00:00:00 Speaker 1: Welcome to How to Money. I'm Joel, and today we're discussing, Hey, you saved it, now give yourself permission to spend it with Gene Chatsky. Okay, so sixty one percent of Americans say they're more afraid of running out of money than they are of dying. Think about that for a second. The idea of spending our later years stressed out about money is so terrifying. Some people would rather face the great unknown than deal with their own financial plan. And yet far too many people are taking the yeah, I'll figure it out someday approach when it comes to retirement. They're hoping things work out instead of building a plan that gives them confidence and freedom. And my guest today believes retirement doesn't have to be defined by fear and uncertainty. With the right decisions, we can worry less about money and spend more time enjoying the life we worked hard to build. Gene Chatsky has spent decades helping people make smarter decisions with their money through her work on The Today Show, her ARP columns, and her books. She even wrote a book called how to Money. So obviously she's in the tribe and her podcast. So I'm excited to dig into what retirement looks like in this modern era and how we can prepare for it without letting fear take over. So, Gene, thank you for joining me today. 00:01:15 Speaker 2: Thanks so much for having me. 00:01:17 Speaker 1: First question I ask everybody who comes on the show, is what they like to suplore John their craft beer equivalent, Gene, So, what is it that you spend money on in a way that some people might think's a little crazy, But hey, it's okay because you're saving an investing for your future. 00:01:33 Speaker 3: I spend money on entertaining. Actually I don't know if people are watching us on YouTube, you can see my beachy background because I'm at my house at the Jersey Shore where we entertain people all summer friends every weekend. And I spend a lot of money on well, at the cheese store and the fish store. 00:01:53 Speaker 1: Quite honestly, She's and fish. Those are the go tos. 00:01:57 Speaker 3: I think, so everybody wants you know, you come to the shore, you want a little bit of fish on the grill. 00:02:02 Speaker 1: There you go, fish on the girl. That sounds awesome. Well, and I love that too, because to spend money to create community and to enhance relationship I can't think of any better things to spend money on. 00:02:15 Speaker 2: We love it here. 00:02:16 Speaker 3: I mean, I don't know if you've ever been to the Jersey Shore, but it's one of those places where you drive over a causeway to get to. 00:02:24 Speaker 2: A long barrier island. 00:02:26 Speaker 3: I'm on an eighteen mile long barrier island and I feel like I go over this causeway and my. 00:02:31 Speaker 2: Blood pressure just drops. 00:02:33 Speaker 3: It's a lovely place where you never have to get out of shorts and flip flops. 00:02:39 Speaker 1: The shorts of flip flap life. I think I can be down with that one. Let's I want to talk about your new book, but I want to start actually with a book you wrote many, many years ago. In two thousand and nine. You wrote a book about getting out of debt with only ten dollars a day to spare. I'm curious, lots changed since two thousand and nine. Does that still hold or would you have to change the premise of the book at this point in time. 00:03:03 Speaker 3: Now it holds absolutely true, and in fact, we're living in one of those moments that made me write that book. So if you're looking at the stats on debt, particularly credit card debt, we are climbing we're hitting new highs. I pitched pay It Down, which was the title of that book, when I read a statistic about Americans owning a smaller percentage of their homes than ever before. We had been digging into our home equity, using our homes like ATMs, then refinancing that debt and putting more on the credit cards, and it was this incredibly vicious cycle that was dragging people down, and I was looking for a solution. And my solution was, Hey, you can do this the same way you build wealth. You just start by putting ten dollars a day, which is something that pretty much everybody could come up with, toward that debt. It's not a quick process if you've got a huge amount of debt, but it I'm an avalanche. You start paying off that highest interest rate debt first, and eventually you retire the cards and you build better habits. So much of money, as you know, Joel, from the work that you guys do on this show, so much of money is just good habits, often repeated. Saving paying down debt falls into that bucket. 00:04:36 Speaker 1: So I mean, yeah, there was literally an article I was reading just a few days ago about Americans treating their home as a piggybank, paying off the credit card debt with money to take from their home because hey, guess what, I've got more more equity in my home, so why not. This seems like a prudent decision to turn twenty percent interest rate into seven percent interest. And it seems like what you're saying is not much has actually changed over these fifteen years. 