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Episode #559 - Think Smart, Retire Smarter: Inversion
Roger: The show is a proud member of the Retirement Podcast Network.
"The first principle is that you must not fool yourself and you are the easiest person to fool."
-Richard Feynman.
Welcome to the show dedicated to helping you not just survive retirement, but to have the confidence, passion, doing the work to really lean in and rock it.
Today's show is the beginning of a month-long episode on improving your decision-making abilities. Last month, we reviewed the eight pillars needed to build a foundation to rock retirement. Those financial pillars, having a vision of what you want, knowing that it's feasible, making it resilient and optimizing it, there are a lot of decisions that happen to build out each one of those pillars.
So, it makes sense that the better you can make decisions, the better your plan, the better your life. How awesome would that be? Makes total sense to me. So, we're going to focus on some mental models that I use in my practice, hopefully to help others make decisions so you can do the same thing too.
Now last month was a classic series, which gave me some time off that I needed for two things.
The first one was to help plan and execute on the Rock Retirement Club Roundup, which is our annual conference for the club, where people learn from each other and learn from subject matter experts. We had over 280 people come to Grapevine, Texas. It was amazing. It was magical actually. So, we got that done.
The second was for me to think about the show and where I want it to go so, we can keep this fresh and relevant for you and for me. No earth-shattering revelations with that perspective, but some things I want to reconfirm here briefly.
We are committed that this show is useful for you. Not to be the most technically savvy planner that can take all the pieces apart, but to empower you to actually do this thing called retirement planning so you can go create a great life, not so you make this your new job. I want you to actually do stuff. That's important to me. So, we're committed to that.
Number two is I want to do a show that I love. I want to have fun. I want to continue to have this be just one of the coolest things I get to do every week, hang out with you and improve my craft and laugh at myself and laugh at each other. That's fun to me.
Number three, I don't want to focus on getting more downloads and promoting out the wazoo and just more, more, more, more, more of everything. No, I don't want to focus on that. I just want to focus on creating a great show.
Number four, I don't want to focus on the commerce, business. I don't want to talk about products for money. I don't want to bring people on just because they're popular and they have something they want to sell. That doesn't interest me at all.
Notice what I did there. I had two positive things of what we want the show to be, and then two things that we don't want the show to be. That's a loose example of using inversion, two things that we want and two things that we don't want, to think about the show in different ways. That's what we're going to talk about today. The first mental model is using inversion as you focus on all the decisions that you have to make.
Before we get to the first mental model, I want to encourage you to go to 6shotsaturday.com or rogerwhitney.com and sign up for our 6-Shot Saturday email. If you like this show, you're going to love our weekly recap of the show that includes some special content, but also links to some of the resources that we talk about.
That's our main way of getting you stuff, and it's also a great way to hit reply and have that email come directly to me. I do my best to reply and read every single one of them. So, you can get signed up for that at 6shotsaturday.com.
PRACTICAL PLANNING SEGEMENT
What is inversion? Well, when you invert something, what do you do? You just turn it upside down.
Inversion is a mental model that involves thinking about problems or goals by considering the opposite of what you want to achieve. As an example, instead of asking, how can I succeed? You would ask, what could cause me to fail? You could ask, what do I want to avoid? Very simple mental model that is very powerful.
How can you practically use this in your retirement planning? We'll think from a macro perspective, instead of thinking, how do I build a better or perfect plan? You could ask the opposite. What things do I want to avoid in my planning? What are the unforced errors that I want to avoid? I've used that term before. Someone asked me, well, what are the unforced errors? I thought I'd go through a few of them, we'll ultimately have a resource on this as we organize them by pillars, because there are unforced errors that we can avoid in all the different areas of our life. But in retirement planning, we spend a lot of time, let me get a better tool. Let me perfect my spreadsheet even more, add some zeros behind the decimal. Let me get better market estimates, etc. We focused on improving and sometimes we can miss just the very obvious unforced errors that if we just avoided those, we get 90 percent of the results that we are shooting for. Here are some unforced errors just off the top of my head.
Number one, Not having structured little conversations to revise the plan. So, you create a plan in whatever form works for you. If you don't schedule time to review this plan and see if it's still relevant, poke around for what I should do next, make sure we're not too far off track. If you don't schedule that, It likely won't happen until it comes to mind because something happens in your life or you're a bit worried about the markets or whatever. So, a very easy unforced error is just to have little conversations at a good pace. I would suggest two bigger conversations and two little conversations on the off quarters. That's enough unless life is really coming at you fast. That's an unforced error you could easily avoid.
