Your Money Map Replay: The 4 Pillars of a Secure Retirement
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I categorically reject guardrails and withdrawal rates. That is a financial framing of how retirement works that is devoid of how people really want to live.

Hey, everyone. Welcome to Her Money. I'm Jean Chatzky. If you have ever asked yourself, am I going to be okay in retirement? And who hasn't? This episode is for you because today we are cutting through the confusion, the fear, and yes, the fog that can roll in when you're staring down an uncertain future.

The one and only Roger Whitney, who calls himself the Retirement Answer Man, joined me recently on Your Money Map, which is a show I host for the Alliance for Lifetime Income. For more than 25 years, he's been walking with clients on the path to and through retirement. We're talking about the four pillars of a rock-solid retirement, how to build resilience into your plan, and why the most common answer

mistake retirees make is focusing on optimization before intention. It's practical, it's philosophical, it might just change the way that you think about your next chapter. So stay tuned. And be sure to check out the great work being done by the Alliance for Lifetime Income at protectedincome.org. We're going to take a very quick break.

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Roger, welcome to the show. It's so great to see you. I always love that because I sound so impressive on paper and then I get to come on and open my mouth. So hopefully we can live up to half of that. I think that you're quite impressive. And I also know that you have the ear of a lot of people who are

planning this journey. They talk to you, you talk to them. So you know where people are right now. And I'm wondering, what are they asking you about most these days? Recently, it has been about, the meta question is, are we okay given, and then we can fill in the blank given, around tariffs. We had some market issues

There's uncertainty. Well, there's always uncertainty, but it was evident here in the first quarter. A lot of talk about Social Security. I think the way I describe it, probably the best way to describe it, Gene, is a lot of fog has come in about retirement, about the economy, about policy, etc.,

And when fog comes in, we naturally get a little worried and we slow down. And I think that's a really good description of where we're at right now. We can't really see that far ahead.

And that's scary. We don't know how to navigate that. I think that's right. I mean, it's very much in line with what I'm seeing in terms of the emails that I'm receiving, what we're seeing in our investing club. People are a little nervous, a little fearful. When they slow down, when they ask you, am I okay? What's the answer? Probably the best quote that I've ever heard, which is Phil Stutz.

The real answer is, Phil Stutz said, you will never be exonerated from three things. From uncertainty, from pain, or the need to do work. Most of life's troubles, most of the troubles that we have in retirement planning is trying to get exonerated from one of those three things. Trying to eliminate uncertainty, trying to avoid...

pain and trying to avoid doing the work of tending a retirement plan. So the answer to are you okay is go back to your process and walk through it in an organized way process. So we got, I had a lot of emails related to this about a month and a half ago, as you can imagine, Jane, when it was really acute and I did, I did an episode on process over panic.

And got a lot of feedback because I actually mentioned the word tariff.

And I might've even said the other T word and it got a lot of feedback related to social security and all sorts of things. So I said, okay, wait a second. We're going to do a whole month on process over panic. What does that mean exactly? I mean, when we're talking about the process of planning for retirement, what is that? So, you know, a plan is not, is an artifact of a process and then you have to work the plan. So in my world, um,

A plan of record has four things, and you want to follow a process to build that plan sequentially. And if you do this, you're in a much stronger position to make judgment calls and decisions about, am I okay? Can I do this? How should I invest?

Unfortunately, most of the messaging that we get starts the other direction. Starts from here's a tactic, here's a new product, here's a solution, rather than thinking through a diagnostic process. The way I say it is the intent of the exercise is to give you confidence that

To live as fully as you can today, still feeling confident that you'll be okay when you're 85. Yeah, same thing. I actually think that's exactly the same thing. 95 would be better. Okay, 95. But lacking confidence, what will end up happening is we will defer life if we don't have confidence. So confidence is like that first principle that we got to grab onto. That's the intent, at least of our process.

And so the four pillars, the process that you would want to go through is number one, answer the question, what do I want? Your vision, right? Now we go to goals really quickly. My suggestion would be go back a little bit. What are your top 10 values? Because those represent what make you fully you, right? So start with what are my top 10 values?

And then what are ways to express those values? An example might be one of Roger's top 10 values is adventure. I am more fully Roger when I have adventure in my life. There are different ways to express that. And that means something different to different people. For me, it means being in the mountains, mountain biking, trying new things. And then that leads you to goals. It's like a thread that you're starting to follow. I have my values.

Here I'd express my values. Here are the goals that, that do it in a practical sense. Okay. That makes sense.

