Full Transcript for Permission to Spend: A System for Living Off What You've Built with Connor Tyson of Progress Solutions LLC

--> 00:02:07.069 strategies and approaches for achieving financial 00:02:07.069 --> 00:02:09.669 freedom and having the option not to work. I'm 00:02:09.669 --> 00:02:12.409 your host, Daniel C. Rogers. It's easy to think 00:02:12.409 --> 00:02:14.050 that the easiest part of the financial journey 00:02:14.050 --> 00:02:16.629 is the climb. The bulk of our prime is spent 00:02:16.629 --> 00:02:18.949 in the working years, accumulating enough wealth 00:02:18.949 --> 00:02:21.349 to live off for the rest of our days. Yet the 00:02:21.349 --> 00:02:24.189 myth of the work ending once you reach your financial 00:02:24.189 --> 00:02:27.569 summit can be existential. We transition to our 00:02:27.569 --> 00:02:29.530 golden years, hoping we did enough to fund the 00:02:29.530 --> 00:02:31.689 lives we want for ourselves and for our loved 00:02:31.689 --> 00:02:34.889 ones. We hope that the work is over and the deaccumulation 00:02:34.889 --> 00:02:37.569 descent is a smooth glide. But the reality is 00:02:37.569 --> 00:02:39.550 that the descent is where most failures actually 00:02:39.550 --> 00:02:42.289 happen. Research shows that the first five years 00:02:42.289 --> 00:02:44.430 of retirement are the critical danger zone. But 00:02:44.430 --> 00:02:47.550 what if the cash continued to flow when the paychecks 00:02:47.550 --> 00:02:50.189 stopped? What if you had a system that replaces 00:02:50.189 --> 00:02:53.150 W -2 income with a predictable flow of assets? 00:02:53.650 --> 00:02:56.310 One that alleviated the need to withdraw in a 00:02:56.310 --> 00:02:59.090 down market or live in fear of inflation with 00:02:59.090 --> 00:03:01.419 a loss of benefits? Well, today's guest is here 00:03:01.419 --> 00:03:04.280 to help us explore Framework for just that. Conor 00:03:04.280 --> 00:03:07.219 Tyson is a personal financial coach, also a chartered 00:03:07.219 --> 00:03:09.639 financial consultant with over 22 years of experience, 00:03:09.979 --> 00:03:13.280 is the founder of Progress Solutions LLC, and 00:03:13.280 --> 00:03:15.539 now focuses on empowering people with the habits 00:03:15.539 --> 00:03:18.280 and behaviors needed to build true wealth. Conor, 00:03:18.280 --> 00:03:20.259 welcome to Escape the Clock. Thanks for having 00:03:20.259 --> 00:03:24.319 me on, Dan. Awesome. You know, I like this Everest 00:03:24.319 --> 00:03:26.939 metaphor to describe the retirement journey because 00:03:26.939 --> 00:03:29.500 it does feel like... a climb as we grind our 00:03:29.500 --> 00:03:31.620 way up the mountain. And then we just hope for 00:03:31.620 --> 00:03:33.719 this smooth journey back down. But I'd love you 00:03:33.719 --> 00:03:35.439 to kind of take us back a little bit because 00:03:35.439 --> 00:03:36.879 you've been doing this for quite a while, helping 00:03:36.879 --> 00:03:39.479 lots of people here. What did you realize that 00:03:39.479 --> 00:03:42.659 most people kind of feel stranded at the summit 00:03:42.659 --> 00:03:44.759 because they never actually made a plan for how 00:03:44.759 --> 00:03:46.719 to get back down? Well, it's not that they haven't 00:03:46.719 --> 00:03:50.379 made a plan, right? It's just that it's human 00:03:50.379 --> 00:03:52.319 nature to avoid those things you don't understand, 00:03:52.560 --> 00:03:54.840 right? And I used to deliver a lot of financial 00:03:54.840 --> 00:03:59.069 plans and all the answers. Based upon the inputs, 00:03:59.090 --> 00:04:02.449 we're on page 67 of the plan, right? How much 00:04:02.449 --> 00:04:04.189 you need to save a month, this is what you need 00:04:04.189 --> 00:04:07.150 to do. But very few people are actually taking 00:04:07.150 --> 00:04:09.969 action. And I realized that like, wow, what is 00:04:09.969 --> 00:04:13.650 it about this that's really holding people back? 00:04:14.250 --> 00:04:17.670 Number one is that it's complicated, right? Like 00:04:17.670 --> 00:04:21.829 the industry itself is scary, right? They use 00:04:21.829 --> 00:04:24.430 terms like standard deviation, asset allocation, 00:04:24.850 --> 00:04:28.639 bibbidi -bobbidi -boo, right? It freezes people 00:04:28.639 --> 00:04:31.660 in tracks. They know they need it, but they don't 00:04:31.660 --> 00:04:33.819 know how to implement it or truly understand 00:04:33.819 --> 00:04:36.639 what it is that they're doing. I used to ask 00:04:36.639 --> 00:04:39.279 people all the time, why do you own it and how 00:04:39.279 --> 00:04:41.660 does it benefit you? I would get blank stares. 00:04:41.740 --> 00:04:43.519 I was like, well, my advisor told me. I was like, 00:04:43.540 --> 00:04:46.560 okay. I had to really simplify. Take something 00:04:46.560 --> 00:04:49.779 that's really complicated and simplify it so 00:04:49.779 --> 00:04:53.540 people understood what they were doing, why they 00:04:53.540 --> 00:04:56.540 were doing it. when to do it, so on and so forth, 00:04:56.620 --> 00:04:59.079 so they can take action. Because like knowledge 00:04:59.079 --> 00:05:00.800 is power, right? So if you give the people the 00:05:00.800 --> 00:05:02.560 knowledge of what they're doing, why they're 00:05:02.560 --> 00:05:05.199 doing it, when they're doing it, they're empowered 00:05:05.199 --> 00:05:07.379 to take action because they understand for themselves 00:05:07.379 --> 00:05:09.519 what they're doing and why they're doing it. 00:05:09.579 --> 00:05:11.879 Yeah, that was basically the missing ingredient. 00:05:12.019 --> 00:05:14.939 And then I was able to explain it pretty quickly 00:05:14.939 --> 00:05:18.439 to people. And the rest is history, as they say. 00:05:18.579 --> 00:05:20.500 But then I also realized it's really habits and 00:05:20.500 --> 00:05:22.980 behaviors. It's not knowledge. I talk about this 00:05:22.980 --> 00:05:25.879 a lot. like most of your listeners now know what 00:05:25.879 --> 00:05:28.939 to do if you ask anybody right spend less than 00:05:28.939 --> 00:05:32.800 i make save invest

give you know avoid debt but 00:05:32.800 --> 00:05:36.420 yeah okay they know this but why is it that when 00:05:36.420 --> 00:05:40.120 it comes to this topic or you see the statistics 00:05:40.120 --> 00:05:43.839 out there right why is that right so it's really 00:05:43.839 --> 00:05:46.819 habits and behaviors of uh aligning it with their 00:05:46.819 --> 00:05:48.579 principles and values so they're motivated to 00:05:48.579 --> 00:05:52.800 take action knowledge plus discipline It's kind 00:05:52.800 --> 00:05:54.500 of implied knowledge, right? Like all the YouTube 00:05:54.500 --> 00:05:56.519 videos are great. What did you do with that information? 00:05:56.800 --> 00:06:00.139 Yeah, absolutely. Yeah. Before we get into all 00:06:00.139 --> 00:06:02.720 the, the way you help people calculate these 00:06:02.720 --> 00:06:05.680 withdrawals and replace that paycheck, I'd love 00:06:05.680 --> 00:06:09.379 to start a little bit though, or with the ascent 00:06:09.379 --> 00:06:11.860 pieces, because you do have this interesting 00:06:11.860 --> 00:06:14.939 framework for recreating a paycheck without work. 00:06:15.100 --> 00:06:16.819 And, you know, I think a lot of people think 00:06:16.819 --> 00:06:19.139 like you said, right. It's about, okay, we'll 00:06:19.139 --> 00:06:22.379 save some. you know, make sure I do that match, 00:06:22.540 --> 00:06:25.980 make sure I, that's something. And, and I do 00:06:25.980 --> 00:06:28.540 notice a lot of strategies are hope, hope. Yeah. 00:06:28.620 --> 00:06:31.720 Yeah. And, and so I would love to hear more about 00:06:31.720 --> 00:06:33.500 your framework first and how you're ensuring 00:06:33.500 --> 00:06:35.720 there's enough money there so that people can 00:06:35.720 --> 00:06:37.720 actually withdraw from the right places and make 00:06:37.720 --> 00:06:41.160 it last. So the ascent piece, which is the climb, 00:06:41.360 --> 00:06:44.000 right? We're trained early on, save, save, save 00:06:44.000 --> 00:06:47.040 401k, automate, so on and so forth. Hopefully 00:06:47.040 --> 00:06:48.319 you're doing that. But the biggest thing is, 00:06:48.810 --> 00:06:50.230 When you're doing financial planning, the first 00:06:50.230 --> 00:06:52.009 number they ask you is how much, because that's 00:06:52.009 --> 00:06:53.949 the input. That's what the whole linear plan 00:06:53.949 --> 00:06:57.029 is based upon. And they usually give you round 00:06:57.029 --> 00:07:00.009 numbers. Put me down for $100 ,000. Put me down 00:07:00.009 --> 00:07:03.069 for $120 ,000. And it's garbage in, garbage out. 00:07:03.129 --> 00:07:05.810 And life is not linear, number one. So the first 00:07:05.810 --> 00:07:08.610 habit or behavior is budgeting, like awareness 00:07:08.610 --> 00:07:10.990 of where your money is going at any juncture 00:07:10.990 --> 00:07:14.470 of your life. And then making sure that you're 00:07:14.470 --> 00:07:17.970 on track to... have it automated where you're 00:07:17.970 --> 00:07:20.230 saving the right amounts in the right areas. 