Carving Out a Robust Retirement Spending Plan (SB1698)

Summary

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

Release Date: June 20, 2025

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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.

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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."

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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."

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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."

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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.

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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.

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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."

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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."

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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."

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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.

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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."

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

Transcript

[Joe Saul-Sehy]

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[Doug]

In some kind of fruit company and so then I got a call from.

[Frank Vasquez]

Him saying we don't have to worry.

[Doug]

About money no more. And I said, that's good.

[Frank Vasquez]

One less thing.

[Doug]

Live from the basement of the YouTube headquarters, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor, Doug, and what's the best way to take money from your portfolio during your retirement years? We're talking decumulation with three top minds from the retirement planning community. From how to frame your retirement spending to setting up your assets for the most success, and all the way to safe withdrawal rates, we're covering as much as we can cram in today. That's right. No trivia challenge, no game show, just a guide to help you plan out how to rethink that retirement year's portfolio and spending plan. And now a guy whose spending plan is all focused on exploring the world. It's Joe Saul. Se.

[Joe Saul-Sehy]

Hey there Stackers, and Happy Friday to you. I'm super excited that you're here with us, Doug. You got that right. I, as you're listening to this, am just ending what I'm sure is going to suck as we record this. I'll just be coming home from Greece, which, oh, I don't know how I'm going to even do that. But I'm not there yet as we record it because we've got this important discussion about retirement. So let's Meet our contributors. Let's start with the closest thing to a regular that we have on this panel. Dana Anspas here from Sensible Money. How are you, Dana?

[Dana Anspach]

I'm doing great, Joe, and this is one of my favorite topics. As you know, I love all things that have to do with decumulation, that word that oftentimes they tell us we're not supposed to use because it sounds so scary.

[Frank Vasquez]

Oh.

[Joe Saul-Sehy]

But you know what's funny, Dana? If you do it wrong, and we'll get into this a little bit, it can be scary.

[Dana Anspach]

Absolutely right. You work hard to save this nest egg, and then one day you're supposed to draw it out. And I have very sophisticated people I've worked with that. Honestly, they get terrified about taking that first withdrawal. So it is scary. No matter how well you do your planning, I think fundamentally, it's scary.

[Joe Saul-Sehy]

I think in this case, a little bit of fear is good because you really need to plan how to change your portfolio, which we'll dive into today, by the way. The million dollar question. Dana, for people that are not hanging out with us on YouTube, you're always walking and talking. You're not walking today. What's going on?

[Dana Anspach]

I'm not. I needed a break. I am planning for a big hiking trip in the Swiss Alps, and I've had enough walking for a while.

[Joe Saul-Sehy]

She's like, hand cut. I'm not going to do it. Generally, people that are new to the Stacking Benjamin Show, Dana's on like, a walking treadmill, like, walking, walking down.

[Dana Anspach]

And I'm actually sitting on that treadmill on a stool right now. That tells you my feet have had enough. I need a break.

[Joe Saul-Sehy]

Perfect. Well, and. And these next two gentlemen, let's start with a guy who I've known for a few years. We met at a campfire outside of San Diego. They call him Big Earn. He's Carsten Jeske from early retirement. Now Carsten Jeske's here. How are you, man?

[Carsten Jeske]

Thanks for having me. I'm doing great. I'm getting ready to travel soon, too.

[Joe Saul-Sehy]

So we're all traveling. So we got the Alps, we got Greece. Where are you going?

[Carsten Jeske]

We're doing two or actually three big trips. We're going to do a cruise to Alaska. Also spend a few days in the Olympic Peninsula, then fly to Asia for four weeks and come back to home again for a few days. And then we take another trip. We fly to New York City and then take a cruise ship from New York to Nova Scotia, Greenland and Iceland, and then fly back from Reykjavik and check out the Blue Lagoon there, too. And so it's going to be pretty packed. Summer.

[Joe Saul-Sehy]

What are you doing, man? I mean, you are never home.

[Carsten Jeske]

Yeah, I mean, and we were thinking about basically renting out the place, but there's HOA rules against that, so can't do that. Or at least I won't tell it publicly. So if I ever do it, I have to keep it a secret.

[Joe Saul-Sehy]

That is the perfect money nerd thing, though. I was thinking about Airbnb. Yes. But I can't. Like, our first thing is that I'm going to enjoy my vacation. The first thing is how can I go on vacation and profit from it at the same time? That's. And, and now for. Because it's your first time here. All of our uber nerds in the financial independence retire early space know what you do. But tell everybody else in Stacker Land, Carsten, what you do as Big Urn.

[Carsten Jeske]

Right. So I started blogging in 2016, and I blog a lot about safe withdrawal rates, but it's not the only thing. So it's not like I'm a one trick pony. I do some other stuff, too. I just write about anything in personal finance. I write sometimes some economics commentary too. So option trading is probably maybe my second favorite topic to talk about, but that's a whole different story. But yeah, I mean, my background is in finance and I retired from that. But of course, you can never let go of that hobby. So you're still involved. I still look at the market every day. It's almost like reading People magazine. Right. So you keep up with your gossip here and there, and for me, it's like a People magazine, but with stocks and inflation reports and GDP numbers and.

[Joe Saul-Sehy]

So that's very sexy stuff.

[Carsten Jeske]

That's my hobby.

[Joe Saul-Sehy]

Very sexy stuff for money nerds. You know, Carsten, actually the only reason I had you here was to chide you for writing at early retirement now about calling me a small cap value fanboy.

[Carsten Jeske]

Oh. Oh, okay.

[Joe Saul-Sehy]

I wanted to have you here to chide you for that. Not a fanboy of anything. I'm like, what the hell, man?

[Carsten Jeske]

I thought, I don't know how I put you into this camp. Maybe you had some comment on some Facebook thread somewhere where I misread something you said there. So I apologize for that.

[Joe Saul-Sehy]

I said you should have some small cap value and all of a sudden it's like, I have Duran Duran posters, but they're small cap value decorating mom's basement here. Yeah. And another guy who got called by you a small Cap Value fanboy, I think he's the host of Risk Parody Radio. He and I have been in the same room, like, 57 times, but we've never, ever actually shaken hands. So it's about time. Frank Vasquez is here. How are you, Uncle Frank?

[Frank Vasquez]

I am doing well. I'm doing well.

[Joe Saul-Sehy]

Well, tell everybody about Risk Parity Radio, because you take this topic we're talking about today, and you deep dive.

[Frank Vasquez]

Yes, well, it's my retirement hobby. I started it in 2020. All we talk about are portfolio strategies, particular for do it yourself investors who are in their accumulation phase. I end up having lots of conversations with listeners. It's a solo podcast. It's just. It's just me and Mary. It's. It's not commercial, but we do support a charity that I also sit on the board of, which it takes up a lot of my time, which is called the Father McKenna Center. And we are having a matching promotion for the Father McKenna center because one of my listeners decided to donate, put up $15,000 to get other listeners to match. And so we are. I love that we're pumping that now, and. And the money's rolling in. So it's a great charity. It supports hungry and homeless people in Washington, D.C. and has about a thousand volunteers every year with their high school students and college students mostly. So.

[Joe Saul-Sehy]

That's fabulous, Frank. Yeah, that's fantastic.

[Frank Vasquez]

Those two things are integrated with and, by the way.

[Joe Saul-Sehy]

And Risk Parody Radio, I think, is the only podcast with more sound effects than the Stacking Benjamin Show.

[Frank Vasquez]

Oh, yeah. Well, I learned from you. I learned from the best.

[Joe Saul-Sehy]

Let's stop. Keep going. Stop, stop, stop.

[Carsten Jeske]

Yeah.

[Frank Vasquez]

And my listener, like, send in their emails designed to get one. A particular one. One of the most favored ones is Homer Simpson saying, you have a gambling problem, which is what I play. Whenever somebody starts talking about leverage, I'm.

[Joe Saul-Sehy]

Like, whenever you hear Karsten talking about options, that's when you play, right then.

[Frank Vasquez]

Yeah, well, he has a gambling problem, too.

[Carsten Jeske]

My favorite one is, I award you 0 points, and may God have mercy on you. I might say that a few times.

[Joe Saul-Sehy]

And, Dana, I accidentally assumed everybody knows what you do, but I skipped over that. But you work specifically with people that are either entering this phase or they're in this accumulation phase.

[Dana Anspach]

Yes. So my company, Sensible Money, works almost exclusively with people transitioning into retirement. We wish people would start working with us five to 10 years out from their retirement date, but oftentimes it's, you know, the year before, three, four days before. Yeah. And so we Work with the people who want to delegate or people who have been do it yourselfers. And then the complexity of retirement, it does get more complex at that point. And so they decide maybe it's time for them to delegate. I'm a big fan though. You know, whether you do it yourself or want someone to help you do it or delegate, it's all if you're following good principles. At the root of it is good advice is good advice.

[Joe Saul-Sehy]

Well, I'm thinking with the three of you, we're going to get some great advice today for our stackers. Whether you're 35 and you're just beginning to think about this, it's great to know ahead of time where you're headed or you're there. Now we're going to have a great discussion, so can't wait to dive in with Dana, Carsten and Frank. We're going to kick this off in just a second, but we've got a couple sponsors that make sure we can keep on keeping on and you don't have to pay a dime for these wonderful people that we bring to you today. So we're going to hear from them and then let's talk accumulation phase. I should. We should play some Dana, some dun dun music based on the fact you said that scares people.

[Dana Anspach]

Yeah. Do we need like Halloween scary music?

