0:00

The purpose of retire with Style

0:02

is to help you discover the

0:04

retirement income plan that is right

0:06

for you. The first step is

0:09

to discover your retirement income

0:11

personality. Start by going

0:14

to reso profile.com/Style and

0:16

sign up to take the

0:18

industry's first financial personality tool

0:21

for retirement planning. Retirement

0:42

planning without a framework

0:44

is kind of like a

0:46

road trip without a map. You might

0:49

get there, but it won't

0:51

be pretty. Wade and Alex

0:54

dive into the psychology of

0:56

financial planning, why a structured

0:59

approach matters, and how

1:01

considering your future self

1:03

can lead to better outcomes.

1:05

Hey, Wade, wait. And we're ready

1:07

to talk about having a framework for

1:10

a financial plan, which is going to

1:12

be a really important topic as we

1:14

get into the retirement income challenge at

1:17

retirement researcher on March 10th through March

1:19

13th. Before getting to all that, just

1:21

a few announcements for everyone. So the

1:24

2025 edition of the retirement planning guidebook

1:26

is now out there in the wild.

1:28

It's available. If you want a hard

1:30

copy that's paper back or hard cover,

1:33

those are available through Amazon. e-books are

1:35

available from a variety of outlets

1:37

and you can see the full

1:39

list at, well in the show

1:42

notes, but it'll point you to

1:44

books to read.com/retirement and that's the

1:47

number two. So books to number

1:49

two. Books to read.com/retirement. And other

1:51

news, on the day this comes

1:54

out, I'll be doing the tax

1:56

planning workshop the following day with

1:58

the retirement researcher. dive deep

2:00

into the whole tax planning conversation

2:03

and when you might realize long-term

2:05

capital gains at a potentially 0%

2:07

rate or maybe 15% if that's

2:09

beneficial and or looking at Roth

2:12

conversions and when there might be

2:14

opportunities to get the most power

2:16

out of your Roth conversions. Alex,

2:18

the other big announcement is we

2:21

do have the retirement income challenge

2:23

coming up. It'll be March 10th

2:25

through 13th. It's two hours a

2:27

day from 12 to 2 Eastern

2:30

time each day, so that's eight

2:32

hours with Wade and Alex and

2:34

Jason Rizcala and all the team

2:36

at retirement researcher. where we'll really

2:38

do a deep dive into making

2:41

sure you have a good financial

2:43

plan by the end of the

2:45

week using our funded ratio. Now

2:47

I mentioned funded ratio and that's

2:50

really kind of the end goal

2:52

of what we'd like to talk

2:54

about getting into these next couple

2:56

episodes is. really this idea of

2:59

building a framework around your retirement.

3:01

And in that regard, as I

3:03

know, we'll have a number of

3:05

excited fans on YouTube, this will

3:08

be more of an Alex-centric episode.

3:10

Alice is going to walk us

3:12

through why to even think about

3:14

having a framework as part of

3:16

the planning process. And so Alex,

3:19

you can listen to this at

3:21

five times feet. You're one of

3:23

the most humble guys I know

3:25

and did you refer to yourself

3:28

in the third person? I did

3:30

for the purposes and the challenges.

3:32

Oh for the purposes. The Weidmeister

3:34

is going to be a challenge.

3:37

The windmister. Yeah, no, we're kind

3:39

of leading these episodes up to

3:41

the challenge just because there's only

3:43

so much we can cover in

3:46

the challenge. I mean, we would

3:48

make it four hours a day.

3:50

Left to our own devices. But

3:52

we'll give you a little sprinkling

3:55

of what's to come because we

3:57

feel we feel very sanguine about.

3:59

the challenge when we run it.

4:01

And it's one of the most

4:03

professionally gratifying things we

4:06

do, frankly. I enjoy

4:08

it tremendously. So with that, we'd,

4:10

yeah, I recommend, go to the

4:12

show notes and sign up for

4:15

retirement income challenge. It's a nerd

4:17

party, if you will, of sorts.

4:19

Yeah, doing this, it's a lot

4:21

of fun. And we usually end

4:23

the week with 300 to 400

4:26

new financial plans. out in the

4:28

wild. So it's really gratifying in

4:30

that regard. All right, there

4:32

we go. Yeah, to start heading

4:34

us in that direction, Alex. So

4:36

I think maybe what's prompting this

4:38

episode in particular, a couple episodes

4:40

ago, I think two episodes back,

4:42

you let us do a look

4:44

at the year in review for

4:46

2024. And as we look back

4:48

in the past in 2024, we

4:51

can see that things end up.

