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Episode #494 - The Roth Opportunity
Roger: "To do our jobs well, we shouldn't want our jobs too much." -George Schultz via Jim Mattis.
Oh, hey there.
Welcome to the Retirement Answer Man Show. My name is Roger Whitney, I am your host, and this is the show dedicated to helping you not just survive retirement but have the confidence because you're doing the work to lean in and rock retirement regardless of what's going on in the world. Lord knows we can't control that, right? We can only control what we do. This is the essence of Rocking Retirement.
All right, we have a good show today. Great month this month. Our theme for the month is focused on Roth accounts in retirement, Roth IRAs, Roth 401ks. What they are and how we might go about using them to enhance our retirement.
Today we're going to talk about the Roth opportunity and set the stage of what we're talking about when we talk about a Roth. In addition to that, we're going to answer your questions and we're going to hit the energy segment with Dr. Bobby Dubois in our Bring It On segment. Got a lot to do today.
BOOKS I READ LAST MONTH
Now it's the beginning of the month, so I want to share the books that I read last month, and I've been asked a few questions about how I read books.
I thought I'd go over that real briefly. Here's how I read books. Number one is I read multiple books at one time. Right now, I think I'm reading three different ones concurrently, and I always have a number of different ones going either Kindle, audio or paper.
When I read a book, my preferred way of reading a book is paper, and I use basically this tab that has all those little “sign me” type of tabs on them. They don't say "sign me", they're just different colored tabs, and I use that as my bookmark so as I'm reading a book and I get to a passage or a quote or something that I want to remember or that really impacted me, I just place a tab on that page and right around the time, right around the place where the passage is, and then if I have a highlighter, which I love to have, I will highlight it as well. So, I read multiple books. I use a tag holder as my bookmark, and then I tag, tag, tag, and highlight if I have a highlighter. Then the ideal version of me is then processing a book after I've read it, going to my tabs, looking at my highlights, and then taking the area that was important to me, and then processing it in a note taking app that I use called Obsidian. So, I'll make a folder for the book and then I will make a little note with the passage or quote that I want to save. And I'll either, literally, I'll type in from the book or extract it from Kindle, and then below that, write a few comments of why I thought this was important, what I think about it, and then perhaps expand upon that. Now, I have gotten out of the habit of doing that, because that takes a lot of time. But I think that's where a lot of the secret is, the specialness of integrating important things.
Now, you don't need to do that with all books, or I don't, but I would prefer to do that with ones, especially with a couple of the books that have read last month. And again, I'm building that habit, so I'm far from perfect with that.
All right, so the books that I read this month, Three books. One I had forgotten about until I was looking at what I read this last month.
The first book is called, and this is the one I forgot about, so I even have to look it up again because I did this via audiobook and it was the Alter Ego Effect by Todd Herman, the Power of Secret Identities to Transform Your Life. I don't remember a lot of this book because it was audiobook and I'm washing the dishes, I'm doing what, whatever I'm doing, and so I wasn't tagging or taking notes. The gist of the book is that high performers have alter egos that they take on or personas in specific roles that they play.
I think it was Beyonce. She had, I guess an alias at one point where she would, and actually publish music, I believe in this person where when she was on stage, she would take on this persona of this other identity so she could be outlandish and audacious, et cetera, which is very different than who she is in private life. So, she would take on this persona and she actually named who that person is. That persona had an identity that she would take on, and I believe she had an album where she didn't need the persona anymore, so she put that persona to bed.
So, the idea is that you take on an identity where Roger geeky Roger walking around the house Roger isn't going to be the same Roger that's on the show, per se. I try to be the same where I'm at, but there was some value to having these personas. Anyway, don't recall a lot of the book because I listened to it on the fly, and that's one of the downsides of audiobooks. So that was book number one.
Book number two was also an audiobook. I have the Kindle version and I've reread this book a few times, and that's called Fooled by Randomness, Nassim Nicholas Taleb. There we go. Nassim Nicholas Taleb, Fooled by Randomness. This is a foundational book. I actually don't have the physical version of this book and I need it. I have to go buy that. There is so much wisdom packed in this book when it comes to managing assets and managing retirement and all the uncertainty around it.
There's so much value in this book. I have to geta physical copy of this book. I'm surprised I don't have it. The gist is that it's very easy to overestimate academic and theory thinking as well as mathematics when it is applied to very fluid multifactor systems like the world or retirement. It's very easy to take academic or theoretical thinking or mathematics and overvalue what they bring to a very random world and environment because we crave certainty, and that's the nice thing about theories and academics and mathematics, is there's a lot of certainty there that is misplaced when you're really trying to manage and make decisions in very fluid, volatile environments such as the world or rocking retirement doesn't mean there's not a lot of value there.
It just means it's very easy to overestimate the value and overestimate our ability to forecast and predict, and model what could or likely would happen, and that's really important because key lesson there is we want to have a lot of humility in what we know and what we truly don't know. That allows us to be free from trying to figure it all out.
So, it's a great book. I would highly suggest it. He is very opinionated and that can come off as very arrogant, but he has walked it. So, he's put in the reps to be able to speak about what he's speaking about.
The last book I read this last month was Call Sign Chaos by Jim Mattis and Bing West, Jim Mattis is a marine general who was in leadership for really all of the conflicts that we've had over the last 30 years in some form or fashion. He was there and around it all. He's known, I believe, as the philosopher general because he is a ferocious reader. He has a quote in the book, says, if you haven't read a thousand plus books, you're essentially functionally illiterate. Hot take there, but he believes in learning from history.
Wonderful book, and here's an example because this is the one physical book I have. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, I maybe 20 different tabs and most of them have highlights when I had a highlighter that I need to process. Wonderful book on leadership in thinking again in uncertain environments.
So, a couple highlights from this book that I'll highlight for you.
One is this concept of commander's intent. Now, I was not in the military, so I'm not as familiar with some of these terms, and he shared the idea of essentially this is a shared understanding of why we're doing this in the first place, and the example he gives is take this bridge in order to stop the enemy retreat.
There are two aspects to that order, right? There's the take the bridge, and then there's the commander's intent, which is to stop the retreat of the enemy. It's really important that you understand the intent of why we're doing what we're doing. because it's very easy to let the tactic of taking the bridge be the focus rather than what the end goal is, which is stopping the enemy retreat.
You can take the bridge and fail to stop the enemy retreat. You have failed. But if you can stop the enemy retreat, but you decide not to take the bridge and do something else, it's still a success. This is critical, especially in what we're going to talk about this month when we're talking about Roth accounts and what the opportunity is to optimize our plans is Roth account is a tactic to optimize rocking retirement. It's the tactic. It's not the intent. The intent is to have more tax flexibility, pass money on whatever you decide that it is. I love that concept.
He also talks a lot about the OODA loop. Observe, orient, decide, act, observe, orient, decide, act, which we've talked about on the show that came from fighter pilots, if I recall, in that they're always trying to observe, orient, decide, and act, and then their enemy is doing the exact same thing. So, if they can go through that process quicker, they're going to have an advantage. That's a great critical thinking framework.
Next idea that I'll highlight here is speed is essential, and this is something he came to many times. He says time is the least forgiving factor and it's the least revocable factor relative to all the other things going on. Time, time, time. Speed is essential in decision making.