[Joe Saul-Sehy]

Yeah. Come on, Steve, give us that music. This episode is brought to you by Navy Federal Credit Union. With rising house prices and steeper mortgage rates, we know homeownership may seem too expensive to be achievable. But that's why we offer a Home Buyer's Choice loan that can open the door to affordable home ownership. Our Home Buyer's Choice loan is no down payment options available, which means you don't need to wait years to save money. And with our no refi rate drop, you may be able to lower your rate in the future without refinancing. Plus, most lenders require borrowers to purchase private mortgage insurance unless they can make a 20% down payment. We don't require PMI. Finally, we offer fixed payments, so your monthly payment will always be the same. So if you're looking for your first home or your next home, you can open the door with the Navy Federal Home Buyer's Choice loan. Visit navy federal.org to learn how you can achieve home ownership. Navy Federal Credit Union. Our members are the mission. Terms and conditions apply. Equal housing lender loans subject to approval and eligibility requirements. Learn more@navy federal.org I know personally the debt isn't just about money. It's about stress and sleepless nights and that constant weight on your shoulders. It can affect your relationships. It can shred your confidence. Truly. It can overshadow your whole life. So know that if you've ever felt any of that, you're not alone. There are millions of Americans struggling with debt. But there's a solution that can help. Beyond Finance was founded with a simple mission to help those struggling with overwhelming debt find a pathway to financial freedom. They can help you escape that endless cycle of making just minimum payments. Typical Beyond Finance clients see their payments on enrolled debt lowered by 40% or more. So you can expect immediate relief and the chance to start saving. The team prioritizes a hands on compassionate approach coupled with a focus on helping you get out of debt as soon as possible, save money and establish long term financial well being. They offer personalized 24, 7 support and financial wellness sessions with accredited financial therapist. And you know you're in good hands with a trust pilot rating of 4.6 out of 5 stars. So if you're ready to take that first step or learn more about achieving financial wellness, visit Beyond Finance. Not available in all states. Fees vary by state. Results may vary. Well, I think to really kick this off, Dana, let's start with you because you have to kind of define this with regular people. When they walk into your office, you know, maybe they've been saving for a long time and they're, they're like, okay, I just do more of the same. When somebody first walks into your office and they're on the cusp of retirement though, what's the first thing you want them to understand about changing their portfolio so they can start spending down their money?

[Dana Anspach]

Yeah, I think one of the first things to know is that what got you here may not be the best portfolio to get you there. Portfolios are constructed with goals and objectives in mind. And a portfolio for accumulation is built around a certain set of risk and return metrics. And a portfolio built for sustainable cash flow will actually have a different set of metrics. So there's an analogy I use sometimes around sports cars, or actually more than sports cars. I am still in a Ferrari portfolio. I am currently 100% equity. I'm more than 10 years from retirement. I'm comfortable with equity risk. I want to maximize returns for a given level of risk and I'm very comfortable with risk. But as I get closer to retirement, my portfolio will change. And what should it look like? So using a car analogy, you could go with an economy car, right? You could say, well, that's maximum fuel efficiency. Maybe that's more conservative. Right. I'm going to use the least amount of fuel along the way, and I want to see if I can maximize what I leave to heirs one day. But that portfolio may not be the right one to get you through stormy weather. And so the one I like for retirement is more like the suv. And it may not be the most fuel efficient, it may not be the fastest, but you don't know what kind of weather you're going to encounter. You could have a big storm, you could have mud, you could have snow, you could have rain. And so you need a portfolio that can get you through all kinds of terrain. And thinking that way is different. And I find that some people struggle with making that shift. They still want to go find the latest stock or the latest way to boost their returns.

[Joe Saul-Sehy]

And.

[Dana Anspach]

And that may not be the right lens to view retirement through.

[Joe Saul-Sehy]

I love that analogy because we also don't know where the journey's going to head. I mean, we don't know what terrain is coming ahead, and we're going to dive into that in a second. I want to ask, before we get into numbers and planning, though, about this emotion, because there's really frank, there's an emotional shift that happens here. You and I at conferences, we see these people that suffer from one more year syndrome. Right. I mean, that's an emotional thing. How hard is it for somebody to shift from this I've been saving my whole life mindset into a spending mindset.

[Frank Vasquez]

It varies from person to person. But Morgan Housel has actually an interesting term for this. He calls it frugality inertia. And it's going to be featured in the book he's got coming out, which is about the art of spending money. It's coming out in October.

[Joe Saul-Sehy]

I love it. Frugality inertia.

[Frank Vasquez]

Yes. That pertains particularly to people who have spent most of their life saving money and just changing their focus and changing their goals, if you will, I think is very difficult for a lot of people, particularly if they've been really good at saving money. Because you kind of. You feel better watching the number go up.

[Joe Saul-Sehy]

Sure.

[Frank Vasquez]

But it can become like this idol that you just worse. Oh, numbers got to go up. And that's what's important. I've seen your presentations about a guy just sitting in front of the TV watching CSNBC all day long. Oh, God.

[Joe Saul-Sehy]

Yeah.

[Frank Vasquez]

That's not a good way to live your retirement. That you need to come to a conclusion in your head that you actually do have enough and stop with that and then start focusing on how can I best deploy or spend these resources over the rest of my life to usually maximize relationships is what you're really.

[Joe Saul-Sehy]

Trying to do 100%. And Carsten, I love the point that Frank made. You know, when you're looking at safe maximum withdrawal rate, you can tell somebody, I remember when I was a financial planner, I could tell somebody that I've calculated this out and you're going to be okay. But watching your number drop from month to month to month to month to month still manages to scare the hell out of people.

[Carsten Jeske]

Yeah. And that's why everybody is afraid of retirement. So the analogy what I would use is you are in a canoe and if you are accumulating, you are paddling downstream. Right. Sometimes the stream just takes you. You don't even have to paddle, sometimes you paddle, which would be your contributions. And retirement is like you are now paddling upstream and there's a waterfall behind you. Okay, yeah, you could stop paddling and it will take you backwards and you kind of cross your fingers that you die before you go over the waterfall. And that would be the analogy. And this is why it's so small, scary in retirement, right? Because it's the same asset market, it's the same tools that you use. You use the same stock portfolios, the same stock mutual funds, the same bond mutual funds as during accumulation, but by shifting around from accumulation to decumulation. That's where the scary part starts. And I also believe that, I mean, a lot of people don't retire because, yeah, I mean, they've heard about the 4% rule and they kind of sort of agree with it. I have actually had some success in telling people, look, I've run these retirement simulations and you would have survived the Great depression or the 1960s and 70s, and if you survive that, you're going to survive the next garden variety recession too. And there were some people that retired and they said, yeah, I mean, I wasn't quite sure, but Big Earn said, I'm good to go. And then they did retire. So I think in some way the math sets you free and makes you confident to retire, whereas trying to wing it, which is what some people do. And some people do it in our community, in the fire community, and they can afford it, right, because they're still making money off of their blog and everything. They don't even have to withdraw much from their portfolio. And then they tell people, oh, don't worry about it, I'll do 4% and everything falls into place. Yeah, but the average typical person, right, the 99% of fire enthusiasts, they still have to take money out of their portfolio and that's a big step. And as I said, so the math sets you free. And at least it helps for some people, maybe not for everybody.

[Frank Vasquez]

I think that's important, that idea of stress testing. I'm sure you probably use that Dana too, saying, let's look at the worst times to retire and see what would have happened with this plan we've come up with.

[Dana Anspach]

Yeah, I mean, the math does set you free. I've never used that line before. I like it. I think there's some inherent biases in math that people don't understand when it's simple math, like the 4% rule. And unfortunately, as you start to use more complicated math that may get you better answers, it becomes more challenging for people to understand the math.

[Joe Saul-Sehy]

Yeah, 100%. And I'm going to want to cover the 4% rule. Cover actually what this idea, Frank, of risk parity even is safe withdrawal rates. But before we get to any of that, Carsten, you said surviving the 70s. Are you talking about surviving a bad market or surviving disco? Like, which, what are we referring to?

[Frank Vasquez]

Stay alive.

[Joe Saul-Sehy]

Frank's like, what disco died? What are you talking about?

[Carsten Jeske]

It's all coming back, guys. It's all coming back.

[Joe Saul-Sehy]

It is.

[Carsten Jeske]

Yeah. So I mean, obviously I was talking about. And again, it's the late 60s, early 70s, it's the great Depression. Who knows what's ahead for us, Right? Because we have very expensive equities. And just when people get complacent and they say that, oh, now we don't have to worry about any blow up in the stock market anymore. That's when things get the most dangerous. So in some way, my blog is a little bit of a countercyclical blog where if the stock market drops a lot, then everybody wants to book me on the podcast. So is fire finished now? And that's actually when I tell people, well, now we have the least to worry about. Right? Because the stock market is already down. I mean, as we're recording this, we're actually close to the all time highs again. But normally when people want to talk to me is when the stock market is 20, 30% down. And then I tell people, yeah, I mean, now is a great time to retire. And the 4% rule is super safe because what are the odds that we tag on another Great Depression on top of the the 20% drop already? So.

[Joe Saul-Sehy]

But still, Carsten, we did a history show a Couple weeks ago, and we were talking about some of these long periods that we went through. And, you know, you have these people out there that always say, buy the dip or don't worry, it'll come back.

[Carsten Jeske]

Right?

