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The Smart Take:
Emotions and questions seem to come from everywhere as you approach retirement. Even the most prepared will ask, second guess, and then ask again: Do I have enough to retire? How do I ensure it lasts?
Leading retirement researcher Moshe Milevsky addressed these questions in a paper “How Long Will a Nest Egg Last.” In this episode, Tyler Emrick, CFA®, CFP®, unpacks Dr. Milevsky’s article and takes a different approach to answer these critical questions. Hear Tyler give actionable steps in plain English that you can help build confidence and clarity around your retirement nest egg.
Here’s some of what we discuss in this episode:
- Breaking down the equation and identifying areas we agree and disagree.
- How many years can you make withdrawals before running out of money?
- What are the variables you know and don’t know and how do you account for both?
- The importance of a diversified portfolio when trying to generate a rate of return each year.
- Rarely is there a single product or investment that meets your needs for all of retirement.
Related Episodes:
Learn more about the Retire Smarter Solution™: https://www.truewealthdesign.com/ep-45-retire-smarter-solution/
Ep 92: Rules Gone Awry – The 80% Spending Rule
Ep 93: Rules Gone Awry – Take Social Security Early
Ep 94: Should I Sell a Stock with a Large Taxable Gain? (Part 3)
Ep 95: Rules Gone Awry – The 4 Percent Rule
Ep 96: Rules Gone Awry – Retirement Healthcare Is Exorbitant
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The Hosts:
Kevin Kroskey, CFP®, MBA – About – Contact
Tyler Emrick, CFA®, CFP® – About – Contact
Episode Transcript:
Tyler Emrick:
The emotions and questions seem to come from everywhere and out of nowhere as you inevitably approach retirement, even the most prepared will ask, second guess, and then ask again, do I have enough to retire? We’ll take a different approach to answer that critical question. Expanding on a mathematical equation dubbed the solution to how long will a nest egg last? Coming up on today’s edition of Retire Smarter, we give retirees insight into what they can do today to confidently say the retirement nest egg will go the distance and be there throughout retirement.
Walter Storholt:
Going to be a great episode today here on Retire Smarter. I’m Walter Storholt alongside Tyler Emrick, a CERTIFIED FINANCIAL PLANNER and chartered financial analyst, and we have a lot of fun to dive into today. I like the fact that we’re talking about mathematical equations on today’s episode. Tyler, you get me excited. Taking me back to my good old math days back in high school. This is going to be fun. I’m looking forward to the discussion on what is that very basic question. Do I have enough to retire? And kind of diving and exploring into that, but really getting into the nuts and bolts of it all. So should be fun. I hope you are doing well. What’s going on in your world?
Tyler Emrick:
Yeah, hanging in there, Walt. I appreciate the enthusiasm, especially that mathematics plug, right?
Walter Storholt:
Yeah.
Tyler Emrick:
So yeah, glad to hear it. Happy to be here today. A little chilly. If we can kind of lean on the weather a little bit. We got fall coming up here in Ohio and turn the page to October. So leaves are turning, weather’s getting cold and yeah, just enjoying it. How about you?
Walter Storholt:
Folks, Tyler and I were talking about Halloween stuff before we started recording today, and he let it slip that he still has year old candy sitting in the cabinet and he was going through a moral dilemma of weather to serve the kids this year, that year old candy or if he had to go out and get new stuff. So no, I’m just kidding.
Tyler Emrick:
Oh, that sounds terrible. Get out of here.
Walter Storholt:
He was fully in the camp of, I need to go replace it with some new stuff. I’m just,
Tyler Emrick:
It is up there though. Walt, you are absolutely right. It is up there. So we’ll get it thrown away here eventually, but it’s a top shelf. Kids can’t get up there. We’ll see even with the highest ladder we got in the house. But yeah.
Walter Storholt:
I love it. I love it. Yeah.
Tyler Emrick:
Good time of year. Good time of year. We’re excited.
Walter Storholt:
It’s a great time of year.
