Rethinking Retirement Readiness with Robert Powell

What if the retirement “crisis” isn’t universal—and the real squeeze is in the middle? We sit down with Robert Powell (aka “Mr. Retirement”) to unpack who’s truly at risk and how to build a plan that survives markets and real life. We start with simple, strong foundations for early savers—why target date funds work when life is straightforward—and when to graduate to a personalized allocation that accounts for human capital, taxable assets, and Social Security as bond-like income.

From there, we get candid about product trends and incentives. Should your 401(k) hold private credit or private equity? If you can’t measure the risk, you can’t manage it. We also confront the crypto question: a small experimental slice might be fine for risk capital, but betting core retirement money on an asset with no earnings or valuation anchor is a leap. Along the way, we revisit the active vs passive debate and land on a practical truth: transparent costs and broad passive exposure often beat complex tilts once you factor fees, taxes, and behavior.

Behavior may be the biggest driver of outcomes. Overconfidence and recency bias lead investors to chase heat or bail at bottoms. Robert lays out how advisors can add real value with behavioral assessments and coaching that keep clients invested and calm. Then the conversation widens to what most plans miss: elder planning. We cover caregiving, housing decisions, legal documents, fraud risks, and the right time to prepare—ideally by the mid‑60s, before cognitive decline erodes decision quality.

Finally, we dig into the spending “smile,” why essential expenses should be covered by guaranteed income, and how to give yourself permission to spend earlier without fearing ruin. The most important lesson: don’t just retire from work—retire to purpose. Define the life you want, automate what you can, build your team, and review your plan annually. If this helped you think differently about retirement, follow the show, share it with a friend who needs it, and leave a review with your biggest takeaway.

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Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Chapters

• 0:00 Setting The Retirement Debate
• 2:34 Who’s Really In Crisis
• 4:44 Target Date Funds And Human Capital
• 8:24 Should 401(k)s Add Alternatives
• 9:34 Crypto’s Place In A Retirement Plan
• 14:04 Private Credit Risks And Incentives
• 15:44 Passive vs Active And Risk-Adjusted Thinking
• 19:24 Behavior, Biases, And Advisor Alpha
• 25:40 Elder Planning Becomes Essential
• 29:20 Spending Patterns, The Smile, And LTC Risk
• 33:50 When To Retire And Purpose After Work
• 37:20 Key Takeaways And Next Steps

Transcript

Steve Davenport: 0:26

Hello everyone and welcome to Skeptics Guide to Investing. Today we're fortunate to have with us Robert Powell, Mr. Retirement. Uh Robert's a CFP who's been a successful journalist, , editor for retirement weekly and retirement daily. Um he's an excellent journalist, , a podcaster, and a friend. Um, I've enjoyed, , talking to Robert about everything, investing and everything. And now that I'm 62 and my partner Clem is 64, we figured we'd try to see if what we've done with retirement and what's happening in retirement, , we're on the same page. I think we probably will be. But today in this world, it's a little bit crazy, and I'm not sure whether we're doing the everything right. So that's why we we have you here today, Robert. Thanks for coming and tell us what what it's nice to have you. So how how how do you feel about today and the world and and everything retirement? It seems like there's a lot going on with extension of , require N R D's and things look like they're going better for introducing retirement accounts across the spectrum . I mean, I feel like retirement has kind of become a bit of the the new black.

Robert Powell: 1:59

Yeah. Well, , I go back and forth on this, A lot of times people are wondering whether people are generally financially ready to retire. And there's a lot of debate around whether there's a crisis in in the US around retirement and how we compare the other other countries. And and I've come to sort of appreciate what Andrew Biggs has said about the retirement crises here in the US. One is, , much of what we say is a crisis is might be based on faulty data. And much of and and we and then in terms of whether there's a crisis or not, we sort of homogenize things. And one of the things that we're homogenizing is that everyone is in crisis. And Andrew Biggs is of the opinion, and I sort of agree with this, is that if you're in the upper income quintile, your high net worth, , you likely have saved enough and you don't have to worry about funding your desired standard of living. If you're in the lower income quintiles and maybe you haven't saved enough, Social Security may replace 80 to 90 percent of your pre-retirement income. And so you're not necessarily in a crisis because you'll at least maintain the same standard of living that you had when you were working in retirement. It's the the middle where we have, I think, a problem where maybe people haven't saved enough and maybe they need to work longer, or maybe they need to adjust how they're allocating their assets. And I think for those folks who are in are in the middle, maybe they have assets of 250 to maybe two, even 2 million, let's say, , and they don't know how they're going to pay for their desired standard of living or whether the money that they have saved will last over the course of the lifetime because obviously this is one of the greatest mysteries of retirement planning. And the hardest part of retirement planning is I don't know what my horizon will be. I don't know whether it's five years or 35 years. And given that uncertainty, , it creates lots of problems. And therein for me lies the crises is I just don't know whether I'll be able to maintain my desired standard of living given what I've saved and given how long I might live.