Then the last one really resonated with me, which was the quote at the beginning of the show, is to do our jobs well. We shouldn't want our jobs too much. This is Jim Mattis talking about something that George Schultz, not Charles Schultz, the peanut guy, George Schultz. Now I'm confused. You know who I'm talking about, the Secretary of State, was he at various other positions in the government. I like that. Especially for appointed officials, which he was referring to, which is to do your job well. You can't want your job too much; you can't want to hold onto it. You got to just be and serve in the role without grasping too hard on wanting the job because you're going to advise or lead differently. I think that is critical and I think that's one of the hardest parts, especially in the advice business as well, because I applied this to how I think of this is if I want to be someone's advisor too much or have someone in the club too much, I'm going to change how I lead. I'm going to tactically do things to make them always stay so I can keep my position, and that's how businesses run a lot because we're always trying to grow, grow, grow.
But I think you have to not want your job too much. You got to speak truth with love, whether they want to hear it or not, and you also want to celebrate when someone is able to graduate, whether it's from the Rock Retirement Club or from being a client because they feel empowered enough, which is my job. So, they can go do this on their own or there's not enough value to add. You got to not want that job too much. You want to celebrate when people are launching in various ways, and if you want it too much, it's just a scarcity mindset. So, I like that. So that's why I shared that quote.
So those are the books that I read in June. One thing I want to suggest to you is a new podcast called Catching Up to FI, catching Up to Financial Independence. This is produced by Becky Help Pig. Becky Heptig and Bill Yount. Becky and I have been friends for a few years. She's a member of the Rock Retirement Club. She and her husband were late to financial independence. They woke up one day and realized, oh, we have a lot of financial messes we need to clean up and we need to change some direction so we can be financially independent enough to live the kind of life we want, and now they're in their mid-late sixties and rocking life. I just saw them on an Alaskan cruise that we had with the Rock Retirement Club.
So, there are a lot of people like Becky who got to a certain stage in life, typically in their fifties, and maybe didn't do some of the things they should have done and feel like it's either too late or they're way behind the curve, and her and Bill talked to experts and talk to people that are navigating this journey as well.
A lot of us feel like, man, I wish I would've known about Roth IRAs or Roth 401ks, or not having so much debt, whatever it is. So, check out catching up to FI as a podcast to realize that we're all a little bit behind in a lot of ways and it's never too late to start to take action to create a great life.
With that, let's move on and set the table to talk about Roth accounts in retirement.
PRACTICAL PLANNING SEGMENT
Today's going to be the first installment on a month-long series on the Roth opportunity in retirement. What we're going to do today is just define our terms of between the traditional and Roth scheme when it comes to retirement savings accounts and talk about some of the opportunities that are available to us, and then throughout this month, we'll talk about contributions and conversions and Roth 401ks. So, we can lay the table to make better decisions around whether this is a tactic that we want to use in our plan.
So where does this Roth opportunity fit within the four pillars of a good solid retirement plan?
Well, we have vision, then we have to have a feasible plan, and then a resilient plan. This is going to fall into the fourth pillar. In optimizing the plan or enhancing the plan by using the Roth opportunity, whether that's a Roth 401k or IRA. So, we already have to have a vision. We already have to have a feasible plan and a resilient plan before we even consider Roth accounts. We don't want to put the tactic ahead of our intent.
Now, many of us baby boomers are a little bit younger, are probably feeling like we're a little late to the game when it comes to Roth accounts. They were established back in 1997, but very few people used them early on, and the tax community and the financial planning community didn't appreciate the value that they could have, especially in retirement because most baby boomers weren't there yet.
I can remember talking to my CPA back in the two thousand about Roth IRAs, and they were not fans of them, even the Roth 401k when it came out, and a lot of that comes from a paradigm of always defer taxes, defer, defer. Minimize taxes for as long as possible. That's been the philosophy that has been prevalent for decades.
So, when the Roth IRAs and then eventually the Roth 401ks were introduced, it wasn't that really attractive. Everybody just sort of, well, whatever, and so as a result of that, the general philosophy of deferred taxes for as long as possible, many of us are late to the game. No worries. That's just where we're at, so no big deal.
So, our goal with this series is to lay the playing field about the Roth opportunity and understand some of the rules around it so we can begin to think through this as an optimization strategy. No doubt, we'll have to have future themes as we get into more advanced stuff, but I think it's good to have the table set.
Around that, because we're thinking of this optimization strategy, I want you to keep in mind a few questions.
Number one, what am I trying to solve for in considering this Roth opportunity? Is it legacy? Is it lowering my required minimum distributions? Is it locking in the tax rate that I pay in my wealth? Is it avoiding future tax rate hikes? Is it avoiding IRMA later on, passing money to my kids? What is it you're trying to solve for? What is your commander's intent?
Then you can identify your agency. That will help define what you can actually do if you're still working, what age you are, what your asset profile is, what your goals are. Then you can identify your pathways, Roth IRA contributions, Roth 401k contributions, Roth IRA conversions, 401k, Roth conversions. Then you can identify the pathways but go through that order as you're thinking through this so you can better make decisions based on what you want to have accomplished and not let the tactics drive the bus.
So, since we're going to talk about Roth IRAs and 401ks, let's set the stage of what they are and how are they different than what we're used to?
So, let's start with a traditional IRA and 401ks. The mantra has been to defer taxes. So, when you make a contribution to a traditional IRA or 401k, that is tax deductible, it's going in before you pay income taxes on it.
So as an example, if you made a $6,000 contribution to an IRA or a 401k, that would not be included in your taxable income. It was like you didn't earn it, it's deferred. Then all the growth on these pre-tax monies would grow tax deferred until you withdrew the money. Now, once you reach 59 and a half for both a 401k and IRA exemptions, some of the exceptions here, after you reach 59 and half, you're able to take money out of these types of accounts without penalty.
But any money you take out would be considered taxable income and be reported on your tax return. So that's the traditional IRA and 401k. In addition to that, the IRS set these up as retirement saving incentive schemes to incentivize us to save for retirement, but they also want their tax income. So, they have required minimum distributions in place for traditional IRAs and 401ks.
The rules of that have just recently changed. It used to be 70 and a half, then it went to 72. Now it's 73 and in 2033 for those that get of age, then it'll be 75 with a required minimum distribution that is set up that once you reach the age right now, 73, you'll be required to take out a portion of your assets every single year until you retire, and how they calculate that portion is based off of your life expectancy. They have a life expectancy table, and every year the percentage that you have to take out goes up by a little bit. Right? At age 73, it's right around 3.7, 3.8% that you'd be required to take out one because hey, you're supposed to use this to support your retirement, and two, we want our tax income because they haven't taxed that money.
Then a traditional scheme, 401k and IRA, when you pass away and that goes to your spouse or to your beneficiaries, that money is still not taxed, but it's going to be taxed when they take it out, whether it's your spouse takes it into their IRA and then they do their own required minimum distributions or withdrawals, or now if it's a non-spouse beneficiary, who's going to be required to take that money out within 10 years and realize all the tax on the value of the assets that they have to withdraw.
That is how the traditional scheme is structured on a high level.
Now, how are Roth accounts different? Well, unlike traditional IRAs or 401ks, when you contribute to a Roth account, that money is still taxed when you do your tax return. So as an example, if you make a $6,000 contribution to your Roth account, doesn't matter, 401k or IRA, that is still considered taxable income when you do your taxes.
