduction and Stephanie's Journey 06:20 Why Focus on Women Planning for Retirement? 10:25 Challenges Women Face in Retirement 16:26 Navigating Retirement After Divorce 28:27 The Impact of Grief on Retirement Plans 30:52 The Importance of Meaningful Money Conversations 35:12 Building and Maintaining Social Connections 44:08 Paying Attention to Feelings Around Money 51:48 Taking Control of Retirement Links Take Back Retirement Podcast Sofia Financial    

Summary Jamie was a professor at The American College and Director of the New York Life Center for Retirement Income. He is a well-recognized writer, speaker and thought leader in the area of retirement income planning. His most recent book, “Rewirement: Rewiring The Way You Think About Retirement,” details the behavioral finance issues that hold people back from a more financially secure retirement. Jamie’s impact on retirement planning has been well recognized as he has been named as both a top 40 financial services professional under the age of 40 by InvestmentNews and a top 40 young attorney under the age of 40 by The American Bar Association. In this episode Jamie and I discuss the need to rewire the way we think about retirement and challenge the assumptions underlying retirement planning. He emphasizes the importance of adapting spending habits in retirement and the need to minimize regret risk. Jamie also highlights the concept of self-insuring in retirement and the tendency to hold onto money due to fear of unknown future events. He suggests adopting a guardrails approach to spending and focusing on adaptive spending rather than a binary view of success or failure in retirement. They highlight the need for a more realistic approach to retirement income planning that takes into account the trajectory of spending and the magnitude of failure. They also emphasize the importance of financial literacy and education in retirement planning, as well as the potential benefits of equity release strategies. Takeaways Retirement planning requires rewiring the way we think about retirement and challenging assumptions about saving and spending. Adapting spending habits in retirement is crucial for a fulfilling and successful retirement. Self-insuring in retirement can lead to holding onto money and not being able to spend it, limiting the enjoyment and fulfillment of retirement. Adopting a guardrails approach to spending and focusing on adaptive spending can help minimize regret risk and create a more flexible retirement plan. Retirement planning models often overlook the trajectory of spending and the magnitude of failure, leading to unrealistic expectations. Financial literacy and education are crucial in retirement planning, as individuals need to make informed decisions based on their knowledge and experiences. Equity release strategies, such as downsizing or reverse mortgages, can be valuable tools in retirement income planning and should be considered as part of a comprehensive financial plan. Individuals should start their retirement planning by identifying their aspirations and using them as a guide for their financial plan, ensuring that their retirement is fulfilling and aligned with their goals. Sound Bites "People need to rewire the way they think about retirement." "The biggest challenge is that everybody thinks retirement is the same phase in life, and we treat it the same." "Self-insuring is holding onto money for unknown future events, which limits spending in retirement." "That's a 50% chance that you're going to underspend crucially." "Why do we talk about anything as success and failure? Because it's actually only partial failure anyway." "There is a framework of flexibility in retirement spending." Chapters 00:00 Introduction and Warm Welcome 06:38 Jamie Hopkins' Journey to Retirement Planning 09:00 Rewiring the Way We Think About Retirement 27:07 The Benefits of a Guardrails Approach to Spending 32:53 The Flaws in Retirement Planning Models 37:40 The Importance of Flexibility in Retirement Spending 42:47 The Role of Financial Literacy and Education in Retirement Planning 53:54 The Benefits of Equity Release Strategies 01:00:14 Starting Retirement Planning with Aspirations Links Jamie's Book - Rewirement: Rewiring The Way You Think About Retirement!

Summary Derek Hagen is the founder of Money Health Solutions®️, a financial therapy and life planning firm. Money Health Solutions helps clients live intentionally and mindfully, using money as a tool to support their ideal life. He facilitates financial health by helping clients understand their own money psychology, lowering financial stress, and increasing confidence in financial decisions. Derek also started Meaningful Money Memo, a newsletter about the psychology of money and living a meaningful life, using personal stories and simple drawings to help demystify money for readers. He shares his journey from being a Chartered Financial Analyst and a focus on numbers to then having the big realisation that money is a tool not a goal which lead to focusing on the interior side of money and helping people find purpose and significance. In this conversation, we discuss the importance of mindset and intention when it comes to retirement planning. Derek emphasizes the need to have a purpose and a value statement to guide financial decisions and prioritize experiences over accumulating wealth. We also discuss the significance of time and the finite nature of life, encouraging people to be present and intentional in their retirement years. Importantly Derek highlights the importance of creativity and designing a life that aligns with personal values and priorities.  Takeaways Money is a tool, not a goal, and should be used to create a meaningful retirement. Diversification of meaning in retirement is crucial to avoid relying on a single source of purpose and significance. Planning for life beyond retirement is essential and often overlooked. Retirement is not a finish line, but a new phase of life that requires structure and purpose. Having a purpose and value statement is crucial for guiding financial decisions in retirement. Being present and intentional with time is important, as life is finite and experiences have a limited number of opportunities. Retirement planning should focus on designing a life that aligns with personal values and priorities. Creativity and a designer mindset are essential for planning and living a fulfilling retirement. Systems, rather than goals, allow for flexibility and adaptability in navigating life transitions and unexpected events. Sound Bites "Money is a tool, not a goal." "Diversification of meaning in retirement is crucial." "Retirement is not a finish line." "You know, that reality check in and, ⁓ and I think unless you can work with someone that can bring this out of you, or you can naturally bring this out of you, you end up reverting back to the mean, don't you?" "Yeah, absolutely. And that's the thing with habits. If we get into our ⁓ habits, we get into what we're familiar with. And this is a pretty big, retirement's a pretty big life transition." "The retirement that I think the 50 to 60 year olds have witnessed in their parents and their grandparents is and was materially different to the retirement that they're entering into." Chapters 00:00 Introduction and Background 09:21 Money as a Tool, Not a Goal 15:57 Money's Role in Retirement 26:11 The Importance of Planning for Life Beyond Retirement 29:19 Retirement: Not a Finish Line, but a New Phase of Life 31:20 The Importance of Purpose and Value in Retirement Planning 32:03 Being Present and Intentional with Time in Retirement 33:42 Designing a Life that Aligns with Personal Values 38:45 The Role of Creativity in Retirement Planning 52:32 Systems vs Goals: Focusing on Inputs and Intentions Links Meaningful Money