[Joe Saul-Sehy]

And in some of these big time, long, long, long downturns, I mean, there was good news and bad news. The good news is it came back. But in one stretch, it came back 16 years later, like, I can't imagine data going, I got some good news. You hang in there for 16 years, you're going to be back to zero. That is ugly. But I want to bring in these terms that we've been throwing around. Frank, let's talk risk parity. So risk parity, often seen as this alternative to the, you know, traditional like 60, 40 portfolio. Another rule of thumb. Portfolio. Right. Why might somebody consider risk parity during their decumulation period?

[Frank Vasquez]

Well, to go with Dana's analogy, I'm trying to build a Toyota 4Runner to take into retirement. Basically, the colloquial use of risk parity now is for a portfolio that is focused really on what is called Ray Dalio's Holy Grail principle, which is a principle of diversification, looking for the most uncorrelated assets to combine. So a basic idea from those principles would be looking at our bonds in our portfolio. What kind of bonds do we want to have? And so your question is, well, what kind of bonds are less correlated to all the other things we have, which are mostly stocks? The answer is U.S. treasury bonds. So those are the kinds of bonds we would want to have, and that would be the kind of choice we would make on that. So it puts a preeminence on the diversification of the assets themselves and combining them in that way. And so these portfolios typically have a stock allocation, a Treasury bond allocation, and then some allocation to alternatives which usually.

[Joe Saul-Sehy]

Go ahead, make a statement. Frank, can you tell me if this is right or not? So instead of a portfolio where you have more money in cash to manage risk, a lot of cash, you're managing risk by keeping money in things that have the ability to grow, but matching them with things where it's like an engine, one part goes up, one part goes down. So you're not sinking the portfolio even though you've got more. More upside potential.

[Frank Vasquez]

Yes, exactly. So I want an asset allocation that's like my four wheel drive and one that's like the fog lights, so that when looking at a portfolio over a span of years, there's always something that's going up in it, not Just sitting there in cash, but always going up. The reason cash causes a problem goes back to Bill Bengan's research in the 1990s, which was if you have too much cash in a portfolio, it tends to cause what's called a cash drag. And that number seems to be around 10%. Once you start going over that, your safe withdrawal rate generally declines. And what I try to build is portfolios that have the highest historical and projected safe withdrawal rates. That's, that's the ultimate goal.

[Joe Saul-Sehy]

And I'm laughing, Frank, because back when I was a planner, people come into my office and I, I would be like, why do you have so much cash? And they go, because I want to be safe. And I said, well, you've got some good news. You're safely not going to achieve any goals.

[Frank Vasquez]

Yeah, you're, you're, you're, you're, you're going to be very safe for the next five to 10 years. But 20 years hence, you may have a growth problem or another problem going.

[Joe Saul-Sehy]

To safely buy less bread for the rest of your life.

[Frank Vasquez]

Yeah, no, but it's, but it's interesting. One of the other things you said, you know, you might have as long as a 13 year downturn. The difference between this kind of portfolio is specific to that, that if you look at say a 6040 portfolio or a simple stock bond boglehead thing, that will have a drawdown, say from 1999 to 2013 of like 13 years. If you take a portfolio, a risk parity style portfolio, the maximum drawdowns you're going to see are three to four years. And instead of having a 40% decline, you're going to be looking at more like a 20% decline. Both of those things play directly into a higher safe withdrawal rate. So that's, if you're, if you're just looking at portfolios, if you know what their maximum drawdowns are in terms of length and in terms of depth, you know, whether that's going to be, is that an SUV or not? That's what the SUVs look like.

[Joe Saul-Sehy]

I love the analogies. I like the SUV. I like the canoe. The canoe scares me with the waterfall a little bit. But, but like we, like, we open with.

[Frank Vasquez]

At least you get a paddle.

[Joe Saul-Sehy]

You need to get a little more scientific here, though. And so having that waterfall behind you, if you're not scientific, I think there's a, you know, there's kind of a safe here. All right, Carsten, let's go to you. Dana brought up the 4% rule, so you've done one of the deepest dives in safe withdrawal rates in history. I what do most people get wrong when they hear this 4% rule?

[Carsten Jeske]

So the first 4% rule is not gospel. It's not written in stone anywhere. I think the 4% rule has to be customized in at least two dimensions. First is your personal preferences, your parameters. If you retire today and you're in your early 30s and you don't expect any Social Security, any supplemental income, you probably have to take down the 4% rule because just because your horizon is much longer, you don't expect any supplemental, supplemental cash flows again. And I'm not talking about the fire influencers, I'm talking about everyday early retirement enthusiasts. They might retire in their mid to late 40s, early 50s. They have Social Security around the corner. If you factor in future supplemental cash flows like Social Security, pensions, if you can factor in something like a spending reduction, right? I mean you have the go years, the slow go years and the no go years, especially a lot of the high income and high net worth early retirees. They might retire and have a retirement budget of 150 or $200,000. Well, they're probably going to scale that down when they are later in their 75, 80 years old. It may not be true for the early retirees who retire at age 28 with $500,000 in the stock borrow for them. It might go the other way around. They might spend more as they age. But I'm talking about.

[Joe Saul-Sehy]

Wait a minute, wait a minute, hold on. I got to stop there for a second. Are you implying, Karsten, that a 28 year old with half a million dollars who promises you they're happy sleeping in a tent in the woods for the rest of their life might change their mind later? Is that what you're inferring?

[Carsten Jeske]

Right? I mean, maybe they will not sleep in the tent anymore when they're 67. So I again, I'm walking out on.

[Frank Vasquez]

Olympia, eating a steady diet of government cheese and living in a van down by the river, right? Sorry to interrupt.

[Joe Saul-Sehy]

It had to be said, Frank.

[Carsten Jeske]

So you customize your withdrawals and you factor in some of these personal parameters, boom, your withdrawal rate might go up quite substantially, might go from maybe the mid 3s to the mid 4s and then the other way you want to customize your retirement is looking at market conditions, right? You have a very different safe withdrawal rate if the CAPE ratio is at 30 versus at 12. Equity valuations matter, the probability of a big market blow up is a lot worse. In today's Cape environment than if the market has already fallen and the CAPE is in the single digits.

[Joe Saul-Sehy]

Okay, hold On a second, Mr. Jeske, because either a. I'm going to have to edit that out, which I'm not going to do. I'm saying this because, because for our stackers, all of a sudden you just said Cape ratio like it's. Like it's nothing. Just threw this out there. If your CAPE is this, what the hell does that mean? What are you talking about?

[Carsten Jeske]

CAPE is the cyclically adjusted price earnings ratio. So it's a valuation measure. How many multiples of aver earnings is the S&P 500 trading at right now? So in the high Cape ratio, say in the high 20s or 30s, seems expensive and has higher probability of a big recession on bear market around the corner.

[Joe Saul-Sehy]

This is a risk measure. This is a measure of risk in the market.

[Carsten Jeske]

It's both. It's a risk and a valuation measure. Right. So it's a risk measure in the sense that. So in some way, I mean some of the calmest markets have been around the time when the CAPE was really high. But it's kind of the calm before the storm, obviously. Right. So before every major market blow up, the Great Depression, the Cape was I think at just about 30. Right before the dot com bust it was about 40. And right now I think the original Shiller Cape is somewhere in the mid-30s. I have a blog post where I do a few adjustments to make it more comparable across time, but it's still historically in some of the highest percentiles of historical valuation observations. So. And again, I'm not predicting that the market will blow up tomorrow. What people will tell you, and I have worked, when I worked in the industry, these valuation measures are terrible at timing stock versus bond allocation, say over the next quarter or year, but they are actually extremely highly correlated with equity returns, say over the next 10 years. And well, 10 years, that's exactly this danger zone. If you have a bad bear market during the first 10 years right out of the gates in retirement. That's what's called sequence of return risk. So that's exactly the time frame where you want to be careful early in retirement.

[Joe Saul-Sehy]

Let me see if I can put my arms around. Hold on, Carson. Let me see if I can put my arms around what you just said. High Cape ratio means we probably should expect a lower rate of return from our portfolio over the next several years. And we can't predict that today, we can't predict that tomorrow. But using a more conservative Number is going to be a better idea because of some sort of reversion to the mean. Right, right, exactly. Gotcha.

[Dana Anspach]

You know, a few thoughts crossed my mind while you were saying that. One was it bears emphasizing that that ratio is referring to the S and P. So if you have a globally diversified portfolio, that rationale may not apply to you as much as if you truly just owned the S and P. And so there are many other sectors in the market that have different valuations. Much lower valuations in the S and P right now doesn't guarantee us anything. But it just, I see the media and sometimes US as professionals talk so much about the S and p, and that's 500 stocks. And a globally diversified portfolio with a few broad index funds could have exposure to 13 or 14,000 stocks across the US so.

[Carsten Jeske]

But it's highly correlated.

[Dana Anspach]

You have to keep that.

[Carsten Jeske]

Right? It's highly correlated. So when I worked in the industry, for us, the US market was the S&P 500. Because you have S&P 500, you have the most liquid market in options, in futures. And I can see that people would complete the portfolio with basically the Russell 2000 and have some additional mid cap and small cap stocks. And then on top of that, just because you have lower multiples in other countries doesn't mean that they are particularly safe. Right. I mean, if we go through another bear market in the US our cape goes from 30 to 15 and the European cape goes from 20 to 10. Right. So it's not like the European capes that are 20 right now that they are so much safer than our domestic cape. So I see that.

[Joe Saul-Sehy]

Yeah.

[Carsten Jeske]

I mean, obviously there is. And by the way, the best time to diversify internationally was yesterday was actually end of the year last year. Right. Because there was a pretty nice recovery of some of the underperformance in international. So German stocks. I'm from Germany originally. I'm very happy that German stocks made up a little bit of that lost ground. I mean, you look at some of the GDP numbers from our neighbors and from other large, even developed countries, I mean, they haven't grown. I mean, Germany has hardly grown since 2017.

