บทถอดความฉบับเต็มของ 45 Forward #116 - Commonsense Strategies to Reboot an Uncertain Retirement

00:03:40.710 --> 00:03:44.150 I plan to manage my savings so that I can 68 00:03:44.189 --> 00:03:47.289 stretch them throughout my retirement? And I said, well, that's easy. 69 00:03:47.310 --> 00:03:49.699 You just need to supply me with one number, which 70 00:03:49.759 --> 00:03:50.659 is how long will you live? 71 00:03:50.680 --> 00:03:51.860 Right, right. 72 00:03:52.409 --> 00:03:56.909 So that illustrates the problem. And that's not the only problem. 73 00:03:56.960 --> 00:04:00.219 The other problem with the 401k system is that it 74 00:04:00.280 --> 00:04:03.759 only reaches about half of workers in the first place. 75 00:04:04.539 --> 00:04:07.879 And generally speaking, this is an experiment we've running now 76 00:04:07.960 --> 00:04:12.580 since the 1980s, this shift from defined benefit to defined contribution. 77 00:04:13.000 --> 00:04:14.560 And what we see is that all the money is 78 00:04:14.599 --> 00:04:19.329 being accumulated in sort of the top 20% of households, 79 00:04:19.610 --> 00:04:21.069 almost all of it. I mean, when you look at 80 00:04:21.110 --> 00:04:23.829 it broken up by quintiles, as soon as you get 81 00:04:23.870 --> 00:04:26.360 below those top two quintiles, what you see is that 82 00:04:27.899 --> 00:04:31.899 the amounts saved are much smaller or negligent or non-existent 83 00:04:33.139 --> 00:04:37.199 and certainly not significant enough to be a meaningful source 84 00:04:37.259 --> 00:04:41.430 of income throughout retirement. So those are the reasons why 85 00:04:41.449 --> 00:04:43.550 longevity risk is such a big deal. 86 00:04:43.970 --> 00:04:47.029 Right. Yeah, it's hard to know. I mean, I guess 87 00:04:47.069 --> 00:04:51.949 there are some longevity projection calculators that you've talked about. But, 88 00:04:52.829 --> 00:04:57.029 you know, they're not that good, questionable ones, certainly. 89 00:04:57.230 --> 00:04:59.449 I mean, a good one is, I think it's a 90 00:04:59.529 --> 00:05:02.769 good illustration to get. It just is going to help 91 00:05:02.829 --> 00:05:07.709 people be thoughtful and think through these issues. The one 92 00:05:07.730 --> 00:05:10.509 that I mentioned in the book that I particularly like 93 00:05:10.649 --> 00:05:14.620 is called the Longevity Illustrator Calculator, which is created by 94 00:05:14.639 --> 00:05:18.459 the American Academy Actuaries. It's a very simple calculator. you know, 95 00:05:18.540 --> 00:05:20.660 set of inputs, you know, your age, your gender, do 96 00:05:20.680 --> 00:05:22.879 you smoke or not your own general assessment of health. 97 00:05:23.709 --> 00:05:25.649 And it kind of spits back a kind of a 98 00:05:25.750 --> 00:05:29.089 range of possible outcomes that for some people will be 99 00:05:29.189 --> 00:05:32.629 eye openers because the people tend to underestimate their own 100 00:05:33.189 --> 00:05:36.449 possible longevity. I think people tend to fixate on what 101 00:05:36.470 --> 00:05:39.470 they read or hear are the averages. So the average 102 00:05:39.509 --> 00:05:42.170 male lives to age 80, you know, whatever it is, 83, 103 00:05:42.149 --> 00:05:46.019 I forget. Um, without stopping to think about that that's 104 00:05:46.040 --> 00:05:50.050 just the average. So many will outlive that. Women tend 105 00:05:50.060 --> 00:05:54.350 to outlive that. And for married couples, it's quite likely 106 00:05:54.389 --> 00:05:59.089 that one spouse will outlive the mortality averages. So those 107 00:05:59.129 --> 00:06:02.629 are the sorts of planning considerations that need to come 108 00:06:02.670 --> 00:06:08.110 into play. But anyway, that illustrator is at longevityillustrator.org. 109 00:06:08.410 --> 00:06:13.740 Yeah. I think you're right in terms of people can underestimate. 110 00:06:13.779 --> 00:06:19.089 I was on a webinar yesterday. It was about caregiving 111 00:06:19.370 --> 00:06:22.910 and it was a lot about long-term care and how 112 00:06:22.930 --> 00:06:27.629 do people plan for caregiving. And the call-in people, there 113 00:06:27.649 --> 00:06:30.110 were about half a dozen call-in people from around the country. 114 00:06:30.129 --> 00:06:33.360 And I think the youngest person on the call was 115 00:06:33.579 --> 00:06:37.759 in their high 80s. And there was a couple in 116 00:06:37.779 --> 00:06:42.899 their 90s. So yeah, I think that it's still it's 117 00:06:43.079 --> 00:06:47.949 a bonus, but it's a concern as well. So let's 118 00:06:47.990 --> 00:06:51.069 dive into some of the themes of your book, Retirement Reboot, 119 00:06:51.129 --> 00:06:54.649 Common Sense, Financial Strategies for Getting Back on Track. It's 120 00:06:54.689 --> 00:06:58.689 a six-part series, and I have listened to a bunch 121 00:06:58.709 --> 00:07:01.899 of them of your reboot casts on your website. We'll 122 00:07:02.100 --> 00:07:03.779 talk about that more later so people know where to 123 00:07:03.839 --> 00:07:06.579 find the outline of some of these chapters. But so first, 124 00:07:07.339 --> 00:07:10.230 just in the title, Getting Back on Track. So I 125 00:07:10.259 --> 00:07:13.550 assume then that a lot of people are on track 126 00:07:13.629 --> 00:07:16.350 for a number of reasons. And so what are some 127 00:07:16.370 --> 00:07:17.829 of those reasons? I mean, I think part of it 128 00:07:17.889 --> 00:07:21.569 is people don't plan very well. But is that your 129 00:07:21.610 --> 00:07:23.410 sense that a lot of people are not on track 130 00:07:23.430 --> 00:07:24.089 in the first place? 131 00:07:25.750 --> 00:07:27.870 Yeah. You know, going back to what I said about 132 00:07:28.009 --> 00:07:31.209 retirement savings, if you just start with a really kind 133 00:07:31.230 --> 00:07:34.889 of wide view of this, you know, most people receive 134 00:07:34.930 --> 00:07:38.540 Social Security in retirement. Social Security, on average, is going 135 00:07:38.560 --> 00:07:42.399 to replace 40% of your pre-retirement income.