Tyler Emrick:
Yeah, a lot of the families that I work with know, I mean, I got a four-year-old and a two-year-old, so it’s like prime time trick or treating season for them. I mean, my four-year old’s been talking about it nonstop and we will see, we’re still settling in on what outfit and what we’re going to go as. But yeah, no doubt. We’ll get something figured out and they’ll enjoy it and we look forward to it.
Walter Storholt:
Well, by the time we get to our next episode, I’m sure you’ll have all that solidified, so give us the full report next time around on what the costumes are going to pan out to be. Look forward to,
Tyler Emrick:
We’ll have to,
Walter Storholt:
Hearing about it.
Tyler Emrick:
We’ll have to.
Walter Storholt:
Yeah.
Tyler Emrick:
And I don’t want to, and opening up the episode today, it’s like, man, how do I go transition from Halloween and trick or treating to the backdrop and what’s going on in the market and talking about how long will retirees nest egg last? But we’ll try to do our best here.
Walter Storholt:
Well, the market’s been a bit of a trick and a treat as of late,
Tyler Emrick:
It has.
Walter Storholt:
Right. So that’s maybe given some people some unease just like Halloween maybe is uneasy for some people who don’t like all the ghouls and goblins out there. There you go. There’s your segue.
Tyler Emrick:
That’s a fair point. That’s a fair point. I like it. Yeah, I mean the last month has been a bit of a challenge. I mean, you look at some of the major indexes, the Russell 3000, which for those that don’t know, I mean that’s like the largest 3000 US companies, so it makes up a wide portion, almost 96% or so of the US stock market. It was down a little over 3% last month. Even if we expand out and go with the all country world index, that was down a little over 3% as well, and there really hasn’t been much hiding as well. I mean, you can look at the bond market, the US Agg Bond Index was down about two and a half percent over the last month. And then you can even look at parts of the bond market who have really seen some challenges.
Some of those longer duration bonds are down almost double digits in the last 30 days. So anytime we see that type of volatility, even if the market in general this year has been okay and most indexes in positive territory, when you see that type of volatility, it takes a lot of families a minute in the midst and maybe some are stepping back, going, all right, hey, what’s going on here? I’m seeing my account balances go down and we get some questions and we’ve seen some questions start to pop up here over the coming weeks. So when we look at podcast episodes, we’re trying to figure out and get you material that we think is going to be impactful. We’re always trying to look at, well, hey, what’s going on in the markets or what questions are retirees asking us? And this one’s been front and center here over the last month.
So when I was doing my research and kind of looking through some prior articles and one of the researchers over at Morningstar put out an article where they dove into a book and the title of the book was Seven Most Important Equations for Your Retirement. And the first equation the author jumped into was this one that said, how long will your nest egg last? And I was like, oh, it’s perfect, right? It’s mathematics, it’s an equation that tells us how long our money will last. The market’s been rough, we can kind of pair it and go through.
So I was like, Hey, Walt, this is like, I don’t know, I hit the jackpot here and as I got down through the article and I was trying to see how I was going to frame today and what we were going to talk about and I was looking at the takeaways from the article. Well, it basically boiled down to, well, to make your nest egg last longer, you need to obtain a higher rate of return or you need to lower your withdrawal rate or both. And I was like, oh, Walt, how are we going to get on a podcast, tell people they need to make more money or spend less?
Walter Storholt:
Yeah.
Tyler Emrick:
I don’t know how that would go over.
Walter Storholt:
You just took all the candy out of my bucket Tyler. That’s the equivalent here, going back to the Halloween comparison. You just told me, no, you can’t have any of those ROLOs. They’ll pull your teeth out. They’re so sticky. The caramel it’s coming out.
Tyler Emrick:
ROLOs. Yeah, I do like the sticky candy, by the way. Reasons were my favorite candy growing up. So if anybody’s ever had a Reason, dark chocolate, caramel and very, very sticky and pulling out of teeth, but,
Walter Storholt:
Nice. Nice.
Tyler Emrick:
Sidebar, yeah, so we’re thinking there, I was like, I think I had the perfect episode, perfect thing to talk about, but it didn’t really come out that way. And what really actually fascinated me probably the most about the article wasn’t necessarily what the end solution was, but more so the work that the author did to adjust this mathematical equation. What do I mean by that? Well, as you can imagine trying to decide, well, how long is my money going to last in retirement and am I going to have enough? There’s a lot of variables that go into that. Some you might know like, Hey, you know how much money you have saved right now. You might even know how much you need per month.
