Don’t Outlive Your Money – Episode 527   

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[00:01] Welcome to the Prosperity Podcast. Welcome to the Prosperity Podcast. This is a best of, but it’s really not a best of, it’s a compilation. We’re covering this topic, which is what happens if we outlive our money and is our money worth as much as it used to be? I know, those are two topics that Kim gets often. So we’re gonna be taking some of her answers, those best ofs, piecing them together, and giving you a succinct episode. This is a different type of format that we wanted to put together for you. And then next week’s will be the format that we usually do. We’d love to hear your feedbacks, your comment. You can send an email to helloatprosperitythinkers.com. Let us know what you think of this.

[00:49] We’re gonna jump right in. Kim, I hope you’re ready. Prosperity thinkers, welcome to the podcast. This one is called retirement is a scam and it’s from a Twitter thread. Kim, are you ready? Always, thank you, Spencer. This is gonna be so good. So this is from Joe Cassandra. We’ll put a link inside of the show notes and give a shout out to Joe. So he says, retirement is a scam. We will finally travel and take up hobbies when actually you’ll do that two months of the year. The rest of the time you’re watching TV and here’s the best part, or looking out the window to see if the garbage man showed up. Oh! Isn’t that harsh? But you know what? That’s reality. So let’s hear it, Kim. Oh my gosh. Well, this has been a soap box of mine

[01:37] for quite a while, although I’ll admit not forever. So like in my early years, I totally got the whole retirement thing and I would properly ask people the question, at what age do you wanna retire? The most ridiculous question in the world. And you know what’s really funny? If I had listened to my mom, who was a teacher her entire life, had no knowledge of the personal finance space, who said to me, that’s a silly question. Why would I even know that answer? And I just never would have gotten into the retirement landscape. I would have been so better off. Nevertheless, since I did get into it, I know how much of a scam it is. And furthermore, I see people, thankfully not a lot, but I do see people that have quote retired

[02:26] and it’s awesome for two months. I’m gonna say not two months out of the year, just two months period. Because what happens after that is, oh, it’s too cold to travel or oh, we don’t feel like traveling or we maybe don’t have the money or we don’t have the money freedom. Those can be different things or whatever the reason is. And I don’t know any hobbies because I never developed any during my working life. And I don’t have friends beyond my work because I didn’t take a sabbatical or take time for vacations or the myriad of things that we’ll talk about as solutions for the retirement is a scam. And then just one more thing, don’t even get me going on age 65 and really what has happened in our society around that.

[03:16] Yeah, it’s scary. So I think, you know, we’ve got the general concept of retirement as a scam, but then there’s the offshoots and the problems that the government forces people into. For example, you hit a certain age and you’re forced to go into their medical programs. You’re forced to sign up for certain paperwork. You’re forced to take advantage and pull some of your assets out. It’s like they want to force people out of the things that they built and did. So talk more about that. We need to have a reason to get up and get on a bed every day. We need to have the societal good that comes from serving, which is the total opposite. I mean, when you think about it, really, retirement is an extremely selfish way of living.

[04:05] It is, totally. I’m gonna spin a spider web of action right now. So I’m thinking for all of our listeners that are in that age where you’re still working and retirement, I’m using that as the language, retirement is not in the near horizon. This may be an episode for you to reach out to the generation that is older than you and get them engaged if they’ve retired. Pull them in, get them actively working with you or working with your kids. If you’re at that retirement age, this is the opportunity for you to reach down to the younger generation and say, hey, how can I sharpen my mind? And for the younger people, our millennials or our Gen Z audience, this is the opportunity for you to collect wisdom

[04:52] beyond your years by asking them. So I hopefully have spun a little bit of a spider web to help there. Long-term is willing to put in the work. Long-term is having literally a perspective of time. And it’s funny because time is one of the most misunderstood aspects in the personal finance space. Nevertheless, it’s one of the most misunderstood aspects of all things. We don’t go to the gym and get results in 30 minutes. It’s a lifelong effort to stay flexible and build our muscles and do other things that we would do around our bodies. Same with our food choices. It’s so easy to be swayed by whatever food is in front of us instead of knowing long-term that maybe a different choice will be more valuable.

[05:47] And believe me, I’m the first to eat ice cream if it’s anywhere near. But nevertheless, it is something that I realize I cannot have a diet of that because long-term that would make a big difference. And I think our mindsets are the same way. It’s so easy to get caught up in whatever the short-term aspect is of the moment. If you know absolutely with certainty, which we do that those two things are gonna come together, that’s gonna impact your life shorter term. Now, not today short-term, more when you’re in your 70s and 80s. Nevertheless, it will impact your life. So I so appreciate that question, Spencer, because those are aspects of the life insurance space that are really important and hard to get our arms around.