4:53

working out, at least in terms

4:55

of the financial markets, at the

4:57

very least. But that's not necessarily

4:59

clear at the time. There's always

5:01

different things going on. And so, what should

5:03

we be thinking about just as we read

5:05

the news each day and we see all

5:07

these events happening? What do we do

5:10

about that? Well, I mean, before we

5:12

even get into the financial plan, we

5:14

need to be in a good mindset,

5:16

right? And I'll take a brow from I

5:18

know you. somewhere in the Bible or

5:20

something like that. But effectively I take

5:22

a page out of George Harrison's

5:25

This Two Shall Pass album. You know

5:27

that's that's really the too long didn't

5:29

read version. But when the news is

5:32

coming fast and furious like you know

5:34

we saw it 2024 and already first

5:36

first month and a half of this

5:38

year you're seeing that as well. It's

5:40

very easy to fall into the what's

5:43

going to happen next the world's going

5:45

to a hell in a ham basket or

5:47

the flip side is. happy times are

5:49

here again forever and ever and nothing

5:51

else will harm us you know kind of

5:54

kind of vibe and so you really want

5:56

to take a step back from all of

5:58

that and from a psychological perspective, there's

6:00

many ways to begin to interpret news

6:02

that could be jarring. And one of

6:05

the things that I've always gravitated towards

6:07

that, you know, stroke accord with me

6:09

when I heard it the first time

6:12

and was used a lot during my

6:14

training. And again, just for those of

6:16

you, I'm by education, I'm a clinical

6:19

psychologist, but I'm more of a research.

6:21

I wasn't necessarily a therapist, but you

6:23

are exposed to a lot of these

6:26

modalities, if you will. in the training

6:28

and something that always stroke a cord

6:30

that I've always tried to have in

6:33

my back pocket that's pretty interesting is

6:35

what's known as the rain model and

6:37

that speaks to actually a lot of

6:40

the things that are going on right

6:42

now you see a lot in mindfulness

6:44

and you see it a lot in

6:46

like the idea of being present right

6:49

and the rain model is interesting and

6:51

it stands for recognize allow investigate non-identification

6:53

and non-identification. Wait, did you think I

6:56

was going to get those in one

6:58

shot without like stumbling through them? Yeah,

7:00

that's great. Although we talked about before

7:03

the episode, pretty much my only role

7:05

was going to be to prompt you

7:07

on each letter. So you covered it.

7:10

Oh, OK. Now we're ready for your

7:12

hamlet. I'd be like, oh, what is

7:14

A again? No, no. But all right.

7:17

And so I'll go through these real

7:19

quick before we get into the plan

7:21

because. Before we can even talk about

7:24

planning and this and that, it has

7:26

to, you have to be able to

7:28

listen. You have to be able to

7:30

be able to, again, be in the

7:33

moment. If not, you come across like

7:35

those Charlie Brown cartoons when the teacher

7:37

is talking and it's just wah, wah,

7:40

wah. And you're just phased out because

7:42

you're thinking about something else that's happening

7:44

in the doom scroll. And so the

7:47

R is for recognize. And this is

7:49

where you purposely want to observe and

7:51

label what's going on inside of you.

7:54

There's nothing wrong with feeling stressful, you

7:56

know, but the difference is being owned

7:58

by that stress. one of the first

8:01

steps you can do is just the

8:03

recognition of it. You know, and

8:05

this goes back to, I'm not angry,

8:08

I'm not nervous, you know, those kind

8:10

of responses. Maybe you are, enough people

8:12

are telling you that, you know, who

8:14

knows, maybe they're onto something, right? And

8:17

so you want to be able to,

8:19

as a first step of the rain

8:21

model, recognize that something

8:23

is off, right? What is it that's

8:26

throwing off that feeling off that feeling?

8:28

The A is the allow. And

8:30

this is not necessarily trying

8:32

to actually now repress that

8:34

stress or just, you know, stamp

8:36

it down, but just, you know,

8:39

you're recognizing this there and then

8:41

acknowledging and accepting its presence.

8:43

You know, you're giving it permission

8:46

to feel it. And that's fine.

8:48

And in many ways, you know,

8:50

when you're going through that relaxation,

8:52

when you're trying to meditate... You're

8:55

not trying to fight the feelings, the

8:57

fleeting thoughts that are coming through your

8:59

head. You accept them and you let

9:01

them drift in and out, right? And

9:03

so that's a little bit of what

9:05

that allow is. There's a recognized allow.

