[Travis] Retirements are changing. The financial industry is changing. What about you? Welcome to "Rebuilding Retirement," a podcast series from Allianz Life Insurance Company of North America. For those of us in the financial industry, we're at the intersection of a number of changes, dramatic changes related to American retirements. There are new challenges, new risks and new technology, even new attitudes about retirement. So in this podcast, we're gonna talk about ways of navigating this new reality with your clients. Hi, my name is Travis Walker, and I've worked in the financial industry for more than 15 years, starting in suitability and progressing to sales and relationship management. In my role at Allianz Life, I've met with financial professionals across the country. I've talked to you and I've heard your stories. And we've heard from clients, too. Allianz has done a lot of consumer research, so we have a good idea of what you're up against. Here are just two data points. More than half of consumers are reluctant to invest in the market in the near future. And 40% say they don't have a financial plan for retirement and will just figure it out when they get there. Statistics like that make it clear that financial professionals are more important now than ever before. So in this series, I'll be talking to thought leaders and innovators for a closer look at how retirements and the financial industry are evolving and, frankly, need to evolve. And today, we're going to start by setting the table for all the discussions ahead. My guest is Moshe Milevsky, a professor of finance at York University in Toronto. He's published 17 books and dozens of papers on retirement and finance. So he is an experienced guy to help us explore this new retirement reality. In our conversation, Professor Milevsky talks about why he no longer views retirement as a math problem to be solved, how he feels about the 4% withdrawal strategy for retirement income, and why he doesn't like the idea of choosing a retirement date. You're gonna come away from this interview with a better understanding of the issues, and I hope feeling energized about the way forward. Moshe, thanks for joining us. Let's start with how you personally think about retirement. You've said that you used to view retirement as a mathematical problem to be solved, like retirement is a financial equation. How do you view retirement now? And how did that change come about?
[Moshe] Well, just in terms of background, I've been at this for, you know, at least 25 years now. I started in graduate school in the 1990s looking at this. I was studying mathematics and finance and economics. And at the time, some of my supervisors suggested to me that, you know, since you're interested in mathematics as well as finance, and my mother's a gerontologist so I was always sensitive to older-people issues, they said, "Hey, why don't you try to solve retirement? "Why don't you solve the retirement problem?" And at the time, I thought that retirement really was about: How much money do you need so that it lasts for the rest of your life? Or how much can you afford to withdraw so that it lasts forever? Or what account should you withdraw from so that you're most tax efficient? And to me, for many years, that was what retirement was about. Retirement was about solving a mathematical problem or solving a mathematical equation. And it's only recently, and especially as I get older myself, that I've come to realize that what I was working on, what I was solving wasn't retirement. I was solving something within retirement which is known as decumulation. How do you decumulate? How do you draw your money in a way that's efficient and tax efficient, and will last? And how much annuities should you have in the portfolio? Decumulation is a much smaller part of a very large problem which is: How do I manage all of the societal problems around retirement? What do I do with all that free time? How do I deal with healthcare? How do I deal with medical risks? How do I deal with family relations? How do I deal with estate planning? All of that's part of retirement, and it's not necessarily mathematical. So initially, it was a very, to me, mathematical journey. And with time, I've realized you need to know more about gerontology and psychology and certainly have a social work understanding. So I'm not sure if I've answered your question, but that's my journey of how I came to realize it's not just mathematics. It's much more than math.
[Travis] I get exactly where you're coming from. So thanks for that. This series is all about helping financial professionals navigate a new reality with their clients. What about retirement is so different that it feels like the game has changed?
[Moshe] Yeah, so once again ... And Travis, I think I'm gonna bore you with the number of times I'm going to say during the next hour: I'm gonna talk about decumulation and I'm gonna differentiate it from retirement. I think that because retirement is such a multifaceted problem, yes, there's mathematics but there's also psychology and there's the social aspect and there's the family dynamics, I think what has changed is that the complexity of the number of financial solutions out there and the financial strategies or products means that the advisor needs to help an individual understand what their options are, let alone what the optimal strategy is. Whereas 30 or 40 years ago, there just weren't that many choices and there weren't that many decisions. And maybe someone could navigate it themselves. Now, it's just become way too complicated to navigate it yourself on the decumulation side. And I think that's one of the things that's changed. Too many options.