00:05:01 Speaker 3: I don't think so. I mean people who consolidate their debt, whether you do it with home equity, whether you do it with some sort of a consolidation loan, forty percent of those people then go out and they charge those credit cards right back up because they haven't solved the problem. The problem is you were overspending in the first place. Now, maybe that's because your income constrained, maybe it's because you had some sort of an emergency, but maybe it's because you wake up at two in the morning, you surf the internet and you see something you want to buy, and you're just so sleep deprived that you click. Okay, you got to figure out what's going on in your life that got you into this situation as you're getting. 00:05:42 Speaker 2: Out of it. 00:05:44 Speaker 1: So let's talk about retirement. A lot of what we discussed today is going to is going to center around that topic. The word crisis gets overused a lot these days. Talk about the loneliness, epidemic, right, epidemic, crisis. Everything is one of those two words. Somehow you say the retirement is in crisis. How So, when we. 00:06:06 Speaker 3: Look at the amount of money that people have saved for retirement, there's a certain segment of the population that really has enough to live a comfortable life in retirement, and then there is a good share of the population that hasn't. And the sooner that you can get yourself on the retirement bandwagon, the greater a chance you have of solving these problems. And the good news about this, particularly for anybody who works at a job where there's a work based retirement plan, is that there are so many more tools available now than there were when I was starting to save for retirement to help you do it right. We have big brother this system in a really positive and incredible way. You can just make the good decision to not opt out of a four to oh one K, to allow your employer to automatically escalate your contributions until you're maxing out to default you into a target date fund, which may not be the best possible investment, but it is certainly a really good one. If you want to make sure that you are taking an appropriate amount of risk for somebody your age, you can do all of those things and just let the system work for you, and it will work for you. This is how when you read the good news stories, which I'll acknowledge there aren't as many of as the bad news stories, But when you read the good news stories, it's about how gen X is paled by comparison. When we look at how well gen z is doing right in saving for retirement, gen Z's doing great because they've got all of these health full tools under their belts. 00:08:03 Speaker 1: And when we start to get twenty years earlier right than those older. 00:08:07 Speaker 3: Adults exactly exactly, And when we look at the fact that we've got so many four oh one k millionaires now and many of them are millennials who've just been letting the system work for them. 00:08:21 Speaker 2: These are the good stories. 00:08:23 Speaker 1: But talk to me about kind of complexity in the retirement space and the reality that more is on our shoulders. Because when you think about let's say the boomers, Yeah, they didn't start as early, but they had not all of them. I think they did, like not everybody, though, I think that's a common misconception, like every boomer had a pension and now I don't have access to one. That's a little bit of embellishment. But how does that kind of complexity and the shifting realities of retirement and how one builds a successful retirement, how much has that changed? 00:08:54 Speaker 3: It's changed completely and it's not really I mean, not every boomer had a pension, but the vast majority of xers do not have pensions. Like if you look at jen X and I'm sort of I sit on the line right between boomers and x Ers, I'm generation Jones, right, that's what they've chosen to call us. Xers do not have the pensions because thirty ish forty ish years ago, corporations looked at their balance sheets and said, we can't afford to pay for retirement for all of these workers, or we choose not to pay for retirement for these workers, and so they left the pension system. They adopted the four to oh one K system, and in doing that, shifted responsibility from themselves to workers to fund their own retirements. So my generation and everybody who's grown up after me has had this responsibility for funding our own retirements, much in the same way that healthcare has been put on our shoulders. Right, we now have to pay a greater share of our healthcare bills every single year, where employers used to do that for us. 00:10:21 Speaker 2: Now this is not true for everybody. 