Steve Davenport: 4:02

That's that's a great story. I mean, I look at it and I keep asking my wife, like, well, how long am I gonna live? And she said, 'not long if you keeps asking me that question. So I've stopped asking, but I don't know. Clem, what do you think about is the issue of the day for retirement?

Clem Miller: 4:24

Well, I think one of the questions is allocation, right? I mean, what are the ideal allocations for people who are near retirement, people who are far away from retirement? Uh, , there's always been these sort of standard sort of rules of th b that that that drive things like target date funds, , , the percentage of bonds, the percentage of stocks, , percentage of alternatives. Uh so the question that I would have is , how do you how do you look at this? Is this is this whole sort of allocation model , sort of underlying the whole target date concept, , whether we're talking about a target date fund or not, , this whole idea of being able to sort of start off with equities at a younger age and move more into more fixed income as life goes on, , do you buy that? Um do you like where does where do alternatives fit into that equation? I mean, clearly, , there's there's been this sort of push to put more illiquid stuff into portfolios. Um I don't know. What do you what do you have to say about all that?

Robert Powell: 5:45

Yeah, I think I mean let's start with target aid funds and let's start with like a younger generation of people maybe entering the workforce who might not have much in the way of assets, may not have much in the way of complex financial issues. And for me, a target aid fund makes sense for the vast majority of younger workers, , in part because you don't have to worry about what my asset allocation is. It generally will be more aggressive than than than you might pick on your own. Uh, and it rebalances. So I think, , from a turnkey perspective, it's great. Um as one ages, as their life becomes more complex, as they acc ulate other assets outside of their 401k, maybe in taxable accounts or Roth IRA accounts, I think target date funds start to make less sense because they're not factoring in all the other assets that you own. And so at that point, I think it would be far better to maybe move in either into a managed account world or maybe into a the the brokerage world inside your 401k, where you can sort of start to pick and choose what investments you ought to own given what else you own in your life and given other factors like your h an capital, right? Are are you are you a venture capitalist with risky earnings, or are you a school teacher with safe earnings, in which case maybe you're going to adjust your your asset allocation based on your h an capital? And that's that's a theory that's been espoused by people like Moshe Moleschi, who is the author of Are You a Stock or a Bond? And I favor this notion of fine-tuning your portfolio based on all your sources of capital, including so your Social Security, which many people sort of disregard, but in many ways, Social Security becomes a fixed income or a bond portion of your portfolio. So you just, I think as you age and as your your finances become more complicated and you're and you acquire assets outside your 401k, you just need to be more mindful of how you're fine-tuning how you're saving and investing for retirement inside your 401k or IRAs or tax-deferred accounts. And , and then as in terms of alternatives, I have to say, , at the moment, the way they're going to be introduced, at least according to my understanding, is that they'll be introduced inside a target date fund. And it might be around 5% of the portfolio is invested in private credit or private equity or a mix of both. And my question ultimately is how does that affect the risk-adjusted performance of the target date fund? Uh, does it affect beta? Does it affect, , what I can expect to return? Uh, who is, , and I could say you could say 5% is a not meaningful allocation, but I still want to know how it's going to affect the rest of my portfolio. 95% of the portfolio that I'm invested in is in things I can track. And there's a, , there are there are shop ratios, right? There are trainer indexes, there are information ratios. With a private credit, I just have no or private equity, I have no idea. It's a blind investment to me. And I would prefer that people not introduce private credit and private equity into a target date fund until we actually actually know how it affects the portfolio. Otherwise, I think we're doing a disservice to investors and we're doing a great service to the people who are packaging these private assets.

Clem Miller: 9:00

Yeah, I wonder if we'll ever know. Um, because by nature they're illiquid. Right. So I don't know that we'll ever know. Um and so let me ask you this. Also, , there's a lot of been a lot of discussion. Um it's diminished recently with poor performance, but also about crypto. Um, and I'm , if you've been following me for a long time, I'm an opponent of crypto. Um, and I don't know, just how how do you think about crypto in in the context of retirement?

Robert Powell: 9:34

Yeah, I I think , , I had a guest on one of my podcasts to talk about crypto. And, , his notion is if you're an investor for the long term, 20, 30, 40 years, maybe you allocate a portion to crypto because we just don't know. Um, on the other hand, if what you're doing is experimenting and you and it's risk capital, that's fine. If on the other hand, this is a significant portion of your portfolio and you don't know what the heck you're investing in, I'd say avoid it for now, right? We just don't know. Bill Sharp says, I don't know how to value it, right? There I there are no earnings associated with crypto, right? So you're really betting on vaporware. And I can tell you from a per firsthand experience, I've not made money in crypto. I probably have lost more money than I've made in crypto. And and I'm just a dabbler. I'm just trying to like see how it works and see how it responds to different inflationary environments or different interest rate environments. And I have to say, I'm not really all that keen on. I fall into your camp. Well, I'm I'm not a big fan of crypto because it really hasn't done what I what people have sort of now again. I haven't had I haven't owned it for 10 or 20 or 30 years, so maybe it'll prove me wrong. But in the short that long, right?