[Joe Saul-Sehy]

Sure. Well, you look at that long stretch, right? The long stretch where Japan didn't grow. I mean, every country has their own issues. It's so funny, Carsten. You always give me so much to grab onto because there are times, and Carsten knows this because we fight at conferences like there were 30 things in there that I just want to wring your neck, my friend. I just Absolutely love it. Hold on just a second, Frank. But the thing that's interesting, though, to me is what you said about the beginning of the year. I mean, this case that Dana, that you're talking about, about diversification. I remember at the beginning of the year in all of these online forums, people saying, should I dump all my international stocks? Which is maybe the perfect reason to load up on international stocks is because everybody else is talking about dumping them. And so we did a show back in January about the whole case for international, and Then1Again2 weeks ago about how to build that in for all the people that might have done that. Frank?

[Frank Vasquez]

Yeah, Just a few thoughts. I agree with Dana that to the extent this is a problem, it is best addressed by diversifying the portfolio better. If you do a very simple thing, which is split your stock allocations into growth and value, whether they're domestic or international, that itself will have a profound effect on making your retirement portfolio better. Because what you see is in years like 2022, when the growth stocks were down over 30%, you had the value stocks. Some were down 10%, some were up 10%. If you have an allocation like that that is really well diversified, what you end up doing then is selling the thing that does better, buying more of the thing that did low when you rebalance the portfolio and you get a rebalancing bonus out of it. And that has been especially true. And the last really bad period that we have in our lifetime is retiring at the end of 1999. And the problem there was that you saw market goes down for three years straight. But if you held value stocks in that there were years that it went up that it really solved this problem. And if you hold that kind of an allocation, your CAPE ratio, your ratio in your portfolio is going to be lower. It's just a more stable SUV like allocation to it.

[Joe Saul-Sehy]

Again, more reason to apply little signs to this versus just hit it head on.

[Frank Vasquez]

That's why you don't want to just be holding the S&P 500 as your allocation.

[Carsten Jeske]

But the S&P 500 has growth and value. It has it in half shares.

[Joe Saul-Sehy]

Hold on, guys. We'll get into. Okay, we'll get into your ideas for portfolios here in just a second, because I do want to.

[Frank Vasquez]

I did have one other follow up on that, which is the idea that you can use the CAPE ratio to predict things, has been a big failure for the past 15 years. It really has been a huge failure. And everybody that tried it, whether it's Vanguard or Carson or Any. No, no, no, no.

[Carsten Jeske]

I mean, no. See, you can't just pick one single date. There's a whole cluster of dots in a scatter plot. Right.

[Frank Vasquez]

I know what it looks like.

[Carsten Jeske]

And in 2011 you predicted 10 years.

[Frank Vasquez]

Ago that this was going to be a bad period and.

[Carsten Jeske]

No, no, I didn't. No, I didn't. No. First of all, ten years ago I wasn't blogging. Ten years ago.

[Joe Saul-Sehy]

Wait a minute, hold on a second, Frank. Let's give Carsten a chance here. Hold on.

[Carsten Jeske]

So 10 years ago I wasn't blogging. And it goes back to exactly what I said. The CAPE ratio is a terrible variable for timing stocks versus bonds or timing stocks for the next few years. But there has been a huge correlation between valuations and subsequent 10 year returns and valuations and subsequent 30 year retirements. And you can't just pin it with 150 years of data and then you just cherry pick a few dots here and there. So 2011 is the one dot that you brought up. And I think, and because it must have been in a podcast in 2021 and 2011, the CAPE ratio wasn't particularly outrageous. And then on top of that, right. I mean, you pick the 2021, which was just the recovery out of the pandemic.

[Joe Saul-Sehy]

Right.

[Carsten Jeske]

If you had taken 2010 and the bottom of the pandemic would have looked perfect.

[Joe Saul-Sehy]

Again, let's.

[Carsten Jeske]

So I think there's.

[Joe Saul-Sehy]

Let's get. Yeah, let's get back on track because we are so far down the CAPE ratio rabbit hole, which is exactly what.

[Frank Vasquez]

You brought this up, Joe.

[Carsten Jeske]

You know, the amazing. The amazing thing is this.

[Dana Anspach]

We can make the data say whatever we want.

[Carsten Jeske]

The amazing thing is also the logical inconsistency that. Frank, who says that there is mean reversion between value stocks and growth stocks? Right. Value stocks do better than growth stocks, but there's no mean reversion for the index as a whole.

[Frank Vasquez]

I think the point there is diversification, the lack of correlation. It's not mean reversion.

[Dana Anspach]

You want a dissension, Joe?

[Joe Saul-Sehy]

I know I told you guys I was going to bring a group of people who felt passionately about this. And that's exactly what we have. We're going to talk in the second half about how to set up the portfolio and your different feelings about how to set up the portfolio, because I got one other thing here. We've been talking about the safe withdrawal rate and the amount that we take out of a portfolio. And the assumption here, especially when people begin, is that this is going to be a set, steady thing. And yet we know, Dana, that life is lumpy. Like you're going to have these years when maybe you want to take the trip, maybe you want to be Karsten Jeske and go on three vacations in the same summer, or maybe you're going to buy the RV or the second home or whatever it is. How do you factor, Dana, this lumpiness into your withdrawal rate?

[Dana Anspach]

Yeah, I think it's not only lumpiness that has to be factored in, but it's also time. And so, you know, if we start with lumpiness in the go, go years of retirement, spending often is lumpy. Matter of fact, I just heard a term in J.P. morgan's, you know, annual retirement report called spending volatility. And I hadn't actually heard that before, but they talked about the amount of spending volatility that they see in the data in someone's early retirement. And it's true. You have these big lump sums that occur. People sometimes move, they buy new houses, they decide they want to gift their child or grandchild money, they decide they want to take up an RV or Winnebago or a new hobby. You know, all kinds of things that maybe they didn't have time to think about before retirement. Maybe it's the big remodel they've been putting off or, you know, building that new patio or porch. So spending volatility is real. We account for it by using what I call the lifetime 4% rule. So we're projecting somebody's withdrawals over their projected longevity and taking the present value of those withdrawals and creating a ratio. And I call it the lifetime 4% rule. Because if I drop in an auto purchase or a down payment on a new home, or funding the, you know, new wedding for my son or daughter, some of these big lumpy expenses that we see routinely, I can drop those in and see, does it change the lifetime ratio to a degree that I would be worried about the plan. And most of the time the answer is no. Now, there are times where if I had these lumpy expenses and I dropped in, you know, too many of them and too frequently that lifetime ratio would go down to a level where I said, you know what, the 80 year old, you might be in trouble if you do all of this early in retirement. So I like that stepping back, 30,000 foot view of some metric that encompasses these withdrawals over your lifetime, not just on a year by year basis. But the other factor that I often see missing is time. We think in two dimensions of withdrawal rate and ending portfolio value. But what if I'm 75 today? You know, what if I'm. I had an 84 year old who recently passed away and for the last five years her number one question to me was, tell me, Dana, how much can I give away this year? That's what she wanted to do to grandkids, to charitable endeavors that she was interested in. And so it was always, well, how much can I give away while preserving enough that if I need assisted living or long term care, I can still cover those costs. And so her withdrawal rate was much higher than 4% because we had time as a factor and there was a shorter time horizon.

[Joe Saul-Sehy]

If somebody knows that 10 years from now I have this one big expense and I know I'm going to do it. Do you just not even factor that in and put it in its own, like bucket its own spot and then not even include that?

[Dana Anspach]

We actually do factor it in. We use it in our model. We have a column we call lumpy.

[Frank Vasquez]

That's a technical term.

[Dana Anspach]

It is. And the reason we put it there, I'm probably turning bright red. It's so, you know. But the reason we put it there is because we want to be able to calculate the monthly spending that we all use to budget on. And then we, we want to be able to separate out those lumpy expenses because we put them in there. But they don't always occur in the year where we put them. Right. We build in auto purchases. But a lot of times people, I'm not ready to buy a new car yet or I'm going to do it year earlier or they might say I have three sons and I want to contribute to their weddings and you know, I'm going to drop in these expenses every other year. But they get there and none of them are getting married yet.

[Frank Vasquez]

And so I don't like who they're marrying. They're not.

[Joe Saul-Sehy]

That's right. I'm just cutting them out.

[Dana Anspach]

But that's what we call it, the lumpy column.

[Joe Saul-Sehy]

But I like that because I don't know when I was a planner, if you use terms like lumpy, they get it.

[Frank Vasquez]

Yeah.

[Joe Saul-Sehy]

It's when we use the highbrow terms that people don't understand what the hell that we're talking about.

[Frank Vasquez]

Yeah, there is some interesting data on this, but it is so personalized that that's why you need to do a plan. But if you look at the general population, the last research from the Rand Corporation shows that the average retiree is not increasing their spending at the Rate of inflation, it's between CPI minus 1 and CPI minus 2. And that's an average. So half the people are spending even less and half the people are spending more. And it seems invariant over even economic how much money you have, which means.

[Joe Saul-Sehy]

It'S very much going to be based on you.

[Frank Vasquez]

Yeah, it is. So for instance, our experience in the past five years is we're spending less nominally than we did at the beginning, mostly because of these pesky kids are gone making their own money.

[Carsten Jeske]

See, I'm afraid of the opposite, at least for a certain time. I think the older my daughter daughter gets, the more expensive she will be.

