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Episode #491 - Listener Questions: How Listener Mike Is Finding His Purpose In Retirement

Roger: "Everything should be made as simple as possible, but not simpler." -Albert Einstein.

Hey there. 

Welcome to the show. My name is Roger Whitney, and this is the show dedicated to helping you not just survive retirement, but to have the confidence because you're doing the work to lean in and rock retirement. We have a really big show today. In addition to answering your questions, we're going to have the CEO of a venture capital firm that focuses on companies that help people age well.

In addition to that, we have the Bring It On segment on making things simpler. One of the questions we have is around simplifying the portfolio structure for retirement. So, I think making things simple is a really good idea. Simple things are easier to manage, but that's what we got going on today.

And you know what, let's just get into it and bring on Abby Miller Levy,

AN INTERVIEW WITH ABBY MILLER LEVY

I thought it'd be fun to bring on someone at the tip of the spear, so to speak, in emerging companies to help people age well, whether it's in the financial sector or companies and services in the wellness sector, and Abby Miller Levy definitely fits the bill for this. She is managing partner and co-founder of Primetime Partners, a venture capital firm focused on startups and early-stage companies in the aging and wellness industry. 

Now, Abby started as a consultant at Mackenzie. She graduated from Princeton and Harvard Business School. She previously was an executive at SoulCycle and has spent her career helping businesses and consumer brands grow either as an operator, an entrepreneur and an advisor, especially in the wellness sector.

Abby is thinking about this stuff all the time, and she's an amazing lady. So, let's have a conversation with Abby Miller Levy about the startup and the technology sector and how they're creating things that are going to help you and I age better. 

Abby, I'm excited for you to join me. My first question is, how difficult was it to start a venture capital firm focused on aging in the midst of a pandemic? 

Abby: Wow. Roger, I will sheepishly respond to that, that it was actually quite easy. Not to say that the next fund will be easy, but when you are dealing with such a universal topic of aging and longevity, The investors that we spoke to raise capital from, everyone nodded and said, absolutely.

Why isn't there more investment focused on this area across healthcare, financial services, consumer experiences, all for this population that's the fastest growing demographic in the world? So, there was kind of a universal acceptance of, there is a entrepreneurial opportunity here. Also, we started fundraising just as the pandemic was at its height of media awareness in the spring and summer of 2020, and for that moment in time, for the first time ever, older adults were on the cover of every newspaper, every TV news channel. It was all people were talking about, which is how do we protect and help our aging population?

In some ways, starting a business to impact longevity, particularly this one, venture capital firm, was the right place at the right time and joined by my partner Alan Patricof, who's been an investor for the past 50 years and has started two funds prior at Prime time. I think we found the process of raising our initial capital of 50 million pretty seamless. 

Roger: Well, you two have put in the reps from an industry standpoint in terms of knowing what you're talking about. It wasn't just an idea out of left field. You guys have done these things. You are a wellness executive from SoulCycle and other adventures.

Now, you just recently had a longevity summit of sorts, your first one. How did that go?

Abby: It far exceeded my expectations. I mean, there's the normal stress of an event, but this was the first time that Primetime Partners and ARP's Age Tech collaborative came together to invite our founders, about 30 primetime founders and I think out of the ARP, there was about 40 of their founders together in New York City to really interact with the other stakeholders in the age tech ecosystem, particularly government officials like the New York City Commissioner of Aging, large financial services incumbents, large healthcare incumbents. We set it up as workshops, not speakers and talking heads, but real workshops where small groups of founders were able to ask those questions of how do I pitch you and what do you look for and what's ROI mean? So, there were just a lot of connections being made that I think people found really exciting.

I think the piece that got us the most excited at the end of the day was that the creativity that happens when you’re together just different than what you can accomplish when you're frankly on Zoom or email. 

Roger: That's what we're all trying to figure out now that we're back to “normal” in terms of work schedules. How much is it remote and how much do you have to be in person? There's an old real estate term if you're in the room, you're in the deal, and there's something about being in the room with people and having connections and things happen. 

Abby: Well, it's very interesting. Deborah DeSanto, who's president of Best Buy Health, she's an amazing executive in longevity.

Best Buy Health, people often don't put those two words together, but one of the largest audiences of older adults that they reach. When asked the question, how does a startup work with Best Buy Health? Her first comment, "just be human. I'm a person. You're a person. Let's just connect" and literally like I saw the founders who were taking notes. Like literally write down, be human, because I think that it really is the art of the deal, and a business still is about human connection, which is why this podcast is so wonderful is because you're able to have a conversation, I'm looking at your face.

We're able to connect and I'm sure you feel that way with a lot of your listeners that that's one of your goals is to be real. 

Roger: Oh, totally. If you see me messing up words all the time, we just leave it there because that's real. That's who I am. 

So, primetime invests in startups to help improve the future of aging and longevity. Those are two different things actually. What are examples of things that you are investing in? 