Clem Miller: 10:50

Um, I mean, when I s read some of the things that younger people write about people who are much younger, okay, than us, , write about crypto and their asset allocation, it sounds like many of these younger people have sort of a third or half in crypto, which is in my mind crazy. I mean, I think what you were talking about is maybe having like two, three, four, five maybe percent in crypto. Uh, but some of these younger people have a third in crypto or or even more.

Steve Davenport: 11:26

Um I was at a conference with somebody who was a hundred percent crypto.

Robert Powell: 11:31

Yeah.

Steve Davenport: 11:31

And I I was like, okay, I I I get the messaging. I understand you're doing this for, but can you tell me why you think none of the none of the other assets are gonna have the return for the crypto will have? And I said, okay, but well that will that how do you understand that return and if it ever got to a place where it was overpriced? And they said, well, I I don't have a a pricing to meet, , but I think I think these things are, , we we all know that there's two ways that you make money buying at the right time and selling at the right time. And I don't know if we don't have a pricing mechanism, how we get to those two things.

Robert Powell: 12:14

Yeah. I mean, if you think about it comparing to other asset classes, I know that small cap stocks have averaged 12% since like for the past 90 plus years or even longer, or large cap stocks , average 10% and bonds average five. I don't right, I and and I know what the historical sharp cape ratios are, right? I like I can measure things and I have things to compare it to. I don't know what to compare crypto to, right?

Clem Miller: 12:38

I just don't know. And and the crypto proponents, they invent certain measures that basically are price moment measures, although they may call them other things. So yeah.

Robert Powell: 12:53

I'm not a fan. I mean, if you again risk cap, , if you have risk capacity and this is a risk, , that you can afford to take and lose without it harming your retirement savings, sure. But I think 100%.

Clem Miller: 13:07

You mentioned, yeah, you mentioned private credit, and , there's a lot of talk out there about how there might be some problems within that whole private credit world. Um, I know that private credit has really been talked up over the last few years by by some of the alternatives people. It's been really talked up a lot. And , , which when I heard all of that, I was thinking to myself, yeah, maybe they're talking it up a little bit too much, right? Uh maybe there's more risk there than we than we think there is. And and I think there's a lot more talk about the risks that are sort of hidden, embedded in in private credit, which I'm not I'm not surprised about because what is private credit? I mean it's it's loans that can default, right? So if you've got some you got some hidden credit exposures in there where you might have some defaults on loans and then collateral that is less secure than you might think it is to to help ensure a recovery on a defaulted loan, , that could be a a serious problem. Um and so I'm I'm very I'm kind of skeptical about private credit as well. I don't know. What do you think about private credit?

Robert Powell: 14:29

I'm just a skeptical. And I I I for me I'm part of the reason is think about the source of this, right? In many cases, you've got an investment firm that is losing money because they can't sell open-end mutual funds anymore. Uh, they can't sell they they can't sell passive ETFs because there's no money to be made for these some of these firms. They could try active ETFs, but , maybe that's not a meaningful contributor to their to their profits. And so where else can I go? I can go to private, I can package private credit and sell that to investors and make a ton of a heck of a lot more money selling that to average investors than I can with other forms of assets that I could manage. So this to me becomes like this is the Hail Mary pass for many investment firms, I think.

Clem Miller: 15:12

Let me let me ask you, since you sort of mentioned active and passive, where do you stand on the whole active versus passive debate?

Robert Powell: 15:21

Well, I I think , I I I probably fall into the passive ETF and and and par so par mostly, I think, because you , if you if you agree with Jack Bogle and and others, right, that low expense ratios is one of the ways that you can build alpha in your portfolio, , then why fight the tape, right? So let's, , and I and I have tried to fight the tape, right? I've gone, I've again I've experiment, right, with , I have risk capacity, so I can experiment with active ETFs. And I have to say, for all the back and forth with these products, ultimately passive just seems to be a better way to go, right? Like whether it you're trying to invest in moment ETFs or or tilt ETFs or whatever, or smart beta, , whatever it might be. I just find that at the end of the day, it was a like a lot of friction to not even keep pace with a passive ETF. Right.

Steve Davenport: 16:18

Yeah, is it is that the way we should measure it, or should we look at it in a risk adjusting? Because I kind of I'm a more of a dividend investor, and I look at it and say, I don't know, I think that these names perform better when there's a downturn. They they give you more income right away. And therefore, if I'm thinking about managing the cash flow for my 401k, it's kind of nice to have my bonds and and dividends kind of pay me something, and I'll take some risk in the with an ETF, maybe an SP ETF. But it it it does feel to me on a risk adjusted basis, like I always look at things and say, well, did you match the benchmark and after fees? And I and I look at it and say, no, my return was slightly lower, but my risk adjusted return was higher. And and so I I I find that I know it's easier to say this is better than this, but in reality, isn't it more about how well you sleep? I mean, the band I think this kind of leads us to the to one of our next topics.

