A lot of retirement people now are shifting towards some sort of secondary career.
It could be something that they consulting in a business that they were part of,
our industry they're part of. It could be as simple as uber.
Remember, we're just living a lot longer now too, so retirement lasts a
lot longer than it ever has for generations in the past. And I think
people are more active, healthier, and are more capable of having a secondary
career. You are listening to carry Lets's Financial Survival Network, where you get
valuable information you just can't find anywhere else to thrive in today's trying times.
You need the Financial Survival Network now more than ever. Go to Financial Survival
and Network dot com and get your free newsletter and gift. Financial Survival Network
now more than ever, and welcome. You are listening to and watching the
Financial Survival Network. I'm your host carry Loves Well. If you're a bo
or an exer, you're thinking about retirement, what it's going to be like,
will you ever be able to do it? Well? This is not
your father or your grandfather's retirement. You need to go to this website.
You need to buy this book, The Fifth option dot com Retirement solutions for
a modern economy. And I think you're going to really enjoy hearing from Walter
Young, my next guest. The book is Fifth Option Your Retirement and why
your retirement plan won't work the way you think it will. Walter, great
to have you on the show. And why oh first, if you got
a question for Walter and myself, I urge you to send me an email.
I read them all. I'm caught up on everything now because I scaled
back asking you for emails. Send me your email k l at kreluts dot
com. Walter, pleasure, honor to have you on the show. So
retirement ain't what it used to be. So you're not going to get a
gold watch from your employer because you worked there twenty five or thirty years and
a retirement bash. Although I'll tell you my friend retired as a pilot from
United Airlines. I don't think they gave him a gold watch, but they
did shoot his plane with water cannons at Newer Airport on his last flight.
There are a few bastions where perhaps you can celebrate a long career like that.
Yeah, so what's different now? How did it happen? What do
you do about it? Yeah, great question. So you kind of hit
the nail on the head, which is really we're moving from what once was
a pension in society into a pension less society. Maybe a few of the
boomers still work for cities or states or something like that where there are some
pensions, but by and large, what's happening now is that we are probably
more responsible than ever for our retirement outcomes. And I could also argue that
we may be the least prepared for that in terms of education and understanding of
how retirement really works. And so I decided to write a book that really
helps take some of the latest research from the academic world and turn it into
a story form so that it's a little more accessible to all of us,
so we don't just get lost in the charts and grass. And the idea
behind the fifth option is that we are now moving into a time frame where
we have to deal with two unknown questions, and I deal with this in
the form of a story, which is simply this. Imagine you are on
a desert island and you recognize that there's no way off this island, and
in front of you is a barrel of water, and that water represents all
the water you have to drink on the island. Carrie, how much water
would you drink each day? Well, I wouldn't be overdoing it because I
don't want to get rid of my supplied So the minimum require to keep me
hydrated and in good health. Right, that's exactly right. So I asked
this question, you know, as I speak around the country and lots of
groups, I asked that question. But there would be two other pieces of
information that would be helpful. One is how long am I going to stay
on this island for? Well, I can't know that necessarily. Second,
will it ever rain? Will it ever replenish my bucket? I can't necessarily
know that answered either. And so if I don't know the answers to those
two questions, then what you said is absolutely correct. I must take the
least amount of water outs each day just to stay alive, hoping for some
sort of a rescue. But now let's change the scene a little bit.
Let's pretend, instead of being on a desert island, that we're actually in
your office on the last day of work, and your office provided you a
big barrel of money, and that is the money that you have that's going
to last for the rest of your lifetime. So Kara, ask you again,
if you're driving home with your barrel of money, how much money can
you spend each day? How much money can you spend each day? Well,
again, you want to conserve it because you don't know how long it's
going to have to last. So the minimum amount that you require for your
needs, plus whatever pleasures you want to engage you in, so you can
see that it. Interestingly, it's the same kind of question, right,
So we want to ask now we want to know two more pieces of information
to be able to dial this in, which is one how long am I
going to live? You can't know that, and two what rate of returns
will the market provide you? You can't know that either. And so when
we are unable to answer those two questions, the default in financial planning is
to take out the least possible so that it can last a thirty or thirty
five year period of time. And in fact, the study was done in
the nineteen nineties that asked that simple question, which is what is the maximum
withdraw rate I can take out of a portfolio so that it lasts thirty years?