9:07

You don't want to fight or deny

9:09

it, because that usually will just make

9:11

things worse. It'll exacerbate it. And

9:14

so the more you resist, the stronger it

9:16

may become, and you want to let it

9:18

breathe. Wait. Yeah, and then what just

9:20

so I is then, so we're recognizing,

9:22

allowing allowing. eye for investigate. There you

9:25

go. In Sacramento Peter Brown.

9:27

Yeah, you're right. Investigate. That's

9:29

when you're now trying to

9:31

gain insight into it. Right?

9:34

You've recognized it a lot.

9:36

Now you're investigating. What's going

9:38

on here? What was the

9:40

precursor that may have led to

9:42

this? Things along those lines. And

9:44

if you catch yourself doing this,

9:46

trying to get insight from it,

9:48

you become more measured. about it.

9:50

You know, you start thinking, okay,

9:53

what would it take for this

9:55

to be different? Those kind of things.

9:57

And again, this is one of these

9:59

things. that if you recognize that

10:01

this too shall pass theme, that

10:03

you'll draw from previous experiences and

10:06

you'll probably draw the similar conclusion

10:08

with regards to that. The other

10:10

one is non-identification, right? And this

10:12

is where you, you know, think

10:14

about how you feel as a

10:16

state or a trait. We brought

10:18

that up many times with the

10:20

reset, right? And most likely what

10:22

you're feeling as a state. And

10:25

so it's okay. You're not defined

10:27

by that. It's all right. You

10:29

know, you cannot will your thoughts

10:31

or feelings as they arise, but

10:33

you recognize them as they are.

10:35

You recognize that you're more than

10:37

your emotions. And that's very powerful,

10:39

because once you take the steps,

10:42

now you can have these feelings

10:44

without being a stimulus response person.

10:46

You know, you don't need to

10:48

act on them without thinking of

10:50

it, but you have to go

10:52

through this process first, and you'll

10:54

see that it'll pay off in

10:56

spades. And this is all leading

10:58

into the financial plan, because... You

11:01

want to be able to and

11:03

the every day there's always going

11:05

to be news That's going to

11:07

be jarring and if you know

11:09

if you don't give yourself that

11:11

chance They say freedom is the

11:13

space between stimulus response Well, what

11:15

we're trying to do is amplify

11:18

that freedom right here Right with

11:20

regards to the the rain model

11:22

if you will and once once

11:24

you can begin to do this

11:26

and I'm not I mean by

11:28

no means do I think listening

11:30

to me you know, two minutes

11:32

later, you're fine, right? But there

11:34

is a way. And if you

11:37

look into this, you'll find that

11:39

it can it can generalize very

11:41

well to many other things that

11:43

you're doing as I'm generalizing this

11:45

into the financial planning process. Okay.

11:47

So in that regard, then you're

11:49

talking about like centering yourself. being

11:51

able to take a step outside,

11:54

making sure that you're remembering that

11:56

this is just a state of

11:58

what's going on in the world.

12:00

Why is that really important then?

12:02

Is the new cycles really always

12:04

filtering us with new stories, new

12:06

concerns, new worries, negative news, and

12:08

so on and so forth? No,

12:11

absolutely right. We're creatures of habit.

12:13

If we're bombarded 24-7 with a certain

12:15

type of new cycle, it's hard to

12:17

really, you know, put yourself out there and

12:19

think, oh well, never mind, right? And

12:22

part of that is, really thinking

12:24

about it, we're not wired for

12:26

investing. We can't undo 300,000

12:28

years of evolution. And the

12:30

reality is we were made

12:32

to continue to live, you know,

12:34

to breathe air, you know, in

12:36

perpetuity, as far as we can

12:38

take it, not necessarily to be

12:41

successful investors. And what's made

12:43

us, you know, the Apex, whatever,

12:45

living organisms, if

12:47

you will, in the world, has

12:49

been very conducive to keeping us

12:52

alive, but not... for investing. And

12:54

I would point out there's three

12:56

things that I think really bring

12:59

home, bring this home. The first

13:01

one is loss aversion, our

13:03

use of mental shortcuts, and

13:06

the fact that we're gregarious

13:08

beings or more social beings. And

13:11

what do I mean by all

13:13

that? Loss aversion, you know, we're

13:15

two and a half times greater

13:17

than that of a game, right? And

13:19

so we're wired not to lose. And

13:21

you can take that to its

13:24

exclusive, you know, natural conclusion, which

13:26

is no pain, even physical, you

13:28

know, stay alive. And, you know, simply

13:30

put, when you heard a noise in

13:33

the Savannah, you ran first and then

13:35

asked questions later. It kept

13:37

you alive. Even though there was a lot

13:39

of, you know, type two errors, who type

13:41

one error, who cares, it kept you

13:44

alive, right? The other one, the mental

13:46

shortcuts. From that standpoint,

13:48

look. The brain will not, you will

13:50

not be able to function if you thought

13:53

out every single action that you take.