It's a little 136 00:07:42.439 --> 00:07:45.839 higher for low-income households, and it's a little lower than 137 00:07:45.879 --> 00:07:51.019 that for high-income households. But that's generally the replacement figure. Now, 138 00:07:51.540 --> 00:07:54.899 from my perspective, the goal that we're trying to reach 139 00:07:55.689 --> 00:07:58.829 in terms of a retirement plan is maintaining your standard 140 00:07:58.850 --> 00:08:03.389 of living in retirement. It's really that simple. if there 141 00:08:03.420 --> 00:08:06.079 are bonuses such as the ability to spend money on 142 00:08:06.139 --> 00:08:10.540 travel or spoil your grandchildren, that's great too. And you 143 00:08:10.560 --> 00:08:13.459 can plan that into it. But the real question is, 144 00:08:13.540 --> 00:08:17.670 can you meet your basic living expenses in retirement and 145 00:08:17.689 --> 00:08:20.670 hopefully have something left over? Now, kind of the rule 146 00:08:20.709 --> 00:08:23.029 of thumb that you hear from financial planners is that 147 00:08:23.129 --> 00:08:27.800 most of us need to replace 70% of our pre-retirement income. 148 00:08:27.839 --> 00:08:30.959 Some would even say higher And that's a very, very 149 00:08:31.300 --> 00:08:34.779 crude rule of thumb. It's not really the number. But 150 00:08:34.919 --> 00:08:37.279 as a starting point, it's not a bad place to 151 00:08:37.320 --> 00:08:40.879 consider that there's this gap for many people from the 152 00:08:40.879 --> 00:08:44.000 40% that Social Security will replace. How do we close 153 00:08:44.039 --> 00:08:47.460 that gap to 70? Now, what we know is, as 154 00:08:47.519 --> 00:08:52.360 I said, is that retirement saving has worked out. The 155 00:08:52.379 --> 00:08:55.529 401k system has worked really well for affluent households and 156 00:08:55.570 --> 00:08:57.870 for people who have access to them. And it's done 157 00:08:57.879 --> 00:09:01.029 next to nothing for everybody else. So depending whose numbers 158 00:09:01.070 --> 00:09:04.269 you look at, at least half, maybe two thirds of 159 00:09:04.789 --> 00:09:08.830 near retirement households, which we define as those within 10 160 00:09:08.830 --> 00:09:12.450 years of retirement, have an issue that they need to 161 00:09:12.490 --> 00:09:15.970 sort out. And one of the things I'm at pains 162 00:09:15.990 --> 00:09:19.250 to do in the book is to say, when we 163 00:09:19.289 --> 00:09:22.029 consider why, why do we have that situation for so 164 00:09:22.049 --> 00:09:25.389 many households? I'm at pains to say, let's not blame 165 00:09:25.409 --> 00:09:29.360 the victim here. First off, only half of households have 166 00:09:29.379 --> 00:09:33.330 access to a 401k. If you're getting near retirement now, 167 00:09:33.450 --> 00:09:37.090 you have lived and worked through four major economic downturns 168 00:09:37.690 --> 00:09:42.509 during your working years, two of which were severe crisis-level events, 169 00:09:42.610

--> 00:09:46.889 the financial crisis and Great Recession that occurred in 2009, 2010, 170 00:09:46.889 --> 00:09:50.649 and really stretched out for many of us throughout the 171 00:09:50.889 --> 00:09:54.289 rest of that next decade. Was it really a signature 172 00:09:54.309 --> 00:09:59.879 kind of economic cataclysmic event for millions of people. I 173 00:09:59.909 --> 00:10:01.980 think we have short memories in this country. We tend 174 00:10:02.000 --> 00:10:03.940 to think of things like that as sort of having 175 00:10:04.000 --> 00:10:07.940 receded into the distant past, but that's not really how 176 00:10:08.000 --> 00:10:11.419 it works from an economic standpoint. If you lost your job, 177 00:10:11.700 --> 00:10:15.019 lost your home, lost your retirement savings in the Great Recession, 178 00:10:15.779 --> 00:10:18.220 you may have gotten back on track sometime over the 179 00:10:18.500 --> 00:10:22.879 following years in terms of finding a new job. But 180 00:10:23.379 --> 00:10:27.480 the losses that you incurred during that period are permanent 181 00:10:27.500 --> 00:10:29.840 in the sense that it's very difficult to make those 182 00:10:29.879 --> 00:10:32.179 things up. People that go back to work after a 183 00:10:32.220 --> 00:10:36.940 long layoff typically go back at a lower wage. The 184 00:10:37.000 --> 00:10:41.139 losses in terms of assets, it's very hard to catch 185 00:10:41.220 --> 00:10:43.639 up with that. They tend to compound out over the 186 00:10:43.940 --> 00:10:47.600 following years. So there's any number of reasons, I think, 187 00:10:47.700 --> 00:10:52.889 why We find ourselves in this situation and people face 188 00:10:52.909 --> 00:10:57.649 a lot of financial pressures, whether it's dealing with student debt, 189 00:10:57.710 --> 00:11:00.450 the cost of sending kids to college, the escalating costs 190 00:11:00.529 --> 00:11:03.009 of housing and healthcare. So when we ask the question, 191 00:11:03.049 --> 00:11:06.179 why aren't more people saving? I think the answer simply 192 00:11:06.240 --> 00:11:09.519 is that the money isn't available. Now, people who sort 193 00:11:09.539 --> 00:11:12.259 of focus on behavioral economics like to say that, oh, 194 00:11:12.340 --> 00:11:15.179 there's all these sort of psychological reasons people don't do it. 195 00:11:15.659 --> 00:11:19.820 People don't want to think about their future selves. People procrastinate. 196 00:11:20.580 --> 00:11:23.620 All that may be true to an extent, but from 197 00:11:23.639 --> 00:11:26.740 where I'm sitting, if the dollars aren't available, you can't 198 00:11:26.799 --> 00:11:29.759 save them. And not only that, there may be things 199 00:11:29.799 --> 00:11:33.179 you should be using those dollars for first before you 200 00:11:34.450 --> 00:11:36.950 sock them away in an IRA account. If you're carrying 201 00:11:37.870 --> 00:11:41.120 high interest rate credit card debt, for example, you know, 202 00:11:41.409 --> 00:11:44.460 the first available dollar ought to go to reducing that debt, 203 00:11:44.519 --> 00:11:48.259 not into a 401k again. So lots of reasons, you know, 204 00:11:48.360 --> 00:11:51.000 why I felt there was an opportunity to do a 205 00:11:51.039 --> 00:11:55.490 book for that part of the near retirement population. You know, I, 206 00:11:56.240 --> 00:11:59.179 I write about both public policy and kind of the 207 00:11:59.240 --> 00:12:02.980 personal finance side of retirement. And then the public policy side, 208 00:12:03.000 --> 00:12:06.850 there's this endless debate about, you know, the retirement crisis, 209 00:12:06.990 --> 00:12:09.789 which is broadly speaking, the topic we're talking about here. 210 00:12:09.809 --> 00:12:10.309 Right. 211 00:12:10.710 --> 00:12:12.330 And what we can do about those things on the 212 00:12:12.370 --> 00:12:14.769 public policy side. And I have thoughts about that, which 213 00:12:14.809 --> 00:12:16.490 we can get into later if you want to. And 214 00:12:16.509 --> 00:12:18.669 I deal with them in the book. But it really 215 00:12:18.720 --> 00:12:23.220 has struck me over the years that the personal finance 216 00:12:23.440 --> 00:12:30.679 journalism field has things exactly upside down. Most personal finance 217 00:12:30.720 --> 00:12:34.759 journalism is written for and targets the people who need 218 00:12:34.779 --> 00:12:38.460 the help least. The people who actually have savings and 219 00:12:38.500 --> 00:12:40.779 are trying to figure out how to you know, get 220 00:12:40.820 --> 00:12:43.779 the edge on their investment portfolio or the latest trick 221 00:12:44.179 --> 00:12:47.330 they can pull on to save on taxes or, you know, 222 00:12:48.210 --> 00:12:51.830 on and on. It's an endless menu. And we don't 223 00:12:51.889 --> 00:12:55.250 focus so much on, and a lot of those people, 224 00:12:55.309 --> 00:12:57.580 by the way, have financial planners too, who can help 225 00:12:57.620 --> 00:13:00.720 them out. So, but, so I felt like, well, and I, 226 00:13:00.759 --> 00:13:04.580 there are reasons for that, that probably listeners aren't that, 227 00:13:04.600 --> 00:13:06.700 can be that interested in the inside baseball of how, 228 00:13:07.259 --> 00:13:10.399 journalism works. But I thought there was an opportunity to 229 00:13:10.440 --> 00:13:12.659 do a book that maybe could lay out some practical 230 00:13:12.720 --> 00:13:17.450 steps for people to take who find themselves in this situation. 231 00:13:17.470 --> 00:13:19.490 And so that's what I set out to do. Yeah. 232 00:13:20.330 --> 00:13:26.049 Yeah, the terrific points. Yeah, I think that last thing 233 00:13:26.070 --> 00:13:28.169 too about the people who really need it most are 234 00:13:28.210 --> 00:13:31.990 the ones we're not targeting. Now, just getting back to 235 00:13:32.009 --> 00:13:34.870 Social Security for a second, granted that it does not 236 00:13:36.250 --> 00:13:40.529 cover the needs

