RPF-0012

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00:00:15.200 | Radical personal finance episode 12

00:00:28.920 | How long do you guys would you work how would you decide not to work you gonna work forever

00:00:33.280 | Have you thought about that at all

00:00:40.680 | No, no Warren is much more fixed in his mind about what he's going to do about it

00:00:47.680 | And that's why when when people say well

00:00:50.920 | We ought to write a story about who's going to succeed Warren Buffett

00:00:53.600 | I say, you know, it's just kind of ridiculous to say that because he isn't gonna retire and if he doesn't retire if he

00:01:00.400 | Say he runs Berkshire ten years more the whole set of people who might succeed him will have changed and so it's ridiculous

00:01:08.200 | To write a story about that. No, I agree

00:01:11.800 | The

00:01:15.280 | You know, I I'm having the time of my life at some point your mind goes

00:01:19.120 | I mean and I've told my my kid I think was I think it was David Ogilvie that says

00:01:23.880 | Develop your peculiarities when you're young that way when you get older, they won't think you're going gaga

00:01:28.400 | So I did that I followed that advice, but my children will come in to me and some point

00:01:33.920 | I've told all three to come in at the same time and tell me you're going gaga daddy

00:01:37.840 | And and if only one of them comes in there out of the will so they have to come in

00:01:41.260 | But it's the truth is

00:01:46.520 | In terms of managing money or even managing a business

00:01:49.200 | Depending on the nature of the business and the way it's managed

00:01:52.680 | Age really isn't much of a deterrence if you turn everything else

00:01:56.360 | I mean, you know, I'm in terms of I hand I coordination balance all kinds of things

00:02:00.480 | but in terms of getting the most out of other people which is

00:02:04.400 | What my job is and in terms of allocating capital so far it hasn't been a deterrent, you know

00:02:10.240 | Who knows what happens next week? It's but you have a contingency plan in terms of governance. Oh, it's total

00:02:15.760 | I mean it if I died a night tomorrow morning

00:02:18.560 | There will be a CEO name every board knows exactly who it is if for some reason that person's unavailable

00:02:23.880 | They know another one. I mean, it's what we spend a majority of our time on

00:02:27.320 | You you have to have a lot of passion for what you're doing and it's totally true and the reason is

00:02:36.240 | Is because it's so hard that if you don't any rational person would give up

00:02:43.640 | It's really hard and you have to do it over a sustained period of time

00:02:47.260 | So if you don't love it, if you're not having fun doing it, you don't really love it

00:02:51.080 | You're gonna give up and that's what happens to most people actually if you really look at

00:02:55.360 | At the ones that ended up, you know being successful on quote in the eyes of society and the ones that didn't oftentimes

00:03:02.320 | It's the ones that are successful loved what they did so they could persevere when you know when it got really tough

00:03:07.880 | And and the ones that didn't love it quit because they're sane

00:03:13.280 | Right who would want to put up with this stuff if you don't love it?

00:03:15.640 | so it's a lot of hard work and and it's a lot of worrying constantly and

00:03:20.320 | If you don't love it

00:03:24.120 | You're gonna fail so you got to love it. You got to have passion and I think that's the high-order bit

00:03:28.840 | the second thing is

00:03:30.840 | You've got to be you've got to be a really good talent scout because no matter how smart you are

00:03:36.360 | You need a team of great people and you've got to figure out

00:03:41.440 | how to how to size people up fairly quickly make decisions without knowing people too well and

00:03:46.280 | Hire them and you know see how you do and refine your intuition and be able to to help

00:03:51.560 | You know build an organization that can eventually just you know build itself

00:03:55.480 | Because you need great people around you

00:03:58.080 | I want to talk about the fact that this is my last keynote

00:04:06.000 | and

00:04:08.720 | It's middle of this year in July

00:04:11.120 | That I'll move from being a full-time employee at Microsoft to working full-time at the foundation

00:04:16.760 | As you heard and so this will be the first time since I was

00:04:20.560 | 17 that I won't have my full-time Microsoft job

00:04:25.240 | And I'm not really sure what that last day is going to be like

00:04:28.440 | You know it could be a bit strange. You know what do you do on your last day?

00:04:33.080 | So I asked some friends

00:04:35.800 | to help me prepare for that and so

00:04:39.920 | We got together and did a little video

00:04:41.920 | So let's take a look at that

00:04:44.480 | It is a day the industry never thought would come join us all day as we report on Bill Gates last full day at

00:04:58.480 | Microsoft

00:05:00.480 | It's been in the planning for the past two years

00:05:02.840 | He'll still be active as chairman. It's hard to believe it's really here

00:05:08.760 | Yeah, I think Bill's ready for his last day

00:05:10.920 | He's worked pretty hard saved a little bit

00:05:14.240 | He is

00:05:17.320 | Completely focused I

00:05:19.920 | Mean Bill's been going all out for more than 30 years so not having a completely full schedule every day

00:05:28.580 | It's been a little well

00:05:30.960 | interesting

00:05:33.600 | Never doubt the magic of software

00:05:38.280 | That's right listen to tobacco

00:05:40.280 | You know after all these years he's finally taking work-life balance seriously. He's even got a personal trainer

00:05:47.640 | All right, that's good one in a row

00:05:50.800 | And you keep this up you're gonna get sexist man alive next year, bro

00:05:55.240 | That's good for the set man you won't let it go you want to keep going well

00:05:59.760 | Am I am I ready to take my shirt off um not yet?

00:06:04.200 | Yourself come on back lean a little forward just think hi hi to the sky you and I

00:06:10.760 | right now

00:06:13.600 | Yeah, Bill's always been a bit of a ham, but more importantly it's the creative risk he takes that really set him apart

00:06:20.840 | Big pimpin I'm Bill T

00:06:24.560 | Big pimpin yeah, you know

00:06:29.880 | I

00:06:31.880 | Hey, let me let me get one thing straight with you you can retire and then unretire

00:06:37.720 | Exactly got keeping guessing. Thanks Jay. No I was great

00:06:44.240 | Not so much

00:06:48.520 | Somebody got talent it's horrible

00:06:57.560 | Hello bill yeah, yeah, I'm a little busy here

00:07:03.760 | Dude wasn't that the craziest rip you ever heard

00:07:14.000 | We've talked about this before

00:07:23.680 | We're full up in the bag

00:07:25.680 | Positions are filled

00:07:29.200 | I know I know, but I can't just replace edge because you got a high score on guitar hero

00:07:36.200 | Bill's always had a passion for music and as long as it's not my music. I'm fine with that

00:07:47.680 | Bill's always been a big fan of the movies, but he's probably gone a bit too far with this whole audition real thing

00:07:55.520 | Who are you expecting Superman?

00:08:00.240 | Well what money can't buy

00:08:11.880 | Yeah, I just watched it yeah look we all know it's all about casting anyway, right I know Steven I can't it's just I

00:08:19.120 | can't play Bill Gates, it's

00:08:22.160 | It's just not something I'm good at I want you Russell Crowe to do it you'd be

00:08:29.000 | You were

00:08:35.720 | Passed on that one too

00:08:37.760 | Hey, I was thinking though the last time I was on the show. I I thought it was really successful

00:08:43.000 | Yeah, no you were great on the show man. We loved it was

00:08:46.800 | Although you know you did kind of run off at the end like guy you know had monkey pops

00:08:53.440 | You want to come back on the show that's fine

00:09:02.200 | That's you know maybe we could make it sort of a regular thing like you mean that the news a

00:09:08.320 | Co-anchor kind of a situation it's it's a great idea. I gotta tell you it's a it's a great idea

00:09:16.800 | it's the only thing is I'm on my jet right now and

00:09:21.080 | they

00:09:23.880 | I'm worried the phone will they have to turn it off or it will throw off the navigation system

00:09:31.640 | The boom boom and you didn't hear this from me

00:09:34.520 | It's a pretty strange coincidence that his transition date is right in the middle of the 2008 presidential campaign

00:09:42.280 | I know you're super busy, but I I'm sure you're starting to think about who would be your best running mate

00:09:48.240 | No, I know I haven't actually declared a running mate yet bill, but I'm not sure politics is really for you

00:09:54.760 | Hey, it's bill

00:09:57.920 | Bill Shatner of Star Trek now the other bill bill Clinton oh

00:10:03.960 | Hey bill

00:10:07.600 | No, it's not an inconvenient time

00:10:11.640 | Yeah, I get it. Yeah, that was a good one

00:10:16.120 | Trust of course we'll miss him in the daily brainstorming meetings

00:10:20.720 | He's always been an innovator really inspiring all of us to think creatively about the future

00:10:26.000 | And we'll be the first to give credit where credit is due oh

00:10:29.160 | Absolutely Microsoft Bob his idea all his

00:10:33.920 | Like I said we've been planning for this

00:10:44.960 | But he's still bill and we'll miss seeing him in the hallway every day

00:10:51.200 | Hey, buddy. See you tomorrow at the board meeting

00:10:55.360 | and all tech markets remain steady as Bill Gates completed his historic last full day as

00:11:25.720 | Microsoft

00:11:26.840 | Personal note all of us here at NBC News will miss reporting every night on this brilliant powerful

00:11:33.480 | Let's face it sexy and good-looking leader of men and women

00:11:37.280 | It just doesn't believe in paying more than seven dollars for a haircut. I'm Brian Williams in New York

00:11:43.720 | Good night

00:11:49.760 | You probably know Bill Gates as the founder of Microsoft the hard-driving tech executive whose software fueled the personal computer

00:11:57.520 | Revolution you might also know him as the longtime richest man in the world

00:12:02.200 | Who left Microsoft five years ago so he could work full-time giving his money away

00:12:07.720 | We had the chance to witness Bill Gates 2.0 the man you don't know

00:12:13.360 | He is driven as much as anyone we have ever met to make the world a better place

00:12:19.520 | Gates told us why he thinks inventions are the key to success and just what he intends to accomplish with his time

00:12:25.840 | intellect and

00:12:28.080 | 67 billion dollar fortune

00:12:30.080 | Starting with its plans to knock out some of the world's deadliest diseases

00:12:34.780 | The story will continue in a moment

00:12:38.160 | You're gonna spend the next 20 years of your life trying to eradicate disease, yes. Yep. That's your mission

00:12:48.600 | That'll be the the majority of my time starting with polio get it done by 2018 tuberculosis

00:12:54.820 | That one will have to see how the tools go. The current tools are not good enough. We can to do an eradication

00:13:02.560 | They're good enough to reduce the the deaths very

00:13:05.840 | dramatically

00:13:07.880 | But we'll we'll we need a few better tools that'll take probably six or seven years malaria

00:13:14.760 | Malaria is the one that the tools are being invented now 15 and perhaps even 20 years but

00:13:20.320 | Start to really shrink that map

00:13:23.040 | These are the people Gates wants to help

00:13:26.240 | They are what he calls the bottom two billion a third of the world's population that struggles on less than two dollars a day

00:13:33.960 | They are poor

00:13:36.080 | Hungry black electricity and clean water

00:13:39.320 | Gates most urgent goal help the millions of children under five who die every year one every 20 seconds from

00:13:47.280 | preventable diseases

00:13:49.000 | No one alive that I know of has said my goal is to eradicate a disease and then another disease and then another disease

00:13:55.640 | This is somebody that dreams high

00:13:58.960 | Yeah, because I'm excited about that and and it's it's doable

00:14:04.720 | Today Gates spent most of his time here at the Bill and Melinda Gates Foundation in Seattle