Number two, related to this is to have an agenda for that little conversation so you know what you're going to talk about and you can do it in a structured way.
Are these the goals that we still want? Are there any changes to my cash flow? Is my allocation supporting what I need to extract from my assets for retirement? Poking around for risks and opportunities to improve. If you don't have an agenda for this, I would suggest prior to having the meeting, it could just simply be an unproductive meeting.
This happens a lot if you work with a financial advisor. You know, the old school planning agenda was no agenda, talking about the markets, maybe talking about the election, reviewing portfolio returns relative to the indexes, talking about what our strategist thinks, everything unrelated to things you have control over that could improve your life. I think if you do work with a planner, you should hold them more accountable to have a structured process to go through. So, it's not just, Hey, how are the family and kids and let's talk about the market. Easily avoided.
Another unforced error is taking Social Security before full retirement age. Doesn't mean that in all cases you shouldn't, but in the majority of cases you likely shouldn't, and it's easy to do because I want my money, I'm worried about Social Security going defunct, or whatever. That's an easily unforced error, not waiting until full retirement age.
Another unforced error. Focusing on allowing the new cycle to drive fear and greed. Seems a little bit obvious, right?
Another unforced error. Being too aggressive or too conservative early in retirement. Either one could cause irreparable damage to your retirement plan. Being too aggressive because you've been in go-go mode in terms of growth and you have a big market downturn and then you take a feasible plan and you turn it into a non-feasible plan. Being too conservative, and you are taking on tons of inflation risk that can happen later in life, and you're either not aware of it or not worried about it, just because you want the safety now. Both of those are easily avoided.
Another unforced error is not overspending early in retirement or underspending early in retirement. Both of those can be unforced errors. You could spend way too much early in retirement because you're excited about today, or you could spend, and this is the one I deal with more bluntly, is that you can way underspend early in retirement and because of the asymmetric nature of your life, as you get older, you lose out on the years where you're most healthy and energetic. Those are unforced errors. You're not going to be able to repair them.
Another unforced error is missing low tax bracket years to do qualified distributions or Roth conversions just because you weren't thinking about it. Oh, wow I'm in such a low tax bracket. I could maybe pay tax now at a lower rate.
Some examples of unforced errors Okay, so unforced errors are a big one.
How do we use inversion in investing?
Well, the classic example Is Vanguard. They used inversion as a mental model to develop what they created, which has helped millions of people. At the time, Vanguard was early in their development, the game was how do I build a strategy to beat the markets and how do I find better managers in process to get more and more returns above something? Vanguard inverted that and said, well, how do we just minimize the unforced errors of investing? So rather than try to be better, because I got the better mousetrap and the better star manager, how about if I just buy the market, control fees, and control taxes. That is a beautiful example of using inversion to create a highly successful company that has helped millions of people by just asking a different question, rather than beating things, just avoiding these unforced errors.
Charles Ellis, in his classic book, Winning the Loser's Game, uses the same structure in his analysis of why managers don't outperform the market. He uses tennis as his metaphor for it. In tennis, meaning Wimbledon type tennis, not you and I, Or at least me is as you get better and better at what you do, you have so many great players, it becomes more a game of not making errors rather than being hitting the better shot, which is true when you have a lot of competition coming in.
How else might you use this idea of inversion in your planning?
Well, let's think about the vision pillar of what do I want? What do I want in my life? What are my goals? What are my dreams? That is one way of thinking about what you want your life to be, but that can be difficult sometime. Right? There are so many choices. We have this paradox of choice that we're dealing with. Well, now that I'm retired and I could, I could do anything almost. Well, sometimes we just can't decide or we just stick with the default. A way of using inversion to help tease out a better life is asking what do I not want in my life?
I've done this with my business and planning. I've done it with clients and planning. Well, if we can't think of what we want, Let's think about what we don't want in our life. A great example of this is The Top 5 Regrets of the Dying, which is a book by Bronnie Ware.
I believe her last name is. I always get that mixed up. We'll have a link to it in 6-Shot Saturday. She interviewed people on their deathbed. She was a hospice nurse for years in Australia. She asked them, well, what are your top regrets? That type of structure, that inversion for me in business and in goals actually works much better than what do I want. I'm much better at thinking about what I don't want, and if your mind works that way and you're stuck about what you want, what don't you want in your life?