[Travis] For every generation, retirement is new to them. So what makes this moment in time different? I mean, I know you said, so much choice is out there. Care to expand on that? Is there something else that makes it a little different for this generation?
[Moshe] You know, I also think that in the past, work was very unpleasant. Let's go back to the 19th century or the 18th century, the Victorian workhouses. You know, nobody came home after a full day of work in the factories or the workhouses, "Oh, that was a lot of fun today. That was really intellectually enjoyable. I discussed with my colleagues." So obviously, the word retirement meant: When can I stop doing that horrible, unpleasant stuff so that I can actually have some fun? Nowadays, there's a very large group of people that, you know what, they don't necessarily hate what they do. They've found some sort of balance. They enjoy it. And they would like to continue doing it for as long as they're mentally able to. They don't necessarily want to cease all activity and head out to the golf course. They might wanna do more of that, but they don't necessarily want to cease activity. That's just one aspect in which retirement planning has changed. Age 65 doesn't mean you stay home for the rest of your life anymore.
[Travis] Yeah, well, 'cause the rest of your life could be 30 years at age 65 these days. Whereas before, not so much. Next thing is kind of a three-parter. So if we need to come back to it to remind you where we started, please just stop me and let me know that's the case. But I wanna ask one: What do you see as the main dynamics changing retirement for Americans? What do you see as unchanged? And then, how do financial professionals fit into this new reality?
[Moshe] Well, you know, I think there are many ways in which things have changed. I think healthcare and the awareness of health heterogeneity. You know, you can be 60 years old and in absolute perfect health with longevity, as you pointed out, of 40 years. And you can have someone who's 60 years old chronologically, and when you take a look at their health, their biological age, which is just another proxy for health, they're 80 from a health point of view. They're 60 chronologically but their health puts them in the 80 category. They're not looking at as much of longevity as the 30 or 40 years. And they know it now. In the past, there was this vague notion: He's in good health; she's not in good health. Now, you can get a metric for it. You can quantify it. Your life expectancy is 37 years. What do you plan to do with the rest of your life? So I think just the awareness of health and longevity heterogeneity is one of the many things that have changed. I think, you know, the greater awareness of the fact that you don't necessarily have to cease all activity and retire completely. It's not a binary zero-one variable. You know, I work, I work, I work; and then I stop and then I don't work. How much labor do you still want to do as you move into your advanced age? Companies are more flexible that way, certainly the investment environment. So I said, those are things that have changed. They did not exist in the past. You know, the gig economy, the working from home, you don't necessarily have to travel to do that. You can work from anywhere. You can retire and live in Baja, California and do part work even though you are retired. Those things have changed. I think what has not changed, what has not changed is the fact that we are aware of the fact that as we age, we're able to do less. I don't think that that's changed. I think the concern as we get older of, you know, what do we still wanna do while we're around, the limited length of life and how we fill the time in our day, I don't think that's changed very much. And the desire, the human desire to have guarantees, even though they're tough to make, the human desire that I will be taken care of for the rest of my life as long as I live, that's a human aspect that goes back hundreds if not thousands of years. I'm getting older. Can't work as much as I used to. I want to make sure that I have enough for as long as I live. That's a concern that has been with us for millennia, not just centuries.
[Travis] Yeah, since time immemorial. And so how do financial professionals fit into that new reality? If they know what you know and they have to address that, knowing what's changed, what hasn't changed, what role do they play in that?