00:14:09.960 | He runs it with his father Bill senior and his wife Melinda whom he credits with being a driving force behind the foundation

00:14:18.120 | There are over 1100 employees to help them decide which programs to fund

00:14:23.360 | But Gates still visit sites around the world to see what's working and what's not

00:14:33.720 | The government of Ghana and all school-age children are grateful for your support

00:14:38.840 | Very well done great to be here. The grant here go towards school nutrition. This is spinach

00:14:44.180 | Improving agriculture. We don't have enough water in the river

00:14:47.840 | And most important to Gates

00:14:51.160 | lifesaving vaccines

00:14:54.120 | Well, whenever you see a mother bringing a sick child into a facility

00:15:00.760 | It's easy to relate to what if that was my child you realize how crazy it is

00:15:06.480 | That with the world being rich enough to afford all sorts of frivolous things that those basic things still aren't aren't being provided

00:15:14.600 | But providing vaccines throughout the developing world is no simple task

00:15:19.560 | So Gates has set up his foundation to run like Microsoft

00:15:23.680 | He insists on strict accounting and when a problem arises he pulls in the best people to find solutions

00:15:30.900 | We saw a good example of that when it comes to vaccines to be effective. They need to be kept cold

00:15:37.600 | So this is using electricity, but that's tough in hard to reach areas where refrigerators are rare and unreliable

00:15:46.440 | So back in Seattle Gates turned to scientists at a company called intellectual ventures where he is both an investor and an inventor

00:15:54.200 | They created a superthermos using the same technology that protects spacecraft from extreme heat

00:16:00.840 | Using only a single batch of ice it can keep vaccines cold for 50 days

00:16:07.520 | So here is the thermos. That's right

00:16:10.640 | This holds vaccines for over 200 children and it doesn't require any battery any energy

00:16:17.880 | Its walls have been designed to be such a good thermos that even in very very hot days

00:16:23.520 | Inside it will stay cold enough to make the vaccines work

00:16:27.440 | And then when you want to take them out you just go in here and there there's a whole tray of the vaccines

00:16:33.080 | You take them out it records everything you've done with it the temperature

00:16:38.160 | So it's a replacement for all those refrigerators that have been so unreliable

00:16:42.320 | I mean just look at this thing when we take it out in the field people go. That's amazing

00:16:47.480 | You can't do that

00:16:48.640 | No matter how perfect the vaccine if you can't get it to the people who need it. It ain't doing no good

00:16:53.760 | That's right. And now you know, we need to get it to every child in the world

00:16:58.240 | Gates is betting technology will solve other age-old problems like sanitation

00:17:05.040 | Two and a half billion people around the world do not have adequate toilets

00:17:09.960 | That means streams and rivers get clogged with debris and human waste

00:17:14.600 | Becoming breeding grounds for disease the toilet is one of those things

00:17:20.120 | That's like a vaccine where it really would change the situation

00:17:25.400 | So Gates launched a global competition design a toilet that works without plumbing

00:17:31.840 | We had over 20 entrants. We gave four top prizes. Some of them used burning some of them used a laser approach

00:17:39.000 | There there were quite a few novel ideas of how you reinvent the toilet

00:17:43.520 | And so this was one of the prototype designs of what a good-looking new toilet would look like it actually

00:17:49.560 | Processes everything down in here and then recycles water over the next four or five years

00:17:55.800 | We think we can have a toilet that's every bit as good as the flush toilet

00:18:00.360 | You can learn a lot about what motivates Bill Gates by visiting his private office

00:18:04.880 | He showed us why he draws inspiration from the Italian genius Leonardo da Vinci in

00:18:11.240 | 1994 Gates bought da Vinci's 500 year old notebook

00:18:15.960 | He had an understanding of science that was more advanced than anybody of the time

00:18:20.600 | The notebook we have here is one where he's thinking about water and he's looking at how it flows when it hits barriers and goes

00:18:28.440 | Around comes back together. He's actually trying to understand turbulence

00:18:32.320 | You know, how should you build a dam how you know does it erode away?

00:18:36.680 | It cost 30 million dollars at auction making it the most valuable manuscript in the world

00:18:42.960 | For Gates it is priceless

00:18:45.720 | It's an inspiration that one person off on their own with no positive feedback. Nobody ever told him, you know, what was right or wrong

00:18:54.920 | That he kept pushing himself, you know found knowledge in itself to be a beautiful thing

00:18:59.680 | Gates scoffs at any comparison to the great Leonardo

00:19:03.320 | But a look around his private office reveals a man equally obsessed with understanding his world

00:19:09.800 | Can I look at these sure? This is the weather one meteorology

00:19:13.600 | My very first course that I watch is this geology course

00:19:17.360 | This is a whole series on the joy of science mathematics philosophy in the real world

00:19:21.920 | Gates collection of DVDs contains hundreds of hours of college lectures that this famous Harvard dropout has watched

00:19:29.480 | The more you learn the more you have a framework

00:19:32.600 | That the knowledge fits into when he's on the road Gates who's a speed reader

00:19:38.440 | Lugs around what he calls his reading bag when he finishes a book. He posts his thoughts on his website

00:19:45.000 | Gates notes what I'll do is I'm reading these books. I'll take notes. Well, these are your notes already

00:19:51.760 | Right. Yes. No, I love to take

00:19:53.920 | So I just haven't written it up yet how long will it take to read all of this Oh long time

00:20:02.040 | Thank goodness for vacations. I read a lot

00:20:05.880 | But Gates isn't just reading books for pleasure. He is determined to use his knowledge to back groundbreaking innovations

00:20:13.640 | Take this high-tech zapper. It is a laser designed to shoot down malaria infected mosquitoes in mid-flight

00:20:21.440 | And Gates showed us one of his boldest and he says most important ventures a new kind of nuclear reactor

00:20:28.920 | It would burn depleted uranium

00:20:31.120 | Making it cleaner safer and cheaper than today's reactors and your fuel lasts for 60 years

00:20:38.400 | And so during that entire time you don't need to open it up refuel it. You don't need to buy more fuel

00:20:43.080 | So there's a certain simplicity that comes with this design and when could it come on stream best case?

00:20:49.720 | Would be to have a prototype

00:20:51.720 | around 2022

00:20:53.640 | Bill Gates calls himself an

00:20:55.640 | impatient optimist a

00:20:58.400 | Description his wife Melinda says was accurate even when they met over 20 years ago Melinda. What did you like about him?

00:21:05.340 | Just his curiosity and his optimism about life and this belief that you know that you can change things

00:21:12.640 | I mean he believed that clearly in Microsoft. He was changing the world with software and he knew it

00:21:16.760 | It's the curiosity shared curiosity or their different curiosities. Well, we both have curiosity for lots of things

00:21:23.160 | Bill at this stage in our life also gets more time to read than I do quite honestly with three kids in the house

00:21:28.840 | But the great thing is Bill will go read an entire book about fertilizer and I can tell you

00:21:33.560 | Three kids in the house. I'm not gonna read a book about fertilizer, but he loves to teach and so as long as I have time

00:21:39.560 | We'll spend time. What is it about a book about fertilizer? I mean seriously fertilizers are very interesting

00:21:45.000 | We we couldn't feed a few people people would have to die if we hadn't come up with fertilizer

00:21:51.960 | How do you find a balance in all this father?

00:21:54.560 | Chairman of a major company a foundation and then all these other ventures has the balance come to you. I don't mow the lawn

00:22:02.260 | He's come a long way from that teenage prodigy obsessed with writing computer code over nearly four decades

00:22:13.040 | We've watched Bill Gates helped lead the digital revolution with what he now admits was a fanatic and relentless

00:22:19.840 | Determination you guys never understood you never understood the first thing about this

00:22:25.160 | I'm not using this thing in the early years. There was a demanding guy. There was a driven guy. There was obsessed guy

00:22:31.600 | There was some say an arrogant guy. Have you changed?

00:22:35.280 | I'm certainly learned

00:22:41.680 | When I make a mistake, you know and my thinking is sloppy I like to be very hard on myself like that is so stupid

00:22:48.640 | How could you not see how those pieces fit together and that way that you're you know?

00:22:53.800 | Very disciplined yourself and careful about your thinking you don't want it to extend

00:22:58.600 | To when other people may not get something quite as quickly

00:23:03.080 | It's like oh, you know, how come you don't don't get this thing as he mellowed at all

00:23:08.080 | I hope any of us in life mature, right?

00:23:11.320 | We all mature but look I wouldn't have married Bill if there wasn't a huge heart with all the adjectives

00:23:16.040 | You just used about how he drove his career, which was very successful for Microsoft. There was an enormous heart always there

00:23:22.560 | No question Gates has softened with age

00:23:25.600 | Just listen to how he reflected on his often tumultuous relationship with the late Apple CEO Steve Jobs

00:23:33.120 | He and I in a sense grew up together. We were within a year of the same age and you know

00:23:40.040 | We were kind of naively optimistic and built big companies

00:23:43.800 | We achieved all of it and most of it as rivals, but we always retained a certain respect communication

00:23:51.080 | Including even when he was sick. I got to go down and spend time with them and talked about what know about

00:23:58.320 | what we'd learned about

00:24:01.800 | Families anything

00:24:03.800 | Today gate says he gets advice on patience and generosity from his friend Warren Buffett who seven years ago

00:24:10.880 | entrusted the majority of his fortune to the Gates Foundation and

00:24:15.320 | From his father Bill senior a lawyer who prodded his son into giving his money away. You've said before this is your hero

00:24:23.400 | Why?

00:24:25.280 | Well, my dad has

00:24:27.280 | integrity

00:24:29.480 | He's got a humble approach to things. He's calm

00:24:32.920 | And wise about things

00:24:35.800 | It's just a huge influence to always, you know want to live up to a great example

00:24:40.800 | Someone said to me your son may be the most influential person in the 21st century. I can only say yes

00:24:49.000 | he's determined as

00:24:52.000 | He already has proven that he can dramatically reduce the number of kids under five who died

00:24:59.120 | You can't do any better than that. That's right. That's right is

00:25:02.840 | There's no way to be unimpressed about that

00:25:06.200 | You couldn't be more proud. I couldn't be more proud. That is exactly true

00:25:12.040 | Go to 60 minutes overtime calm to hear more about the great rivalry and friendship between

00:25:21.200 | You

00:25:23.200 | You're working at two companies simultaneously which is kind of extraordinary in itself and you have this amazing way of

00:25:43.240 | You spent just talk really quickly about how you balance those two. I think it's kind of interesting. Yeah, so I

00:25:50.360 | the only way to do this is to be very disciplined and very practiced and

00:25:54.440 | And the way I found that works for me is I theme my days

00:25:59.800 | So on Monday Monday at both companies focus on management and running the company, which is you know

00:26:06.560 | We have our directional meeting at square and we have our op-com meeting at Twitter

00:26:11.440 | I do all my management one-on-ones on that day

00:26:14.080 | Tuesday is focused on product Wednesday is focused on marketing and communications and growth

00:26:20.360 | Thursday is focused on

00:26:22.360 | developers and partnerships and Friday is

00:26:24.660 | Is focused on the company in the culture and recruiting Saturday? I take off I hike and then Sunday is

00:26:32.280 | reflection feedback strategy getting ready for the the rest of the week and

00:26:37.080 | there's interruptions all the time, but I

00:26:40.440 | Can quickly deal with an interruption and then know that it's Tuesday

00:26:45.400 | I have product meetings and I need to focus on product stuff and it also sets a good cadence for the rest of the company

00:26:51.520 | So that we're always delivering. We're always showing, you know where we were last week and where we're going to be

00:26:56.960 | The following week so it's been good

00:27:00.640 | But we're always we're always evolving and you're splitting your time equally between the two. Yep. How many hours at each one?