Although I would argue that might be hard to quantify as well because things change throughout retirement and there certainly are things that we did you not know. Well, what rate of return are you going to get on your money or how long are you going to live? So trying to take this complex question and boil it down to a mathematical equation is extremely difficult. And there were two specific changes that the author made to this equation that I thought would be good for us to build off of and talk through a little bit because the author decided to make those changes because he’s trying to, what we call improve the statistical significance of the equation itself. And that’s a fancy term I guess, and I don’t want to get the egghead alert so I won’t go too far into it, but essentially it just means, hey, how do we make this equation better?
And really the data that it spits out better and more impactful and well, if the author had to make those changes to improve the equation, the way my mind worked, it’s like, well, if we as individuals and financial planners and people trying to look at retirement coming up, if we focus on those areas as well, well that’s going to probably drive and create the most impact as we think about, well, what’s going to increase our nest egg or what’s going to help my nest egg last throughout a long healthy retirement? So we’ll pick and choose a couple of those, dive into them a little bit. And hopefully give the listeners a few items that they can take away from today and apply to their own situation to give them a little bit more confidence and clarity as they approach retirement and think about, well, hey, as they inevitably will at some point, do I have enough?
Walter Storholt:
Very good. Usually you’re trying to get the egghead alert, so the fact that you’re trying to avoid it today is interesting, but I’ve got it queued up if you need it, my friend. All right. So,
Tyler Emrick:
Fair enough.
Walter Storholt:
It’s on standby, but so yeah, let’s dive in. What’s the first direction that really caught your eye here?
Tyler Emrick:
Yeah. So the first change was the return assumption in the equation, and they changed it from a constant to a random variable, which in my mind sort of makes sense. And the reason they did that is because, well, it’s very unlikely that you’re going to get the same rate of return on your money through the entirety of retirement. So introducing that random variable is a way for the equation to introduce that risk or introduce the fluctuation that investments in veritably have. One of the things is you think about your nest egg and how much you can withdraw from it or how long will it last. Investors might’ve ran into that old 4% rule which states that, hey, you can take a look at your balances that you have, save for retirement and pull out about 4% a year and you’ll be fine and you won’t run out.
And we’ve done some episodes in the past on the 4% rule and kind of debunked it and showed some of the challenges that that has, but that variable about returns going up and down and having some, what Kevin would call, I guess wiggle factor in them is what makes that 4% rule very, very hard to use as you think about will your money last? And there’s a whole number of reasons on that. I think one of the other big ones would be that bad timing risk or our industry, we call it sequence of return risk. And that’s essentially, if you think about retirement and you head into it and you come across a period where the market does perform very poorly, you think back to May of 2008 for example, retiring in that and having a couple years of bad performance. Well that can really impact your results of a financial plan or what your retirement outlook would look like.
So simplifying it and just saying, Hey, I can pull 4% out per year, really isn’t necessarily the approach to go. And as you’re listening here, you might be thinking, well, how do I account for the variability of returns? And there’s a few things that come to mind that I like to lean on or I think the families or I ask the families that I work with to lean on when they think about and they see their accounts going up and down and experiencing some of that volatility. And the first is maybe stepping back and taking a historical perspective and understanding the importance of a diversified portfolio. We’re always big looking back on data and trying to get and look at the market through a historical perspective. We look back through the Bloomberg data, going back almost 70 years and there really has never been a rolling five-year period where the bond market has actually returned negative annual returns.
We expand that out to say the stock market, well, that time period expands quite a bit and there’s never been a 20-year period with negative stock market returns. But you combine those two into say a 50-50 portfolio where you’re taking and diversifying some of your money and not putting all your eggs say in that one basket in bonds or stocks alone, well then you kind of go back down and there’s never been a rolling five-year period where a 50, 50 portfolio has had negative annual returns. So spreading out that risk will inevitably smooth out that ride.