for most people fully for their retirement. 237 00:13:41.330 --> 00:13:43.789 And yet it is an important component, as you pointed out. 238 00:13:44.000 --> 00:13:46.860 And one of the most important things is about the 239 00:13:46.899 --> 00:13:49.759 timing of it and how you do it. And also 240 00:13:49.799 --> 00:13:53.980 there's a lot of constant chatter about cutting it and 241 00:13:54.039 --> 00:13:56.919 what the impact would be. So we may have to 242 00:13:56.960 --> 00:13:58.139 take and carry this over to the other side of 243 00:13:58.159 --> 00:14:01.100 the break, but let's start on, so what's your sense 244 00:14:01.200 --> 00:14:06.110 about all the arguments about what happens if Social Security 245 00:14:06.230 --> 00:14:09.309 is cut. I think you've made a good point about it. 246 00:14:09.309 --> 00:14:12.450 It's not about going bankrupt. That's not really the right terminology. 247 00:14:13.129 --> 00:14:17.870 But what are the risks of the Social Security system 248 00:14:17.929 --> 00:14:20.269 now in terms of its solvency? 249 00:14:20.960 --> 00:14:22.980 Right. Well, and I want to just say first that 250 00:14:23.000 --> 00:14:27.600 I definitely would concur that there's nothing more important in 251 00:14:27.620 --> 00:14:30.019 the kind of the retirement landscape of the United States 252 00:14:30.059 --> 00:14:33.049 than Social Security and Medicare. Mm-hmm. You know, I write 253 00:14:33.110 --> 00:14:36.330 probably three quarters of my work in journalism is about 254 00:14:36.370 --> 00:14:40.850 those two things because there are two universal social insurance programs. 255 00:14:40.889 --> 00:14:45.169 They impact everybody. So I couldn't agree more that these 256 00:14:45.220 --> 00:14:49.139 are terribly important topics, Social Security and Medicare. So back 257 00:14:49.159 --> 00:14:52.799 to your question on Social Security. So, you know, Social 258 00:14:52.820 --> 00:14:56.580 Security is on track right now. You know, the finances 259 00:14:56.600 --> 00:14:58.940 of Social Security work this way. We talk about the 260 00:14:58.960 --> 00:15:02.740 Social Security Trust Fund or actually technically it's two trust funds. 261 00:15:02.820 --> 00:15:05.460 It's the disability and the retirement funds, but they often 262 00:15:05.500 --> 00:15:08.809 get lumped together and talked about as one, which is fine. 263 00:15:09.970 --> 00:15:12.389 And you could think about these trust funds as though 264 00:15:12.409 --> 00:15:16.889 they were a checking account. So the payroll taxes come 265 00:15:16.929 --> 00:15:19.909 into the checking account and then the checking account is 266 00:15:19.980 --> 00:15:22.840 used to pay out the benefits. That's really what a 267 00:15:22.860 --> 00:15:27.019 trust fund is. And while the money is sitting in there, 268 00:15:27.059 --> 00:15:31.500 it also gets invested in very conservative treasury notes. to 269 00:15:31.519 --> 00:15:34.960 earn some return. So the issue

that Social Security has 270 00:15:35.000 --> 00:15:38.000 right now is that over the last several decades, Social Security, 271 00:15:38.399 --> 00:15:42.679 the checking account's been running huge surpluses and it built 272 00:15:42.820 --> 00:15:48.720 up reserves of about $ 3 trillion. And those reserves are 273 00:15:48.779 --> 00:15:52.419 now being drained for two primary reasons. One is the 274 00:15:52.460 --> 00:15:58.519 accelerating pace of claims by retirees as the country ages. 275 00:15:59.470 --> 00:16:02.490 And the other is we've had a sharp decline in 276 00:16:02.909 --> 00:16:05.110 birth rates in the United States. So there are fewer 277 00:16:05.190 --> 00:16:07.509 workers coming into the system to pay into it than 278 00:16:07.529 --> 00:16:09.809 there used to be. So that mismatch is what we're 279 00:16:09.830 --> 00:16:12.830 dealing with. And what the trustees have been telling us 280 00:16:12.889 --> 00:16:15.450 is that we're on track for that checking account to 281 00:16:15.490 --> 00:16:19.870 be empty in 2035. And that forecast fluctuates a little 282 00:16:19.889 --> 00:16:22.230 bit from year to year, but not a lot. A 283 00:16:22.269 --> 00:16:23.409 year ago, it was 2034. Now it's 2035. It could 284 00:16:23.450 --> 00:16:30.429 drop back down. And so- If we reach the point 285 00:16:30.710 --> 00:16:34.049 where the checking account is empty, current revenue coming in 286 00:16:34.090 --> 00:16:37.009 from the payroll tax is enough to cover roughly 80% 287 00:16:37.009 --> 00:16:40.039 of the scheduled or promised benefits. So it implies a 288 00:16:40.039 --> 00:16:43.620 20% across the board cut in Social Security benefits, which 289 00:16:43.639 --> 00:16:47.720 would be catastrophic for current retirees and for future retirees. 290 00:16:48.080 --> 00:16:51.059 That's the most kind of primary issue that needs to 291 00:16:51.080 --> 00:16:54.129 be dealt with. And you can deal with it one 292 00:16:54.169 --> 00:16:57.509 of two ways. You can either raise taxes, you can 293 00:16:57.529 --> 00:17:00.090 cut benefits, or a third way is you can do 294 00:17:00.110 --> 00:17:01.750 some combination of the two. Right. 295 00:17:01.980 --> 00:17:05.519 Mark, let's just hold that thought. We're going to take 296 00:17:05.559 --> 00:17:09.200 a quick break, but don't go anywhere, folks. When we 297 00:17:09.240 --> 00:17:11.720 come back, we'll be talking much more with Mark Miller, 298 00:17:12.160 --> 00:17:15.849 the author of Retirement Reboot, Common Sense Financial Strategies for 299 00:17:15.890 --> 00:17:18.970 Getting Back on Track. So don't go anywhere. We'll be 300 00:17:19.029 --> 00:17:23.069 back very shortly. Welcome back, folks. We're talking with Mark Miller, 301 00:17:23.190 --> 00:17:26.910 a veteran journalist, author, and podcaster who's a nationally recognized 302 00:17:26.990 --> 00:17:30.950 expert in trends and retirement and aging. Now, before the break, 303 00:17:30.990 --> 00:17:34.430 we were talking about Social Security, and Mark was mentioning 304 00:17:35.450 --> 00:17:39.940 the conundrum we're in now about the trust fund theoretically 305 00:17:40.000 --> 00:17:42.859 being depleted by 2035 and a couple of different solutions 306 00:17:42.880 --> 00:17:45.119 to that. So let's just go back to that, Mark, 307 00:17:45.180 --> 00:17:48.359 and mentioning that we can raise taxes or Right. 308 00:17:48.740 --> 00:17:50.519 So if you look at where sort of the two 309 00:17:50.559 --> 00:17:54.349 political parties are on this, it's reasonably clear at this point. 310 00:17:54.769 --> 00:17:57.910 You know, there was a lot of coverage on this 311 00:17:57.950 --> 00:18:00.769 topic right after President Biden's State of the Union address 312 00:18:00.809 --> 00:18:04.130 in February, where, you know, he kind of laid down 313 00:18:04.190 --> 00:18:06.269 the gauntlet on this. And there was a lot of 314 00:18:06.309 --> 00:18:08.829 back and forth about cutting Social Security and Medicare between 315 00:18:08.849 --> 00:18:13.329 the political parties. Right. You know, the Democrats are pretty 316 00:18:13.410 --> 00:18:15.309 united on what they want to do. Basically, what they 317 00:18:15.329 --> 00:18:19.210 want to do is raise taxes on the wealthy and 318 00:18:19.289 --> 00:18:24.609 also expand benefits modestly. So it's a two-part punch there. 319 00:18:24.750 --> 00:18:27.089 One is you raise revenue to close that gap we 320 00:18:27.109 --> 00:18:31.460 were discussing, and then you raise enough to also expand benefits. 321 00:18:31.500 --> 00:18:36.720 The Republicans, you can't really generalize where they're at at 322 00:18:36.880 --> 00:18:40.839 this point. There's kind of the populist Trump wing basically says, 323 00:18:42.049 --> 00:18:44.450 don't touch Social Security, don't touch Medicare, but they're not 324 00:18:44.490 --> 00:18:47.369 proposing what they actually want to do to deal with 325 00:18:47.390 --> 00:18:50.390 the solvency problem. So it's not really a coherent position. 326 00:18:50.970 --> 00:18:56.529 The more Tea Party conservative wing, particularly in the House 327 00:18:56.569 --> 00:19:01.670 of Representatives, has a very well-articulated plan that they've been 328 00:19:02.430 --> 00:19:04.630 pushing for a number of years now. So it's no 329 00:19:04.710 --> 00:19:07.109 mystery as to what they want to do. They would 330 00:19:07.329 --> 00:19:11.089 cut benefits by raising the full retirement age further And 331 00:19:11.130 --> 00:19:14.230 that is a benefit cut that translates over time to 332 00:19:14.289 --> 00:19:17.539 about a 6% cut in benefits for every 12 months 333 00:19:17.579 --> 00:19:21.440 of delay or extension of the full retirement age. That 334 00:19:22.480 --> 00:19:24.319 may sound like a lot of jargon. We can unpack 335 00:19:24.359 --> 00:19:26.019 it if you want to, but it's a benefit cut. 336 00:19:26.700 --> 00:19:28.660 And then the other