00:27:05.760 | eight hours at each one and I live across

00:27:09.120 | eight hours

00:27:11.120 | Another thing I wanted to ask you about was your work day. I mean, I know you're famous for the four-hour work week

00:27:27.560 | But you've also explained, you know that beyond just doing the basic things you you go beyond those four hours

00:27:35.360 | Do you love doing that you're passionate about and that yeah, that's inspiring and I'd like to hear about your

00:27:42.280 | Typical work day your routine. I know it changes probably, you know day-to-day, but just something that you typically do

00:27:49.240 | Sure, so I'll give you the framework

00:27:52.120 | I think that that routine can be very empowering as a as a positive constraint and I think

00:27:57.840 | Having things scheduled also helps you to get more done

00:28:01.400 | So you've probably heard the expression if you want to get something done give it to a busy man

00:28:05.280 | I think that's very true and that comes back to Parkinson's Law

00:28:09.100 | So I'll give you my framework for the day and then what fills certain spaces varies day to day

00:28:13.980 | But generally I wake up around 10 a.m

00:28:17.160 | Which is very late for most people but I go to bed around 2 or 3

00:28:21.240 | And I do make sure that I get my sleep

00:28:24.200 | Almost always 8 to 9 hours unless it's prior to some type of event or presentation in which case

00:28:30.640 | I generally don't sleep

00:28:32.640 | Then I'll get up have a quick breakfast

00:28:36.240 | Do about 10 to 15 minutes of reading generally things like Seneca something to really put my mind in the right frame

00:28:44.160 | for the rest of the day and

00:28:46.840 | Then I'll do a

00:28:49.760 | Workout, so I'll do a workout generally

00:28:51.760 | Resistance training for 20 to 30 minutes and then from that point for about a two-hour period

00:28:57.960 | I'll work on any one of my projects that could be helping

00:29:01.040 | Startups that I've invested in I do work as an angel investor here in Silicon Valley

00:29:06.280 | It could be any number of different things this week

00:29:10.480 | I'm actually selling a company that I'm involved with and that's taking up most of my time

00:29:15.520 | Then I'll have lunch around 1 or 2 p.m

00:29:19.520 | and that's usually

00:29:23.640 | Along with a trip to pick up mail or packages if I have any after that point I will

00:29:30.280 | In the last few months do a

00:29:34.840 | Swimming workout of about 45 minutes then do another let's say 4 to 5 hours on particular projects

00:29:42.600 | I'll take us to 6 or 7. I have a small snack workout again

00:29:47.320 | and then

00:29:51.640 | Two or two or three, but they're very short some of these workouts might only be 10 15 minutes keep in mind especially in the morning

00:29:57.640 | It's the greatest mental performance enhancer

00:30:01.880 | Possible physical exercise really not separating the the brain and other organs

00:30:08.120 | and then I will have after working out I'll have a nice big meal and

00:30:13.760 | Come home and from about I would say 8 p.m. To 11 p.m. Is generally allocated to spending time with friends

00:30:22.120 | And I'll oftentimes have lunch with friends business associates. They're they're usually one in the same now

00:30:28.840 | And then my most productive writing period and I enjoy writing

00:30:33.560 | As difficult as it is for me my best writing period is from about I would say midnight or 1 a.m. To

00:30:41.000 | 3 4 a.m. And so I'll generally sit down with a glass of wine or two and

00:30:48.960 | Some tea and write and I'll put on a headset and usually play music off of Pandora and I'll have a music in the I'm

00:30:56.080 | Sorry a movie in the background playing on big screen TV

00:30:59.840 | So that it feels like I'm in a social environment, even though the TV is actually muted

00:31:04.400 | That is my routine

00:31:18.040 | Well, that's part of the reason I found that I get my best work done between 1 and 3 or 4 a.m

00:31:23.680 | Is that particularly since I'm on the West Coast the options for?

00:31:28.440 | procrastination and distraction are fewer and

00:31:32.040 | Whenever possible in my life, I try to control my environment

00:31:37.400 | Rather than control my behavior. So I think that's

00:31:41.680 | Changing your environment and designing your environment and that includes schedule is oftentimes much more effective than trying to rely on

00:31:48.640 | Self-discipline for certain things and I've really tried to follow that as much as possible making it impossible for me to misbehave in other words

00:31:57.040 | Welcome

00:31:59.040 | Welcome welcome welcome. Welcome to episode 12 of the radical personal finance podcast today is July 2

00:32:21.080 | 2014 and our topic of the day retirement

00:32:26.460 | Today we're gonna expose the elephant in the living room is

00:32:30.340 | Retirement a complete and utter scam or is it something that we should be working towards at all? Stay with us

00:32:51.580 | So welcome welcome welcome again, my name is Joshua sheets

00:32:54.540 | I'm your host for today's episode of the radical personal finance podcast and after that length the

00:33:00.260 | Introduction. I hope that you have some sense of where we are going with today's show

00:33:06.940 | I'm sure that if you

00:33:09.900 | picked up on it the theme through all of it is retirement and

00:33:14.340 | so

00:33:16.020 | One of the things that I've learned working with financial planning is that retirement is almost the universal goal in the universal

00:33:22.700 | Universal discussion. So today we are going to try to break down some of the myths of retirement and we're going to try to

00:33:30.060 | Expose some alternate ideas and some alternate things that can be done to advance retirement. I

00:33:38.180 | Find the return I find the retirement

00:33:45.220 | Discussion a lot of times extremely frustrating and the thing that I've learned over time is that nobody retires

00:33:51.060 | Nobody retires. I first learned this I'll share a little bit of personal history

00:33:56.820 | I first learned this watching my two grandfathers and I had one grandfather

00:34:00.780 | Who was a farmer and another grandfather who was a teacher?

00:34:05.380 | he was actually a

00:34:07.260 | Farmer and a rancher earlier in his life and then he went back to school and became a teacher and ultimately

00:34:12.140 | Wound up spending most of his career working as a college professor

00:34:15.220 | But in working with and watching these grandparents, one of the things that I learned is that neither of them quit

00:34:21.460 | My grandfather who was a teacher he actually quote-unquote retired about three times

00:34:27.140 | I think he left three different retirement parties at different points of his age, but at his final job

00:34:31.700 | He was working as a tutor at a local community college tutoring students on

00:34:35.020 | on

00:34:37.820 | Math and

00:34:39.740 | The only reason he ever quit at about the age of his mid 80s

00:34:43.140 | I think it was 84 83 84 something like that

00:34:45.740 | But the only reason that he ever quit is because it became unsafe for him to drive, but he loved it every single day

00:34:50.760 | Every single day of his life prior to that time

00:34:54.340 | He would get in his car get up early 5 5 30 in the morning get up early go down spend his day

00:34:59.540 | Tutoring his students and he loved it. My other grandfather was a farmer and if any of you know farmers

00:35:04.840 | Then you know that a farmer never retires

00:35:08.060 | He just kind of pulls back a little bit and so I on the other hand was always interested in early retirement

00:35:14.220 | I was always interested in quitting work early

00:35:16.860 | And so when I became a financial advisor about six years ago

00:35:20.380 | One of the things that I decided to work at was to focus a lot on retirement planning

00:35:25.540 | but I learned that

00:35:28.500 | Nobody retires and I make I'm gonna make some broad generalizations in today's world and I'm gonna bake

00:35:37.180 | Excuse me in today's show. I'm gonna make some broad generalizations, and I understand when I'm making

00:35:41.780 | Statements for dramatic effect, so I'm aware of them, but I think they do need to be said

00:35:45.860 | But one of the things that I learned is that nobody retires in today's world

00:35:49.780 | the people that have the money to retire are the ones that never quit and

00:35:54.420 | the people that desperately want to retire the most are the ones who never accumulate the money to quit and

00:36:00.340 | So in in essence you find out that nobody is retiring

00:36:04.980 | so I just played that audio montage and I'll tell you who they were as far as who all of the all of the

00:36:11.620 | Videos were that I played for you there

00:36:14.700 | But the first video that you had was an introduction the first video was an introduction

00:36:19.620 | From on Warren Buffett and here's Warren Buffett at however old he is now

00:36:24.860 | He's never retired. He wrote a there's a book written about him called tap dancing to work

00:36:29.080 | That's his by and the person that was being interviewed with him was Carol Loomis who's his longtime

00:36:34.620 | Person who editor who helps him with his writing and so Warren says I'll never retire and the day

00:36:39.820 | I'll retire is the day. I'm gonna go is the day. I'm gonna die

00:36:42.840 | Billionaire Steve Jobs billionaire never retired till the day that he died

00:36:47.300 | Bill Gates billionaire that video that I played was from his see

00:36:52.140 | CES

00:36:54.060 | Presentation right before he quote-unquote retired and then the video following shows that clearly it's obvious that he's never retired although

00:37:00.980 | He's no longer working at Microsoft. He moved on and he's spending more time working

00:37:05.540 | He's spending more time working

00:37:08.060 | Than probably he did before and maybe there's a little bit more of a balance in his life

00:37:13.020 | There sure could be but he's certainly not retired. The next video was Jack Dorsey who is the billionaire?

00:37:18.060 | co-founder of Twitter and and the CEO of Square

00:37:22.100 | The next video after that is Tim Ferriss

00:37:24.420 | So Tim Ferriss writes a book called the four-hour workweek excellent book highly recommended enjoyed it immensely

00:37:29.780 | But he writes a book called the four-hour workweek and it's clear from his daily schedule

00:37:33.580 | He's probably working on average 12 to 14 hours a day now to his credit

00:37:38.540 | He's very clear about that in any interview and he's very clear that you know

00:37:42.420 | The four-hour workweek is kind of a gimmicky title designed to sell books and that he doesn't praise

00:37:47.200 | inactivity his goal is to get people to

00:37:49.900 | His goal is to to get people to be to stop the time-wasting parts of activity

00:37:56.060 | But just pointing out this this issue of that nobody retires

00:37:59.960 | so this one this has really bothered me over the years and I do not have I don't have the answers but

00:38:07.260 | As I observe something I just I believe we need to have a new conversation

00:38:11.540 | In this country and where it's gonna start is with retirement in today's world in the finance world

00:38:16.820 | You have a lot of people that are very focused on early retirement. I think that's awesome to me. That's a really valuable

00:38:24.980 | Thing to pursue as well, but even the people that are early retirees. They don't retire

00:38:30.820 | The

00:38:33.620 | Probably the two most prominent financial bloggers that I'm aware of one is is is Jacob Lund Fisker who writes the blog

00:38:40.200 | Early retirement extreme I've reviewed his book and I hope he'll come on this show for an interview at some point

00:38:45.580 | But Jacob Fisker

00:38:47.620 | He's written on his in his writings that he actually regrets using the word retire because he's not retired

00:38:53.900 | Even now he's no longer blogging. He's working to the best of my knowledge in the investment trading business

00:38:59.300 | Earning money. I don't have any idea doesn't really matter

00:39:03.440 | Mr. Money mustache at mr. Money mustache comm blog about early retirement. See retired. Absolutely not

00:39:09.940 | he's working harder than ever, but he's working on projects that he enjoys and

00:39:14.900 | He's probably making more money than ever. He's probably just simply enjoying his life more. So whether we

00:39:22.580 | By the way, he wrote an article called the internet retirement police, which is quite fun

00:39:27.060 | I don't think I qualify as part of the internet retirement police, but it's one of the common

00:39:31.700 | Allegations against people saying, you know, you're not actually retired. I just think the word retired. We needed an expanding

00:39:38.380 | understanding of that word

00:39:40.660 | The idea that you're gonna reach a point in time at which you just completely quit and never and never

00:39:46.660 | work again is a very

00:39:50.980 | new and interesting idea

00:39:52.980 | so it's the origin of the retirement has always really always bothered me and

00:39:58.340 | I'm gonna do my I don't first of all to be clear. I don't have all the answers

00:40:02.900 | In fact, I am looking for answers on this subject and I've done a good bit of research

00:40:07.540 | But I've done a good bit of research, but I still don't have I still don't have

00:40:14.180 | A full understanding of it. And so for the next couple of shows we're gonna be talking about retirement

00:40:19.640 | But not from the technical how do you save money and what should you do to save for retirement that comes later?