And during times of that volatility, it’s important to keep that in the back of your mind. I take a look at today, and one of the hot topics we’ve talked about in some prior podcasts would be CD rates and how high they’ve gotten over the course of this year. And I think it’s very interesting that Bloomberg came out with a chart here in the last month where they tried to say, Hey, if we look back through historical market interest rate hikes like we’ve experienced here recently and we hit the peak of interest rates, and we purchased a six-month CD, and we compared the next 12 months return to other investments, say the stock market or the bond market in aggregate, it was fascinating that during each of those six historical time periods where they were looking at this, this goes all the way back to the early 80s, there was no time that the bond market didn’t outperform that six month CD, and there was only one time where the S&P 500 underperformed the six-month CD.
So I think it just goes back to Walt, how difficult it is to really try to time the market. And when one investment might look like it’s a no-brainer and the biggest win, kind of taking a step back, not letting the emotion drive that decision and saying, Hey, it’s very important as you’re constructing that portfolio or you’re thinking about your portfolio to ensure that you have that diversification in place somewhere.
Walter Storholt:
Yeah, you can almost time the market if you are thinking in these longer timeframes, right? Because you’re essentially eliminating the worry about timing the market knowing that these rolling periods are eventually going to pay out in your favor with this proper diversification. So that’s kind of neat, I guess if you flip it around that other direction.
Tyler Emrick:
Yeah, I’m a big proponent of giving yourself tools and knowledge to be able to make better decisions. One of the things that I lean on heavily when talking to families is plan results. And we do a lot of work trying to analyze and review situations where the market performance is extremely volatile or better yet, how do we account for different returns per year as families progress in and through retirement? And there’s a number of numbers that we kind of look at and we talk about in most of our meetings and one of those numbers, we call it a success rate. And essentially what that is, is when you look at a financial plan in its most basic form, what we’re doing is we’re taking a look at your assets, we’re taking a look at what you’re spending on a year to year basis, and we’re trying to project that over the course of a long, healthy retirement.
And the variable that we change, what we test is this variability of returns. So each year we’ll assume you need to get money to live off of and we’ll assume you get a different rate of return. And when we make that return adjustment each year, we project it out over the next 20, 30 years of retirement and say, Hey, do you have money left at the end under this test? And if you do, we call that a successful trial and then we’ll go back again and we’ll do it another trial and maybe we’ll assume that you have very bad market performance early on in retirement and we’ll kind of look and say, Hey, do you still have money left? Was it a successful trial? And essentially we call that a plan success rates, and we believe in it so much that when our families log on to their accounts to see account balances, their actual success rates are posted right there in real-time.
So families can actually see and say, Hey, how has the market performance affected my overall goals and what I’m trying to accomplish? I actually was sitting down with an individual just last week and we were kind of covering some of these topics coming off of 2022 S&P 500 was down 20%, bond market, it was down about 13%. We’ve had this recent volatility here over the last month and he was like, Tyler, I log onto my account maybe once a month, but I don’t even look at the balance. You want to know what I look at? I look at that success rate number and if it’s still where we want it to be because I know whatever my balance is, my success rates are going to determine how I’m going to live in my retirement. And that’s what’s important to me.
And I kind of sat back and I was like, wow, that’s good, right? That’s what we want. And matching up that portfolio performance with what you’re trying to accomplish in retirement, I think can be extremely impactful as you’re trying to think through, Hey, do I have enough? Did this recent market downturn affect my spending? Do I need to change it? Well, having those results to lean on are pretty powerful.
Walter Storholt:
Yeah, all of this is really powerful and that’s why you guys love, I think taking this approach where, yeah, we factor in emotions and those kinds of things into the planning process, but it’s a really small portion and it always needs to point back to the mathematical side, the scientific side, the research side. You want this factual evidence in the background of all the planning that you do.