00:07:20.350 --> 00:07:23.389 The other thing is looking at the descent before 00:07:23.389 --> 00:07:26.709 you even approach it. I make the descent very 00:07:26.709 --> 00:07:29.629 simple to understand. You're climbing this mountain 00:07:29.629 --> 00:07:32.850 called retirement or saving one day, where it's 00:07:32.850 --> 00:07:35.110 working by choice, not by necessity is really 00:07:35.110 --> 00:07:39.910 what it is. Most people also choose to do something 00:07:39.910 --> 00:07:42.290 part -time in retirement because it's just sit 00:07:42.290 --> 00:07:45.069 around and watch TV all day. You can't do that. 00:07:46.259 --> 00:07:48.839 I break it up into three phases, which is like 00:07:48.839 --> 00:07:51.819 the go -go years, the slow -go years, and then 00:07:51.819 --> 00:07:55.040 the no -go years. So you're seeing things, you're 00:07:55.040 --> 00:08:00.000 traveling, you're probably 65 to like 80, 75. 00:08:00.860 --> 00:08:06.079 Slow -go years, 75 to 80 -ish. That's when the 00:08:06.079 --> 00:08:07.740 grandkids are coming to you instead of you visiting 00:08:07.740 --> 00:08:10.560 them. And the no -go years is everybody's coming 00:08:10.560 --> 00:08:13.899 to you. You're not going to Christmas. They're 00:08:13.899 --> 00:08:16.240 coming to you. And that's really where it is. 00:08:16.319 --> 00:08:18.519 And you want to fund the first piece of that, 00:08:18.699 --> 00:08:21.100 the go -go year, because you have to also give 00:08:21.100 --> 00:08:23.060 yourself permission to spend down the money. 00:08:23.660 --> 00:08:25.079 That's what it's for. That's what you've been 00:08:25.079 --> 00:08:27.139 saving for for all these years. The ascent is 00:08:27.139 --> 00:08:29.439 also just automating. A lot of people have decision 00:08:29.439 --> 00:08:32.620 fatigue. You're living. You have two kids. I 00:08:32.620 --> 00:08:36.389 have two kids. And it's, you know. You work all 00:08:36.389 --> 00:08:38.850 week, you're taking kids to events, you're working 00:08:38.850 --> 00:08:41.169 overtime, you're doing all this stuff on family 00:08:41.169 --> 00:08:43.590 vacation, you got to do this camp. Who wants 00:08:43.590 --> 00:08:46.629 to sit down and really look at a hardcore budget 00:08:46.629 --> 00:08:48.509 with their significant other or themselves on 00:08:48.509 --> 00:08:49.950 a Friday night? You don't want to do it, right? 00:08:50.049 --> 00:08:51.830 So you have to automate a lot of these things. 00:08:52.009 --> 00:08:54.549 So the decision fatigue is not there. You have 00:08:54.549 --> 00:08:56.230 two types of people, right? All the plans and 00:08:56.230 --> 00:08:58.450 no resources, all the resources and no plans 00:08:58.450 --> 00:09:01.710 is really what it comes down to. I, it's a lot 00:09:01.710 --> 00:09:03.549 easier to work with people that have all the 00:09:03.549 --> 00:09:05.450 resources and no plan, because then you can

actually 00:09:05.450 --> 00:09:07.570 frame it in a way that makes sense for them. 00:09:08.210 --> 00:09:09.769 And the word retirement too, like, what does 00:09:09.769 --> 00:09:11.570 that mean for everybody? I don't know. I think 00:09:11.570 --> 00:09:14.149 of shuffleboard in Florida, but it's really, 00:09:14.230 --> 00:09:17.889 how do I recreate the income without working 00:09:17.889 --> 00:09:20.610 as much? I live the life I want. That's like 00:09:20.610 --> 00:09:22.570 the go -go years. For some of those people that 00:09:22.570 --> 00:09:24.870 are planning, right? Let's assume someone's in 00:09:24.870 --> 00:09:26.870 their accumulation phase right now. They're still 00:09:26.870 --> 00:09:29.230 working. Maybe they have a good, you know, 10, 00:09:29.309 --> 00:09:33.460 20 years left of work. How much should they be 00:09:33.460 --> 00:09:37.840 expecting things like Social Security as part 00:09:37.840 --> 00:09:41.559 of their plan? It's a big piece. Yeah, it's a 00:09:41.559 --> 00:09:43.720 big piece. Do you feel like that's something 00:09:43.720 --> 00:09:45.480 you need to mitigate, or do you feel like that 00:09:45.480 --> 00:09:47.700 is something that everyone should be able to 00:09:47.700 --> 00:09:49.879 comfortably have as part of their plan? There's 00:09:49.879 --> 00:09:53.460 the math of it, and then there's the socioeconomics 00:09:53.460 --> 00:09:57.120 of it also. There would be complete riots and 00:09:57.120 --> 00:09:59.100 pitchforks and everything else in the streets 00:09:59.100 --> 00:10:03.049 over this. Legislation will probably be passed. 00:10:03.169 --> 00:10:05.529 That's my own personal opinion to keep that going. 00:10:06.350 --> 00:10:09.190 They've rated it, and it's not good mathematically. 00:10:10.210 --> 00:10:12.210 It's up to them, personally. It's not up to me. 00:10:12.230 --> 00:10:14.350 If you don't want to plan for it, then don't 00:10:14.350 --> 00:10:17.950 plan for it. Will it be reduced? Maybe. There's 00:10:17.950 --> 00:10:21.830 other alternatives. They can increase the age. 00:10:22.289 --> 00:10:24.230 They can take off the limit of income of how 00:10:24.230 --> 00:10:26.049 much is taxed for Social Security. There's a 00:10:26.049 --> 00:10:28.269 lot of things they can do before that happens, 00:10:28.389 --> 00:10:32.159 but it's definitely going to be a piece. of the 00:10:32.159 --> 00:10:34.419 retirement picture. It's not going away 100%. 00:10:34.419 --> 00:10:36.519 What about the person who's like, well, I wish 00:10:36.519 --> 00:10:39.220 I could have a pension, but I don't have access 00:10:39.220 --> 00:10:43.000 to get a pension. I want some fixed income. Yeah. 00:10:43.320 --> 00:10:46.360 What other assets might people consider? Yeah, 00:10:46.379 --> 00:10:50.519 yeah. So you can recreate your own pension, right? 00:10:50.580 --> 00:10:54.340 So you can take equity assets and turn them into 00:10:54.340 --> 00:10:56.860 a pension themselves if you

wanted to. So what 00:10:56.860 --> 00:10:58.620 a pension is just a stream of income you don't 00:10:58.620 --> 00:11:01.399 now live. when you die it stops that's what that 00:11:01.399 --> 00:11:04.000 is right so you can actually create your own 00:11:04.000 --> 00:11:05.799 pension if you wanted to you're kind of speaking 00:11:05.799 --> 00:11:08.080 to the four big pieces of the retirement income 00:11:08.080 --> 00:11:11.139 strategy but there's so there's four buckets 00:11:11.139 --> 00:11:13.440 right social security pension which is going 00:11:13.440 --> 00:11:16.299 away fixed assets and equity assets right and 00:11:16.299 --> 00:11:18.139 if you look at those four buckets and i said 00:11:18.139 --> 00:11:21.000 okay pick any two you want ninety percent of 00:11:21.000 --> 00:11:23.779 people like social security and pension why It's 00:11:23.779 --> 00:11:25.679 fixed. It's guaranteed. It's pretty simple to 00:11:25.679 --> 00:11:27.279 understand. Yeah, you can look up the numbers 00:11:27.279 --> 00:11:29.500 of a lot of strategies, right? The other two 00:11:29.500 --> 00:11:31.879 are variable, scary. You have market risk. You 00:11:31.879 --> 00:11:34.700 have a whole bunch of things, right? Where you 00:11:34.700 --> 00:11:37.419 can convert a portion of your equity assets into 00:11:37.419 --> 00:11:40.659 a pension if you wanted to. Not all of it, but 00:11:40.659 --> 00:11:44.179 a piece of it. Because pensions, you know, inflation. 