13:55

In investing, there's a 2 and 20,

13:57

right, where some hedge funds will charge you

13:59

2%. 20% of the profits, the real

14:01

two and 20 is the brain is

14:04

roughly 2% of your body weight, but

14:06

eats up roughly 20% of your calories.

14:08

So think about it. It's always functioning.

14:10

And if you thought this, you know,

14:12

this morning when you got up, did

14:14

you think, okay, now I'm going to

14:17

supinate my hands and grab the toothbrush

14:19

and now I'm going to pull it

14:21

towards me. Then with my other hand,

14:23

I am going to grab the... you

14:25

won't get past the day. Although I

14:27

think my younger son does that because

14:30

to get him out of the house

14:32

and not being made for school is

14:34

a challenge. But the reality is you

14:36

can't. You do things on automatic mode,

14:38

right? And so you have these mental

14:40

shortcuts, which again, if you're in Savannah,

14:43

you hear a noise, you're not going

14:45

to all of a sudden say, I

14:47

am going to thrust my hips to

14:49

the right. and you know start putting

14:51

my right foot down on the balls

14:53

of my feet and yet you don't

14:56

do that you just run along right

14:58

and so from an investing standpoint we

15:00

suffer from a lot of those mental

15:02

shortcuts that are sort of counterintuitive to

15:04

what a successful investor would do such

15:06

as the affinity effect right this is

15:09

where you see someone every day if

15:11

you see them every day and all

15:13

of a sudden you like them you

15:15

tend to trust them a little bit

15:17

more on things that they may not

15:19

be they may not have a competence

15:21

to provide advice on. You can see

15:24

that on CNN BC. After a while,

15:26

you kind of see, I'm gonna take

15:28

Jim Kramer not because I think poorly

15:30

or good about his investment advice for

15:32

the purposes of this podcast, but just

15:34

from the standpoint of that could be

15:37

somebody you see every day. And after

15:39

a while, he may be picking stocks

15:41

by just throwing darts, right? But you

15:43

hear him enough, all of a sudden

15:45

you think, hey, I like this guy

15:47

must know what he's talking about. So

15:50

that's a shortcut that you take so

15:52

you don't have to think through things

15:54

too much, which again for surviving is

15:56

great, but for investing not so great.

15:58

Recency effect. That's another shortcut, right? You

16:00

take what's happening now and you extrapolate

16:03

that into the future. I'm going to

16:05

revisit this when we talk about

16:07

the financial plan itself. Survivor ship

16:09

buys. You just remember all

16:11

the Bitcoin millionaires, but you

16:13

forget all the ones that lost money

16:15

off of it. Right? And even though

16:17

the numbers could be staggering on the

16:20

ones that lost money versus made money,

16:22

it doesn't it doesn't hit you the

16:24

same way. Right? And so those are

16:26

mental shortcuts that you begin to have.

16:28

Just because it... helps you be

16:30

more productive in the everyday of life.

16:33

If not, you'd just be stuck in

16:35

paralysis. And the last one that you

16:37

have to fight is we're social beings,

16:39

right? That's where you bring in

16:42

the herd mentality a little bit.

16:44

We're social beings. We like being in

16:46

groups. You know, the example I always

16:48

give is if you put a monkey

16:50

and myself in an island and you

16:52

come back a year, monkey will probably

16:55

be alive, I will not. If you put

16:57

20 human beings. in an island

16:59

and 20 monkeys, it'll be a

17:01

different story. Right? And so

17:03

that social fabric that we have

17:06

lends itself very well to surviving.

17:08

But sometimes you can be lemmings

17:10

going off a cliff, right? And

17:13

so that's where it becomes tricky

17:15

from an investing standpoint.

17:17

So we're great at surviving, but

17:19

poor investors. Now the trick is,

17:21

even though I've said all of this,

17:24

and you know, if you read

17:26

the Kahneman... books and all of

17:28

that and every behavior finance person

17:30

out there. Their conclusion is we have

17:32

these but you can't really overcome

17:34

them. They're just ingrained.