00:40:25.020 | But right now we're just gonna be talking about retirement as a concept and I would invite your comments and invite your feedbacks

00:40:30.620 | I'm gonna be doing a lot of

00:40:32.100 | Reading of some articles and I'm gonna be doing some extensive reading from a book which I'll introduce in a little bit

00:40:37.840 | as well that has helped me and basically the idea behind today's show is simply to

00:40:44.500 | Give some background for you

00:40:47.300 | As far as some ideas and some commentary that may help you to understand more of what you want to do

00:40:52.260 | I'm gonna add one more article before we go into

00:40:54.580 | Kind of the history of retirement. I'm gonna read an article from the Washington Post

00:40:59.740 | And this article was bylined of June 10

00:41:03.200 | Of the art in the Washington Post and the title is called Bill Marriott Warren Buffett Rupert Murdoch Murdoch and the age of the everlasting

00:41:11.180 | executive

00:41:12.980 | The writer here is Michael Rosenwald

00:41:14.980 | He's 82 now

00:41:16.580 | But Bill Marriott can't bring himself to completely walk away from the company that bears his name on Tuesday

00:41:22.180 | the octogenarian presided over the grand opening of the gleaming

00:41:25.080 | 1175 room Marriott Marquis the new Convention Center Hotel in Northwest, Washington that his family considers one of its proudest legacies. I

00:41:34.460 | Really do wish my parents could be here to see this wonderful and monumental

00:41:38.580 | Hotel Marriott told about 200 guests who toasted the hotel with root beer to honor the nine stool district root beer stand that begat a

00:41:46.260 | hotel empire

00:41:47.820 | Though Marriott no longer runs the company. He transformed into a global lodging chain

00:41:52.440 | He remains its executive chairman still working 50 hours a week and visiting more than 200 hotels a year in the process

00:42:00.540 | He has become one of the country's most prominent everlasting executives a small but high-profile

00:42:06.460 | group of golden aged Titans whose identities and personal fortunes are so wrapped up in their firms that the concept of retirement is

00:42:14.220 | incomprehensible

00:42:16.300 | Many of them bear famous names

00:42:18.300 | News Corp chief executive Rupert Murdoch age 83 Viacom chairman Sumner Redstone

00:42:24.160 | 91 Berkshire Hathaway investment legend Warren Buffett 83 and Marriott who ran his company for 39 years

00:42:32.260 | But there are less prominent ones to Melvin Gordon chief executive of Tootsie Roll Industries is 94

00:42:37.980 | Oh Bruton Smith, the chief of Sonic Automotive a fortune 500 group of auto dealerships is 87

00:42:44.460 | Owning large stakes gives these executives the ability to essentially hang around as long as they please

00:42:50.460 | But academics who study and interview older executives say there is a complicated psychology at play and that advances in health care

00:42:58.300 | Marriott has survived several heart attacks mean the country could see more everlasting executives in the future

00:43:03.840 | What motivates them for starters death?

00:43:07.900 | One way of pushing death away as hard work said Manfred FR Ketz DeVry who studies management

00:43:14.440 | psychology and is the author of a paper titled death and the executives and

00:43:18.880 | Executive encounters with the stealth motivator

00:43:22.020 | Work as a way of not thinking about it as opposed to sitting on the golf course and having some drinks

00:43:27.480 | It's about finding and having meaning though

00:43:30.800 | There are studies showing that the older executives get the more risk averse they become

00:43:34.400 | Potentially robbing shareholders of big acquisitions that could improve companies bottom line that that drawback

00:43:41.000 | some experts say is ignored by corporate boards too worried about pushing out popular figures whose identities would vanish without their jobs a

00:43:49.200 | report by the conference board a business research group showed that mandatory retirement policies are now seldom used and the

00:43:57.360 | Idea of everlasting work is filtering down to the lower executive ranks with surveys by Gallup and others

00:44:03.920 | Showing that large numbers of baby boomers intend to put off retirement because they find work

00:44:09.040 | Rewarding or because their retirement accounts took a beating in the recession

00:44:12.760 | Some 10% of organizations now offer some form of phased retirement according to the Society for Human Resource Management

00:44:19.120 | If you have reasonably good health and a real interest in what you're doing

00:44:23.880 | There is no reason why you can't continue contributing for as long as you can said Fred Malek a close friend of Marriott and former

00:44:31.080 | President at the company. He's still working at age 77 people like Bill are lucky to have that

00:44:37.040 | Marriott's everlasting career is somewhat rare when compared to Murdoch

00:44:41.400 | Redstone and Buffett all of whom still wield considerable day-to-day control over their companies

00:44:46.720 | Marriott stepping away was the subject of intense speculation over the years

00:44:51.320 | Especially after his son John left the company in 2005 leaving no other family member ready in age or experience

00:44:57.880 | to fill the top job

00:45:00.200 | Marriott turned to Arnie Sorenson a young well-liked executive he had personally groomed

00:45:05.880 | Sorenson said he regularly consults with Marriott whose office is just down the hall at the company's Bethesda, Maryland headquarters

00:45:12.240 | Not because he has to but because he wants to

00:45:15.640 | Marriott he added remains deeply interested in hotel operations and isn't shy about bringing up ideas or problems

00:45:22.820 | He attends monthly senior staff meetings in

00:45:25.560 | Marriott Sorenson has a counselor with such love and recall for details that in an interview

00:45:31.440 | He offered the secret to a famous hot shops dessert

00:45:34.120 | The key to our hot fudge ice cream cake was to leave a spot in the middle of the cake on the top and not cover

00:45:39.840 | It with anything so you could put your whipped cream and cherry on a dry spot

00:45:43.580 | If you put it on top of the chocolate, it would slide off and you wouldn't have good ice cream cake

00:45:48.160 | by hanging around

00:45:50.640 | Marriott is hedging a bit and making sure his successor lands on his feet said Donald C

00:45:55.160 | Hambrick a management professor at Penn State University who has studied lengthy executive tenures

00:45:59.860 | He is showing that he's pooling for Sorenson and doesn't want to leave him high and dry

00:46:04.200 | Asked what he thinks Marriott gets out of his role Sorenson said it keeps him young and active and engaged

00:46:11.840 | He's a big competitor. He wants to win

00:46:14.400 | His family thinks they win, too

00:46:17.040 | My dad will never stop working said daughter Deborah Marriott Harrison and we're happy about that because he would probably curl up in the fetal

00:46:24.080 | Position and die because this company has been so much a part of his life

00:46:27.860 | But he's no longer putting in 80 hours a week. They get more of him at home

00:46:32.280 | He's less preoccupied and more in the moment Harrison said earlier this year

00:46:36.840 | Harrison saw him play a game with one of his 15 grandchildren a fishing expedition with magnets

00:46:42.080 | He and his granddaughter played for 45 minutes who won. Are you kidding? Marriott said laughing she won

00:46:49.200 | So contrast that article with this article right here, this is from USA Today

00:46:56.000 | of

00:46:58.120 | from a USA Today article on personal finance

00:47:00.800 | published April 1

00:47:03.160 | 2014 and the writer here is Nancy Helmick. And so this is the article that pervades

00:47:08.640 | Just about everywhere you look in the financial world

00:47:11.720 | Retirement a third have less than $1,000 put away

00:47:16.240 | Most people aren't trying to figure out how much they'll need in their golden years

00:47:21.160 | Most people have very little tucked away for retirement and many aren't even trying to figure out how much they'll need later in life a

00:47:29.160 | new national survey reveals

00:47:32.280 | About 36% of workers have less than $1,000 in savings and investments that could be used for retirement

00:47:38.360 | not counting their primary residence or defined benefit plans such as traditional pensions and

00:47:43.440 | 60% of workers have less than

00:47:46.160 | $25,000 according to a telephone survey of

00:47:48.560 | 1,000 workers and

00:47:50.880 | 501 retirees from the non-profit employee benefit Research Institute and Greenwald and Associates

00:47:57.840 | Only 44% say they or their spouses have tried to calculate how much money they'll need to save by the time they retire

00:48:05.280 | So that they can live comfortably in their golden years the survey shows

00:48:08.920 | Workers who have done calculations and what they need to save tend to have higher levels of savings than those who haven't crunched the numbers

00:48:15.840 | interesting little did

00:48:19.240 | Excuse me a little interesting little tidbit there in that sentence

00:48:22.300 | There's an incredible difference between those lucky enough to have a retirement plan and those who don't says Jack Vander High. I'm gonna pause

00:48:29.100 | this drives me nuts anybody can have a retirement plan and I

00:48:34.540 | Won't preach on it right now

00:48:37.260 | Nobody is lucky to have a retirement plan people who want a retirement plan can get one

00:48:41.940 | There is nobody that's excluded from retirement plans in this country period

00:48:45.620 | There's an incredible difference between those lucky enough to have a retirement plan and those who don't says Jack Vander High

00:48:51.140 | The Institute's research director and co-author of the 2014 retirement confidence survey

00:48:55.720 | What's really striking is that 73% of those without a retirement plan?

00:48:59.500 | My comment because of their choice such as an IRA 401k or 403 B have less than

00:49:06.040 | $1,000 in savings and investments the reason defined benefits weren't included in the total is most people don't know how much those are worth

00:49:13.300 | He says that's been hugely true in my own benefit

00:49:16.820 | If you have a defined benefit plan understand how much it's worth almost nobody that I've ever talked to

00:49:21.340 | Actually understands how much their defined benefit plans are worth

00:49:25.020 | Continuing on many people realize that they are not on track and saving for retirement and the two most important reasons

00:49:30.860 | They give for not saving more our cost of living and day-to-day expenses Vander High says

00:49:35.220 | People's confidence that they'll have a comfortable retirement has risen slightly after record lows in the last five years

00:49:40.660 | with 18% of workers in

00:49:43.260 | 2014 saying that they are very confident they can retire comfortably up from 13% who are very confident in

00:49:49.140 | 2013 meanwhile

00:49:51.580 | 24% are not at all confident. They have enough saved for a comfortable retirement about the same as

00:49:57.020 | 2013

00:49:58.820 | Retirement confidence is moat is present mostly in people with higher incomes and in those with retirement plans Vander High says

00:50:04.740 | The survey quote highlights the impending retirement crisis that we will face over the next 20 years says Mark fried

00:50:12.340 | president of TFG wealth management in Newton, Pennsylvania

00:50:14.820 | When I see those these numbers I have a I have a I have to ask the question. How did we get here?