00:10:23 Speaker 3: There are a lot of people who work for small companies work for themselves. They don't have the same work based retirement plans. But that's been the big shift in the system, and people are now many people as they get to retirement are now at this point where Okay, I've accumulated what comes next? 00:10:48 Speaker 1: Nobody ever told me, which is exactly what your new book Either Forever Paycheck is trying to help people solve. Right, Because the great thing about the pension was partly right that you didn't really have to think about it, and this wealth was essentially like growing for your future. Then you would have a forever paycheck at some point once you hit retirement age. But now even if people save and invest wisely, there's some fear of tapping into those retirement funds. And we know about the four to four ish percent role, which has changed and had iterations and stuff like that, but for a lot of people, there's just a level of discomfort and a complete change in mentality when it comes to drawing down on retirement funds versus building them up. Talk about that trepidation, and it seems like that's what led you to this book. 00:11:38 Speaker 2: Yeah, it really is. I watched my mom. So my mother. 00:11:45 Speaker 3: My mother was sixty three years old when my father died in two thousand and five. He died way too young. She was set up very, very nicely. She had a paid off apartment in Philadelphia. She had my father's pension, not a huge pension, but one of his jobs left him with a pension. She had Social Security, and she had a retirement account. And over the next twenty years, I watched her spend but not spend, because she didn't want to see the balance in that retirement account get any smaller than it was when my dad died. So she would spend the social Security, she would spend the pension, she would spend the interest on the retirement account. But when my mom died, twenty years after my dad died, she had slightly more money in that retirement account than he left her with. 00:12:50 Speaker 2: And she is the rule. 00:12:52 Speaker 3: She's not just an outlier. There's a lot of research that's now being done into how retire are spending, and what we're learning is that they're not spending. They're not spending because it's highly uncomfortable. After you've been watching the balance in your four oh one, kay grow and grow and grow and grow, to see it turn in the other direction just feels really. 00:13:21 Speaker 2: Bad. 00:13:22 Speaker 1: It's why some people say real estate investing feels more comfortable because you're paying down the mortgage. And let's say you hit retirement, you have a paid off mortgage, and then you've got that rent coming in every month. It feels easier to spend the income from a rental property. And you're saying we need to maybe treat retirement some of the retirement funds. We've been asked a little more like that. 00:13:41 Speaker 3: Yeah, yeah, because that money coming in from the real estate is a forever paycheck for as long as you own those properties. And so what I'm suggesting with this book that's the title, is that people use some of their money, not all of it, and we can talk about how much, but some of their money to create a stream of income that will last for the rest of their life, no matter how long that life turns out to be. Because the other problem with that four ish percent rule, besides the fact that the ish means every year, morning Star tells us that the number is somewhat different. 00:14:22 Speaker 2: One year, it's three point. 00:14:24 Speaker 3: Two percent, then it's three point eight percent, then it's four percent. It's it's head spinning, and it's it's confusing. The other problem is that we don't know what the markets are going to do. And if you hit a year like twenty twenty two or two thousand and eight within the ten year period surrounding your retirement before or after, the chance that the four percent rule succeeds for you goes way down. And that's not a risk that many people are willing to live with. Add inflation and interest rate risk and longevity risk on top of that, and it's a lot for people to have to handle, especially if you're trying to handle it yourself. But even if you're trying to handle it with the help of a financial advisor. 00:15:21 Speaker 1: And even if the math works, it doesn't mean that it's not going to be stressful to the max. And so and I think people sometimes gene they invest and save more than they need to to prepare for outlier events, and so it leads to maybe more years of work than they otherwise planned on in an attempt to shore up their retirement. And you think there's a better way, I guess to go about that than just like overinvesting in black swan events, like being prepared for everything that could possibly come your way. 00:15:53 Speaker 3: Yeah, I'm suggesting that you either build or buy yourself a retirement paycheck that you take somewhere between a quarter and a third of your money, and you turn it into an income stream that will last the rest of your life. 00:16:12 Speaker 2: And there are a couple. 