#27 – A 6% Withdrawal Rate: Crazy or Possible? / How To Stay Young As We Age with Doctor Dawn Carr

Wes Moss [00:01:16]:
When it comes to retirement planning, barring getting to your savings and all the sacrifices we need to do that Jack and Jill went up the hill. Who’s the one that ends up with the most? It’s Jill the investor, not just the saver. But when it comes to making your savings last, it has to be the most important topic in all of financial planning and investing. The whole point of saving and investing is to be able to live off what you’ve sacrificed for and for the income and the withdrawals you take from your retirement assets to keep up with the insidiousness of inflation, aka protecting your long term purchasing power. So when we’re talking about money, it’s hard to find a more important topic. And it’s not black and white. And that’s why we spent a whole lot of time around this. It’s not a one size fits all conversation.

Wes Moss [00:02:06]:
Some families I work with have super low spending needs. Thus they have super low withdrawal rate needs. They’ve got two healthy Social Security payments. They’ve got two pensions, sometimes three or four pensions, and they have eight grand a month coming in. They have no mortgage. They have $8,000 a month coming in from all their different income sources, and they don’t need anything from their retirement savings. Now, that’s a relatively rare situation, but I see it a lot. And you end up in a situation where families really the only money they ever pull out of their accounts are the required minimum distributions, and they don’t even really need those.

Wes Moss [00:02:43]:
So I see people that use 1%, 2%, 3% and that’s totally fine as a withdrawal rate from their assets and that’s great. They’re not worried about the 4% plus rule because their rpms are way lower than that. They don’t need to try to figure out a way to max out what they can take out from their investments without running out. But most people do need to worry about it. Then of course there’s lots of other families that need a 6% withdrawal rate from their retirement savings. They need it every year and they need that just to cover the bills. Now sometimes this may only be for a short period of time. Maybe it’s a year or two or three interim until they have an income stream like Social Security that maybe kicks in because they retired sooner and then they can drop back to the 4% where there’s lower ebb on your retirement withdrawal.

Wes Moss [00:03:39]:
Rpmsen and when I say rpms I’m visualizing the Rpm meter in your car. You don’t want it. And it’s ironically very much like retirement planning. You can run at three or 3000 rpms or 3% withdrawal rate. Pretty. You do that all day long and you could drive across the country, your engine’s going to be fine, 4%. You can still do it but you’re starting to run the engine. But once you get to five and 6% withdrawals or 6000 revolutions per minute on your car it’s revving the engine.

Wes Moss [00:04:07]:
But again for some families those low rpms or those low withdrawal rates, they just don’t cut it. 2% doesn’t cut it. 4% isn’t going to cut it. And they really do need 6% let’s say in order to live the lifestyle they plan on living. And remember, when it comes to finances, when it comes to money no one is crazy. Your situation is what it is. You decide when to retire and then you simply have to make the best of the cards you’ve been dealt or that you’ve dealt yourself. So today let’s say just hypothetically the 4% withdrawal rate just doesn’t cut it for you and you need 6%.

Wes Moss [00:04:48]:
What can you do? What should you do? Our research team at CIA Capital Investment advisors spent a whole lot of time around this recently and studied what kind of asset mix might work best. If you need to extend your withdrawals beyond that 4% range all the way up to 6%. Is it ideal with no risk? No way. Of course not. But it is possible. And there are moves that you can do that increase the probability you won’t run out of money over your lifetime, even at a 6% withdrawal level. Couple of important points about when we’re studying this. Remember, this is based off of stock market and bond market history.

Wes Moss [00:05:39]:
So all we can do is go back and look at what has happened over a really long period of time. We’re going back to 1928 in most of these studies, and we’re looking at the cadence of how stocks or bonds did in any given year and how inflation did in any given year. So when we run these probabilities and say we need this percentage withdrawn with this inflation rate, starting at this time, it’s all based on history. So when we say you have a, let’s call it 90% probability that you don’t run out of money if you take this amount per year and you have this asset mix, that in itself isn’t necessarily a hard and fast rule. That’s just based on what’s happened over the last, call it almost 100 years. So all of this is probability planning. We want to increase the probability relative to what’s happened historically that our money lasts 303-54-0455 years. And that, to me, is still a very smart way to think about planning.

Wes Moss [00:06:38]:
We, of course, can’t see the future, but if you look over the course of market history, stock market, bond market inflation, economic history, we’ve learned that it tends to repeat itself, maybe not in any given year or two, but the longer the period of time we look at, the higher the probability that markets continue a similar path over time. There’s a couple of ways I want to look at this. This is a way that we’ve never talked about here on the show before. I want to start with, this is a new fidelity study that looks at withdrawal rates and does it almost in an inverse way. I’ve always looked at it. I’ve always looked at this as if I’m going to take x percent. How long historically has my money lasted? They do it the inverse of that, and they asked, what withdrawal rate can I use at what asset mix between stocks and bonds and cash to reach different confidence levels? That money doesn’t run out and that money doesn’t run out. And in their study, it’s for 25 years or more when we get to our studies.