Robert Powell: 17:30

Before you do that, Steve, let me let me throw this question out to you. I would love for people to think about risk-adjusted performance, but I don't know if the average investor, 401k investor, would even know how to do that.

Steve Davenport: 17:40

Information ratio is pretty simple, Robert. Right? I mean, I mean they give you both n bers on every statement for every strategy.

Clem Miller: 17:48

So and to an average investor, you think invests information ratios? Yeah, I you take one n ber and you divide it by the other n ber.

Robert Powell: 17:55

I know it's on the CFP exam, I can tell you that, but I don't think the average investor would say information ratio what? Like, what do I what do I do with that?

Steve Davenport: 18:04

Are we are we here to make people better investors, or are we here to make people broadly simpler investors?

Robert Powell: 18:10

Right, a hundred a hundred percent. I mean, I I I will I look, I'm trying to get my son to read the intelligent investor, right? Because he's because I feel like he's he's he views investing like he views betting on sports games, , much in the same way, right? It's all it's all I mean I I don't know.

Steve Davenport: 18:30

I I find that the let's j p around a little bit. I find that the idea of a behavior is something we need to talk about. And I know you're doing some interesting work with AI and vibe coding and trying to talk about behavior. Is is the industry wrong to just keep coming out with fact sheets and not talk about, , hey, most of our investors are invested in this strategy because they like the way it behaves in both up and down markets, and it's easier for them to feel good about like we we've got a strategy where we look at faith-based investors, where we take names that are what we consider, , are approved by the US Catholic bishops as socially responsible, and then we put those into our portfolio in a balanced way, and people are like, are any bad names? We're like, no, these names are all determined by someone else, and we just try to take what we consider to be the better names and put them together. And people are feeling a little bit like the media and other things that promote things, , like crypto and Bitcoin and and off spaces, and well, we can go down the list. But I kind of think that we're on the precipice of people really looking more at what are my values and what are the things that are important that are gonna make me comfortable with holding this investment through thick and thin. We can ask people to hold every single name in the S B through thick and thin or the Russell three, but is is that really? I mean, are we really saying we believe in all of the names?

Robert Powell: 20:11

You know, it it's a tough question. I and I'm gonna use one degree of separation here, which I can say is as I look at young people investing, I don't think they're they're thinking about in some cases, they're looking at My values and my investments. In other cases, it's a it's hard work to do that inside a 401k, right? Like how would I go about matching my values to the investment inside my menu that I'm being offered through my 401 plan? And that's, I think that's a tall order, right? Ultimately. Um, maybe outside your 401k, it's a little bit easier. I can do fractional investing and blah, blah, blah. Um, , but but I think as, and then there are another set of people who don't care whether their values match their investments, right? All they care about is whether I can write a call against this stock and earn some income while while I hold the stock because I don't care if it's a pharmaceutical company that does X or a gun maker that does Y or whatever it might be the case, , I just I just care about making money. I don't care about whether it matches my values, right? I think so. I think on the one hand, yes, I think it would be great if people could match their values to their investments. I think the the and and there's a segment of people that for whom that makes sense. I think the more important thing for an advisor to do, though, ultimately, if you buy the research that Vanguard and others have done, where they say if you add behavioral coaching into your practice, you can add one to two percent performance to your client's portfolio just by coaching them around recency bias or overconfidence or whatever the case may be. And so you mentioned vibe coding. I've become really fond of using AI to create web applications that would allow, in this case, of an advisor to actually help their clients assess which biases they're susceptible to, right? So at the moment, there is no tool, right? An advisor can say, I can say the words recency bias, but I have no idea whether you have it or not, right? I can't do that in the absence of an assessment. So this application that I've built, would it allow an advisor to help their client assess which of the biases they're susceptible to? And then what are the mitigation factors or strategies that you could employ to help someone overcome whatever bias they have? I if no, if no one has recency bias but they have overconfidence, well, I don't have to work worry about the strategies to help you overcome recency bias. You don't have it. But if you have overconfidence bias, I do have to work on that. And then therein I can start adding, , in the words of Vanguard Alpha or in the words of Morningstar Gamma to someone's portfolio by helping them overcome these biases.

Steve Davenport: 23:02

Yeah, I mean, I I'm I'm all for like I've always tried to look at this thing and say, which one is the most problem? And that's the one I should address because I I can't address every bias of every behavior of every investor, but I want to try to, , and I think the overconfidence one is is is is is where I think the energy is. But where do you think like what is the one bias hey, if we could if if we if we had the the one that we could address this with people, like w we should address this first.