00:50:21.100 | We need more financial education in the schools in the media in the workplace

00:50:25.500 | If possible people 40 and older should try to save up to 20% of their income

00:50:30.300 | He says quote if you can't afford to do that right now

00:50:33.020 | Then set this as a target and as you get annual raises put aside part of each raise until you reach the 20% number

00:50:39.020 | Fried says invest in your company's retirement account up to the match

00:50:42.700 | One of the best ways to increase your retirement savings is to take advantage of your employer match if you have one

00:50:47.940 | He says John Pearshale a certified financial planner at Pearshale financial group of Crystal Lake

00:50:52.900 | Illinois says try to imagine how much you're going to need to have saved up to last you to 20 to 30 years during

00:50:59.540 | Retirement the only way you can figure that out is to do some retirement calculations. We help clients figure this out

00:51:06.220 | If people are way behind in saving for retirement

00:51:08.700 | They may need to work longer at their current job or get a second job to help fill the savings gap

00:51:12.940 | Pearshale says quote if you had the idea that you were going to retire at 62 or 65

00:51:18.180 | And you don't have enough saved up then you have to keep working

00:51:20.780 | other survey findings

00:51:23.620 | Debt is weighing heavily on many people with 58 percent of workers and 44 percent of retirees saying they have a problem with their level

00:51:30.560 | of debt

00:51:31.620 | Like workers. Did you notice 44 percent of retirees saying they have a problem with their level of debt?

00:51:37.100 | Like like workers many retirees are also short on funds with 58 percent of them having less than

00:51:43.020 | $25,000 in savings and investments not counting their primary residence or defined benefits plans

00:51:48.860 | Which are traditional pensions and 29 percent having less than $1,000

00:51:53.440 | note that

00:51:55.660 | 29 percent of retirees have less than $1,000

00:51:59.100 | Although 65 percent of workers plan to work for pay in retirement only 27 percent of retirees say they are working for pay

00:52:06.020 | during their golden years

00:52:08.100 | That point is incredibly important, and we're going to talk about that in detail

00:52:12.720 | Total savings and investments reported by workers not including the value of primary residence or defined benefit plans such as a traditional benefit

00:52:20.340 | 30 for 6 percent have less than a thousand bucks

00:52:23.000 | 16 percent have between a thousand bucks and ten grand eight percent have ten to twenty five thousand

00:52:29.820 | Twenty five to fifty nine percent fifty to not ten to a hundred nine percent and a hundred to two fifty eleven percent

00:52:35.620 | 250 or more 11%

00:52:38.620 | Total savings and investments reported by retirees not including the value of the primary residence

00:52:45.580 | less than a thousand bucks 29%

00:52:49.020 | So

00:52:53.900 | This is a decent article. I mean, I don't have any problem with the article just

00:52:58.660 | the problem is is that it's it's an it's a

00:53:01.400 | Find myself speechless which is unusual the problem with the article is that there's no

00:53:11.620 | It's like what do you do? Okay, and what I compare this to is I compare this to

00:53:17.060 | Kind of like the low-fat thing in this country if you pay any attention over the last

00:53:23.340 | 30 years how long has you know eat low calories whole grains and low-fat been working and go and look at the statistics and you'll

00:53:30.140 | See that over that entire time Americans have gotten fatter and fatter and fatter and less and less and less healthy

00:53:34.900 | So at what point in time do you wake up and say the Emperor is not wearing any clothes?

00:53:39.020 | You know the elephants in the living room. There's you know, this isn't working and

00:53:43.460 | To me that's what I feel like the whole retirement situation in in this country is it's not working clearly if you say that you have

00:53:51.900 | this woeful kind of ringing of the hands article which again this one's pretty balanced and less than

00:53:57.300 | 36% of workers have less than a thousand dollars and

00:54:01.380 | 11% of workers have two hundred and fifty thousand dollars or more

00:54:05.100 | Which two hundred fifty thousand dollars or more is just scratching the surface of what you would need to have saved for retirement if you were

00:54:11.580 | planning on living off of investment assets

00:54:13.580 | You've got a problem. It doesn't work. It's clearly not working period now. What's the solution?

00:54:19.520 | There's tons of solutions and that's what we're going to talk about at length throughout this show

00:54:23.640 | But again 29% of workers have less than a thousand dollars. So that means that either they're living purely on social security

00:54:31.560 | or that

00:54:34.220 | So this doesn't this doesn't include the value of a traditional pension defined benefit plan

00:54:39.260 | So hopefully they have some defined benefit plans, but you got 30% of retirees have less than a thousand dollars saved

00:54:44.960 | So what's going on? Well

00:54:49.140 | Clearly, you know those retirees are figuring out a way to

00:54:52.820 | To make it work and we've got to talk about new solutions

00:54:57.380 | We've got to talk about new solutions of ways that you know

00:55:01.020 | Other than just simply a bunch of you know

00:55:02.860 | Certified financial plan are saying you need to save more money and no offense to the guy that's in this article. It's true

00:55:08.220 | It's 20% would be awesome

00:55:10.060 | That would be a great recommendation for people to make

00:55:12.300 | unfortunately, these little soundbite pieces of

00:55:16.340 | Advice just simply don't work because you know a who's gonna change their behavior because they they just read an article on this

00:55:23.780 | And it doesn't give you any tools. That's why I'm creating this podcast is kind of because of this frustration

00:55:28.680 | We've got to do something better

00:55:29.860 | but I think before we do and talk about solutions which we will not get to in today's show and

00:55:34.780 | 55 minutes and and I'm just getting warmed up, but we're not going to talk about solutions today

00:55:41.380 | That's gonna be a separate show

00:55:43.180 | we're gonna talk about history today, and I'm gonna read a couple more articles that are helpful and

00:55:47.660 | so

00:55:49.260 | And then we're gonna go in detail

00:55:51.260 | Using a book called a history of retirement that I was able to find that was written back in

00:55:56.860 | Back in

00:56:02.380 | 1980

00:56:03.620 | By it's published by Yale

00:56:05.940 | Yale University and the author's name is William Grabener and

00:56:10.980 | To me it's been the most comprehensive thing that has helped me but to kind of set the stage

00:56:15.380 | Let's talk about the history of retirement

00:56:17.300 | What got me interested in this is that I've always heard this anecdote and maybe you've heard it as well

00:56:23.540 | but that retirement was originally intended as a punishment and

00:56:27.100 | so the story as it was told to me is that the inventor of retirement was

00:56:33.140 | German Chancellor Bismarck and the way that I was told the story in the way that I remembered it is that

00:56:38.700 | retirement was intended as a punishment and basically he looked around and he had a bunch of

00:56:42.980 | Political competitors and he was trying to figure out how to get rid of his political competitors and

00:56:49.540 | He noticed that they were all old. So he said I've got an idea

00:56:52.580 | let's institute mandatory retirement starting at the age of 65 and

00:56:56.100 | That'll get rid of my political competitors. So he sold it to them as this is a great idea

00:57:01.620 | Let's have mandatory retirement for everybody. And so everybody loved it

00:57:05.420 | We're gonna sit back and live on the dole for the rest of our life and we're in good shape

00:57:08.660 | And the state's gonna pay for our retirement

00:57:11.940 | So at this point in time, we can you know, we can retire and that single-handedly wiped out his political competition

00:57:17.940 | That's how I heard the story and as was most things anytime anytime you check a story like that

00:57:22.540 | Probably has some amount of truth in it, but it's probably not

00:57:26.900 | the full truth, so

00:57:29.780 | I've done a lot of research on this and I want to do more

00:57:33.620 | But let me read you some articles and I think these articles have set a good

00:57:36.860 | overview and then prior to our getting into retirement in the United States of America, which is the the primary focus of

00:57:44.020 | the primary focus of this

00:57:46.820 | primary focus of

00:57:48.860 | This show obviously, so we're gonna cover three articles here

00:57:51.980 | The first one is from the New York Times and it's called the history of retirement

00:57:56.080 | This was published March 21 1999 by Mary Lou Wiseman

00:58:01.060 | the history of retirement from early man to AARP in

00:58:04.500 | The beginning in the beginning there was no retirement

00:58:08.820 | There were no old people in the Stone Age

00:58:10.820 | Everyone was fully employed until age 20 by which time nearly everyone was dead usually of unnatural causes baloney

00:58:17.620 | But I'll keep going any early man who lived long enough to develop crows feet was either worshipped or eaten as a sign of respect

00:58:23.620 | even in biblical times when a fair number of people made it into old age retirement still had not been invented and

00:58:29.420 | Respect for old people remained high in those days. It was customary to carry on until you dropped regardless of your age group

00:58:36.220 | No shuffleboard, no Airstream trailer when a patriarch could no longer farm herd cattle or pitch a tent

00:58:42.160 | He opted for more specialized less labor-intensive work like like prophesying and handing down commandments or he moved in with his kids

00:58:49.940 | Drives me nuts

00:58:53.240 | Elder hostile elder hostile as the centuries passed the elderly population increased by early medieval times their numbers had reached critical mass

00:59:01.060 | It was no longer just a matter of respecting the occasional white bearded patriarch old people were everywhere giving advice

00:59:06.960 | Repeating themselves complaining about rheumatism trying to help getting in the way and making younger people feel guilty

00:59:12.280 | Plus they tended to hang on to their wealth and property

00:59:15.160 | this made them very unpopular with their middle-aged sons who were driven to earn their inheritance as the old-fashioned way by committing patricide and

00:59:23.080 | Even as late as the mid 18th century

00:59:25.000 | There was a spate of such killings in France by 1882 so patricide being the idea of killing off the the the patriarch evidently

00:59:31.740 | in 1882 Anthony Trollope wrote a futuristic novel the fixed period in which he foresaw retiring large numbers of old men to a place where

00:59:40.760 | They would be encouraged to enjoy a year of contemplation followed by a peaceful chloroforming, but this was hardly an acceptable long-term strategy

00:59:49.480 | Old people hanging on to their worldly goods also threatened the social and economic fabric of colonial America

00:59:54.760 | Celebrated Puritan zealot Cotton Mather is generally credited with stimulating the national appetite for witch trials

01:00:01.160 | But few people realized that he was among the first to try to force the elderly to retire

01:00:05.520 | Quote be so wise as to disappear of your own accord

01:00:09.280 | He exhorted them be glad of dismission be pleased with the retirement which you are dismissed into and quote

01:00:16.240 | nobody listened in

01:00:18.960 | 1883 Chancellor Otto von Bismarck of Germany had a problem

01:00:22.440 | Marxists were threatening to take control of Europe to help his countrymen resist their blandishments

01:00:27.840 | Bismarck announced that he would pay a pension to any non working German over age 65

01:00:32.320 | Bismarck was no dummy hardly anyone lived to age 65 at the time

01:00:36.800 | Total baloney as well

01:00:39.440 | Given that penicillin would not be available for another half-century

01:00:43.520 | Bismarck not only co-opted the Marxist but set the arbitrary world standard for the exact year at which the old age at which old age

01:00:50.320 | Begins and established the precedent that government should pay people for growing old

01:00:54.520 | It was the world-renowned physician William Osler

01:00:58.120 | We're going to discuss him in depth who laid the scientific foundations that when combined with a compelling economic

01:01:04.120 | Rationale would eventually make retirement acceptable in his 1905

01:01:09.120 | Valedictory address at the Johns Hopkins Hospital where he had been physician-in-chief. I'll read that to you tomorrow

01:01:14.120 | Osler said it was a matter of fact that the years between 25 and 40 in a worker's career are the quote

01:01:20.920 | 15 golden years of plenty and

01:01:23.520 | Quote he called that span quote the anabolic or constructive period