Tyler Emrick:
Absolutely. And another, so I had mentioned earlier, there were a few numbers that we talk about on our meeting, success rates being one of them. Another one is required rate of return. And essentially what you’re looking at when I say required rate of return is, well, hey, we’ve built this plan, we’ve encompassed all your goals and what you’re trying to accomplish. What rate of return do you need to get on your money to make that plan work? And I think that can be something when you have that in the back of your mind and saying, Hey, all right, what have I gotten on performance over the last three years, five years, 10 years, and what’s my required rate of return? Yes, here recently we’ve experienced that volatility. I’m still at X amount over the last few years. And then you can apply that and look at it to that required rate of return and give yourself a little bit of confidence there to know and say, all right, hey, we’re long-term investors here.
Inevitably there’s going to be variability in the market. And going through that and being diversified and riding out those upswings and downs swings in a smart way proves better outcomes in the long run. And leaning on success rates, leaning on that required rate of return just helps promote those good activities and those good decisions as you’re thinking about what to do with your portfolio. I think Kevin dove into our retirement plan results in a little bit more detail. If anybody’s looking at that. Walt, is that episode like 40, 45, 46, something like that? I think.
Walter Storholt:
45, the Retire Smarter solution, all the details about that back in 2020 in April of that year, if you’re scrolling and scrolling and scrolling through your podcast app to find that past episode or just check the show notes of this one and we’ll link to it.
Tyler Emrick:
You got it. So as we’re going back to that article, we’re going back to that mathematical equation and hey, how do we make our nest egg last longer? If the author’s making changes to account for that variability of required rate of return, the best way for you to do it in your own situation is to ensure that you have that diversified portfolio and to ensure that you have some type of financial plan to fall back on to understand how that variability is impacting what you’re trying to accomplish in retirement. But returns were not the only change that they made to the equation. The equation as written actually what’s in continuous time, which assumes that withdrawals are taken continuously and the author went back and said, well, hey, that’s not very practical. Let’s adjust the equation and put it in discrete time to assume that withdrawals take place over a period of time, whatever, a year or a monthly withdrawal or whatever the case may be.
And what they were trying to do is essentially affect, Hey, all retirees are going to have a different retirement. What does your retirement look like to you and what are you trying to accomplish and where’s your spend going to go? Is a lot of that spend go towards normal living expenses that aren’t going to change as you progress into your 70s, 80s, and 90s? Or is a lot of that spending on things like travel that might fall off later in time? Again, going back to just one simple mathematical equation, it’s hard to account for all of that and build that in. As we kind of think about those rules that retirees have heard. We talked about the 4% rule. There’s another one that’s called the 80% spending rule. You ever heard of that one, Walt?
Walter Storholt:
You’re going to spend 80%,
Tyler Emrick:
Better because you did a podcast on it.
Walter Storholt:
Yeah. Yeah, you’re going to spend 80% of in retirement that you do during your working years. Is that sort of the 80 spending rule?
Tyler Emrick:
You got it.
Walter Storholt:
Okay.
Tyler Emrick:
You got it. Right. And I think that’s going back to that simplified approach and oversimplifying things a bit and not accounting for those spending changes throughout retirement, but you’re exactly right. It’s saying, Hey, how long will my nest egg last? Well, I got to know how much I need in retirement to understand that question.
Well, let’s use a basic rule. 80% of what I’m making now, that’s what I need throughout retirement. And there are a number of issues that we kind of taking that one lump sum approach and kind of extrapolating it out over a long retirement, and I can’t say that enough. When you take these numbers and you start looking over a 20-year, 25-year time horizon, it’s really fascinating to see how the numbers actually change as you think about and accounting for things like inflation and so on and so forth. So I think taking that simplified approach is probably historically been maybe too conservative and Kevin dove into that quite a bit. Again, we’re going to reach back on the plugs on the podcast here, Walt. We’re going back, what, almost two years, but episode 92 through 96, I got in my notes where Kevin kind of tackled some of these rules that have gone awry where he speaks more on the 4% rule and that 80% spending rule, but I think they’re great.
Walter Storholt:
I had some bad flashbacks when you took us back to the 2020 episode. At least we’re only at the beginning of 2022 with those episode numbers. And yes, the obligatory. We’ll link to that series that you did on those retirement rules in the show notes as well.
