11/15/24: What the Depletion of the Social Security Trust Fund Means for You
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It's friday in november fifteen s on today's show conversation about social security, retirement security and the current status of the social security trust fund. Also, I have a pretty cool announcement for you before we do that, though, i'm gonna a question from Larry. He's an ora gn.

Here's what he hi, rick, as a proponent of bitcoin, i'm curious as to your perspective on the growth formula Michael sailor has instituted for micro strategy. Yeah a really good question. I considering the excitement that is going on, on the world of bitcoin these days, let me share with you.

For those who don't know what is happening, a microstrip gy, who is Michael sailor. Michael is the chairman of microstrip gy. Microstrip gy is a business services company, a business intelligence, business consulting enterprise, profitable company will run, has been a business for decades, but its real claim to fame has nothing to do with any event.

It's claim to fame is that Michael seller, the founder and chairman of the company, is a bitcoin maximum list, meaning Michael seller believes very strongly in the future of bitcoin. He believes that bitcoin is a revolutionary asset and is an incredibly important tool, useful as corporate reserves. So let me back up just a little bit of a moment teer.

Every big company, if you look at the fortune five hundred, look at the S M P five hundred, all big companies. And I think it's ideally true of every company, but certainly of the biggest ones. They all make a lot of money and they have to figure out what to do with that money.

Do they invest the money into research development, into expansion, uh, into product growth, into distribution of their products, to the expanded new markets? Should they take some of the money and distributed to shareholders as a dividend, should they use the money to acquire other companies? What is that that a company ought to do with the profits that IT produces? Well, these are pretty important questions that companies have to figure out.

And until they figure out what to do with money, they have to park the money somewhere. They they just got to hold onto IT until they figure out how to dispose of IT, how to invest IT or spend IT or what have you. This is known as corporate reserves.

And big companies have lots of money. And corporate reserves often. I think the grand total right now of the S. M. P.

Five hundred is somewhere in the neighbor od of three or four trillion dollars that these massive companies are collectively sitting on in cash reserves because they haven't decided what to do that. They they haven't yet needed to spend IT on R. N.

A. They haven't yet decided what other companies that want to require. They haven't yet decided to distribute the money to shareholders as dividends. So they are sitting on all of this cash and the cash, well, they don't want to literally sit on cash because cash doesn't earn any interest, and they want to be able to get some return on this capital.

So they typically invested, well, where are you? Gonna take a half a trillion dollars if you don't have any use for you, but you need IT available in case you use. That occurs when you can't buy bank cds.

No bank will take that much money. So where do you put IT? You put IT into us treasurers. That's what these large companies typically do, which is why corporate reserves are often referred to as treasury reserves because this is their corporate treasury. It's there. It's it's their treasure chest full of money, and they invested into us treasuries, the safest investment in the world. That is also highly liquid, meaning the money is not only earning interest for now, but it's available as needed on demand for them to use in the conduct of their business.

Michael seller, as the chair of microstrip gy, has recognized that his company has a lot of corporate reserves as well, but he has decided that rather than have this money sitting in a treasury which is barely earning the rate of inflation, and in fact, in many cases, in many years, doesn't even learn as much as the inflation rate, certainly net of tax. That's the case. He recognizes that having money in cash reserves in corporate treasuries is a losing proposition, net of inflation, net of taxes.

The companies actually losing money. And his attitude is, why on earth does that make sense for microstrip gy and for its shareholders to place all of this money into a losing investment? And so Michael decided some years ago, back in around twenty eighteen, that a Better place to park the cash is bitcoin.

And ever since, Michael has been a big proponent of this strategy and he's been encouraging other corporations to do the same thing. Not very many have followed suit. A couple of them have, but not very many.

He continues to a spouse this, and he believes that all companies want to do this, and he also believes that all companies eventually will. Michael has not only, however, taken microstrip gies cash reserves and put them in a bitcoin. Michael has gonna step further.