Abby: So, we have made 31 investments in the past three years. Two thirds are healthcare related, more or less financial services within the financial services world, we are invested in a business called Penelope, which is a 401K provider designed for solo entrepreneurs and micro businesses. Low cost, flat fee, digital first with service behind it, and the goal is to move the needle on the percentage of Americans that have access to 401ks, because you and I both know, and I'm sure you talk about on this podcast, the number one thing you can do to help save for retirement is to have a retirement savings account, especially when there's a corporate match. It's free money and it's critical, and oftentimes small business owners or solopreneurs don't think they're like "eligible" because they think of 401ks for big businesses. So that's an example, does it largely serve older adults? Not today, but it will because it's helping them save for tomorrow.

I love businesses that are helping people think about their future because most people don't really think that way or prioritize down the line when there's so much to enjoy today. So that would be one example. We've invested in a few retirement advisors that are more robo-advisors focused on middle income or mass American budgets, saving for home care.

90% of Americans think in-home care, like a home health aide is covered by Medicare. It is not. In most cases it's not. So medical debt is one of the foremost causes of bankruptcy. Being able to predict and save and get insurance for these types of likely outcomes is really important. So, we're really excited about some of the newer things we're seeing on the FinTech side.

On the healthcare side, my gosh, like there's so much going on because of telemedicine. Telemedicine wasn't reimbursed before COVID, and now 77% of older Americans have used telemedicine. I mean, think about that. We're now so used to seeing doctors on a video screen, but that didn't exist four years ago.

Roger: That's still in its infancy in terms of the execution and the experience that people have.

Abby: Exactly, and so we've made investments in a bunch of different infrastructure companies that are very much focused on how to manage the accreditation of doctors, the reimbursement of doctors to really enable this remote care and care in the home to a different degree. One of our businesses, yes, hearing is concierge audiology care in the home like the Geek Squad of hearing aids.

Again, this wasn't possible several years ago, but 90% of Americans who need hearing aids don't get them, and they don't get them because of the stigma, because of the concern that they don't work well, I don't know if you've ever had loved ones. My father-in-law would always say, my hearing aids don't work.

That's why I don't wear them. 

Roger: There are two people downstairs right now that are saying that exact same thing. Literally. 

Abby: Yeah, and if you had someone who came to your house and tweaked it, like when your TV's broken and you have a repair man come, well, if your hearing aids aren't working right, you need someone to come make sure that it's tweaked the right way.

We hope businesses like this that now have the ability to scale and people are comfortable within home or remote care, that it's going to bring conversion and bring utilization up for a whole host of health issues that people had their head in the sand in. 

Roger: When it comes to healthcare, I would think that the people that have the most means have the most access, and where you start to get less access to even just having hearing aids is awareness and approachability and just means to be able to get it easily. These types of things can help solve some of that by making them more efficient. 

Abby: I think there's that piece of it. You're absolutely right and there's a big, big push to the inverse of that around health equity, where you've got healthcare deserts. And you've got individuals who don't have access to quality healthcare either in rural areas, in low-income communities. So, it's now being mandated by Congress through CMS that health plans need a very explicit policy and program around health equity because COVID really highlighted the lack of access to healthcare divided along income, racial, and geographic lines. 

But there's one other thing that I think in addition to accessibility that is really something we're not talking about, which is behavioral health, which is more the issue of we know that what you put in your mouth, what you eat is a huge driver of health outcomes, and it doesn't matter how much money you have, if you are eating poorly and have diabetes, then it creates all of these other issues.

So, I do think that there is increasingly the same way that mental health was something that was a taboo topic 15 years ago, and now everybody's talking about mental health, that I think there's other topics of behavioral health that is key to aging well that are starting to become less of an affluent wellness LA New York issue and starting to become more common across the country. That's the thing that people ask me all the time for my advice on, because I think I've learned something about this pill to take or some fountain of youth on how to live longer, it also helps my partners who are 88 to live to 114. 

What I always say is, and I mentioned this to you, max out your 401k. That's the number one thing.

Number two, change your behaviors, sleep more, manage your stress, take care of your mental health, plant-based diet, like all the things that we know and read about are legitimately impacting our ability to age well and have a longer health span. So, it's kind of common sense to in some ways.

Roger: Yeah, I've always said that if you don't take care of your health, you'll live almost as long. It's just going to suck a lot more. This is an interesting concept of a convergence of things. You're investing in FinTech, which is financial technology to help on the money side. In healthcare delivery of various sorts. But I think a lot of that is what you're talking about now is wellness. 

All of these things ultimately have a pillar of behavioral adjustments. Essentially building better habits. You know, when we talk about health, the things we talk about are eating, sleeping, moving. We like to do these things in grand gestures, right?

 I'm beginning that exercise program or that diet or I'm going to sleep, but really, it's the small things that you can do that most of us don't get a lot of coaching on. We just go for the New Year's resolution type of things, rather than sort of the tiny habit concept of BJ Fog of just little baby habits that compound over time. You want to talk about compound interests. Money has it, but health and wellness definitely does as well. 