Wes Moss [00:07:45]:
And if you want to skip this fidelity study commentary and just skip to the four and 6%, feel free to do so. But we’re starting with this. So in the fidelity study, they just title this. As I look at this table here in this graph, it’s just titled appropriate withdrawal rates. So what if I want appropriate withdrawal rates and they’re looking at different confidence levels? So what if I want a 50% chance of success? How much can I pull out versus a 75% chance, a 90% chance at a 99% chance? And just intuitively, it makes think of it this way. When you want a 99% probability that money doesn’t run out over a certain period of time, of course, those withdrawal rates would be naturally lower. If I’m okay with a 50% probability that my money won’t run out over 25 years, then naturally those withdrawal rates will be a whole lot higher. So that’s how this study works.

Wes Moss [00:08:41]:
So let’s start with this. What if I want a 75% chance of my money to never run out? What rates? What withdrawal rate, though, could I then use? See how this little inverse of how we normally talk about it? For example, if I was okay with a 75% probability of success, success here again is money lasting at least 25 years. The fidelity study shows that if I use a balanced mix of essentially half stock, half bonds, cash, then I would be able to take out at maximum 5.6% per year and still have a 75% confidence level that I don’t run out for at least 25 years. That’s again, at a 70 75% of the time that would work, or it has worked over the course of history. But if I used an all stock portfolio still targeting the 75% confidence level that I’m not going to run out, I could actually take a little bit more. Not a lot, just 5.7% though, as the max with the same confidence level. But it’s very different if you want a 99% confidence level. And I’ve done a lot of retirement planning over the years with families, and most people are looking for a 95% confidence level.

Wes Moss [00:09:56]:
Rarely have I ever heard someone say, you know, I’m good with a 50% confidence level. But remember, everyone is different and nobody’s crazy. So here are the numbers. If I want a 99% confidence level that I’m never, that I’m not going to run out for at least 25 years, and I want to use all stocks. So remember, we’re also trying to figure out what’s the asset mix that changed these probability levels. So if I use all stocks in this example, and I still want a 99% confidence level, then I could only take out 3% per year. Only 3%. And we know that’s because there’s some really rough periods of time.

Wes Moss [00:10:39]:
There’s huge drawdowns in equity markets. So if we’re 100% in stocks and we get up almost 50% correction, and you’re pulling money out and you never, and you’re not stopping. Those are the scenarios where you tend to run out of money. Also in periods of time when inflation’s super high and your spending need goes up a lot. Because remember, in all these tests, we’re starting with a withdrawal rate number, and then we’re increasing that nominal number amount for inflation, whatever it is prevailing in history over time. Here’s where it starts to get a little more interesting. If I use a more conservative mix, 60% in bonds and 40% in stocks, then I could count on a 4.1% withdrawal rate. That’s a higher max withdrawal rate than if you used all stocks.

Wes Moss [00:11:31]:
Again, remember, targeting the 99% confidence level. Let’s go back to our 75% probability that we talked about earlier. If we use Fidelity’s conservative mix, the max long term withdrawal rate is only 5.2%. Remember, 75% confidence. But if I use their heavy stock mix, then the maximum withdrawal rate goes to 5.7%. What this study is really telling us is that as your withdrawal rate needs to go up from four to five to, let’s say, 6%, you actually need more in stocks to increase your probability of success, even though in the 99% confidence part of the study, it was better to use a more conservative mix. So, very simply, higher withdrawal rate needs call for more in stocks and less in bonds and cash. Lower withdrawal rate needs with higher confidence levels require a much more balanced approach of stocks and bonds.

Wes Moss [00:12:40]:
Now, I’m not going to spend a lot of time on this next part because I think most of our retire sooner listeners have already gone through this, and we have a whole show, we have a couple of different shows that explain the 4% role, but I’ll just do a quick recap of that. In our 4% study, we’re simply looking at the 4% confidence level. We start with 4% of whatever retirement balance is called a million dollars. 4% is $40,000 a year, and then that gets increased for inflation every year according to CPI. And when we’re looking at the data using a 60% stock, 40% bond approach points to a 99% level of success, not running out of money for at least 30 years. In fact, the five worst outcomes. This is something also new that we’re sharing today. We looked at what are the worst periods of time? When does money run out the soonest? Over the course of history, utilizing 4% the five worst outcomes for that balanced mix were the following.

Wes Moss [00:13:42]:
The worst was it ran out. Money ran out in 30 years. Then 31, 37, 38, and 39 years. Those are the worst five. Now, looking at a 4% withdrawal rate with 100% in stocks still gives you a high probability of success. It gives us a 97% success rate, or 97% of scenarios lasted 30 plus years. Remember, now we’re talking about data we did with our CIA team and the retire sooner team. So it’s a little different than the fidelity study.

Wes Moss [00:14:17]:
And as great as 97% is, the 3% of scenarios, 3% of the time, they don’t look so good. And in those worst instances, we’re looking at the worst outcomes. Money only lasted 1617 and 26 years. So again, most of the time, things worked out great. But in the few cases when we had really bad stock markets, really bad inflation, money didn’t last nearly as long as we wanted to. So you can deduct from this that a conservative balance again wins if you’re looking to maximize your probability of success, aka not running out of money. All right, now let’s look at 6%. Now, I’m not recommending that you should use a 6% withdrawal rate.