[Frank Vasquez]

That's true. Your expenses will typically.

[Carsten Jeske]

So in terms of college, marriage, helping with down payment, that's definitely on my radar screen. And I agree. So I think what really matters is as long as you get the average spending right, I think you should be safe. I once did some simulations where I looked at somebody million and a half portfolio, $60,000 annual withdrawals. And then I looked at, well, what if this person flips a coin the first year and then that determines you spend $72,000 in the first year and then 48 in the second and you keep alternating and then $120,000 and $0. 120,000 and zero. So also average $60,000. How much of a difference would that make in your final balance? I mean, it's indistinguishable. The distribution looks the same. There might be a level of lumpiness where probably it might make a difference or there might be a level of maybe also a correlation and persistence where it might make a difference. For example, if you spend twice of your budget for eight years and then zero for the next eight years, and then these eight years exactly coincide with the down market. That probably would make a difference. But I mean, as long as the fluctuations in my expenses are faster moving than the global economy and the market cycle and the business cycle, I think there's absolutely nothing to worry about, at least. So I have a blog post. It's called when to Worry, when to Wing it. I think it's part 47 of my series if you want to check that out. Give it a plug here.

[Joe Saul-Sehy]

Part 47. That is such a car thing to say right there. Part 47 of 182.

[Frank Vasquez]

He makes a good point though, that he does. Typically, you're spending, for most people that I've known or seen is it peaks when your children are in college. And so Joe, you're right there.

[Joe Saul-Sehy]

No, no, no, no, no. My kids are 30. And I'll tell you, Frank, to your point, when my son was a senior in high school, we found out what the. What the bill was going to be for room and board, especially the food at the University of Texas. I was so happy, Frank, to write that check because I knew the way my kid ate. And I was like, university of Texas is going to lose money with my kid.

[Frank Vasquez]

And that circumstance, too, that it's like, sure, you were costing money over there, but you weren't eating on the side of a house at home when you were here.

[Joe Saul-Sehy]

It is so wild because. And I would tell clients that sometimes, Dana, that a lot of that was cost transfer. Right? I mean, they're saving all this money for college for their kids, and yet, you know, the kids go to college and all of a sudden they have money in their checkbook they didn't expect. Do you see most of your retirees spend less money than they think they were going to or more money than they thought they were going to.

[Dana Anspach]

I would say, on average, I see people spend less than what we have projected in the plan.

[Joe Saul-Sehy]

Well, that's good. You're being conservative.

[Dana Anspach]

We are conservative. So we have factored in Medicare Part B premiums, we factored in these lumpy expenses that they perhaps didn't put in their budget. I've heard people say, well, we just bought our last car, you know, right before retirement. And I'm like, I don't think that's going to be your last one. And so I just did the last major home repair. It's like, I don't know that that's going to work that way. So we have factored in these things that people forget to factor in. To Carson's point, our average, if you were to factor in an average, well, it's already including all of those things. So in general, people tend to spend. Yes. Now, I've had some surprises. People who didn't consider their hobbies. One gentleman comes to mind. He was into hunting and camping and fishing. And so immediately upon retirement, he wanted a new camper van and a new truck to pull the camper van and all his new gear. And it was a substantial lump sum that we hadn't factored in. And his portfolio was less than a million, and it impaired his fundedness for the remainder of his retirement. You know, there was many years there where I was nervous. Other cases, people who move right upon retirement, oh, I'm going to buy this house now instead of that house. Often it's just the timing of those things. We have a certain portfolio structure where bonds are maturing for anticipated cash flows. So if they surprise us with a big lump sum expense when the market's down now, we are required to take that big lump sum out of equities. And so the timing of those surprise expenses are where I have seen things put someone in a in a less than desirable position where the time horizon.

[Joe Saul-Sehy]

Changes because of just life happening.

[Dana Anspach]

Yes.

[Joe Saul-Sehy]

Yeah.

[Dana Anspach]

And life changes. You don't retire and everything happens just according to the plan.

[Joe Saul-Sehy]

You know, we look at it way too much like retirement's a finish line.

[Dana Anspach]

It's not.

[Joe Saul-Sehy]

In many ways, it's a starting line. Right for this whole new new adventure that you're going on.

[Doug]

We'll be back with more of our special retirement portfolio planning episode in just a moment.

[Joe Saul-Sehy]

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[Carsten Jeske]

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[Dana Anspach]

30, 2025 I think you're on mute.

[Carsten Jeske]

Workday starting to sound the same.

[Frank Vasquez]

I think you're on mute.

[Joe Saul-Sehy]

Find something that sounds better for your career on LinkedIn. With LinkedIn job collections you can browse curated collections by relevant industries and benefits like Flexpto or hybrid workplaces so you can find the right job for you. Get [e-mail] jobs finding where you fit LinkedIn knows how. I wanted to start with a 4% rule and a little bit about safe withdrawal because I truly in this discussion has made me believe it even more that starting with how you want to spend money, I think, versus what can I safely spend? And don't get me wrong, I think calculating safe withdrawal rates really important. But I think it's thing number two. I think we get, especially mega geeks in the community get so obsessed with how much can I spend versus here's what'll make me happy. Can I afford to do that? Like if I start there and then go okay, and plus I can do more, I can do whatever. Like how safe is it for me to do that? I think is a much better. Because I mean, what I'm hearing is we're all so much different. We're all across the board different. So even more of the suv, I think if we handle it that way or, or the bigger paddle for the canoe, depending on which, which analogy we want to use.

[Frank Vasquez]

Yeah, I want an outboard motor.

[Joe Saul-Sehy]

I want to get into some questions about portfolios though, to drive this guys, because we are starting to disagree on portfolios. I want to hear more of that disagreement. No, I'm kidding. What I really want to do though is, is I want to talk about these things because Frank, we just started on really risk parody and you were talking about the differences between if we just get a little bit more scientific about this asset class versus that asset class. You guys mentioned this idea of sequence of return risks where if I retire and things go to hell right away, that is a big risk that the certified financial planning community has warned people about. You know, you retire on the wrong day. How does a risk parity portfolio handle that differently than the traditional person would handle it.

[Frank Vasquez]

So yeah, let's talk about a period like say you retired at the end of 1999. If you were holding a portfolio that was just like the s and P500 and a bond fund, your portfolio would have been underwater or at least for the next decade. It might have come out a little bit, but it would have been underwater for the next decade. A portfolio, a risk parity style portfolio with a much more diversified holding is going to only be down say four years max out of that and it's going to be down a lot less. I mean, I can give you all of this plays into what the safe withdrawal rate is. There's a relationship here that the reason you have a safe withdrawal rate that's a 4% for these two fund portfolios and not five is simply because of these worst case scenarios. Because it's a worst case scenario. It happens to be in the late 60s for, for that at least.

[Joe Saul-Sehy]

So these different portfolios fit different conditions better.

[Frank Vasquez]

And I also, I. You mentioned sequence of return risk. I think we need to be the audience. I really want them to understand what the real problem is here because oftentimes I hear people say, well, I'll just have two or three years of cash and that'll take care of my sequence of return risk in case the market goes down in the next two or three years. That's not the problem. Any portfolio is going to be fine if it's just like one year out of three. The problem is these bad decades. So whatever your, the sequence of return risk you need to solve for is not two or three years, it's 10. It's a 10 year bad decade either like the 70s, the 30s, or the early 2000s. And so if you are designing a portfolio, you at least have to deal with those three things. And if you've dealt with those three things, you probably dealt with 99% of what you're likely to see.

[Joe Saul-Sehy]

The big question, I think, Frank, on everybody's mind is where am I taking money from? Let's say that I'm taking money out in a risk parody portfolio. Am I changing that all the time? Am I changing it up as I go? As I'm rebalancing? Am I rebalancing now money out? So I'm rebalancing out to spend the thing that performed best over the last period. Period.

[Frank Vasquez]

Yeah. You're basically selling high and buying low. It's very simplistic management. It's very, it's very elegant actually. So you can do it one of two ways. Basically you could every year say, okay, I think I'm going to spend this for the next year and add a little bit more onto it at rebalancing time, carve that off. When you rebalance the portfolio to put it back to its original allocations, you're taking cash out of it at the same time putting it in a pot and then just spending that for the next year out of there. Or what we actually do is look at it every month and sell the high thing. So right now we're selling lots of gold. I've been selling gold for the past year and a half because it keeps going up.

[Joe Saul-Sehy]

You're selling whatever the driver is in that condition. And then as the condition changes, whatever's.

[Frank Vasquez]

Doing the best gets sold.

[Joe Saul-Sehy]

Gotcha.

[Frank Vasquez]

Which contributes to the rebalancing of the portfolio. And then you have to do less rebalancing. The idea is to minimize the Number of transactions, which also helps you on the tax side. And to not make this complicated, not have to have 15 different rules just to manage your portfolio. You've referred to this, I think in your conversation with Paul. It's like, yeah, it's like this tree and you go pick the money off it every month by selling whatever it is and then you leave it alone. And you're not monkeying with it or trying to do strange things with it.

[Joe Saul-Sehy]

Well, you see people become, to your point, I mean they become victims of their own complexity. The more complex it is, the more you're going to blow yourself up.

[Frank Vasquez]

And I think this is important. The more complex something is to manage, the less likely a do it yourself in particular is going to handle it.

[Joe Saul-Sehy]

Agreed.