Abby: Well, and I think part of it is this motivational shift so, if you imagine it this way that the oldest person alive right now is. You think about, well, how do I want to live between the ages of 60 and 120? And most people would be very nervous about their current habits, about their ability to your point, to live well for those six decades that nobody has planned for, that no one has considered, there's no intentionality around it.

There's very little intentionality around it. There are even scientific experts like David Sinclair who say, we have the technology for someone to live to be 150. 

Now, you could argue who wants to live 150 years, but I think changing the motivational aspect of saying it's worth a little sacrifice today to pay it forward for those six decades that I want to live well.

I can just tell you, having started this business at three years ago at age 45, it has absolutely changed my personal perspective, the choices I'm making and how to live my life because I want in my nineties and hundreds to be living well, and I think it starts with motivation. 

Roger: What I have observed with current people that are in their eighties and nineties is that one of the number one struggles is to have something actually to live for.

So many I've observed are just putting in time.

Abby: Which is why working longer, and I define work broadly, work can be family caregiving work can be volunteer, work can be supporting others in your life, or work can be a conventional job, paycheck, et cetera. But that's why this concept of retirement is in some ways detrimental to health span because it was always this black or white, not this new gray world we live in. 

I mean, one of the greatest things for retirement has been the gig economy. You can become an Uber driver, Airbnb, whatever it is, it's income, it's community, it's purpose. But there was a study that I was just reading about yesterday talking about how people in their eighties and nineties are happier than other generations. One of the things they were correlating was purpose, and in some ways religion. I mean, you can use spirituality in a whole variety of organized and disorganized contexts, but I think coming up with your own game plan to stay working in any capacity broadly defined, is really important, which is why I love starting a new career at 45.

My last venture, Arianna Huffington and Thrive Global. She started Huffington Post in her fifties and Thrive in her sixties. And so there are always new challenges and new things to do, and there are no limits with technology. There are no limits for any age.

Roger: Especially for baby boomers because they grew up in the era of the retirement brochure, where you sacrifice your time with your kids, your life, in order to get to the picture on the brochure. So, it was approached with a binary mindset, like a light switch, and now it's much more of a dimmer switch that you can adjust up and down work-wise, they meld together. Financially speaking, because of the lack of pensions relative to other ages or other generations, by necessity, working more is the biggest thing that's going to solve the problem.

So, if you're going to work more, why not do it with more balance and choose something that you enjoy more? 

Abby: I think that's right. I think one of the things we need to work on as a country though, is the ageism in the workplace, because that is, if I had to say the inhibitor to folks working longer isn't their desire to, oftentimes it's the receptivity of the employer or of the organizations to find a way to incorporate older workers and have age inclusive environments and age diverse environments.

That was actually something we talked a lot about at the summit, because there's a woman named Ashton Applewhite, who wrote a book called This Chair Rocks, a Manifesto Against Ageism. She is like one of those amazing civil rights, just, she's dedicated her life to combating ageism, and she was chatting about how pernicious it is in terms of our own self-talk, when someone says, oh, I'm having a senior moment, things like that, like it's just become such the ism that is the last ism that no one's really talking about from a DEI perspective. 

So not to get all on my soapbox with you, but I do think that recognizing that in order to work longer, we're all going to have to engage openly in this topic of what are the biases that people have that prevent us from doing so and openly discuss it.

Roger: There's a couple of layers to that, I would think Abby and one is, just simply hiring somebody, as an employer. When you're hiring somebody, you're hiring somebody for the future, and that's sometimes part of that. Someone that's older might not fit that mold, but they fit other molds of, they have the wisdom and the experience that you don't have to worry about training.

Another layer, I think too, is you mentioned the gig economy. The gig economy is very attractive, whether it's coming back as a consultant to the company you just retired from, which happens all the time, or Uber driver or something like that you mentioned. But some downsides of the gig economy too are, Hey, you're 1099, you're an independent contractor.

You get no benefits. It's a very simple way for an employer to treat people more as widgets than a partnership. 

Abby: Absolutely, and I think that there's a whole to your point, that boomers grew up with this black or white kind of definition. So, I think that is very much evolving.

One of the nice things about an older workforce is they're on Medicare. They’re not responsible for their healthcare benefits. So, like, I think there's a lot of benefits of hiring or maintaining relationships with older workers. One of the unfortunate outcomes of COVID is a lot of people retired prematurely, and you've got this great workforce that I think over the next few years will be coming back to work, which is a real asset.

Roger: So, you just had this summit where you had some large firms in the healthcare industry and the financial services industry, coupled with startups, FinTech, health and wellness, as well as healthcare. How interested are the larger incumbents in the next wave of things in all of those verticals?

Abby: They are so interested in finding new ideas to solve their big problems.