Wes Moss [00:15:12]:
I don’t want another Dave Ramsey fiasco out there where I think he said something like 8% and the whole world got nuts. So about it. We’re looking at data here. And, of course, this is a much taller order. We’re using all the same historical parameters, adjusting for inflation and looking at different asset mixes. 60% stocks, 40% bonds, 40% stocks, 60% bonds, and then 100% in stocks. How does that change our probability of success? If we were to say, I’d like to start with 6% and ratchet that up every year for inflation, again, of course, it’s a much taller order. We’re using more of our money in any given year in perpetuity.

Wes Moss [00:15:58]:
And remember, that’s the other catch here, is that these studies are also linear. It’s as though you start on this track of I’m taking x amount per year, and I’m ratcheting up for inflation every single year, and your foot is on the gas pedal and there’s no brakes. There’s never any pumping of the brakes when it comes to these studies. So it’s assuming that even though, let’s say you have a bad market and your balances start to go down, you’re still taking your 6% plus inflation, and then you do it again the next year, the reality of all of this and I guess I’m maybe skipping to the bottom line is that when it comes to real life retirement planning, we’re going to adjust. You may start with a number that’s a withdrawal rate, and if it’s too taxing on your portfolio, you know that you really need to slow it down. And you start with a number maybe thats really conservative and inflation is low and the market is in a wonderful, glorious period of time. And youre thinking, wait a minute, my portfolio has grown way more than I thought, even with taking out my starting withdrawal rate. And then you adjust with that.

Wes Moss [00:17:08]:
So all of this is couched with when were looking at these probabilities, were on a direct line foot on the accelerator, and we never slow down. And in real life, we’re certainly going to adjust. But again, I think this is still a very helpful guide when we’re trying to contemplate, well, how much can I spend? So we’re looking at 6%. As you can imagine, mathematically, money just won’t last as long here when we run this over the course of market history. But it also doesn’t mean that it hasn’t worked or been possible. In fact, we’re looking at a balanced portfolio here, 60% stock, which we’re looking s and p 540% in bonds, which is the aggregate bond index over history. What I would say a healthy 62% of the time funds lasted 30 years or more. Think of it this way, nearly two thirds of the time over the course of economic and market history, that balance, 60% stock, 40% bonds, allowed someone to start and stick with a 6% initial withdrawal rate, ratcheted up for inflation every year, and money still lasted more than 30 years almost two thirds of the time.

Wes Moss [00:18:28]:
Now, it doesn’t give us that 99% confidence level that the 4% data shows, but it puts the 6% rate in what I would call the decidedly possible camp. Now, how do we increase our chances? If you say, look again, 4% rule doesn’t work for me. I need to withdraw 6%. What’s interesting, and maybe now intuitive at this point, is that the probability of success using this higher, heavier withdrawal rate goes up, not down, when you switch to a 100% stock allocation. In fact, the probability jumps to 71% from 61% when we’ve gone from a balanced portfolio to 100% in stocks. So 71% of the time, money lasts more than 30 years using a 6% withdrawal rate in a 100% stock portfolio, and 69% of the time using 100% stocks with a 6% withdrawal rate. Money lasted more than 35 years. Compare that to the balanced or more conservative portfolio, where only 51% of the time money lasted 35 years or more.

Wes Moss [00:19:48]:
Now, let’s also go back and look at worst outcomes. The worst outcomes using all stocks. Remember, worst refers to money running out quickly. Weren’t all that different between the hundred percent stock approach and the balanced approach. In the three worst case scenarios, using 100% in stocks, money ran out in 1011 and 14 years. It’s pretty quick. Using the balanced portfolio, 60% stock, 40% bond, the three worst outcomes were all 16 years, not all that different. So if you really sat on these higher withdrawal rates, knowing that your confidence levels would be much lower than using lower withdrawal rates.

Wes Moss [00:20:37]:
So bottom line, using a 4% withdrawal rate is, of course, much better for your probability of success than 6%, especially if you’re looking to have money left over at the end of retirement. But according to history, and we’ve looked at this from a data perspective, 6% isn’t impossible. If you want the highest confidence level, maxing out withdrawals without running out, you want to get to a 99% confidence level. You can get there using the 4% withdrawal strategy and a balanced 60% stock 40% bond portfolio if you want to increase your confidence levels when using 6% again, if you have to, history suggests you’re largely better off again, a higher probability of not running out of money by simply being a 100% stock investor. More money matters straight ahead. If you’ve ever done a Jane Fonda workout, or if you remember as a kid rocky running the steps, and if Michael Keaton is still Mister mom to you, then guess what? It’s officially time to do some retirement planning. It’s wes moss from money matters. Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead of schedule.

Wes Moss [00:22:06]:
An appointment with our team today@yourwealth.com. dot. That’s your yourwealth.com dot. We all know that older person who just seems so young. How do they pull that off? Do they hit the genetic jackpot? Or do their lifestyle habits act as a fountain of youth? Well, doctor Dawn Carr has the answers. With a PhD in sociology and gerontology, she directs the Claude Pepper center at Florida State University and is a former researcher at the Stanford center on Longevity. What I love about the interview that you’re about to hear with dawn is that she has very concrete and actionable solutions to so many of these longevity and aging challenges. She doesn’t just identify the problems and hand out vague suggestions.