00:11:44.639 --> 00:11:47.259 You have to have a hedge against inflation. You 00:11:47.259 --> 00:11:49.039 mentioned variable. I'd love to pick on that 00:11:49.039 --> 00:11:50.820 a little bit, you know, because life is very 00:11:50.820 --> 00:11:53.480 variable. um things like health care comes up 00:11:53.480 --> 00:11:56.059 a lot people seem very worried about health care 00:11:56.059 --> 00:12:00.080 um to a degree that sometimes can be a little 00:12:00.080 --> 00:12:02.840 irrational to be honest uh because it's an expense 00:12:02.840 --> 00:12:06.059 but you know i think some when your job takes 00:12:06.059 --> 00:12:07.720 care of it for so long and it's something on 00:12:07.720 --> 00:12:10.440 you later i guess it can be scary to deal with 00:12:10.440 --> 00:12:12.919 but how do people think about all those variable 00:12:12.919 --> 00:12:15.519 costs in life when there's so many unknowns and 00:12:15.519 --> 00:12:17.480 it's an insurance right and you protect those 00:12:17.480 --> 00:12:19.620 things you can't afford to lose and if you you 00:12:19.620 --> 00:12:22.059 were single and you don't have anybody take care 00:12:22.059 --> 00:12:26.059 of you yeah i would definitely take a insurance 00:12:26.059 --> 00:12:29.960 policy out or self -fund that or do some get 00:12:29.960 --> 00:12:31.960 a product there's definitely one that addresses 00:12:31.960 --> 00:12:35.980 it out there to address that concern of yours 00:12:35.980 --> 00:12:39.539 in your retirement or whatever that is in your 00:12:39.539 --> 00:12:41.940 life line so let's say let's say people you know 00:12:41.940 --> 00:12:44.740 they use the framework they're you know they 00:12:44.740 --> 00:12:46.279 have social security to some degree in their 00:12:46.279 --> 00:12:48.659 plan they're able to do the right amount of savings 00:12:48.659 --> 00:12:52.379 they maybe and maybe they do a mix of a cd ladder 00:12:52.379 --> 00:12:54.899 and an annuity they have stuff set up and they've 00:12:54.899 --> 00:12:58.019 done the plan they feel like okay i'm going to 00:12:58.019 --> 00:13:00.860 have enough charles swab did this uh survey last 00:13:00.860 --> 00:13:03.639 year where they said uh reported one in four 00:13:03.639 --> 00:13:06.940 retirees who retired in the last decade said 00:13:06.940 --> 00:13:08.759 that they weren't financially prepared for the 00:13:08.759 --> 00:13:12.539 transition from accumulation to spending yeah 00:13:12.539 --> 00:13:15.679 it just it didn't feel prepared there's a psychological 00:13:15.679 --> 00:13:19.659 shift that happens i know you you teach about 00:13:19.659 --> 00:13:22.480 the rule of 72 here a bit to help calculate spending 00:13:22.480 --> 00:13:25.379 rates i was wondering like do you see that as 00:13:25.379 --> 00:13:28.080 part of what helps people feel more comfortable 00:13:28.080 --> 00:13:29.500 because look there's three things you can do 00:13:29.500 --> 00:13:30.919 with money right you can save it you can spend 00:13:30.919 --> 00:13:34.159 it you can give it saving it You know, it's hard 00:13:34.159 --> 00:13:36.279 to do and it's kind of hard to shift the gear 00:13:36.279 --> 00:13:38.940 out of saving into spending for a lot of people. 00:13:39.259 --> 00:13:41.200 Is it more of a math thing or is there something 00:13:41.200 --> 00:13:42.720 else that needs to happen here? It's definitely 00:13:42.720 --> 00:13:44.980 psychological, right? So you have to give yourself 00:13:44.980 --> 00:13:46.940 permission to why you're saving the money in 00:13:46.940 --> 00:13:48.779 the first place and understand that you've been 00:13:48.779 --> 00:13:53.019 saving for 40 years for this goal. of basically 00:13:53.019 --> 00:13:54.840 financial independence to do what you want to 00:13:54.840 --> 00:13:56.320 do when you want to do it give yourself permission 00:13:56.320 --> 00:13:59.340 to do it right if you think you're going to die 00:13:59.340 --> 00:14:01.399 with the amount of money you started with or 00:14:01.399 --> 00:14:03.899 more without spending the money in retirement 00:14:03.899 --> 00:14:05.799 over i don't know what the average retirement 00:14:05.799 --> 00:14:08.360 is but it's definitely more than 10 years there's 00:14:08.360 --> 00:14:10.940 two ways to go about it one is capital preservation 00:14:10.940 --> 00:14:15.740 right which is very difficult to do if you don't 00:14:15.740 --> 00:14:17.700 mitigate those risks through giving yourself 00:14:17.700

--> 00:14:19.159 permission to get out of the market when it's 00:14:19.159 --> 00:14:21.240 going down right like i'm a big proponent of 00:14:21.240 --> 00:14:25.120 like you can Ride the market up and down the 00:14:25.120 --> 00:14:27.960 buy and hold strategy. But why would you buy 00:14:27.960 --> 00:14:30.059 and hold? Why would you hold during a downtime? 00:14:30.500 --> 00:14:32.840 I don't understand that. I've never had anybody 00:14:32.840 --> 00:14:35.840 explain to me why. Because you can't predict 00:14:35.840 --> 00:14:37.559 when it's going back up. But you know it's going 00:14:37.559 --> 00:14:41.419 back up. That's why you're holding. So why wouldn't 00:14:41.419 --> 00:14:45.779 I just sell a piece of that portfolio where it's 00:14:45.779 --> 00:14:49.139 in cash and preserving capital versus writing 00:14:49.139 --> 00:14:53.230 it down 30 %? Right. Real money managers sell. 00:14:53.629 --> 00:14:57.950 They do. Right. And there's algorithms and indicators 00:14:57.950 --> 00:14:59.929 out there now that tell you the market's bad, 00:15:00.029 --> 00:15:01.789 market's good. Right. Green light, red light. 00:15:01.870 --> 00:15:04.830 So money management is a big piece of this where 00:15:04.830 --> 00:15:06.830 you can have you can delegate that to professionals 00:15:06.830 --> 00:15:09.789 to preserve your capital. And if it's buy and 00:15:09.789 --> 00:15:11.950 hold, the only argument I've heard is like, well, 00:15:11.970 --> 00:15:13.929 you don't know when to get back in necessarily. 00:15:15.009 --> 00:15:18.519 I mean, there are some big indicators. of when 00:15:18.519 --> 00:15:20.200 things are getting better, right? Employment 00:15:20.200 --> 00:15:23.259 rate, this, that, the other thing, where you 00:15:23.259 --> 00:15:25.200 have a good idea and you don't do everything 00:15:25.200 --> 00:15:28.000 overnight. You don't go 100 % cash. You do it 00:15:28.000 --> 00:15:30.519 in tranches of money. So you preserve that capital. 00:15:30.600 --> 00:15:33.139 But back to what you were talking before about 00:15:33.139 --> 00:15:37.240 the rule of 72, let's just say over 40 years, 00:15:37.340 --> 00:15:39.279 you've accumulated all your equity assets, right? 00:15:39.320 --> 00:15:42.019 Most people maybe downsize. Let's say you have 00:15:42.019 --> 00:15:45.220 a million dollars, right, at this point of everything. 00:15:45.820 --> 00:15:49.159 you would actually give yourself permission to 00:15:49.159 --> 00:15:51.519 spend a half a million dollars of that. Why? 00:15:51.740 --> 00:15:54.779 Because the other half, the rule of 72, if you 00:15:54.779 --> 00:15:58.559 get the average S &P 500 rate of, what is it, 00:15:58.600 --> 00:16:03.039 9 % or 10%, that's going to double in 9 to 10 00:16:03.039 --> 00:16:05.720 years. What do you do in 9 to 10 years? You just 00:16:05.720 --> 00:16:07.860 reload is what you do. You have a million again, 00:16:07.960 --> 00:16:10.159 and then you just reload the equity assets, and 00:16:10.159 --> 00:16:11.799 you keep that stream of income coming in, but 00:16:11.799 --> 00:16:13.759 you're going to spend it down because that's 00:16:13.759 --> 00:16:15.950 the goal of the money. It sounds like what you're 00:16:15.950 --> 00:16:17.850 describing is knowing your safe withdrawal rate 00:16:17.850 --> 00:16:20.450 because you could do the math. Yeah. I mean, 00:16:20.470 --> 00:16:22.990 withdrawal rate or more like time frame because 00:16:22.990 --> 00:16:26.710 life, again, is not linear, right? So a fixed 00:16:26.710 --> 00:16:30.090 withdrawal rate is not going to line up with 00:16:30.090 --> 00:16:33.809 your life. Sometimes you need more money in the 00:16:33.809 --> 00:16:35.470 go -go years than you need the slow -go years. 