An example in your vision statement or in your goals, might be I don't want to not be close to my family. That's a weird statement, right? Basically, you invert that. I want to be close to my family. So, if you want to make sure at the end of life, you look back and said, I maintained my relationships better, then you can start to build goals. If you want to avoid not having quality relationships with your children or your community, what are goals that will allow you to avoid that regret?
Another top five regret, I wish I would have allowed myself to be happier. Okay, if that's a regret that you want to minimize, what things can you create in your plan to help you be happier? Maybe it's building a fun bucket where you prefund this. Kevin Sebesta and I were just talking about this a lot at the roundup. Maybe you build a fun bucket that you prefund with money that it's okay to spend. It's not going to impact your base great life. That is a bucket that you can give yourself permission to use to go relax a little bit more. Kevin calls it stretchy pants. We'll have to get him on here. Some of us have a hard time allowing ourselves to be happy and like stretchy pants, you just got to stretch them a little bit.
You can use these things in the future that you don't want to build goals if you don't want to be alone well, then how are you going to build community a good friend of mine? Mark Trotman just moved to a new city. Sorry Mark I don't know if I'm supposed to talk about this or not but he did it intentionally because he has a community of people around the FIRE movement for him that he's connected with and they help each other. They have like message boards. They'll take each other to the airport That helped him build that. So, if you don't want to be alone, think how do you build community? That might change where you live. It might change how you travel in order to have more interaction. So that's one way that you can go about doing that.
Let's think about the energy pillar.
How do I have more energy? I think about this all the time. How do I have more energy? Well, if you invert that question, it's like, well, what do I need to avoid that's draining my energy? Maybe it's wine, maybe it's potato chips, maybe it's sitting too much. So rather than how do I get more energy, you might go down the pathway of, well, I need to exercise more, I need to stretch more, I need to walk more. All of these may be true, but if you're not thinking that way, maybe there's more power initially, at least in not drinking the wine or eliminating sugar. Maybe there's more power there first. Using this inversion can help us.
Now let's think about identity. That's a big one. We talk about next week on the show. Well, actually, no, we're going to do it this week on the show. We have Kevin Lyles who wrote a chapter on identity for a new book, you know, rather than think of what do I want my identity to be, maybe you think of what don't I want my identity to be? What do I want to avoid people saying about me? This inversion structure can help us approach a topic at a different angle. There are many different ways you can do it and derivatives of it.
I use this one all the time, by the way, in my own life, but also in my practice, to help people poke around things. Now, next week we're going to talk about another mental model called second order thinking. But for now, Let's go answer some of your questions.
LISTENER QUESTIONS
If you have a question for the show, you can reply to 6-Shot Saturday and I'll put it in the queue to answer it on the show, or you can go to askroger.me and leave an audio question or type in a question or just say hello. Either is great.
JAY ASKS ABOUT HSA AND TRANSFERRING FUNDS
Our first question comes from
Jay says,
"Hey Roger, longtime listener.
My question is about managing my HSA after I no longer am able to contribute to it. I am 62 years old, retired for three years. I have an HSA that I no longer contribute to. Up to now I've been paying for medical expenses out of pocket as they have thankfully been low. I work part time making about 1, 000 a month and I use that money to fund my base great life. I have an HSA with about 50, 000 in it and was wondering if it makes sense to start reimbursing myself for past medical expenses that I paid out of pocket and use that money to fund maybe my Roth IRA."
Hey Jay, you definitely have a couple different avenues that you can go here and this would be in the optimize pillar.
Your strategy of using your health savings account to fund your Medicare premiums, that can work and be part of this plan. Now, you can use that for some premiums. You can use it for Part A, Part B, Medicare Advantage, if you go on it. You can use it for Part D, but you can't use it for the Medigap premiums. So, just be aware of that. I think that can be part of the strategy. That way, you naturally know when those expenses come that you can start to draw from your HSA.
Number two, because you have past expenses that you're keeping track of and having documentation for, you could use this to withdraw money to help you manage your tax brackets year by year because you could just submit those past expenses, take the money, and it will be more favorable when it comes doing taxes to maybe keep you below some brackets or some thresholds related to IRMAA or other things, so that's a good strategy.
Now, your idea of, hey, I'm earning 1, 000 a month and I'm not contributing to my Roth IRA, I think that is a very viable strategy too, is you have some earned income, you can take distributions from your health savings account. using the medical expenses that you can justify and submit from past years, and then take that money to fully fund your Roth IRA.