Tyler Emrick:
Okay. Now, and frankly I sit down with a lot of pre-retirees, so individuals that are really sitting down and trying to get serious about their retirement, and really I get a lot of questions on how do we even make this work? I’ve been working and saving my entire life. How do I start to think about getting that income or that withdrawal in retirement? And the answer is different, but generally speaking, if we boil it down to a simple answer, there’s likely going to be a combination of some type of income component, which is either through pensions or social security. And then it can be as simple as setting up a monthly withdrawal from your retirement account that’s deposited in your bank account each month that you can use to live off of as you cover that normal living expense and progressed throughout retirement.
Now, in practice, a thoughtfully constructed withdrawal plan can really help make that nest egg last longer, right? I mean, that’s the whole premise of today’s podcast is, well, how much do you need and how do you make that nest egg last as long as possible? And when you start thinking through how you’re going to withdraw that money, I think this is where individuals can really provide themselves a lot of value. And I think of that value in a few different ways. The first is with what I call withdrawal flexibility. So when you think about that money that you need throughout retirement, not every expense is going to happen every year, right? There’s going to be things that come up, maybe car purchases, big trips, a new roof, hopefully no one listening has to get a new roof. But these bigger expenses are going to come up from time to time. Yes, you’re going to have those monthly needs that you have to cover, and it’s great to have those covered with some type of monthly income with monthly withdrawals from your retirement accounts or social security or whatever you’ve got in your situation.
But as you think about these expenses that are harder to account for, well typically you would go in and you would do what we call just ad hoc distributions from your retirement accounts to cover expenses like that. And you think about volatile times from a return standpoint, some of those ad hoc distributions for things like cars, well, you don’t necessarily have to, a lot of times, hopefully unless your car breaks down, you might be able to push that. Or if you have a big trip, you might be able to push that one year out if your accounts are down or you have some volatility that are affecting your returns and you’re getting a little bit worried about maybe the tax bill for that year or the return or whatever the case may be.
So if you build in that flexibility for some of those larger purchases to not necessarily time them when you want, but push them if need be, I think that provides a lot of value for some families as they start thinking about and they get a little nervous around, well, hey, I see my account balances going down, I may be early in retirement. What are some of those things that I can do to help protect some of those assets? And there can be some adjusting sometimes, sometimes you can’t, but when you can, having the flexibility to push those can be helpful. And doing those distributions really in a tax-smart way is very impactful as well. You think about anytime we can save money from a tax standpoint, that’s more money in your pocket. So thoughtfully construction, going back to that thoughtfully constructed withdrawal plan, taxes need to be a piece of that.
And then the other point that I want to make as well, which I think gets lost sometimes, is really understanding and saying, well, when I have this monthly distribution set up for my retirement accounts, which investments inside of the retirement account are you going to sell to get the money that you need? Because you are going to need money to cover spending. And when you think about those distributions, well, you are going to have a choice as to which investments are we going to go into the account and pull from. And whether you think about that from a rebalancing standpoint, you think about that, well, hey, these investments are down. Maybe I’ll pull from other. Hey, do you have a safety net built up inside of the account for your next three months worth of withdrawals or whatever the case may be? They’re a multitude of ways that you can look at that and accomplish that goal, but putting some thought into how you do your distributions and the investments you sell in them will again add-in and help make that nest egg last a little bit longer.
So again, going back and kind of putting a bow on that withdrawal change that the author made to the equation and trying to account for this variability of withdrawals as they pop up. The big thing is to better understand your spending, build in some of that withdrawal flexibility inside of your retirement plan. Do it in a tax-smart way. And when you have to pull distributions, make sure you’re pulling from the investments that make the most sense and your thinking through what impact that has with the remaining investments inside of the account.
Walter Storholt:
As with most things, it seems like you guys already have, even though you don’t know what’s going to happen in the future, you’ve got various plans in place so that when X, Y, and Z happen, this is going to be our response. And I love that about the way that you build your plans for clients. It’s got that level of detail and forward-thinking into all of these different little elements.