thing that they want to do, 337 00:19:28.700 --> 00:19:32.059 which I think is significant, is they want to refocus 338 00:19:32.079 --> 00:19:34.400 Social Security so that it is mainly a program for 339 00:19:34.440 --> 00:19:37.660 low-income people. They're very upfront about this. They say that 340 00:19:37.799 --> 00:19:41.619 Social Security is not needed for middle income and affluent households, 341 00:19:41.660 --> 00:19:44.920 which I vehemently disagree with. I think that's just wrong, wrong, wrong. 342 00:19:45.420 --> 00:19:49.970 But it's a dangerous position also because it fundamentally moves 343 00:19:50.170 --> 00:19:52.839 social security away from what it is, which is an 344 00:19:52.930 --> 00:19:55.759 earned benefit program to one that is essentially kind of 345 00:19:55.799 --> 00:19:59.299 a means tested or welfare program. We don't award social 346 00:19:59.319 --> 00:20:02.019 security benefits based on need. We based it on what 347 00:20:02.039 --> 00:20:05.880 you've earned. So the benefit is determined by number one, 348 00:20:05.940 --> 00:20:08.740 having paid into the system with your payroll taxes and 349 00:20:09.160 --> 00:20:12.279 but actually your benefit amount is determined by your wage history. 350 00:20:12.759 --> 00:20:16.240 So Social Security takes your 35 highest years of wages 351 00:20:16.299 --> 00:20:20.440 and punches it through a formula that translates into a 352 00:20:20.480 --> 00:20:25.589 adjusted for wage inflation benefit amount that has nothing to 353 00:20:25.630 --> 00:20:28.829 do with your need for the benefit when you claim 354 00:20:28.849 --> 00:20:33.170 this is what you've earned. So those are the two approaches. Now, 355 00:20:34.789 --> 00:20:38.029 I used to think that Congress would come together and 356 00:20:38.349 --> 00:20:43.369 solve the problem, the exhaust, the trust fund problem, well 357 00:20:43.430 --> 00:20:47.500 ahead of 2035. But given the way politics have evolved 358 00:20:48.180 --> 00:20:50.240 in this country over the last five years, I'm not 359 00:20:50.279 --> 00:20:53.279 so sure anymore that they'll be able to come together 360 00:20:53.319 --> 00:20:57.069 around a solution. So then the question becomes, what happens 361 00:20:57.130 --> 00:21:00.410 if we get right up against that deadline? Mm-hmm. The 362 00:21:00.470 --> 00:21:03.829 answer is, I think that you would have an emergency 363 00:21:03.869 --> 00:21:06.950 infusion of new revenue to avert the cuts. And that 364 00:21:06.970 --> 00:21:11.390 would happen either through taxes or some form of borrowing, perhaps, 365 00:21:12.710 --> 00:21:15.500 because the closer you get to 2035, you really can't 366 00:21:15.539 --> 00:21:19.119 solve the problem through cuts. Mathematically speaking, you can't get 367 00:21:19.180 --> 00:21:21.579 it done because it takes much more time for those 368 00:21:22.000 --> 00:21:25.200 changes to wash through the system. So, you know, it 369 00:21:25.740

--> 00:21:27.839 would be unfortunate to get to that because I think 370 00:21:28.160 --> 00:21:30.710 the longer we wait, it just contributes to the public 371 00:21:30.890 --> 00:21:33.690 worry about the future of the program. You know, I 372 00:21:33.710 --> 00:21:36.430 think there's some evidence that it leads to some bad 373 00:21:36.470 --> 00:21:40.890 decisions on claiming strategies with people saying, oh, I better 374 00:21:40.930 --> 00:21:42.859 get my money while I can, that sort of thing, 375 00:21:43.900 --> 00:21:46.180 which is, we probably will get to this, but that's 376 00:21:46.279 --> 00:21:50.420 not an optimal strategy for optimizing your security benefits. Right. 377 00:21:51.529 --> 00:21:56.349 You know, unfortunately, that's the way it's evolving. You know, 378 00:21:56.369 --> 00:21:59.789 and I just am a strong proponent of the inject 379 00:21:59.829 --> 00:22:04.069 new revenue into the program approach. The standard line about 380 00:22:04.089 --> 00:22:07.039 this is, well, we can't afford, these programs are unaffordable. 381 00:22:08.319 --> 00:22:11.180 Where are we going to find the money to put 382 00:22:11.220 --> 00:22:15.880 into Social Security? This is, to me, nonsensical. It's not 383 00:22:15.920 --> 00:22:18.339 a question of money. It's a question of values. So 384 00:22:18.400 --> 00:22:21.119 if I lay out the case that two-thirds of the country, 385 00:22:21.819 --> 00:22:26.099 has been left behind by the 401k system and needs 386 00:22:26.220 --> 00:22:30.299 more in the way of retirement income. We can certainly 387 00:22:30.359 --> 00:22:32.799 find the money to do that. We're a wealthy country. 388 00:22:32.859 --> 00:22:36.160 Social Security is like about 5% of gross domestic product. 389 00:22:36.220 --> 00:22:39.559 It's going to peak at 6% with the aging of 390 00:22:39.579 --> 00:22:41.980 the baby boom wave and then come back down to 391 00:22:42.019 --> 00:22:45.099 about 5%. And when we need to find money in 392 00:22:45.140 --> 00:22:47.400 this country to do things, we find it. When we 393 00:22:47.420 --> 00:22:51.140 need money for COVID emergency relief, I don't remember anybody asking, 394 00:22:51.160 --> 00:22:52.799 where are we going to find the money? We find it. 395 00:22:53.839 --> 00:22:58.009 When we needed to make changes to security after 9-11, 396 00:22:58.029 --> 00:23:02.990 we find the money. It's only on topics like this 397 00:23:03.390 --> 00:23:06.109 where it's all about hand-wringing about where the money's going 398 00:23:06.130 --> 00:23:08.750 to come from. So we know where we can find 399 00:23:08.789 --> 00:23:10.519 the money. There's lots of places to go get it. 400 00:23:10.549 --> 00:23:13.980 I can get into them if you like, but that's 401 00:23:14.019 --> 00:23:17.079 what this is about. And so I actually think kind 402 00:23:17.099 --> 00:23:23.089 of a broad rethink of Social Security's role would be terrific. 403 00:23:23.180 --> 00:23:28.490 You know, the expansion programs, proposals that have been made, 404 00:23:29.910 --> 00:23:31.690 I just don't think go far enough. I mean, I 405 00:23:31.710 --> 00:23:34.190 really think that what we should do is have Social 406 00:23:34.230 --> 00:23:40.490 Security replace 60% or so of free retirement income, certainly 407 00:23:40.529 --> 00:23:43.269 for middle class and lower income households, maybe less so 408 00:23:43.309 --> 00:23:45.680 for on the affluent end. And, you know, we could 409 00:23:45.720 --> 00:23:47.819 find ways to do that if we decided we wanted 410 00:23:47.839 --> 00:23:52.390 to make Social Security the pension program with fewer and 411 00:23:52.410 --> 00:23:55.990 fewer people getting a traditional pension, which is a guaranteed 412 00:23:56.029 --> 00:23:59.329 lifetime payment. You know, this could be very beneficial. Instead, 413 00:23:59.369 --> 00:24:02.539 we're constantly fiddling around the edges here. Well, how do 414 00:24:02.559 --> 00:24:06.319 we create programs in the states to have like a 415 00:24:06.440 --> 00:24:10.099 public option auto IRA for low income workers, which is, 416 00:24:10.720 --> 00:24:13.339 you know, you know, a nice idea, but it's not 417 00:24:13.359 --> 00:24:17.609 a It's not a game changer. This Secure 2.0 legislation 418 00:24:17.630 --> 00:24:21.130 that was just recently passed into law, more marginal stuff, 419 00:24:21.170 --> 00:24:25.910 a lot of it benefits the wealthy. Extending required minimum 420 00:24:25.930 --> 00:24:30.130 distribution ages to 75 helps nobody except the most affluent. 421 00:24:31.150 --> 00:24:32.670 There are a few things in that bill that I 422 00:24:32.710 --> 00:24:37.380 think marginally are good for lower income people, but they 423 00:24:37.400 --> 00:24:40.480 take a long, long time to kind of wash through 424 00:24:40.519 --> 00:24:43.759 the system And they don't produce anything like the dramatic 425 00:24:43.940 --> 00:24:48.299 impact that you could have by reimagining Social Security to 426 00:24:48.339 --> 00:24:48.680 do more. 427 00:24:50.279 --> 00:24:54.400 Yeah, again, excellent points. I think that, you know, so I'm, 428 00:24:55.200 --> 00:24:59.009 you know, I'm still working, but I file for Social Security. 429 00:24:59.029 --> 00:25:03.089 So I'm getting Social Security as well. And it seems 430 00:25:03.150 --> 00:25:04.769 to me that I guess first, the thing that was 431 00:25:04.789 --> 00:25:08.990 hardened initially, you know, when people say, well, do you 432 00:25:09.019 --> 00:25:11.400 pay taxes on your Social Security? And the answer is yes. 433 00:25:12.029 --> 00:25:15.430 But on the other hand, that revenue goes back in 434 00:25:15.450 --> 00:25:17.509 the Social Security Trust Fund. So it doesn't go into 435 00:25:17.549 --> 00:25:19.470 general revenue. So I was like, okay, well, that's good. 436 00:25:19.490 --> 00:25:21.130 It goes back into the fund, number one. 437 00:25:21.799 -->