And the answer to that question. Back in the nineties was four percent,
So a lot of your listeners may have heard of the four percent rule
or the safe withdrawal rate rule, and that was its origin. Today,
you might have some arguments. Some folks like doctor Wade foul for the American
College of Financial Services would argue that it's closer to two point eight percent.
Others like Vanguard might tell you that it's three point five percent. But the
whole point of the conversation is that it's a much smaller number than you're expecting.
So what does that mean? In reality? It means that if I
actually can save a million dollars, then I should be budgeting somewhere between thirty
and forty thousand dollars of income to live on. And for most of us
that's just not enough money to live on well. But also a million dollars,
there's a lot of money to save, right plus your social Security you
got to throw into the obsivation you're going to get some and you know,
I think the maximums forty three forty five hundred dollars a month now in that
neighborhood, depending on your work record. And so what people are starting to
wake up and realize is that that the amount of money that you're going to
save is not going to generate as much income as you would hoped. And
so traditional financial planning will give us four options. I call them the four
frustrating options. The first option, I'll tell you is what you have to
save more, We'll save it. More money always solves a financial problem,
but it's not easy to do. And the other thing, Carrie that's interesting
is that when I have to save more, I'm sacrificing today's lifestyle hoping for
a better tomorrow lifestyle. And so we have these two lifestyles that are kind
of at war with each other. Right, every dollar that I save today
is a dollar I don't get deaf fund with today, but it also means
that perhaps I can use that dollar later in retirement. The second option is
take more risk. Right, I could try to take more risk in the
markets, hoping for a better return that would improve my pile of money at
retirement. The third option is like it work longer. Right, Maybe I
have to work to age seventy Maybe I have to work at age seventy two.
Maybe I have to have a part time job in retirement. And the
fourth option is a capitulation, which is I will just have to live on
less in retirement. And that is the one that is the most heartbreaking because
that's when you see people's eyes all of expectation of all the things they want
to do in retirement, realize that maybe they don't get to go on some
of these trips, maybe they don't get to go visit their grandchildren, maybe
they don't get to go out to dinners as much as they thought. And
they begin to tell me when I interview them, of all the things they
don't need to do now in retirements instead of all the things they want to
do in retirement. But there's a fifth option, and that's what the book
is about. There's a fifth option that helps us put together strategies that unlocks
this minimalist thinking that will give us a much more robust income into the future.
And it is based on the latest academic findings of some of the folks
that study this and is a way to unlock better income with the same dollars.
And it really takes advantage of some of the old philosophies like pensions and
things that gave us retirements back when we actually could retire with confidence and we
bring them back into today's world in a modern economy. Okay, well there's
actually a sixth option. It's called the Smith and Wesson retirement plan. Right,
Yeah, so we used to call that up here at the doctor Vorkin
plan. We fly down to Portland and he will he'll end it all for
you there. Yeah, but we don't advocate, and I think is generally
short sighted, bad idea. But look, you want to retire, but
you don't have to fully retire. If you have control of eighty percent of
your time, whereas before retirement you had control of fifty percent of your time
or even less, then you're still retired. May maybe you're doing a gig.
Like I met a guy the other day. He lived in the same
town as me. He seemed to be fairly well off, but he was
doing uber in his spare time. I think, honestly, he probably wanted
to get out of the house and away from his wife was probably part of
the motivation. But he was making another I would guess tomate twenty thirty forty
thousand a year on top of his Social Security and on top of his savings.