So, this is money going into a savings account after you've paid taxes on it, and since you're paying taxes up front, the cherry is that this money will grow tax free for the rest of your life and for your heirs, meaning that you won't pay tax on that money again. And you won't pay tax on any of the growth again, that sounds pretty good, right?
The negative is you have to pay tax on that money right now. So, if you wanted to make a, say a $6,000 contribution and you're in the 22% tax bracket, you'd have to pay $1,700 in taxes. So, you'd have to earn like $7,700 to actually have the money to make the contribution of 6,000.
So that's the pain that you get at the beginning for the benefit at the end. So, this money will grow tax free for the rest of your life, and because it's all tax free, the IRS isn't so concerned about when you take the money out. So, there are no required minimum distribution rules, forcing you to realize money as you get older. Whereas the traditional accounts can force you to take money out, which will realize taxable income, which could impact not just your income tax bracket, but it could impact capital gains. It could impact IRMA Medicare surcharges, taxation of social security, et cetera. So, you can see how all these things interact.
Then when you pass away, monies that are tax free in your Roth IRA or 401k will go to your spouse or to your beneficiaries tax free. When they withdraw the money from those accounts, they're not going to have taxable income to pay at whatever taxable rate they have at that time.
So that's essentially this Roth scheme.
Now let's talk about the planning opportunities of why we might want to think about this in the optimization stage to enhance your retirement plan. All of the opportunities that a Roth account presents orbit tax flexibility, your ability to realize and control how you have taxable income. When you have withdrawals from traditional accounts, any monies you withdraw from traditional accounts are considered taxable income, but they also impact other tax schemes that can impact you in retirement.
Whereas when you withdraw money from a Roth IRA or 401k, they are not included in the calculations of taxable income, and this could have a material impact financially on your retirement.
So, what are we talking about here? Well, once you reach 59 and a half, assuming you have a Roth IRA open for five years, you can take withdrawals tax-free, and it's not included in your tax calculations.
It's also not included in the calculations for a number of credits and surcharges that can present themselves in retirement. What I'm talking about here are, let's start with healthcare before Medicare, the Affordable Care Act. There are tax credits that you can receive based on your reportable income, modified adjusted gross income, that will lower, potentially lower the cost of healthcare prior to Medicare.
These are ACA tax credits. IRA traditional distributions are included in that calculation to determine how much of a discount you get on healthcare premiums. Roth distributions are not included, so by having Roth accounts in the mix, you can choose to take distributions from Roth accounts to potentially lower the amount you pay on healthcare prior to Medicare.
Once you're past age 65 and you qualify for Medicare, it's similar goes to IRMA surcharge calculation, so you're going to pay a premium for part B of Medicare, and if you choose Part D, the drug benefit of Medicare, and then there's something called an IRMA surcharge, where if you earn over certain amounts of money, you could pay extra for your premium based on your reportable income.
For a married couple, it's 195,000 or less. You don't have any surcharge. If it's over 195,000, that surcharge goes up based on the brackets. If you're single, it's about half that 97,000 or less, no surcharge. But when you take distributions from a traditional IRA, those pre-tax accounts, that's going to be included in that calculation.
So, if you took a $200,000 distribution from, say, a traditional IRA and you're single, that's going to move you up to where you're going to pay roughly 400 plus dollars extra a month for your Medicare between Part B and Part D. Whereas if you took the same distribution from a Roth account, it wouldn't impact these surcharges.
The next potential benefit, and as you can see, it's this tax flexibility that Roths present as an opportunity is taxation on social security. We don't talk about taxation on social security much, but if you earn over certain amounts of reportable income while you're on social security, you could end up paying taxes on up to 85% of the monies that you receive from your social security benefit.
So as an example, if you're a couple and you're on social security, if you earn over $44,000 in income, 85% of your social security is going to be taxable, and traditional IRA distributions or withdrawals count towards that calculation, whereas distributions from Roth accounts do not count to that calculation.
One last area where there is some flexibility tax-wise, that Roths present, that's an opportunity to think about is in long-term capital gains. So long-term capital gains rates go from zero to 20%. There is a 0% long-term capital gain rate, a 15% and then a 20%.
So, let's assume that you are single.
If you have income taxable income below $44,625 this year, and you realize a long-term capital gain your rate would be 0%. Whereas if you earn over $44,626 up to just shy of half a million dollars, it would be a 15% long-term capital gain event.
IRA distributions are going to count towards your taxable income to determine your ACA tax credits, your IRMA surcharges, your social security taxation, and the rate that you pay on capital gains. Your Roth IRA distributions are not included in those calculations, so we can understand how this could be a big benefit, maybe not today, but years into the future, where you can choose which account that you pull from if you have Roth IRA assets as one of the levers to pull. That's why we're talking about this.
Now, in addition to that, there's another opportunity when it comes to Roth IRAs and that is Roth IRAs do not have required minimum distributions as traditional IRAs do. This is one calculation we like to do when we're thinking about the optimization stage. It's because most people of our vintage have a lot of tax deferred assets and we like to calculate what is the potential required minimum distribution that I might have when I say turn 73 if I don't touch those monies. because the traditional philosophy is, you drain your after tax assets, you drain any Roth assets, and then you go to tax deferred assets because the mantra is defer, defer, defer.
So, a lot of times people won't touch their IRAs, their traditional IRAs until they have to. Well, that money keeps growing in theory, which means that your required minimum distribution in this case at age 73, will get bigger and bigger and bigger. Which means you're going to be forced to realize income at age 73 that you're going to have no control over.
So, a really simple example, let's assume you have two and a half million dollars growing at 5% and you are age 64. And then at age 73, your required minimum distribution is going to be $157,000. So, in that scenario, you would have to take $157,000 out of a traditional IRA. That would be taxable income, and that would be factored into your social security taxation, your long-term capital gain taxation, your Medicare surcharge taxation, and you would have no choice.
Then every year, the percentage of that IRA as a required minimum distribution is going to go up by a little bit and so now, you're going to have all this taxable income that you have zero control over, that is going to have impacts downstream on not just your tax rate, but all these other things that we're talking about.
The opportunity when it comes to a Roth account is how do we lower our pre-tax assets earlier because we can see this bomb coming to manage the lifetime tax that we pay. One thing that I want to make sure I throw in here, and it's not really an afterthought, it's a pretty important thought, is assuming you're married now, you're probably doing all of your calculations based off of how you file taxes, which is married filing jointly, most likely.
Let's say you're this 64-year-old person. So, when you look at the married filing jointly tax bracket, the 24% tax bracket is in 2023 anyway, between 190,000 and 364,000, right? That's where you would be if you're in those tax ranges after deductions and so forth, you'd be in the 24% bracket. If you're single, it would be between 95,000 and 182,000. I'm rounding there. If you're married and you're making decisions now, you're thinking that you're going to be married forever.
But one of you is going to pass away before the other, God willing, it's late in life, but if it's not, the surviving spouse is going to move up the tax brackets a lot quicker and pay more tax as an effective rate or an average rate.
In addition, for all these surcharges and things that we're talking about, we could move up faster there. We want to factor in that we're planning for two, but we also have to plan for one, because that could create a tax, I won't call it a disaster, later for the surviving spouse. So, we're trying to manage all these things that we really can't predict.
