Roger Whitney is known as the “retirement answer man.”
“All I think about, all day long, is how to make that [retirement] transition successfully,” he says.
But he holds a dirty little secret.
“I don’t believe in retirement. And the most successful clients that I work with … technically they’re retired, but they’re still working.”
Huh?
What does that mean?
In today’s episode, Whitney and I discuss the nuances of 21st-century modern retirement — and how this ain’t nothin’ like the traditional retirement that you’ve been taught to expect.
Enjoy!
“WTF?” — Vocabulary guide from this episode:
Monte Carlo simulation — This is a mathematical model that calculates the probability of different outcomes under uncertain conditions.
The Monte Carlo simulation builds a probability distribution (a range of values) for any uncertain factor. It then re-calculates the results using random values from the probability functions. After thousands of recalculations (depending on the number and ranges of uncertain factors), the Monte Carlo simulation will show the probability distribution of possible outcomes. It may, for example, show a bell-curve distribution, a triangular distribution, a uniform distribution, etc.
Sequence of returns — The “sequence of returns risk,” in the context of investing, refers to the risk that a person’s returns may be lower either (a) at the start of their investing timeframe, thereby reducing their compounding growth, or (b) early within their withdrawal period, such as a retiree who needs to start withdrawing money at the bottom of a particularly bad bear market.
Standard deviation — This measures variance, a concept that we discussed in detail in our podcast episode with professional poker player Billy Murphy. Standard deviation is a measure of the variance of a data set from the mean, or average. The wider the range (i.e., the further that the data points are from the mean), the higher the standard deviation. TL;DR — Higher standard deviation equals higher volatility.
Long-term aggregate average — This is the measure of the long-term average performance of an asset or investment.
529 Plan — This is a tax-advantaged college savings plan.
Resources Mentioned:
- HP12C Financial Calculator
- Michael Kitces – Your Mind is More Powerful Than Money (Interview)
- What Professional Poker Taught Me About Running a 7-Figure Business, with Billy Murphy (Interview)
- Mind the Gap (Article on Afford Anything)
- Retirement Answer Man
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