I like that idea because you're getting a tax-free distribution, you're using the fact that you have earned income to contribute the max to a Roth IRA, and now that Roth IRA will grow tax free forever, not have required minimum distributions and not be tied to a specific item like an HSA is. It's greatly improving the optionality that you have in your plan.
You didn't mention in your description, Jay, whether you are married or not. But if I assume that you're not, I do think this 50, 000 bucket that you've built up is something that you should continually think on using during your lifetime. Because passing it to a non-spouse can be a little bit problematic. I would focus on using this 50, 000 strategically as an easy way to go get money without any tax consequence. whenever you need to and as a source to fund your Roth IRA while you have earned income, which would take the money out, pay no tax on it, submit your bills, and then put it into the Roth, which is much better to be inherited for any money that is left over. Even if you move money over to the Roth and the strategy that you're talking about, if you have a major medical expense 10 years from now, that money is still going to be available just as it would be in the HSA. So, I think that is the best strategy is yeah, start submitting your bills, taking the money out and contributing to the Roth while you have earned income.
QUESTIONS FROM CONNIE ABOUT PASSWORD WEBSITES, 1PASSWORD, AND ABOUT SECURING YOUR SOCIAL SECURITY ACCOUNT
Our next question comes from Connie related to security issues when it comes to our personal data. We did an episode with a subject matter expert. We'll put a link to that in 6-Shot Saturday in case you missed it.
Connie has two questions,
" First, you mentioned a password website for securing the many passwords we all have."
Roger: Yes, and what I mentioned, Connie, was 1password.com, that is the password manager that I've used for five plus years. I have no affiliation with them whatsoever other than that's what I've used. There's also LastPass, and Apple and Microsoft have their own password managers as well now, I believe.
" You also mentioned securing your Social Security administration accounts. My husband and I have already done this."
Roger: Bravo.
" But I did mine through id.me, and he did his through login.gov. Is there any difference between these two login sites to get to our social security accounts? Are they both secure and fully claimed to protect ourselves?
Thanks for the information. It helps me keep my retirement planner on his toes."
Well, glad that helps. Good question.
Now, I'm not an expert in this, Connie, but I did a little basic research. Login.gov is a site used by a lot of government agencies and with the .gov at the end, it's a government site for logging in securely to the I. R. S., the Social Security Administration and many agencies. Now it's a third-party application. When I go to the website, it is provided by technology transformation services, so they probably have a contract with them to do that.
The other site, id.me, is also a private site that's not as closely affiliated with the U. S. government, and it's a single sign on provider, which is basically what these are. Now, they have had some issues in the past, if you do a Google search on what is id.me you can read some summaries of that. I would probably go with login.gov since it's so closely aligned with the U. S. Government when it comes to the Social Security Administration. They both claim to use the highest security protocols, I don't know the devil of the details on that but that's going to be a normal thing and all these things work until they don't. It's like an arms race, everybody's going to have to keep improving because the nefarious actors are motivated.
I would probably lean towards login.gov if I had a choice for government sites, mainly because they seem to be more closely affiliated with them.
A QUESTION ABOUT FINANCIAL ADVISORS AND DIMENSIONAL FUNDS
Our next question comes from Magnus.
He says,
"I recently switched advisors to a retirement focused advisor. As part of this switch, I'm looking to simplify our investment portfolio across the board.
My initial plan was to use a mix of six to ten ETF index funds, but our new advisor suggested Dimensional’s funds as an alternative. I had never heard of these funds, I did some online research, but all I can find is it's produced by Dimensional themselves or parties selling these funds. Are you familiar with Dimensional’s funds and can you direct me to more independent reviews or a white paper like reviews?"
That's a great question.
You can look at Morningstar. There's a lot of articles over the years on dimensional and their research is good. I'm not going to have a lot of third-party reviews, I think you can Google those, but I'll give you my perspective and hopefully this will help you, Magnus, on the on the pros and the cons of using dimensional.
I've used dimensional in my practice for some time, so full disclaimer there. The pro of using dimensional is that it is an academically based methodology to building index funds to get exposure to the broader markets backed by a lot of academic rigor, which they're happy to tell you about if you've read a lot of their articles. Dimensional has been around for a very long period of time.
What I like about them is that. They accomplish three things in my mind.
Number one, like an ETF index that licenses the S&P or Russell index, they have very low fees, a little higher than say an ETF or a Vanguard fund, little higher expenses, but low fees. They are very thoughtful in how they trade their portfolio. More thoughtful than I would say, index, which controls costs and controls taxes. I like those two things.