Right. And those should all be congruent. So go ahead. So we have our values, which leads us to our goals. And on this show, we've talked a lot about purpose and lining up your values with the way that you're living your life, right? Making sure that if family is one of those values, as it is, we know for a lot of people, then maybe you express that in a goal by wanting to

Have a place where your family can gather. Right. For one person, it could be having the lake house. For another person, it could be giving to your children. For another person, it could be going on a trip with every child or grandchild annually. Everybody's going to have their own individual place.

expression of that value. And that's what you want to get out of it. That's your vision. That's pillar number one. And that gets you, what is my base great life? And then what are my discretionary desires, wants? So pillar number one, you have to start there if our intent is to have a confidence. And then pillar number two is,

You have to organize your resource to know whether it's feasible. We have three sources that we can pay for life. We have social capital. In finance speak, that means social security or pension or guaranteed income. We have human capital, which means maybe part-time work or royalties or something like that. And then we have our money, our financial capital.

So stage two is now that I have what I want and I've expressed it in goals and all those goals cost money year by year, here are my resources. Is it feasible or is this just silly? We have to make sure it's feasible and there are tools and software is really good at that.

The Alliance actually is about to release its big consumer and advisor piece of research for the year. We call it PRIP in partnership with Ipsos. And when people were asked what they thought a financially secure retirement is, one of the top responses was my ability to cover basic expenses and

and bills, right? So that's the financially feasible part. I would take it beyond basic, right? We're hoping to cover the good life. People also, though, wanted to have peace of mind that they were protected, that that money was going to last as long as they did. Is that represented in one of the pillars? It is in the third pillar.

So feasible is just, do we have enough resources to pay for all our base? Great life is what we would call needs, which is more than, you know, rice and beans. So once you have a feasible plan and that's a good place to where when you have, oh, I might want to buy a lake house. Let me see if that's feasible. Let me see if this feasible, that's where you get creative to get to what we call a feasible plan of record.

Once you have a feasible plan of record, and actually most planners and individuals are good at feasibility, getting to feasibility, where it really starts to get a lot lower resolution that I found, Jean, is in, it's not enough to be feasible. You have to make it resilient, which is the third pillar, right? Exactly. Yes. We don't want to get knocked off course, right? It's feasible for me to ride my mountain bike up this mountain because I have a bike and

I have enough energy resources, but what happens if I get a flat tire or what happens if- There are tariffs, right? I mean, I think that's what's baked into this, am I okay question that you've been asked so much in the last couple of months, right? We're feasible, but are we actually resilient? And how do you solve for resilience? Well, I'll tell you first how you don't solve for it.

which is trust me. We're really smart. We have smart people. We have great software. Trust me, you're okay. Trust is not a strategy. The way that you build a resilient plan initially is you have to build space so you can make better decisions. Time and positioning is really important if you want to make better decisions.

And so step one is we need to stress test the plan, the feasible plan. Well, what happens if the market goes down like 2008? What happens if one of us dies early and we lose social security, et cetera, or the pension? What happens if we have a big healthcare shock? You want to stress test the plan to tease out the impact of feasibility and the severity of it so you can figure out how to manage those risks.

But then the next step, and I think this is more where we're getting to, is our position is if you're going into retirement or if you're in retirement right now, you should have the first five years retired.

of your expected spending from your money pre-funded, meaning in a treasury that's coming due right before you need the money. Now, a treasury coming due right before you need the money is one way to fund it, right? How do you factor in things like Social Security, like

pensions and annuities. I know that you talked recently about fixed annuities on one of your podcasts. It's something that the Alliance talks a lot about because when you're looking at those retirees who aren't living their best life,

The irony is that sometimes those retirees have plenty of money to live their best life. They're just so scared they're not spending. But if the money comes in the form of a paycheck rather than in the form of an asset, they're more likely to feel comfortable with that. So when you're building out that five-year income floor, and our judgment is we're getting the net amount that comes from your financial money after pension, social security, and any annuities that you might have.

And then we're pre-funding the first five years. So we're creating a payroll account. The guaranteed income conversation that you're referencing, until you do this stage, it's very difficult to be in a position to do something that's much longer term planning because we're worried about the world. So as an example, just currently, we'll use this last quarter or so

Having that five-year income floor, so pre-funding your spending, when markets are going down, you're not worried that much about how you're going to get your money. But it does give you a stress test of maybe I'm not as excited about having as much in investments as possible. Maybe I want a more safety-first approach. And now we can start talking about how do we provide more safety first, right?

to a plan. And that could be building a longer income floor. That could be taking some of your financial capital, your money, and buying a pension or an annuity of sorts to give you guaranteed payments. They all work together. But you want to get to that baseline before you can really dive into...