So, if you're a healthcare company, if you're a health plan, your medical loss ratio keeps going up, the cost of healthcare is going up, not down. Why wouldn't you talk to a business like one of our portfolio companies, Carta, that does remote cardiac rehab, if you have a bunch of conditions after you have a surgery or after you have a procedure, they do group one to many rehabs. 

It lowers their cost of care. By engaging with this kind of technology and this kind of a platform, so that large health plans are saying, help me with one of three issues. Help me lower my cost of care, improve my quality of care, and retain and keep my members longer because if they go move around from plan to plan every two years, we can actually never really help them because they're always looking for the next shiny object.

So, they are perfectly happy and have a history of working with startups in pilot programs and ultimately sometimes investing in or acquiring them. So that has always been the case.

The same thing within financial services. I think that the fact that this is the largest wealth transfer in a generation of older adults with all of the assets transferring into the next generation, the financial services players are saying the children and grandchildren don't necessarily want to work with us the same way that their parents or grandparents did, and we're not equipped with our existing business model necessarily to manage that. So how do we engage in conversations around things the next generation cares about, like their health and wellness, like housing and kind of living this rich meaningful life. So, they're really excited to talk with startups that help them bridge that generational gap as many businesses that we've invested in do.

They also have a track record of testing out and then ultimately acquiring smaller businesses. That's where this whole kind of FinTech unicorn and all those things come in. This notion of a unicorn is because they ultimately have large contracts with large firms. 

So, we're seeing a tremendous appetite for the incumbents to both watch what's going on, to learn from it, but then ultimately to insource the innovation to bring it in-house.

Roger: I have to ask you, because you're at the tip of the spear of the innovation in these three areas. You're investing in startups that are creating the new, that these larger firms are either going to acquire or innovate and riff off of. This is the creative cycle.

With the recent advent, or not advent, but the introduction of AI really coming to the forefront, which is super exciting and extremely scary at the same time.

We were talking about your summit, just the magic of having humans together. Have you had any thought, or have you done any thinking on your startups or integrating AI in a human way? 

Abby: It's such a great question, and I say this often, and it's easier with healthcare to say this, which is healthcare is a human business.

Nurses, doctors, it's a human business, but so is financial services. Mm-hmm. Even the word service, it's a human business. So, I think most of the companies we're looking at are using ChatGPT and AI to say, how can we deliver human service, like interactions at scale. So that it's not one-to-one, always human to human in the same way, but we are able to figure out which interactions can be scaled through technology and which ones remain human to human.

Or the example of the company I gave, one to many humans versus one-to-one. So, I think if you start with the premise, and that's probably why we're a little bit different as an investor, people will say all the time, like, what's your criteria for investing? I think we acknowledge that these are human problems to solve that historically been solved by humans. So, if you look at a hundred percent technology solution and older adults, we’ve only invested in a few that don't have a human in the loop because healthcare and financial advice require personalized attention. I think technology is allowing that to happen now at scale. It's really a tool.

You have to be careful that the tail isn't wagging the dog. 

Roger: Yeah, I think it's really exciting. You think of wellness, you think of healthcare, and you think of financial services, where it is the most human ends up being with people that have the most money because there's an economic structure that works. The unicorn in all of those, especially financial services from my perspective, is how do you deliver to the masses or to people without those means in a human way? 

Robo-advisors are the first iteration of not so human, they were just an attempt to deliver asset allocation at scale, essentially. Then through Personal Capital and a few others, they started to introduce, trying to insert more planning.

 I think AI in this structure, if you do it in a human way, is a way to serve more people in a human way and nobody's figured that out yet. So that, I think that's really exciting. 

Abby: Absolutely. 

Roger: Thank you so much for sharing. The reason I wanted to have you on the show, one is you're just a fascinating lady and wicked smart, and you're at the forefront of looking at companies to solve these problems. I love the combination of wellness, healthcare, and financial services.

Technology is going to be a game changer. It already is, but it is going to accelerate the ability for more people to get solid advice and service than ever before.

Abby: We're just at the beginning, Roger. With all of this technology, the cost of building a business has dramatically decreased. There's just, you know, we've looked at 1300 startups over the past two and a half years. The pace of innovation is increasing in this country, not decreasing. It's just a really great time to be an entrepreneur and a great time to be building a business.

So, if anyone's listening and has an idea, I'm abby@primetimepartners.com. Feel free to reach out and share the idea, and we have to get these creative folks building businesses.

LISTENER QUESTIONS

Roger: Now it's time to answer your questions. If you have a question or a comment, you're welcome to go to rogerwhitney.com/askroger, and there's a place for you to type in a question or a comment, and you also have the ability to leave an audio message for us, and we'll share those questions on the show.

I MISSED LAST WEEKS QUESTION - SO HERE'S TAKE TWO

This actually worked out really well this last week because the title question of last week's show was answering the question, how does the five-year rule work for Roth conversions? It was a question from Charlie that I answered incorrectly. Now, I've answered questions incorrectly before. Sometimes I just got my facts wrong.

I just misspoke and it's very easy to miss those things. But what is wonderful about this avenue and having so many awesome listeners is that we got a number of emails. 