[Frank Vasquez]

And that is the problem with some, some complicated things involving buckets or ladders or things like that. You don't have an advisor that's helping you with that. Chances are you are setting yourself up that you will have to make ad hoc decisions during the management of it. You have to have a plan that covers all eventualities or covers all possibilities in terms of how you're going to take money out of this.

[Joe Saul-Sehy]

That's where I get frustrated sometimes by the question, like I will answer the question for people over on afford anything and I'm like, but there's no way that you actually are going to do this. This will fail. And people will look you in the eye and they'll assure you no, no, that won't fail. And then eight months from now they're like, what kind of hell have I created for myself?

[Frank Vasquez]

Yeah. So if you take this portfolio, that's maybe a lot of do it yourself portfolios are just like the same pile of stocks I've always had and a big pile of cash. And they think that that's going to cover their sequence of return risk. There's a chance that that cash could all run out. Then what do you do?

[Joe Saul-Sehy]

Then you sell when it's down.

[Frank Vasquez]

The stock market was down for three years in a row. If you haven't thought through all of the possibilities and built that into your management plan, you're going to have problems. And, and the reason I manage our portfolio the way we do is because we want it to be a simple management. We just want to get in the Forerunner and drive it and press the four wheel drive button when we need it or turn on the fog lights and not have to be wondering, oh, this sports car has got to stop. I need a ladder, I need some buckets of sand. I Need this other stuff. It can get really complicated once you try to fix a substandard portfolio or suboptimal portfolio by bringing in all of these extra, I call them buckets, ladders, flower pots and hoses and pie cakes and other. It's all kitchen and gardening implements. I always hear people talking about. It's like, let's just put those away. Stop, stop. Just take all those away and get yourself a good portfolio and a plan. You can manage and do that and, and not be fooling around with the.

[Joe Saul-Sehy]

We'll save that for another day, Frank, because I actually think that's a simpler way to go, as you know. But Dana, when you're setting up your portfolio for income, do you take it in a similar way that Frank does? And how does, how does tax location play into this? My Roth, my pre tax and my brokerage stuff, how does that work itself out?

[Dana Anspach]

Well, it gets far more complicated as Frank was saying. It's interesting because as I'm listening I'm thinking, well, how often we all apply the same concept but the way the answer we get to might be different. And so we use a concept on our portfolios called Minimax. It's what mix of assets created the best outcome in a worst case scenario? When you look historically at various asset classes and you look at the longer timeframe, you know, 7 to 15 year time frame, certain mixes of asset classes had a much lower drawdown than other mixes. And so a traditional portfolio that's goal is to maximize return for a given level of risk, measured typically by standard deviation is going to have a very different asset mix than one that is looking at. If I have to draw money out over 10 years, well, which portfolio still gave me the most left at the end in a worst case 10 year period. And so we do that through an investment partner asset dedication. It's a firm out of San Francisco that builds these specific portfolios. But it's the same concept Frank's talking about.

[Frank Vasquez]

It's exactly the same concept. It's a different solution to the same problem.

[Dana Anspach]

Different solution to the same problem. Now we do love ladders and so buckets, whether you want to call them.

[Frank Vasquez]

Well, you are actually an advisor who can handle the thing for them client. And so you're dealing with somebody that wants you to do that. And I, I'm talking to do it yourself. Investors that need something.

[Dana Anspach]

If I had all my money in an IRA or a Roth. The strategy you're talking about, Frank, sounds amazing, right? It's, it's automatically rebalancing Perhaps on a monthly basis. And I don't have to worry about taxes within that. Fantastic. But we often have households that have eight different accounts. They might have trusts, they each have an IRA, they have a Roth, they may have a 401K. Well, now we're trying to rebalance across this entire household, create the most tax efficient outcome in the process. And those taxes when you're in retirement suddenly impact all kinds of other things like how much of your Social Security is taxed and your Medicare premiums. And we have Roth conversions to think about. So for us, being able to step back and look at the portfolio within context of the financial plan means, okay, we have to align each account to the cash flows that it needs. And so we will use income ladders within that. Paired with this mini max portfolio, this portfolio equity portfolio that, that is designed to hold up best under a worst case scenario.

[Joe Saul-Sehy]

See, and that's interesting because I feel like I'm on one end and I feel like Frank's on the other end when it comes to the ladder strategy. I feel like Dana's kind of in the middle. But what's funny about that is that I think if I'm pulling money from a different asset class every month, Frank, it's more confusing for a do it yourselfer than if I just have a simple. This is my short bucket, this is my mid bucket, this is my long bucket. And to your point, I think it's not as efficient. I think it's nowhere near as efficient as what you're doing. But I think if, if I take the average person, if I take my mom for example, and I tell her to look at her portfolio once a month and pull the thing that's did the best. I just completely lost her. Like she is gone. She is bye bye gone. So maybe for the person in our community who likes looking at every month, it's way, way, way better. But for my mom, short bucket, mid bucket, long bucket is a strategy. She's not going to blow up.

[Frank Vasquez]

This is where we, you need to separate what is purely a financial tool from a psychological tool.

[Joe Saul-Sehy]

Exactly.

[Frank Vasquez]

And that's what really what's going on here. And I think people get confused as to what is a psychological tool and think it's a financial tool. So they think that a bucket strategy is going to solve sequence of return risk. And it doesn't.

[Joe Saul-Sehy]

And it doesn't. Yes.

[Frank Vasquez]

On the good chip lollipop, you just go and rearrange the lollipops, they're still going to taste the same.

[Joe Saul-Sehy]

Where does he come up with these. I have no idea where the hell he comes up with all these.

[Frank Vasquez]

The nonsensical ravings of a lunatic mind.

[Carsten Jeske]

I have two comments. So first of all, now I'm not a huge fan of the bucket strategy either, especially not if it's marketed as something that can improve your results. Because my philosophy is that, I mean, we want to arrive at some kind of a strategic asset allocation, right? How much do you want to have as stocks, bonds versus cash? I look at what kind of portfolio would have been most robust among all the different things that the economy would have thrown at me. And I would start all of the bad recessions in the early 1900s, 1929, 1960s, 1970s and 2000s. Thousands and something like maybe a 75, 25 portfolio, 75% stocks, 25% bonds, or maybe you want to go super safe and do 60, 40 would have done reasonably well. It wouldn't have done perfectly all the time. And you can come up with some strategies that would have done phenomenally well in the 70s and in the 2000s. But then these strategies also would have done very poorly in the 1920s, 30s, 40s and as originally, risk parity is actually that one strategy that I don't particularly care about it. And risk parity had its heydays and golden years if you think about it that way, in the 2000s. And then everybody was talking about, I was working at BNY Mellon Asset Management at the time and everybody was kind of intrigued by that idea. And we were never particularly intrigued because it was actually quite low tech. You go from the innovations of the 1960s of mean variance portfolio optimization and then you throw out half of it, the mean part, and all is left is the variance. And then you work around with the variance and then you got this super lucky run in the 2000s, right? Stocks recovered very nicely out of the dot com. Bonds were on this multi decade run. And then commodities also did phenomenally well, right? And then commodities the last few years, commodities outside of gold. Gold is that one special asset that has these very nice correlations both in demand side and supply side recessions. But commodities are a very low expected return asset and they have very high volatility. And I mean I look at some of these ETFs that are marketed to unsuspecting retail clients. I mean, for example, crude oil, right? If you look at the crude oil spot price has been the same as 10 years ago. Crude oil cost $60 in 2015 and it cost $60 right now. And what was the Annualized return of the USO ETF, which is the crude oil fund, it's minus 9%, not overall, minus 9% annualized. So putting something into this overly hyped asset class called commodities.

[Joe Saul-Sehy]

I think you're just going to say this crap, crap, right?

[Carsten Jeske]

Everything that's marketed at retail, which is.

[Frank Vasquez]

Probably why I wouldn't ever hold something like that. So I don't know.

[Carsten Jeske]

But you are holding it as part of the commodity index and then on.

[Frank Vasquez]

Top of that you don't know what I hold.

[Carsten Jeske]

And this is really the backward looking bias. I am actually looking at your returns and they're actually quite underwhelming over the last five years. So a lot of this hyped stuff of overpriced and ineffective products like managed futures, leveraged ETFs, commodity ETFs, this high dividend yield ETFs, right. Where they kind of sneak in principal liquidation through covered calls selling. So it's as really a lot of garbage is sold at retail client and then it's sold with this aura of exclusivity.

[Joe Saul-Sehy]

Right.

[Carsten Jeske]

This is something that only hedge funds know about and only private wealth clients at Goldman Sachs have until now been in the loop on this. And I tell you a secret and you can come along with me with risk parity and all of these exotic ETFs. So I personally don't believe in that. And just going back to your earlier.

[Frank Vasquez]

Point, you're talking about two different things though because I don't do that.

[Carsten Jeske]

I prefer simplicity.

[Frank Vasquez]

I don't do that. So stop, stop talking about things. It's like if you're going to talk about it, let's talk about the 100 year data set. And I've given you this portfolio.

[Joe Saul-Sehy]

Let's not go there, okay? Let's not go there at all. What I am interested in, because we heard what Frank likes, we heard what Dana likes. Carsten, enough about what you don't like. You've thrown a lot of fireballs, right? What do you actually like?