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An extra 25 cents for every gallon on your first tank of gas using promo code HERMONEY. I was watching Yahoo Finance and I was listening to a strategist who was describing the resilience of retirees and that, you know, retirees can roll with it when the markets are down and maybe your 4% becomes 3.5%.

I just sort of thought, wouldn't it be nice not to have to do that? And that's essentially what you're describing, a setup where you are not expected to be the one that compromises your lifestyle in order to roll with the markets. Very good point. I categorically reject that.

guardrails, and withdrawal rates. That is a financial framing of how retirement works that is devoid of how people really want to live. How do you think people really want to live that gets you to this other framework? The withdrawal rate structure is basically duct taping on a retirement strategy to an accumulation portfolio in a sense. When you're, let's say you're 60 years old,

life becomes less symmetrical, right? Symmetrical is like my son. He's 29. If he waits to go on that bike ride or that trip until he's 39, he's going to be basically the same person physically and mentally, et cetera. If you're 60, what I have observed is we have a certain pressure of, wow, I only have so many years left to do the Camino hike in Spain or to do these things. At some point,

I'm physically or mentally not going to want or be able to do them. So I have a pressure to live life now. And I think it's important to solve for that. And a 4% withdrawal rate example, as you used, what will likely happen? Yes, you likely won't run out of money if you follow it to the T, but you'll probably die with a lot of money too. And that's a bad outcome because now you're left with the regret. What could I have done? And so that's why I don't use them. What's the fourth pillar?

Fourth pillar is optimization. What does that mean? Optimization is, this is what I want. Hey, it's feasible. I've made it resilient. Now it's, well, how can I enhance this journey and make it even better? And that's going to be obviously a lot of tax management, a lot of tactical stuff. And this is actually currently anyway, Gene, where we use the RESA developed by Retirement Researcher, which is an income style.

assessment to help match the style of your withdrawal strategy to who you are, because that is critical. It's a personality metric in some ways. The REES is an instrument developed by Wade Pfau. Wade is a fellow, an education fellow, a research fellow rather, with the Alliance for Lifetime Income, in addition to all the many other titles that he holds. And I've looked at it and it basically asks you how much

Do you want to be guaranteed? And how much can you live with not being guaranteed? And how much FOMO are you going to have if you don't get a life that you want versus being able to sort of live with not getting what you want for a period of time? I have a beautiful example that literally just happened this morning.

It was related to long-term care, but it's a similar concept of safety first and getting guarantees. It was with a client. We walked through, do they need long-term care? So we walked through that from the financial assessment. And it was very clear that they had enough resources to

to absorb any long-term care event, even a longer-term long-term care event for both of them or either of them. So the math said they do not need long-term care insurance. They can self-fund. They have the resources. And we had the meeting today to talk through this and

I'll call her Sally. Sally has always been very risk adverse and a little anxious about future stuff, especially long-term care because she's had some instances that she's seen with in her business. And so we started to explore that with her and I was asking her,

well, what is it about this that is really gnawing at you? And we had a 20 or 30 minute conversation. Fast forward, the end result was that we're going to proceed with the policy, not because they need it financially, but because it will help give her permission or help give her confidence to live a better life. I think of the annuity conversation or guaranteed income conversation very much the same way is annuity.

Money nerds, we'll money nerd out on it all day long and we can debate the spreadsheets. But at the end of the day, the point is for the individual, when we're talking individuals, not macro research, what will give that person confidence? And many times having guaranteed payments is a thing that will give people confidence so they can actually go spend the rest of their money. Right. If you know that that paycheck is coming in again next month, it's a lot easier to

mentally for some people to spend this month's paycheck, because you know, there's more where that came from. When we look at couples, and clearly that was an example of a couple, when you are trying to plan for retirement together, and yet your age is different, or your risk tolerance is different from that person who is sharing your bed,

How do you solve for that? It's messy. Yeah. I've spent a lot of time increasing coaching chops as a result of that. I actually can think of somebody here in Colorado that has that instance, very different risk tolerances and different ages, not too extreme, but different ages. Well, it's like, how do you solve, do we go to the beach or the mountains when you're a couple?

You just have to hash it out and find something that gives each party enough of what they want. Usually you're not going to convince one or the other. You have to find an accommodation. And that's the messiness in the art part of retirement planning is

That gets lost because, bluntly, most people are advisors and planners are too busy talking about products and markets and the economy and everything else. The process should be totally compartmentalized from what the heck's going on in the world. We can't control any of that, but we can control these conversations. And that's where we get lost. I clipped an article out of the Wall Street Journal years ago. The headline was, She Says Maine, He Says Florida.

And it was about the couple who were completely on opposite ends when it came to what they wanted from retirement. And they had never talked about it.