So what's wrong with that? There's nothing wrong? In fact, A
lot of retirement people now are shifting towards some sort of secondary career. It
could be something that they consulting in a business that they were part of,
our industry they were part of. It could be as simple as uber.
Remember, we're just living a lot longer now too, so retirement lasts a
lot longer than it ever has for generations in the past. And I think
people are more active, healthier, and are more capable of having a secondary
career. The point of the fifth option is simply to introduce efficiencies of retirement
income planning so that you don't need to use as many dollars to create the
same income. I think of the one of the areas that people are becoming
educated in, and I use this quick analogy, is that there's personal finance
and there's corporate finance, and they both share the same word finance, but
they manifest themselves in a completely different way. Corporate finance is all revolving around
cash flow, income earnings. But unfortunately, in the personal financial ward,
we talk about balance sheets, how much, how much right? And unfortunately
you cannot go You cannot take your former case statement or a brokerage account statement
to any safe way even though it might have a million dollars account balance,
you can't buy milk with it until you turn it into some sort of cash
room. And we have to understand the efficiencies and the strategies of how to
do that well so that when you are an uber or you are doing a
second career, it's more because you have a passion or an interest or a
curiosity as opposed to having a mandate that you can't make ends meet. Okay,
so obviously you've given this a lot of thought. People own a real
estate, rental income, passive income. Is it worth getting into that in
your sixties seventies to do that? Or well, yeah, I don't know
if the question is it worth it as much as what's your what's your preference?
Right? When when people have real estates, what they're really trying to
do is create their own pension to some degree. Right, they want predictable
income, but that's coming through income that's coming through Right. If I can't
replace my active income with passive income, I never retire, right, And
so we have to figure out how it is that I can create this income
that's going to replace the income that I used to work for real Estate's a
very powerful way of doing that. We know lots of people with lots of
wealth have done that. It's just a question of whether you want to be
a landlord or have the capacity to have someone help management manage a portfolio properties.
So it really comes what I call the PETA factors, more of a
pain in the ass factor is whether or not it's a good investment. Right,
So everybody has their own preferences what they're comfortable with, and real estate
certainly can be a good one. You know. I always say there's two
types of retirements, the retirement that you have to take health career ends,
you're obsolete, whatever, and the retirement that you want to take, the
voluntary retirement where hey, you could work a little bit myself. Hey,
I'm getting to that age, but I'm not offer and most of my entertainment
is nocturnal in nature. Not to put a kind of devious cast to it,
but you know, I have fun at night, so during the day,
you know, I guess I could be taking courses, which I do
and other things, but I'm just as happy doing something that kicks off a
little bit of cash flow, keeps my gray matter active, and keeps me
relevant. I guess yeah, I think that's right. And part of that
is just that we have a much more vivacious aging group maybe than past generations
where there is curiosity. We do have the physical capacity and we have the
longevity to be able to have interests that go beyond a normal working career.
And I think also we don't have a normal working career anymore. Right,
There isn't such a thing as the thirty year gold watch more mortgage burning party.
You know, most of people today, especially the youth, really at
more free agents. It's almost like we all are free agents for companies for
periods of time, and it's some point either the company or ourselves decided that
ten years old and we'd move on. And so you know that that kind
of pattern it could certainly well persist into our retirement ages, where we have
small stints of jobs, maybe a break kid between them, and then we
pick it up again as we have interest. So I'll just give you an
example, because this is from my son, but it's something that many of
you out there could probably do. He was working in a ski shop tuning
up bindings and skis and stuff in high school and he said, you know,
he really don't want to do that job anymore. And I say,
hey, don't do it. You know, you don't have to do it.
I'm not forcing you to get a job. I think it's good that
you have a job, and then your own source of income for gas,
money or fun or whatever, over and above what I give you. And
he wound up writing content doing research on the internet. It was something called
the textbroker dot com. And he would they have five levels of writing.
