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Episode #563 - Think Smart, Retire Smarter: Occam and Hanlon

Roger: The show is a proud member of the retirement podcast network.

“Simplicity is the ultimate sophistication.” 

-Leonardo da Vinci. 

Welcome to the show dedicated to helping not just survive retirement, but to have the confidence because you're doing the work to really lean in and rock it. 

Today on our show, we're going to do two things. 

Number one is we're going to finish up our exercises on building some mental models so you can rock retirement by talking about Occam and Hanlon's Razors. 

Number two, we're going to have Dr. Bobby Dubois on our Rock Life segment to talk about how not just to live longer, but perhaps have more energy while you're alive. It's been a while since we had Dr. Bobby on. We need to fix that. We've been a little bit cluttered here. I don't like to do really long episodes, but I'm excited to talk to Bobby.

Before we get started, I want to invite you to join me on November 7th at 7:00pm Central where the Rock Retirement Club will host a live online meetup where we're going to do two things. I'm going to teach a little bit on how to use organized thinking to think through Roth conversions so you can get to a judgment call that you feel confident in because it's going to be a very complicated subject. So, we're going to do some teaching on how to think through the Roth conversion decision. 

In addition, I'm going to invite you to consider joining the Rock Retirement Club. We'll talk about the club and what it has to offer. We put together in one place all the tools and education you need to create a retirement plan you can have confidence in and a community of over 1000 people with expert coaching to help you actually live out rocking retirement and work on the financial and the non-financial side, this will be our last open enrollment for 2024. It also will be the last enrollment at the current price because we'll be increasing the price for Future members in 2025. 

So come check out the teaching as well as the open house for the Rock Retirement Club. You can register at livewithroger.com to be there live or to get the replay.

PRACTICAL PLANNING SEGMENT

All right, with that said, let's get on to today's mental models. 

Today we're going to talk about Occam's razor and Hanlon's Razor. My first question was when I started studying these is why are they called razors? It makes sense in that the razor refers to the metaphorical cutting away of unnecessary complications. Over the last two to three years as we've worked to operationalize the Agile retirement management process. Scott Sanborn, Troy Ketter, Heinrich and many others have been instrumental in that. I actually experienced this without really knowing this framework in that in order to create four pillars with clear boundaries of how do I make a vision, how do I assess whether it's feasible, how do I make it resilient and optimize? 

In order to get to that simplicity in organization, we went through a lot of detailed outlining an examination. In order to simplify it on the other end, which is counterintuitive, we had to go way down at the rabbit hole to explore lots of different options to come back out the other side with four pillars to focus on what's most important. 

So, a lot of times you do have to go deep into things. Same thing with Roth conversions. You'll see that as we talk about it, if you join us for our meetup on November 7th, we have a very detailed structure for the analysis of Roth conversions. Initially you can go the simple route, which will probably be good enough for 90 percent of the people. You don't always have to go down the rabbit hole. That's essentially what Occam's Razor talks about, is that when confronted with multiple explanations or a lot of options, typically the simplest one, requiring the fewest assumptions, is the best. Simply said, don't overcomplicate things. 

Now, when we hear simplicity, our minds often think simplest as something that's simplistic, that really isn't thought out, it's too basic and there wasn't enough thinking into it. Simplistic is definitely dangerous because it's not addressing all the things that you might have to put into a retirement plan. But simplicity is what you have after you go through the depth of the rabbit hole of all the details and come out to focus on the most important things. Simplistic is not the same as simplicity, and that's really an important distinction. 

How do you actually apply this in retirement planning? Well, if we think of the four pillars, we have to know what our vision is. We need to know that it's feasible and we need to make it resilient. Those are the most important of the three pillars. When we get to the optimization pillar, which is enhancing a plan that is resilient, feasible and focused on what we want that is actually optional. Roth conversions would come under the fourth pillar of optimization. 

In theory, you shouldn't have to do any optimization to rock retirement. This is just enhancing a journey that's already solid. 

What's another Application for Occam's Razor. Well, let's think of investment selection. Generally, a simple strategy using proven options is going to be the best solution. Instead of researching active managers looking for sector rotation calls or all the sorts of strategies that are market or even alternative investments and private investments, there are so many ways that we can overcomplicate investment selection. Well, Occam's Razor would argue that, well, just focus on the simple proven options and don't go down the rabbit hole of all these other things that aren't really going to add significant value to your retirement journey. Definitely something that individuals struggle with because simplicity seems simplistic and everybody out there is telling us that it is simplistic, not realizing that it's more than enough strategy to achieve the objective. 