Robert Powell: 23:37

Yeah. I don't know, Clint. You have a thought on that? You you work with right?

Clem Miller: 23:40

You have no well, I I was just thinking that , when you were when you mentioned this, the vibe coding. First of all, when I hear the term vibe coding, I have basically no idea what that is. Yeah. Um this is kind of the first time I've ever heard of vibe coding. Um, but also , I'm trying to imagine what it is that you're exactly doing. I mean, are you like doing a questionnaire and then sort of deriving from that what the behavioral biases are?

Robert Powell: 24:10

Or yeah, that's precisely it. It's it would be a series of questions that are aimed at surfacing, uncovering which bias someone might have. So , the question might be if I gave you $10 today versus $12 in two weeks, which would you prefer? Or if you learn that the market was down 10% today, which of the following things might you do? Uh sell 50% of your portfolio, hold hold steady, or invest more now, right? So all those kind of questions would surface and or cover the biases that you have. And then with that, then the advisor can say, well, , you're green, yellow, red lights on these following biases, and we don't have to worry about the ones that are in green or , maybe a little bit of those that are in yellow, but a lot and the ones that are in red. So, , and I think , to Steve, your question, like which are the more popular, I , I'm fond of saying overconfidence and recency, right? One of the things that we know is people will think that tomorrow will be the same as today as it was yesterday. And so they think about like, well, the market went up, , 0.5% today. Uh, it's gonna go up another 0.5 tomorrow because it's tomorrow's the same. And the other is overconfidence, and that's the notion of , we're confusing brains with a bull market, right? So people sort of think, oh, my portfolio with their th bs under their suspenders. Look at how smart I am. I'm up, , 27% when it was had nothing to do with, , whatever , it had everything to do with the allocation or the or whatnot, but not necessarily like , that they did anything that that they could take credit for.

Steve Davenport: 25:44

I'll try to I'll try to focus on those two with our client. I mean, we we have a blog and we try to talk to our clients continuously about patience and time and let things work for you and try not to get shaken up by the the volatility or the uncertainty of the markets today. Um but let's take a step even longer term. I can you talk to me about elder planning and how important that has become in the in the world of retirement? I yeah I think that living longer has been in some ways not exactly what we planned, right? Because the quality of life in that longer life isn't necessarily what you consider to be high quality living. Is that fair?

Robert Powell: 26:31

Yeah, I think it's fair. So just by way of background, I'm involved in in a program that's being taught by the Financial Planning Association. It's called the Elder Planning Specialist Certification Program. Uh it's based on work that Annalie Krueger and Bob Mortestock began over a decade ago. Uh both of them have have a long history in terms of elder planning with with clients. Bob with on the financial services side and Ali sort of on the on the boots in the ground helping people through crises mode. I came along because I had some expertise in building online courses and we joined forces to build this course and then launch it through the Financial Planning Association. And one of the things that we focus on is sort of all aspects of elder planning. And just for a moment, I'll take a step back. You, as an advisor, have helped your clients save for retirement. Uh you have built them financial plans, , you and now they're on the precipice of retirement and you're helping them build maybe an income plan. And the next iteration of planning is well, above and beyond building an income plan. What else do we need to factor in as you think about your life in retirement? And among those things would be , will you become a caregiver? Will you become a recipient of care? Will you experience cognitive decline? Um, where will you live? What kind of healthcare shocks might you face? Uh, will you become a solo ager? Um, what about the importance of a family meeting so that people understand your wishes? What about all the legal doc ents that you might need? And you, as a financial advisor who's the quarterback of maybe a team of advisors or a team of adjacent advisors, need to understand whether your clients have a HIPAA release, whether they have a healthcare proxy or a durable power of attorney for healthcare matters? Uh do they have an advanced directive or living will? Do they have things like Mulse and Pulse, , et cetera? And then , , what about end-of-life wishes? Do you do you actually know whether your clients want this or that treatment as they sort of approach the end of life? Uh, what about AI? What what role does AI play in elder planning? And how would you incorporate it into your practice to help your clients as they age and experience things? What about elder fraud and and scams and schemes that your older clients might be exposed to? So there's a whole, , and so I I often think of it this way like financial planning doesn't end when your clients retire, right? It you you have pledged to help them over the course of their life, right? And so there's no end date to your financial plan, which means now you need to acquire new knowledge, skills, and abilities to help them as they go through these other phases of their life. And that and that means that you go new as an advisor, where heretofore all I had to worry about was information ratios, maybe, right? Now I have to think about I don't know how to pick an assisted living facility or a nursing home or how to help them pick caregiving options. But now you now it's who are they going to turn to if not you for this information and and help? Um and and you as the quarterback need to be able to help them figure out like how do I age in retirement? And and we're finding in this course great receptivity, it's twofold. One is the advisors are dealing with it themselves with their own families. And that's the reason why many of them sign up for the course is because they have they're dealing with parents that they've never had to deal with these issues before. And then, of course, their clients are aging, and many of them are now experiencing cognitive decline or dementia or caregiving needs and whatever the case may be. And they're signing up for the course. Uh, and , and , and one of the things that we do in the course is we give them an 80-page template that they then can use to build an elder plan with their clients. And it's a fillable PDF that you can go through this, all the things I just mentioned, all the laundry list of things that you have to think about as you think about becoming offering elder plan services. And and this is to say that you don't have to become the person that delivers all those services, right? But what you you do need to do is build out a team of people, whether it's geriatric care managers or estate planning attorneys that specialize in this or or whatever the case may be, , long-term care insurance agents, et cetera. Uh it just means that it the the the the bar has been raised on you as your clients age. Now the bar doesn't get lower as they age.

