Why Are There So Many So Sad Retirees? – Episode 103

This transcript was auto-generated and may contain errors.

[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler, and No BS Money Guy, Todd Strobel. Hey, everybody. Welcome to the Prosperity Podcast. This is No BS Money Guy, Todd Strobel, and we have our co-host and bestselling financial author, Kim Butler, with us today, and today we’re going to be talking about the so sad retirees. How are you, Kim? I’m very, I’m very happy. I don’t want to be so sad. It was funny when you brought the topic up, but it’s something that we can do something about. So, yes, let’s talk about it. That’s what’s important. And that’s why I like asking you these questions.

[00:47] This is asked actually a question that was asked by Money Magazine, a recent edition of And what they’re referring to is that between 1998 and 2012, the number of retirees who said they were very satisfied, now, this is very satisfied as in their overall quality of life, fell to 48.6% down markedly from the 1998 study, which was 60.5%. And the question is, is, you know, why do you think that’s happening? And what can we do to be happier retirees and to plan to be happier retirees or to prepare? Let’s use prepare. Yeah, prepare is always a better word than plan. Well, it is a great question. And it’s something that is really strong in my mind right now as to the answer. And it’s twofold. And the one is, first, it’s a choice.

[01:45] It’s a mental, physical, psychological, social, how many other words can I come up with? Choice. Because it must happen every day, sometimes every hour, sometimes even every minute. And you know what’s amazing about it is it’s not just for retirees. It’s for everybody. Being happy is a choice. So that’s where we’ve got to start. You know, our first principle of prosperity is think. And it’s there to remind us that our thought process, our mindset, even going as far as the words that we use is so critical. And we must start with gratitude first. We want to make a choice every single day to be happy in the space that we are in. The whole it’s not what life does to you. It’s how you react to it.

[02:38] You know, that’s a great example of making a choice. The whole are you going to get up today and be affected by the weather or are you going to make a choice to be happy regardless of whether it’s sunny or rainy or whatever other weather issues you’ve got? It’s a choice. It’s a choice. It’s a choice. And you want to make that choice first. So that, without a doubt, is the first part of the answer. Now before I go on to the second part, is there any clarity that’s needed? No, I think you’re hitting the nail on the head because I think, you know, automatically my first thought was is that it’s a money issue. And the article does go on to clarify that this drop was across all income levels, not just those people that you would say are financially struggling during their retirement.

[03:29] So when these people are not happy, and yet they have plenty of cash flow, what is the issue? So you asked about preparing. And so clearly the issue is choice. So you’ve got to get that down and you can practice getting that down today. Right now, whether you’re 20 years old or 40 or 60 or 80 or 100 years old, it doesn’t matter. You can practice creating a choice to be happy all the time. And believe me, I have to work on this myself. You know, when I use the example of sometimes it’s every minute, that’s because sometimes I’ve had to do it every minute. But let’s focus some on the second part of that. And that’s the monetary part, because I mentioned cash flow. Our society has been set up to focus on net worth.

[04:19] And this causes a lot of people to head into retirement with absolutely no clue how to convert that net worth into cash flow. And there are some real obvious ways, things like annuities, as an example. And yet there’s a lot of opposite wisdom that says, oh, my gosh, annuities are bad. There’s some obvious ways in our mind, like using the bridge loan environment. That’s a great way to convert net worth into cash flow. And yet there’s a lot of opposite information out there that says, oh, my gosh, that’s risky. Or, oh, my gosh, I’ve never heard of that. I don’t want to do that. Or it’s real estate based or whatever all the naysayers are. But this ability to convert net worth to cash flow, and frankly, it’s a lack of ability that

[05:10] we have here in America, is one of the biggest problems that retirees are dealing with. And it doesn’t matter if you have a little $100,000 account or a $1 billion account. If you don’t know how to convert that into income, into cash flow, you’ve got a challenge on your hands. I think there’s a lot of retirees out there who expected to be able to save their principal and live on the interest. And that’s just not possible in the typical financial environment because there’s just not those kind of rates of return out there, number one. So number two, they need to figure out some alternative strategies maybe. You’ve also discussed the reverse mortgage, using the equity or reverse mortgage in combination with the life insurance policies, all kinds of strategies out there so that

[06:02] you do have some type of income coming in each month. And then I think you have permission to spend that money as it comes in each month. And it doesn’t feel like you’re robbing the nest egg. Absolutely. So if somebody’s got a billion dollars and they can easily earn, let’s just even say five percent, then they’re going to be in a fairly efficient cash flow environment where they can probably retire, quote unquote, and live a lifestyle on interest only. But the problem is most people don’t have a billion dollars and billion with a B and all of those that don’t have that and even those that do have it cannot find that five percent account anymore. It just doesn’t exist. Now, we can talk about the life insurance being a close to five percent account.