They accomplish to a good extent what normal ETF index funds accomplish and the third thing they accomplish which I appreciate is that they don't license say the S&P 500 or the total market index. They build their own portfolio Index from the ground up which is I would argue more diversified than the normal indexes that we see.
Now are we talking a matter of degrees or in some major material way? It's probably more a matter of degree than in a material way, but I understand the methodology and for the most part, agree with it and I like thoughtfulness and there's a way that they go about it, I don't understand as clearly how the S&P 500 creates their index. I don't agree with how they use so much of a cap weight to it. They don't have a lot of profit screen to it like dimensional does. It's more of a stylistic decision of whether you use them or not. It likely will not make material impact in your life.
Now, we have moved to using more of the ETF version of Avantis, which their pedigree is from Dimensional, so we could have ETF forms, and that might be important in this discussion, Magnus.
One of the big downsides of using DFA funds with an advisor is that Dimensional's strategy has been you always had to be approved to use their funds, meaning you couldn't just be an advisor and go buy their funds like anybody else. They weren't available to consumers. There were a lot of advantages to that back in the day because it was more long-term money. If you were an advisor, you had to go get educated. They wanted to have good partners, and I actually think that worked really well. But if you're buying their open and mutual funds, which are the non ETF version that have five letters in the symbol, that's a good way of knowing it's an open end fund, a downside to implementing that Magnus is that if you ever leave your advisor, you guys disassociate, you will be able to maintain your dimensional open end fund positions, but you will not be able to buy them because they are a little bit behind a wall. If you're not an advisor that's approved to buy them and if you're a consumer that owns them, you're limited to liquidating them only. Then possibly, you'll have some issues in who will hold those funds meaning that if you want to transfer from your advisor wherever they have their money to Fidelity or some other place.
That probably won't be an issue, but the biggest issue is going to be you're likely going to only be able to liquidate those in the future. I would argue that the Avantis ETF or using the ETF index fund structure is going to give you the most flexibility and accomplish the mission, but I think Dimensional is a great company and run really well.
Those are my thoughts on that.
LINDA ASKS ABOUT ASSET ALLOCATION AND OPTIMIZATION
Our next question comes from Linda about asset allocation, so this is going to be a resilient or an optimization question. Let's see.
"Hey, Roger, I'm working on converting IRAs to Roth IRAs. Wondering if you would recommend allocating my Roth investments to equities and my leftover IRAs more to bonds for tax reasons.
Thanks, and love your show."
In this case, Linda, your question is more of an optimization question and you're converting money to a Roth IRA. As you build out your asset allocation, should you keep more bonds in your traditional IRA? My understanding of that logic would be that it's not going to grow near as much, which means that the future tax liability won't be near as much when you have to do required minimum distributions or take money out. Whereas if you have equities in your Roth IRA, over time, those should grow a lot higher and you will not be taxed on that growth. I think that logic is fairly sound. So, I don't disagree with that, Linda.
Some of the complications that will come with that will be in the execution in management over time if you want to have 20 percent in bonds and 80 percent in equities, let's say that your target allocation for your upside portfolio, which I'm assuming what we're talking about here, then when you're reallocating, you'll have to reallocate in two separate accounts, which creates a little bit of complication there. There'll be a little bit more execution friction and risk on an ongoing basis by doing that.
Whether you pursue this extra level of optimization, a lot of that's going to depend upon how much potential impact there is with asset location.
Asset location, for everybody else if you're not familiar with it, is trying to put certain assets in certain tax categories of accounts that are beneficial. As an example, a fixed income or a bond is not tax efficient in an after-tax account, better in a tax deferred account. Whereas in equity, you have capital gains rates, you have dividend rates that can be lower than your normal tax bracket, so those might be better in an after-tax account.
In this case, I think Linda's thinking more about the tax liability of growth in her IRA. It's a matter of degrees, Linda. How many zeros are we talking about in terms of the value of the accounts? If it's a half million-dollar account, It probably doesn't matter from a tax perspective. If it's a 5 million account or more, maybe it makes more of an issue of trying not to let that IRA grow and keep that more conservative, it's just going to add more complexity. I'm not necessarily opposed to it but think about the journey that you're going to be on and doing that faithfully over time.
My default, Linda, is to allocate each account as its own portfolio unless there's a compelling case to complicate it more.
With that, let's go to our Bring It On segment and talk about identity.
BRING IT ON
Kevin Lyles wrote a chapter for a new book from the Retirement Coaches Association. I'll let him talk about the book, but before we bring him on, I just want to let you know, because he probably won't mention it, is that he received the Retirement Catalyst Award from the Retirement Coaches Association for making an impact on the retirement coaching industry.