00:16:35.690 --> 00:16:39.690 Or like you said, healthcare. All my advisors 00:16:39.690 --> 00:16:41.629 said not to take a withdrawal rate of more than 00:16:41.629 --> 00:16:44.299 5%. Yeah, you need it. Where are you going to 00:16:44.299 --> 00:16:45.720 get the money? You have to sell assets or do 00:16:45.720 --> 00:16:48.259 something or work. It's a finite resource. And 00:16:48.259 --> 00:16:49.559 if you have it, yeah, you're going to have to 00:16:49.559 --> 00:16:52.460 spend it to live the life you want. Talk about 00:16:52.460 --> 00:16:55.500 liquidity buffers, because I know if you had 00:16:55.500 --> 00:17:00.179 a nice cushion, you could not have to feel like 00:17:00.179 --> 00:17:02.460 you're forced to. Yeah, I'm a big proponent of 00:17:02.460 --> 00:17:05.319 that, too. The average bear market lasts somewhere 00:17:05.319 --> 00:17:08.539 between, I think it's nine to 13 months or 14 00:17:08.539 --> 00:17:11.019 months or something like that. If you had that 00:17:11.019 --> 00:17:13.460 amount of cash, you could weather that bear market 00:17:13.460 --> 00:17:16.140 without stopping the income or the amount of 00:17:16.140 --> 00:17:17.839 money you need to live off of. And you don't 00:17:17.839 --> 00:17:19.619 have to spend down any assets. And then when 00:17:19.619 --> 00:17:21.859 the market goes up, good. Now it's going back 00:17:21.859 --> 00:17:24.619 up. All right. So would you advise one year cost 00:17:24.619 --> 00:17:25.799 to live? Yeah, you definitely want to have some 00:17:25.799 --> 00:17:28.940 cash. Those who have liquidity and cash have 00:17:28.940 --> 00:17:30.900 options. If you don't have cash and liquidity, 00:17:31.079 --> 00:17:32.440 you don't have many options. Like most of my 00:17:32.440 --> 00:17:34.640 clients wanted to have flexibility and options 00:17:34.640 --> 00:17:37.019 of what to do, when to do it. It's also your 00:17:37.019 --> 00:17:39.960 opportunity money as well. It might not even 00:17:39.960 --> 00:17:41.779 be about withdrawal. It might be about investment. 00:17:42.039 --> 00:17:44.400 You never know. It's nice to have the option. 00:17:44.940 --> 00:17:48.160 Yeah, it is. So I used to do this

presentation. 00:17:48.400 --> 00:17:51.279 I don't know. I've retired thousands of people. 00:17:51.359 --> 00:17:54.680 And it's like, you don't have to complicate it 00:17:54.680 --> 00:17:56.880 very hard, right? So we were talking about those 00:17:56.880 --> 00:17:58.859 pieces, the puzzle pieces. You have social security, 00:17:58.920 --> 00:18:01.619 pension, fixed assets, and equity assets. In 00:18:01.619 --> 00:18:03.319 the middle of those four buckets, if you can 00:18:03.319 --> 00:18:05.809 think of a piece of paper. In the upper left 00:18:05.809 --> 00:18:07.650 -hand corner, you have Social Security. Lower 00:18:07.650 --> 00:18:09.730 left -hand corner, you have pension. Upper right 00:18:09.730 --> 00:18:11.950 -hand corner, fixed assets. Lower right -hand 00:18:11.950 --> 00:18:14.809 corner, equity. In the middle of that page, you 00:18:14.809 --> 00:18:17.269 just put a dollar sign, a paycheck. How much 00:18:17.269 --> 00:18:20.170 do I need to live off of on a regular basis? 00:18:20.289 --> 00:18:22.589 To answer that question, you should be hopefully 00:18:22.589 --> 00:18:25.269 budgeting, telling your money where to go versus 00:18:25.269 --> 00:18:27.750 wondering where it went, all that stuff, and 00:18:27.750 --> 00:18:31.049 on top of that. You have a good idea. People 00:18:31.049 --> 00:18:32.490 are like, oh, you're going to live on 80 % of 00:18:32.490 --> 00:18:34.069 your income. Why would you give yourself a pay 00:18:34.069 --> 00:18:37.609 cut if you didn't have to? So live the life style 00:18:37.609 --> 00:18:41.109 that you want, but this is going to dictate how 00:18:41.109 --> 00:18:43.009 much you can live off of, right? So Social Security, 00:18:43.109 --> 00:18:45.190 we used to get a green and white piece of paper 00:18:45.190 --> 00:18:47.309 in the mail. We don't have it anymore. You can 00:18:47.309 --> 00:18:49.769 actually go to their website, look up the estimates 00:18:49.769 --> 00:18:52.660 based upon your age. when you want to retire 00:18:52.660 --> 00:18:54.400 and how much you'd actually collect for maybe 00:18:54.400 --> 00:18:56.019 you and your spouse. So let's say you want to 00:18:56.019 --> 00:18:58.660 live on $120 ,000 a year. Just keep numbers simple 00:18:58.660 --> 00:19:01.180 and round to get the concept across. You'd have 00:19:01.180 --> 00:19:04.960 $10 ,000. You got to make $10 ,000. So social 00:19:04.960 --> 00:19:07.740 security, probably between a married couple or 00:19:07.740 --> 00:19:11.240 so, would be like 3 ,500 bucks. Let's just call 00:19:11.240 --> 00:19:13.200 it, let's say it's two grand each, right? Four 00:19:13.200 --> 00:19:16.599 grand. You have $6 ,000 left. Pension, you may 00:19:16.599 --> 00:19:18.980 or may not have it. Zero. Let's just put a zero 00:19:18.980 --> 00:19:21.500 there. You have fixed assets. These are things 00:19:21.500 --> 00:19:23.299 that pay you a fixed amount of income for a fixed 00:19:23.299 --> 00:19:25.420 period of

time. Those are bonds, CDs, things 00:19:25.420 --> 00:19:27.559 of that nature. You live on the dividends of 00:19:27.559 --> 00:19:29.859 those. You live on the interest. Then you have 00:19:29.859 --> 00:19:32.480 equity. This is everything you own. This is the 00:19:32.480 --> 00:19:34.720 house you might downsize. Unlock some of the 00:19:34.720 --> 00:19:38.039 equity in that. Your 401k, IRA, your stocks, 00:19:38.119 --> 00:19:41.269 whatever that number is. Whatever is remaining. 00:19:41.430 --> 00:19:44.190 So in that illustration, we need $6 ,000. $6 00:19:44.190 --> 00:19:47.190 ,000 of a half a million, how long would that 00:19:47.190 --> 00:19:50.890 last? That would be 300 months. $6 ,000, you 00:19:50.890 --> 00:19:54.210 would spend that down over that period of time. 00:19:54.329 --> 00:19:57.369 And then the other money, the half of it is growing 00:19:57.369 --> 00:20:00.990 in a diversified portfolio. And within 10 years 00:20:00.990 --> 00:20:05.029 or so, probably nine, it would double. A good 00:20:05.029 --> 00:20:07.960 hedge against inflation. which is the cost of 00:20:07.960 --> 00:20:10.660 living going up, is equities. If you have equities, 00:20:10.680 --> 00:20:12.500 it's a hedge against the inflation, it's growing. 00:20:13.279 --> 00:20:15.220 Then within 10 years, if you need more or less, 00:20:15.440 --> 00:20:17.259 you're probably going to spend less, but you 00:20:17.259 --> 00:20:20.660 would just reload. You would take that other 00:20:20.660 --> 00:20:23.039 half of money and spend it down. You have to 00:20:23.039 --> 00:20:26.619 keep it really simple. If you overwhelm and confuse 00:20:26.619 --> 00:20:30.779 people, they're always going to second doubt 00:20:30.779 --> 00:20:33.019 what you're doing and not take any action and 00:20:33.019 --> 00:20:35.460 be freaked out, like the Charles Schwab study 00:20:35.460 --> 00:20:37.779 indicated. I mean, I could have told him that, 00:20:37.819 --> 00:20:43.160 but. Yeah, I love what you're covering here. 00:20:43.319 --> 00:20:47.299 I do think a lot of people, they kind of pick 00:20:47.299 --> 00:20:50.880 their poison a little bit, though. To be honest, 00:20:51.099 --> 00:20:53.160 I noticed like there are people that are like, 00:20:53.220 --> 00:20:55.680 OK, I'm going to just do it with dividends. And 00:20:55.680 --> 00:20:57.900 then they just go all in on dividends until they 00:20:57.900 --> 00:21:01.519 get it. Yeah, I mean, but you have every strategy 00:21:01.519 --> 00:21:05.480 has pros and cons and risks. Retirement isn't 00:21:05.480 --> 00:21:08.930 cookie cutter. in that if I don't have an appetite 00:21:08.930 --> 00:21:11.549 for risk or volatility, I'm not going to want 00:21:11.549 --> 00:21:14.549 to have the majority of my assets in equity assets 00:21:14.549 --> 00:21:17.369 in the market risk. Maybe I take a portion of 00:21:17.369 --> 00:21:20.009 that and put it into an annuity, a bad word, 00:21:20.230 --> 00:21:23.990 to guarantee income, to supplement my retirement, 00:21:24.130 --> 00:21:26.910 my Social Security income. I know, come hell 00:21:26.910 --> 00:21:29.750 or high water, this money is guaranteed. Every 00:21:29.750 --> 00:21:31.849 third Thursday of the month, I have this amount 00:21:31.849 --> 00:21:35.200 at least. Okay, great. Where are you going to 00:21:35.200 --> 00:21:37.119 make up the other piece? Maybe in the go -go 00:21:37.119 --> 00:21:40.299 years you work part -time. Maybe, I don't know, 00:21:40.339 --> 00:21:44.579 but you definitely need to save and also give 00:21:44.579 --> 00:21:46.880 yourself permission to spend down the money. 