The goal here with this opportunity is how do I give my future self some flexibility now without paying too much of a price today? That's essentially what we're trying to get to, and do we add this to enhance our overall plan? In addition, another opportunity for Roths is that when you pass with Roth assets, as we talked about, it's hard to say that over and over and over again when we pass with Roth assets, those will go to your spouse or to your beneficiaries, and when they have to take those monies out, they will pay zero taxes on those monies. So, it's not going to impact their taxable income, and we don't know what their future rates are going to be so it's a very effective way to pass assets to someone else in a tax-free way.
Then the last big opportunity I'll mention for this segment is the deferral of taxes can be beneficial, but we'll never avoid taxes.
So, when we're deciding whether to contribute to a Roth IRA or 401k, or to do Roth conversions, as we'll talk about in a couple weeks, we have to understand that we're not choosing to accept taxes or avoid taxes. We're really controlling the timing of when we pay taxes. So, if we do to choose to do a Roth IRA contribution or a big conversion. Today at least we have the certainty of the tax that we're going to pay, as ugly as that might be. But now we've neutralized all future taxes on those assets as well as policy risk and future tax increases that could come down the pike as we get older, and we've paid it upfront rather than have the risk of taxes later on. So that's another advantage that we want to consider here.
So next week what we're going to do is talk about contributions to IRAs and 401ks from a Roth perspective and some of the rules around that, including the five-year rules, and then in the third week we're going to talk about conversions. Then the last week we'll try to put this into a framework that can help you make better decisions about whether you want to use this to optimize.
Now with that's done, let's move on to answer a few of your questions.
LISTENER QUESTIONS
If you have a question for the show, you can go to roger whitney.com/ask Roger, and you can leave an audio question or type in a question and we'll do our best to answer it respectfully on the show, love your questions. In addition, if you're not signed up for our 6-Shot Saturday email, you go to sixshotsaturday.com or rogerwhitney.com. You can enter your name and your email. Every Saturday morning, we send a summary of the questions and any links to resources that we mentioned, so it can be helpful. We promise not to spam you there.
A TIP FOR USING THE DETAILED CALCULAR ON SSA.GOV
All right. Our first question actually is clarification from Mark who we answered a question for on episode 487, I think it was about a month or so ago.
Mark said,
"Hey, I was so excited when you answered my question on the detailed calculator from the Social Security Administration.
I felt like a celebrity when I heard my question come on air. Thank you!"
He realized he could not find the detailed calculator when he went to ssa.gov and then he signed in, which took him to myssa.gov. Once there, there is no search option, and the calculators are not available.
So, what Mark said is he had to sign out and open up a new browser window to just go to ssa.gov where he could find the calculator.
I appreciate that clarification, Mark. So, if you go to the social security website and you're looking for the detailed calculator to get a better estimate for your social security benefits because you're going to retire early and not have income, you want to make sure you're not signed into the myssa.gov.
You want to get out of it in a new browser using ssa.gov so you can find those calculators. Thanks for the clarification there, Mark.
HOW TO SEARCH FOR A FINANCIAL ADVISOR
Our next question comes from Alice, who is looking for a financial advisor.
Alice says,
"Hey, Roger. I know the financial industry skews male, and I'm generally the type of person who work with the human, who is the best fit.
But now I'm looking to become a client of a fee only financial advisor who is a woman for wealth management, advice, planning, and oversight. I'm happy with my broker arrangement, but I'm looking for holistic financial planning as I'm four to five years away from retirement. What's the best way to search for this?"
Well, luckily for you, Alice, this is going to be a lot easier than it's been in years past. This is one big benefit of the internet in that as long as you're okay with it not being local, although the internet can help you with the local search, it shouldn't be too difficult to find female advisors that specialize in serving females.
I think of Tanya Nichols from Align Financial, who's on the show periodically. That's her specialty. She focuses on helping females with financial planning and asset management, but there are a number of women who cater specifically to female clients, and that just takes a simple Google search. If you put that in and put certified financial planner or CFP®, you're likely to come up with a lot of results to begin the search.
About one quarter of certified financial planners are female right now, and almost 30% of new CFP®'s this year are female, it's definitely a growing segment of the industry, which is an awesome thing, by the way.
So my first suggestion would be to define exactly what you mean by someone that is going to help you do the financial planning, management, and oversight. What exactly does that mean? Do you want them just to create the retirement plan and be available to you for hourly check-ins? Do you want someone that's going to actually manage the plan, manage the assets, and have a process that you are involved with and work hand in hand together? Is it going to be specific about retirement? Because I would suggest you really want to look for a retirement planner, not somebody that works with people in their thirties, somebody that specializes in retirement. So certified financial planner is a good screen. I would suggest either RICP or RMA as a designation that shows someone has retirement specific training that's robust. I think those three certifications, you look for that, you look for female advisor. You should be able to find plenty just through internet search and from there you can look at their website, read their bio, schedule an intake call. You can grab our find a trusted advisor interview worksheet to guide how to interview them.
You should be able to do that fairly simply. Another option would be to ask your female friends if they use an advisor and if it's a female and how they've been treated. Even if you have a referral from a friend, it doesn't mean your friend knows how to evaluate them. I would still go through an organized way of interviewing the advisor to see that they actually have a process, and they specialize in what you're trying to accomplish. But it should be relatively easy to find female advisors. The CFP® board has how to find a CFP®. I don't think you can screen by gender, but you can definitely tell by name typically that whether it's a male or female, and then you can go to their website, read their bio.
If you go to FINRA, you can see if they have any disciplinary history and see their work history, and then schedule an interview. All of this is outlined in our find a trusted advisor worksheet that we can share in our 6-Shot Saturday to help you on that journey.
ON CONSOLIDATING YOUR IRAS
Our next question comes from Eileen in regard to an individual retirement account that she has.
"Hey, Roger!
Love, love, love the podcast. I have six separate IRA accounts created over the years in two different banks. I would like to consolidate these all into one IRA, but I heard something about the one-year rule and don't want to make any mistakes. I went to the IRS site and the description says that you can't do two rollovers from the same IRA in the same year, which rather implies that more than one IRA would be okay. Right after that, it says you can only do one regardless of how many IRAs you have. So, is it going to take me six years to consolidate all these accounts or am I misunderstanding something?"
That's a great question, Eileen. So, let's walk through this. When you have an individual retirement account, whether it's a traditional or Roth, that account is held by a trustee as the custodian for you, and that keeps it out of your hands and allows the tax benefits of an IRA to be in place.
So, let's assume you have an IRA at the bank. I don't know, ABC bank. That's why when you get your statement, it says ABC bank custodian for Eileen's IRA, traditional IRA, Roth IRA, et cetera. They're acting as custodians for you, and in this case, you have multiples at two different banks.
The rules that you refer to are what are considered rollover rules. So functionally the way that would work is you tell the bank. I have a hundred thousand dollars in this IRA. Give me that money. You fill out paperwork. The bank issues a hundred thousand dollars check from your IRA to you. That starts the clock on a couple different things. Now you've taken possession of that money in Eileen's name, Eileen's name rather than the custodian's name, and so now you have a clock that is ticking on whether that becomes a taxable event or not. It's a 60-day clock, so you can actually use those hundred thousand dollars. In this example, Eileen, to do whatever you want, but you have to put that money back into an individual retirement account. It doesn't matter where it is. The IRS doesn't care how many accounts you have. It just looks at Elaine. How much money does she have in IRAs? You have to put a hundred thousand dollars back into an IRA account within 60 days, or it becomes a taxable event. It's taxable income.