17:36

Remember you're fighting 300,000

17:39

years. Markets have only been

17:41

around roughly let's say 300 and

17:43

that's being generous 300 years.

17:45

Right. I'm going back to the you

17:47

know the Dutch if you will wait

17:49

from that perspective. Yeah, exactly right. I

17:52

was thinking more the ships. But yeah,

17:54

yeah, yeah, that kind of thing. But

17:56

the reality is, you're not going to

17:59

just overcome this. just because you've

18:01

read a book on it or

18:03

anything like that, right? And so

18:05

to me, the trick is having

18:08

a process and framework in place

18:10

to work from to give ourselves

18:12

the best chance of success. Similar

18:15

to that, any Duke book where,

18:17

you know, good decision doesn't necessarily

18:19

guarantee a good outcome, but if

18:21

you make enough good decisions over

18:24

time, you improve your probabilities, if

18:26

you will. So it's basically a

18:28

matter that what it takes to

18:31

survive in the short run, fleeing

18:33

danger and so forth. is really

18:35

the opposite of what it takes

18:38

to be a successful long-term investor,

18:40

which requires a process to overcome

18:42

all these behavioral instincts to flee

18:45

when the reality is staying the

18:47

course has always historically been a

18:49

better strategy. So could you talk

18:51

more about what exactly that process

18:54

is that you're referring to? If

18:56

you're looking for more personal advice,

18:58

take a look at this episode

19:01

sponsor. McLean Asset Management. You can

19:03

learn more of McLeanam.com. That's M.C.L.

19:05

E-A-N-A-M.com. McLean Asset Management is there

19:08

to help you on your path

19:10

to the retirement that you deserve.

19:12

And don't forget to check the

19:15

show notes to get your free

19:17

e-book on retirement income planning. Yeah,

19:19

it simply put. To me, that's

19:22

the financial planning process. begins to

19:24

incorporate a systematic way of thinking

19:26

through things as it as it

19:28

regarding dollar signs for your life.

19:31

This has nothing to do with

19:33

becoming a better person, you know,

19:35

in times of stress or anything

19:38

like that. This is just strictly

19:40

driven to anything that intersects money.

19:42

This is where the financial planning

19:45

process really serves as that counterbalance

19:47

balance to... you know to what

19:49

you're fighting against from the standpoint

19:52

of your your biases right it

19:54

provides the context as to why

19:56

you're investing you know then in

19:58

the background it does a lot

20:01

more than providing a framework because

20:03

the trick is it's it's actually

20:05

trying to amplify some of

20:08

the things that you that you

20:10

can incorporate and intervene to maybe

20:12

minimize to some extent

20:14

the biases by focusing on other

20:17

sort of human tendencies that

20:19

you have. So there it's focusing

20:21

on how to use behavioral insights

20:23

or insights from some of this

20:25

behavioral research to help manage the

20:27

biases that we're, we experience. Yeah,

20:29

that's a better way of saying

20:31

it. Exactly right. It's almost like

20:34

I'll use a pickleball example, right?

20:36

Wait. It's the third shot drop.

20:38

It's neutralizing the ball in the

20:40

kitchen when there's nothing there. You

20:42

know, it helps kind of reset

20:44

and level set. Now, some of

20:46

the things in the financial planning

20:48

process, so the financial planning process

20:50

serves up that framework and we could

20:52

get into the underlying framework of the

20:55

planning process, but really. a financial plan,

20:57

I think we get caught up in

20:59

a cash flow base plan and ledgers

21:01

and taking things to the fifth

21:03

decimal point, or we get cut

21:05

up in Monte Carlo. Oh, someone could

21:07

say, oh, Monte Carlo, oh, but you

21:09

know what, those inputs are terrible

21:11

and I don't trust anything with

21:14

lepto, curtic curves, you know, these kind

21:16

of distributions, you know, they get all

21:18

up in it like that, and to

21:20

me that's missing the forest for the

21:22

trees. At the end of the end

21:24

of the day, It is important, I'm

21:27

not saying it's not important,

21:29

but the true value of planning,

21:31

why everyone should engage in

21:33

a planning, are the things that

21:35

it helps neutralize. And it does

21:37

that by, let's, the first one

21:39

out there is backcasting. It

21:42

helps you backcast your future. And

21:44

what do I mean by that? That's,

21:46

you're working backwards from

21:48

an angle. It's the, what's

21:51

the Alice in Wonderland, Wonderland,

21:53

uh... If you don't know

21:55

where you're going, then anywhere

21:57

will do something like that. Right?

