Retire at 75. Start planning to retire from age 35.

I recently interviewed Chip Conley, author of “Learning to love Midlife”. He defines midlife as ages “35 to 75”. Watch the episode – he explains his own experience as a “modern elder” around much younger Airbnb founders and execs. Overall he has a very positive view on life and the interaction between various generations in the workplace.

HR executives are starting to realize they need to “Redefine retirement” as I wrote here. Margaret and I been interviewing what I call multi-dimensional financial advisers who broadly help you with investment, multi-year tax, estate, insurance and other planning as you age. Ideally these are advisers who can handle multi-year tax scenarios, not just file annual returns. They call themselves “retirement advisers” and many of them are fiduciaries.

I think you should start that evaluation process at 35 and rinse and repeat the process through Chip’s broad definition of mid-life.  

Our evaluation of potential advisers been a humbling process (we are about 75% done). It’s like trying to solve Rubik’s Cube. There are more than 43 quintillion possible combinations for that cube.

In some ways Retirement planning is even more complex like solving an ever-changing, multi-dimensional hypercube. Markets swing wildly as does your portfolio. Politicians keep changing social security and private retirement rules. Wall Street keeps taking an ever bigger bite out of your investments. Insurance companies get you one way or another.

No wonder you get wildly divergent recommendations:

• Some will tell you to apply for social security at 62. Get as much as you can before (if) the fund runs out or you pass away early. Others tell you each year you delay your benefit increases by 5% to 8% but it maxes out at the age of 70. So start then, but they don’t always factor that increases your income tax exposure by pushing you into a higher tax bracket since the IRS requires you to take Requirement Minimum Distributions starting at age 73. Uncle Sam wants the deferred taxes along with their accrued gains.
• Most will tell you to convert your tax-deferred funds to Roth IRAs and take the tax bite now before marginal tax rates go up in 2026. They did not know of the work around we applied. We refinanced the house on a 10 year mortgage and took out immediate tax-free cash and are paying the mortgage from annual withdrawals and paying taxes on those tax deferred amounts.
• No surprise, one of the advisers told us to pay off the mortgage. I asked him why? It is at a ridiculously attractive rate of 2.4%. He said their numbers say otherwise. “When you become a client, we will show you the calcs.” 😊
• Our investments are currently fragmented across several managers. I did not realize how fragmented till an adviser ran our portfolio through their algorithms and pointed out we own Alphabet stock in 17 funds, Apple in 11 and so on. I thought we were diversified but fund managers move in tandem with their colleagues and negate the diversification.
• Couple of advisers told us stocks rarely fall in a Presidential election year. Couple on the other hand showed us we had too much exposure to equities. That was timely, we sold a bunch before the recent decline.  
• Most advisers pointed out all the hidden fees and conflict of interests at most funds. As one adviser said, try and avoid anything that “comes with a prospectus”.
• The other problem with institutions which hold most of our retirement funds is their limitations on diversification across asset classes. Try to find many which will allow you to invest in real estate, gold, Bitcoin etc. Unless it is with one of their own or partner funds which come with the dreaded “prospectus”
• Most of the advisers told us to sell our life insurance policies. They were so right. We asked the insurance company for a rate card till age 99. Such a deal! Wish we had cut them off a decade ago. There is an arbitrage market for selling your coverage, but apparently those buyers like policies of terminally ill insured so they only have to pay premiums for a couple of years and collect the coverage. Apparently, we are too healthy to qualify! We plan to let our policies lapse.
• I mentioned insurance companies don’t lose. Save on the life insurance policies, but pay for umbrella insurance. We asked our auto insurance company – after asking us 10 questions they still would not disclose the max umbrella coverage they offer. They wanted to know about our daughter’s car even though the umbrella policy did not apply. We went with another provider.
• One of the main reasons I keep working is we want to leave behind a chunk for the kids. Our estate planning is not complex, multi-generational. Even there we have got conflicting advice. We have heard about “Ladybird”, "pour-over" and other deeds.

I could go on. Like I said it was a humbling but timely exercise. Now multiply that over the rest of the US.

The numbers at stake across all of us ginormous. You hear in the media all the time that inequality keeps getting worse. It is if you compare King Charles or Elon Musk to the average Joe. What they don’t tell you is some research I have done for an unfinished book. The retirement assets of Americans (most in the middle class) – IRAs, 401ks, etc. were valued at $38 trillion at the end of 2023. There is even more in pension funds and other retirement vehicles.

Our real estate is worth $47.5 trillion. That does not include jewelry, heirlooms and other personal assets

In 2022, 92% of US households had at least 1 car.  22% had 3. Most of our real estate and vehicles are financed, but the net value of the assets are still significant

We are talking real money! No wonder politicians and Wall Street salivate at our pool of money.

There is a third group which also cannot wait to get its hand on these funds. They are export addicted countries like China, India, Germany and others. For decades they have run trade surpluses with the US and we have been chumps to dent our middle class that way. Unfortunately we have too many academics, economists and policy makers who cling to the notion of “free trade”. Hello it’s free trade when it is bi-directional,  not when we keep running trade deficits year after year.  We have a strong middle class – use access to that demographic as a bargaining tool.

Wish we had started the process at 35 and gone through a detailed review every few years.  

We all have unique portfolios and goals. Too many people just park their savings. You should be actively managing it. Start early in life, be willing to move fiduciaries. Keep them honest. And work with them to keep the politicians and Wall Street (to include banks and insurance) companies and our trade policy makers honest.