Now what you're referring to in your question is what's called the one rollover per year rule. So you cannot make one rollover from the same IRA within a one year period. You can also not make a rollover during this one-year period from the IRA to which the distribution was rolled over into. Now a rollover is this structure that I'm talking about, Eileen, which is the custodian, ABC bank, issues the check to you in your name, and then you have that 60 days to go put that back into another IRA.
You're only allowed to do that once per year. Now a really simple way to not get into taking receipt of money, which is going to create tax forms, and you'll have to report this on your tax bill. Eile is to do what's called a trustee-to-trustee transfer. This is where ABC bank is the custodian say for IRA number one, you fill out paperwork to transfer that money from ABC bank to let's say, XYZ bank.
Let's say you're going to consolidate everything in XYZ bank IRA. You go to XYZ bank. You tell them that you have an IRA at ABC, they're going to have a transfer form for you, and you'll complete that transfer form. They'll likely ask you for a statement from the IRA that it's coming from, and they will shepherd the money in this case, coming from that ABC IRA, going from that trustee directly to the trustee at XYZ bank without it ever touching your hands. Never actually touching your hands, I mean, going into your name, you can do as many of those as you want, so you don't have to wait six years.
You could literally choose the IRA that you want to be your one IRA in this case, and then let them know that this is what your intent is. Go meet somebody at that bank. They could easily consolidate other IRAs that you have at that bank to go into that IRA, and then you can tell 'em, hey, I got these other IRAs over at this XYZ bank, or whichever bank I'm getting my names confused now and they'll have a form for you to complete to do a trustee-to-trustee transfer. And that's the key thing that you want to do. No tax consequence. You're not going to have to report anything. You can get all this consolidated all at once.
Part of the key here too is we're talking traditional IRA to traditional IRA. It could be named Rollover IRA because we have some older names that are still out there. The key is it's not going from a traditional to a Roth or a Roth to a traditional, they're all pre-tax assets going into a like-minded account.
So, the key here is choosing the bank that you want to use, go talk to them. They'll have forms for you to do all of this, and you want to make sure it's a trustee-to-trustee transfer.
CAN KELLY ROLL OVER HER 401K TO A ROTH IRA OR IS THERE A BETTER OPTION?
So, our last question today is similar but with some different terminology and this comes from Kelly. Let's listen to Kellyq's question.
Kelly: Hello Roger. My name is Kelly. I am a new listener to your podcast.
I really enjoy your structured thought process for thinking through the questions that your listeners bring to you. My question is regarding an old 401k plan that my husband has. My husband is a member of the IBEW, which is the International Brotherhood of Electrical Workers, and he's been a member since 2019.
In 2019 when he started the electrical union, he worked for an employer that offered a 401k plan, also referred to as the deferred compensation plan. We contributed to this 401k while he worked for that employer, but then stopped contributing once he left employment. He is only typically employed by each employer for about three to six months at a time, and then we go to another employer. We do not plan to contribute to this 401k plan in the future because not all of the employees that he works for offer a 401k.
My question to you is what is a deferred compensation plan, and since we are not contributing to this plan anymore, can we do an IRA rollover? If so, how do I determine if it would be into a traditional or a Roth? And what is your thought process for this account? I just don't know what to do with it, and if these funds can better serve us elsewhere.
There are a few options online for the withdrawal rules. Upon separation from service, you can receive a lump sum payment, elect periodic payments, and then the plan sponsor has to approve, required disbursements, and then there's a tax rule that any withdrawals not rolled over to an IRA, or another qualified retirement plan is subject to federal income tax. So, I believe this can be rolled over to an IRA.
So that's my question. I just don't know what this account is and what to do with it. I really enjoy your thought process for making these decisions, and I can't wait to hear what you recommend.
Thank you for all of your content. It is greatly appreciated."
Roger: It's a great question. Very detailed question, and you're using two phrases there that we want to make sure we are using correctly. You mentioned 401k plan and you mentioned deferred compensation plan, and sometimes even providers will use names inappropriately or interchangeably.
So, a deferred compensation plan is generally a non-qualified plan that is a bespoke type of plan for a high-income earners, whereas a 401k plan will be something that we're more used to and much, much more prevalent, which is a way for you to defer income into a 401k structure. These are regulatory nuances that are important when you're thinking about what you do with money.
Not having seen anything, and based on your description, which was very well organized, by the way, I'm going to assume that this is a 401k plan, but I'm going to want you to confirm that.
So, the first question is, what do I do with this? Do I consolidate it? Do I not consolidate it?
Hearing your tone and here you can talk about it. I'm going to suggest that you consolidate this and any other plans that he has along with this into one account as much as possible. You can do that at any custodian, like Vanguard, Schwab, Fidelity, whatever. That way it will make it much simpler for you to manage and access because if you start to have multiple accounts spread out, it's like getting a cluttered closet. It can be difficult to manage. You could forget about things. Or if something happens to him or to you, they can just totally be forgotten because it's not organized. So, the more you can consolidate, the better, in my opinion.
So, here's what I would suggest that you do with this one. From what you said, it sounds like you can do a direct rollover from this plan to an IRA, based on what sounds like you read or took notes from the website, but you're using this term deferred compensation plan. I want to make sure there isn't any quirky things related to that.
So, step one is, do you want to consolidate? I would say yes. Set up an IRA somewhere once you confirm what kind of plan this is. So, I would call the plan administrator, not the company, but whoever administrates the plan. You can find that on the website. If you're not sure, you can call the old company and they can tell you who it is and talk to somebody about this specific account and ask them, can I roll this over to an individual retirement account, an IRA?
They're going to know, they're administering the plan, what your options are, and your preference would be to do a trustee-to-trustee transfer, sort of, or direct rollover is what it would be called in this case, which means that the money isn't going to you or your husband in this case, in his name, it's going to the new custodian. That way you don't have any tax consequences related to it, but I would call the administrator to find out what your options are, that way you know the pathways are available.
I can't tell unless I read the plan description and went through it because there are so many different types of plans out there that I would just be guessing. My intuition says, yes, this is a 401k. Yes, you can move it to an individual retirement account. Call the administrator, get the options that they give you, and you're welcome to email me again and we'll try to help you on the show. That's always going to be the case. If you're not sure, especially with qualified plans or company plans, there are people that administer these things. They're also going to be able to tell you, or your statement will tell you whether it's pre-tax money or Roth money. Sounds like this is probably pre-tax money, but it should be said in your statement as well. I'll see if I can get a fictitious statement so we can maybe do that on a YouTube video or something.
But call the administrator, find this option out. If you can roll it to an IRA, I suggest that you do, you can establish one at a good provider.
All right, with that said, let's move on to the Bring It On segment and talk about energy and how we put all of these tools together to start building our energy so we can age in a healthy way.
BRING IT ON WITH DR. BOBBY DUBOIS
all right. Now it's time to bring it on, and we're going to talk about the energy pillar with our energy guide, guru Sherpa, Dr. Bobby Dubois. How are you doing, Bobby?