[Moshe] I think that there are two aspects to this. You know, on the one hand, and I'll start on a rather pessimistic note, you can't be a jack of all trades. You can't wake up as a financial advisor and say: Well, I'm gonna become a gerontologist overnight. And while I'm at it, I'll become an expert on social work. And then, family dynamics will be my expertise. Or even something like Social Security. It is a complex mechanism to decide when do you claim and who should claim. You can't become an expert on Social Security overnight, even though in some sense it's purely decumulation. So know your limits. Know your limits and know the system limits. You may not have the software to be able to do that. On the one hand, you can't do that. On the other hand, I think that there has to be an awareness that decumulation is complex, and the tools that you used in the past to help people manage their financial affairs aren't going to be sufficient. I mean, another way that I try to explain this is, you know, there's accumulation. I'm accumulating wealth to get to retirement. I get to the top of the mountain and I have a sum of money. And then there's decumulation where I gotta get down. I gotta draw it down. The accumulation problem is rather simple when it comes to investments. I'm accumulating wealth. What's the right asset allocation? Or I'm accumulating wealth. How should I diversify my investments? The answer isn't that complex. Make sure you're diversified broadly. Make sure you don't have too much stocks and too much bonds. I sometimes joke, you know, if I'm in an elevator and somebody says to me, "You know, I'm 40 years old. "What should I do with my money? "What should I do with my 401k? "I'm 40. "What should I do?" I just need three floors: 60/40 stocks and bonds, diversify. Three floors later, you know, we're done. I mean, what more can you tell them? Diversify, low cost, balance, and get back to work. You know, do what you love. Somebody comes to me not at 40. Somebody comes to me at 70. I'm in an elevator and at 70 say, "Hey, I'm 70 years old, you know, facing RMD. "What should I do with my money?" I can't do it in three floors. I mean, I gotta be at the Burj Khalifa. You know, it's 140 floors. That is a very complicated ... You know, is it in a tax-sheltered account? Is it not? Is it Roth; is it IRA? Did you start Social Security? What's your spouse's situation? Do you have any annuities? What's your dividend rate? I mean, it's just so much is going on. That's the new reality that financial advisors have to be aware of. And because there's so much going on, you've gotta limit yourself to that as opposed to trying to become an expert on everything else. It means you have to be focused more on satisfying the groups that you have. You know, this business of: Well, I wanna grow my business. I wanna have double the clients. I wanna have triple the assets. Lovely. The assets that you have already, you better pay a lot more attention to because it's gonna require more work.
[Travis] In talking about, you know, the financial tools and accumulation, you did mention a couple things. And that leads perfectly into the next question here: How do longstanding rules of thumb for retirement fit into this new retirement reality? So, like comprising a retirement portfolio of 60% stocks and 40% bonds. What about, you know, the 4% withdrawal strategy for retirement income? How do things like that, those longstanding rules, fit into the retirement reality today?
[Moshe] Yeah, it's interesting on a, you know, brief historical note. So as I said, I was a graduate student in the 1990s. And I had already been writing articles on decumulation in the early 1990s. And that was when the famous 4% article came out, this idea that we should spend 4% I think was published in 1992. And I had written something about decumulation. And I looked at that and I said: Yeah, that's not gonna last. That 4%, come on, that's too simplistic. And here we are 40 years later or 30 years later, and I mean, it's taken over, right? I mean, it becomes, you know ... I think 60/40 has legitimacy. 60/40, you have a balance. You don't have fully stocks. You don't have fully bonds. You never really know. For most of the time, they're countercyclical. That has legs, it has scientific basis, and it will still be used for very long periods of time even in decumulation, I think the idea of a balanced portfolio. I think the 4% rule is problematic as a normative tool to say: You should withdraw 4%. First of all, the world has changed dramatically in the last 30, 35 years since that rule came into effect. I think it completely ignores longevity risks. There is absolutely no awareness that, you know, you can be in very good health or you can be in poor health and that's gonna affect longevity. And unfortunately, and to me this is the biggest concern, the 4% rule leaves no room for annuities. There's no way to see how an annuity improves your outcome in retirement if you're using a 4% rule. It's like a thermometer that's not capturing the wind that's blowing. It's giving you a great temperature read, lovely, balmy 72 degrees, but there is so much wind that I'm just gonna be knocked right into the ocean. But it's 72 degrees. And I think that's the sort of ... You know, 4% rule, yeah, it seems reasonable. And I think that there are certain things that lose out from that. And I think that it overemphasizes asset allocation and, you know, spend-down rates. So, the way I like to say this, it's a great conversation starter, you know, right? I mean, it's like sitting down with someone at dinner and starting the conversation with, "Wow, those Raiders, did you see them over the weekend? "Finally." That's a conversation starter. You can't spend the entire dinner talking about Green Bay versus the Raiders. And I think it's the same idea. The 4% rule, great start to a conversation about retirement. But at some point, it's gotta get serious. And 4% isn't gonna be it.