00:16:13 Speaker 3: Of ways that you can do this. You can do it with insurance, in other words, annuities, or you can do it with investments by building ladders of things like bonds and tips or putting some money into dividend paying stocks. The difference between the insurance and the investments is that the insurance can offer you guarantees for the rest of your life that the investments can if the If interest rates fall out of the sky again as they have in the past, it's really tough to build a bond ladder that's going to continually replace the same level of income. But you gotta do this in a way that lines up with your personality. So if you are if you're not a big risk taker, you're probably gonna want to do it with more insurance than investments. But if you've got a huge amount of FOMO, if you are the kind of person that if the market goes gangbusters in a good way and you don't have every last dollar in those markets, if. 00:17:26 Speaker 2: You're gonna, if you're gonna really. 00:17:28 Speaker 3: Regret that decision, then a more investment heavy paycheck is gonna be a better way for you to go. But either way, knowing that this chunk of money is allocated to the to to cover both those things that you need and those that you really really want in combination with social Security and we can talk about the future of the system if you want, gives you the freedom to take the rest of your money and invest it even more aggressively and know that that's your legacy money, that's the money for the extras. These are your needs and your wants over here. You're going to cover those with your paycheck, but your wishes can those can be taken care of by the stocks. 00:18:21 Speaker 1: And I want to talk about kind of the trade offs of opting for an annuity and what you give up if you go in that direction. But the behavioral reality of a paycheck that's consistent, which is essentially what social security is as well for a lot of people. So that's another question I want to get to. But that paycheck that's depositing your account because you opted for let's say, an annuity earlier on with a lump some of what you saved and invested for retirement, that's just creating the psychological reality and ability to spend without guilt, where whereas otherwise people would be wringing their hands and biting their nails. 00:18:57 Speaker 3: And we saw it in a couple of of really impressive research studies from some retirement researchers David Blanchette, Michael Fink, of people who've been in this space. 00:19:09 Speaker 2: For a very very long time. 00:19:10 Speaker 3: So they looked at people who had groups of people with similar asset bases. One group of people had their money in retirement accounts that it was in a chunk of assets in a four to oh one k. The other group had their money annuitized as a pension. These were teachers and other people who had had pensions. And then they compared using real data, how much money these groups of people were spending, and the people with the pensions spent twice as much in most cases, twice as much because they knew that another paycheck was coming, right, They knew that every single month a paycheck would land. And even if they blue one month's money by spending it frivolously, they were gonna get another, and another and another after that. 00:20:09 Speaker 1: Some people might hear that and say, well, they spent more. That's not a good thing. But no, this is what you want to do with the money, right. 00:20:14 Speaker 3: Sah, I mean, this is exactly right. Why are you saving for retirement. You're saving for retirement so that you can spend in retirement, so that you can you can take trips, do those bucket list things, Spoil the grandchildren if you if you have them, play pickle ball, play golf, I don't care you You you know what's your craft beer alternative equivalent? 00:20:39 Speaker 1: Right? 00:20:39 Speaker 3: You're you're saving this money for the craft beer so that you don't have to go back to perhaps blue Ribbon or whatever you don't want to drink, right, please lord, no? And so this is this is so that you don't have to make those compromises in retirement all. 00:20:59 Speaker 1: Right, I've got more I want to get to with you, and I specifically want to talk about the trade offs, because there are some if you opt for the forever paycheck approach. We'll discuss some of that right after this. All right, we're back still talking with Gene Chaskey, talking about turning money you've accumulated over many decades into a paycheck of sorts to help ease the burden of the psychological burden of actually spending the money that you've saved up over a few years. It feels like we just talk more about accumulation than we do spending down your retirement. Is that part of the problem? And have we just come up with insufficient ways to help people up until this point? 