Dr. Bobby Dubois: I'm doing really well. Thank you.
Roger: Your sense of organization is in how you have approached this journey that we've been on. It has been really impressive.
We started with some tools, whether it's exercise or sleep, you built a toolkit and now we're starting to explore how do we actually use this toolkit. It's evident that you've walked this kind of journey before in your academic and scientific career.
Dr. Bobby Dubois: That I have. Like you, I like to put frameworks around things and a bunch of tools that don't have a real application are not going to be very useful.
So, this exercise of bringing all the tools together has been very helpful and hopefully for the listeners as well.
Roger: Yeah, so last month we applied the tools to the risk of heart disease and that was pretty impactful. That is, we know about heart disease, but to think that we actually have some agency and knowing what that agency is has really set on me.
I haven't quite figured out what I'm doing with it, but I'm definitely aware about it.
Dr. Bobby Dubois: Well, that's good to hear and I hope some folks in the audience realize it's an important issue to reduce the risk of heart disease and that they really have some things they can do, agency, the ability to make changes that are powerful. I look forward to hearing from folks what they've tried, what didn't work, and hopefully what did work.
Roger: On that note, before we begin, we've received notes from, generally it's Rock Retirement Club members, because you do a meetup on a regular basis within the club from members that have had success experimenting in their own life using some of the tools and they've been extremely powerful. We had one that went on a long weight loss journey and has had a lot of success and has a lot of energy. I only say that, so that if you have a success story that you want to share, you can go to rogerwhitney.com/askroger and you can type an email and just tell us one way that you've used a tool.
You can leave an audio message and share some impact that you've had, because I think the more we see each other using these things and having success, the more motivated we can be. I wasn't even planning on doing that, but I'd be great to hear. I know you like to see those responses, Bobby and I do too.
Dr. Bobby Dubois: People say, I tried this. It didn't do me any good. I mean, I think what the approach does is change how you think about health. So often I go to the doctor, he makes the diagnosis, he determines, or she what needs to happen. I take that advice hopefully, and then I go back later, and the doctor tells me if I've made improvements in my blood pressure, cholesterol, whatever it is.
The beauty of the kind of end of one test on yourself approach is you're in charge. You figure out what you want to do, you check your baseline and then you monitor your progress. Then of course, talk to your doctor, tell him how you're doing, and she or he will respond to that. So, it's, I hope, empowering for folks.
Roger: It can be a frustrating journey, right? Because I've tried a number of things and didn't get any information that I could discern, or it just simply failed. And that can happen in a string. It's a force mind trick to say it's not failure, it's just more information. Okay, that doesn't work. Now what's next? That can be maddening, but it's a good journey.
All right. So, what are we going to focus on today, Dr. Dubois?
Dr. Bobby Dubois: Well, I wanted to bring the same tools together. Last time it was heart disease. Now I want to talk about energy more broadly. Energy is, how you feel about yourself, to use the word again as the definition, how much energy you have to get up in the morning and do things, and do you run out of gas at four in the afternoon and are you anxious all the time? Is there a lot of sadness in your life and how are you able to cope with all that? So energy is quite broad. I mean, if you were the Chinese, you'd say Chi and the Chinese would then say, oh yes, that's all aspects of energy, not just your ability to run down the street. That’s, I think, what we want to get at.
I think in terms of why somebody should care that's in this audience. Now, you probably have a few 20-year-olds, but I suspect most of the people are older. They're either in retirement, they're thinking about retirement, you know, they're in their fifties, sixties, seventies, maybe some that are younger. So why should we focus on this?
When we are young kids or if we have young kids, we know they never run out of energy. They're just running, running, running, and they don't run out of energy. In college, we could pull an all-nighter and then we were Superman or Superwoman, and we just make things happen the next day. In the business world, you know, in our careers, we worked hard, we were focused, we had home activities. We were busy, but we pulled it off and we made it happen. As we get older, and for many of the folks on this podcast who were in their forties, fifties, sixties, seventies, inevitably things will change. And that reservoir of ability to address challenges in the world and in our lives will be more difficult.
We're going to have health challenges. Yeah, we might get killed in a car accident, but for most people, things wear out and break in our bodies, and we're going to have to deal with that. We're going to lose friends and. God forbid loved ones because they're going to pass on or move or whatever. We no longer have that work focus, and our natural vim and vigor may wane a bit. So, it's really, really important that as we think about retirement, thinking about getting older, we want to be able to be aware of the fact we may have less motivation, less sort of physical energy, maybe more sadness from some of these things, and more loneliness.
So, for me, the positive is our tools, some things we've been working our way through over the last six months, can help these aspects from a holistic standpoint. Although I'm sad about what's going to happen in life as I get older, I think we can get ahead of the game.
Roger: Let me ask a question about that. Some of these are physiological changes with chemicals and muscle mass and things like that, right. That's just a natural progression. Then coupled with that is, the health challenges, the mileage on our body and aches and pains that come from use, they both work together, right? There's an element of both of those, which can cause us not to strive or go into stressful environments physically, or I don't know if I'm saying this right, and an object that slows down because of whatever reason continues to slow down an object not in motion stays where it's at. An object in motion goes in motion.
It's a little bit of that concept, right? We have to keep working on it.
Dr. Bobby Dubois: Yeah. Look, if you're not feeling good because life is put a bunch of challenges in front of you cause you age, it's hard to get up the energy to go and say, I need to make a new friend and I really want to start this new activity. All of those sorts of exploration of this part of our life requires us to feel like when we wake up in the morning, we have that drive to do something. It's something I fear we may lose.
In one of the future podcast segments. I've got a new phrase I'm working with. There's the sort of the saying, use it or lose it and that applies to lots of different things, but I think as we age, the proper way to think about it is to overuse it or you will lose it.
What do I mean by that? That our mental capacity is going to deteriorate. Our physical capacity is going to deteriorate. One of the best protections against cognitive decline is starting with more cognitive workhorse, because you get more to lose. If your IQ is 160 and you lose 30 points, that's different than if you start at a hundred and you lose 30 points.
Now there's not much you can do about that, but similarly with exercise, yes, I want to be able to lift 20 pounds in 10 years, but I have to be able to lift 20 pounds and more now. So, overuse it or you will lose it, and that'll be one of the themes I want to bring up over time is that we have to get ahead of some of these inevitable deteriorations.
Roger: What I hear in that is, and I was actually journaling on this this morning, is stress and we were talking about doing deep work and focusing. Thinking is hard, just like exercise. If you are doing at the high level or a little above, what you're capable of doing is hard and when things are hard, just like if a flame is hot, you should pull away or slow down.
When in reality it's actually a counter indicator when it's hard or it's stressful, you should lean into it, within reason from an injury standpoint, et cetera. Does that summarize that concept?
Dr. Bobby Dubois: I think that's right.
Roger: It's a counter indicator. Okay.
When I was thinking about the four pillars on the non-financial end, I have energy as first before mindset. The growth mindset is very integral to what we're talking about here as to why this is important.
The reason I put energy first, and I'm not sure if it was correct, is if you don't have energy, it's hard to have any kind of mindset. You have to start with being able to show up more as your best self in the first place, and this is why this is so important. Does that make sense?
Dr. Bobby Dubois: Absolutely. I think that framing is right on target.
Roger: Okay, so how do we start to use these tools to build our energy?