Clem Miller: 31:06

So what at what age should all of this be done by?

Robert Powell: 31:11

Well, I I at the at the latest, let's say. I I think at the mid-60s, at the latest. You know, one of the things that that I'm fond of quoting is a study that Michael Finka did when he was at Texas Tech University, where he and his co-authors found that our our financial literacy starts declining in our 50s or so by about one to two percent per year over the course of our lives. Uh and and meanwhile, your confidence in your decisions stays the same, which to me means that you're now increasingly more confident about the bad decisions you make as you age. So you want to take that away from that older person, right? You want to have your 65-year-old self think about your 85-year-old self. And so for you, for the advisor, is to say, we have to anticipate what could happen in the future, one of which is you're going to have a decline in financial literacy and cognitive decline. And , and we want to make good decisions for you now that will affect you 20 years hence.

Steve Davenport: 32:10

No, I think that's great. I I I fall into that category where I've experienced in my own parents Alzheimer's and financial fraud with my father when he was on a low. And I feel that there's no real good way, like you say, unless you talk about it early and often to try to get because guess what? My father, when he , wanted to keep driving, that decision got harder and not easier through time because he believed he had whatever skills until we had an incident. So it's I I I think that isn't it is the best model in your mind for retirement thinking to think about the go-go, slow go and no-go years, or is there a better like I I agree with the smile and I agree with some of the the research, but I'm not sure that can we can we sort of divide up retirement into three stages? Is that the way to think about it?

Robert Powell: 33:10

Uh you might even think about it in four stages, which is the , the pre-go go, which would be like on you're on retirement's doorstep and you've got a plan for all the things that you're gonna do. And I'd say, , generally speaking, it's a good way to categorize retirement. You know, one of the things that we know generally is that when people are in the early years of retirement, maybe from 65 to 75, maybe they travel and do all the things that they said that they wanted to do. By the time they turn 75, I don't need to go to Paris the second time I've been there, right? I don't need to go back to Japan a third time because I've been there. Maybe in Clem's case, you do need to go back a third time.

Steve Davenport: 33:45

That's what we're we're we're we're we're wondering if we should let them back.

Robert Powell: 33:49

Yeah, but , the folks over at the Rand Corporation will say there's decreased utility around some of the activities that you did in the early years. And so you start to slow down in your 75 to 85 year , , years, generally speaking, right? I don't go, I don't need to travel as much, and maybe I spend more time gardening with the grandkids and working on charitable things that I'm fond of. Uh and then at some point, , Peter and Tia will say, , at some point you're gonna slow down, right? Your your VO2 max has declined to the point where you can't do all the things that you used to, and age catches up with you. So by the time you reach 85, certainly by the time you reach 90, some people have just experiencing that slowdown. So I think the the go-go slogo, no go, is , is an appropriate way to think about it. It's certainly, I think, an appropriate way for you to plan for retirement as you think about like what activities will I do throughout the course of my 30, 35 years of retirement. And equally important, how will I spend my money , , throughout retirement? And I think , you mentioned the smile. I'm fond of mentioning the smile that David Blanchett did back in that must be 20 years ago now, it seems like, or the work that Michael Hurd did at the Rand Corporation, where he too looked at spending in retirement. And one of the interesting things to me about spending in retirement is if it if it's true that it declines on an inflation-adjusted basis by one to two percent over the course of retirement, and that more people than not end up with more money in the retirement accounts at the end of retirement than it is when they started. You as an advisor, it's inc bent upon you to say, it's I give you permission to spend now because I assure you you're not gonna be spending it the same way 35 years hence. Now, there is some idiosyncratic risk, right? There's gonna be the idiosyncratic risk of needing long-term care of some sort, nursings, homes, etc. Um, but but in the in the but you don't know if you're gonna be in the 5% that that faces that idiosyncratic risk, right? So you should, as the advisor, it's inc bent on you to manage and mitigate the risk of long-term care shocks.

