Larry Swedroe is one of the most respected investment thinkers and writers of our time.
He’s published 8 books on investing, including one of the first books to explain the science of investing to a layperson audience. He recently wrote an ultra-comprehensive guide to retirement planning.
He joins us on the show today to discuss the nuances of investing and retirement planning. We talk about the stock market (is it going to fall soon? Are we heading for a recession?), we talk about risk (including three dimensions of risk that all investors should consider), and we talk about what traditional retirees vs. early retirees should know.
Resources Mentioned:
- Larry’s book: Your Complete Guide to a Successful & Secure Retirement, co-authored by Kevin Grogan
- Bluehost: start a blog in 5 minutes!
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Jim
I like that Larry mentioned that social security could pay out something more like 75% of benefits. I think too many people talk about doom and gloom with social security but the reality is people will still be paying into the system. So rather than assume $0 from social security it’s more reasonable to assume you’ll have some smaller percentage than today’s rate.
Douglas Sprague
I agree Jim, I found this article from Barrons that put it clearly into perspective for me. https://www.fidelity.com/insights/retirement/social-security-worries
Gerardo Ruiz
For digging deeper on “you are a bond or a stock” key take away, check Milevsky’s book: Are you a Stock or a Bond? Identify your own human capital, for a secure financial future.
Bill
Great episode. I definitely agree that “3% is the new 4%”, but one of the key reasons wasn’t hit on in this episode. The Trinity Study declared 4% withdraw rate would nearly guarantee success. The part people often don’t realize is that “success” was defined as “not broke after 30 years”. Which means 31 years in, you might be penniless. Not ideal for today’s retiree’s given longevity statistics, but absolutely terrible for any early retiree.
Beeb
At 36:45 Larry starts talking about risk vs volatility and forecasting longevity for retirement planning: “we don’t know things like if there will be another flu pandemic, or SARs viruses, or wars.”
We’re still in the midst of Covid, and a month after a single ~30% decline, so there might be a second wave and more market drops, or this is “just” the fourth crash in a couple of decades. Will 3% still be safe? Can our sequence of returns planning cope with such frequent downturns?
Excellent reminder about the Utility Curve, but worrying warnings about being prepared for long term aged care. With all the planning and cushions in place, I’ll always be worried about needing a parachute to make a safe landing.
Good luck to everyone in your pursuit of financial independence and long term security.
Lesley
Loved this podcast. It had some very timely reminders about asset allocation and reality checks on how the market returns have changed and why the 4% rule might not be relevant anymore. A little on the conservative side though I found! Since I’m in my 50s I guess I can still go with the 4% rule as I don’t have 40-50 years in retirement based on how long my relatives have lived…
I also liked the issue raised of whether the US market might go the same way as Japan, although I think this is unlikely as the US is much more open to immigration and growing the economy through that path, whereas Japan isn’t that open to high immigration levels, for a number of reasons.