00:25:24.980 Number two, I think- And not everybody pays taxes on 438 00:25:25.000 --> 00:25:29.980 their benefit, it's worth mentioning. It really targets more people 439 00:25:30.000 --> 00:25:31.480 with higher ordinary income. 440 00:25:32.140 --> 00:25:32.779 Right, right. 441 00:25:34.000 --> 00:25:36.259 Which in your case is because you're still working and 442 00:25:36.279 --> 00:25:38.059 so on. Yeah. Yeah. 443 00:25:39.720 --> 00:25:42.369 But going back to your initial thing about longevity, if 444 00:25:42.569 --> 00:25:46.210 we're living longer, if you create a base for people 445 00:25:46.309 --> 00:25:51.109 to be productive and secure and stable during those years, 446 00:25:51.910 --> 00:25:54.819 I think you'll get the return on investment is high 447 00:25:54.859 --> 00:25:57.400 on that in terms of not having them worry about 448 00:25:57.420 --> 00:26:01.980 not spending any money. If you provide a base of support, 449 00:26:02.500 --> 00:26:05.329 I think that'll come back in a societal way. 450 00:26:06.220 --> 00:26:08.500 In a societal way, yes, I think you're right. Not 451 00:26:08.559 --> 00:26:12.730 so much so for the trust fund. Taxes on benefits 452 00:26:12.789 --> 00:26:15.829 are a relatively trivial revenue source in the trust fund. 453 00:26:16.390 --> 00:26:19.450 So it doesn't solve the trust fund issues. But the 454 00:26:19.490 --> 00:26:22.670 question of working, there's lots of benefits to working longer, 455 00:26:22.809 --> 00:26:26.869 both societally and for the individual. I get into this 456 00:26:26.910 --> 00:26:29.789 in the book in some detail. I think it's a 457 00:26:29.829 --> 00:26:33.230 highly personal choice. It's not the right prescription for everybody. 458 00:26:33.250 --> 00:26:37.869 I think people who have worked in more physically demanding jobs. 459 00:26:37.890 --> 00:26:40.869 They're going to have trouble extending their working years into 460 00:26:40.930 --> 00:26:44.450 the late 60s and 70s, for example. And the other 461 00:26:44.470 --> 00:26:48.509 thing about this is that the older we get, time 462 00:26:48.529 --> 00:26:50.970 becomes that much more valuable to us. And so kind 463 00:26:50.990 --> 00:26:53.079 of being thoughtful about how you want to use your time, 464 00:26:54.079 --> 00:26:57.539 I think is important. So I don't say that working 465 00:26:57.579 --> 00:26:59.779 longer is a universal prescription, but one of the key 466 00:26:59.819 --> 00:27:04.369 chapters illustrates the critical importance of timing of retirement and 467 00:27:04.410 --> 00:27:07.369 how big of an impact, you know, when you retire 468 00:27:07.450 --> 00:27:11.630 can have on your security and retirement. So I'm illustrating 469 00:27:12.049 --> 00:27:15.269 that as an option, one of the main options for 470 00:27:15.490 --> 00:27:19.279 improving outcomes, if it's a path that's available to you. 471 00:27:19.319 --> 00:27:22.000 And then I've got another chapter that just looks at 472 00:27:23.079 --> 00:27:25.180 managing your career later in life. So I think it's 473 00:27:25.200 --> 00:27:27.680 an important topic, but it's just one of the many. 474 00:27:28.000 --> 00:27:30.539 You know, I basically have sort of six key things 475 00:27:31.089 --> 00:27:33.609 chapters in the book that outline what I call levers 476 00:27:33.650 --> 00:27:37.549 you can pull to improve outcomes. And they're not, none 477 00:27:37.589 --> 00:27:40.410 of them are, number one, they're not gimmicks. Number two, 478 00:27:40.470 --> 00:27:43.599 they're not necessarily easy to do, but they are achievable. 479 00:27:44.380 --> 00:27:46.759 And they're all worth, not all of them will be 480 00:27:46.819 --> 00:27:49.240 right for everybody, but they're all worth considering, I think, 481 00:27:49.259 --> 00:27:52.700 for people who find themselves approaching retirement without a lot 482 00:27:52.720 --> 00:27:53.299 of money saved. 483 00:27:53.740 --> 00:27:57.539 Yeah. So let's just finish up on social security, because 484 00:27:57.559 --> 00:28:00.640 you do mention that there are some decisions you can 485 00:28:00.680 --> 00:28:04.319 make irrespective of the global systems affecting Social Security, about 486 00:28:04.839 --> 00:28:11.119 when you file and how you file. This comes up 487 00:28:11.180 --> 00:28:12.980 a lot. Do you file sooner or later? What are 488 00:28:13.009 --> 00:28:15.549 the implications of when it is you decide to file? 489 00:28:16.369 --> 00:28:19.210 Right. Simply put, most people should be claiming later than 490 00:28:19.230 --> 00:28:25.170 they are. That's the headline. 80% of people have claimed 491 00:28:25.289 --> 00:28:29.299 by their full retirement age. And Just to be clear 492 00:28:29.359 --> 00:28:32.140 what we're talking about here, full retirement age is kind 493 00:28:32.160 --> 00:28:36.589 of a funny, jargony phrase. You might think it means 494 00:28:36.829 --> 00:28:38.930 the maximum amount you're going to get, but no, it 495 00:28:38.970 --> 00:28:43.150 means the age at which you're qualified to receive 100% 496 00:28:43.150 --> 00:28:46.750 of the benefit you've earned through your working years. Right now, 497 00:28:46.809 --> 00:28:50.880 it's about 66 years old and change. For anybody born 498 00:28:50.930 --> 00:28:52.559 after 1960 and later, it's 67, and that's because the 499 00:28:52.579 --> 00:28:59.410 age has been gradually pushed up as a result of 500 00:28:59.430 --> 00:29:02.410 the reforms that were enacted in 1983 to the program. 501 00:29:02.690 --> 00:29:05.400 It went from 65 to 67 over a long period 502 00:29:05.420 --> 00:29:09.440 of time. So you can claim as early as 62 503 00:29:09.440 --> 00:29:12.180 and you can wait as late as 70 to claim. 504 00:29:12.740 --> 00:29:15.220 And the earlier you claim, you're going to have an 505 00:29:15.359 --> 00:29:20.779 early claiming reduction if you file before your full retirement age. 506 00:29:20.819 -->

00:29:23.319 And if you claim after it, you get these delayed 507 00:29:23.380 --> 00:29:26.650 retirement credits. And the delayed credits are amount to about 508 00:29:26.710 --> 00:29:31.140 an 8% annual bump in your benefit amount. And the 509 00:29:31.200 --> 00:29:35.420 reductions are a little less on the order of 6.8% 510 00:29:35.420 --> 00:29:38.170 for every 12 months before your full retirement age. So 511 00:29:38.190 --> 00:29:42.890 like I said, say, 80% of us claim by our 512 00:29:42.910 --> 00:29:47.460 full retirement age. A very small percentage, maybe 15% claim 513 00:29:47.500 --> 00:29:50.500 at the latest age is that you would wait until 514 00:29:50.500 --> 00:29:55.880 70 to file. There has been some improvement in the 515 00:29:55.940 --> 00:29:58.819 percentages of people who are claiming at the earliest age. 516 00:29:58.859 --> 00:30:04.490 That's dropped from like 60% in the mid-1990s, I think, 517 00:30:04.910 --> 00:30:07.589 to about 30% now. So it's a dramatic decline. So 518 00:30:07.609 --> 00:30:09.329 people are at least getting the messages that they should 519 00:30:09.750 --> 00:30:15.029 delay somewhat. But for most people, delaying longer would be 520 00:30:15.069 --> 00:30:17.880 a good thing, especially for married couples. So that's the 521 00:30:17.920 --> 00:30:23.279 basic message. The challenge here is, how do you fund 522 00:30:23.400 --> 00:30:26.240 that delay? And I mean fund from the standpoint of 523 00:30:26.740 --> 00:30:29.559 meet your living expenses. So some people can do it 524 00:30:29.599 --> 00:30:32.160 by drawing on savings while they wait, which can be 525 00:30:32.200 --> 00:30:35.299 a smart strategy. Some are going to do it by 526 00:30:35.660 --> 00:30:39.400 working longer. So there's always the question of how you 527 00:30:39.440 --> 00:30:44.220 fund a delay. The people who are wise probably to 528 00:30:44.240 --> 00:30:47.660 claim earlier are those who, for whatever reason, don't have 529 00:30:47.700 --> 00:30:53.099 an expectation of great longevity. And for married couples, it's 530 00:30:53.140 --> 00:30:55.569 good to have a coordinated strategy. It shouldn't be done 531 00:30:55.609 --> 00:31:00.809 in isolation. So the higher earner, higher earning spouse, if 532 00:31:00.849 --> 00:31:04.910 the higher earning spouse delays, uh, the longest that's, that's 533 00:31:04.990 --> 00:31:08.210 beneficial because that, that net person is bringing in the 534 00:31:08.230 --> 00:31:11.329 maximized monthly benefit to the household. Right. 535 00:31:11.910 --> 00:31:14.359 Now the other piece, um, that you've talked about a lot, 536 00:31:14.420 --> 00:31:19.079 of course, is Medicare. Uh, and we'll probably, uh, run 537 00:31:19.099 --> 00:31:22.329 through the break with this topic, but, uh, Again, let's 538 00:31:22.349 --> 00:31:24.930 just look at some of the general observations you have 539 00:31:24.990 --> 00:31:29.450 about Medicare. And then you got a good piece recently 540 00:31:29.470 --> 00:31:33.349 about some of the changes that are going to come into, 541 00:31:33.410 --> 00:31:37.480 have been coming in 2023. So first of all, you know, let's, 542 00:31:37.599 --> 00:31:41.660 if you've had some interesting observations about just comparing traditional 543 00:31:41.680 --> 00:31:45.180 Medicare and, you know, the Medicare Advantage. 