Wes Moss [00:22:59]:
She has a litmus test for determining a person’s social health. How many close friends should we have? How cognitively complex should our daily activities be? And can more sleep prevent mental decline? I hope getting the answers to these specific questions can help us determine how to maximize the vibrancy of youth while we age. Doctor Dawn Carr, you were at the Stanford center on longevity for a period of time as a researcher, and then you did your postdoc at. At UNC. So are you a. Do you consider yourself a tar heel, or was that because when you’re postdoc, not so much.

Dawn Carr [00:23:38]:
Yeah, I have a lot of different. I mean, I did my undergraduate Arizona state. I did my master’s in doctoral work at Miami University, and then. Yeah, so then postdoc at UNC and then Stanford, and of course, now as I see. So I think you’re asking who I’m most loyal to. Is that what I’m hearing?

Wes Moss [00:23:57]:
Yes, I am. Who are you most loyal to?

Dawn Carr [00:23:59]:
Yeah. Yeah. Oh, I’d probably have to say Florida state now. I mean, I’ve been here the longest, the eight years here at Florida state, so I think I have to say that. But I do really appreciate the tar heels.

Wes Moss [00:24:12]:
And that’s a nice way to say I appreciate the tar heels.

Dawn Carr [00:24:16]:
They’re pretty special.

Wes Moss [00:24:18]:
So how much of your time now is research versus. Are you teaching actively? Are you doing research or both?

Dawn Carr [00:24:25]:
Yeah, most of my time these days is running a research center, so I’m working with researchers. I have some students that I work with. I don’t do much teaching. I have an internship program that I oversee in my center here. But most of my work is definitely doing research and running research teams.

Wes Moss [00:24:46]:
This is maybe my first question. I kind of set this up as a thought, and I thought about that. This weekend, I ran into a neighbor of mine and a new neighbor. New neighbor. So it’s not someone I had ever met before in person. And I think of. And maybe this is just situa. This is not situational.

Wes Moss [00:25:07]:
I think this is just the life. We all, we see this in life where I can run into a 72 or 73 year old, and they’re kind of. They’re old. They’re kind of like. They strike me as old. And then I run into my new neighborhood and we talk for 20 minutes or so, real friendly, and it just like, he’s young. And when he told me his age, he’s like, I’m 78. So you’ve got a super young 78 year old.

Wes Moss [00:25:35]:
And then we all know people that are 72 or 74 and they don’t feel young.

Dawn Carr [00:25:40]:
Right. Right.

Wes Moss [00:25:41]:
And I think we all see that. I know this is an impossible question to answer. Cause there’s so many layers to this. What is it? Is it genetics? Is it. The young one is regularly been exercising since they were 30? Is it their diet? Is it physical? Is it mental? I mean, that’s like the whole question around longevity in one question. But I wanted to maybe think about it in that context. Young people who there are doubling people.

Dawn Carr [00:26:07]:
You meet, and they just have, I think, what most people respond to when they meet someone that is older than they expect, like, they’re. How could you be that age? That’s not what I envision for 78. I think of someone who’s, you know, not going to be moving very quickly or maybe not interesting. I think that. So I will say that a part of this is just our interpretation of what age looks like. And we’re pretty ageist as a society where we think about old people and getting older as, like, becoming irrelevant and useless and not relevant to our world when we’re younger. And so part of it is we have this sort of stereotype in our head about what it’s like. But at the same time, you definitely meet these people that seem, I’ll say, prematurely older than you would expect, and that really stands out.

Dawn Carr [00:27:00]:
And you’re. I mean, it’s always funny when people say, oh, the golden girls, you know, when I was growing up, were, like, the old ladies that were, like, kind of the fun old lady. They were in their fifties, right?

Wes Moss [00:27:12]:
The goldie girls?

Dawn Carr [00:27:13]:
Yeah, they were in their fifties and maybe early sixties, I mean, depending on which season you’re in. But, yeah, they were in their fifties. And, Terry, you don’t think about old as in your fifties anymore. That sounds silly and ridiculous, but there are definitely these people who are, we’ll say, like you said, 72, and you’re thinking, okay, when I’m 72, I definitely want to be a person who’s not working and enjoying my time. I want to be that person who’s got all the time in the world to. To work on hobbies, to take my time checking out of the grocery store instead of hurrying to get stuff done, like, really have the space to breathe.

Wes Moss [00:27:51]:
By the way, I love the grocery store. That’s like an event for me. If I ever get to the grocery store, my wife will call and she’ll like, where are you? I’m still. And I’ll say, the other day, I said, I’m shopping. She was like, for what? For what? I was like, I’m at the grocery store. She said, that’s not shopping. That’s grocery shopping. When you say shopping, you’re, like, buying jeans.

Wes Moss [00:28:12]:
But I was like, okay, I’m sorry. I’m grocery shopping. I’m sorry. Keep going. Yeah.

Dawn Carr [00:28:15]:
Well, the grocery store is a fascinating. If you’re a sociologist like me, the grocery store is like a microcosm of fascinating human interactions. And there’s all kinds of stuff you see. And when you talk about old people, they shop at different times than people of different ages. So if you’re curious to go watch people of different ages, you go to the grocery store at a particular time. And. And this has been the case for a long time for lots of different reasons. But when you see someone who’s, like, older than you expect at a grocery store, what you see is they’re leaning on their cart for support.