Dr. Bobby Dubois: Well, the good news is we can do something about it, and many of these tools will sound very familiar to folks, and then there's a bonus tool I'm going to throw out that we haven't spoken about much.
So, the first is exercise. Exercise just is the root of all goodness in so many ways from a heart disease standpoint, stroke prevention, mental decline, obesity, likelihood of diabetes, so that we all have talked about together for a number of sessions. But, and again, you know, I'm all about the evidence and I'm not going to suggest stuff that doesn't have evidence, or at least I'll make it very clear. This is my opinion. It's based on no science whatsoever.
But there's studies that have been done on people and their exercise levels and their levels of depression or sadness or energy. In people who went from basically sedentary and said, okay, I'm going to walk 60 minutes a few times a week, or I used to walk 15 minutes and now I'm going to do a gentle jog for 15 minutes.
So that ramp up of one sort of category of exercise, there was 25% likelihood of reduction in depression for each increment. So, if you walked and now you jog once a week and then you decide, well, I'm going to do that twice a week, or I'm going to do those three times a week. You're likely to have compounded benefits.
There is a randomized trial, you know, the gold standard where they took people and exercised them, or they had controls and they measured anxiety levels, and anxiety levels went down substantially. So, exercise for a hundred reasons, makes you feel better. It has a kind of indirect effect that when you exercise, it helps your sleep.
When you help your sleep, then you feel better. So, this is number one. Always going to be number one on my list.
Roger: I have been a walking study on exercise and depression and anxiety management my entire life. I can tell if I'm not by my mood, whether I'm exercising or not for sure. Anything else on exercise, and I think a good book. I have a good book that I would suggest that talks about the importance of exercise when it comes to energy and aging is Younger Next Year, which we actually have done a book study on before to not just exercise and this is maybe where you might deviate from this or not. I haven't read the book in a while, but I remember in talking about exercise, there's a qualifier, exercise hard.
Now walking, just moving is important, but is hard important in this, in your opinion?
Dr. Bobby Dubois: Well, when we talked about exercise six, eight months ago, I mentioned there's really four aspects and they're all equally important or all very important. The first is your basic aerobics. Let's just walk. It's not pushing ourselves hard, that's the one.
Second is strength. You have got to have your strength.
Third, you have to have good balance, which is more than just strength.
The fourth is this issue of anaerobic ability, meaning my kid runs across a parking lot or my grandkid and I need to have the ability to ramp up very quickly, very intensely.
They're all four important. Just doing one but not working on your balance or your strength, I don't think would be wise. So, all four, yeah, we could argue about what percent of our time should focus on each one of these, but I like them all.
Roger: We can go back and listen to that segment to go deeper in on that. So the next tool is sleep. So, let's talk about sleep.
Dr. Bobby Dubois: Sleep is the root of all goodness, and a hundred years ago, we knew very little about sleep, and Freud gave us some ideas about what dreams mean, but we are learning more and more that sleep is really important. There is a process in the brain where basically you get toxins that build up and not toxins like, oh, I had too much mercury in my diet, but there's just byproducts of thinking, and you got to flush those suckers out of your brain and there's a process when you sleep, it's almost like a massaging process within your brain to get rid of some of those. Just more and more we realize how important it is.
There's an interesting study which asks the sort of chicken and egg question, am I sad therefore, I didn't sleep very well. Or did I not sleep well, and I became sad. So, they really did a lot of trying to disentangle the chicken and the egg. What they found is absolutely, if your mood isn't good, you may not sleep well. But even more important was your sleep and your next day mood.
So, in this study, they really looked at depression and anxiety and both. People who had the magic seven or more hours were better on that measure.
Roger: So that's a tool that will help.
Dr. Bobby Dubois: I think, think a lot of people anecdotally know it, but this is something that's been proven scientifically as well.
Roger: A discussion I was having with my son the other day, which will be fun because he listens to the show because he does the transcripts, was I'm focusing on sleep and I was mentioning that my sleep scores on my whoop were not that good, even though I've been focusing on it.
He was explaining to me, and he's a nurse, that as you get older, sleep becomes, I don't know if he was saying difficult, but we end up, our sleep patterns change, and we end up needing or getting a lot less sleep. It just naturally happens as we get older. I guess that's a struggle in trying to manage sleep as we get older into our fifties, sixties and seventies, unless do you know anything about that aspect of sleep and aging?
Dr. Bobby Dubois: Often people talk about that and. I don't know that I would just chalk it up to aging, and we have tools that can help us. I've been focused on sleep and I'm a good sleeper, but I noticed in the last month, I'm waking up at four in the morning and that's only giving me six, pushing seven hours of sleep.
I'm like, why am I waking up at four in the morning? I used to sleep till at least five, maybe six. So, I'm doing my own internal, okay, so do I have the temperature in the room correctly and am I eating too late in the day? So, it is a constant struggle. I can't blame it on the fact I'm a year older, now I can't sleep for as long. It's up to me to figure this out, try things, and that's the way of the end of one trial.
Roger: Just have to keep experimenting.
Dr. Bobby Dubois: Keep experimenting, find what works for you.
Roger: All right, so the third tool that you've built out is mind body activities. So how does this interact with our mood and our energy?
Dr. Bobby Dubois: Well, people have been talking about meditation, breath work, and walking in nature as, oh, that'll calm you, and that's absolutely true. But what I want to emphasize is that not only does it seem right, but again, there's data to support it. So, we talked in the mind body segment about this investigator that took people and had 'em walk around town, which was noisy, and compare that to people who walked in nature and then did brain scans and found that the amygdala, which is a seat of a lot of emotions lit up differently. It was a calmer scenario in people who walked in nature, mindfulness meditation. They've shown that after a couple of day retreat, people's cortisol levels dropped a lot, and breath work is again, in the scientific studies have shown that people's anxiety levels and such is it's much better. In a randomized trial of yoga for six months compared to people who didn't do yoga on this was randomized, so people were in control groups. Again, their sense of wellbeing and energy and fatigue was just a lot better when the people did yoga.
So, this is a grab bag of things my wife and I took our very first class of Tai Chi, so we're going to see if that helps us in additional ways to improve our mood and balance and all the rest.
Roger: Can I share a tool here that I've been trying That is super, super simple, and it comes from sports performance.
It's called red, yellow, green light. Maybe I'll do a video on this, but I can explain it. We get caught up in the day and things overwhelm us, or we're in a stressful situation, or maybe we made a mistake. We start to just get tense. The action is, and this is a centering action that they use in baseball and other sports, is when you get in sort of a red light, you're feeling a little off, you do a physical motion like you clap or you slap your side or something.
So, step one is do a physical motion. Step two is to take a deep breath, and step three is a verbal affirmation. Something like, I'm good. One guy actually does, I'm good. And he wipes down the front of his chest, like he's wiping away what he was dealing with, and then he just goes on. Then it's like a very quick red, yellow, green to just sort of reset.
It actually helped a lot when I get a little overwhelmed during the day to just sort of, Okay, I'm good. Clap my hands, breathe, swipe my chest and say I'm good.
Dr. Bobby Dubois: I think it's fantastic.
Roger: All right, so the next tool is the fun one, cold showers, cold plunges, saunas, et cetera. How does this help our energy?
