Why You Shoudln't Listen to Most Retirement Planners

追加: 2026-05-24

[00:00:00]Why you shouldn't listen to most retirement planners. All right, so let's uh first thing we're going to show you this right here. This is pretty funny.

[00:00:09]Let's see if I can't start it from scratch.

[00:00:12]See here.

[00:00:14]>> [music] >> Well, I just ran the numbers and turns out I can retire at 89 and live comfortably for 21 minutes.

[00:00:25]>> [laughter] >> That's too good. That grand dog is saying I can just retire comfortably for 21 minutes. I said, "Grand dog, you should have been listening to the PVC pipe of knowledge." The PVC pipe of knowledge cuz I would have got you on the right path. All right. So, we're going to look at this. I don't have the whole pay I was just reading it. I don't know what I did with the rest of it, but this is this from my formerly beer stein Guinness hands. Model predictions for aggregate savings and population life expectancy.

[00:00:57]An increase in life expectancy, this is basically the the life cycle model and you can see life cycle stages right there. This is what we're going to be looking at. I can't remember the name of this from 2004 some paper I was just reading.

[00:01:11]And you can see we got a couple things.

[00:01:12]And I just basically put this up here. And this is the life cycle model.

[00:01:18]This is what basically a lot of retiree retirement planners base their assumptions on, which is stupid, but okay. And the first we got consumption real real consumption means net of inflation. All right, so it just says, "Hey, I'm consuming a buck today and I'll be consuming two bucks tomorrow, three bucks the next day, and four bucks the next day." Net of inflation, it's all the same amount. And we have savings in green and assets in red. And you can see right here consumption is at one when I'm 20 and at one when I'm 80. And again, that's net of inflation.

[00:01:52]That's the life cycle model.

[00:01:55]Your consumption grows with inflation, and that's it.

[00:01:59]Okay.

[00:02:00]Then we got assets. All right, so you can see we have negative assets or negative net worth. It should be net worth, but they say assets, I'll say assets. Negative assets, we have more debt than we have equity essentially.

[00:02:12]That's the negative assets. All right, negative net worth.

[00:02:16]Reason for that is we'll just say we put 5% down on a $200,000 house. All right, so that means we have a $190,000 mortgage on it. We got a car loan, student loans, all that. We have $250,000 of debt, $200,000 of assets, so we have negative net worth. Essentially, we're 20 years old, our net worth doesn't really start going into the positive until we're in our 40s or so. And whether or not that's exactly the models is the same. So, we have negative net worth. This is where a lot of people get real 32 years old, I'm not saving enough, I'm negative net worth. That's what the life cycle assumptions are correct. You do have negative net worth because you're young and you have a lot of debt, but that debt will slowly be paid off and your assets will slowly grow. And your savings is going to grow, too. We're not saving anything right out the gate, we're saving a little bit, saving a little bit, then we hit our peak earning years, 60 to 70 Well, really our peak earning years are really 50 to 60. We start saving a lot, and so our assets are growing. You can see our assets just really take off right here.

[00:03:17]So, by the time we hit 65 or so, our peak earning years are basically behind us now cuz we're retired. Our asset base is growing significantly, our savings is at the highest it's ever been cuz we're at our peak earning years. And then what happens is we don't we dis-save, all right? We don't save anymore, we're pulling money out of our portfolio, and our assets are tanking until we die 80 years old. All right, that's that's the model. And the model I actually agree with the negative net worth, and I agree with the savings amount, and the assets.

[00:03:47]I agree with all that stuff. It's the consumption I don't agree with at all. I I just find that stupid. Um the consumption doesn't work like that and that's why we have to adjust. So basically what the consumption would be um I guess I'll just I don't know if I don't know if light blue's going to work. Let's try. You ready?

[00:04:07]Woo, that smells good. Smells like blueberry. Is that blueberry uh scented? Oh man, they don't have a doesn't have tell you what it is.

[00:04:16]Can you all smell that?

[00:04:18]Woo, smells like blueberries. Yeah.

[00:04:20]Actually what happens with consumption consumption goes like this.

[00:04:26]That's how it works.

[00:04:27]And I don't know how you can if you want to do real consumption net of inflation, it goes like this.

[00:04:35]That's just how it works.

[00:04:36]And so the idea that your consumption stays level relative to the in to inflate I mean just like who would who would say that? Consumption right there.

[00:04:46]Why would anyone say your consumption stays flat relative to inflation? It doesn't make any sense, man.