01:01:28.720 | Close quote workers between ages 40 and 60 were merely uncreative and therefore tolerable

01:01:35.040 | He hated to say it because he was getting on but after age 60 the average worker was useless and should be put out to pasture

01:01:42.120 | Retirement came in very handy in the United States when large were large numbers of aging factory workers were wandering around the Industrial Revolution

01:01:50.600 | Dropping things into the works slowing down assembly lines

01:01:54.360 | Taking too many personal days and usurping the places of younger more productive men with families to support

01:02:00.720 | it was one thing when an occasional an

01:02:03.640 | Occasional superannuated farmer leaned on his hoe in an agrarian culture a few bales of hay more or less didn't matter

01:02:10.160 | But it was quite another when lots of old people caused great unemployment among younger workers

01:02:15.120 | By refusing to retire the Great Depression made the situation even worse it was a Darwinian sacrificial moment

01:02:23.900 | Retirement was a necessary adaptation and everybody knew it

01:02:28.520 | But the old guys were not going quietly the toughest among them refused to quit

01:02:34.040 | Even when plant managers turned up the conveyor belts to chaplain esque speeds

01:02:38.560 | pause for a moment to the best of my ability to

01:02:42.560 | Research this this paragraph in in my experiences is kind of the the key

01:02:49.760 | this to me shows

01:02:52.720 | again, probably the the primary

01:02:58.080 | The primary reason and we'll talk about that in detail tomorrow

01:03:01.600 | by 1935 it became evident that the only way to get old people to stop working for pay was to pay them enough to stop

01:03:08.440 | working a

01:03:09.680 | Californian Francis Townsend initiated a popular movement by proposing mandatory retirement at age 60 in

01:03:15.880 | Exchange the government would pay pensions of up to $200 a month an amount equivalent at the time to a full salary for a middle-income

01:03:23.240 | worker

01:03:24.520 | horrified at the prospect of Townsend's radical generosity

01:03:27.920 | President Franklin D Roosevelt proposed the Social Security Act of 1935 which made workers pay for their own old age insurance

01:03:35.280 | What used to mean going to bed suddenly meant banishment to an empty stage of life called?

01:03:41.240 | Retirement if people were not going to work. What were they going to do sit in a rocking chair?

01:03:46.360 | Eleanor Roosevelt thought so quote old people love their own things even more than young people do it means so much to sit in

01:03:54.920 | The same chair you sat in for a great many years she said in 1934, but she was wrong

01:04:00.000 | Most retired people wished they could work the problem was still acute in

01:04:04.920 | 1951 when the Corning company convened a roundtable to figure out how to make retirement more popular at so notice

01:04:11.760 | 1951 but she was wrong most people most retired people wished they could work the problem was still acute in

01:04:19.760 | 1951 when the Corning company convened a roundtable to figure out how to make retirement more popular at that conference

01:04:26.560 | Santa Rama Rao an author and student of Eastern and Western cultures

01:04:31.360 | Complained that Americans did not have the capacity to enjoy doing nothing

01:04:35.420 | The opposite of work turned out to be play the rich discovered leisure first, but by night

01:04:41.840 | But by 1910 Florida became accessible to the middle class

01:04:46.120 | Retirement communities were older people did not have to see younger people working began to appear in the 1920s and 30s

01:04:52.200 | the number of golf courses in the United States tripled between

01:04:55.600 | 1921 and 1930

01:04:58.160 | Subsequent technological developments like movies and television helped turn having nothing to do into a leisure time activity

01:05:04.900 | From now on the elderly would work at play

01:05:09.320 | The publication in 1955 of senior citizen magazine was the first widespread use of the euphemism that

01:05:15.480 | While intending to reconfer respect instead made a senior citizen sound like an over decorated captain in the Pirates of Penzance

01:05:22.520 | It's it's merely partial success may also be so the introduction of the word

01:05:28.920 | Senior or senior citizen it's merely partial success may also be linked to the fact that there is something inherently

01:05:35.640 | Suspicious about an age group that has to offer its potential members discounts to induce them to join

01:05:41.120 | the R word in

01:05:43.840 | 1999 the American Association of Retired Persons

01:05:46.120 | Once the welcome wagon of retirement dropped the word retirement from its name and became the American Association of our

01:05:54.200 | persons

01:05:55.720 | This change was affected in recognition of a basic reality

01:05:59.080 | Many of its members are not retired and in anticipation of the baby boomers threat never to stop wearing lycra turn gray

01:06:05.520 | And in anticipation of the baby boomers threat never to stop wearing lycra to turn gray to stop carrying around bottled water or retire

01:06:13.720 | Although the article is clearly a bit sarcastic which good for her

01:06:20.120 | to me, that's a good overview of a good overview of

01:06:26.200 | a

01:06:28.200 | Good overview of kind of the situation and she and the author there Mary Lou Weissman writes a couple of a couple of important details

01:06:37.360 | Especially about the development of retirement in America, but the key couple of key points. I want to point out from that in

01:06:44.320 | 1951

01:06:46.720 | people still did not want to retire and I feel like this is probably underrepresented in today's world and

01:06:53.000 | You know, I was born in the mid 80s and I grew up in a world thinking

01:06:57.280 | Well, everyone needs to retire and all I stuffed into my head was retirement books about how to retire with retirement

01:07:03.120 | Kind of being painted as this golden prospect

01:07:05.560 | I'm not so sure it is and there are lots of strategies of how to deal with it

01:07:10.800 | But there are a lot of changes that are happening

01:07:13.240 | Incidentally a quick side trip. I kind of mocked this idea that

01:07:19.880 | That the average person hardly anyone lived to be age 65 in 1883

01:07:25.240 | I'll give credit for this is that I've listened

01:07:28.880 | I listened to a long time to a podcast called the survival podcast by a guy named Jack Spirico

01:07:33.800 | And I'll give him credit for pointing it out to me is that he pointed out in one of his shows

01:07:38.640 | He pointed out that the statistics on lifespan are a little bit odd because we're taught that you know back in the 1800s

01:07:45.400 | no, but hardly anybody lived to make it to the age of 65 and

01:07:49.480 | His point was that that's not true

01:07:52.200 | Think of the signers of the Declaration of Independence and many of them lived past

01:07:56.160 | Many of them lived past the age of 65

01:07:59.100 | And so I thought that was kind of interesting

01:08:02.480 | So I went one day and I did a research project just to kind of prove it to myself

01:08:05.600 | And I went and I took and I wrote down all the signers of the Declaration of Independence

01:08:10.240 | And I calculated their out their average lifespan

01:08:13.840 | And the reason I did that is because if you try to figure out okay

01:08:17.280 | maybe the general population number was that was that amount but why and

01:08:21.480 | So is it the fact that we have great medications now?

01:08:25.040 | Or is it the fact that we have dry beds to sleep in?

01:08:27.260 | Is it the fact that we have awesome hospital services or is it the fact that you know, we have that we have adequate food?

01:08:34.160 | What's the actual answer here as far as?

01:08:36.640 | What's the answer and I'm certainly not sure of the answer. I don't know

01:08:42.640 | I certainly don't know what the actual answer is, but I did go and do this interesting

01:08:47.920 | Chart and I'll share it with you

01:08:49.840 | I looked made a list of the 56 signers of the Declaration of Independence and I calculated their average age and

01:08:56.840 | The average age of the 56 signers of the Declaration of Independence ended up being sixty seven point five years

01:09:03.080 | I took out the one so but however, obviously when you read through why different people died

01:09:10.280 | You have accidents you have old age. And so I took out one signer who died at age 30 of shipwreck

01:09:17.020 | That was the one that that was the one that was an accident that was very clear that raised the average lifespan to 68

01:09:24.740 | Point two so the average lifespan of these people was sixty eight point two

01:09:28.320 | If you look down the list and I just pulled it up here on my computer

01:09:32.080 | If you look down the list some of the oldest ones

01:09:35.240 | Well, I'll just give you a few so Josiah Bartlett died at 65 and a half from poor health and heart poor health poor health

01:09:41.520 | So that would be kind of the normal old age old age William Whipple died at fifty five point not

01:09:47.320 | So he's sixty years old from heart disease is he had clogged arteries

01:09:52.320 | Matthew Thornton died at 89 while visiting his daughter

01:09:56.000 | John Adams died at 90 of a coma. He died while in a coma

01:10:02.440 | Samuel Adams died of at 81 from severe lung hemorrhage

01:10:06.360 | Elbridge Gary died at 70 in it

01:10:09.420 | Excuse me. I'm looking at my chart wrong Samuel Adams

01:10:13.480 | It doesn't list the cause of death here and my notes that I took Elbridge Gary died at 70 John Hancock at 46

01:10:19.880 | I'll skip I'm not gonna read all of these just a few noted ones Francis Lewis died at 89

01:10:24.480 | Benjamin Franklin died at 84

01:10:27.600 | James Smith died at 87

01:10:31.640 | Charles Carroll died at 95

01:10:33.640 | Thomas Stone died at 44

01:10:36.880 | Some of the older ones George Wythe died at 80 and so you have a broad range of these people dying it

01:10:43.360 | You know relatively normal ages

01:10:45.360 | Seems like one of the interesting things is that the gout was a major a major factor at that point in time

01:10:53.320 | and

01:10:54.800 | And that really affected a lot of these people's health health, but the point is I'm not sure

01:10:59.880 | It's something if anybody has any knowledge share it with me

01:11:02.320 | I'm interested in researching this because I personally think that it's like it's possible

01:11:06.680 | That a lot of the increases in lifespan are just simply due to the more widespread

01:11:11.720 | the the greater prevalence of

01:11:15.240 | You know a warm bed to sleep in at night to keep the rain off and enough food for people to eat

01:11:20.360 | Rather than you know this idea that I've had in the past that that it's just simply that you know amazing medicine

01:11:28.120 | I think it's much more basic than that probably the discovery of germ theory and

01:11:32.360 | Warm beds to sleep in and enough food and enough nutrition is a compelling

01:11:36.960 | compelling

01:11:39.360 | Idea another article here that I think these articles do a good job of laying out in a short version

01:11:44.280 | Kind of the history of retirement so this article is from the Seattle Times

01:11:47.400 | published December 31

01:11:50.360 | 2013 and I don't see the author listed here at least not on the top this one's relatively short a brief history of retirement

01:11:57.560 | It's a modern idea

01:11:59.480 | Work until you die or until you can't work anymore

01:12:01.880 | Until the late 19th century that was the old age plan for the bulk of the world's workers

01:12:06.880 | Only in 1889 did German Chancellor Otto von Bismarck introduced modern pensions

01:12:11.960 | Bismarck wasn't really motivated by compassion for the plight of the working class

01:12:16.280 | He wanted to present preempt a growing socialist movement in Germany before it grew any more powerful

01:12:22.520 | The idea of providing financial security for the aged gradually caught on and expanded in Europe the United States and other advanced economies

01:12:30.520 | Now as life expectancy reaches links Bismarck couldn't have imagined and retirement lasts two or three decades

01:12:37.040 | These countries are struggling with government pension plans

01:12:40.320 | They can no longer afford the pension Bismarck offered was the first to be widely available

01:12:44.800 | But it was hardly the world's first in

01:12:48.040 | 13 BC the Roman Emperor Augustus began paying pensions to Roman legionnaires who had served 20 years

01:12:54.960 | The troops pensions were financed at first by regular taxes then by a 5% inheritance tax

01:13:01.000 | according to a 2009 history by Frank Ike an

01:13:04.080 | Economist now with the International Monetary Fund in the 16th century