00:21:47.160 --> 00:21:49.579 If you don't, it's going to be very, very, very, 00:21:49.779 --> 00:21:53.019 very, very difficult. That part's huge. I think 00:21:53.019 --> 00:21:56.200 a lot of people, like I was, people in the fire 00:21:56.200 --> 00:21:58.279 community, this comes up a lot. They calculate 00:21:58.279 --> 00:22:02.740 this magic 4 % 25 times or something. magic cost 00:22:02.740 --> 00:22:04.259 of living that they think will stay the same. 00:22:04.359 --> 00:22:07.579 And, and hopefully inflation is what it is. And 00:22:07.579 --> 00:22:08.859 then you get to a point where it's like, well, 00:22:08.920 --> 00:22:12.339 I just saved for the past 20 years, but now I 00:22:12.339 --> 00:22:15.619 don't know how to spend, help me. And it's like 00:22:15.619 --> 00:22:18.660 the sacrifice life gets stuck in your mind. And 00:22:18.660 --> 00:22:21.539 there's a shift that has to happen. You know, 00:22:21.539 --> 00:22:24.119 with that, is it as simple as just giving yourself 00:22:24.119 --> 00:22:27.539 permission or is there? No, it's not. So I actually 00:22:27.539 --> 00:22:29.480 had a client that just recently retired and I 00:22:29.480 --> 00:22:32.619 was like, you need to take like a week. and get 00:22:32.619 --> 00:22:35.220 a dream book out and think about what are you 00:22:35.220 --> 00:22:37.900 going to do to stay socially active? What are 00:22:37.900 --> 00:22:39.880 you going to do to stay healthy? What are you 00:22:39.880 --> 00:22:42.259 going to do? What are the things you wish you 00:22:42.259 --> 00:22:44.579 could have done while you were working or you're 00:22:44.579 --> 00:22:47.599 staring out the window? You have the opportunity 00:22:47.599 --> 00:22:51.940 to do these things. It was almost, you came back 00:22:51.940 --> 00:22:55.799 with over 50 ideas. I was like, great. I was 00:22:55.799 --> 00:22:58.380 like, now let's just pick two and do some research. 00:22:58.890 --> 00:23:00.690 Of how much would it be? When do you want to 00:23:00.690 --> 00:23:02.269 do it? Is there anybody you want to take with 00:23:02.269 --> 00:23:05.190 you? Where if I told them they wouldn't believe 00:23:05.190 --> 00:23:06.990 it, if they say they believe it and they take 00:23:06.990 --> 00:23:10.349 action, right? Because it's within themselves. 00:23:10.589

--> 00:23:12.269 They want to do it. They've been thinking about 00:23:12.269 --> 00:23:13.890 doing it. And it's like, if you have the resources 00:23:13.890 --> 00:23:15.930 to do it, you only go around the block once. 00:23:16.609 --> 00:23:20.029 And yeah, I wouldn't deny myself that which I've 00:23:20.029 --> 00:23:23.009 been working for 40 years to do. Yeah, for sure. 00:23:23.910 --> 00:23:26.799 It's more psychological. It is. It's not the 00:23:26.799 --> 00:23:28.759 numbers things you and I can figure out. It's 00:23:28.759 --> 00:23:32.140 more of the psychological, right? Dealing with 00:23:32.140 --> 00:23:35.779 the, what do I do to stay busy? Fear. What ifs? 00:23:35.779 --> 00:23:38.039 The what ifs in life, right? The whole industry 00:23:38.039 --> 00:23:40.640 built on that. And as you live in a place of 00:23:40.640 --> 00:23:43.039 fear, yeah, you're not going to be very happy 00:23:43.039 --> 00:23:44.259 and sure of what you're doing and why you're 00:23:44.259 --> 00:23:48.059 doing it. Because there's always a what if. I'd 00:23:48.059 --> 00:23:51.539 love you to talk a little bit about the phases 00:23:51.539 --> 00:23:54.640 a little here because, you know, early retirement. 00:23:55.210 --> 00:23:58.970 I think people understand that you can't rely 00:23:58.970 --> 00:24:00.990 on your retirement accounts. You have to do, 00:24:00.990 --> 00:24:04.490 you know, asset location matters. You know, the 00:24:04.490 --> 00:24:07.769 money needs to be in the right place. And when 00:24:07.769 --> 00:24:10.450 I help some people, you know, they're kind of 00:24:10.450 --> 00:24:13.609 wake up to the fact that they over put money 00:24:13.609 --> 00:24:17.509 in a 401k. Yeah. And way, way, way, way too much 00:24:17.509 --> 00:24:19.690 pre -tax money in one place. And that really 00:24:19.690 --> 00:24:22.359 limits their ability to create. some of the cash 00:24:22.359 --> 00:24:24.619 flow that we're talking about here. And then 00:24:24.619 --> 00:24:26.579 they're dealing with a bit of a tax problem about 00:24:26.579 --> 00:24:28.480 conversions and a bunch of stuff gets in there. 00:24:28.539 --> 00:24:31.079 But, you know, I think people would be interested 00:24:31.079 --> 00:24:33.200 to know, well, how do I think about putting this 00:24:33.200 --> 00:24:35.339 stuff in the right place to make this easy on 00:24:35.339 --> 00:24:37.920 myself later? How would you help them? Yeah. 00:24:38.019 --> 00:24:40.299 So you want to think about buckets of liquidity. 00:24:41.049 --> 00:24:43.069 So if you're going to retire prior to 59 and 00:24:43.069 --> 00:24:45.630 a half, you don't want to deal with the rules 00:24:45.630 --> 00:24:48.109 of 59 and a half, which is most employer risk 00:24:48.109 --> 00:24:52.289 plans out there, 401k, 403b, IRA, so on and so 00:24:52.289 --> 00:24:54.910 forth. There's penalties. The key word is tax 00:24:54.910 --> 00:24:58.509 deferred, deferred till when you take it out, 00:24:58.569 --> 00:25:01.750 then you're taxed. Can you predict the tax rate 00:25:01.750 --> 00:25:04.910 at that time? No. Do I think it's going up? Yeah, 00:25:04.950 --> 00:25:07.450 probably. Yeah, most likely, because the government's 00:25:07.450 --> 00:25:08.990 spending money like a drunken sailor, and they're 00:25:08.990 --> 00:25:11.529 not going to stop anytime soon. So what could 00:25:11.529 --> 00:25:15.970 I do to have some tax strategies or lessen the 00:25:15.970 --> 00:25:18.730 burden of that? So you have taxable, which is 00:25:18.730 --> 00:25:21.730 tax now, at long -term capital rates. You have 00:25:21.730 --> 00:25:26.089 Roth IRA, Roth, tax -free. I like that. Tell 00:25:26.089 --> 00:25:27.630 me some more about that. And then you have tax 00:25:27.630 --> 00:25:30.589 -deferred. Those are the three buckets of money. 00:25:31.180 --> 00:25:34.519 And you can have supplemental rental properties 00:25:34.519 --> 00:25:36.480 and so on and so forth, but that's income. That's 00:25:36.480 --> 00:25:38.980 reportable income. So if you're going to retire 00:25:38.980 --> 00:25:43.220 prior to 59 and a half, you need liquidity and 00:25:43.220 --> 00:25:46.619 reduce the tax burden as much as possible. Then 00:25:46.619 --> 00:25:48.880 you have Social Security doesn't start until 00:25:48.880 --> 00:25:52.160 you're 62, right? Okay, 62. And then Medicare 00:25:52.160 --> 00:25:55.400 only kicks in at 65. I got to bridge the gap 00:25:55.400 --> 00:25:58.539 from 62 to 65. What do I do with that? Where 00:25:58.539 --> 00:26:02.369 do I get those assets? You have to gap it out 00:26:02.369 --> 00:26:07.269 to when you want to retire. The other thing that's 00:26:07.269 --> 00:26:10.289 funny about the FIRE community is it's financially 00:26:10.289 --> 00:26:13.950 independent, retire early. Retire early. It's 00:26:13.950 --> 00:26:16.210 in the name. What are you going to do to fill 00:26:16.210 --> 00:26:18.829 your time? Hopefully, do some fun stuff that's 00:26:18.829 --> 00:26:21.210 going to cost money. The other thing too is if 00:26:21.210 --> 00:26:23.470 you pay taxes, it means you made money in the 00:26:23.470 --> 00:26:27.550 United States. It's not such a bad thing. So 00:26:27.550 --> 00:26:30.210 let's just reduce the amount of taxes you have 00:26:30.210 --> 00:26:33.089 to pay while you're using the money. You can 00:26:33.089 --> 00:26:35.150 put most of it, like you said, Roth conversions 00:26:35.150 --> 00:26:36.650 and so on and so forth. But sooner or later, 00:26:36.730 --> 00:26:38.910 you're paying the tax, especially if you're doing 00:26:38.910 --> 00:26:41.670 a conversion. It's tax -deferred. You're converting 00:26:41.670 --> 00:26:43.890 it tax -free. They tax that amount that you converted. 00:26:43.970 --> 00:26:47.069 That's the gamble you take. Yeah, the IRS is 00:26:47.069 --> 00:26:49.049 going to get their cut no matter what. No matter 00:26:49.049 --> 00:26:50.369 what. And if they