[Travis] For a long time, and you alluded to this earlier, you know, retirement meant leaving the workforce and drawing down on your saved assets. And those two don't necessarily happen at the same time. And I know that you look beyond the number, you look beyond decumulation, and again, the kind of quality of life and everything else that goes into retirement. But in looking at that, now when you're talking about retirement, what does that mean to you when thinking about leaving the workforce and drawing down, things like that?
[Moshe] Yeah, so, with the understanding that we want to differentiate, we want to break apart the link between decumulation and retirement, we want to recognize that those are two very different things, I would say that, for me personally, I have no intention of retiring 100% from the labor force. I will continue teaching and lecturing in a reduced scale for, you know, as long as I possibly can, you know, until they just drag me out and they say, "Look, he's completely lost his mind. He has nothing to say. Get him outta the classroom." Decumulation though, drawing down of assets, I plan to start in my mid 60s. Because I'm tax aware.
[Moshe] And I wanna start withdrawing, I wanna decumulate. So I will begin decumulating much, much earlier than I begin retiring. I will retire later than I decumulate. And I think it's important for people to understand that for many of those out there that say, "I'm never gonna retire. "I love what I do; I have no intention ..." Yeah, but you're gonna have to decumulate. You're gonna have to decumulate, so have a conversation with a financial advisor. Even if you have no intention of retiring, you do need to decumulate. Because at some point, you do turn on Social Security. At some point, you do have pension and annuity income. You're gonna need some guidance on how to do that even though we respect the fact you wanna go into the office until you're 90.
[Travis] Yeah, yeah, so in answering that, you kind of answered the other question of how that change would affect financial professionals and how they would work with clients, because they do need to be aware of that, of a person, like you said, not necessarily taking their foot off the gas and just walking off into the sunset, retired. I know that you don't like the idea of picking a retirement date. And I think you've explained that, but I'll ask directly: Why is that exactly?
[Moshe] Well, I think that, you know, many people leave the workforce not by choice. I don't have the specific number in my head, but if you take a look at people that you and I would agree are retired, very rarely was it something, a date, that was picked in advance that they got closer to and they realized. You know, there was a pandemic hit and they were forced to do something that eventually led to their retirement. They had a health shock. They had a layoff, a merger, an acquisition. Or if I can use a fancy term here, retirement is less deterministic and more stochastic than you think, which is a fancy way of saying: Many, many people move into the less-work phase not by choice but because something forced it upon them. So this notion that you pick a date and that is the date, let alone 65, which is a relic of 130 years ago. Bismarck in Germany sets up a pension system. You need to pick a date. What is the age? Is it 70? Is it 60? Like, why are we even using that number? I mean, that number is meaningless when longevity is in the 90s. What does that number mean? So I'm against picking a date and saying, that's when everything's gonna happen given all the uncertainty that takes place in the world. Decumulation though, when do you start to plan to decumulate? Yeah, that's easier because there are tax rules that force us to do certain things at certain ages. And if you wait to 70, you'll get more Social Security. You take it at 60, you get less. So they're age gearing and fixing ages for your financial plan. That makes sense. And once again, I would encourage advisors, stop talking to people about retirement. There's a lot of stuff going on. Focus more on your expertise, decumulation.