What's another way that Occam's Razor could apply in retirement planning? Let's think about spending. Occam's Razor would argue that you could begin by just focusing on your current spending or developing a high-level base great life budget rather than going down the rabbit hole of building an elaborate budget. 

Usually, we're building these budgets before we're tired and we're trying to forecast a life that we've never actually lived. Occam's Razor would argue, why don't you just start with what you're spending now or do a base great life budget without getting in too much detail initially. That may be good enough for most of us now, not always. Sometimes you do need to get down in the weeds, but for 90% of us it probably is not the case. 

What about tax planning? That would be another example where we could apply Occam's razor. Focus on simple well-known strategies. If I'm in a low tax year, do you qualify distributions or consider Roth conversions? If you just focus on these simple options, you're going to garner the majority of tax optimization strategies that you could have. Realize that you have large RMDs in the future, so prioritize Roth conversions or qualified distributions. That's going to be much more helpful than going down tax strategies, tax shelters, multiyear planning, decisions that are way off in the future that will actually bog down the process and cause you to throw your hands up in exasperation. I always get those mixed up and do not do anything. 

We actually ran into this because we're building a Roth conversion decision pod for the Rock Retirement club. It should be out in December. Initially we approached it with how we do it, which is extremely complicated. We go through a lot of tax planning that takes time and effort, and we pivoted from that strategy for the decision pod that we're going to give to Rock Retirement Club members in that we're going to go phase one. What's the simple version of this? Like going to the general practitioner to assess yourself from a high level and prescribe action plans based off of making sure we don't make unforced errors or miss easy opportunities and also determine whether after that phase one, you go down the rabbit hole in phase two. So, in the minority of the cases, you actually do have to do all this detailed work, because a lot of this can be overwhelming. It's probably important to go to the general practitioner to do a basic assessment and maybe solve the problem there just by filling up your tax bracket bucket or doing a Roth conversion. Only a minority of people need to go to a specialist or go down the rabbit hole of the detailed tax analysis that some of us like to get into. That's an example of how Occam's Razor always looks for simplicity in the answers, because likely that's going to get you what you need, the meat of what you need. It's also going to help set yourself up for success because you won't overcomplicate something that you need to manage over and over again, which increases execution risk.

Now let's switch to Hanlon's Razor, which says never attribute to malice that can be adequately explained by incompetence or ignorance. 

I actually have been practicing that one for a number of years when it comes to the podcast, believe it or not, over the last 11 years. I don't know how many thousands and thousands of emails I have gotten over the years. 99% of them encourage or ask questions, but I get a lot of feedback from people that, oh, you forgot to mention this, or outright hard critiques, sometimes very unkind critiques. 

I made the decision long ago that when I get an email, I'm going to assume that the person has the best intent in mind and it just may be the way that they're communicating it. So, I assume that there is no malice and that they might be ignorant of something, but they're not doing it out of malice. They're just expressing themselves and maybe not the most eloquent way. That has actually helped me a lot in life, not just with receiving emails for the podcast, but the key point here, focus on error over malice. People often jump to conclusions assuming others are acting out of bad intention. In reality, it might just be a mistake or an oversight or just a casual unintentional slight. 

Another key point of Hanlon's Razor is human error. Humans, you and I are super messy people. We make mistakes all the time. In most situations, people are not deliberately trying to harm or cause problems. Just taking this stance really encourages empathy, and it's very easy to apply this to the guy that cuts you off or the ignorant email or text that you receive. Just assume they have best intent, which is likely the case. They just might have been acting unintentionally or out of anger, etc. 

How do you apply this to retirement planning? 

Well, number one, it can help you be kinder to the person you need to be kinder to, and that's yourself. Looking at your past decisions on investing or planning or whatever. We're usually really, really hard on ourselves and we forget that, hey, we lacked knowledge and we were in our own journey at that time. Using Hanlon's razor can help us be a little bit kinder to ourselves. If you're working with a planner and let's say you email them and they fail to follow up or miscommunicate a recommendation, Hanlon's razor would suggest assuming it's due to an oversight or a misunderstanding rather than some malice or deliberate attempt to mislead you, better just to have the conversation. 

