Podcast Summary: The Stacking Benjamins Show – "Carving Out a Robust Retirement Spending Plan (SB1698)"

Release Date: June 20, 2025

Introduction

In this engaging episode of The Stacking Benjamins Show, hosts Joe Saul-Sehy and Doug delve into the crucial topic of retirement spending plans. Joined by three experts from the retirement planning community—Dana Anspach of Sensible Money, Carsten Jeske of Early Retirement Now, and Frank Vasquez of Risk Parity Radio—the conversation explores strategies for decumulation, portfolio structuring, safe withdrawal rates, and the emotional aspects of transitioning into retirement.

Guest Introductions

• Dana Anspach (Sensible Money): Specializes in helping individuals transition into retirement, emphasizing decumulation strategies.

  [02:58] Dana Anspach: "I'm doing great, Joe, and this is one of my favorite topics."

• Carsten Jeske (Early Retirement Now): Focuses on safe withdrawal rates and personal finance, sharing insights from his blog "Early Retirement Now."

  [04:34] Carsten Jeske: "I'm getting ready to travel soon, too."

• Frank Vasquez (Risk Parity Radio): Hosts a solo podcast discussing portfolio strategies, particularly for DIY investors in their accumulation phase.

  [07:28] Frank Vasquez: "I am doing well. I'm doing well."

Understanding Decumulation and Portfolio Transition

Dana Anspach emphasizes the importance of adjusting one's portfolio as retirement approaches:

[14:09] Dana Anspach: "One of the first things to know is that what got you here may not be the best portfolio to get you there."

She likens the transition from accumulation to decumulation to switching from a high-performance sports car to a reliable SUV—highlighting the need for a portfolio that can navigate various economic terrains.

Frank Vasquez introduces the concept of "frugality inertia," referencing Morgan Housel's work, to describe the difficulty individuals face in shifting from saving to spending mindsets.

[16:39] Frank Vasquez: "That pertains particularly to people who have spent most of their life saving money and just changing their focus and changing their goals is very difficult for a lot of people."

Safe Withdrawal Rates and the 4% Rule

Carsten Jeske discusses the limitations of the 4% rule, advocating for customization based on personal circumstances:

[26:57] Carsten Jeske: "The first 4% rule is not gospel. It's not written in stone anywhere."

He highlights factors such as age at retirement, expected supplemental income (like Social Security), and personal spending patterns that necessitate a tailored approach to withdrawal rates.

Dana Anspach introduces the "lifetime 4% rule," which accounts for lump-sum expenses and varying spending needs throughout retirement:

[39:19] Dana Anspach: "We account for it by using what I call the lifetime 4% rule."

Portfolio Strategies: Risk Parity vs. Traditional Allocation

Frank Vasquez champions the risk parity approach, emphasizing diversification across uncorrelated assets to mitigate sequence of return risk:

[23:56] Frank Vasquez: "These portfolios typically have a stock allocation, a Treasury bond allocation, and then some allocation to alternatives."

He contrasts this with traditional 60/40 portfolios, noting that risk parity portfolios historically experience shorter and less severe drawdowns.

Carsten Jeske shares skepticism towards complex strategies like risk parity and commodity ETFs, advocating for simplicity:

[65:16] Carsten Jeske: "I prefer simplicity. I like broad indexes. So something like anywhere between 60 and 70% equities. The rest in bonds."

He criticizes the underperformance and high volatility of retail-focused commodity ETFs, urging investors to stick with straightforward, diversified index funds.

Behavioral Aspects and Cognitive Changes in Retirement

Dana Anspach underscores the emotional and cognitive challenges that can arise in retirement, such as changes in financial decision-making abilities:

[77:34] Dana Anspach: "We underestimate the cognitive changes that we might experience as we age."

She advocates for involving spouses and family members in financial planning to mitigate the impact of potential cognitive decline.

Frank Vasquez and Carsten Jeske echo the importance of addressing psychological factors, emphasizing that tools like bucket strategies often serve as psychological aids rather than robust financial solutions.

Misconceptions in Retirement Planning

Frank Vasquez identifies the misconception that maintaining a large cash reserve can effectively manage retirement risks:

[74:12] Frank Vasquez: "Their biggest misconception is the way to deal with all their problems is to have a big pile of cash."

Carsten Jeske criticizes the bucket strategy for implicitly attempting to time the market, which he argues is counterproductive for most DIY investors:

[75:58] Carsten Jeske: "People think they can time the market because this is what a bucket strategy implicitly tries to do."

Annuities and Guaranteed Income Streams

Dana Anspach discusses the role of annuities and Social Security as tools to hedge against longevity risk and provide inflation-adjusted income:

[70:37] Dana Anspach: "Annuities can help protect against the risk of living long and provide guaranteed income."

However, she cautions against viewing annuities purely as investment alternatives due to concerns about fees and the reliability of insurance company guarantees.

Joe Saul-Sehy shares his frustration with deferred annuities, highlighting their high fees and the tendency for individuals to hesitate in tapping into these funds:

[72:36] Joe Saul-Sehy: "You're going to put the money in, you're never going to take it out."

Final Thoughts and Key Takeaways

Doug wraps up the episode by summarizing key lessons:

1. Start with the End in Mind: Define your retirement spending goals to avoid common pitfalls.
2. Be Cautious with Special Products: Annuities may offer benefits but come with high fees and should be considered carefully.
3. Understand Your Portfolio’s Achilles Heel: No strategy is foolproof; recognize and plan for potential weaknesses.

[87:09] Doug: "First, begin with the end in mind. When you know what type of spending you're looking at, you're more likely to avoid mistakes."

Conclusion

This episode of The Stacking Benjamins Show provides a comprehensive exploration of retirement spending plans, emphasizing the need for personalized strategies, portfolio diversification, and awareness of both financial and behavioral challenges. The panel of experts offers valuable insights into safe withdrawal rates, the drawbacks of overly complex portfolio strategies, and the importance of emotional preparedness in retirement planning.

Notable Quotes

• Dana Anspach: "[14:09] One of the first things to know is that what got you here may not be the best portfolio to get you there."

• Frank Vasquez: "[16:39] That pertains particularly to people who have spent most of their life saving money and just changing their focus and changing their goals is very difficult for a lot of people."

• Carsten Jeske: "[26:57] The first 4% rule is not gospel. It's not written in stone anywhere."

• Dana Anspach: "[39:19] We account for it by using what I call the lifetime 4% rule."

• Frank Vasquez: "[74:12] Their biggest misconception is the way to deal with all their problems is to have a big pile of cash."

• Carsten Jeske: "[75:58] People think they can time the market because this is what a bucket strategy implicitly tries to do."

• Dana Anspach: "[70:37] Annuities can help protect against the risk of living long and provide guaranteed income."

For more insights and in-depth discussions on personal finance and retirement planning, visit StackingBenjamins.com and explore their extensive resources and upcoming webinars.