Dawn Carr [00:28:48]:
They’re walking more slowly. Their steps are more shuffles than steps. These are about mobility, usually the physical mobility. And there’s a lot of factors that influence our physical mobility as we age, but it’s really correlated with a lot. And I think when we look at someone who’s not able to move quickly when they walk, that’s a sign that they’re becoming frail and struggling. And by the way, those things connect to your brain. Frailty with your body leads to cognitive consequences. So then you often see the connection with speaking more slowly.

Dawn Carr [00:29:21]:
Sometimes they can be related, but aren’t always. So there is this sort of, I’ll say, accelerated aging. Some people have, and then the alternative, which are these, like, super angers, where it’s like they’re 90 and they’re running marathons and doing all the things that you don’t expect of a 90 year old. And most people don’t live like that. So there are genetic aspects to this. I just lost my aunt. And on that last month, she was 92, smoked for over 70 years. She never eat vegetables or fruits.

Dawn Carr [00:29:55]:
She broke all the longevity rules, and she was fine. Her brain was fine. She was sharp as a lip. And I don’t know why she survived as long as she did. She finally got lung cancer and died very rapidly with very little suffering. She is the example of all the good things. We wouldn’t look at her life and say, well, everyone should smoke for 70 years and eat bacon multiple times a week and avoid fruits and vegetables. We know better than that.

Dawn Carr [00:30:23]:
So there’s genes that are protected, and some people are just born with that in front of them. Both good and bad.

Wes Moss [00:30:33]:
And by the way, have we. I know that there’s. And I don’t know if this is maybe part of your research or not. Has it just been so difficult to identify? Like, so take your aunt, that example you hear about once in a while. Smoked for 50, 70 years, but still lived into the nineties. Is there nothing genetically that we can figure out about that person that we can somehow replicate? Is the longevity industry, I would think, has tried to work on that and learn from, I don’t know, sea turtles that live indefinitely. Where are we? Right. The negative salinity.

Wes Moss [00:31:12]:
Isn’t it called something like negative salinity where you don’t. Your cells don’t age? Why have we not been able to figure that out? Why is there no magic potion at all?

Dawn Carr [00:31:19]:
The problem is there’s lots of stuff going on all at the same time. So any one thing, it just doesn’t exist. That’s why there’s never going to be a pill you take, and it’s like the longevity pill, and you could just take that pill and you slow down aging or something like that. I mean, damn it, everybody wants.

Wes Moss [00:31:36]:
Are you sure about that?

Dawn Carr [00:31:38]:
We have AI now, I know maybe there’s something coming. Maybe AI will help us find the magic pill, but I don’t think that’s ever likely to happen. The issue is there’s a whole bunch of factors that are going on, and. And you might think of it as you have a genetic capacity to live a certain length. And the lifestyles we have either reduce that capacity or help you reach that capacity. And we don’t ever know. Cause we just don’t have enough information or insights about your genetic capacity. But we have the, you know, if we’re born in environments that aren’t very supportive and we have a rough childhood, that’s gonna reduce our capacity.

Dawn Carr [00:32:15]:
On the other hand, if we have all the resources we need growing up, that might help us reach that capacity. So my aunt probably should have lived to be 105, and she gave up some years, right? We might think of it that way.

Wes Moss [00:32:28]:
That makes sense. Yeah. Okay, so let’s start with. So, first of all, what do we get? What do we get wrong about. And I want to come back to mobility because I think you answered, that’s an interesting way to look at this, is that there’s mobility. You slow down in pace, and I movement, and you slow down cognitively kind of all the same time. And that’s what we see as age. It’s like, oh, that person is slower, and.

Wes Moss [00:32:53]:
But what do we get wrong about aging.

Dawn Carr [00:32:57]:
Well, first of all, probably the thing we get wrong is that it’s all bad. I mean. I mean, let’s start there getting older. I mean, you, most people, as they get older, they feel more free and they feel more connected with themselves. That’s the right thing. That’s part of development. As we get older, we have this amazing opportunity to better make sense of things that maybe we weren’t able to handle when we were younger. You have experience to draw from.

Dawn Carr [00:33:28]:
And they always say, like, don’t sweat the small stuff. It’s so trite. But as you get older, you actually don’t sweat the song because you have perspective. You look backwards and you say, I’ve been through these hard things before. I mean, unless you’re like some rare individual that had no hard things happen to you. And, wow, I don’t know very many.

Wes Moss [00:33:48]:
Of those people, but I don’t know.

Dawn Carr [00:33:50]:
That many of them.

Wes Moss [00:33:51]:
There’s some, yeah.

Dawn Carr [00:33:52]:
And I will say there’s something to be said for having had too many bad things happen to you that doesn’t work well. But for most people, the benefits of aging are that you have more ability to see with clear eyes what really matters, and you’re able to highlight and focus your time and attention on those things. And from my perspective, most, well, I’d say most conversations I have, the thing people think are most important are having lots of money and maybe saying when they’re young and those are the least important things as you get older. Now, being poor is bad, but being super rich isn’t as important as having enough. And so once you have enough, that’s enough.