I'll use my case. Sometimes I miss replying to an email or I miss the context of a conversation that I've had with a client and I'm talking about one thing, thinking this is what we're talking about, when really, they meant something else that I just happened to miss. Communication between advisors or even with spouses is messy. We have to assume best intent to be more productive in those conversations. This often happens when managing, say, retirement assets or discussing inheritance. I've walked the journey with clients dealing with extended family on who gets what photo, what we are going to do with the house of our parents, et cetera. This can be very difficult. Some members of family, and I've seen it, can be very difficult. They can be very uncooperative and outright mean. Hanlon's razor suggests assuming their behavior may stem from misunderstandings or emotional stress rather than being a jerk or that they're just trying to grab money. We don't know what mental drama they have going on.

Both of these are very simple to just remind ourselves of, to not overcomplicate things so we can focus on creating a great life and not get caught up in stuff that is really just noise. 

All right, so that's the end of our mental models. If you want to dive into mental models more, as I started building and researching these, I came across a book called the Great Mental Models, Volume 1 by Beaubien and Parrish. They actually have a set of four books, fantastic books, that summarize these mental models very succinctly in approachable form. So, you can check those out. We'll put a link to those in 6-Shot Saturday. 

With that said, let's get on and chat with Dr. Bobby Dubois.

ROCK LIFE WITH DR. BOBBY DUBOIS

We are going to focus on building energy in order to show up, in order to rock retirement. And to help us, as always, is Dr. Bobby Du Bois. How are you doing, Bobby?

Dr. Bobby: I'm in a non-inflammatory mood and hoping I will live to be 100.

Roger: All right, well, non-inflammatory, I think that's a good thing. So, what are we going to talk about today, exactly?

Dr. Bobby: It is a good thing. So, we are going to talk about four different studies and they all have key lessons, very practical lessons, but they all relate to one another and you might think they don't. The story will all come together in due time and, not surprisingly, given what I said just a moment ago, it's about inflammation and things related to that, and ultimately about living potentially to be 100 years old.

Roger: I'm going to try not to jump ahead and just trust the flow of this. Do we need to have a primer on inflammation or is that going to be revealed as we look at these studies?

Dr. Bobby: I'll try to reveal it.

Roger: Okay.

Dr. Bobby: I think people have a kind of a generic sense of it, but I'll give you some more specifics.

Roger: Okay, so what is the first study to build this story?

Dr. Bobby: Okay, the first study looked at sleep, which we've talked about many times before, how getting not enough sleep increases your body's measures of inflammation. So, the brief primer on inflammation. If you sprain your ankle, you're going to get swelling and all the rest, and that's what you want because your body is helping you get better. If you have a cold, yes, you want all the white cells and antibodies revved up to make you healthy again. But if you're under stress or you have cancer or you have a chronic illness, your body can remain revved up from an inflammation standpoint, and that's not a good thing. 

There are various measures of inflammation that your doctor can do with blood tests, like your white blood cell count and C-reactive protein. There are things you can measure that might suggest there's some sort of inflammation going on. This first study asked the question, we know that not getting enough sleep leads to bad things, that leads to higher risk of mortality, higher risk of heart disease, higher risk of cognitive decline, and maybe part of this is mediated through inflammation.

I can't say we have the definitive answer here. A small study, 13 young men, and they said, okay, for the next four nights, five nights, you're only going to get four hours of sleep. By anybody's measure, that's not enough sleep. Then after those five nights, you get two recovery nights. This sounds an awful lot like many of us when we're very busy at work and with family and life, where we may not get much sleep during the week, and then we try to get more sleep on the weekend. So, they measured a bunch of blood tests and some of the ones I mentioned, as well as your heart rate. What do they find? They found that when you went through this phase of not getting sleep, these blood measures got worse, suggesting your body had inflammation. That was the first thing. The second thing was when you had the recovery nights, it didn't undo the problem. This is really important because people think, well, I'll just catch up on my sleep on the weekend. No, the damage is done, the damage will persist. So, you really, really want to try to avoid those low sleep nights.

Roger: I assume with a study like this that they get a baseline beforehand of what the numbers are. The participants aren't coming in already elevated necessarily.

Dr. Bobby: You absolutely have to have a baseline. Again, this study could have been bigger and more complete, but yes, they absolutely had a baseline. There are so many interesting things that come out of this, but one of the things that I get asked all the time, oh, I went out late last night and I have to get up to get to work at a reasonable hour. I was thinking I would still try to get to the gym. So, Dr. Bobby, should I get less sleep tonight and get to the gym and do my exercise because you said that's very important, or should I sleep in and not go to the gym? It's a tradeoff, like much of life. The answer is, you can't make up for the lost sleep just like I talked about, the two days of recovery didn't do it. But you absolutely can make up your gym workout. So, the next day you maybe do a longer workout or you work an extra workout, an extra day in the week. So given a choice between the gym and sleep, Dr. Bobby says, get the sleep.