[Travis] How has that role changed for financial professionals? If they're gonna consider some of the things you're talking about, I think it's in some ways kind of even easier just to think about the numbers and accumulation. And that's just fine, kind of set it and forget it. But what you're talking about goes far beyond that. How does that change for a financial professional going forward?
[Moshe] Look, I think financial professionals need to have a broader Rolodex of contacts than they did in the past. I think once they recognize that they will never become experts in Alzheimer's and dementia, and you will need that as you get to the end of the lifecycle, if you're fortunate enough to get to your 90s, if you get lucky, you get into the tail of the distribution, you're going to have to deal with cognitive decline. You will. And if you are an advisor to someone who is in their 80s and 90s, your client will have to deal. But you're not gonna become an expert in Alzheimer's and dementia and cognitive decline. Make sure you know people who are so that you can put your clients quickly into contact with someone who is. You know, you have to start thinking of yourself as a concierge at a top-end hotel. You know, you may not know where to get the best dinner, but you better know somebody who does. You may not know where to get ... You gotta be one step removed. And I think that that's part of the value add of the advisor. Say, "Hey, you know, we have someone here ..." But as soon as the advisor thinks that they can start to become an expert in cognitive decline, it's like, no. Hey, you were a stockbroker 15 years ago. Now you're suddenly a bio-gerontologist. Come on, it's gonna be surface-deep knowledge. But get a network of people and know who to put them in contact with, and I think that's where your value add is. Know the people to put your client in contact with.
[Travis] Thinking about adjusting the financial strategy and, you know, kind of the number of financial decisions and how to make them as you age. I go to a lot of conferences and meetings. And for the first time ever this year, someone actually did do a presentation that I've seen about cognitive decline and all that that entails, and the decisions that will have to be made. And scrambling about and where you're gonna get your money from and who's got power of attorney, and all the sort of things that go into that with cognitive decline as people are living early. So I think you may be out front on something that a lot of people aren't giving a ton of consideration to. So when we think about what risk to retirement a financial professional should be paying attention to right now when creating retirement plans for clients, I'm assuming that fits into it. What other things are you thinking about that they should look at in terms of risk when creating this plan?
[Moshe] So, we've certainly talked about health risks and the many multidimensional aspects of health risks so I won't overemphasize that. I think the other risks that you certainly wanna have conversations around are about the economic environment and the geopolitical environment and how that is going to affect your financial plan. I think that software today, and specifically financial planning software that a lot of advisors rely on, a lot of the broker/dealers and RIAs rely on, create this false sense of determinism for the future that you have to build resilience towards being wrong. And let me be specific about it. You have software that's projecting out for the next 30 years what your tax rate is going to be. "And look at that, Mrs. Smith. "In 97, you'll have $1.3 million." "Whoa, whoa, whoa, whoa, I'm 60. "You're telling me in 37 years... "How do you know who's gonna win in ... "How do you know what the tax code's gonna be?" "Oh, we assume everything's gonna stay the same." "Wait a minute, you're assuming everything's gonna stay the same." If there's one thing I've learned in the last three years is nothing stays the same. So, I think that resilience to changes in basic fundamental factors is something that an advisor has to prepare clients for. You know, we can call that risk management or we can call it prepare for the unexpected. We can call it, you know, make sure that no matter what happens, you're okay, not just the trajectory we're expecting. I think that that's gonna be very important in the environment where we don't even understand what currency is gonna look like in 20 years. So you're telling me I'm okay for the rest of my life, but I don't know what currency will look like in 15, 20 years from now. Modesty, modesty, and the clients will appreciate the fact that you're being a little bit more realistic. Like, you know, we really don't know. Given what we know now, we think you'll be okay. Come back in six months, let's take a look at it again.
[Travis] So that being the case, what are some strategies that can help clients mitigate those risks? And then how do we decide about what we budget for and what we insure?