544 00:31:47.000 --> 00:31:52.240 Well, Medicare has been massively privatized over the last couple 545 00:31:52.259 --> 00:31:54.799 of decades. People talk about it as government, quote unquote, 546 00:31:54.839 --> 00:32:00.970 government health care. And it is, and it's not. You 547 00:32:00.990 --> 00:32:03.690 can either be in traditional fee-for-service Medicare, or you can 548 00:32:03.730 --> 00:32:09.210 be in this managed care alternative called Medicare Advantage. And 549 00:32:09.230 --> 00:32:13.170 it's a critical choice that people need to pay a 550 00:32:13.170 --> 00:32:17.269 lot of attention to. at the point of initial enrollment 551 00:32:17.329 --> 00:32:20.529 in Medicare for reasons that I get into in the chapter. 552 00:32:20.869 --> 00:32:24.329 And I say in the chapter that, you know, I'm 553 00:32:24.369 --> 00:32:28.269 a believer in traditional Medicare wherever possible. You know, I 554 00:32:28.289 --> 00:32:30.809 think traditional Medicare to me is the gold standard of 555 00:32:30.829 --> 00:32:37.569 health insurance, United States. Traditional Medicare paired with a Medigap 556 00:32:37.589 --> 00:32:41.809 supplemental policy and a Part D drug plan. That's the 557 00:32:41.869 --> 00:32:44.130 most rock solid coverage you can get. Now you're going to, 558 00:32:44.569 --> 00:32:48.509 pay more in premiums on the front end because you'd 559 00:32:48.529 --> 00:32:52.309 be paying a Medigap and a Part D drug premium. 560 00:32:52.890 --> 00:32:55.869 But once you've done that, most of your, that's pretty 561 00:32:55.890 --> 00:32:59.579 much it. Nearly everything is going to be covered, uh, that, 562 00:32:59.700 --> 00:33:02.519 that Medicare is going to cover. Um, and you're going 563 00:33:02.539 --> 00:33:07.700 to have the greatest flexibility in your choice of healthcare providers, uh, 564 00:33:07.720 --> 00:33:10.440 where in your Medicare advantage, you're, you'd be subject to more, 565 00:33:10.640 --> 00:33:13.259 you know, the, the so-called narrow network approach of, uh, 566 00:33:14.750 --> 00:33:18.390 HMOs and PPOs. And so, you know, if some of 567 00:33:18.430 --> 00:33:20.970 this is financial and some of it is quality of life, 568 00:33:21.779 --> 00:33:24.319 you know, there's nothing more important than your health, particularly 569 00:33:24.339 --> 00:33:26.579 as we get older. And let's face it, you know, 570 00:33:26.640 --> 00:33:30.220 it's when we're older that we encounter more serious health issues. So, 571 00:33:30.259 --> 00:33:33.519 you know, I'm laying out the case here for people 572

00:33:33.559 --> 00:33:36.759 to give a hard think to being in traditional Medicare 573 00:33:36.779 --> 00:33:38.740 when they first sign up and sticking with it. 574 00:33:38.740 --> 00:33:42.759 Right. Okay, so we're going to talk about some of 575 00:33:42.779 --> 00:33:45.940 the changes that have come up in the last few 576 00:33:45.980 --> 00:33:50.269 months and look forward to this year. But before we 577 00:33:50.309 --> 00:33:52.990 do that, we're going to take another quick break. So, folks, 578 00:33:53.170 --> 00:33:55.190 we'll be back with much more in our last segment 579 00:33:55.210 --> 00:33:58.819 with Mark Miller, the author of Retirement Reboot, Common Sense 580 00:33:58.859 --> 00:34:02.200 Financial Strategies for Getting Back on Track. So don't go anywhere. 581 00:34:02.279 --> 00:34:05.750 We'll be right back. Welcome back, folks. We're talking with 582 00:34:05.809 --> 00:34:09.969 Mark Miller, veteran journalist, author, and podcaster, a nationally recognized 583 00:34:10.070 --> 00:34:13.719 expert on retirement and aging. Before the break, Mark was 584 00:34:13.780 --> 00:34:16.860 talking about Medicare, and I asked him, you know, what 585 00:34:16.900 --> 00:34:19.559 are some of the changes that we should expect this 586 00:34:19.639 --> 00:34:24.199 year for various reasons, you know, change in rules as 587 00:34:24.260 --> 00:34:27.170 well as legislation. So I'd just ask him to quickly 588 00:34:27.210 --> 00:34:27.809 touch on those. 589 00:34:28.670 --> 00:34:31.530 Sure. There's sort of a collection of things that take 590 00:34:31.570 --> 00:34:33.710 effect this year that, you know, I don't think any 591 00:34:33.789 --> 00:34:36.469 one of them are uh, game changers, but, you know, 592 00:34:36.510 --> 00:34:39.889 taken together are, I think, interesting. One is, uh, a 593 00:34:39.929 --> 00:34:44.880 streamlining of the, um, process for enrolling in Medicare when 594 00:34:44.920 --> 00:34:49.860 you enroll late. And people do, unfortunately, sometimes enroll later 595 00:34:49.880 --> 00:34:54.369 than they're, than they should. Um, And this first change 596 00:34:54.829 --> 00:34:59.599 streamlines the process for enrolling when you enroll late. It 597 00:34:59.679 --> 00:35:02.619 used to be that if you didn't enroll on time, 598 00:35:02.659 --> 00:35:05.460 you had to wait for a general enrollment period that 599 00:35:05.500 --> 00:35:08.719 ran from January through March. And that could expose you 600 00:35:08.760 --> 00:35:11.440 to a long wait, depending on the time of year 601 00:35:11.460 --> 00:35:15.840 that you enrolled. And so starting this year, whenever you enroll, 602 00:35:16.719 --> 00:35:20.090 you're going to be covered during the first month following enrollment. 603 00:35:20.670 --> 00:35:21.150 Enrollment. 604 00:35:21.210 --> 00:35:25.760 So it sort of streamlines that process. Another one that 605 00:35:25.980 --> 00:35:29.019 got a lot of headlines and is important is the 606 00:35:29.059 --> 00:35:32.340 cap on the cost of Medicare. Sorry, excuse me, is 607 00:35:32.360 --> 00:35:34.500 the cap on the cost of insulin for people enrolled 608 00:35:34.539 --> 00:35:38.429 in Medicare. Insulin costs have been a very big deal. 609 00:35:38.949 --> 00:35:41.309 And starting this year, the maximum you can be charged 610 00:35:41.690 --> 00:35:46.590 in Medicare Part D is $ 35 a month. Another change 611 00:35:46.630 --> 00:35:52.929 this year is that vaccine coverage is provided, adult vaccines 612 00:35:53.550 --> 00:35:56.449 are covered for free under Part D. This is gonna 613 00:35:56.489 --> 00:36:00.130 be important for some of the more expensive vaccines out there, 614 00:36:00.170 --> 00:36:03.469 such as the one for shingles. And then kind of 615 00:36:03.769 --> 00:36:08.219 more of a technical change that kicks in that involves 616 00:36:09.119 --> 00:36:12.340 rebates that pharmaceutical companies have to start paying back to 617 00:36:12.400 --> 00:36:16.199 Medicare if they boost prices at a rate that's higher 618 00:36:16.280 --> 00:36:20.260 than the general inflation rate. So it's an incentive to 619 00:36:20.380 --> 00:36:25.880 get drug companies to start moderating price hikes on drugs. 620 00:36:26.000 --> 00:36:27.960 So there's a number of things that were included in 621 00:36:28.019 --> 00:36:32.909 the Inflation Reduction Act passed last year that kick in 622 00:36:33.349 --> 00:36:35.829 over the next few years. But this last one I 623 00:36:35.849 --> 00:36:39.789 was just mentioning and the insulin provision became effective this year. 624 00:36:40.110 --> 00:36:43.679 Right. And on the talk about Medicare having the ability 625 00:36:43.699 --> 00:36:48.159 now to negotiate drug prices, those measures really kick in 626 00:36:48.199 --> 00:36:50.210 over the next few years, right? They're not immediate. 627 00:36:50.409 --> 00:36:54.210 Yeah, they're not immediate. They started in 2025, and even there, 628 00:36:54.250 --> 00:36:57.750 it's a limited list of drugs. So that's kind of 629 00:36:57.809 --> 00:36:59.730 a longer-term proposition. 630 00:37:00.130 --> 00:37:03.559 Right, right. So let's shift back now to our segment 631 00:37:03.739 --> 00:37:07.440 earlier about Social Security, about how we save for retirement 632 00:37:07.460 --> 00:37:11.269 in terms of our assets and income. So let's talk 633 00:37:11.289 --> 00:37:13.289 a little bit about other kinds of ways that you 634 00:37:13.329 --> 00:37:15.150 talk about how to build savings. And you've got a 635 00:37:15.750 --> 00:37:18.690 pretty good, streamlined approach to this. 636 00:37:19.909 --> 00:37:22.860 Well, I'm thinking here about a reader who hasn't saved 637 00:37:23.050 --> 00:37:25.559 earlier and might be getting close to retirement, maybe has 638 00:37:25.599 --> 00:37:28.579 the opportunity to do it now. Let's say kids are 639 00:37:28.599 --> 00:37:30.800 out of the house, college costs have been dealt