don't, they get it when you 00:26:50.369 --> 00:26:54.130 die, right? Yeah, I'd love to ask you this question 00:26:54.130 --> 00:26:57.559 around... the kinds of behavioral habits people 00:26:57.559 --> 00:27:01.140 should be, you know, looking for here, right? 00:27:01.200 --> 00:27:03.279 Some of this is a bit of self -awareness. We 00:27:03.279 --> 00:27:04.819 can kind of hold each other accountable and help 00:27:04.819 --> 00:27:06.819 each other as well. But what are the behavioral 00:27:06.819 --> 00:27:09.319 habits that predict both success and failure 00:27:09.319 --> 00:27:12.519 when it comes to building up enough and then 00:27:12.519 --> 00:27:14.480 knowing that you're able, that you're making 00:27:14.480 --> 00:27:17.099 it last, you're doing the right things? Yeah, 00:27:17.140 --> 00:27:20.579 you want to be proactive. Is it behavior intentional? 00:27:21.640 --> 00:27:25.950 You want to have clarity. or awareness. That's 00:27:25.950 --> 00:27:28.349 done through, I hate the B word, budgeting or 00:27:28.349 --> 00:27:30.549 money planning. You have to plan out your money. 00:27:30.730 --> 00:27:32.329 You either tell your money where to go, or it's 00:27:32.329 --> 00:27:34.170 going to tell you where it went. Simple as that. 00:27:34.329 --> 00:27:37.549 It's a horrible, horrible master, great servant. 00:27:38.190 --> 00:27:43.150 If you want to do these things, you need, it's 00:27:43.150 --> 00:27:45.650 just like more, I've heard this one, more people 00:27:45.650 --> 00:27:48.369 put more time in planning family vacations than 00:27:48.369 --> 00:27:52.650 they do their retirement. That's been my experience. 00:27:52.990 --> 00:27:56.269 It's scary. where all of a sudden one day you 00:27:56.269 --> 00:27:58.170 wake up, you're 65, okay, I'm just going to retire. 00:27:58.450 --> 00:28:02.569 It doesn't work like that. You need to have an 00:28:02.569 --> 00:28:06.029 idea approaching that descent or that launch 00:28:06.029 --> 00:28:10.670 point of I have enough resources in my lifeboat 00:28:10.670 --> 00:28:13.690 to leave the cruise ship, regardless of what 00:28:13.690 --> 00:28:16.750 size waves hit me. I have enough supplies where 00:28:16.750 --> 00:28:18.990 I can actually leave the cruise ship and go on 00:28:18.990 --> 00:28:20.869 my own lifeboat because you don't know what the 00:28:20.869 --> 00:28:22.940 seas have ahead of you. But if you don't have 00:28:22.940 --> 00:28:24.539 anything, you've just been willy -nilly just 00:28:24.539 --> 00:28:27.880 throwing things in, hopefully it sticks. You're 00:28:27.880 --> 00:28:31.319 going to find out, yeah, I need to go back to 00:28:31.319 --> 00:28:33.660 work, or this is not what I thought it was going 00:28:33.660 --> 00:28:37.240 to be. So proactive, intentional. And if you 00:28:37.240 --> 00:28:39.779 have a good pulse on where your money is going 00:28:39.779 --> 00:28:42.660 and the growth rates and taxes and stuff like 00:28:42.660 --> 00:28:45.079 that, you'll be in a much, much, much better 00:28:45.079 --> 00:28:49.079 position than those who do not. So is it the 00:28:49.079 --> 00:28:52.619 autopilot kind of blinders on that you see, which 00:28:52.619 --> 00:28:54.940 is the people who are getting themselves in trouble 00:28:54.940 --> 00:28:57.240 here? Are they just like the lack of plan? It's 00:28:57.240 --> 00:29:00.680 both. So the reason why they do the automation 00:29:00.680 --> 00:29:04.279 at all, like the apps and the bed, right, is 00:29:04.279 --> 00:29:07.359 to make life easy, right? Like, oh, let me just 00:29:07.359 --> 00:29:09.059 automate. They don't check it. It's automated 00:29:09.059 --> 00:29:12.400 where life changes behind the scenes. And I couldn't 00:29:12.400 --> 00:29:13.759 tell you how many times I've sat down and they're 00:29:13.759 --> 00:29:16.980 like, oh, I didn't know I was spending. three 00:29:16.980 --> 00:29:18.920 hundred dollars on subscriptions a month because 00:29:18.920 --> 00:29:20.519 i haven't checked in eight years it's been on 00:29:20.519 --> 00:29:23.640 auto like yeah it's by design they want you to 00:29:23.640 --> 00:29:26.519 stay asleep at the wheel and not checking it 00:29:26.519 --> 00:29:28.039 right and it's like what's the last time you 00:29:28.039 --> 00:29:30.299 looked at your home and auto insurance i don't 00:29:30.299 --> 00:29:32.980 know since i bought my house like okay so you 00:29:32.980 --> 00:29:36.160 want to do a little bit of an audit at least 00:29:36.160 --> 00:29:39.400 once or twice a year i would think twice yeah 00:29:39.400 --> 00:29:42.099 where you're having a pulse of Is your money 00:29:42.099 --> 00:29:43.839 doing what you want it to do? And is it aligned 00:29:43.839 --> 00:29:45.700 with your principles and values? And you have 00:29:45.700 --> 00:29:47.440 to take some time and think about that stuff. 00:29:47.700 --> 00:29:49.839 Like to me, my family is very, very important 00:29:49.839 --> 00:29:52.460 to me. So I put that as the top priority, right? 00:29:52.559 --> 00:29:54.920 So it's summer camp for the kids. It's gymnastics. 00:29:55.140 --> 00:29:59.039 I put those things ahead of fixing up the porch. 00:29:59.279 --> 00:30:01.240 I'm okay with it. And my wife's on board with 00:30:01.240 --> 00:30:02.980 it because we've already discussed this. And 00:30:02.980 --> 00:30:05.259 it's not playing whack -a -mole with our bills 00:30:05.259 --> 00:30:07.819 and playing catch -up. It's intentional. We're 00:30:07.819 --> 00:30:09.819 driving the car, not just a passenger in it. 00:30:09.960 --> 00:30:12.940 And I try to make it as simple as possible. Like, 00:30:12.960 --> 00:30:16.259 you can complicate a lot of things in life. This 00:30:16.259 --> 00:30:18.779 is not that complicated. They try to make it 00:30:18.779 --> 00:30:22.119 complicated to sell you stuff. It's true. They 00:30:22.119 --> 00:30:24.099 want you to be dependent upon them for the answers

00:30:24.099 --> 00:30:26.039 to sell you stuff as solutions. And when they 00:30:26.039 --> 00:30:28.599 hear things that you really, really crave, like, 00:30:28.619 --> 00:30:31.440 I want security. Oh, I got that. This is guaranteed 00:30:31.440 --> 00:30:34.099 income for blah, blah, blah. They know this. 00:30:34.539 --> 00:30:38.500 But it's like, let's actually put some ideas 00:30:38.500 --> 00:30:42.299 to paper and figure out the pieces. And then 00:30:42.299 --> 00:30:46.440 the unknown is not that big of the piece. It's 00:30:46.440 --> 00:30:48.220 not that big of the puzzle. If you have Social 00:30:48.220 --> 00:30:50.400 Security, you can have some fixed income through 00:30:50.400 --> 00:30:52.960 pension or convert some of your equity assets. 00:30:53.220 --> 00:30:55.400 How much is the paycheck? What are we trying 00:30:55.400 --> 00:30:57.619 to solve for here? How long does it have to last? 00:30:58.440 --> 00:31:00.779 Okay. What happens if? What happens if? What 00:31:00.779 --> 00:31:03.440 happens if? I don't know. But there's a product 00:31:03.440 --> 00:31:05.660 out there that can definitely put your mind to 00:31:05.660 --> 00:31:08.220 ease on that one particular risk. But you have 00:31:08.220 --> 00:31:10.779 to have a general idea of where things are going 00:31:10.779 --> 00:31:12.359 and where you stand in relationship to that. 00:31:13.000 --> 00:31:15.680 thing i love about doing that is it not only 00:31:15.680 --> 00:31:18.640 do you end up naturally optimizing when you look 00:31:18.640 --> 00:31:21.180 at where your cash is going but you start to 00:31:21.180 --> 00:31:24.259 get a gut about where what is your high utility 00:31:24.259 --> 00:31:27.420 spending like what is worth spending your money 00:31:27.420 --> 00:31:29.119 on right you have a finite amount of money you're 00:31:29.119 --> 00:31:31.539 going to have in your life and know that you 00:31:31.539 --> 00:31:33.220 put that in a place that brought actual happiness 00:31:33.220 --> 00:31:36.119 to you or your family or whatever it was and 00:31:36.119 --> 00:31:39.559 yeah and that helps you kind of calibrate your 00:31:39.559 --> 00:31:41.900 savings and how to spend later in life because 00:31:41.900 --> 00:31:43.920 you're like, well, I know I want to spend this 00:31:43.920 --> 00:31:46.140 much on experiences because I always got more 00:31:46.140 --> 00:31:48.579 out of that. I kind of feel like that exercise 00:31:48.579 --> 00:31:51.380 is the hygiene that sets you up for success here 00:31:51.380 --> 00:31:53.779 a bit, both on calculating your numbers and, 00:31:53.799 --> 00:31:56.000 you know, ensuring you're okay. And, you know, 00:31:56.019 --> 00:31:59.160 kind of calibrating, like I said, so how, for 00:31:59.160 --> 00:32:03.160 you personally, do you, do you budget twice a 00:32:03.160 --> 00:32:05.299 year? Like, how are you doing this? Yeah. So 00:32:05.299 --> 00:32:08.079 I do a monthly family budget. So we sit down,