[Moshe] So I think the first thing is a scenario analysis instead of a probability analysis. You know, stop telling people that you'll be okay 97% of the time. "Yeah, we just ran the numbers. You're 99% okay." I think it's the wrong ... I mean, this is the analogy I like to explain. Can you imagine you get on a flight, you get on a plane. And you're in New York, you're flying to LA. And the pilot says, "Look, we believe here "at American Airlines in democracy. "We wanna give our flyers a chance to decide the flight path."
[Moshe] "We're gonna let you decide the flight. Imagine that, right, the flight path. And the pilot says, "We have two flight paths here from New York. We can go south. And in this flight path, there is a 99% chance that we will arrive within the hour. And there's a 1% chance that we'll arrive 15 minutes late of when we had determined." 99 to 1, 99 to 1. And you listen and say, "Okay, what's the other alternative?" And they say, "Well, we can fly north. And that one, there's a 99.9% chance we'll arrive on time." "Ooh, that's good, 99.9." "But there's a 0.01% chance we'll never arrive." But 99.99 sounds really, really good. I like 99.99. But the alternative is not acceptable, it's not acceptable. So, you know what, let's go south. Let's do the 99; I'll take the 1% delay. But 99.99 sounds good. And I think that a lot of financial planning has gone into that: Let's get that number as high as possible. Oh, we allocate this way, we'll get you a couple more percentage points. No, no, no, no, no, it's not about probability, it's about scenarios. If we have an administration that heavily taxes your IRA or if it changes tax rates and now, federally, you gotta pay 50%, will you be okay? No, we won't. So what are we gonna do around that? Instead of giving probabilities that in many cases are hard to really justify, and I don't think that's the way people should make decisions. So I will answer your question with the following Twitter summary. Scenario analysis is how you prepare for risk management.
[Travis] No, I like that. And I love your philosophy on this and how you're looking at it a lot more broadly than, you know, just accumulating assets here. Right now, retirement planning is focused on boomers, right? How do you envision retirement strategies varying for Gen Xers, millennials, and even Gen Z?
[Moshe] So, you know, that is something that I face a lot because my students tend to be more, you know, the Gen Z, Gen X, and millennials, obviously, depending on whether it's MBA or undergraduate students. I think that for many of them, the word retirement is a joke. If you're 22 years old and you get asked, what's your retirement strategy, and you still don't know what to study. Where are you gonna work? Where to live? Do you want a family? Do you want kids? Like, retirement? It's seriously like asking someone: So have you given a thought to your burial plot? Cremation or burial, what have you decided? Like, I'm 22. Like, it's just way too early. Like, this idea of the retirement, come on. Have you thought about your future? Or are you provisioning for the uncertain future? You know, are you setting yourself up for stability in your financial plan? Yeah, that kinda resonates with someone in that age group. But, you know, the word retirement, it becomes a joke. And we have to understand that we hear the word differently depending on the age group that we're in.
[Moshe] For many people at that age group, they do not have a defined benefit pension. No company is offering 25 year olds, unless you work for government. And I wouldn't consider that a company. Unless you work for government, you're on your own. You're on your own. So provisioning for advanced age, provisioning for a day when you might not be able to work, provisioning, I think that's the way to approach it. Creating stability in their spending is the way to do it as opposed to focus on retirement planning. If you're a baby boomer, the word retirement means something to you. Yeah, you wanna use it in conversation. So if I'm talking to financial advisors, don't sprinkle the word retirement too much when you're discussing this with a 30-year-old. It's just ridiculous. 70-year-old: yes, absolutely.
[Travis] No, that makes perfect sense. And then we always say: Oh, it's not a one-size-fits-all. Well, that's I think the clearest example of not being one-size-fits-all, simply even coming down to a word. And at that point, you're correct. Retirement does sound a bit like a joke. All right. So from a financial professional perspective, Moshe, cutting through the clutter for their client, what are a few things they can do? Just 'cause there's just, you know, a laundry list of things out there that are being thrown at them for, you know, suggestions. But to get through all that, what are some important things you think financial professionals can do to get down to brass tacks for their clients?