That's pretty awesome. Kevin has put in the reps and is committed to this and it's showing because he is an incredible coach. Let's chat with Kevin about identity.
I'm here with the Honorable Kevin Lyles. How are you, Kevin?
Kevin: I didn't know I was honorable, but I'll take it.
Roger: You are very honorable.
Now, you wrote a chapter in a new book, so let's talk about, first, what the book is.
Kevin: Sure. It's called The Retirement Collective. It's shared wisdom from top retirement coaches. We've got 14 chapters, each written by a different retirement coach from the Retirement Coaches Association. Some of them are topics that apply to everyone. Some of them are very specific topics. It's a great book just to sort of pick up and pick out a chapter that appeals to you.
Roger: What I like about books like this is that each chapter is written by somebody that is doing the work, right? They're all coaches that have put in the reps talking with people about real questions and struggles that they're having. I think that's a great perspective.
Kevin: Yeah, and there are great chapters. You know, the first chapter, "Make Friends Like Your Life Depends on it". Title sort of speaks for itself. But then, you know, there's "How to Use Your Time in Retirement", "How you can Cultivate Curiosity". You mentioned my chapter on identity. Then there are some specific chapters for people like female first responders. So, if you're a female first responder, you ought to pick up a copy of this book because there's a chapter written just for you.
"How to Use Regrets to Your Advantage", to learn from your regrets and how to, how to use them as a motivator for going forward. Purpose is obviously a chapter, how you can develop purpose in retirement. I think it's pretty good book. I'm happy with how it came out and had fun writing my little chapter in it.
Roger: Yeah. I only got to read your chapter so far because I just got it and I knew of one or two, but you've been like retirement coach of the year via the organization for three years.
Kevin: I've been receiving some awards in coaching and it's not a big field.
Roger: Congratulations.
Kevin: I'm top 10 in a 20-person race. How's that?
Roger: Come on, you put in the reps.
Today I want to talk about identity, the chapter that you wrote, and you phrase a question that we don't talk about a lot. That's one of the hardest things to answer when you're retired is, so what do you do? You're at a party. So, what do you do? So how do you do that currently?
Kevin: I'd start out that I'm a retirement planner and retirement coach and talk about that now. First of all, I didn't do that for a few years after I got my certifications because I didn't feel like I had earned them. But It is a tough question for retirees.
You know, identity, we don't think about it a lot, but especially if you've had a career where you were at one company for 30 years or, or in one profession, that becomes a big part of who you are. When you leave that, you need something to replace it, and that's what my chapter is about.
I talk about, not only are you retiring and losing that work identity, but it happens at a time in your life where a lot of your other identities are falling, you know, your kids are leaving the nest going off on their own, so you're no longer that parent that needs to be there every week to help them. Maybe your parents are starting to need help.
In my case, I became a grandfather this year. So that's a new identity. Coming with that, you know, I think back to my grandfather, I thought, Ooh, you know, he died when I was kind of young is what does that mean for me? Your own perception of your age, you know, I no longer feel like I'm middle aged. I felt middle aged for a long time, probably longer than I should. I don't claim I'm old aged yet, Roger, but I'm in the middle somewhere between middle age and old age.
Roger: I was thinking about identity, because I'm working on the non-financial masterclass and this is the topic and I'm going to steal all your ideas.
I'm 57. I don't think I really in my life proactively thought about my identity. It's just sort of something that happened, but it seems to be an, a bigger issue when you're retiring. Is it a bigger issue or are we just helping people acknowledge why they might be feeling uncomfortable, if even if they don't know why, that it's related to this?
Kevin: Yeah, I think it is a bigger issue at retirement because you realize you're giving up that huge part of your life, and you'll never get that back. There's a void there, and that's why I think it matters.
Even you, Roger, and I know you have no plans to retire anytime soon. I know how important being a husband, being a father is to you, but I'll bet most of your identity is tied up in your profession.
Am I right?
Roger: Where I think you are right is later in your chapter, identity is also related to relevance. I think for me, if I was not the leader of a business, Retirement Answer Man, I probably am okay with the identities, not feeling relevant or important to whatever I'm being honest here. I don't think of it as importance, but I probably would be a little insecure.