[Carsten Jeske]

So what do I like? Simplicity. I like broad indexes. So something like anywhere between 60 and 70% equities. The rest of the in bonds and again in bonds. Don't get carried away. Oh well, 40% government bonds is too boring now I'm going to throw in high yield bonds or preferred shares or something like that. Right. That becomes much more risky. And you introduce a lot of equity beta through the backdoor. What I think is the most robust portfolio with simulations, something like a 30 to 50 year retirement horizon, maybe Some modest final portfolio value at the end of the retirement horizon. So something like a 75, 25, 75% equities, 25% intermediate US government bonds seems to be the best performing. And sometimes you can come up with some special situation if you believe that, for example, small cap value stocks are going to add 8% returns again like they did in the 1920s and 30s. Yeah, then you throw in small cap value. But I personally prefer that you fanboy there. The blog post I published, I think.

[Joe Saul-Sehy]

Karsten's just here to just throw lob Maltov cocktails at everybody.

[Carsten Jeske]

I just throw Molotov cocktails.

[Joe Saul-Sehy]

That's it.

[Carsten Jeske]

Anyways, you like simplicity. That's the easiest to sell, that's the easiest to manage. And by the way, I would do the same thing. Right, you would rebalance occasionally. You don't have to do it every single month. How much of a difference does it make if we rebalance every month? Every quarter, every half a year, every year, every. This final value distribution looks extremely similar, depending. It doesn't really. As long as you rebalance, at least occasionally.

[Joe Saul-Sehy]

Right.

[Carsten Jeske]

If you let it completely just run into infinity, that might create some problems in the long term. But as long as you occasionally rebalance, there's no harm by doing it more frequently or less frequently. So, I mean, it's exactly as Frank said. I mean, it's intuitive, right. I look at what looks like is a little bit, and you look at your fidelity statement, right? And it says, well, my target is 75% and currently my equities are 75.6%. Well, then you take it out of equities and vice versa. So I think this rebalancing, you don't even have to do much rebalancing. Some of the rebalancing is simply done by taking it out of the pie slice. That is the biggest at that time.

[Joe Saul-Sehy]

Well, that's what Frank was talking about earlier. Yeah, you know, selling the thing that's.

[Frank Vasquez]

Doing well, it's the whole portfolio every month.

[Joe Saul-Sehy]

Guys, I want to ask another question before we say goodbye, which is Dana, as guys, the CFP here, I want to ask you. And then, gentlemen, feel free to chime in on this. We haven't talked about the things that a lot of the sales people talk about when they talk about retirement. We haven't talked about it at all. Right. We even talked about annuities. We even talked about guaranteed income strategies. These are the things that people are being fed a diet of every day. Where does an annuity or some guaranteed income Stream fit into the Dana Ansbach strategy.

[Dana Anspach]

It's interesting because you make decisions for different reasons. And so when I think about Social Security as an example, in today's world, with all of the media saying it's going to run out and people wanting to claim earlier because of this, it is the decision you can make that hedges what we call longevity risk, the risk of living long. And it also provides inflation adjusted income. And it's one of the only decisions you can make that really helps protect against that risk. So you need to look at that decision differently than anything.

[Joe Saul-Sehy]

Look at your Social Security decision.

[Dana Anspach]

Yes, and I. And the reason I bring that up in context of what you just said is because it is an annuity. That is what Social Security.

[Joe Saul-Sehy]

I was going to say, Dana, just before you move on, if you have a pension, then same thing, ditto in some cases.

[Dana Anspach]

Some pensions aren't inflation adjusted, some are. Some pensions have some built in factors where it benefits you to claim them later and some don't. You should claim as early as possible. So you really have to look at that again.

[Joe Saul-Sehy]

Another decision.

[Dana Anspach]

Yeah, another decision. But it can hedge a different risk. And same with an annuity. So where I get frustrated is, you know, annuities are framed as an investment alternative. And there are a ton of research out there that shows, you know, if you add annuities to your portfolio, it can help prolong the length of your portfolio, actually help pass along more assets to heirs. And all of those things are true. But it's really a risk decision that, and ultimately, if we have a truly horrible economic outcome, I wonder how secure will those insurance company guarantees be? And so that has to be factored into that equation. But where I do think annuities come into play is behaviorally, when you look at David Blanchett's license to spend research, when people have guaranteed income, they are more comfortable spending and going out and doing some of the things that they want to do. So when we're factoring in annuities, one, we're looking at a set of metrics, something called coverage ratio. How much of someone's spending is covered by guaranteed income. But there's also a lot of behavioral decisions. I like framing things red, yellow, green, like green, you got to do this. Red, don't do this. And so many of these nuances are yellow. Is having some of your money annuitized going to help you feel more comfortable spending? If you're someone that feels a lot of reluctance, are you going to be able to take that extra vacation or do some of those extra things, then maybe it has a place in your portfolio.

[Joe Saul-Sehy]

I love that it comes down again to the behavior. Because my biggest frustration with these deferred annuities, Dana, is not the fees, which can be egregious. And it's not the way that they're sold and marketed with all these bells and whistles. It's the fact that because they are last in, first out. Every study I've seen shows people don't take the money out. They don't spend the money inside the annuity because they're afraid of the tax.

[Frank Vasquez]

That's. That's the horrible thing about variable annuities.

[Joe Saul-Sehy]

Yeah. It's way worse than the fees. You know what I mean? Like, the fees are horrible. Like, don't get into that. But the fact is, you're going to put the money in, you're never going to take it out.

[Dana Anspach]

I can't tell you how many clients we've had that purchase those elsewhere. And one of the first things we do is say, hey, you need to turn that income on now.

[Joe Saul-Sehy]

Good.

[Dana Anspach]

In many cases, the right decision is to turn the income on early and as soon as possible. Not in every case, but in a lot of cases, that is the right way to use the product.

[Frank Vasquez]

Because those are even more horrific if you leave them to somebody else on the tax side, Right?

[Joe Saul-Sehy]

Oh, yeah, yeah, yeah. Then we got the bomb. Okay. There are so many things that people need to think about. I love the framework here that it clearly is not one size fits all. I mean, we have not talked about Medicare planning. We did not talk about required minimum distributions. We didn't talk about the fact that if you have a strategy that is defer, defer, defer. What that might do with Irmaa this, Aunt Irma that I don't even like.

[Frank Vasquez]

So frustrating problem for you. You have too much money.

[Joe Saul-Sehy]

That is.

[Frank Vasquez]

That is.

[Joe Saul-Sehy]

That truly is. Don't get me wrong, Irma. Frank, to your point, it's a good problem to have, right? It is a good practice. Guess what? What? You're gonna pay more tax because you have more money. But there are so many things. But I think we set up a good framework here. I want to ask all of you one more question. Which is biggest misconception that you wish you could erase. Frank, let's start with you people start to go into accumulation phase. What's the biggest misconception?

[Frank Vasquez]

There's so many. I think what I see right now with do it yourself. Investors.

[Joe Saul-Sehy]

Investors.

[Frank Vasquez]

Their biggest misconception is the way to deal with all their problems is to have a big pile of cash. And that will solve their problems in some way, either whether they think their sequence of return risks or some other thing. And that's really all they need to do is like I'll just sell some of my stocks, have this big pile of cash that's three or five years or something and then I can just ride off into the sunset.

[Joe Saul-Sehy]

It's so funny how you, how people think that that's the solution. It creates a whole nother slew of problems.

[Frank Vasquez]

Yeah, yeah. And I think a lot of it today is because we've had such good stock markets for so long that a lot of the people retiring now have not experienced a multi year downturn. And how bad that can be not only on the number side but on the psychological side of it.

[Joe Saul-Sehy]

Yeah, Carsten, same question for you. But before you answer, there was something that we skipped over that I want to, I just want to make clear to everybody, when I said I like the bucket strategy has nothing to do with it being the most efficient. It has zero to do with that. In fact, I've said very publicly it is nowhere near the most efficient. My fear we do it yourselfers is that you're going to blow yourself up. That is my biggest fear is that I've seen so many plans that go sideways. Because Frank, to your point, we just put all this, you know, spaghetti into the plan thinking it's better, it's better, it's better. And to your point, simplicity I think is the reason why I like that. But Carsten, same for you. What's biggest misconception besides now the one Frank mentioned, which is cash.

[Carsten Jeske]

I think one misconception is that again it goes back to this bucket strategy that people think that they can time the market.

[Frank Vasquez]

Right.

[Carsten Jeske]

Because this is what a bucket strategy implicitly tries to do. Oh, I don't have to sell my equities. If we go through a bear market, I liquidate my cash first and then my bonds. But that becomes now a timing problem. Right. You have to time when to replenish the cash and bond bucket. Again, the average retail investor is horrible at timing the market. Right. I mean in some way it's actually worse than just randomness because randomness at least you have a 50, 50 chance if you are getting your emotions involved and you're trying to rebalance and you lose your nerve when the market is. So it's basically you're selling low and buying high. Simplicity works best. And again, I don't fault the bucket strategy. I think it's a starting point. And if you arrive at the same asset allocation that seems pretty robust everywhere, El else, that's fine too. But don't expect any miracles. And in the best possible case, it's a kind of a crapshoot. And in the worst possible case, you actually lose money by overreacting and letting your emotions get in the way.

[Joe Saul-Sehy]

You bring up a great point, which is, you know, the point that we didn't say, which is a point that I think we need to articulate, is that every strategy has an Achilles heel. There isn't a. And if you think your strategy doesn't have an Achilles heel, you haven't looked hard enough. Because I think the key is to not think I have the perfect strategy. It's to think I know what the Achilles heel is in my strategy. And I love how Karsten, I say the bucket strategy and you immediately go, we got a time. Which brings up you don't. You don't do that. But that's a whole nother podcast. Dana, save us.

[Doug]

What's yours?