[Moshe] Well, I think, you know, if I was giving career advice or if I was coaching a finpro on what they should be doing, number one is never rest on your laurels. I mean, you cannot simply look back and say: You know, I have been successful and now I can coast in today's environment. Just like a good athlete continues to train even if they're at the top of their game, I think that financial professionals have to understand that it is very, very dangerous in this environment to simply sit back and coast and say: Well, you know, next 10 years of my career are smooth sailing because I've made it, I've built it. So simply continuing to be engaged and not to simply say that: I've achieved a certain level of success and now that'll stay there. That's number one. Continue continuing education. People view it as a drag. They view it as a requirement. "Ah, darn CE credits, I gotta continue." No, it is a very good idea to continue your education. It's not just to keep FINRA and the SEC or the insurance regulators happy. You wanna make sure you're keeping up to date on what's happening out there. So I think that's important. I think another aspect that I would emphasize for financial professionals is that, get to know your clients' human capital. You know, what exactly do they do for a living? It's not just an entry in a spreadsheet. Well, my client makes $172,000 a year and this is what their portfolio looks like. Look beyond the cells in the spreadsheet. What do they exactly do? Do they like what they do? Do they wanna stop what they're doing? Sometimes the metrics on the dashboards don't tell us that. Is this someone that would love to work forever, but won't be able to because of job impediments? Or is this someone that really wants to stop? Get behind the numbers is what I would strongly urge as part of my learning that it's more than just a mathematical or equation part. I also think that one of the things advisors have to understand is that the tools and the strategies and the products that they learned to help people in accumulation may not be enough in decumulation. Learn about newer products and strategies that are coming out that in the past you might have dismissed because they weren't suitable and appropriate for your clients in that phase of life. Your clients are aging. They're moving into decumulation. Those things, you might wanna pay more attention to now even though in the past you dismissed them and perhaps rightly so. Now it's time to go back and learn more about it. So those would be some of the recommendations. Continuing awareness. Budget more time in your day to learn. How many hours a day are budgeted to learning new things? "I don't even have a budget for that," they'll say. Well, put it in your budget: learning new things.
[Travis] So in reducing the number of decisions, right, when you're thinking about retirement and speaking of people getting a little bit older, you're thinking about those strategies, what can financial professionals do to kind of reduce the number of some of the decisions? 'Cause there's gonna be a ton of them out there and, like you said, decumulation chief among them. What can they do to kind of narrow that list?
[Moshe] Yeah, and, you know, Travis, just to emphasize the importance of your question, it is so critical to minimize and reduce those decisions with time. I mean, I'm in my 50s, you know, all of it. I enjoy financial decisions at this stage. Because I teach it and I enjoy it. You know, I fire up my spreadsheet once a month and I look at my asset allocation. And I look at the allocation to European stocks versus Asian stocks. And I'm wondering: Hey, the dividend yields are looking nice on the European side. Let's up it. I'm engaged with financial decisions. I like to think about whether it's better to pay down debt or to take on more. I enjoy decisions. I enjoy making financial decisions at the age of 50. When I hit my 60s, will I continue to enjoy and be able to do that? I think so; I hope so. 75; 20 years from now, I'm 75. Do I really wanna fire up that spreadsheet every month and figure out whether the dividend yield on Europe is better than the ... I don't know at 75 if I'm gonna ... How about 85, if I get to 85? Do I wanna make that decision? Now let's imagine I get longevity. I get lucky, I'm 95. I'm 95. Do I really wanna figure out how much to withdraw this month from my portfolio? I'm gonna have other things to do at 95. I wanna minimize those financial decisions. Why? Because I don't think I trust myself, let alone that I'm gonna enjoy it then. So I want it, and here's the key word, on autopilot. I wanna put my financial affairs on autopilot. I want AI to land that Boeing 747 because the pilot is now 97 years old, and I'm not sure I trust their intuition to land that plane. It's a scary runway. So I want it on autopilot, highly reliable autopilot. I wanna minimize financial decisions by putting it on autopilot and having products and strategies that by construction are autopilot. You don't have to make any decisions. Every month, there's a check that comes into your account and it's gonna last for as long as you live. That's an example of autopilot.