Wes Moss [00:34:37]:
That’s enough.

Dawn Carr [00:34:38]:
But if you have no friends and you have enough money, that’s way worse than being poor and having lots of friends. If I were to give up one of those things, it’s the people in our lives that matter the most, that give us meaning and purpose.

Wes Moss [00:34:51]:
I love this idea of perspective, mobility, perspective, and then socialization. So clearly that is, there’s a link, right? I’ve probably undisputed, yeah. Socialization leads to. Well, I think about Dan Buettner and his work around longevity, around the world and one of the cultures, I think it’s the okinawan culture, where women have these moas, where they live to, they kind of pledge and they live their friends forever. It’s like a golf group plus one forever. Does it just change us psychologically? Does it keep us healthy psychologically? How does it help longevity, socialization? Does it give us purpose? Yeah. Tell me why it works or what does it do?

Dawn Carr [00:35:35]:
Well, I mean, you can be really simple. If you’re sitting in your bed and you’re dying and you’re thinking back on your life, it becomes really crystal clear to say, what am I leaving the world with in my absence? And usually the thing you want to leave the world with are the people and the things that, the connections that you made and you left behind. And I think it’s that simple. But let’s go further, because socialization is also about doing things. You’re building ideas, you’re building solutions, you’re helping make one person’s or two persons or many people’s lives better in some way if you’re really having an impact and you’re able to see those benefits through those people. But when you meet with people, you’re also physically doing things. If you go out and spend time with friends, especially in these blue zones and other places, you see these connections. They’re usually doing something.

Dawn Carr [00:36:37]:
They’re physically moving and they’re using their brains. And when you talk about longevity, I always say it’s kind of simple. You want to make sure you’re physically, socially, and cognitively active. And when you’re connecting with people in meaningful ways, you’re often doing all three at the same time. Because the reality is we need to exercise. But more isn’t always better. More is enough. Like you reach a point where enough, there’s enough.

Dawn Carr [00:37:09]:
We don’t know what the enough is yet, by the way, and it probably varies per person, but there’s a point at which you don’t have as much return on investment with certain things. And with exercise, doing nothing is really bad. But doing even a small amount gives you lots of gains. And exercise has remarkable impacts on everything else. But you wouldn’t want to exercise 10 hours a day. That would hurt you. But when it comes to social engagement, there’s a really great body of literature on volunteering, and I think it’s actually the best form of social engagement for really studying, because these aren’t people who are just like friends of yours or family members you have to be around. These are strangers who choose to be around, and you have an explicit purpose to connect and give back.

Dawn Carr [00:38:01]:
When it comes to volunteering, you pretty much max out the benefits to health of any other health activity you can get. If you’re just volunteering two to 3 hours a week, which isn’t that much, but the health returns in later life are as good as any health behavior I can get my hands on. And I think that’s fascinating.

Wes Moss [00:38:24]:
It is fascinating. I want to talk about socialization. It feels to me think about so money on the scale of, again, needing some sort of foundation, eliminating this fear we’re going to run out. That’s a pretty big deal. On a scale one to ten, it’s a, it’s a ten, but it also gets press and coverage like it’s a twelve. It gets all the press. If you think about it, gets a lot of it. Then you think about socialization, which is a ten and it gets like a two on the thought around what do you do? Like what are you doing about it? There’s not, there is so little on a relative basis, not zero on, hey, this is like a huge deal, but what are we doing about it in life? That is, I guess talked about in any sort of structure.

Wes Moss [00:39:21]:
Like, hey, you really need to spend x amount of time making sure you are being social, forcing yourself to do more socialization, cultivating that. And I guess I just, a, wanted your opinion on that and b, I wanted to talk about men versus women. And then just like the practical steps of keeping that cultivation of socialization going.

Dawn Carr [00:39:42]:
Yeah, those are awesome things to talk about. First of all, I think you’re right. When you think about, if you want to talk about a retirement portfolio, I think that’s a good way to think about it. You have your money stuff and then you have your people stuff, your social side, and then you have your sort of daily tasks. I mean, there’s, and then like where is exercise fitting in there? And it should be if you’re doing those things as meaningful activities, those social activities, those physical activities, and then you’re making sure you have enough money, that’s your balanced, that’s a real balanced portfolio in preparation for retirement.

Wes Moss [00:40:19]:
Jeff, I like it. Money, people, exercise. Was there one more?

Dawn Carr [00:40:22]:
And tax things, your roles, those things we were just talking about, what is your role for what you’re doing in your day? And that could be those other things, of course, but you could spend time in lots of different ways. But it’s about figuring out what your meaning and structure of your day centers around. Tasks that are meaningful for you. But if we go to socialization, I do feel like what’s happened? And I think the pandemic just really put the gas on these trends. There hasn’t been as much emphasis to social relationships as any of these other things for most of the time. And sometimes people are like, well, I just don’t have time for friends because I’m working so much, or I have kids at home or all these things. And the issue is you don’t suddenly hit retirement and say, okay, now I’m going to get friends. I mean, I’m sure there are people who are like, okay, my task for today is to go get a friend of, you know, most of the time, you know what?