Clyde is one of 'em who said, hey, dude, I think you missed that one. Sorry. This is what my understanding is. We got one from Clyde and from a number of other people, to say, Roger.

Oh, whoa, whoa, whoa. I don't think you answered Charlie's question correctly, so I want to thank all of you for letting me know so I could research it to make sure that we get good information out here, and they were right. I misspoke. 

So, this is a take two on answering Charlie's question and we actually put a video link in our last week, 6-Shot Saturday email where we share a summary of the show where I answered it there, so that way we could get the record straight as quickly as possible.

So, thank you everybody that helped all of us be a little bit better. 

All right, so let's go back to Charlie's question, Charlie. I want to answer his question specifically here. 

Charlie says, 

"I am 67 years old. I have been retired for two years, and then he goes on to say, I can't believe how smart you are, Roger."

Oh my, so Charlie, thank you, but smart can be overrated and you can make mistakes, but I do appreciate that you can't know all of this stuff. At least I'm not the kind of person that can. But Charlie's question was, here's the fact set. 

"If I do a Roth conversion this year in 2023, and I pay tax on the conversion, am I able to withdraw funds, converted the amount that I converted or the growth prior to 2028?" 

So, let's actually walk through an example of this, Charlie. 

So, let's assume you do a 10,000 conversion in 2023 and in 2025, that's only two years hence it's now worth $12,000. The question is, can you take out the entire $12,000. Without taxes or penalties, and this is where that five-year rule comes into play.

Charlie further qualifies he's had money in a Roth account for over 10 years and so, he's hit what we call the golden rule, which is he's had an account with money in it, a Roth account with money in it for over 10 years. Plus, he is over 59 and a half.

So even if Charlie, you were to close this account, say in two years and it was worth 12,000, you will have no tax and no penalty on the amount of the conversion, which is always your money, or that 2000 in earnings because you've hit that golden rule, you've had a Roth with assets in it for over five years, and you're over 59 and a half, so no tax, no penalty on any of it at any time because you've hit those two qualifiers of being over 59 and a half and have had money in a Roth for five years. 

So now let's take a derivative, Charlie, of your question. Let's assume you didn't ever have a Roth, and this was your first Roth conversion ever in 2023, and you converted that $10,000 and then in 2025, only two years, hence, you wanted to take out the 10,000 plus the growth of 2000 on that conversion. 

Well, you haven't hit the Golden Rule. Yes, you're over 59 and a half, but you've only had dollars in a Roth account for two years in this instance, or less than five years. So, what would happen if you closed that account? Well, number one, you would get your conversion back, that $10,000 contribution with no penalty or tax.

Now the 2000 in growth, you would have no penalty, but you would be taxed on the growth because you had not hit the five-year rule of having a Roth open for at least five years. This is one reason why it's important that if you're thinking about doing Roth conversions in the future and you don't have any Roth accounts now, it might make sense to even just open up a Roth and convert as little as a dollar into that Roth.

Because that will start the five-year clock. So, once you're past 59 and a half and you have that dollar in there, that's where the clock will start. So that's one reason why it can be a good strategy to open up even a small Roth and get some money in there early. So, it can give you some other options or optionality later in life.

I want to thank Clyde and I want to thank everybody else that emailed me to help me clarify that, so we give Charlie some good information. So, it sounds like you are good to go, Charlie, if you're to do that conversion and you want to take some money out at some point in the future.

By the way, from an ordering standpoint, when you're taking money out of a Roth where you have some conversions, you have some contributions, the ordering is important because the IRS will look at all of your Roth accounts is one, and it's going to assume that first you're taking out your contributions, then you're taking out your conversions from oldest to newest, and then you're taking out earnings. So that's the ordering of a withdrawal. We created a really robust mind map on the five-year rule, how it relates to contributions and how it relates to Roth conversions, and my plan is to do a video where we walk through that mind map so we can understand this, and then share the mind map as a PDF with all the normal disclaimers where we're in the middle of fact checking that so I don't have to wipe the egg off of my face, again, 

I'll tell you, when you answer a question like this publicly wrong and you get called on it, it’s a little embarrassing, which is not necessarily a bad thing, right?

I want to answer the questions correctly, and I have a choice when that happens. When I got Clyde's email and I read it, I had a choice. I could step backwards and be embarrassed and ignore it and just move on and keep doing more shows, or I could step forward. Say, let me check this out. Confirm that I was wrong, and if I was wrong, I could have quietly corrected the record, or I could have done what we're doing now and publicly talk about it and correct the record.

I'm not doing this to say, yay, Roger. What I'm doing is an example for myself of always trying to step into growth. Knowing that we can't know everything. It doesn't mean that there's not a lot of value there. I just got it wrong here and I'm glad that we're able to correct the record.

So, with that, let's move on to our next question. 

HOW MIKE IS FINDING PURPOSE IN RETIREMENT

Our next question is actually some insider wisdom from Mike on how to rock retirement. 