00:21:45 Speaker 3: You think that's the legacy problem, and it's a problem that I think both the financial services industry and the media is responsible for. But it's also a lot of demographics at play. We didn't have the big baby or generation decumulating until now. Yeah, and so it wasn't as in your face as it happened to be. But I grew up at all the personal finance magazines. I spent years writing and writing and writing about accumulation encouraging people to pay themselves first, put money into their four oh one k's, max out all the things. We really didn't talk about decumulation at all. In fact, I was just part of a piece of research that showed most people don't even know. 00:22:33 Speaker 2: The word. 00:22:35 Speaker 1: Well and interestingly enough, you write in your book that back in two thousand and six, someone came to you and talked about I forget was if it was for your mom or mom for your mom okay, talked about, hey, you should think about one of these products to help your mom create a forever paycheck, and you talked about the problem just now of your mom not being able to spend the money that came down, and you, being the prudent financial wizard, you're like, no way, this is this cost too much, this is going to inhibit growth, and you have second thoughts about that I do. 00:23:11 Speaker 3: I basically told this financial advisor to go pound sand I mean, And he made a compelling argument. He said, and this, by the way, a guy I trust, right, he was buying this annuity for himself and his wife. He was buying it for his parents. We could start with a small amount of money. I mean, he made all of the he laid it out, and I couldn't hear it. Well, I couldn't hear it or I wouldn't hear it because I was convinced that annuities were bad. I was convinced that they were too expensive, that they were too complicated, that you could just do better by investing your own money. I didn't understand the spending side of the equation that would come down the road. I should have listened. I wish I would have listened. I have felt bad about that in the years that followed, particularly after I read a column years later that an economist named Mosha Malevsky, who's a noted economist, wrote about this particular annuity, where he actually wrote a line something to the tune of, if a financial advisor recommended this for my mother, I would be very pleased with that financial advisor. 00:24:37 Speaker 2: And I thought, oh my god, what did I do. 00:24:39 Speaker 1: But the things in your brain that were causing you to doubt that advice were not untrue either, Right, there are some downside son as you are giving, Like if if you had annuitized one hundred thousand dollars ten years ago and you were you, you might not be happy with the results. Compared to the stock market returns. The fees are higher than they are with the index funds you're investing in, So there are trade offs. 00:25:06 Speaker 3: There are absolutely trade offs. There are always trade offs. I will say that the products have gotten better, and so when we talk about being able to understand what you're buying, it's a clear roadmap these days. And when we look at things like the complaint that if you put money into this and you died tomorrow, you would lose it, that's not really true anymore. There are return of premium guarantees so that if I die, if I put one hundred thousand dollars into this and I died tomorrow, my heirs would. 00:25:47 Speaker 2: Get that money. 00:25:48 Speaker 3: It's a different landscape than it used to be. I also think that the argument that the markets will likely do better better is a little bit of a false argument. I'm not talking about taking the money that you would have put into stocks and putting it into this. I'm talking about taking the money that you would have put into bonds and putting it into this. This is a replacement for the fixed income component of your portfolio, and actually annuities, according to some recent studies, have been shown to do better with a greater potential income stream than you would get from those bonds. So I think we know a lot more today than we knew then about the trade offs and the alternatives and where this might fit. But it took me a while to learn it, and it took me a while to accept that these products, that these products could fit. When I go out to buy a paycheck for my own retirement, I'll be doing it with an annuity. I'm not, and I'm in the process. I'm sixty one, so I'm in the process. I don't need the income now. I'm still working and I plan to keep working for a good long time. But I'm in the process of shopping for a deferred annuity that will allow me to turn on the income when I'm ready to turn on the income. I think that that's the best alternative for me. 00:27:29 Speaker 1: I want to talk about specific types of annuities and where to shop and what to look out for. But the reason you're doing that is because your goal is to maximize joy and satisfaction in retirement instead of maximizing overall number go up. Yeah. 00:27:48 Speaker 3: Yeah, I will watch the number go up in my stock portfolio and know that I don't have to worry about those things that I just don't want to come compromise on. I mean, you started this show by asking me, you know what I like to spend on. I don't want to not go to the fish store because I am worried about taking four percent out of my four oh one k. 00:28:20 Speaker 2: Right now, I'm I'm not going to worry about that. 00:28:22 Speaker 3: I'm I'm you know, I'm fortunate and we've we've done just fine. But I also I like getting paid. I've been getting paid since I was fifteen years old. One of the stats that I pulled from the book for the book is that eighty four percent of Jena Xer's are concerned or terrified about the day that that paycheck stops. I'm one of those people, like I don't want my paycheck to stop. And the good news is that my paycheck doesn't have to stop. 00:28:58 Speaker 1: Like it's all you've right. 