Michael has issued bonds. He has borrowed money from investors paying zero interest on those bonds, saying to those investors, if you want, you can convert your bond holdings into equity of our company, so this is called a convertible bond. You can convert your bond into stock in microstrip gy in the future if you wish to do so.

In the meantime, he's paying little to no interest on the money that he's borrowing, and he's taking the money that he's borrowing and using IT to buy more bitcoin. He also has issued more shares of stock selling part of the company, two investors who are instead of lending the money via bonds, they are buying a piece of the company, and he is taking the money that they are investing in the company. And he's also using that to buy more bitcoin.

IT has gotten to the point that microstrip gy is the biggest corporate owner of bitcoin in the world. Microstrip gy owns more than one percent of all the bitcoin that exists. And along the way that translates into more than twelve billion dollars were the bitcoin.

Michael sailor has earned so much money off of his bitcoin trade that the profits microstrip gy has earned on bitcoin s growth has dwarfed the profits that microstrip gy has earned from its business intelligence company, meaning that most investors today look at microstrip gy not as a business consulting investment, but as a bitcoin investment. In other words, it's kind of like a proxy for bitcoin. And that is what takes us to Larry is question, what do I believe about the methodology Michael saylor refusing for my gross strategy? My viewpoint is kind of brilliant.

Michael is not only investing his own money in to bitcoin, he's borrowing money at an incredibly low rate of interest to make a further investment in the bitcoin. If IT fails, it's the lenders who are suffering the risk, not him. If he succeeds, he enjoys the profit along with the investors.

This is kind of a brilliant strategy, is also a pretty good strategy for the investors who are lending him the money because Michael is posting microstrip gy as collateral against that loan. So if bitcoin does go broke, the investors will own microstrip gy. So they have some downside protection that you Normally don't get if you're simply buying bitcoin directly.

This is a pretty clever idea by Michael sailor, and I believe it's going to be replicated by a lot of other companies over time. IT has gotten to the point that investors are so excited about what microstrip gy is doing that when you look at the Price of microstrip gy stock and you compare IT to the Price of bitcoin, microstrip gy stock is now trading at about three times as much as the value of a bitcoin that microstrip gy ones. In other words, if microstrip gy ones ten billion dollars with a bitcoin just to pick a number, it's actually closer to fifteen doing.

But let's just pick up easy number. If the bitcoin that microstrip gy owns is worth ten billion, the Price of the stock is worth about thirty billion, meaning investors are paying more for the stock, a lot more then the underlying value of the bitcoin. Why would the investors be willing to do this? Well, some of them are religious.

They don't know that this is the case. They don't know they're paying a three to one premium. Others, though, take the attitude that this is worth IT because the reason that the multiple is justified is because of the leverage that sailor is engaging in.

By buying bick coin with borrowed money, you inherently create leverage. Is three x the correct multiple? Maybe you all to be four x, which means microstrip gy stock has a long way to rise.

Or maybe IT only ought to be two x, which means microstrip gy stock is gona fall by a lot. So I don't know if microstrip gy is the best way for you to be buying bitcoin. You need to make that decision for yourself. I can simply tell you an awful lot of people like the idea of microstrip gy as their bitcoin proxy because at the end of the day, microstrip gy is a stock available for you to purchase in any brokers account, just like any other stock.

And unlike any tf, which has expenses, even though those big oni tf are incredibly low and expense typically around twenty basis points, microstrip gy, as a stock is often flat out free because a lot of brokers, firms allow you to trade stocks, commission free. So is this the right way to go? I'll let you decide that I can tell you that if you're interested in owning a diversified approach to bitcoin, only bitcoin directly through an exchange like coin base owning bitcoin, throw a fund like one of the E T S owning bitcoin through the proxy of microstrip gy, all of these are legitimate process es.

You just have to decide which of those you favor or what combination of them you favor. But it's a legitimate play, and it's a fascinating one. And Michael sailor has established himself as one of the most prominent and outspoken proponents of bitcoin.

You do well to pay attention to what he has to say and the rational he uses for justifying his strategy. If nothing else is a good source of education, is more to come on the truth about your future. Stay with us right here.