He says, 

"Hey, Roger, I'm a regular listener and love the show. 

On the recent podcast you talked about finding purpose in retirement. I've been retired for two years. When I retired, I decided to do something each day for my mind, body, spirit.

For the body, this can be anything from going to the gym or taking a walk around the neighborhood. The mind can be anything from taking a class to learning new skills by listening to podcasts like the Retirement Answer Man and spirit can be anything from attending a place of worship, meditating, or listening to beautiful or inspiring music.

Some activities like helping at the food bank or taking a guided hike in nature may count on all three levels. I personally do not have a set time to do these activities, but just to try to fit them in as the day unfolds. Other people may find more structured approaches that work for them. I think the only rule is to find activities that interest you personally and it will never feel like it's a chore. 

Anyway, that's what's worked for me. I'm still growing as a person and I'm very happily retired."

I love that, Mike, and just some little simple structure, those three things, mind, body, spirit. In thinking about those in the morning, setting a little baby target is really all you need to do.

Thanks for sharing so much. 

ON SELF-FUNDING LONG-TERM CARE BY EARMARKING

Our next question comes from Diane, and it's related to self-funding for potential long-term care expenses. This would fall in the resilient pillar of a retirement plan. So, let's listen to Diane's question. 

Diane: Hi Roger, this is Diane. I love listening to your show. Thank you for all your valuable advice.

I have a question regarding long-term care. I'm looking to self-insure down the road. I'm currently 50 and married. We have a 1 million net worth, and I was thinking of earmarking our Roth IRA and 401K earnings for long-term care. 

I was wondering how we would go about extracting it from the rest of our financials to quote unquote put it away for 20 to 30 years until it's needed, and hopefully with the growth along the way, we can self-ensure for long-term care.

If there's a way that you think would work on Excel sheets or if that's something that your club has to offer where you can earmark certain accounts for certain things, I'd love to hear about it. 

Thank you.

Roger: All right, Diane, let's think through how to earmark an account with the assumption that you already want to do this.

So, I would create a feasible plan of record and then stress test what happens if a long-term care event were to happen? How resilient is the plan based on my estimates today? That's part of the resilient stage of building out a plan of record. 

You might assume, okay, 25 years from now, there's a long-term care event, and it's going to cost $80,000 a year, but it will last for three years. You would stress test that kind of extraordinary outflow and just see if the plan is still resilient and feasible if something like that were to happen. Because we're going so far into the future, this is something you'll do periodically, but let's assume you've done that and you've decided, okay, there is something here. I don't want to buy traditional insurance. I want to self-fund it, and I want to set aside a bucket for that money right now because I like to divide things this way, and that might be the way you like to plan. 

It's not that difficult in the sense that you could just set up let's say a Roth IRA that you're going to use. You would set up a second Roth IRA and then fund that, and that would be your long-term care contingency account. Nowadays you can label accounts fairly easily. The idea is you would move some money over there and invest that very long-term for growth with the idea that it will grow to cover that potential outcome of a long-term care event.

Then the question becomes, well, how much money do I move over from my current Roth account to this labeled long-term care contingency account? We're going to do some basic math here. You would want to be a little bit more nuanced than this, but let's assume it's that in 25 years, you're going to need $80,000 a year for three years, and let's just call that in 25 years, you're going to need $240,000, okay? 

So, we have that number. We're going to ignore, just for simplicity's sake, the inflation on spending, what the cost is going to be. Now we need to get to what's the net present value of that $240,000, because you're going to have growth between now and then. For the next 25 years, what's the net present value of that $240,000 in 25 years?

Let's assume that you're going to put in one amount at the beginning, then you assume, let's say, a 5% growth rate on whatever amount you put into that. What is the net present value of 240,000? 25 years at 5% discount rate? It comes out to, let's see here, about $71,000. So, in theory, in this simple example, you could put $71,000 from your Roth IRA, from your traditional IRA, move it into this account labeled LTC contingency, and if you get an average of 5% growth, that should get you two to the $240,000 for the terms that you've decided. 

So that's how I would go about that. You could be getting a little bit nuanced in the fact that there's a higher inflation rate, at least currently on long-term care expenses and some of that's different based on zip code, so you can get a lot more complicated with this.

Then that would be when you look at your balance sheet, my long-term care contingency bucket, and just like you would a pension, if you have subpar returns relative to your model, you may have to fund more to it. Or if you have outsized returns, you may be able to glean some of that off and move it back to your normal Roth IRA.

In reality, especially with the timeframe that we're talking about, it's all going to be one big pot anyway. So, unless this is just something mentally you want to be able to do right now, because we're looking so far out, I don't know if there's much more utility in it other than the fact that you would like to compartmentalize that thing.

But that's how I'd go about that, Diane. And with that, let's move on to the Bring It On segment and talk about mindset.

 BRING IT ON WITH MARK ROSS

Now it's time to Bring It On so you can dial in the non-financial part of retirement so you can rock it, and we're going to talk about mindset today with Mr. Mark Ross.