[Dana Anspach]

You know, I think we underestimate the cognitive changes that we might experience as we age. And I'm in the midst of writing a new book called Living off your acorns. It's your guide to the four phases of retirement. So I'm talking about pre go and then go go, slow go and no go. And right now I've been interviewing a lot of our clients in their late 80s around this slow go and no go phase. And I have seen cognitive changes occur as early as the late 60s when someone's in their late 60s. And then if you read the Wall Street Journal and Warren Buffett announcing he's finally stepping down, as he said, At 84, I'm finally feeling my age. We only hope that will be us, right?

[Joe Saul-Sehy]

Right.

[Dana Anspach]

If we're managing our own portfolio. And if we have a spouse that's not financially sophisticated. Right. What happens if those cognitive abilities change? And are we even going to recognize it? Because the part of the brain I've learned that causes those changes is the same part of the brain that generally governs our self awareness. And so not only can we be experiencing these changes, we are not aware that our decision making, we don't see it. And so in a pitch for the financial advisory community, it's one of the reasons that in the decumulation phase, financial planners and advisors add so much value as you have that advocate with you through all of those phases. And if you're married, you have a spouse that has someone to Turn to also.

[Joe Saul-Sehy]

You bring up a great point. I saw that in my clients, and it's difficult to bring up. I was very happy when I saw family members begin to come to the meeting with them, which was great. And there were times when I would just suggest that it wasn't my job to call a family member, but it was my job to say, you know what? Why don't we have your daughter meet with us, too? You know, have you ever thought about that? We'll do some intergenerational planning. Like, how. How do you work around that, Dana? Because that's a tough conversation to tell your client that. That it might be time.

[Dana Anspach]

Yeah, I mean, I've done the same, you know, asked people to set up family meeting. In many cases, I've had people recognize it in themselves and let us know, hey, I've been diagnosed. And we just want you to know so you can be aware of, you know, if we request anything that is good.

[Joe Saul-Sehy]

But that's the. In my experience, that was the exception. Somebody. Because it also took some. I don't know if it's bravery or what to say. I'm. I'm slipping.

[Dana Anspach]

Yeah, it did. It took a lot of bravery. And it was relatively early, in this person's early 70s. You know, it wasn't where we might expect to see it. We're in a situation right now where we have specifically asked someone to find a power of attorney and have basically said, if you can't locate someone who can act in this capacity, we are going to need to terminate our relationship. We don't want to do that, because I don't know what this person might do, but we've been getting conflicting instructions. And then, oh, I changed my mind. And then, oh, I'm suffering from this particular medical condition, which is the reason I'm acting like this. And we're like, well, what are we supposed to do? And so that's a case where, you know, that's all we can do is just say, you know, we really need you to find a power of attorney, and we can send them the Schwab form that enables them to talk to us and act on your behalf. And, you know, if you can't do that, ultimately, you know, we're in a pickle here. Right? As a firm, what are we supposed to follow this person's request or not? And what's our liability?

[Joe Saul-Sehy]

Yeah, the liability thing, I think, could be real. I can see the. The. The family member later on saying, dana, you should have. You should have seen this. You should have. Yeah. Yeah, Ugly. Ugly. Thank you guys for this episode. This has been a fantastic discussion and truly proving that this is not a one size fits all problem. Let's talk about what you're doing in those amazing places you work. Let's go. Ladies first. Dana, what's going on at Sensible Money here at the end of June?

[Dana Anspach]

Well, I don't know that we have anything immediately upcoming, but we are doing our next webinar in August. It's on planning for healthcare and retirement. This might be our third or fourth annual webinar on this particular topic. It's on August 28th. You can find it on our website. If you scroll down, you'll see our upcoming free webinar and register for that. And also I'm excited to announce I have started writing for Fritz Gilbert Kurt's blog, the Retirement Manifesto. My first joint post with him went out about two weeks ago and my next solo post goes out I think in the upcoming weeks. And so it's super exciting and I will be vlogging about my own thoughts on retirement. I'm 54 this year. I want a very slow 16 year transition to retirement at 70 is what my plan is. But I had an experience on vacation last year that kind of brought it home for me. Of like it was. No, never. I'll never retire to. Oh my gosh, one day I actually will retire and I really need to think about what this looks like.

[Joe Saul-Sehy]

Wow. So we'll send people to the Retirement Manifesto as well. That is really cool, Dana. Congratulations.

[Dana Anspach]

I'm looking forward to it.

[Joe Saul-Sehy]

That's super fun. And when do we expect the book, by the way?

[Dana Anspach]

Hoping the book will be out in the fall. I'm doing this big hiking trip and then I'll get the book wrapped up as soon as I return and then it'll depend on, you know, how quickly they can get it through editing and formatting and all of that.

[Joe Saul-Sehy]

It is sad you weren't walking today, but I totally understand it. She's going to get all the walking she can do. Let's go to Carsten next. Man, what's going on at early retirement now, my friend?

[Carsten Jeske]

Yeah, so I've slowed down my publishing after 62 parts of save withdrawal rates. It's kind of. You have almost written about everything you needed to write about. Yeah, so I'm busy with my retired life here. So as we are recording this, my daughter is finishing up before her summer break and then a few days after this goes live, I'm going to be on a roughly two month trip this summer so multiple different locations. Alaska cruise, flying to Asia for a month about. And then taking another cruise from east coast from New York City via Nova Scotia, all the way to Iceland and back.

[Joe Saul-Sehy]

Are you taking a vacation from your vacation?

[Carsten Jeske]

We need a vacation after the vacation. But I mean, in some way, I mean, there's a life here so comfortable. I mean, it is a little bit like a vacation. It's like a retirement home here. So my. My wife and my daughter are very sweet. And so it's. I'm kind of resting before this long trip, so.

[Joe Saul-Sehy]

And then after too, resting by fighting with us. Nice job. Yeah. And we will link to early retirement now because if you haven't been there, your stuff is evergreen. These are pieces that you can dive in.

[Carsten Jeske]

That's the intention to.

[Joe Saul-Sehy]

Yes. And if you're a money nerd, you're going to find. Find so much to love at early retirement now. Especially the part where he calls me a small cat fanboy. And now he's gonna write about what a Joe is with buckets. Yes.

[Frank Vasquez]

He awards you no points to make. God have mercy on your soul.

[Joe Saul-Sehy]

Uncle Frank. Glad we got in the same damn room together. Well, virtually, at least. You know, it's about time we had you over at Mom's basement. But what's going on at Risk Parody Radio.

[Frank Vasquez]

Okay. As I mentioned before, we are on a fundraising campaign, a charitable campaign. So I'm very blessed by our listeners. I don't have a large audience, but they're. They're wealthy and generous.

[Joe Saul-Sehy]

They're passionate.

[Frank Vasquez]

Yes. So one of our listeners has put up $15,000 for the Father McKenna center, and we are to match. And so we've been. This just started last week. We've already got some good donations, but I'm hoping to get some more and even from your audience. But what I really would like your audience to do is start following the Father McKenna center on Instagram or on Facebook. It's spelled the Father M C K E N N A. It'll be the nicest thing you have in your Instagram feed because what you will see is people helping other people, particularly high schoolers and college students once you see what we do there and how nice it is. And that's why my listeners like it. It's very efficient. And it's actually on the campus of a high school. We're the only high school in the country that has a soup kitchen homeless shelter next to it.

[Joe Saul-Sehy]

That's fabulous. Where are you at, Frank? I don't even know where you are.

[Frank Vasquez]

Washington, D.C. area. And the Father McKenna center is on North Capitol Street. You can see the Capitol from there. It's also the closest homeless shelter from the Capitol. So I would invite your audience to follow that and then also to donate to the Father McKenna Center. They go to their website, go to their donation page. When you fill it out, there's a little box there that you can, like, dedicate it or something. And if you put Stacking Benjamin's Match or Match or Risk Parody Radio Match, it'll get counted for this matching campaign within the next month or so.

[Joe Saul-Sehy]

Fantastic. And we'll make sure we note that also on the show, notes@stacking benjamins.com that is so awesome. And it goes well for everybody that missed Wednesday's show. We had the creators of a great documentary called Join or Die about the fact that joining a club, you're 50% less likely to die this year than if you don't join. And yet we increasingly are isolated. The number one group that commits suicide is men over age 70. We tend to retire and isolate. So talked about that on Wednesday. If you missed that, go back and listen to that. And then today we plan the money. So great stuff, guys. Thank you so much for being with us Stackers. Thank you. And Doug, you got it from here, man. What should we have learned today?

[Doug]

Well, Joe, here's what's stacked up on our to do list for today. First, this won't come as a shock, but begin with the end in mind. When you know what type of spending you're looking at, you're more likely to avoid mistakes. Second, special products like annuities, while they may help people who aren't investment savvy, generally the fees inside most annuities make them unattractive. However, if there's longevity in your family, an annuity can help you control the risk that you may outlive your funds. But the big lesson, don't play games with Frank. That guy's a former lawyer and the threats he can lay down, brutal. Hey, Frank, ease up on me, dude. We're just playing Go Fish.

[Joe Saul-Sehy]

Chill.

[Doug]

Thanks to Frank Vasquez for joining us. You'll find his podcast riskparityradio wherever. You're listening to us now. Thanks to Karsten Jeske for joining us. You'll find his [e-mail] and of course, thanks again to Dana Onsbach for joining us. Dana can be [e-mail] this show is the property of SB Podcasts, LLC, Copyright 2025 and is created by Joe Smith. All Sea Hive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello.

[Joe Saul-Sehy]

Oh, yeah.

[Doug]

And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug. And we'll see you next time back here at the Stacking Benjamin show.