00:32:08.119 --> 00:32:09.859 we have a Tyson Incorporated business meeting. 00:32:10.019 --> 00:32:12.079 We don't keep it because it's not my money, your 00:32:12.079 --> 00:32:15.680 money. It's our money. And we take care of the 00:32:15.680 --> 00:32:19.740 needs, right? Food, shelter, utilities, medicine. 00:32:20.579 --> 00:32:23.480 Okay, those are all covered. Insurance, got it. 00:32:23.799 --> 00:32:27.000 Then it's wants. What are our wants? So it's 00:32:27.000 --> 00:32:29.680 family first, family vacation. We pay ourselves 00:32:29.680 --> 00:32:32.740 first for that. Sports, all those different things 00:32:32.740 --> 00:32:35.140 for the kids. We start saving for camp, Christmas. 00:32:35.960 --> 00:32:38.759 Make sure that we're not stressed out. And then 00:32:38.759 --> 00:32:42.299 we have a priority list. It's like a dream list 00:32:42.299 --> 00:32:44.680 of things that you'd want. She has five. I have 00:32:44.680 --> 00:32:46.500 five. We put them together. Hopefully they match. 00:32:46.660 --> 00:32:48.460 Sometimes they do. Sometimes they don't. And 00:32:48.460 --> 00:32:51.099 then we attack one together as a team. And once 00:32:51.099 --> 00:32:53.920 that's done, we cross it off. How is our emergency 00:32:53.920 --> 00:32:57.279 fund? Oh, we had to go fix the boiler and the 00:32:57.279 --> 00:32:59.579 dishwasher. OK, great. Let's replenish that. 00:32:59.640 --> 00:33:02.559 That's our goal. Right. And we start accomplishing 00:33:02.559 --> 00:33:05.319 things together as a team. High five. Great. 00:33:05.420 --> 00:33:07.819 Hugs and kisses. Let's go on to the next thing. 00:33:08.500 --> 00:33:10.940 And yeah, there's curveballs. I'm not perfect. 00:33:11.460 --> 00:33:14.500 But they become inconveniences, not crises. It's 00:33:14.500 --> 00:33:18.000 a good place to be where I'm teaching my kids 00:33:18.000 --> 00:33:20.440 about this stuff. It's A -OK. You have to have 00:33:20.440 --> 00:33:22.339 some principles or operating systems on how. 00:33:22.420 --> 00:33:24.819 Do you lend money to relatives? I don't know. 00:33:24.940 --> 00:33:27.240 Let's think about this before this happens. Do 00:33:27.240 --> 00:33:31.460 we use credit cards? Yes. OK, great. We do. What's 00:33:31.460 --> 00:33:33.490 the rule around that? We're going to pay it off 00:33:33.490 --> 00:33:36.450 within 26 days. Okay. Right. We use it as a leverage 00:33:36.450 --> 00:33:39.390 tool, not a necessity. So to answer your question, 00:33:39.490 --> 00:33:44.029 yes, we budget once a month before the month 00:33:44.029 --> 00:33:48.470 starts. Proactive. We communicate regularly on 00:33:48.470 --> 00:33:50.690 a weekly basis. We have a 15 -minute stand -up 00:33:50.690 --> 00:33:52.750 meeting. You need anything taken off your plate? 00:33:52.910 --> 00:33:54.329 How are we doing with this? Did you call the 00:33:54.329 --> 00:33:57.569 cell phone company to reduce? Yes, I did. What 00:33:57.569 --> 00:34:00.759 did they say? Great. Keep it moving. Now, is 00:34:00.759 --> 00:34:02.519 that money saved? No. Why? Because we haven't 00:34:02.519 --> 00:34:04.480 told it what to do. It's going to sit around 00:34:04.480 --> 00:34:06.099 waiting for instructions or just find a place 00:34:06.099 --> 00:34:08.980 to go in our life. So, great, we saved $68 on 00:34:08.980 --> 00:34:10.559 our cell phone. What do you want to do with that 00:34:10.559 --> 00:34:11.940 money? Let's put it towards the college education. 00:34:12.780 --> 00:34:16.360 Okay, done. Next week, I will automate $68 increase 00:34:16.360 --> 00:34:19.780 into the 529 plan. Amazing. Wow, you've really 00:34:19.780 --> 00:34:22.500 optimized your cash flow. Yeah, you got to optimize 00:34:22.500 --> 00:34:27.260 it. And then it's, yeah, most people are, unfortunately, 00:34:27.699 --> 00:34:31.980 are reactive. Right. And they feel a victim to 00:34:31.980 --> 00:34:35.480 those things outside of their control. I'd say 00:34:35.480 --> 00:34:37.719 less than half of it's really out of their control. 00:34:37.920 --> 00:34:40.320 Well, listeners who might be interested in learning 00:34:40.320 --> 00:34:42.780 more about this or getting help from you on it, 00:34:42.800 --> 00:34:46.179 how can they connect with you? Yeah. So the best 00:34:46.179 --> 00:34:49.400 place to meet up with me would be on my website. 00:34:49.900 --> 00:34:52.820 It's www .progress, if you want to make some 00:34:52.820 --> 00:34:55.980 progress. FC, which stands for financialcoaching 00:34:55.980 --> 00:34:59.539 .com. So progressfc .com. Everybody gets a free 00:34:59.539 --> 00:35:01.719 consultation. It's just a conversation about 00:35:01.719 --> 00:35:03.019 where you're at, what you're struggling with, 00:35:03.179 --> 00:35:05.980 what you need. And there's a lot of tools and 00:35:05.980 --> 00:35:08.380 resources on there. Catch me on social media. 00:35:08.440 --> 00:35:10.820 It's Connor, the financial coach. Amazing. Well, 00:35:10.840 --> 00:35:13.400 thank you so much for sharing your decades of 00:35:13.400 --> 00:35:16.500 wisdom and experience with us on this topic. 00:35:16.579 --> 00:35:19.699 I think hopefully folks will feel better about 00:35:19.699 --> 00:35:22.219 getting to the summit there and knowing that 00:35:22.219 --> 00:35:47.329 it's a great journey. Believe that. In my conversation 00:35:47.329 --> 00:35:49.849 with Connor Tyson, what struck me was just how 00:35:49.849 --> 00:35:52.789 badly we are all trained for half of the financial 00:35:52.789 --> 00:35:56.309 independence journey. We spend 40 years learning 00:35:56.309 --> 00:35:59.949 to climb by saving more, investing and pushing 00:35:59.949 --> 00:36:02.610 towards that summit. And then at the moment that 00:36:02.610 --> 00:36:04.349 we're supposed to start enjoying everything that 00:36:04.349 --> 00:36:06.610 we work so hard to build, the entire game itself 00:36:06.610 --> 00:36:09.309 just changes. And almost nobody's

practiced for 00:36:09.309 --> 00:36:12.110 that. And it's not a small problem. According 00:36:12.110 --> 00:36:14.510 to recent research published by Kipling Learner 00:36:14.510 --> 00:36:17.710 this year, The average 65 year old couple with 00:36:17.710 --> 00:36:21.010 at least $100 ,000 in investable assets withdraws 00:36:21.010 --> 00:36:24.670 only 2 .1 % of their savings annually. Single 00:36:24.670 --> 00:36:28.389 retirees are even more conservative at 1 .9%. 00:36:28.389 --> 00:36:31.590 That is roughly half of what financial models 00:36:31.590 --> 00:36:35.309 consider safe. After decades of saving, working 00:36:35.309 --> 00:36:38.610 and sacrificing, most retirees with means get 00:36:38.610 --> 00:36:41.949 to the summit and completely freeze. They're 00:36:41.949 --> 00:36:43.750 not running out of money. they're running out 00:36:43.750 --> 00:36:45.829 of permission to allow themselves to spend it. 00:36:46.309 --> 00:36:48.610 And I think that Connor put it pretty plainly. 00:36:48.769 --> 00:36:51.230 This isn't a math problem. It's a psychology 00:36:51.230 --> 00:36:54.070 problem. And the only way to solve a psychology 00:36:54.070 --> 00:36:56.510 problem is with a system clean enough that you 00:36:56.510 --> 00:36:59.309 actually trust it. Like I put together in Escape 00:36:59.309 --> 00:37:02.190 the Clock, he aimed to simplify this to help 00:37:02.190 --> 00:37:04.309 boost the confidence that people need to take 00:37:04.309 --> 00:37:07.369 the leap. His framework starts with four buckets, 00:37:07.590 --> 00:37:09.789 the ones that most of us already have access 00:37:09.789 --> 00:37:13.630 to. Social security, pension, if you're one of 00:37:13.630 --> 00:37:15.489 the few people who still have access to that. 00:37:16.369 --> 00:37:19.849 Fixed assets like CDs and bonds and the interest 00:37:19.849 --> 00:37:22.429 that those are giving. And then equity assets. 00:37:22.750 --> 00:37:26.590 These are things like your 401ks, your IRA, taxable 00:37:26.590 --> 00:37:29.110 brokerage, and even the equity in your house. 00:37:30.070 --> 00:37:32.389 In the middle of these four buckets sits the 00:37:32.389 --> 00:37:34.969 only number that actually matters though. And 00:37:34.969 --> 00:37:37.150 that's that monthly paycheck that you need to 00:37:37.150 --> 00:37:40.030 live the life that you actually want. That single 00:37:40.030 --> 00:37:43.349 shift from net worth to monthly paycheck, that's 00:37:43.349 --> 00:37:45.690 the shift that changes everything. A million 00:37:45.690 --> 00:37:49.389 dollars can feel very fragile. $6 ,000 a month 00:37:49.389 --> 00:37:51.670 coming in? That, on the other hand, can feel 00:37:51.670 --> 00:37:54.070 like a job that doesn't require you to ever show 00:37:54.070 --> 00:37:57.610 up to work. That can be quite liberating. And 00:37:57.610 --> 00:38:00.030 on top of that, Connor layers the three phases. 00:38:00.570 --> 00:38:04.170 He mentioned the go -go years.