01:13:08.240 | Britain and several European countries offered pensions to their troops starting with officers and gradually expanding to enlisted men

01:13:15.480 | the first civilian public servant known to have received a pension was an official with the London Port Authority in

01:13:21.320 | 1684 he was paid half his working income deducted from the pay of his replacement

01:13:26.660 | Thomas Paine the Revolutionary War firebrand famous for his essay common sense called for a 10%

01:13:34.380 | inheritance tax

01:13:35.720 | Part of the tax was be used to pay benefits to everyone aged 50 and older to guard quote guard against poverty in

01:13:41.640 | Old age according to a history by the Social Security Administration

01:13:45.400 | The idea went nowhere

01:13:47.360 | After the Civil War the US government paid pensions to disabled or impoverished Union veterans or to the widows of the dead

01:13:53.840 | Southern states paid pensions to disabled Confederate veterans the Civil War pensions became a basis for Social Security decades later

01:14:01.560 | When farming dominated the economy most men worked as long as their health held out as they aged though

01:14:07.960 | They often cut their hours and turned the most physically demanding chores over to sons or hired hands in

01:14:14.360 | 1880 when half of Americans worked on a farm

01:14:17.320 | 78% of American men worked past age 65 as factories began to replace farms and economic importance

01:14:25.520 | Skeptics wondered whether old folks could understand and work with the new machines

01:14:29.600 | one of the giants of American medicine Johns Hopkins

01:14:33.120 | Johns Hopkins Hospital co-founder William Osler in

01:14:38.040 | 1805 decried quote the uselessness of men older than 60 and said they should leave the workforce

01:14:45.040 | Growing prosperity also meant more people could afford to stop working late in life in

01:14:50.240 | 1875 American Express offered America's first employer provided retirement plan five years later the Baltimore and Ohio

01:14:57.920 | Railroad introduced the first retirement plan

01:15:01.040 | financed jointly by contributions from an employer and its workers

01:15:04.400 | From their private pension plans grew in the United States the plans received a boost during World War two when the government imposed wage

01:15:11.940 | Freezes that led some companies to offer pensions and other benefits to attract scarce workers

01:15:17.680 | That was a key a key development in retirement plan history right there

01:15:21.400 | Is that they weren't able to pay more wages? So the employers came and built up other?

01:15:29.960 | other ways of

01:15:31.960 | Compensation which which really helped with fringe benefits so pension contributions other ancillary fringe benefits health plans, etc

01:15:39.280 | Made a big difference there when that when that happened the United States created Social Security in

01:15:44.440 | 1935 and added Medicare health benefits for the elderly in

01:15:47.400 | 1965 in the 1980s many countries lowered the age at which people could retire and collect full benefits

01:15:53.560 | This step was part of an effort to clear older workers out of the labor force to make way for the young

01:16:00.200 | And a pause and emphasize this in the 1980s many countries lowered the age at which people could retire and collect full benefits

01:16:08.260 | This step was part of an effort to clear older workers out of the labor force to make way for the young

01:16:14.000 | One of the things that I found

01:16:16.480 | researching retirement is that retirement has usually been used as punishment and

01:16:21.440 | I think it'll be tomorrow when I go into some of the detailed history

01:16:24.720 | From this book a history of retirement. It's very interesting to see that a retirement was originally intended

01:16:31.420 | There's many reasons why but one of the major factors originally intending

01:16:36.520 | Excuse me originally affecting retirement was that retirement was intended to solve an employment problem and the idea was that

01:16:42.840 | economically speaking with

01:16:45.280 | Industrialization it was never going to be possible to have full employment and especially during the Great Depression

01:16:50.480 | The policymakers had decided it was never going to be possible again to have full employment

01:16:55.240 | And so they needed to reduce the number of people that were unemployed

01:16:58.600 | But one of the fastest ways that they chose to do that was to introduce and mandate late at later dates

01:17:05.080 | The concept of retirement and so retirement was originally intended as a solution to the problem of employment

01:17:11.520 | That's key. Don't rely on my statement. So I'll try to prove it to you tomorrow with with some better researched information

01:17:20.120 | finishing this article now governments are reversing those policies and raising retirement ages to prevent aging populations from breaking their budgets and

01:17:27.200 | Older older people who now enjoy better health are working longer again in the United States

01:17:32.320 | 18.6 percent of people 65 and older were working or looking for work as of November

01:17:37.920 | That was up from a record low ten point four percent in January 1985

01:17:42.080 | according to Labor Department figures dating to

01:17:44.520 | 1948

01:17:47.920 | Why on earth do we have these constant articles decrying the

01:17:52.960 | the retirement crisis

01:17:56.160 | Many older people are enjoying work are working longer again

01:18:00.800 | So we're going to talk about kind of some alternate ways because from a financial planning perspective

01:18:05.760 | This opens up a huge huge huge number of opportunities

01:18:11.280 | for us to kind of reinvent basically reinvent the entire concept if you could if we can get free of this concept of

01:18:18.000 | Work for my lifetime and then I have to retire at 65 if we can get free of this concept

01:18:22.560 | Then we can completely re-engineer our lives in some really awesome ways and we can take control of it again

01:18:29.320 | Over the over the years of working as a financial planner. I've asked hundreds of people

01:18:33.880 | This question is kind of part of my standard fact-finding process

01:18:37.680 | and the question is this is there a point in time at which you'd like to be in a position to not to have to

01:18:42.400 | work if you didn't want to and kind of phrase it like that to try to not be

01:18:45.920 | critical of you know

01:18:47.280 | Do you want to retire to try to kind of phrase it a little more?

01:18:49.480 | elegantly or you know, is there a point you just like to work because you choose to not because you want to and

01:18:55.360 | Almost universally I get one of three answers. There are exceptions

01:19:00.160 | The most common answer is oh, yeah, definitely

01:19:04.680 | The follow-up question is what age when do you want to do that?

01:19:07.600 | You know 65 that's the by far the most common answer. I'm gonna make up some some percentages on the spot here

01:19:13.760 | I would say that's probably 50% of the time

01:19:16.060 | The second most common answer is no. Yeah. Well, I mean, yeah, I'd like to have money but no, I'm never gonna quit

01:19:22.880 | You mean retire? I'm not gonna quit and that answer is probably the second most common. I make up a number that's 30%

01:19:29.560 | Well, let's say 20% and then the third most common answer is yeah, absolutely at what age, you know

01:19:36.200 | Maybe a little bit early like 60 and that's probably another 20%

01:19:40.120 | So if I got my statistic if I if I made up my percentages appropriately, that's 90%

01:19:45.000 | The other 10% has various answers

01:19:47.000 | And I always push back and say why why 65?

01:19:50.840 | I don't know, you know

01:19:53.600 | That's a good age, right? That's the Social Security age, you know, that's when I get collect collect Social Security

01:19:59.220 | and

01:20:00.460 | The thing I always I just feel like is a big deal to push back on is why are we choosing the age of 65?

01:20:06.020 | Why

01:20:09.720 | Why not 66? Why not 64? Why not 44? Why not 94?

01:20:13.860 | I don't care what you choose, but don't just choose the answer because that's the convenient answer

01:20:19.500 | Don't just say I'm gonna make this retirement plan because here's what happens

01:20:22.560 | I take that number and I go and create a written financial plan and it shows that by the age of 65 you need

01:20:28.080 | You know 1.4 million dollars and I come back and I deliver the financial plan and I talk you through it

01:20:32.680 | But the reality isn't door to accumulate the 1.4 million dollars

01:20:35.480 | You got to be saving a thousand bucks a month and then we don't follow through and do the savings

01:20:40.340 | so

01:20:43.300 | We got to change that

01:20:45.240 | Begin we got to create

01:20:47.240 | Individualized plans that are really compelling and so whether that's I'm gonna I'm gonna take a year off every 10

01:20:53.200 | Whether that's I'm gonna work, you know and get early retirement

01:20:57.880 | I'm gonna you know, I don't know what what the answer is, but I mean there's lots of answers to it

01:21:03.720 | I'll give you one of one of mine. This is me speaking personally

01:21:06.900 | This whole retire at 65 thing has never made sense to me

01:21:10.280 | And the reason it doesn't make sense to me primarily is because of you know, my personal family values

01:21:15.780 | So I look at it and I say why on earth should I do this?

01:21:20.320 | So go to school Joshua graduate from high school go to college go to college

01:21:24.000 | You know get a get a degree get out get a good job. Okay, I'm gonna get a good job now

01:21:27.900 | Now you need to really work hard on your job

01:21:29.980 | So you should also however get married when you're in your early 20s and you should start a family

01:21:34.660 | So now that's the career building time and that's when you've got a family you need to work really really hard

01:21:38.760 | So you have a bunch of money saved up so that at the age of 65 you can retire

01:21:43.540 | So I work from let's call it, you know, let's say I got married and had kids at 25

01:21:47.540 | So I work from 25 to 45 during those 20 most crucial years really building my career

01:21:52.500 | I'm a workaholic always, you know, just slaving away at the office to allow me to save money and I miss my kids

01:21:57.260 | Like, you know my kids childhood

01:21:58.560 | So I go to some soccer games from time to time and I get home at about 8 o'clock at night because I'm living on

01:22:02.960 | An airplane, but I miss my kids childhood because I got to build my career and I got to save for retirement

01:22:07.840 | So then about the age of 45, I'm ready to pull back a little bit

01:22:11.340 | But now I look down and my kids are 14 years old

01:22:13.380 | They don't want anything to do with me because I wasn't there and now they're 14 years old

01:22:16.540 | They're trying to establish their independence

01:22:18.800 | And so here I am at the age of 45 and now I'm senior enough in my company

01:22:23.200 | That I can afford to pull back a little bit of all my time

01:22:25.800 | And so I do that but the problem is they don't care much about me

01:22:28.800 | And then I keep working and I retire at 65 right when my kids are, you know, 25 years old

01:22:33.700 | And they're the ones that are working, you know, 25 to- they're in their 25 to 45 years old

01:22:38.200 | And they're working to build their careers doing exactly what they watched me do

01:22:41.200 | So I'm 65 so I can afford to sit around and do nothing

01:22:44.400 | But my kids don't want anything to do with me so I have to go play non-stop

01:22:48.600 | It doesn't make any sense to me

01:22:50.600 | Why not, you know, just a very simple alternate plan

01:22:53.800 | Why not simply say, okay, I'm gonna, you know, graduate from college, you know, 22 or whatever

01:22:59.000 | Work really hard for a few years, save a bunch of money

01:23:01.600 | But then all during the time that my kids are growing up, why don't I pull back from the work?

01:23:06.200 | Why don't I pull back and spend time being present with them?

01:23:09.000 | And then once the kids are starting to kind of establish their independence, they're 14 years old

01:23:13.400 | Why not at that point in time then really pour on the effort at work?

01:23:17.000 | And forget this whole 65 thing

01:23:19.000 | Why not just simply build a lifestyle and a career that allows me to integrate fully my life and my work?

01:23:25.400 | If it's good enough for Mr. Marriott and Mr. Buffett and Mr. Gates, why is it not good enough for the rest of us?

01:23:30.800 | Now, there are a lot of alternate plans

01:23:34.000 | So I love the early retirement concept

01:23:36.000 | The concept that, you know, for example, Money Mustache

01:23:39.000 | Hopefully we'll have him on the show at some point, I'd love to interview him

01:23:41.000 | But Money Mustache talks about he and his wife's plan

01:23:44.600 | Their plan was to retire by the time they had kids

01:23:49.000 | So they did it at 31

01:23:50.200 | That's awesome!