Steve Davenport: 35:51

Yeah, I was gonna say that it seems like we're getting into this place where we're trying to say, hey, there's this data that says this about retirees. I've , we've got clients who just are like same. They are and they have been wonderful savers. And they they get, , they get to this point with just the right mix of assets and some Roth and some other things, and and they they are truly managing their budget so that they they're living on less than their social security and they have all these other assets. And yeah, and how do you I guess how do you turn from being the money person to being the person that becomes the lifestyle person?

Robert Powell: 36:37

Yeah, it's I think it's the hardest thing that advisors have to do is to get people to change their behavior from saver to spender and to give them the confidence, right, that they need to spend that money. It's not no, it's not only just the permission to spend, it's the confidence. And I think if you're able to show them, I always think about retirement income planning as a as a spreadsheet, it's a row and col n exercise, right? And I'm gonna show you how your assets and your sources of income and your expenses, and and I'm gonna show you how over the course of 35 years, that you'll be fine, right? And and and it's fine regardless of whether even if there's a some sort of emergency of some sort, you need a new roof. Well, we've already built in reserve funds for the the odd chance, or not not even the odd chance, the likely chance that you're gonna need to spend money on things you didn't anticipate. Um, and and and so, but on the other hand, right, here's here's here are the sources of income. It's it's RMDs, it's social security, it might be a pension, it might be rental income from properties that you own. Um, it's gonna be , , and all this income and is going to meet all these expenses that we've outlined over the course of your life, even accounting for either inflation or inflation adjustments along the way. And I think once people see that in a spreadsheet and see that they're, , that they're not gonna run out of money and you've accounted for all these contingencies, I think they'll be fine. One of the things I'd like to set to tell people is I'm part of , I'm involved in the faculty that teaches the retirement management advisor program out of the Investments and Wealth Institute. And we talk about like as you're building a retirement income plan, let's see the percentage of essential expenses that we can meet with guaranteed sources of income. And if you're over 50% and close to 80% and you're covering that with guaranteed sources of income, whether it's Social Security or other forms, income annuities, et cetera, , that should give your client the confidence to know that they can spend the money and they can spend some additional money on discretionary things because their essentials are covered. And that, , I think that gives people the confidence to then spend. And then you get it gives you the confidence to tell them that they can spend.

Steve Davenport: 38:48

Oh, that's great advice. I appreciate that.

Clem Miller: 38:51

I don't I don't think people actually change their spending habits too much from their work lives into their retirement years. I really don't. I think , they might they have more time to spend, right? Money.

Steve Davenport: 39:06

Yeah.

Clem Miller: 39:07

But I don't think, , people don't go, , if they never went crazy in spending when they were in their work years, they're not gonna go crazy in spending when they're in when when they're in their retirement year.

Steve Davenport: 39:20

I I think that some people feel like they missed things by being too engaged in work. And I think there is a big possibility of I I I'd say that if you're not a diehard traveler, you're not likely to turn into a diehard traveler. And that's travel seems like that big variable that everybody about I've al I've always been a diehard traveler, so that was always correct. I don't think your behavior change, but I'm not saying that there are people out there who look at things and say, hey, I I I wish I did this and I can do this and I'm gonna do this.

Clem Miller: 39:54

Um I mean there's priorities for me, , vacation travel, okay, travel, is much more important than having like a big house or a yacht or a boat or any of these things that that some people like to like to spend their money or waste their money in some cases on. Yeah.

Robert Powell: 40:16

Just it's interesting, Clem. One of the things that people have been doing is when a lot of times they talk about inheritances. And I'll give you an example. Professor Zv Bodhi, a professor emeritus out of Boston University, who I'm fond of, says instead of giving my children and my grandchildren an inheritance, I'm gonna spend the money on them traveling. So he took his whole family to Yellowstone. And that was his way of traveling in retirement. It but also, , spending time with his grandchildren in ways that many people want to do once they reach that point in their lives where they have grandchildren. So two a twofer. Nice. I like that idea.

Steve Davenport: 40:53

Yeah. Do you have any last questions to wrap up?

Clem Miller: 40:58

Um no, not really. Uh well no, I do have one that I was thinking about while we while we were discussing earlier, and that is the appropriate time to retire. Um, , I'm fine. I mean, I retired age 60 a few years ago, right? Uh almost four years ago now. And I think that was a great move to retire at that age. Yeah. Um, it was the perfect timing because my son had just graduated from his master's degree. It was in the middle of or towards the end of the pandemic, and I didn't want to go back into the office. Uh, I was kind of tired of the of the work grind, the former work grind. I wanted to teach, which I'm doing now. Um, so , it was perfect timing. And also, I find that, , I had a lot of energy to travel. I wanted to travel and so on. I think if , when I think about people who like wait till 65, 66, 67, 60, I mean, that really reduces the n ber of years you have left to do the things that you want to do.

Robert Powell: 42:12

Yeah.