[Travis] Okay, so as we wrap up, just a few final questions for you. What does your ideal day look like in retirement?
[Moshe] So I think Travis, by now, you'll know that to me there is no binary, a day in retirement. There is a day in 90% retirement. And there's a day in 70% retirement. And there's a day in 60% retirement. I'll tell you that the day in 50% retirement is the day where I can spend more time reading, which I obviously enjoy, writing a little bit more, spending more time with family. That would be a day in, you know, 50% retirement. A day in 90% retirement, you know, maybe more time on the beach, more time traveling, more time enjoying things that life has to give. I envision a day in retirement is spending a lot of time in doctor's offices. It's not ideal, but I have no choice. I'm gonna have to do it. But with the recognition that as this stage evolves, there are gonna be things I have no choice about, I would say doing more of the things I've always enjoyed doing but things that I haven't had the time to. But I don't envision any day in my life that will be 100% retirement. I have no doubt that there will never be a point in this life, or my life, where you point to me and say, "He is 100% retired." Not happening.
Gotcha. So what's the best thing you've done or are doing to make sure you can achieve that vision for your retirement? And I'm putting retirement in air quotes.
[Moshe] You know, I think that one of the things for me that has been a challenge is to develop interests and hobbies that go beyond work. You know, I'm not proud of this. I consider myself a workaholic. And, you know, to develop things that I enjoy doing that'll last for a period where I'm not 100% engaged with work: hobbies, interests, you know, things that I enjoy doing with my wife that maybe in the past I wouldn't have done because I didn't see the point in doing it. I'm trying to prepare for it. The famous Roman author, Cicero, wrote a book "On Old Age," a very, very famous jurist from 2,000 years ago. He was lamenting that he was getting older. And he makes the very interesting point that retirement requires preparation not just for financial reasons, but because of: What are you gonna do? You gotta plant that garden years and years before so that you can enjoy the fruits of that garden. And he said that the old age, he didn't use the word retirement, he said old age is similar. You gotta prepare things that you're gonna do in old age. You can't just get to it and say: Now what do I do? And I think preparing for it is something that is important in terms of activities. What do you plan to do?
[Travis] Yeah, yeah sure. Well, this has been a wonderful conversation. I thank you for your time and it truly has been great. For listeners who have enjoyed today's conversation, where can they find you online?
[Moshe] Well, I don't live online, but I have a website, moshemilevsky.com, they can Google it, where a lot of the research and articles and books that I've discussed and written are available. So I would start there for people that want to read more or perhaps hear a little bit more. There are snippets of videos there.
[Travis] Well, I would encourage them to do it because this has been great for me. Really, a different perspective on how to look at retirement and, honestly, one of the best I've heard. So thank you, Professor Moshe Milevsky, so much for your time.
[Moshe] Yeah, my pleasure.
[Travis] No question, Professor Milevsky gave us a lot to think about in terms of the shifting dynamics of retirement and how the financial industry needs to respond. But one of the biggest takeaways is that now more than ever, Americans could benefit from retirement strategies that consider more than just finances. As we heard, it's no longer just a math equation to be solved. It's so much more. But we aren't through yet. We've got more episodes to come exploring different aspects of our new retirement reality. We'll get into the role of technology, managing new risks to retirement income, and where the next generation of clients is coming from. And you'll hear from guests like Sallie Krawcheck, Joel Bruckenstein, and Suzanne Siracuse. And if you don't know those names, you should, and you will when you come back for future episodes of "Rebuilding Retirement." I'm Travis Walker. Thanks for listening.