01:23:51.200 | How cool is that? That works

01:23:52.800 | And now they're both home full-time raising their son

01:23:55.400 | That's an awesome plan

01:23:56.800 | It's a lot smarter than doing it at 65

01:24:00.200 | So there are a number of different plans that we have

01:24:08.000 | But once we get out of this age 65 thing

01:24:10.800 | Then we create a dramatically different financial planning options

01:24:15.600 | I'll read this article here, very short

01:24:18.400 | But to me this is the constant

01:24:20.200 | And over the next couple of decades it's going to get worse and worse and worse and worse

01:24:25.000 | As the government balances, the government debt balances get worse and worse and worse

01:24:30.600 | Here's the constant refrain, this is from the BBC News

01:24:33.800 | "Thinking of the Bismarck legacy"

01:24:36.000 | "Otto von Bismarck was the Prime Minister of Prussia before overseeing the unification of Germany

01:24:41.200 | The German Chancellor Otto von Bismarck introduced the world's first state pension system in the 1880s

01:24:46.600 | You had to be 70 years old and the expectation was that you would probably only live a few years after that to collect it

01:24:54.000 | But in 1916 they lowered the pensionable age to age 65

01:24:58.200 | It has remained at 65 for almost a century

01:25:01.000 | And it will take a brave government to juggle with the political sensitivity of raising that age again

01:25:07.200 | "It is a part of our political system and we pay for it

01:25:11.000 | The employees, the employers and the state"

01:25:13.800 | Says Wolfgang Wipperman at the Berlin Free University

01:25:16.800 | "They have to continue with this

01:25:18.400 | Otherwise there will be a revolution of the pensioners"

01:25:22.000 | Bleak future

01:25:23.600 | But 9 out of 10 old people around the world do not have a pension

01:25:26.600 | And for many of those lucky 1 in 10 who do, these are worrying times

01:25:30.800 | Sinking portfolio values and demographic changes are forcing cash-strapped governments to consider fundamental reforms

01:25:39.600 | Bismarck designed the system in 1881 and it came into force at the end of that decade

01:25:44.000 | In a very different world from the current one

01:25:46.400 | Old people are living longer than they were 50 years ago, blah blah blah

01:25:50.000 | Today there are 4 working Germans paying the pensions of every retired person

01:25:54.600 | But by the time today's youngest workers retire, there will be only 2

01:26:00.200 | You don't need to know anything more than that

01:26:02.800 | The system is going to change

01:26:04.800 | So instead of having these whiny articles constantly about how we got to adjust things

01:26:10.400 | Instead of us financial planners yelling at people saying "You got to save another percentage"

01:26:14.600 | We need to find a new way of tackling this problem

01:26:20.000 | And the best way I know how to tackle it is with the concept of lifestyle design

01:26:25.600 | Now lifestyle design to the best of my knowledge was popularized more recently by Tim Ferriss in his book

01:26:32.400 | In his book "The 4-Hour Workweek"

01:26:37.400 | And he designed it, which is a great idea

01:26:41.000 | But I would maintain that all people design their lifestyle

01:26:45.000 | Whether they do it intentionally knowing the idea of lifestyle design or not

01:26:48.800 | All people still design their lifestyle

01:26:51.400 | Why does one person choose to go to welding school and why does another person choose to become a horse farrier?

01:26:58.200 | One I would assume likes horses and the other I would assume likes welders

01:27:02.600 | So that's designing a lifestyle

01:27:04.600 | But the key is that we've got to apply this lifestyle design to every aspect of life

01:27:12.200 | Bill Gates has a lifestyle that I think is really really neat

01:27:17.600 | Not because of the private jet and the big house, to me, fine, good for him

01:27:22.600 | To me the fact that he gets to sit around and read books all day is my...

01:27:26.600 | To me that's an idea, read books and watch videos and talk to people and solve great problems

01:27:32.600 | In my mind that's one of the world's greatest things you could do

01:27:37.600 | That would be the most fun thing you can do

01:27:40.600 | That's why I'm creating a podcast, it's lifestyle design

01:27:43.600 | And any one of us can do it now if we integrate it

01:27:47.600 | So we've got to integrate the lifestyle design and the goal setting

01:27:50.600 | And figure out an individualized plan which will be different for each one of us

01:27:54.600 | One person may say I want to work till 65

01:27:57.600 | Another person may say I want to quit at 45

01:28:00.600 | Another person say I never want to quit

01:28:02.600 | Doesn't matter what your answer is as long as you know what it is

01:28:05.600 | I think that's enough for today, a longer show today

01:28:11.600 | Tomorrow I plan to come back and continue on this retirement program

01:28:15.600 | And we're going to continue with...

01:28:17.600 | I'm going to read at length from this book, A History of Retirement

01:28:20.600 | Because it gives some background I think that is so crucial to understand the world today

01:28:25.600 | I had to go and learn this from books because I wasn't around

01:28:28.600 | But I've never heard anybody kind of reference this history

01:28:31.600 | Once you reference this history and once you understand that retirement is not this end all be all of leisure

01:28:37.600 | That this is a very new concept

01:28:40.600 | It allows you to feel good about making alternate plans

01:28:44.600 | And I really believe that the idea of leisure being the goal

01:28:54.600 | We see through that for the most part

01:28:56.600 | We've all been on a vacation that's kind of like we're ready to be off a vacation when we're done with it

01:29:01.600 | That's something that I think we've all experienced

01:29:04.600 | However, there's so much noise in the media

01:29:09.600 | There's so much noise in all of these articles that come across Yahoo Finance everyday

01:29:13.600 | And USA Today finance section about how we're supposed to beat ourselves up for not saving for retirement

01:29:19.600 | It's okay to not save for retirement

01:29:22.600 | It's fine

01:29:23.600 | Now, let me be clear

01:29:26.600 | I save for retirement

01:29:29.600 | But the point is that just saving in a 401k

01:29:33.600 | On this arbitrary idea of I've got to save for retirement may not be the best way to do it

01:29:36.600 | The best thing to do sometimes may be to cash out that 401k and go start the business

01:29:41.600 | Warren Buffett didn't become rich by saving in an IRA

01:29:45.600 | Conrad Hilton didn't become rich by saving in an IRA

01:29:49.600 | And I'll just finish with this

01:29:51.600 | I just want to point this out

01:29:53.600 | One of my biggest frustrations with the financial media is that a lot of the advice just simply doesn't work

01:30:00.600 | It's lies

01:30:01.600 | Now, it's not lies in the normal way that lie is defined

01:30:05.600 | It's not actually untrue

01:30:06.600 | It's that it just doesn't work

01:30:08.600 | The idea that, well, you know what, if you'll just save $200 a month into a Roth IRA, you're going to be rich

01:30:17.600 | Is that true?

01:30:18.600 | Maybe

01:30:19.600 | There is no mathematical reason why that can't be true

01:30:23.600 | If you will save $200 a month

01:30:27.600 | Just a second, I've got to get my calculator

01:30:31.600 | If you will save $200 a month

01:30:33.600 | Let's run the numbers here

01:30:34.600 | If you will save $200 per month, every month

01:30:37.600 | Let's say over a 40-year period of time

01:30:40.600 | 40 years

01:30:41.600 | And we do this

01:30:42.600 | Let's just plug in 10% interest and start with nothing

01:30:47.600 | Yes, at the end of 40 years, you will have $1,264,815

01:30:52.600 | That is absolutely true

01:30:54.600 | And there's no reason why you can't do more than that

01:30:57.600 | If you save $400 a month

01:31:00.600 | At the end of 40 years, you will have $2,500,000

01:31:03.600 | So $400 a month over a 40-year career is $2,500,000

01:31:07.600 | Which considering, what was that statistic that I read?

01:31:10.600 | 29% of retirees have less than $1,000

01:31:13.600 | And only 11% have more than $250,000

01:31:17.600 | That will put you there

01:31:18.600 | So I was mistaken

01:31:20.600 | So current retirees, 17% have $250,000 or more

01:31:25.600 | So yes, $400 a month into a Roth IRA

01:31:28.600 | Will in fact, if you go to my 10% number

01:31:31.600 | Will indeed get you there

01:31:32.600 | Let's plug in 8%

01:31:33.600 | And 8%, you're at $1,400,000

01:31:37.600 | So you're in that top echelon of retirees with money

01:31:42.600 | But look at the people that are in the Forbes 400

01:31:47.600 | None of them ever got there by saving for retirement

01:31:50.600 | And look at the fact that

01:31:51.600 | Excuse me, in an IRA

01:31:53.600 | Look at the fact that only 17% of retirees have more than $250,000

01:31:57.600 | So what about the rest of them?

01:31:59.600 | What's wrong with taking that and starting a business?

01:32:02.600 | What's wrong with taking that and investing in other ways?

01:32:04.600 | I love Roth IRAs

01:32:07.600 | I think they're one of the most incredibly flexible accounts

01:32:11.600 | But it's not the end all be all

01:32:14.600 | It's okay to do other things with the money

01:32:16.600 | So we'll talk about that on another day

01:32:20.600 | Hopefully today has been interesting

01:32:22.600 | I really appreciate you listening

01:32:24.600 | To close out here, just a couple of comments

01:32:26.600 | I'm going to say this once and I'm going to try not to

01:32:29.600 | Apologize a lot in the future about this stuff

01:32:32.600 | I don't expect my

01:32:34.600 | A lot of times podcasts are expected to be short

01:32:37.600 | I'm here at an hour and a half

01:32:39.600 | I don't have any predicted time for the show

01:32:42.600 | Whether that's 20 minutes or 1 hour and 45 minutes

01:32:45.600 | If you're bored with what we're talking about

01:32:46.600 | Just feel free, just turn it right off

01:32:48.600 | That won't bother me a bit if you turn the show off

01:32:50.600 | If there's something you want to completely skip, skip

01:32:53.600 | Pick and choose what you find interesting

01:32:55.600 | I do my best to try to present things in a way that I think are interesting

01:32:59.600 | But it won't bother me a bit if you just shut it off and move on

01:33:03.600 | Love to hear your comments on today's show

01:33:06.600 | Come by the website at radicalpersonalfinance.com/12

01:33:11.600 | For episode 12

01:33:12.600 | Radicalpersonalfinance.com/12

01:33:15.600 | Send me an email, joshua@radicalpersonalfinance.com

01:33:20.600 | Connect with us, got a Facebook site up

01:33:22.600 | Just search Facebook for Radical Personal Finance

01:33:24.600 | And connect with us on Twitter

01:33:26.600 | RadicalPF is our Twitter name

01:33:29.600 | Hopefully the information today has been interesting for you

01:33:32.600 | Disclaimers at the end as always

01:33:34.600 | I give authoritative information

01:33:37.600 | Which is my opinions

01:33:39.600 | I screw stuff up, I would love to know about it

01:33:41.600 | If you found something I screwed up

01:33:43.600 | Come by the show page radicalpersonalfinance.com/12

01:33:46.600 | Tell me about what I screwed up

01:33:48.600 | Let me know so I can correct it

01:33:50.600 | Financial planning is very personal

01:33:52.600 | And it's very state and country specific

01:33:55.600 | Please call a professional for their opinion on your situation

01:33:59.600 | And don't rely on the advice of a random guy on the internet

01:34:03.600 | For any major decisions

01:34:05.600 | Have a great day

01:34:07.600 | [Music]

01:34:16.600 | [Music]

01:34:23.600 | [Music]

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