[06:56] But cash value of life insurance is not usually the best place to literally create monthly income. It can support the structure that creates monthly income. And that’s what you were hinting at. We’ve got this article called permission to spend. Now we mean permission to spend your monthly cash flow as well as permission to spend your principal, because if you have life insurance, it can back up that principal and create that permission slip, that ability to spend your principal, which means that you can get higher income, partially because it’s less taxed, partially just because there’s more of it. But it still behooves you to learn how to create cash flow from net worth. And it’s why with all of our clients, we talk to them about learning how to create cash

[07:52] flow early, early on, because you don’t want to be waiting until you’re in your 60s and 70s to learn how to do this. It’s too big of a decision at that time. We’ve got a client right now that has a very large 401k rollover to make, and they’re literally retiring in six months. And so here is this gentleman having to make this huge decision. Whereas if we had started work with him 10 years ago, we could have inched him into the creation of cash flow so that he would have confidence in the alternative investments that create that monthly cash flow. Then I’m mostly speaking of bridge loans right now, but it’s a whole combined effort. And you’ve got to have other things, too, because not only is the cash

[08:37] flow important, but that emergency slash opportunity fund is important. And most of our clients know we love to use the life insurance, the cash value of whole life insurance as the emergency opportunity fund. So we’re building, if you will, this three legged stool, but it’s not the three legged stool that everybody else talks about. Our three legged stool has your emergency slash opportunity fund, which is your cash value of life insurance. It has a good income provider, a cash flow provider that’s going to send you a paycheck every single month. And then the third leg of our three legged stool is something that’s really going to continue to grow your investments so that they continue to beat inflation.

[09:29] Because going back to this sad money magazine article, I believe one of the biggest issues is these people were not prepared for the impact that inflation has. Wouldn’t you think that’s a big part of it? Oh, absolutely. I would say one good news that is out there for people is that they are going to have a much longer and probably much healthier retirement. And I would think that would make the satisfaction rate grow higher. But it still kind of surprises me that it isn’t. Well, I think fear comes into play because people start to see the impact of inflation and they’re sitting there in their 70s or 80s, they’re feeling healthy and they’re thinking, oh my gosh, I can’t keep doing this. You know, every day is a Saturday, so I’m spending more money.

[10:18] That’s a Todd Langford quote that we love. And here we have this paycheck that’s showing up and it says the same amount of money every single month. But year after year after year, it spends like it’s less money every single month. And so not only is the impact on the incoming cash flow, but of course, on the outgoing expenses. So your cash flow is feeling less. Your expenses are feeling more. And a retiree gets his head up out of the water and looks down the lake another 10, 20 years and sees a very, very scary picture. And so that fear causes them to be sad, causes them to be afraid, obviously, and saddened by what they feel like they’re in, which is a position that they can do nothing about.

[11:12] And that’s the biggest message that I want today’s podcast to have, is that, yes, there is something that you can do about it. The first thing is to get that thinking right, to get that choice made, that you’re going to be happy regardless. The second thing is to make sure that you have your investments creating new cash flow every single month. And if not, reach out to us so that we can help you create cash flow. And we can do this at some pretty low dollar figure. So don’t feel like you have to be an accredited investor just to get a good monthly cash flow. And then third of all, let’s make sure that all the other investments that are not needed to create cash flow are building and growing substantially

[11:55] in order to help you beat that inflation. And then, yeah, you’ve got your social security or maybe a pension and some life insurance money and whatever else you got. But it’s the cash flow and the ability to beat inflation that’s going to get you out of that sadness. And Kim, I believe you have a book out there that you’re willing to give to our listeners, either audio or a digital download that can kind of help them with a little more information on this. Absolutely. It’s called Financial Planning Has Failed. And this book does address the three primary legs of the stool that I just mentioned, a place to store cash, a place to create cash flow and a place to really grow net worth. And it’s available at partnersforprosperity.com slash ebook.

[12:40] So it says ebook, but there’s an audio there as well. Again, that’s partners number four, prosperity.com slash ebook. It’s the only place that you can get it. And it’s not available on Amazon or anywhere else. And it’s about 60 pages. And we go in depth into not only how financial planning has failed for people that are in the younger set where they’re actually growing their net worths, but also how typical financial planning has failed the retirees. And you know, when I think about it, no wonder they’re sad. I’m going to share one more statistic with you before we wrap up just because I think it’s fun. And this is that retirees who live within 10 miles of their children are less happy than those that are living farther away.

[13:29] Now, isn’t that interesting? Too close for comfort, I guess, right? Is how we interpret that? I guess. I guess it’s maybe dropping by or a drop in babysitter type situation versus call before you come. That makes sense. I love it. Well, you know, that’s a choice too. Just because the geography is there doesn’t mean that you have to feel out of control. And there are all kinds of things that you can install in your life to help you control things. You know, we talk about control of money being a principle of prosperity, but you can control how you use your time. And you can also control your attitude about that time. So maybe that’s what our next podcast ought to be about is how to control family members that show up too often.

[14:18] Super. Well, I encourage all of our listeners to download that free book, download that free MP3, whichever you decide. Check out our website and to, you know, get in touch with us with any questions we can answer for you. If you want to email them to us, we can put them on the podcast and answer them here for the rest of our listeners. We are so grateful to all of you. This is No BS Money Guy Todd Strobel. Also special thanks to our bestselling financial author, Kim Butler, and we’ll see y’all in the next podcast. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.