Wes Moss [00:41:26]:
We’ve circled right back to the grocery store. I’m gonna go shopping, actually.

Dawn Carr [00:41:29]:
I love that. It is a good place to go meet a new friend. I like this. Yeah, we’re gonna come back. I think that the issue.

Wes Moss [00:41:37]:
Honey, I’m going to the friend store. I’m out shopping. I’m at the friend store. Yeah, they’ve got a sale on friends. All right. Sorry.

Dawn Carr [00:41:45]:
I do think people think about that. If they’re highly motivated people with their careers, they’re often, like, focused really hard, often at the cost of losing relationships across their lifespan. And they think, but this is what’s most important. It’s right in front of me. Money is driving me because I want to make sure I get the promotion or the thing. And so at the cost of losing all the other stuff and what you’re actually doing is you’re setting yourself up for a shorter life, probably because you don’t have the thing. The real stuff that matters in your life isn’t, again, what’s in your bank account, assuming you have enough. It’s who you’re sharing your day with and how you’re spending your time.

Dawn Carr [00:42:27]:
And you don’t do that once you retire. This has to be something that’s cultivated across your life course, you learned how to make friends when you’re kids, and you’re supposed to use those skills to continue to develop meaningful connections with others across your life. And those things become more and more important as you get older. And this is the litmus test I often give people, and I haven’t taught undergraduates in a while, but I have.

Wes Moss [00:42:53]:
To say, this is a litmus test for what?

Dawn Carr [00:42:56]:
For if you have good social health.

Wes Moss [00:42:59]:
Okay, let’s hear it.

Dawn Carr [00:43:01]:
So here’s the thing. If you were to have a terrible emergency in the middle of the night, do you have at least two different people you could call who would drop everything and come help you who are not your spouse and don’t live with you two?

Wes Moss [00:43:17]:
Yeah. Okay.

Dawn Carr [00:43:18]:
And if you have at least two people that would drop everything and help you most of the time, you have a sufficient number of people in your life to support meaningful social health.

Wes Moss [00:43:33]:
Now, what if everyone’s phone is, what if phones are on silent?

Dawn Carr [00:43:37]:
I know, this is a big problem. It’s a theory of, do you have two people? But I mean, the actual practice, without even getting them shown, theoretical. You’re gonna have to, like, have them on, find friends and make their phone buds or something.

Wes Moss [00:43:49]:
So’s, yeah, hold on. Does other family count, or would you.

Dawn Carr [00:43:54]:
I usually say I want you to not think about other family, but that’s. That’s cultural, to be fair, because in certain cultures, you really focus primarily on family. And this is true for especially hispanic. A lot of hispanic cultures where they’re really large, robust families, and that is their social connection, and it is very effective. I would just say a lot of other cultures have not cultivated that kind of intense family relationship bond that they have. And so I usually say, just to be on the safe side, let’s think about non family, because that’s what you should be. And it’s not to be like, go to the friend star and make sure you bring two home. It’s that you’re cultivating trust and vulnerability with other humans on a regular basis, and those things can go away in a heartbeat.

Dawn Carr [00:44:48]:
So you can’t, like, not watering. I got a plant in my office, and I’m looking at it, and it’s reminding me of dead leaves over here. I forgot to water my plant last week. You do the same thing with your friends. If you don’t, don’t go away. The point about non family is they have just, like, a volunteer job, the choice to walk away at any given time. And so you have these regular engagements that you’re feeding and you’re helping nurture over time, and those you keep with you over time. You can’t just go get them.

Wes Moss [00:45:19]:
It’s almost a certain. There’s a different value set that a non family friend brings, because it does take a little. It just takes a little bit more effort. Whereas your brother should be there for you forever.

Dawn Carr [00:45:32]:
You would assume even if you don’t.

Wes Moss [00:45:33]:
Even if my brother’s listening, just. I’m saying if I don’t call for like, a whole month, like, you’re still supposed to be there.

Dawn Carr [00:45:40]:
Yeah, there’s a word for. It’s filial responsibility. This is sometimes what they use. If you’re family and you’re related, you can not very much care for a family member, but still feel obligated to help be there for them when things matter. Friends, you can have a deep connection and have a falling out and not talk to them again. They have the choice to walk away. And there’s something powerful about that actually, because in order to nurture those meaningful connections again, it’s time, the investment of time and meaningful conversation, so much so that you feel that you, someone is going to give you grace if you screw up. And we only give people grace when they screw up, when we have enough trust and time under our belts to say that was just a moment in time.

Wes Moss [00:46:31]:
This year, it’s a popular headline that this the peak year for 65 year olds turning like 11,250 a day. But like five years ago, it was 10,000 baby boomers turning 65 a day. So today, I always think of that group as there’s, there’s 10,000 people a day turning 70 right now because they were turning 65 five years ago. So you’ve got this aging population and you run into, and I’ve certainly seen that this is the reality of life, is that as you get up in age, people die, right? Your friends die or they get sick or they move away. And I think it’s harder for the 75 year old, the 85 year old to maintain that just because of the practicality of our lifespan. So to some extent, that’s this constant. You almost have to always be cultivating friends in case somebody gets divorced and moves away. I remember a period of time, I remember after college, everyone’s always heard all your life that 50% of all people get divorced.