00:29:00 Speaker 3: Right, It's what I can. I can do this for myself, and you can do it. You know you can do it for you and the younger people in your listening audience are going to have more choices of how to do this than are even available today. 00:29:20 Speaker 1: The book is called The Forever paycheck. When the word forever is an interesting one. What do you mean by forever? 00:29:27 Speaker 2: I mean till I die, Okay, I mean I mean literally. 00:29:31 Speaker 1: It's all a structured essentially to provide a paycheck, to provide you income from the lump sum for decades until you're deceased. 00:29:41 Speaker 2: Yeah, you get to choose, right. 00:29:43 Speaker 3: If you want a twenty year payout, you can structure it for a twenty year payout. If you want a five year payout that bridges you from the time you stop working until Social Security kicks in, you can buy a stream of income for that. That's not what I want. I want something. There's longevity in my family. I mean my parents I think died too young. My grandfather lived till ninety eight, and I've got aunts and uncles going strong in their nineties. I don't want to have to worry if I live into my hundreds that this paycheck is going to stop, and by buying a particular kind of paycheck, I know that I won't have to. 00:30:30 Speaker 1: And that's one of the other things you've touched on just a little bit, is that you're not taking your entire portfolio, every dollar you've invested in turning it into this to this paycheck, this bigger paycheck, even that you can count on the rest of your days. You still think stock market risk is important. 00:30:46 Speaker 2: Yeah, crucial. 00:30:47 Speaker 3: I think stock market risk is crucial for keeping up with inflation, for satisfying you know, your legacy goals, your charitable goals. Yeah, everybody needs to keep money in the markets as you get older. 00:31:04 Speaker 2: This is for twenty five to a third of twenty five percent to a third of your money. Something something in there. It's it's it's that you know, we. 00:31:17 Speaker 3: Used to talk about the three legged stool of retirement. You'd have social security, you'd have pension, you'd have your savings. This is the pension component. It's the fixed income component of a sixty forty portfolio. It's it's it's that money. 00:31:34 Speaker 1: And social security. You would say, is not enough of a monthly paycheck to make most people feel comfortable. 00:31:42 Speaker 3: No, No, social security replaces forty percent on average of a person's pre retirement income. Forty percent is not enough, and forty percent is the average, which means if you earn very little, it replaces more, but if you earn more than average, it replaces significantly less. It was never meant to be a be all and end all for people. It's you know, social Security is meant to be a form of social social insurance, and it is an annuity. You know, it will continue to come for the rest of your life. Yes, Congress has to fix it so that the trust fund doesn't run out, the one trust fund that makes Social Security payments doesn't run short in twenty thirty two or twenty thirty three. But even if Congress doesn't fix it, what many people don't understand is that it will continue to come. It's just that Social Security will only be able to pay out what it's taking in in payroll taxes, which means a haircut for some group of people. 00:32:53 Speaker 1: Yep. Yeah, we've talked about that on the show. It's frustrating to watch the slow descent into the Social Security ABYSS, but somebody will do something at some point, probably just for the last minute. 00:33:05 Speaker 3: I know. 00:33:06 Speaker 1: I've got a few more questions to get to, including some of the specifics where to shop, what products we should be looking out for. Get to just a little bit more with Gene right after this. All right, we're still talking with Gene Chansky talking about the forever paycheck and how to use part of the money over time that you have saved and invested to create this ongoing income stream. And gene As you know, a large part of this audience is millennial. We have gen Z listeners. Is this something where they're like file away for future use? Is this something they should be taking action on right now, thinking about actively kind of what their retirement paycheck looks like down the road. 00:33:49 Speaker 2: Yeah. 00:33:49 Speaker 3: I think this is something that you start thinking about in your forties, late forties maybe as you. I mean, the number one job of gen Z and millennials is making sure you're saving enough. Right, You've got to make sure you're on track to be able to build the paycheck that you want. But what is going to happen over the next decade is that we're going to start to see an income path emerge inside. 