He was a number four fifth being the highest, probably you know, post
graduate type. And the kid was making a hundred bucks a week, working
maybe five hours ten hours a week, doing it five to ten hours,
and that was that was almost twenty years ago, and it really worked for
him. So there's a lot of those opportunities out there, Well, there
aren't there. There's tons of opportunities. As as daunting as it is for
the youth right talked to the people in the gen millennial gen zs areas,
and as daunting as it is for them to try to get their head around
how does this fiance going to work? There's also perhaps more opportunities than there
ever has been. And you know, and the proverbial side hustle that once
it used to be something that meant that you weren't really making ends meet.
Now really becomes a passion project for people of all ages, right where people
have a secondary interest that they're either just using as a hobby or maybe they're
really trying to build it up into a career over time, and they're really
using corporate jobs or just kind of traditional ninety five jobs to pay the bills
until he gets there. And so you know, when you know, as
much as there is around anxiety around how am I going to buy a home
or how am I going to retire, I think there's endless amounts of options
now that we could take advantage of that didn't exist even ten years ago.
All right, So, like what you're saying, opening your mind up,
not being locked into the traditional retirement paradigm. Like my friend I told you
about senior pilot, the most senior pilot at a major airline, you know,
sixty five mandatory retirement. You win, and now he's flying private.
He doesn't make anywhere near what he used to, but he lose to fly
and you could easily support his family just on the earnings he's making as a
private pilot. So so life doesn't end at sixty five. And and you
know, I think that the definition welter of work, the way we relate
to it has changed quite a bit. Because it used to be, you
know, you worked in a factory, busted your hump for twenty years whatever
to make money, and then that was it. There wasn't like a lot
of personal development involved in careers, especially the more worker oriented careers. But
now our relationship to work is completely different. We realize that it satisfies certain
needs in our psyche, like like the idea of interacting with other people,
of challenging yourself, of the self esteem, so many other things. So
as the definition of work has expanded, and as it's become more understood as
to why we work, and it's not just for money, recognition, gratification,
personal growth. There's so many factors involved in your career. So it
makes the idea of retirement, retiring from a job you really hated to go
to for twenty five years every day to now it's it's it's a mixed bag.
You know, you might be very well working in a job that you
hate, but you know that there could be other things out there that you
like to do that are better. Yeah, there's a wonderful Japanese philosophy called
iky Guy that is becoming very popular, and an iky Guy is kind of
this kind of the the mix of what I'm good at doing, what the
world needs, what I can get paid to do, and when I'm passionate
about and when you operate in the center of that iky Guy Van diagram,
the Japanese will tell you never work a day in your life. And so
for those books, there is no such thing as retirement because you are at
the place of happiness when when those pieces all come together. And like you
mentioned, and you know, some of us may may make more money,
but we may have less pleasure from the job. And so I think part
of the pursuit, especially amongst our young, is really defined that centerpiece,
that place where their passions come together, as they really are interested in making
a difference in the world rather than just making a buck for an owner.
And so we'll see a little bit of shift and philosophy, I think in
the next couple of generations to really get into place where you know, the
enjoy your work. It's something that means is meaningful, and it's something that
the world really needs. And you might have a very very long career doing
it that way. All right, Well, hey, we appreciate you coming
on. Just tell us again the name of the book and where we find
it. Yeah, so you can go to Amazon is called the Fifth Option
by Walter Young. Can certainly buy it on any Amazon outlets. You could
also visit my website which is the Fifth Option dot com and has certainly been
a pleasure speaking with you any likewise, appreciate it. Got a question Walter
myself again, email address kl carry Lutz dot com and you'll find a link
to the book on our website, Financial Survival Network dot com. While you're
there, make sure you sign up for your free newsletter. Walter truly a
pleasure. Good luck on the book and we'll talk to you again soon.
Thank you, thanks for listening to carry Lets's Financial Survival Network your solution to
today's trying times. For the latest, go to Financial Survival Network dot com.
Financial Survival Network now more than ever,