We went deeper in these, by the way, in past Bring It On episodes with Bobby and the We do Bobby's episode at the beginning of each month, this energy episode. So we've gone deep into each one of these if you want to really hear a longer discussion about any one of these tools. So let's talk about cold, plunges and mood and energy.
Dr. Bobby Dubois: Yeah, so the cold plunge, which people hate and they love to hate it. There's new data that your dopamine levels double, triple, quadruple quintuple. Dopamine and adrenaline noradrenaline are the happy hormones that are in our brain. So it's been shown th this makes a real difference and sauna probably helps as well, but the study I'm referring to was one that was done with cold plunge.
So again, I may not get you completely to do cold plunge, but I'd try it. You may hate it, but I guarantee when you get out of that bath or shower, whatever it is, you'll feel invigorated, and not just for five minutes, we'll go on for hours.
Give it a try.
Roger: My brother-in-law, we, he and I were talking, and he does 30 seconds of cold shower, and his perception of it, I don't know if he knows any of the science around it is, and he does it in the morning. For him it was like, it feels good to do a hard thing first thing in the morning, just psychologically, I just did a hard thing.
Dr. Bobby Dubois: Good. Whatever helps you. I think it's a wonderful approach.
Roger: All right and this bonus tool, one thing that I've worked on and I think I've mastered is what?
Dr. Bobby Dubois: I'm not a smiley person. That just isn't what I know how to do. And anytime somebody has me in a picture and they say, smile, it's the most artificial thing you've ever seen.
So, I don't know how to, some people are really good. It's natural. There's this famous saying, smile and the world smiles with you, cry and you cry alone. People will anecdotally say, yeah, if I'm smiling, I'm happy. But then people might argue, well, you were happy. That's why you were smiling. But there was actually a study where they kind of forced people to forcibly smile, and the way they did it, you can do this because I'm not a good smiler, is stick a pencil in your mouth. The ability to hold the pencil in your mouth forces your muscles in your face in the way that a smile would do the same thing. So, they basically took people stuck pencils in their mouth and compared them to controls, and then they flashed various pictures in front of them.
Somewhere you might get a happy reaction and the likelihood of a happy reaction was way higher in people who had done the pencil in the mouth. So, it's one of these things I have to keep reminding myself, but when I do, it really works just to momentarily smile for 30 seconds. It actually works.
So, there's not as much science as I would like, but give it a go, it can't hurt.
Roger: I can't help but share my experience with this.
So, I have a natural grumpy face, especially when I'm thinking, and I'm an overthinker, so I tend to have natural grumpy face all the time. Especially growing up and over the last 15 years, I'm going to say I've mastered walking around with a slight smile on my face.
I don't even know if I'm doing it anymore. It's not a full smile, it's just a pleasant face. I do my best anyway, and I have experienced, I don't know if I say internally, it makes me feel better, but I do know that the world interacts with me differently as I walk around. I remember I was in Tennessee, had a blowout in the highway, and I was in a discount tire, and I'm standing there waiting an hour to get my new tire on. A random gentleman walked by and was like, you have a very nice face. Just random.
Dr. Bobby Dubois: Ah, how sweet.
Roger: That was definitely awesome, my affirmation because I had been proactively working on this, but people around you that interact with you, whether it's a store or a gas station, just see you differently and you're more approachable.
Whereas I have no doubt in my natural state, if I wasn't walking this journey, I'd probably be very unapproachable.
Dr. Bobby Dubois: Well, it's very nice, another benefit of smiling.
Roger: No science there, but something to practice and then we haven't really talked about this one in a little bit, but nutrition.
Obviously, all this stuff works well together.
Dr. Bobby Dubois: I thought about including nutrition and I was like, you know, there's not a lot of good science on mood, but anecdotally, people often say, well, if I have my cup of coffee in the morning, I'm just so energetic and when I get tired, I then have a Diet Coke and I feel more energetic. So, we know caffeine will help our energy level.
The challenge of course, is. You come off the caffeine and then you may have a lull that is challenging for you. But I think that's one that's, I'm not recommending everybody have a lot of caffeine, but I know for me it makes a huge difference and I use it sparingly, and I enjoy it when I do.
Then it gets a little squishier. Some people say, oh, if I have all these carbs and sugars in my diet, I just feel like a slug that day and I don't feel good. I don't know if the science is that clear, but as we'll end up this segment, try it in yourself and see. Maybe changing your diet will make you feel happy or less anxious, more energetic.
Give it a go.
Roger: All right, so we need to now experiment knowing that energy is what we bring each day to be able to have a good mindset and to be the present for people and to pursue really interesting activities. We need to have that energy.
How do we experiment with this? What is a proactive step somebody can take that's super simple?
Dr. Bobby Dubois: As we end all of our segments like this, we need to experiment on ourselves.
Step one, some baseline of where we are now. Step two, try one of the tools we just talked about or something you've got that you think would help, and third reassess.
The good news is most of the stuff you'll know pretty quickly in a couple of weeks. So, it's not like you're committing to a year of this.
Now, as always, I want there to be a little bit of objectivity to this, not just, oh, I feel a little bit better. There are lots of questionnaires on the web that are free. We talked about the heart risk calculator, but there's one called the Moot Scale. It's called the PHQ nine, and in maybe 6-Shot Saturday, we'll have a link to it, but it's one of many.
It asks on a scale of whatever to whatever, do you have much interest in doing things? Are you feeling down? Are you having trouble with sleep? Are you feeling tired? Are you feeling bad about yourself? You just answer these nine questions, takes all of a minute. You'll get a score and then try one or two or three of the tools, and then come back in a couple of weeks and do the test again.
Then try some more tools and try it again.
Roger: Just like a weight scale, and as you build up data.
Dr. Bobby Dubois: Exactly, exactly, and let Roger know, let me know which of these tools helps you, or conversely, which ones don't.
Roger: Awesome. Thanks so much, Bobby. Until next month. Let's get our energy on.
Dr. Bobby Dubois: Absolutely
TODAY’S SMART SPRINT SEGMENT
Roger: On your marks, get set
and we're off to set 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, really for this month of July, this is the midyear. This is a good check-in on where you're at.
At the beginning of the year, we challenged you to set targets for what you wanted to accomplish this year.
Here we are halfway through. Your action items are one, update your net worth statement from year end to now. Update your cash flow, what you're expected to be spending, and what your actual spending is, and then forecast what spending you're going to have going forward, and if you're still working, what saving you're going to have going forward, and how you're going to navigate that.
By updating these, you're going to mark that you have current data, you can look at your net worth and look at your cash reserves. Look at your savings year to date to get an idea of what's changed or what's on track to help you tease out risks and opportunities of things that you can take advantage of or address between now and the end of the year. Then you're going to assess your financial and your non-financial targets.
We're actually doing this this month in the Rock Retirement Club where we're doing our guided agile retirement management huddles, where we have an agenda and tools to do this. Doing this twice a year can help refresh our intentions and identify opportunities or risks early.
So, update your net worth statement, look at your cashflow, and identify what you need to be working on here in the last six months.
CONCLUSION
As always, this show is about you and empowering you to rock retirement. I really value being able to walk this with you and sharpening my saw, but I don't value it too much because I always want to speak truth with love to you as with as much integrity and honesty as I can, and I appreciate you being on this journey with me.
I hope you had a wonderful 4th of July.
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 does 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.