00:34:24 Speaker 2: Of your four oh one K. 00:34:26 Speaker 3: You're going to start to see income solutions, and you're going to be asked to at some point make a choice about whether you want to put a chunk of your money on the income path. All the research that I've done for this book, and there's a lot of psychology in the book. There's a lot of emotion in the book, and I think it's worth having a look at early in order to understand why it's so important to make those income related choices. But you'll be able to divert a chunk of your income to create a paycheck for yourself when you hit that retirement age. Eventually, the younger you are, the more the more of these solutions that will be available to you. 00:35:13 Speaker 1: Yeah, I was going to say, it does seem like you've already noted the change kind of in this space over the past fifteen years. The next fifteen years, we're going to see a lot more of it. We've seen Fidelity in Vanguard announced the annuities inside of target date funds. What are those going to look like? And should people be participating at some point? 00:35:34 Speaker 3: As best as I can tell, and you know, things are still moving pretty pretty quickly and pretty frequently here, but it looks like that somewhere around age fifty you are going to be asked do you want to put thirty percent of the money in your portfolio or in your target date fund on the income path. Then when you get to retirement, you're going to be asked again do you want to actually take that income or do you want to put it back into the portfolio itself. So there'll probably be a couple of different points at which you can choose to put yourself on the income path. And I would say that it's absolutely something that you should do for the reasons that we talked about. I was very, very struck in writing this book by research done by a professor at Cornell named Suzanne Shue, and she looked at things that she sort of put under the heading of precious cargo. She looked at bottles of wine that had been given as gifts, boxes of really really expensive chocolates, gift certificates for spas and restaurants, and how we used those things. And what she found was that we didn't use them, like we would just save those bottles of wine so long that they would turn to alcohol, and saved the chocolate so long that they would get that icky whitish stuff on the top of the chocolate, and never use the gift cards. Like if you've wondered why you have gift cards sitting in drawers, it's because they're special, right, somebody gave them to you. 00:37:22 Speaker 1: And special or forgotten. 00:37:23 Speaker 3: Well, yeah, but her finding was that people thought they would have more regret about using these things too soon than if they never used them at all. Retirement account balances are the ultimate precious cargo. We can't let go and we're hoarding and it's such a shame because people are not experiencing the joy that they saved for so many years for. And so when you're offered a chance to go on that income path, particularly knowing that you're going to get a do over at some point in the future, if you want it, I would say, go on the ride. 00:38:09 Speaker 1: You made it sound like your mom was well set up. She was What did what did she miss out on by not having a paycheck with some of those funds? Are there things that you could remember where she had that sort of precious cargo mentality, So. 00:38:23 Speaker 3: She would she if she was here, she would say she missed out on nothing. But she loved orchids. She loved them, and she would only buy them at Trader Joe's where they were ten dollars, and she would say that they lasted longer, but they didn't last longer, and they weren't as good as the ones from the specialty orchid shop across the way. She really liked clothes shopping, but she never got past waiting for a sale. Were there trips that I mean? She did travel right, she traveled. She and my stepfather did a lot. They lived, They lived well. But I did see her hold back and I saw the fear. Every year she would ask me to sit down and go over her budget to tell her that she was okay, and I would say, you are more than okay, you are fine. Spend your money. My brothers and I all told her we did not need her money. We you know, encouraged her to spend it. And she still had a really really difficult time. 00:39:33 Speaker 1: Give us, give us the rundown maybe on some of the specific products that people should consider. Do you want to do that, like we can do that? 00:39:40 Speaker 3: No, we can do that is too complex? It isn't it, really, it really isn't. There are two basic categories of annuities. There are fixed annuities and there are variable annuities. If you see the word fixed attached to an annuity, you are never going to lose money on that product. You know that your investment is not going to go down. Whether it goes up by a lot is you know, that's that's another