Mark. How are you doing, buddy? 

Mark: All things considered. I'm doing great. I appreciate it. I'm looking good, and I'm feeling even better. 

Roger: You actually do look really good. You're an attractive man. 

Mark: Back at you! 

Roger: Well, don't patronize me. I remember you shared a photo in the club a year or two ago now, and it was you like in your twenties or thirties and you were just like Tom Selleck-y studs-y, and you have aged well anyway. 

Enough of that man love. Let's talk about mindset.

Mark: A learner's mindset, I wanted to talk about that today because throughout life I think it's important to have and adopt a learner's mindset. What is a learner's mindset? 

We can get so comfortable in our zone of competency that we just quit learning, or we don't dig as deep as we could. We're not at capacity, but we just kind of coast, and I think that this season of retirement where you have the freedom, you've created a paycheck for yourself, or you're approaching that space, you could be in your forties, fifties, sixties. It doesn't matter. 

It's that this is like a brand-new season where you can learn whatever you want, and many of us have been complaining for years, like, if I just had more time, I would pursue this, or I would do that, or I'd experiment with this, and then when you have the time to do it, sometimes we forget how to learn.

Roger: When I think of learners' mindset, it makes me think more of a lack of curiosity because once we're this vintage of human. We are very capable, especially in certain domains, whether that's professional or personal, and it's easy to think, I got this figured out. I don't have to learn anymore. 

I can think of myself as a retirement planner.

I got all these certifications. I've taught the CFP® program. I've been doing it for 30 years. I got it figured out. That's really dangerous to think that there's nothing that you need to learn, because there is always stuff you need to learn and it's easy to think you have it figured out. 

It could be your marriage. Oh, we have a great marriage. It's been running for 30 years. I got this figured out and I don't have to be curious and learn and improve in my marriage. You could use that example as well, right?

That's a dangerous place to be. Not being curious about the world or things. 

Mark: Yeah, and I think especially in retirement. I retired unofficially/officially seven plus years ago, and it was really at that point that I really started learning more about the financial side and the non-financial side of retirement.

I kind of did this backwards. A little time into that journey, the Rock Retirement Club was initiated. You created that and started it up, opened the door, and ever since then, I've just been drinking it up on both the financial and the non-financial side. And I attend things in the club that I go, man, I just, every time I'm in an event there, on the virtual calls or a live meetup. I'm learning something new; I'm connecting some dots. It's exciting to me.

We were having some talk in the club the other night in a small breakout about, I wonder what's going to happen when I turn, like, I don't know, 80, 85, am I still going to be as excited about learning about these aspects of this season of life. The answer is, I don't know, and here's the other answer, it probably doesn't even matter if I'm not that interested, then there'll be something else to interest me because I do have a learner's mindset that's a real strong driver for me. 

So yeah, I don't think you ever figure out all this stuff, but you get to a place where you go, okay, this is good. I think I'm going to open the door for some new learning now in a different area or related area. 

Roger: That's an interesting question of will I have this type of mindset when I'm 85, my guess is that if you don't have it now, you're not going to have it then.

It's not like if you have it now and it goes away, it's something that you have to refresh. I think of a client, he's 83 years old and he works in an Apple store as a genius. 

Mark: Cool. 

Roger: He's an 83-year-old dude teaching people how to use Apple products. I think he has always been this way, and part of it, I'm sure, is his nature, but I think part of it is he is really good at being this way. He's kept this flame now. 

I always like that framework too, of. You have a flame, like a campfire. If you don't tend it, it will diminish. I think curiosity or learning's mindset is probably one of those, right? 

Mark: It really is. And I think you're right about the mindset piece, about learning, what if you don't have it now, where you have it later? I think it just depends. 

Here's one thing I've noticed about some who enter into this retirement space have been in a career where it's super demanding, and it's a grind and it's just lots of pressure. And sometimes you just need space to just chill.

You could say out loud or to yourself, I ain't going to learn nothing. I don't care anymore. I just need relief.

You know what? That's a great admission. That's good self-awareness. Chill until you get to that place where you want to learn again, and chances are you are, because if you were in that kind of work, you're a learner.

You just need some relief. 

Roger: I have an example with my wife and she's not here so I can talk about her. It's like with an iPhone and we just recently upgraded her iPhone because she had an ancient iPhone and it's been an ongoing battle. I'm like, honey, that phone is so slow, and the screens are so nice now.

One of the reasons she didn't want to get a new phone is because the newer ones don't have the button. I don't get that no button thing. I don't get that no button thing. It can be just as simple as that of learning to navigate something that doesn't have buttons. Right. It's keep learning. Keep learning.

Can I ask you a question real quick, Mark? 

Mark: Sure. 

Roger: We've known each other for a long time. You were a new friend and you're a new old friend now. You're an old friend now.

Now you worked at a municipality prior to retirement. Municipalities aren't the most exciting sounding professions.