22:00

of that quote and the reality is

22:02

it's that I lose your weight I

22:04

think that the rabbit or the the

22:06

guy with a clock if you don't

22:08

know where you're going anywhere we'll do

22:11

something like that you know roughly speaking

22:13

and so backcasting helps stop that and

22:15

and what it really is it's If

22:17

you work backwards from an angle, then

22:19

you always have a reason for what

22:22

you're doing. You decide what you want

22:24

to describe as a successful outcome. It's

22:26

up to you. You decide it. What

22:28

Wade thinks is a successful outcome is

22:30

very different than what I want as

22:33

a successful outcome is very different than

22:35

what I want as a successful outcome,

22:37

etc. But you work backwards from there,

22:39

and you work how to systematically get

22:41

there. Because when you work backwards, it's

22:44

the step before that, and before you

22:46

know it. Here you are, right? And

22:48

now you've laid out that path, right?

22:50

And so you can always refer back

22:52

to that plan because you've done it

22:55

from a backcasting standpoint. And that's part

22:57

of the reason why we want to

22:59

do this, the retirement income challenge. It's

23:01

not good enough to just say, I'm

23:03

just going to use a million dollars

23:06

to say a million dollars. I have

23:08

a million dollars now, I'm getting ready

23:10

to retire in five years, and by

23:12

20 years, I want a lot more

23:14

than a million dollars. And I'll just

23:17

live my life with whatever's there. That's

23:19

effectively what I think is a default

23:21

financial plan for many, although it may

23:23

not be a million dollars, it's whatever

23:25

money it is, but that's what it

23:28

is. That's the same thinking. And you

23:30

don't want to do that. You really

23:32

want to give yourself what's the end

23:34

goal, now let's backtrack from there. And

23:36

that will reinforce the discipline needed in

23:39

times where you're going to be stressed

23:41

about things. That's the first thing that

23:43

I know that a financial plan does

23:45

that you see that it gives you

23:47

that sort of plan Regardless the fact

23:50

that you have a plan is is

23:52

an intervention in and of itself The

23:54

other piece and this has been coming

23:56

around a lot and that's the I've

23:58

even seen commercial of this now. Your

24:01

future self. You've seen that

24:03

right? What would your future self

24:05

think? I even used that with

24:07

my kid the other day. Grades

24:10

were coming in and I

24:12

said, look and imagine yourself

24:14

six years from now. Are

24:16

you doing yourself a favor

24:18

then? You know, similar conversations

24:20

to I'm sure your mom had with

24:22

you, Wade, right? About your grades.

24:24

or at least I've had with

24:26

my children as well. Yeah, yeah,

24:29

yeah. I assume, well, you're high

24:31

school, were you like an all-e

24:33

student? I assume you are, you're very

24:35

diligent. Were you like a pretty

24:38

much a 4.0? Yeah, yeah, I was

24:40

more diligent in high school. Oh, you

24:42

still are. But yeah, yeah. And so,

24:44

and the reality is, when you frame

24:46

things in your future self,

24:48

you're combating against temporal

24:51

discount. That's a fancy

24:53

way of saying it's hard for

24:55

people to think in to think

24:57

long term because the the the valence

25:00

of shorter term time arises

25:02

just overwhelmed longer term horizons.

25:04

And so by by thinking

25:07

in terms of your future version

25:09

you're really doing yourself a

25:11

great service. And what is a

25:14

financial plan? Remember through backcasting is

25:16

what do you want to accomplish

25:18

with this wealth? Where do you

25:20

want to be 25 years ago?

25:23

25 years from now. I'm using 25

25:25

years as a standard, but you can

25:27

say 10 years from now, 15 years

25:29

from now, whatever. And so that helps.

25:32

That mindset helps tremendously. And if you

25:34

think about your future self, what would

25:36

your future think? Then you're becoming

25:38

accountable to yourself in a manner

25:41

that's kind of interesting. And in

25:43

a manner that actually has results.

25:45

There's been a lot of work

25:47

with that and and I thought my

25:50

head I can't remember the folks that

25:52

did it, but it's the who's a

25:54

professor at UCLA Hal Hirschfeld

25:56

He's yeah, yeah, he's exactly he

25:59

started this this sort of, I

26:01

think he coined that term, frankly,

26:03

but it's a great simple concept,

26:05

construct that helps you really think

26:07

about it. Another, and so the

26:10

financial plan, you know, answers that

26:12

what about your future self, a

26:14

little hack when you're deciding to

26:16

do something, at least from a

26:18

financial planning standpoint, is to ask

26:20

yourself, how will you feel about

26:23

this in 10 minutes? How will

26:25

you feel about this in 10

26:27

months? How will you

26:29

feel about this in 10 years?