question. But you're not gonna lose principle and there are a lot of There are a lot of annuities that fall into that category. Immediate annuities, which are the simplest. You just hand an insurance an insurance company some money and they give you a paycheck that starts right off the bat. Those are Those are the simplest, the simpler they are, the greater the return you are likely to get. There are deferred annuities where you hand them the money now, but you don't start the income until years down the road and the money has time to grow. There are some annuities called magas that act like CDs, but with a slightly greater return. And then with all of these annuities there are there are income riders. So some annuities are products in which you save money and you attach a rider that will help you figure out how much income you're going to get later on variable annuities. And you're asking me, you want to ask me a question, So. 00:41:23 Speaker 1: I'm wondering if there's is there an easy way to compare apples to apples? 00:41:27 Speaker 2: Oh, one hundred percent. 00:41:29 Speaker 1: Okay, Because I think sometimes people get lost in the details and they're not sure what they're looking at, and they end up buying a product that's more expensive than they need. 00:41:36 Speaker 3: Yeah, I would say if you are headed into annuity land, if you want to buy income. 00:41:44 Speaker 2: You should. 00:41:46 Speaker 3: You can find different annuity primers on the internet. I've got a good one in the book. Should read up enough about the types of annuities to know what type you want. And then these are commodity products. You are looking for the highest income at the lowest price, and it's not always going to be an across the board compare. You know there are better deals than others, and sometimes those better deals come where you don't expect them. Because what insurers are doing when they are selling annuities is pooling risk. 00:42:31 Speaker 2: Right. 00:42:31 Speaker 3: They know when people are going to die, not each individual person, but they know when you put a group of people together what sort of longevity they're going to get from that pool of people. And sometimes those insurers may look at their pool of people and say, oh, I need more sixty seven year old men, or I need more fifty three year old women. And when they see that the prices for those fifty three year old women are sixty seven year old men, they're better. And it's kind of like when airlines need to fill seats, right, then all of a sudden, the pricing gets a little wonky. 00:43:19 Speaker 2: And you can get a really really good deal. 00:43:23 Speaker 3: On the variable side, let me just touch on that for a second. When you see variable with an annuity or a product called a RYLA, which is a registered. 00:43:32 Speaker 2: Index linked annuity. 00:43:35 Speaker 3: You can lose money these products. Invest your money in a stock market index. It's not exactly an index. You're not going to get the full advantages of that index. You get some of the upside and the downside is capped, so you're not going to lose as much money or feeling. There's a floor and a ceiling, and so you should understand that they're two very very different products. 00:44:06 Speaker 1: Okay, last question for you. You wrote another book a long time ago about lifespan, and this was you were like early I think it was twenty seventeen, maybe this book came out, Yeah, and now it's all anybody talks about. I mean, Brian Johnson is the butt of jokes and the admiration of many, I guess. But it was overlapping this interest that you have of lifespan and fiscal health. And it seems like, especially for people listening who have really taken care of themselves and who do have a family history of people living a long time they did, they stand to benefit even more from the certainty that these products provide. Like, how do you think about that intersection of kind of lifespan and financial planning. 00:44:49 Speaker 3: Yeah, I think that if you believe that you've got longevity on your side, these products make. 00:44:56 Speaker 2: More and more sense. 00:45:00 Speaker 3: The other thing, though, to think about when we think about longevity is that by the time you get into your seventies, by the time you get into your eighties, even if you've been a DIY manager of your own money, you probably should not be doing this yourself. We're learning more and more every day about cognitive decline and how it actually shows up in our finances a good eight to ten years before we actually realize that we're declining, which means that we may not be making such great decisions. So you either need another person keeping an eye on you, or if you've done something that is akin to what we've been talking about, if you've set yourself up with a forever paycheck, you just know that that money can continue to come excellent. 00:45:55 Speaker 1: The book is The Forever Paycheck. Gene Chaski, thank you so much for joining me I really appreciate it. 00:46:00 Speaker 2: Thank you for having me