Wes Moss [00:47:36]:
I remember thinking ten years after college, like, hey, wait, I don’t know anybody that’s gotten divorced. I know a lot of people get married and then all of a sudden, maybe it was like twelve years later, I don’t know what year it was. Then all of a sudden it was like, oh, wait a minute. Okay, I see now. Lots of people are getting divorced. But in that, I remember one year, two of my best friends got divorced and they moved. And it’s like, wait a minute. Even your great friends don’t necessarily stick around.

Dawn Carr [00:48:02]:
They don’t.

Wes Moss [00:48:02]:
That’s the other issue.

Dawn Carr [00:48:03]:
Yeah, we have sort of seasons of our lives and different kinds of people come and go. And sometimes that’s because you mutually benefit when you have kids. You need people who can pick up your kids. And there’s like sort of an exchange thing going on. And the true friendships don’t require exchange, but sometimes they’re built foundationally on those exchanges because you’re like, we both have skin in the game on this thing and we’re going to build from that. And then even when the skin in the game sort of is no longer a factor, does that relationship hold? And there’s something to be said for having relationships that aren’t the deep, deep, deep ones, but plenty that are very functional relationships because we need others in our lives. And the part that people often miss, I think, is that asking for help builds connection. It doesn’t create a burden on others.

Dawn Carr [00:48:55]:
And we often think, I’m not going to ask for help because I’m strong and I’m independent. And I will just say, that’s BF. And in fact, we don’t live in a world where we should ever be thinking about independence. We should be thinking about interdependence within social relationships with others. And if we aren’t, you’ll probably be lonely for a good bit of your life, and that’s not going to be good for you.

Wes Moss [00:49:19]:
Okay, do you have a particular, so let’s say somebody’s listening right now. And they are that hard charger. And I particularly see this with entrepreneurs. It’s executives, entrepreneurs that are just like, they’re totally consumed with work. And they do to some extent, they have this excuse that they’re kind of always working. And I think maybe more so. Why they can get limited socially is that they’re always thinking about work. So it’s hard for them to even like, go outside of that.

Wes Moss [00:49:53]:
It’s like they can’t relate at some point. Cause they’re so involved. Is there, and maybe this is why this doesn’t get as much fodder or press. But is there a, is there a doctor, Don Carr, prescription around that to make sure that you’re healthy socially?

Dawn Carr [00:50:10]:
I would say that if you’re not doing something in person with another person who you’re not related to and is required to spend time with you at least once a week, it’s insufficient. You’re gonna lose.

Wes Moss [00:50:24]:
That’s good, right?

Dawn Carr [00:50:25]:
That’s a bare minimum.

Wes Moss [00:50:25]:
That has to be on your, that’s on your rx list.

Dawn Carr [00:50:28]:
Yeah. And I think a lot of people are like, well, yeah, I have all these friends at work, but this is the problem. And you were asking about gender differences earlier. We’re socialized, as you know, in, based on gender, and these things are changing over time. But the men who are in that, however many thousand a day turning 65 group, they were brought up at a time when men were supposed to be providers, and that was what made them valuable to their families and to society. And that there’s no space in that definition for being a good friend to others. They might have those things, but they have to say priority one is providing. And so if providing for them meant I have to cut off my social relationships.

Dawn Carr [00:51:16]:
They might reach retirement, stop working, and feel like they’re not important in the world anymore, because the thing that made them important and valuable is gone. And that’s terrible.

Wes Moss [00:51:28]:
Providing.

Dawn Carr [00:51:28]:
Yeah.

Wes Moss [00:51:29]:
Yeah.

Dawn Carr [00:51:29]:
Women, on the other hand, have traditionally been raised where work, even if it became a part of their life, was not front and center always. They were socialized, especially, again, the 65 plus group, to focus on family immunity and being a good member of their household, of helping keep everybody up and going. So even if they were working as many hours as their spouse, women have, especially in this cohort, done all these other things, although that was hard at the time. When they’re working, when they reach retirement, it’s one of many roles that they’re losing. So they still have a whole bunch left behind that help them have a sense of connection and meaning. And they have social relationships embedded in those social roles. So they’re more protected socially. They’re more practiced at flexing those social skills on a regular basis than men have been traditionally.

Dawn Carr [00:52:26]:
So I would say we kind of did it wrong in the way that we set men up for, for retirement because of that. So I think new generations are better, but.

Wes Moss [00:52:36]:
Okay, so you’re saying that the boomers, it is a little, on average, it’s harder for Ben, I think, so, to keep a healthier social network, whereas millennials maybe not so much, or Gen x maybe not so much. Okay, I’m going to leave it there. Dawn, thank you so much.

Dawn Carr [00:52:53]:
All right.

Wes Moss [00:52:54]:
If you’d like to find me and our money matters team, it’s easy to do so throughout the week. We’re available right at yourwealth. That’s y o u rwealth.com. enjoy the rest of this wonderful day.

Mallory Boggs [00:53:13]:
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Mallory Boggs [00:54:01]:
This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment tax, estate or financial planning considerations or decisions. Investment decisions should not be made solely based on information contained hereinhood.