Tyler Emrick:
It is. Well, and it’s not a one-size-fits-all. I sat down with an individual about a week ago and he was referred to me and he actually works with a financial advisor. And what actually prompted him to come in and talk with me was his financial advisor was pitching him on an annuity, which essentially the big selling point of that annuity was really driven by what I would call fear. The financial advisor’s pitch was essentially saying that, Hey, you do not want to lose money in the stock market. The stock market is volatile, the bond market is volatile. Put all your money in this particular annuity and you will not lose any money. And it really came back to when the individual started asking his financial advisor questions, he’s like, it just really felt like they were leading from a place of fear and not necessarily building the plan for my needs going forward.
And I always say, rarely, if ever is there going to be a single product, strategy, or investment that kind of checks all those boxes and meets all the needs throughout the entirety of your retirement. I mean, your goals are going to change. Life happens, things come up that you need to account for. So if we kind of take that situation from that individual I just met with and why he was looking for something different, I think it goes hand in hand with kind of what are those ways you can really extend out your nest egg and make it last as long as possible. And if there were just be a couple takeaways that I would have from what we’ve talked about today, I mean if you want to extend out that nest egg, you really need to one, create a diversified portfolio that really tries to maximize your returns for a certain level of risk that you’re comfortable with.
You want to two, arm yourself with some type of financial plan to fall back on when those portfolio returns become volatile, which they inevitably will. And then three, build in that flexibility into your plan to account for changes that will inevitably incur throughout the retirement. We talked about building that flexibility in through your retirement withdrawal and distribution strategy today, but always in the back of your mind be thinking about flexibility and different situations that potentially come up and where would you go to solve those issues that are going to come up as you think about and progress through retirement.
Walter Storholt:
Well, a great outline of this essential retirement planning question and why it’s so important to have a deep analysis and not just make these simple assumptions. The level of detail that you went into here Tyler just really underscores, I don’t want to maybe go this extreme, but it kind of feels that way, the silliness of, like that 80% spending rule. Right. And the fact that if somebody’s basing their plan off of just such a simple rule, yet that sets the foundation for every other response that comes from it. Man, it’s just like your chances of having a solid retirement plan are really minuscule at that point when you just simplify it that much and it makes it nice and easy to talk about on a podcast if you can just throw out a nice little rule like that,
Tyler Emrick:
Right.
Walter Storholt:
And then say you build the plan off of it. But boy, I love knowing that there’s a little bit more effort and science going into the backend of these things so.
Tyler Emrick:
Sure. We want to be simple when we can, but there are times where that complexity matters. And having I think a financial professional in your corner to help communicate that complexity in a way that makes sense to where you can make actionable decisions off of it makes all the difference and all the difference in the world.
Walter Storholt:
Well, it’s the difference between just retiring and retiring smarter and that’s why Retire Smarter is the name of the show here. You liked that, didn’t you Tyler? I know you saw that one.
Tyler Emrick:
I did. I did. I did.
Walter Storholt:
So if you’re wondering how you can also Retire Smarter, it’s easy to do. Speaking of simple, that’s where we have made it simple for you to get in touch with Tyler Emrick, Kevin Kroskey, and the great team at True Wealth Design. Two ways to get in touch and schedule a quick visit to see if you’d be a good match and a good fit to work with one another. The first is to go to the website, truewealthdesign.com. That link is in the description of today’s show of course. Truewealthdesign.com. And just look for the, are we right for you button. You can click that and schedule a 15-minute call with an experienced advisor on the team. Again, that’s at truewealthdesign.com, or you can call if you appreciate the old-fashioned way of doing things. 855-TWD-PLAN is the number. That’s 855-TWD-PLAN, and we’ve put that full number in the description of today’s show as well. Well, that’ll do it for this week’s episode. Appreciate all your guidance and help Tyler, and I know you’ll have a good one dialed up for us again in a couple of weeks.
Tyler Emrick:
Will do.
Walter Storholt:
All right. Good luck with finding some new candy and all the Halloween preps. I hope that the costumes don’t change another eight times on you before we actually reach Halloween.
Tyler Emrick:
I can’t guarantee anything. We’ll see.
Walter Storholt:
I know that could be a thing with kids, right?
Tyler Emrick:
We’ll see.
Walter Storholt:
We’ll have a good one and we’ll talk to everybody next time right back here on Retire Smarter.
Speaker 3:
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