After you retired or right around that time you went through a coaching certification program? I forget the exact name of it, but a common friend is the owner of it. What was it called? 

Mark: Coaching Mastery, Dan Miller.

Roger: Also, with Chris. 

Mark: Yeah, Chris McCluskey, professional Christian Coaching Institute and the International Coaching Federation, and the whole string of possibilities there.

Roger: So, my question is, what spurred you to explore that and go down learning this type of stuff? 

Mark: Yeah. It was in my fifties. I had this smoldering unrest that I wanted to do something different, and I didn't want to just stop working. I had no clue what it was. I worked with a coach. It was Dan Miller who helped me figure out, I'm really not stuck.

It was my way of thinking, you know, my mindset wasn't really moving in the direction of, Hey, there's new possibilities. You don't have to think that this is the only thing you can do, just because you've been doing it for so long. He helped me see that you just have to get a starting point, a foothold, just a sense of direction and experiment with it.

So that's what I did, and as I experimented with this new direction after I retired, I wanted to do something at my pace that interested me where I could learn and grow and do as much or as little of it as I wanted. But I took a slice of what I used to do that I really enjoyed, which is helping people in projects move forward, then I got some training on how to make that happen. 

So fast forward seven years and it's like it's a really good fit. It's expanded into other related opportunities, this being one of them, and just getting my voice out there that man, there's just so many possibilities in this second half of life for people to adopt a learner's mindset and do all kinds of fascinating things that they just didn't have time or resource for before. 

Roger: But prior to doing that, when you started going through the certification process, when was the last time you had taken a class to learn something? 

Mark: That's interesting. In my early fifties, my boss challenged me to do an MBA program.

I remember when he came into my office and told me, imagine there's all kinds of chaos and crisis going on. I was a spokesperson for a large department in the city to talk about all the negative stuff, and in the midst of all that, he says, "Hey, you want to take an MBA program?". I'm going, are you absolutely insane, I said to myself and to him, I said, oh, that would be interesting. 

I thought, what did you just say? Why did you say that? So, I took a two-and-a-half-year MBA program in my early fifties. So, by the time I got into my later fifties, it wasn't completely foreign to me to pick up something new and learn it. But once again, there was a learning curve and there were moments in there where I go, I don't have to do this. Why am I slugging it out here?

I had to remember why I was doing it, and that helped me pull me forward. And I'm so glad I've kept on that journey. It's just opened a lot of doors to be with some great people and new opportunities that I just didn't have time for. Honestly, whole different doors have opened and, and different worlds where I can do things with people now that I didn't even know that I was interested in this stuff.

Learning leads to more learning and it's a good thing for me. 

Roger: So what's one thing we could do today to stoke that learning mindset?

Mark: I think depending on your personality, some are real go-getters and dive in the deep end, go for it, but others who want to wade into the beach front entry, just pick something that interests you.

Put it on your calendar as a starting point and say, I'm going to at least make a phone call or inquire about a certain program that I'm interested in or I'm going to take a course online for 30 days or 30 minutes, whatever. Start. That's the answer. Start and see where it leads. 

TODAY’S SMART SPRINT SEGMENT

On your marks, get set,

Roger: and we're off to take a little baby step you can take in the next seven days to not just rock retirement, but rock life. 

All right, in the next seven days. So, my challenge for you today is to stress test your plan against a long-term care event. 

Use the numbers I gave you of, okay, at 80 I have a three-year event that's going to cost me $80,000 a year.

You can do this on a spreadsheet. If you use retirement planning software, you can create a what if scenario. So, this is going to pre assume that you have a plan of record and then you're going to create a carbon copy of that plan and then add in a long-term care event, three years at age 80, $80,000 a year. Let's just go with that.

Then add that in there and see the impact to the feasibility of your plan based on whatever methodology you're measuring, the feasibility of your plan. And that will help you see whether, hey, at current levels, given a lot of assumptions, it looks like I could self-fund this, or it may show you, Ooh, this could put something in jeopardy. Maybe I need to explore how to make my plan a little bit more resilient.

ROCK RETIREMENT PLEDGE

As always, this show is dedicated to helping you actually rock retirement. We are focused on you and your journey. 

We want you to have hope, which is an inspiring goal, agency, and pathways. We want to be authentic, no pretense. We want to be humble and respectful. We want you and us to always approach all these topics with curious eyes, right?

To be fresh so we can hold our beliefs up for examination so we can make adjustments as life unfolds. 

We want to be free from big finance products and gimmicks. Just want to keep it real. And we are always going to be focused on you taking incremental action and expanding your perspective. 

We want you to do this stuff.

We want you to rock retirement. I'm all in on this, so let's go do this. 



















The opinions voiced in this podcast are for general information only and not intended to provide specific advice or recommendations for any individual. All performance references, historical and do not guarantee future results. All indices are unmanaged and cannot be invested in directly. Make sure you consult your legal, tax or financial advisor before making any decisions.