with. 640 00:37:31.239 --> 00:37:33.340 There can be a number of reasons. People tend to 641 00:37:33.380 --> 00:37:36.219 be in their higher earning years. It can be a 642 00:37:36.239 --> 00:37:38.380 number of reasons that it was possible to save. But 643 00:37:39.340 --> 00:37:42.119 I think one of the problems with retirement savings is 644 00:37:42.159 --> 00:37:46.940 an intimidation factor. It's not that many of us are 645 00:37:46.980 --> 00:37:51.260 investment experts. Not that many of us are, I think, 646 00:37:51.519 --> 00:37:55.000 interested in becoming investment experts. And so there is a 647 00:37:55.039 --> 00:37:59.699 fear factor of how to deal with this. So one 648 00:38:00.070 --> 00:38:02.929 bit of good news in the retirement landscape over the 649 00:38:02.949 --> 00:38:07.940 last couple of decades has been the advent of more simple, 650 00:38:08.239 --> 00:38:14.619 low-cost ways to invest in the market with great diversification 651 00:38:14.800 --> 00:38:22.409 and relatively lower risk. And that is using the approach 652 00:38:22.449 --> 00:38:26.449 of just using passive index funds, invest in a fund 653 00:38:26.489 --> 00:38:30.139 that just buys the entire stock market fundamentally. And so 654 00:38:30.199 --> 00:38:32.699 what I'm basically doing is laying out a simple approach here. 655 00:38:32.719 --> 00:38:35.590 It says, look, if you're able to save Do it 656 00:38:35.630 --> 00:38:40.550 in these low-cost, passive, total stock market vehicles. Pay careful 657 00:38:40.590 --> 00:38:44.559 attention to your costs because fees are the enemy here. 658 00:38:45.599 --> 00:38:49.099 It's very possible to invest in products that carry very 659 00:38:49.159 --> 00:38:55.500 low expenses these days. And when you compound costs out 660 00:38:55.579 --> 00:38:59.159 over a couple of decades, you start to see how 661 00:38:59.219 --> 00:39:01.559 big of a deal it is, how much of the 662 00:39:01.599 --> 00:39:05.869 money you keep in your pocket versus... what's staying in 663 00:39:05.889 --> 00:39:09.090 the pocket of the investment company. I think there's a 664 00:39:09.110 --> 00:39:11.130 tendency to think when you look at the fees on 665 00:39:11.170 --> 00:39:15.039 an investment product, let's say it says, we're only going 666 00:39:15.059 --> 00:39:18.360 to charge you 1% a year. It doesn't sound like much, 667 00:39:18.440 --> 00:39:20.659 but when you start doing the math and see that 668 00:39:20.699 --> 00:39:24.409 that's going to be charged to your account annually, year 669 00:39:24.469 --> 00:39:28.110 after year after year, and as your account grows, those 670 00:39:28.150 --> 00:39:31.670 fees get bigger, you start to see that it can 671 00:39:31.690 --> 00:39:35.150 really be determinative in terms of your ability to succeed 672 00:39:35.210 --> 00:39:39.000 building savings. So it's a very straightforward look. Kind of 673 00:39:39.019 --> 00:39:43.039 just do it this way, folks. This is the

way 674 00:39:43.179 --> 00:39:45.179 to do it if you're getting a late start. Keep 675 00:39:45.219 --> 00:39:48.360 it simple. By all means, keep it low cost. 676 00:39:49.340 --> 00:39:52.860 Right, right. And then on the other side of that, 677 00:39:52.920 --> 00:39:55.559 of course, is a lot of discussion about the withdrawal rate, 678 00:39:55.900 --> 00:40:00.179 you know, and some discussion, some differences about what changes 679 00:40:00.239 --> 00:40:02.440 in terms of how much, you know, makes sense in 680 00:40:02.460 --> 00:40:05.119 terms of withdrawal, you know, on a yearly basis. 681 00:40:07.119 --> 00:40:09.210 Yeah, there's a lot of research out there on that, 682 00:40:09.230 --> 00:40:11.829 you know, with the so-called safe withdrawal rate, what can 683 00:40:11.869 --> 00:40:15.610 you afford to withdraw in a way that, and safe 684 00:40:15.670 --> 00:40:20.550 means not exhausting your resources before you die and So 685 00:40:20.610 --> 00:40:25.219 it's really those calculations are done using mortality averages. So 686 00:40:25.260 --> 00:40:28.820 how meaningful are they? Yeah. I'm not sure. Current thinking 687 00:40:28.860 --> 00:40:32.139 seems to be, you know, somewhere a little bit below 688 00:40:32.139 --> 00:40:35.920 4% a year. So that gives you an idea of 689 00:40:35.980 --> 00:40:39.739 the kinds of, um, portfolios you need to build in 690 00:40:39.780 --> 00:40:42.309 order for retirement savings to be a meaningful part of 691 00:40:42.329 --> 00:40:44.730 your retirement income. Right. Right. 692 00:40:45.630 --> 00:40:50.030 Um, uh, I did want to get to, uh, I thought, uh, um, 693 00:40:50.650 --> 00:40:54.820 Your discussion with your kids was about retirement. What questions 694 00:40:54.840 --> 00:40:58.679 they had was really interesting and some of the questions 695 00:40:58.699 --> 00:41:01.039 they had. Maybe you could just mention some of the 696 00:41:01.079 --> 00:41:04.159 questions they had and how you responded to and what 697 00:41:04.199 --> 00:41:05.920 your reaction was to the questions. 698 00:41:07.139 --> 00:41:09.280 I mean, my big takeaway, this was for a podcast 699 00:41:09.360 --> 00:41:12.050 I did where I answered my kids and my nieces' 700 00:41:12.090 --> 00:41:15.989 questions about retirement. They really are paying attention. I think 701 00:41:16.030 --> 00:41:18.849 this idea that younger people aren't interested in this, I 702 00:41:19.030 --> 00:41:21.309 think they are. I think they have the general idea 703 00:41:21.349 --> 00:41:24.789 that maybe Social Security is not going to be what 704 00:41:24.829 --> 00:41:29.150 it has been for previous generations. And they'd be right 705 00:41:29.210 --> 00:41:32.630 about that because they're going to have a higher retirement 706 00:41:32.710 --> 00:41:37.440 age of at least 67, maybe higher, which means that 707 00:41:37.500 --> 00:41:39.300 they're going to take away less from the program. So 708 00:41:39.340 --> 00:41:43.380 they are thinking about saving. Questions had to do with 709 00:41:43.420 --> 00:41:47.559 things like where to prioritize retirement saving as compared with 710 00:41:47.599 --> 00:41:51.449 other things. And I basically say, It's not necessarily, unfortunately, 711 00:41:51.469 --> 00:41:53.449 the first thing you should be thinking about. I think 712 00:41:53.510 --> 00:41:59.849 if you're carrying high-cost student debt or high-cost credit card debt, 713 00:42:00.469 --> 00:42:03.880 and if you haven't built up some emergency savings, that 714 00:42:03.920 --> 00:42:08.119 ought to be done first. The rule of thumb is, 715 00:42:08.920 --> 00:42:11.119 especially for younger people, have three to six months of 716 00:42:11.480 --> 00:42:16.000 expenses socked away in a readily available liquid savings account. 717 00:42:17.559 --> 00:42:20.119 that's important because it can help you avoid going into 718 00:42:20.199 --> 00:42:23.829 debt when emergency needs come up and you want to 719 00:42:23.869 --> 00:42:25.190 stay out of debt. You don't want to be paying 720 00:42:25.230 --> 00:42:27.530 a lot of interest costs. So, you know, that was 721 00:42:27.949 --> 00:42:31.710 one area. I got a question about environmental, social and 722 00:42:31.750 --> 00:42:38.550 governance investing from my highly idealistic politically oriented niece. You know, 723 00:42:38.590 --> 00:42:41.030 so I think there's lots of things that, you know, 724 00:42:41.219 --> 00:42:44.000 are on their minds that I got questions about, you know, 725 00:42:44.019 --> 00:42:47.239 should they be worried about social security and, you know, 726 00:42:47.260 --> 00:42:49.039 that sort of thing. Right, right. 727 00:42:49.530 --> 00:42:51.909 Yeah, I think that I'm not, I think one of 728 00:42:51.929 --> 00:42:54.590 the articles maybe you referred me to was, but, you know, 729 00:42:54.610 --> 00:42:57.909 an interesting, you know, optimistic thing is that, yeah, they 730 00:42:57.949 --> 00:43:01.670 are thinking about retirement and that, in fact, millennials, from 731 00:43:01.710 --> 00:43:06.280 what I read, 7% of millennials contributed 7% or more 732 00:43:06.320 --> 00:43:11.699 to the 401ks last year, which is a lot more 733 00:43:11.739 --> 00:43:14.260 than we baby boomers did, which we saved an average 734 00:43:14.280 --> 00:43:17.460 of 3% or less, you know, for our 401ks. 401k 735 00:43:17.500 --> 00:43:19.349 so yeah the. 736 00:43:19.280 --> 00:43:21.920 Uh i mean i hope that survey is correct. 737 00:43:22.050 --> 00:43:26.829 Yeah yeah that'd be great yeah yeah yeah so um 738 00:43:27.730 --> 00:43:31.449 um so any additional thoughts before we leave uh you 739 00:43:31.469 --> 00:43:34.730 know you mentioned things about you know career choices and 740 00:43:34.929 --> 00:43:39.230 deciding when to retire as you know um uh part 741 00:43:39.269 --> 00:43:41.150 of the part of your equation. 742 00:43:42.170 --> 00:43:44.170 Well i'll just