Roger: Let's say I need nine hours in bed, just as an example. It’s better to get the nine hours in bed than to get up an hour and a half early in order to get my workout in.

Dr. Bobby: Exactly, exactly. 

Now, has there been a randomized controlled trial? No, but what this study suggests is you don't immediately wake up, make up the lost sleep from a standpoint of inflammation. There's other data on the brain and toxins in the brain, which we won't get into. But bottom line, try to get good sleep every night. Sleep impacts inflammation, and inflammation markers increase mortality rates.

Roger: All right, so what's the next study and how does it connect to the first one?

Dr. Bobby: Ah, yes, great question. 

So, the first study says if you don't sleep, your inflammation is going to be worse. The next one is what is it about inflammation that is bad for you? Or at least these measures of inflammation that you can test in your blood. This is a study that followed 160,000 people for six years, so a long time, and they measured various things in the blood, some about your blood cells, that C-reactive protein, which is something else that folks measure. What they found was that if you had one of these things that measured and suggest inflammation, you had almost a threefold increase in mortality over the course of those six years. If that wasn't bad enough, if several of them were all pointing in the wrong direction, you had a seven-to-nine-fold increase in mortality and cancer mortality and risk of stroke and all. So, the first study said if you don't sleep, these measures of inflammation look worse. This next study says, well, these measures of inflammation suggest bad things will happen. Now, again, can we then point to bad sleep leads to death? No, but we're starting to piece some things together that are not so good.

Roger: All of this feels like walking around in fog a little bit. There are connections to the things, sleep impacts inflammation, inflammation markers increase mortality rates, and you throw the numbers out. I can't think of what those numbers actually mean, but it sounds worse.

Dr. Bobby: Yep.

Roger: We, we don't know that there's a causation necessarily of it's a connected dot, but it's information to help inform decision making, even if it's not a complete causation.

Dr. Bobby: I think that's exactly right. 

Now in the past I've talked about studies that link if you don't get enough sleep, it increases your mortality. So, we have actually put some pieces of the puzzle together in prior studies. What those studies haven't been able to teach us is why. Why would poor sleep lead to dying early? You could have all sorts of hypotheses. But this is now saying, well, maybe it's being mediated in part through inflammation.

Roger: Inflammation is influenced by sleep. Connecting the dots, I think of this as how do we just eliminate some unforced errors? Well, one is just getting better sleep, prioritize sleep. That will eliminate some unforced errors of inflammation and some other things.

Dr. Bobby: Totally, totally. 

I mean this is just another reason to believe that focusing on your sleep is a good thing. If you don't believe this, just go back to the other discussions we've had in the past how important sleep is on so many other levels. This is just adding to that.

Roger: We will have a link to one of those in our 6-Shot Saturday email. Now, on your podcast, have you had an episode on sleep yet?

Dr. Bobby: Absolutely. I don't remember which episode is. It's probably episode four. But if you go to Live Long and well with Dr. Bobby, go back to the beginning and it's one of the first episodes and it's on sleep and the beauty of it.

As a reminder, there are 12 very tangible things you can do to improve your sleep. So, sleep is really, really important. I may be a sleep aficionado or, you know, I'm out there as a champion. That's what I am.

Roger: So, what's the third study?

Dr. Bobby: Well, third study, rather than being Debbie Downer and being like, oh, well, this is just awful. Now the question is, can we do something about this inflammation stuff or can we improve our sleep? This basically shows that the other thing I really love is exercise. This was a series of studies. There were 19 clinical trials and they were in people who had insomnia, they weren't sleeping well. They asked the question in these studies, would exercise improve the insomnia and allow them to sleep better? They found in those people who exercised, sleep got better, both subjectively, they felt better and they also had some objective sleep measures. One of these things that I get very excited about is there was a dose response relationship, meaning more exercise, you got even more sleep benefit. So yes, I love exercise and it helps us in so many ways. But now exercise helps our sleep. Exercise can help that process practically.

Roger: I totally have connected those dots.

Dr. Bobby: Beautiful.

Roger: Totally connected even. I'm a work transition exerciser, I exercise at the end of work but before evening. I think it probably would help more if I was a morning exerciser, but I'm not. It just doesn't fit the rhythm of my day. But it definitely connects that dot.