They talked about it when this reporter started having these conversations with couples about what they want in retirement, realized we have a problem. How do you get people to the table? Well, think of it like I've been married 35 years this year. I don't know how long you have been married, Jean, but when you get married, you're walking hand in hand.

And as you're walking forward, it's like life happening. And we get distracted and we get busy, et cetera. The only way I know how to handle that, and this is why our firm is Agile. We use Agile project management for our process, is essentially at the core of Agile is have lots of little conversations. And that's my secret to a good marriage. You want to have a great marriage? Never have a big conversation with your spouse. Right.

It will help you a lot. That implies that you have little conversations so you don't start walking to other sides of the field. Now, when you encounter a couple like the Maine, Florida couple, they may be all the way at the other side of the field. So that's a lot more work. And I don't know how to answer that question right here. But from a retirement planning perspective or a life planning perspective, little conversations, even uncomfortable conversations, we have to be able to have uncomfortable conversations with

So we don't swallow them and let them fester because that's how resentment builds. That's the only way I know how to deal with it. When you see people in their 50s and their 60s, and you see a lot of them in your rock retirement club, what's the big mistake that you see many of them making? What's the most common or the biggest? I think it's epidemic of most people in retirement is they're focused on optimization first because that's what's talked about all the time. That's what's most acute to them.

That's what they're told to think about by our industry and talking about all the cool stuff that we talk about. So they talk about optimization too early. So an example might be, I want to retire. Let's say that I have a pain in my arm.

that I have to solve. I want to retire. I have all these things I have to solve. But when you go to the doctor, they don't just start treating you with a product that you suggested or a product that they already had in mind. What they do is you go through a diagnostic process, which is a pain in the butt because you just want the pain to go away. I just want to know whether I can retire or not. And they're making me talk about my values. Come on. Haven't you seen my spreadsheet with pivot tables?

Let's look. And you're making them talk about your values. So they're rolling your eyes at you. But if you don't start at the beginning, you're going to make a lot worse decisions on the products you use or the optimizations. The biggest mistake I think is the optimization because that's where they think they're supposed to be. So if you've already...

done some of that optimization work, right? You went to the planner, you ran the numbers, you got really deep into the numbers, you did the optimization, but you never really did the front end. Can you reverse engineer it? Actually, I would suggest you not reverse engineer it.

What I would suggest you do, and it's frustrating to people, I was having this conversation last night on a meetup, is keep it going because your life is fine, right? Start at the beginning, build the process sequentially, build your plan of record, starting at the beginning, totally ignoring anything that you own, investment-wise. Don't even look at your allocation. Okay. Okay.

And the reason that is, I see your face. Sorry, I have no poker face, not at all. The reason that is, at least in my experience after 35 years, is if you start with what you have right now, you've framed the whole process around tweaking. And so now you're playing a game of inches rather than creating what should be. So my recommendation is you have to know the value of the accounts, but don't worry about what's in them.

Create a plan from scratch with fresh eyes of what should be

Then take what you have and figure out the path to reconciliation or making those as close as you can. That path can be long sometimes, but that's okay. Similarly, what I've seen, Gene, is a mistake that people make is with their goals. When you're getting towards retirement, your life has been organized around your commute, your work, your children, your neighborhood, et cetera. And

It's difficult to think about a life outside of that because that's how you're designed. The more you can think about this clean slate where I don't have to worry about my commute, my kids are graduated,

I'm not worried about the school system. Where do I want to be? Maine or Florida? What do I want the rest of my life? The more you can do that clean slate, the better. So you don't just tweak what it is. We are almost at the end of our time here. And we've alluded to your poker chip and the Rock Retirement Club. I just want to give you a minute to tell everybody what it is and if they're interested, how they can find it. Yeah, Rock Retirement Club is a online community and educational platform that what we call a safe place.

Meaning that there's no upsells, there's no anything. Where you can go in and we have a master class where we walk you through step-by-step the four pillars and we give you the tools to execute each step along the way so you can build your retirement plan of record. And then they have experts, I don't want to call myself an expert, I'm always on a master's degree. You're an expert.

We have experts like Andy Pankow and Tanya Nichols that do this for a living that are there simply to coach. And we have a community of about 1200 people that the best people to learn from are people that are a little bit ahead of you. So you have the framework, you have the tools, you have the experts, you

And you have people that are ahead of you on the journey that all want to make the most of life, which we call rocking retirement. It's been a great journey. Amazing. Where can people find it? Now they can find it at rockretirementclub.com. We do open enrollments three times a year. Roger, thank you so much for doing this with us today. Thanks, Jean. Thank you. And if you would like more information from the Alliance for Lifetime Income about retirement, you can find it at protectedincome.com.

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