Clem Miller: 42:12

Um, and I think for me, I've created a a lifestyle which is intellectually fulfilling. And it's gotta be something that keeps my I mean it keeps my brain going, right? Um , I think I think what I've done is created a a lifestyle that that will help keep me going for years and years and years to come. Um whereas I think some people who just sort of wait until they're, , who who work who sort of retire in place at their jobs and then and then leave at 65, 66, 67, I think they're gonna deteriorate much faster than somebody who retires early and does all these things.

Robert Powell: 43:01

Yeah. I I think of it in two ways, Clem. One is , , have you crunched the n bers? Are you financially ready to retire? Right. So that gives you, , some degree of confidence. It's not just that I'm tired of working and I, , I'm gonna call right. I'm tired of it.

Clem Miller: 43:16

Well, I had the confidence, I had the confidence too. I mean, if I if I didn't think I had the resources to do it, I wouldn't have done it.

Robert Powell: 43:23

I think that's right. I think that's job one, right? I mean, there was research that done that was done in France, I think, about utility workers there. And they were like, what was the primary reason for you retiring? They were like, I'm tired, right? I'm just tired.

Clem Miller: 43:36

Well, not tired in general, but you're tired of doing a particular, right?

Robert Powell: 43:40

Like I think of that right, I think of that famous scene from one flew over the cuckoo's nest, right? Where he's like, Mac, I'm tired, right? And then you retire. So that's one. Are you financially ready? And then the second, and the more important thing is, and you've addressed it but didn't quite say it in the same words, is not retiring from something, but retiring to something. Yes. And that's the that's the key. That's the key.

Clem Miller: 44:02

Absolutely right. I don't think people think about that two part all that much. Yeah, and I I did. I mean, I had in my mind exactly what I wanted to do when I retired. Yeah. Uh the teaching, , I thought about podcasting even before Steve approached me. Um, I thought about writing. So I write my my little missives on LinkedIn when I get upset enough about something, I'll sit down. That's probably a big thing.

Steve Davenport: 44:35

Robert regrets a lot.

Clem Miller: 44:37

So so writing and and and teaching and and traveling, all those things are are intellectually appealing and and are just things that will keep my mind and body active for years and years to come, I I hope. Yeah.

Robert Powell: 44:55

Yeah, I mean I think that's the key is to be intentional about it, right? Not to be sort of like let circ stances dictate when you retire and then what you do. So often people retire and then go back to work because they, , their identity was tied up in their work, right? Like their social network, et cetera, right? And men have a particularly hard time of this, right? Women have much bigger social networks than men in general. And , and so , our friend groups tend to shrink as we age. Whereas, , women, , if I if if if I was to die, I would not worry about my wife. If if my wife was to die, I would worry a lot about me because I don't have the same social networks. You know, I'd have to like where I have to work hard at making those social work networks now, or , , because , on the odd chance that that my wife does predecease me, which is pretty unlikely, , , it would be up to me to figure out like how do I make sure that I don't become isolated and lonely.

Steve Davenport: 45:54

Yeah. I mean, I think we're probably reaching a point where I mean, I I would love to have you, Robert. I think we could talk about these things for for days, not hours. Um, but I guess how would you wrap up if if we had one thing to message to our clients or to our our our listeners? How how do you look at what is most important for the person around this topic? Just to follow, , the certain writings or to like what is it that you think is a key to helping make your retirement work as well as it can work? Is it this is it this values decisions around time? What is it you think you need? I I I know that financing and being able to live that life is a big part of it, but I mean, what do you think is most important? You're the expert on retirement.

Robert Powell: 46:46

Yeah, I I think it is really being intentional about the time. I think Glenn, you you're doing it right. Like, I I one of the projects that I want to work on is a book and video series that in essence is called Retire Successfully. And it would be to interview people who have retired successfully, not necessarily people who have acc ulated the most money, but who, , on their own terms have retired successfully, whether, , they may they have enough money, they have enough activities that they've that they've chosen. And what are the common elements of what these people have done? And I think by and large, it will be this notion of of of spending the time having enough money and then spending the time in retirement in the ways in which they want to do so. And along the way that they've planned for all the risk that they might face in retirement, right? Because I think you have to be prudent about it. You just can't say, again, right, recency bias, tomorrow will be the same as today. I've got to be able to plan for the Society of Actuaries has identified 15 risks that you'll face in retirement, right? All the way from the common ones like longevity and inflation to death of a spouse. Like who even thinks about death of a spouse? But , if you're being prudent about retirement planning, , you're gonna factor in things like that. So anyway, that's great. Time well spent. Thank you.

Steve Davenport: 48:08

That's great, thank you. Um, can can I get you to promise to come back and talk to the skeptics again?

Speaker 2: 48:15

Yeah, I eat, breathe, sleep these things, and hopefully I won't repeat myself.

Steve Davenport: 48:20

All right. Well, thank you. I appreciate you coming on. I think it was great, and I look forward to doing it again soon. Thank you, Robert. Thank you very much, Robert. Appreciate it.