26:31

Right? You see the difference there?

26:33

Will your future self in 10

26:36

minutes? Thank you for this? If

26:38

you do something rash, the answer

26:40

is probably yes. If you do

26:43

something rash and you ask yourself

26:45

in 10 months, your answer is

26:47

probably, probably, I know it, I

26:50

can feel it. If you ask

26:52

yourself in 10 years, I think

26:54

at the very least you give

26:57

it. a significant amount of greater

26:59

contemplation. And so the plan really

27:01

helps emphasize your future version a

27:03

lot better than just not having

27:06

something. Because not having something, again,

27:08

you just tilt back to your

27:10

biases. You're quick, you know, you

27:13

don't want to think about it.

27:15

And so you're going to be

27:17

more intuitive about it. And as

27:20

much as you think you have

27:22

great intuition, I would say, yeah,

27:24

you probably do for surviving. But

27:26

not necessarily for being a great

27:29

investor, and I'm using investor to

27:31

generalize all things financial planning right

27:33

now. And the other piece is,

27:36

by thinking about your future self,

27:38

you're externalizing yourself. And that's what,

27:40

when we talked about the rain

27:43

model, that's effectively what's happening, right?

27:45

If you're all of a sudden

27:47

recognizing an emotion, you're allowing it

27:50

to exist inside of yourself, but

27:52

you're also giving it that separation,

27:54

saying this doesn't define me, let

27:56

me now investigate this a little

27:59

bit more. Right? You've

28:01

effectively, the financial

28:03

plan is beginning to

28:05

personify what the rain model should

28:07

be for you in many ways. And

28:10

so it's a very interesting

28:12

piece right there. And frankly, the

28:14

last one is it's a

28:17

rules-based decision-making process. And

28:19

go back to the rain

28:22

model, right? It's objective and

28:24

dispassionate. It's decision-making,

28:26

but it's pre-made during the times where

28:29

you were in the harbor, not in

28:31

the tempest. And that's where

28:33

you're going to naturally be

28:36

more rational about things, having

28:38

that decision-making process. And so,

28:40

to me, the financial plan

28:42

serves that financial planning

28:45

statement, if you will, where

28:47

you're pre-setting what to do. And

28:49

people do this on investing all the

28:51

time, right? Oh, I'm going to rebalance.

28:54

Not this month. Right? No,

28:56

you shouldn't. You should be

28:58

actually robotic about it, if

29:00

you will. And so to me, wait,

29:03

because you're hearing this,

29:05

and you know, if there was

29:07

ever a numbers guy, that would be

29:09

you, correct? We talked about the

29:11

benefits of a financial plan,

29:14

and I didn't discuss,

29:16

hey, is this cash flow versus

29:18

goals base, or within goals base,

29:20

are you doing? You know, Monty

29:22

Carlo and how many runs are you

29:25

doing and all of that stuff? I'm

29:27

not saying it's not important, but

29:29

to me, the most important

29:31

part of a financial plan is

29:34

you're giving yourself a quiver

29:36

full of arrows to help you against

29:38

your biases when the moment of

29:41

truth arises. Yeah, it's a form.

29:43

Commit yourself to following this plan

29:45

that you've created at a time

29:47

when there's not as much stress

29:50

so that you have the framework

29:52

to get through that stress.

29:54

And again, this is something

29:56

that we feel very passionate

29:58

about and I, I. I encourage everyone to

30:01

sign up for our retirement income challenge

30:03

where we're going to get into this

30:05

with more detail and we're going to

30:07

get into the nuts and bolts of

30:09

actually doing a plan as well. So

30:12

all of that will be in the

30:14

show notes and I highly encourage you.

30:16

Now, now a little teaser for the

30:18

next episode I would say is once

30:20

you have all of these in place,

30:23

what kind of framework is it beneficial

30:25

for you to lay out your financial

30:27

plan on? Right,

30:30

wait, is that a, did I

30:32

do a good cliffhanger? It didn't

30:34

sound that. It didn't sound that

30:36

like, ooh. Yeah, are we gonna

30:38

put some concreteness around this? Yeah,

30:40

but that would be your job

30:42

in the next episode, right, wait?