Kevin: Yeah, that's a big part. Frankly, you know, that's what I said in the chapter. It really hits professionals, the doctors, the lawyers, the professionals and executives, the higher you are up in the company. If you were the CEO, that's a bigger part of your identity, probably than if you were a shop steward, it just becomes that way. Recognition that you get from those careers, the significance that you feel. It's somewhat an ego thing, I guess, but more it's how the world relates to you. Then once you're retired, and that's why I had that question, you know, what do you do when you get that at some social gathering and you don't have an answer for it anymore, you really recognize that void that we talked about.
Roger: I can think of two quick examples.
One is my longtime friend and business coach, Nick Kennedy. He started an airline, RISE, here in Dallas, was EY Entrepreneur of the Year, sold the airline to a big firm that does it in California, and he's told me the story a few times, you know, you're wined and dined, he's been in New York Times and everything else, and he's going to the first meeting after his company was sold, to the board meeting. He walks into the board meeting dressed like he should be in his mind and he starts talking to the board and midway through. He realizes these people don't care about anything I have to say. I'm the old owner. I'm not relevant to them anymore. They're probably looking at me as why is this guy here? He sold the company. We don't need him anymore.
That is what really struck me. That's intimidating.
Kevin: It is.
Roger: We had a comment, a throwaway comment from a gentleman that came out with his wife and our expat series right at the end, and I asked him just right at the end, he was talking about expat retirement, and he said, it's, he struggled for two and a half years because he was no longer Dr. So and so.
Kevin: Right. Well, and you know, most doctors that I know continue to be called doctor long after they quit practicing and they've earned it. They're welcome to it. I'm not criticizing them, but when I hear that now from someone who's obviously no longer practicing, I wonder about their identity. Have they chosen a new identity or identities? That's what I talk about in this book is I think you need several identities. Mainly because you can lose an identity really quickly. Sort of like diversifying your portfolio that you talk to your clients about, you need to diversify your identities, I think, when you're retired. I talk to people about, and sort of my tip on this subject is, think about what it is that you got from your career, identity wise, that you want to continue.
In my case, I retired from my law firm. Well, big thing for me was the intellectual part comes with practicing law and learning new things, taking on a new topic and trying to learn everything you can about it. I tried to fill part of that void through studying retirement planning and retirement coaching. It was a new field that I wanted to conquer and take on, but then in my law career, advising clients, having people come to you to help them solve their problems. That was something that was a big part of what I did as a lawyer. I felt like I wanted to continue that. Yes. I wanted to help people, but I was also doing it for myself. I wanted to be needed, wanted to be relevant.
Then finally, the one you talked about that recognition, the significance. If you're just tell people you're retired, that's interesting, and then they walk away, so you need to stay significant through other things, and I've tried to do that through personal growth, not needing the recognition so much, but also changing my own priorities, becoming more significant to family and friends rather than to a career.
Roger: Yeah, I was trying to think of a Walt Whitman quote around identity and how there's a vastness to it. We don't just have one identity, right. I'm not just a retirement planner. I'm a reader, I'm a coach, I'm a father, I'm a mentor. Right. You can answer with anything.
Kevin: You have a really evolved sense of your identity. A lot of people don't, especially coming out of those CEO positions or doctors. That's their whole world, that identity, and it's hard to have those other identities. It just doesn't sit well. That's part of the transition into retirement is figuring out the identities and who you want to be in retirement.
Roger: Let's do a quick exercise. Let's take two different individuals.
Let's take someone who's forward thinking about this.
Acknowledging, oh, yeah, this does seem like it could be something so they're actively thinking about it at some level. The objective is, who do I say I am when I'm asked after I leave this career, after I shed the skin. What can they do proactively to start to reshape this so they can better answer that question later?
Kevin: I think they need to figure out how they are going to continue to contribute. We talk about purpose and you and I've had this conversation on this podcast before about how do you find your purpose in retirement? A lot of people struggle with that because they feel like it's too big of a challenge to figure out, but we can all figure out how we are going to contribute. That may be to your loved ones. It may be to your friends, maybe to your strangers, your community, the world in general. You can decide how big of a contribution you want to make and in what ways you want to make it. But I think that person who's planning to retire and realizes losing that work identity is going to be a big deal, if they can just figure out two or three ways they intend to contribute once they're retired. Might be helping a child, might be becoming a great grandparent, might be volunteering for a cause that is really meaningful to them. Whatever those contributions are going to be for them, that's the new identity they want to sort of try on and, and make sure it feels good on them.
Roger: I think the idea of purpose, you can have multiple purposes. The earlier you're thinking about this, you can start to play with words because you're still in your profession, you can play with how you describe yourself and start to put some reps in from a wordsmith standpoint.