[00:04:51]I don't know why anyone would say this is uh starting with seminal work of our Arabac and Kotlikoff's so read Arabac and Larry Kotlikoff. It actually is Larry Kotlikoff. I don't know who Arabac is.

[00:05:02]Models and courses incorporating the features described above have been solved on computers with the basic features of simple money models remaining intact. Individuals accumulate assets during their working years to finance consumption retirement.

[00:05:15]That's what I'm saying, right?

[00:05:18]Figure three This is figure two. Um Where is figure two in here? Anyway, figure Actually, I wonder if I Oh, I can't type for just a second.

[00:05:29]So this paper rethinking inflation and I think this is it.

[00:05:33]Let's see.

[00:05:35]Page was that? Page nine.

[00:05:38]That wasn't this one. Oh man.

[00:05:41]Mhm.

[00:05:42]Yeah, I'm not sure what uh uh where this paper was I was reading.

[00:05:46]It's in there someplace. I just got too much crap in there. I'm not going to be able to find it. Anyway, the point being is this is the way the retirement models work, actually. As your consumption goes up, and I I frankly doubt that many people would disagree with this, to be perfectly honest with you.

[00:06:00]Uh but the the level consume even Kotlikoff himself, him and Scott Burns is one that really introduced me this argument. The the consumption model changes as you age. Uh just a fact, and we want a consumption smoothing. And so this would be a version of consumption smoothing where we're just But I I don't agree with that. Because I I get it, there is consumption smoothing, but it's not like that at all. I'm just not Dude, look, I'm spending more money right now than God. Because I got all these freaking kids running around. We're going I mean, it's nuts how much money we're spending. It really stresses me out, to be honest. I'm like, damn. You know, we got freaking kids, marriage, graduation, graduation, vacation, the whole thing. Like, I can't keep my head on straight. You see what I'm saying? And so this is our peak consumption year, right now. All right, this would be our peak consumption year. Once Lena's out of the house, we'll start going down. So this is where we are right now. When Charlotte and I were first When I was in the army, I was only spending here. When we first got together, we were basically sharing going Dave Ramsey without even knowing who Dave Ramsey was back then.

[00:06:58]You know, we'd split a freaking black We used to eat black bean burritos. It'd just be a a fajita with black beans and rice. That was it, man. And then we'd once a week we'd go to Blue Burrito in Phoenix, Arizona and share a big blue.

[00:07:10]And they had free chips, and we'd get a drink. what we got. I think Charlotte iced tea, so I think we got iced tea. So the big blue for like five bucks, iced tea and free chips. That's what we'd share. Black bean burritos, pita pizza.

[00:07:21]We'd get pitas and put p- we'd make pizza. We just This is where we were.

[00:07:26]As you start having kids, our consumption went up. Until we hit right here.

[00:07:31]But right here is not We're not going to be doing this when we hit retire. We're just not And that's why retirement planners mess us up. They say I was just talking to a guy today. You know, he's 50, he's my age.

[00:07:42]And he's like, "Dude, I said you're not going to be and he knows. He goes slowly go go go slow go no go years. He's like he's not going to be consuming anywhere near the same kind of money he is right now when he's over here. It's just it's not going to happen. So, if we're design designing retirement planning models assuming that that consumption stays like this, it's just based on what? There's no evidence. I mean, there might be a little bit evidence that oh, my mom okay. Okay.

[00:08:10]That's That is evidence, but just not based on any solid evidence that's sustainable.

[00:08:15]What's the word I'm looking for? That's proof. It's just not based on any proof.

[00:08:18]Yeah, you might have some anecdotes, but that's it.

[00:08:20]Your consumption goes down here. So, in this case what we did is we did a slow go go slow go no go years for this guy.

[00:08:29]If you're I mean, just this is insanity to me, man.

[00:08:33]The consumption amount should not be level with inflation. Your consumption amount shouldn't be level with inflation once you hit your peak spending years up here. That doesn't make any sense.

[00:08:43]Anyway, and you should not sweat if your asset base is in your negative when you're 32 years old and you got three kids.

[00:08:49]And you shouldn't worry that your savings isn't very high cuz your savings is going to grow as your peak earnings grows, too.

[00:08:57]And if retirement planners aren't saying that, you know what they need to do, don't you? They need to pound sand and get their own freaking PVC pipe of knowledge cuz it's ridiculous.

[00:09:09]God bless you. Smash. Comment.