Dr. Bobby: Beautiful. So basically, if you take those three studies that teach us poor sleep worsens inflammation, inflammation is bad, it relates to mortality. But exercise can improve our sleep and hopefully reduce that inflammation. So that's how those three studies fit together as a little story. There are many things we can do to help us live well beyond 80.

Roger: All right, we have one final study.

Dr. Bobby: I believe we do now. 

It's not part of that inflammation. One I said at the beginning I was feeling in a non-inflammatory mood and I was hoping I'll live to be 100. I think we'd all love to be living to be 100. We might have to tweak our retirement plan to make sure it goes out to 100 to make sure our money will last not just to 90 or 95. But this was a study that asked the question, if you had a bunch of 80-year-olds and you followed them for 20 years, who was more likely and less likely to live to be 100 years old? I want to be one of those men that lives to be 100. What they found is that there were five characteristics of an 80-year-old that they looked at. Smoking, did they ever smoke, etc. Etc. Their drinking status, how much alcohol they consumed. Exercise, not surprisingly, whether they were doing regular exercise or not. Something called dietary diversity, which is eating fruits and vegetables and fish and beans and tea almost every day. So basically, you were doing all the good nutritional things and your body mass index weight was in a good place. The 80-year-olds who had all five of these had a 61% greater likelihood of living to be a hundred. I was like, great, these are things that we've been talking about and I'm certainly trying to do. If we do them, maybe we won't just live to be 80, we'll live to be 100. So, I like this study and it was a positive one for me.

Roger: We'll also have links to the studies mentioned. Beautiful view. There are some like you that want to go down the rabbit hole a little bit deeper. But for those that do not, let's sum up the takeaways.

Dr. Bobby: I think that the takeaway is that there are things we can do that can really help us live long and well, and it's the many things we've talked about. 

But for here today, sleep is really, really important. Try to get your seven to eight hours of sleep. Exercise is really, really important. Again, I've talked a lot about what the elements of exercise are. Then these other things like your alcohol intake, your eating habits, keeping your weight under control, are not just theoretically important to us, but can really make a difference and help us live well beyond 80, hopefully up to and even including 100.

Roger: So, Bobby, I'm going to end this segment with a phrase that I repeat to myself when I find myself being incongruent with my thinking and my actions. Eating healthy, moderate drinking, exercise. Many things that are somewhat common sense as you've talked about, that I totally agree with, but I don't do consistently enough. So, let's just take sleep as an example. Whenever I find that incongruency, it's like, okay, I have to actually do this stuff. Otherwise, just knowing it and feeling good that I know it and I agree with it doesn't help me. I'll take out any off-color words because he uses a lot of them, but it always makes me think of David Goggins, who's this exemplar of what you're capable of in terms of enduring. He says one phrase he uses is “Don't talk about it, be about it”, being about it is where you create a life and getting sleep and doing these things. 

So, the question for the day is, well, how can we be a little bit more about the things that you talked about? 

Thanks for sharing, buddy.

Dr. Bobby: My great pleasure.

TODAY’S SMART SPRINT SEGMENT

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

All right, in the next seven days, I want you to look for an opportunity to practice Occam's or Hanlon's razor. How can you choose a simpler solution? How can you receive something and assume they have the best intent? If you have those opportunities, see how you react to those, take a day or two and then reassess to see if it actually helped you move on and be more productive so you can rock retirement.

CONCLUSION

All right, before I leave, I have to share a funny story. I want to thank all the people that are involved in producing this show. We have Laura “Monkey Dog” who does all the graphics and the handouts that we shared via our 6-Shot Saturday email. We have Allison, who does the show notes and some of the social posts. We have Nicole, who does 6-Shot Saturday and makes everything work. We have Graham Gornall, who is my nephew, who is the new podcast editor. I had to laugh with Graham because I woke up last week when he was editing last week’s episode. Remember when I talked about being a pilot and I was just kidding? Well, I get these texts from Graham saying, number one, the first text was, you're a pilot. Then the next text a few minutes later, it was like, bro, tricked your own editor. And he was like, I have to smack his head face. He was laughing because I tricked him. Then he said, you had me thinking you were a straight up pilot. I was like saying to myself, how in the world do I not know this? So, Graham, I gotcha. So easy to sound like an expert these days. That's scary. Thanks for all the work. everybody does. If I failed to mention some, there are so many people. We have a team of 16 that work on the show and the club and everything else. So, love you all. 

Hope you have a great day. 

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 reference is 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.