Now, what about the person that didn't think about this? They're a year or two in, and they're either uncomfortable, they don't know what to answer, or they're saying, I am a retired fill in the blank and they know that that feels empty. They're a little bit more acute and not proactive. What should they do?
Kevin: First of all, we got to say there are a lot of those people who are really struggling with the retirement transition.
I think the first thing they have to do is acknowledge it because part of the problem, it's why we see so much depression, boredom. We see suicide. We see a lot of failed marriages. It all has to do with the retirement transition. I think the first thing for them to do, Roger, is take a look at how they're spending their days in retirement.
Roger: One other thing I think manifests is that I would say there's a decent contingency that go back to work even though they don't want to, because it is safer.
Kevin: Yeah, and frankly, some people go back to work made the right choice, but you're right. A lot of people do it for the wrong reasons just because they can't figure out what else to do. That's why I would counsel that person, try to look at how you're spending your time and how does that align with your values? Back to my question, how are you going to contribute?
You know, if you've got three or four things you're going to try to do to contribute to your family, your friends, your world, then that needs to be how you're spending your time, or a good portion of your time. Yes, there will be lots of time for leisure, for just relaxing, maybe it's travel, those fun things that we associate with retirement. But as a human, if you stop contributing, I think you're not going to be satisfied. You're not going to be fulfilled, and that's the person you're describing.
I think it's, how are you spending your time in retirement? Let's start there and see if maybe that's out of alignment with who you want to be.
Roger: You can think of a car moving down the road, getting someplace and some of us that don't, you know, think about this and some of us never have an issue with it, but for other people, all of a sudden, it just stops in the middle of the street and you're stuck. Thinking about what you're doing is part of it.
I also think part of it is acknowledging that you're not going to just sit there and journal for an hour and figure it out. It's going to be a lot of testing. Move forward. If the car is not moving, you can't turn it, you know, the old phrase, just doing something is better than not than not doing anything.
Kevin: You're right though. There are no quick fixes to this one. You know, you're not going to read my chapter and okay, click, now I've got my identity, but hopefully it gives you a path to go down. Yeah, you're right. You need to take some time and really think.
The most common reason I hear from people in the club who have not yet retired and maybe are working, they're in their late 60s and still working, usually the refrain is, I think I'd be bored to death if I quit working. That's fine, and I don't try to discourage those people from working, but I do suggest hey, let's try to vary your interests a little bit beyond work. What other things really matter to you? What things maybe matter even a little more than your work? For some people, that's a challenge to think of that.
Most of us can then quickly say, well, yeah, my family's more important. Maybe my, my religion, maybe. whatever values they have are more important. Well, how are you focusing on them now that you're telling me you're working 55 hours a week?
Roger: Our vintage of humans, our generation, and baby boomers, for a variety of reasons, went all in on work.
Kevin: Absolutely.
Roger: Sacrificed a lot.
Kevin: That's how you succeeded at your career.
Roger: I think of Carl Jung, he has a quote, I may butcher it a little bit, "you're not what you say you're going to do, you are what you do", that can be a mirror of, we all will likely say our family is important, or contributing to the community is important. The mirror of what am I actually doing? Because it's so easy to talk about it and say, Oh, wow, me, I'm not quite what I thought I was, and that's okay. That's just information. It will help get you more in congruence, which will lead to a confident sense of identity.
I'm excited to read the rest of the book. Although now that I've read the best chapter, I don't know what I'm going to do. I'm excited for all the things you're doing. I'm excited to see you next week.
Kevin: Thanks. Looking forward to the roundup.
TODAY'S SMART SPRINT SEGMENT
Roger: On your marks, get set,
Now it's time to set a smart sprint, 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, when you're faced with a decision, whether it's about retirement or anything in life, think about inverting the question. If you're trying to avoid something, maybe you invert it back to thinking forward, or if you're thinking about something forward, like where do I want to go out to eat and you can't decide, maybe you invert it. Well, where don't I want to go out to eat? That will start to limit your choices and maybe get you to a better solution. It's a great mental model to help improve your decisions.
CONCLUSION
You know, I never know how to end these shows. You think after 11 years, what do I do? Say goodbye?
Now next week, we're going to talk about another mental model, second order thinking, which is a really important one when we're making decisions. In November, we're going to have open enrollment for the Rock Retirement Club. I think it's November. Is it? Yes, it's November. You can go to livewithroger.com to get more information on that. I hope you have a wonderful week.
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.