[06:38] Why pursuing a 0% tax bracket is a race to the bottom. And I love the language of the race to the bottom because there’s a few other things that we do in our society that are races to the bottom. So let’s talk about those so that it fleshes out the context of the story. And I think one of the ones that everybody can relate to is cheaper and cheaper goods. So if you look at, I mean, just look at the shirts you and I are wearing right now. Like your basic shirt could have easily been $20, $30, $40 maybe, you know, I’m not talking to name brand, but I am talking with a little bit of quality. You can get them, again, with a little bit of quality for $10 today. And we all know that you can get a shirt for $2, right?

[07:36] That probably doesn’t have quality. So this is an example of a race to the bottom. And I am going to say that Walmart has really supported this. And a lot of people go to Walmart for a lot of things and there’s nothing wrong with that. And yet the idea of something getting cheaper and cheaper and cheaper, and I am using the word cheap on purpose, is where we need to watch out because we vote with our dollars. We say, I’m okay driving down quality and driving down all the other pieces and the parts and the amazing things that Walmart does like transportation and shelf space and all that kind of thing. Yet that is a race to the bottom. I mean, I cannot get that shirt to be zero unless I’m trading it for time or something else.

[08:31] And so our tax environment is the same way. If we are trying to literally pay zero taxes, we are trying to race our dollars to the bottom and you cannot win that race, especially as an individual. No different than an individual could ever compete with Walmart as a general store. Even a tiny little miniature store, they probably couldn’t ever compete with Walmart as a general rule, one or two things, sure. So this race to the bottom mentality, I find is a little bit scary. And especially when it applies to our income because the way to have more lifestyle, the way to have more freedom, the way to have more capability is to earn more income. Does that require that you pay more tax? Yes. And so I think a fun arguably trick question

[09:27] that we can ask our listeners is would you rather pay more tax or less tax? Your life insurance policy should be the absolute last asset that you turn to for income. You should turn to all of your other things. In fact, primarily your qualified plan money, your retirement dollars, 401k, IRA, 403b, profit sharing, all of that space, all those dollars should be used first because they’re the worst asset to die with. And then you should turn to real estate and stocks bonds, mutual funds that are not in the retirement plans. And then towards the end of the game, you pick up social security and maybe some other things. And then the very end of the game, you want to take income from your life insurance policy.

[10:18] And sometimes it is actually better to actually take the income and pay some tax rather than borrow against it, which is what these 0% tax people are talking about and use the loan to create the income which you can absolutely do short term. But holy cow, if you start that in your 60s and 70s and you’re gonna live to 90, 100, 110, 120, there’s almost no way it can work. It can, I will admit, if you start a life insurance policy in your 20s and you pay into it for 50 years into your 70s, maybe even 60 years into your 80s, yes, you could take some tax-free income. And yet you still will get more benefit if you let that life insurance policy go to the last asset and you stop having this race to the bottom goal

[11:11] that you’ll never ever win of a 0% tax bracket. Inflation is impacting the dollar right now, but even that is a temporary thing. Inflation is always in our lives, but the big, big impact that it seems to be having right now, I don’t really see as long-term. That could be wrong as well. There are lots of times in our history where inflation has gone on for quite some time. And so one of the things that people need to realize is that one of the biggest ways to overcome inflation is to keep working. And it’s why I have for so many years really counseled people to abandon the societal construct called retirement. It’s just very detrimental and in particular as it relates to inflation. And yes, I know Social Security

[12:03] just went up by eight point whatever, but that’s not the point. Everything else went up too. So it’s almost irrelevant. And these things are all interrelated of course, but again, focus on what you can control. And right now, everything that we deal with So it doesn’t behoove you unless you have, I would say probably a worth of over 10 million. It doesn’t really behoove you to try to move things sure or some of the more extreme measures that you hear about. I believe that we need to store things in dollars. And there are other things that we can store like real estate that can be more peace of mind oriented. And that’s why a lot of people are buying farms and land and that kind of thing. So again, going back to the focusing

[12:54] on what we can control it to me, it’s more where are you gonna store your dollars than whether or not the dollar and unit of currency or a measurement of money or even a measure of progress is going to fail. Share us your feedback. Send an email to hello at prosperity thinkers.com because the feedback that you share with us helps make it better and it helps bring more people in. And those, we’re multiplying the work that we’re trying to do. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit prosperitythinkers.com.