This is when you're 00:38:04.170 --> 00:38:06.489 traveling and exploring and doing the things. 00:38:07.150 --> 00:38:10.590 that you deferred for 40 years. Then there's 00:38:10.590 --> 00:38:13.110 the slow -go years. This is when the grandkids 00:38:13.110 --> 00:38:15.110 start coming to you instead of the other way 00:38:15.110 --> 00:38:17.710 around. And then finally, there's the no -go 00:38:17.710 --> 00:38:21.250 years, when home becomes the destination and 00:38:21.250 --> 00:38:24.030 your spending naturally just drops. In each of 00:38:24.030 --> 00:38:26.130 these phases, these have different cost profiles, 00:38:26.429 --> 00:38:28.789 which means a flat withdrawal rate is almost 00:38:28.789 --> 00:38:31.869 guaranteed to be wrong for your actual life. 00:38:32.130 --> 00:38:34.389 There's no way costs will be exactly the same 00:38:34.389 --> 00:38:36.630 constant number. And all these different years 00:38:36.630 --> 00:38:39.329 when your life just acts so differently. And 00:38:39.329 --> 00:38:41.489 so the piece I keep coming back to is what Connor 00:38:41.489 --> 00:38:44.409 called the reload. If you have a million dollars 00:38:44.409 --> 00:38:46.550 and you give yourself permission to spend half 00:38:46.550 --> 00:38:49.590 of it in your go -go years, and then the other 00:38:49.590 --> 00:38:53.150 half invested at a long -term equity growth rate, 00:38:53.250 --> 00:38:56.510 which is doubling roughly every nine years, now 00:38:56.510 --> 00:38:59.570 you might feel better about spending it down 00:38:59.570 --> 00:39:01.610 because you know the other half is doing the 00:39:01.610 --> 00:39:04.550 work. Then you reload when the timer goes off. 00:39:05.309 --> 00:39:07.710 And that is not magic at all. This is actually 00:39:07.710 --> 00:39:11.030 very comfortable, proven stuff that many of us 00:39:11.030 --> 00:39:13.170 financial advisors talk about all the time. It's 00:39:13.170 --> 00:39:16.469 called the rule of 72. And in his case, his framework 00:39:16.469 --> 00:39:19.449 is helping you apply it with intention. But none 00:39:19.449 --> 00:39:22.190 of that works without the part that Connor pounded 00:39:22.190 --> 00:39:25.769 on the hardest, which is behavior. I talk about 00:39:25.769 --> 00:39:28.309 this a lot as well. If you're not intentionally 00:39:28.309 --> 00:39:30.289 planning and telling your money where to go, 00:39:30.429 --> 00:39:34.039 then it will just go places on its own. And you'll 00:39:34.039 --> 00:39:36.559 sometimes scratch your head at trying to figure 00:39:36.559 --> 00:39:39.019 out where it went. For instance, think about 00:39:39.019 --> 00:39:42.139 running a budget, like a business meeting. He 00:39:42.139 --> 00:39:44.420 was talking about even having 15 minute weekly 00:39:44.420 --> 00:39:47.800 standups with his family. And I know not everyone's 00:39:47.800 --> 00:39:51.039 going to go to that degree, but honestly, businesses 00:39:51.039 --> 00:39:55.179 try

to treat finances as a budget. They treat 00:39:55.179 --> 00:39:58.719 spending as an expense to be managed. Why do 00:39:58.719 --> 00:40:01.860 we want to take? And put the risk in when so 00:40:01.860 --> 00:40:04.079 many others have proven there's these mechanisms 00:40:04.079 --> 00:40:07.400 to remove it. So audit your insurance and your 00:40:07.400 --> 00:40:10.059 subscriptions twice a year at least. Keep enough 00:40:10.059 --> 00:40:12.900 cash on hand to weather an average bear market 00:40:12.900 --> 00:40:16.860 or maybe layoffs. Historically, around 9 to 14 00:40:16.860 --> 00:40:20.260 months of liquidity can make all the difference 00:40:20.260 --> 00:40:22.960 in psychological safety. Because when that market 00:40:22.960 --> 00:40:25.500 turns, you don't feel forced to sell at the bottom. 00:40:25.980 --> 00:40:28.500 But if you do... you're still generating more 00:40:28.500 --> 00:40:31.300 liquidity and cash to make some moves. Those 00:40:31.300 --> 00:40:33.000 three habits, the proactive, the intentional, 00:40:33.099 --> 00:40:35.340 and the aware, are what separate retirees who 00:40:35.340 --> 00:40:36.900 burn through their savings from the ones who 00:40:36.900 --> 00:40:40.079 underspend out of fear. Both groups are missing 00:40:40.079 --> 00:40:42.760 the point. The point of all of this work is not 00:40:42.760 --> 00:40:44.960 to die with the largest pile. It is to live the 00:40:44.960 --> 00:40:48.119 life that you spent 40 years funding. That is 00:40:48.119 --> 00:40:51.159 the financial freedom part. That requires a system. 00:40:51.519 --> 00:40:54.059 The four buckets, the free phases, the reload, 00:40:54.320 --> 00:40:56.619 the cash buffer, the family business meeting. 00:40:57.130 --> 00:40:59.550 These are not just Connor's tools. They can become 00:40:59.550 --> 00:41:02.269 anyone's tools. The moment you decide the descent 00:41:02.269 --> 00:41:04.670 deserves the same engineering that you gave to 00:41:04.670 --> 00:41:07.090 the climb to get there. I'd love to hear from 00:41:07.090 --> 00:41:09.170 you. Which part of the descent worries you the 00:41:09.170 --> 00:41:11.670 most? Is it the math? Is it the timing? Or is 00:41:11.670 --> 00:41:13.590 it the permission to actually spend the money? 00:41:14.090 --> 00:41:16.230 Email me at contact at escape the clock .com 00:41:16.230 --> 00:41:19.469 or leave a comment wherever you listen. I'm Daniel 00:41:19.469 --> 00:41:22.130 C. Rogers. Thank you so much for listening and 00:41:22.130 --> 00:41:24.809 best of luck engineering your paycheck, escaping 00:41:24.809 --> 00:41:29.480 the clock. I'll see you next week. That's a wrap 00:41:29.480 --> 00:41:31.510 on this episode of Escape the Clock. Everything 00:41:31.510 --> 00:41:33.309 you've heard today is for educational purposes 00:41:33.309 --> 00:41:36.309 only. Designed to help you think, plan, and build 00:41:36.309 --> 00:41:38.530 a stronger financial program. Take what resonates, 00:41:38.789 --> 00:41:40.969 bring it into your escape the clock plan, and 00:41:40.969 --> 00:41:42.929 review it with a qualified professional before 00:41:42.929 --> 00:41:45.670 making any major moves. The book, the free planner, 00:41:45.829 --> 00:41:47.730 and the one -on -one time with me are all waiting 00:41:47.730 --> 00:41:50.309 for you at escape the clock .com. If this episode 00:41:50.309 --> 00:41:52.409 was valuable, please leave a rating, share it 00:41:52.409 --> 00:41:54.130 with someone who needs to hear it. I'll catch 00:41:54.130 --> 00:41:54.630 you next week.