mention one other thing which is another 743 00:43:44.190 --> 00:43:47.829 i think bit of good news on the retirement landscape 744 00:43:47.889 --> 00:43:50.409 in the last couple of decades is sort of, I'll 745 00:43:50.429 --> 00:43:55.190 call it the small D democratization of retirement advice or 746 00:43:55.210 --> 00:43:58.309 planning help. It used to be that this was just 747 00:43:58.349 --> 00:44:00.469 the province of the wealthy and it kind of went 748 00:44:00.489 --> 00:44:03.110 by wealth management was the acronym, the name for it. 749 00:44:03.650 --> 00:44:08.780 But we've seen the advent of much lower cost, good, 750 00:44:08.989 --> 00:44:12.780 solid advice solutions that are unbiased. I have a chapter 751 00:44:12.880 --> 00:44:14.320 on how to hire a planner, how to get advice. 752 00:44:16.679 --> 00:44:20.179 And I think, you know, even for the households we're 753 00:44:20.340 --> 00:44:24.300 talking about, which are not those that have big investment portfolios, 754 00:44:24.760 --> 00:44:27.099 you know, building a plan for retirement and getting a 755 00:44:27.119 --> 00:44:30.219 little professional help with it can definitely pay off. And 756 00:44:30.239 --> 00:44:34.119 it can be done these days, you know, relatively inexpensively. 757 00:44:34.179 --> 00:44:38.940 You can hire a fee-only registered investment advisor who's a 758 00:44:39.000 --> 00:44:44.360 fiduciary advisor, he said, underscore, bold face, fiduciary advisor. You 759 00:44:44.380 --> 00:44:47.289 want somebody who is acting as a fiduciary in all 760 00:44:47.369 --> 00:44:51.190 cases on your behalf. Hire such a person to do 761 00:44:51.210 --> 00:44:53.849 a one-time plan for you, give you sort of a 762 00:44:53.889 --> 00:44:57.829 checkup on where you're going. There are online services that 763 00:44:57.849 --> 00:45:00.869 can be helpful. So I think for those of us 764 00:45:00.909 --> 00:45:03.949 who are not necessarily expert in some of these areas, 765 00:45:04.010 --> 00:45:05.809 getting some help can really be a great thing. 766 00:45:06.230 --> 00:45:09.710 Yeah. One thing that I've covered a bit in the 767 00:45:09.750 --> 00:45:12.210 past is just that, how do people think about their 768 00:45:12.250 --> 00:45:14.360 housing as they get older? I think that a lot 769 00:45:14.389 --> 00:45:17.849 of people They want to age in place, but in 770 00:45:17.909 --> 00:45:20.730 some cases, you've got to transition somehow and you've got 771 00:45:20.750 --> 00:45:25.969 to think about your houses. It's a home, but it's 772 00:45:26.010 --> 00:45:30.380 an asset. How does that fit into your planning? 773 00:45:31.460 --> 00:45:34.039 I have a chapter in the book about home equity 774 00:45:34.460 --> 00:45:36.300 and how to think about it in a retirement plan, 775 00:45:36.320 --> 00:45:38.380 which I think you have to do when you're talking 776 00:45:38.420 --> 00:45:44.800 about a middle-income reader. where the home is probably the 777 00:45:44.820 --> 00:45:49.039 biggest source of saving, you know, with quote marks around it. Right. 778 00:45:50.280 --> 00:45:53.639 That they have, you know, most older Americans are homeowners 779 00:45:53.719 --> 00:45:55.670 and they have some equity built up in the home. 780 00:45:56.849 --> 00:45:59.250 But as you say, it's not the same. It's not 781 00:45:59.289 --> 00:46:01.210 a liquid asset in the way that, you know, a 782 00:46:01.250 --> 00:46:04.869 bank account is because it's wrapped up in a need 783 00:46:04.909 --> 00:46:09.460 for shelter and be lifestyle considerations. Where do you want 784 00:46:09.480 --> 00:46:13.090 to live, et cetera, et cetera. So I walk through 785 00:46:13.179 --> 00:46:17.500 in that chapter different options to consider everything from downsizing 786 00:46:17.519 --> 00:46:22.219 and moving to something less expensive. And I actually walk 787 00:46:22.239 --> 00:46:25.639 through some, for instance, examples on how big a deal 788 00:46:25.699 --> 00:46:31.519 that can be, sometimes involving a shift of location. But 789 00:46:31.840 --> 00:46:35.739 as you say, the surveys tell us ad nauseum over 790 00:46:35.780 --> 00:46:37.880 and over and over and over again, people want to 791 00:46:37.940 --> 00:46:41.639 age in place. And you know, I take that survey 792 00:46:41.699 --> 00:46:43.420 result with a grain of salt because I don't think 793 00:46:43.440 --> 00:46:48.690 people really have thought through what it means. I get it. 794 00:46:48.800 --> 00:46:50.320 I guess I would say I want to age in 795 00:46:50.360 --> 00:46:51.900 place too, but I don't know if it's the right 796 00:46:52.380 --> 00:46:55.440 move for me just yet. And I don't think we 797 00:46:55.460 --> 00:46:58.920 have as a country have thought through the implications of, 798 00:47:00.260 --> 00:47:02.159 you know, a country that we're all saying we want 799 00:47:02.179 --> 00:47:04.960 to stay right where we are when you know, first 800 00:47:05.079 --> 00:47:08.460 off communities aren't prepared to provide the kinds of services 801 00:47:08.500 --> 00:47:10.739 we're going to need if we're all living in, you know, 802 00:47:10.780 --> 00:47:15.599 suburban single family dwellings or, or multi dwelling walk-ups for 803 00:47:15.619 --> 00:47:19.219 that matter. Right. Um, you know, housing stock isn't really 804 00:47:19.260 --> 00:47:22.829 ready for it. You know, most, most houses are, you know, 805 00:47:22.849 --> 00:47:26.230 really equipped for people to age in place and get 806 00:47:26.269 --> 00:47:28.469 to a very advanced age as we haven't figured out 807 00:47:28.949 --> 00:47:33.329 how to provide the appropriate level of social and healthcare supports, um, 808 00:47:34.269 --> 00:47:38.230 Even basic things like transportation in the community. So, you know, 809 00:47:38.289 --> 00:47:40.210 I can frame that as a problem. I can also 810 00:47:40.269 --> 00:47:43.150 discuss it as an opportunity for

communities to get on 811 00:47:43.170 --> 00:47:45.809 the ball and start thinking about innovative solutions that can 812 00:47:45.849 --> 00:47:49.309 be opportunities to create businesses and jobs and all kinds 813 00:47:49.369 --> 00:47:52.590 of things. So I think it's a big unaddressed topic 814 00:47:52.650 --> 00:47:55.489 in most American communities. And then the final thing about 815 00:47:55.530 --> 00:47:58.199 home equity I'll say is that, so I have a 816 00:47:58.260 --> 00:48:01.019 section in the chapter about reverse mortgages, not because I 817 00:48:01.099 --> 00:48:04.530 love that solution, but, um, You know, I think they 818 00:48:04.610 --> 00:48:08.670 can be used safely. They've been regulation of reverse mortgages 819 00:48:08.730 --> 00:48:11.849 has been improved over the last decade or so. It's 820 00:48:11.869 --> 00:48:14.989 a very complicated product. Most people aren't that interested in 821 00:48:15.010 --> 00:48:18.440 it because it kind of feels like yet another form 822 00:48:18.480 --> 00:48:23.219 of debt that they're taking on, which it is. So 823 00:48:23.360 --> 00:48:25.539 it's not my number one choice, but I lay it 824 00:48:25.699 --> 00:48:28.940 out in some detail, you know, is that how they work, 825 00:48:29.840 --> 00:48:31.679 how they can be used, you know, how can they 826 00:48:31.699 --> 00:48:34.949 be used safely in retirement? Right. Great. I think home 827 00:48:34.989 --> 00:48:38.010 equity is, and just, you know, the whole question of 828 00:48:38.050 --> 00:48:39.789 housing is terribly important. Yeah. 829 00:48:40.690 --> 00:48:43.190 Well, we're going to save that for another show, Mark. 830 00:48:44.510 --> 00:48:46.809 But I just, so before we end, I just wanted 831 00:48:46.829 --> 00:48:49.940 to thank you for a lot of terrific information. And 832 00:48:49.980 --> 00:48:53.599 I wanted to, as we close to just let our 833 00:48:53.639 --> 00:48:58.440 guests know, our audience know where to reach you, where to, 834 00:48:58.500 --> 00:49:01.179 I mean, how to get in touch with you, where 835 00:49:01.199 --> 00:49:02.699 to find out about your stuff. 836 00:49:03.369 --> 00:49:05.570 Yeah, the easiest way is through my website. And the 837 00:49:05.610 --> 00:49:11.320 website is retirementrevised.com. And there you'll see a couple of things. 838 00:49:11.480 --> 00:49:14.820 One is an opportunity to sign up for the free 839 00:49:15.650 --> 00:49:18.409 email newsletter that I do. I generally publish it two 840 00:49:18.449 --> 00:49:21.820 or three times a month. sometimes with a podcast attached. 841 00:49:22.519 --> 00:49:25.079 And also at the site, you'll see a lot more 842 00:49:25.139 --> 00:49:28.760 detail and information about Retirement Reboot, the book. Yeah. 843 00:49:29.239 --> 00:49:32.380 It's a terrific site. You can listen to his podcast, 844 00:49:32.420 --> 00:49:35.039 read his articles, his blog, and so forth. And I've 845 00:49:35.079 --> 00:49:37.909 done it, so I recommend that you do it as well, 846 00:49:37.949 --> 00:49:40.170 and you can find out about his books on that 847 00:49:40.369 --> 00:49:43.530 site as well. So, folks, you can listen to Mark 848 00:49:43.769 --> 00:49:47.409 as a podcast at voiceamerica.com. You can also find it 849 00:49:47.949 --> 00:49:52.079 on my website, rowellresources.com. Just click on the 45 Forward tab. 850 00:49:53.519 --> 00:49:56.900 And so be sure to join me next Monday, 12 851 00:49:56.900 --> 00:50:00.099 noon Pacific, 3 p.m. Eastern time, when I'll be talking 852 00:50:00.159 --> 00:50:03.960 with Diane Jakobowicz of Fitness Empowerment. who is going to 853 00:50:03.980 --> 00:50:06.639 be doing the first of two shows about fitness and exercise, 854 00:50:07.179 --> 00:50:09.929 and does more broadly what she defines as movement for life. 855 00:50:10.670 --> 00:50:14.679 So with that, folks, keep moving forward. 45 forward.