30:44

Yeah, and to follow up on

30:46

your Alice in Wonderland. So yes,

30:48

the Cheshire cat. So, one day

30:50

Alice came to a fork in

30:52

the road and saw a Cheshire

30:54

cat in a tree. Which road

30:56

do I take? Where do you

30:58

want to go? What's his response?

31:00

I don't know, Alice answered. Then,

31:02

said the cat, it doesn't matter.

31:04

Did I get it? I did

31:06

say rabbit, I think, so I

31:08

got it wrong. And that's it.

31:10

I didn't know. It was a

31:12

cat. Yeah, at least. Yeah, you

31:14

were. It was right. More or

31:16

less. I was right. I was

31:18

right. I was right. I was

31:20

right. I was right. It's good

31:22

enough for government work, if you're

31:24

asking horse shoes and hand grenades.

31:26

All right, everyone. Well, that's it

31:28

for this week's. Oh, no. We

31:30

do want to do a question.

31:32

Oh, yeah, right. Our new theme

31:34

here. So listener mail. Yes. Had

31:36

a very nice message that was

31:38

covering a number of topics, but

31:40

one that I thought was really

31:42

worth mentioning here. And it was

31:44

a reference in reference to reading

31:46

the retirement planning guidebook. So she

31:48

wrote, it's becoming increasingly obvious that

31:50

Medicare Advantage is a scam. you

31:52

should not be presenting it as

31:54

a rational option, since nearly everyone

31:56

who has it and gets seriously

31:58

ill, which is all of us

32:01

someday. Regret's signing up for it

32:03

as a bad financial deal they're

32:05

stuck with. Yeah, so that's good

32:07

feedback. Thank you. Wouldn't go so

32:09

far as calling it a scam,

32:11

though nonetheless. I hope I do

32:13

get the message across in the

32:15

retirement planning guidebook that at least

32:17

for risk-averse individuals, you really do

32:19

want to think seriously about original

32:21

Medicare with a comprehensive supplement. that

32:23

if you don't get your, also

32:25

known as Medicare, if you don't

32:27

get your Medicare supplement or Medicare,

32:29

when you're first eligible, you have

32:31

to go through underwriting at a

32:33

future date and you may not

32:35

be able to get it at

32:37

that point. So a lot of

32:39

people get enticed by Medicare Advantage.

32:41

That's the program that's running all

32:43

the commercials all the time. More

32:45

than half of Americans now use

32:47

Medicare Advantage. It could have, it's

32:49

kind of sold as lower premiums,

32:51

some additional benefits, things like maybe

32:53

dental coverage and so forth. I

32:55

care and so forth. But at

32:57

the end of the day, I

32:59

think the strategy people might have

33:01

is let's pay these lower costs

33:03

on Medicare Advantage while we're still

33:05

healthy someday if we get sick,

33:07

then I'll switch to original Medicare

33:09

with a supplement. the reality is

33:11

that that's not always feasible or

33:13

possible. And so in the long

33:15

run, if you're building that long-term

33:17

financial plan and your risk averse

33:19

and so forth, Medicare Advantage can

33:21

sound really great in the commercials,

33:23

but you really do want to

33:25

do your due diligence and research

33:27

about whether that's the right plan

33:29

for you. So I hope I

33:31

get that message across in the

33:34

book. I wouldn't call this scam,

33:36

but at the very least, I

33:38

do try to encourage people to

33:40

think twice before signing up for

33:42

Medicare Advantage. So what would your

33:44

future self say, Wade, if you

33:46

signed up for a Medicare advantage?

33:48

My future self would say, oh,

33:50

why didn't you just go with

33:52

originally Medicare plus a Plan G

33:54

supplement? You would have been so

33:56

much better off in the long

33:58

run. There you go. And would

34:00

you have the same intonations? Probably.

34:02

Wait and Alex are both principles

34:04

of McLean Asset

34:06

Management and

34:08

Retirement Researcher.

34:10

Both are SEC

34:13

registered investment advisors

34:16

located in Tyson's

34:19

Virginia. The opinions expressed

34:21

in this program are for

34:23

general informational and educational purposes

34:25

only, and are not intended

34:27

to provide specific advice or

34:29

recommendations for any individual or

34:31

on any specific securities.

34:34

To determine which investments may be

34:36

appropriate for you, consult your

34:38

financial advisor. All investing comes with

34:41

a risk, including risk of loss.

34:43

Past performance does not guarantee future

34:45

results.