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Let's move on now to our other topic. I've got a pretty cool announcement. I've got nothing to do with this, but it's got my name on IT. So what the heck i'm gona mention IT to you. I row in university is the wick at all and college of communication and creative arts, the university named of this school in my honor.

Several years ago, I was a graduate of the college communications at rome, and I was very honored and grateful that they named the college communication and creative arts in my name. They have now expanded their program at the college. They are now offering a brand new bachelor warts degree in a new field.

E sports, yeah, those teenagers were sit in the basement playing video games, driving mom and dad crazy. You can now get a college degree in the subject. Only about twenty colleges offer this degree nationally and IT role they offered in three different tracks, communication, business and computing.

The course work is offered through the evening college communication and creative arts, as well as the rural college business and the college of humanity and social sciences and the school of professional studies. You can also minor and e sports at row in. You can also get two certificates of undergraduate study in IT.

This is a highly specialized degree. The communication track is designed for students who want a career in reporting, broadcasting, public relations and social media. The business track is for students who want a career in financial management, Operations and strategy, and the computing track is for students who want to focus on media design, coding and mobile APP development.

Yeah, can you imagine that you can go go to college and get a degree in electronic sports? This is really no longer just for high school kids playing video games in the basement. Global e sports is a two billion dollar market right now, and it's projected to hit nine billion by twenty thirty two.

This is a tremendous opportunity for generating revenue for gamers, organizers, influencers and game developers. There's even international prize money for teams who play these games at the professional level. The opportunity to earn high income is really pretty significant, and that is why e sports is now a professional career choice and demonstrating your proficiency and expertise by holding a college degree in this field makes you pretty marketable.

The classes that role are limited to fifteen to twenty five students. The classes are online. Well, of course they are.

This is an e sports degree, but the wick adleman college of communication and creative arts, roan university has also built a seven thousand square foot facility that houses seventy powerful high and gaming consoles. There's also ten of them on a stage and ten more in a private room for competitive teams. There's space in this facility for three hundred people.

So it's going to be a big draw for students who like to play or watch e sports competitions. Really watch people would sit around watching other people play video games. yeah. At the dota two championships last year, IT was watched live by over half a billion people.

This is an incredible demonstration of the innovation that is occurring in technology, leading to the mainstreaming of these new text by virtue of being able to get a college degree in IT. What a wonderful illustration of the evolution of college and why your kids need to be looking at college. And the opportunities that exist in new and different ways.

I'm really proud that at rome university, they are among the elite ite schools around the country, one of the few that are offering a degree in e sports. Coming up next, a conversation about social security, retirement security and the current status of the social security trust fund is more to come on the truth about your future. Stay with us right here.

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You're listening to the truth about your future. One of the big topics that we talk about chaotically on this program is social security, retirement security broadly and the current status of the social security trust one. And I think everybody is not pretty much aware of the fact that the trust funds being depleted.

And the most recent data suggest that it'll be gone in twenty, thirty four, ten years now with big income implications for america's retirees and policy implications, therefore, for washington and not just an issue for current and near retirees, but equal implications for people who are very far away from tirely because those people with jobs the taxpayers so can be footing the bill for. The social security account just says it's been in place for the last nearly hundred years. Let's go into all this and understand what is going on, what's happening, what's going to happen, what might we do to adjust our own personal planning and policy issues as a result.

So joining me is Jason fricker. He is A P. H. D. And chief economist at the bipartisan policy center. J, and is so good to have you here on the podcast .

everything back on again. It's good to be here.

Jason is uh the executive director of the retirement income institutes also on the board of feras investor education foundation. And most of the point right here he is the former acting deputy commissioner of the social security administration. That was S.

S. S. Chief economist. IT was also a senior economist with the joint economic committee in congress.

So this is the guy who really knows from the inside out what's going on here. And you've recently written a paper, Jason, in fact, we've got a link to the paper. You've got a protective of income out of work.

We've got a link to IT so everybody can obtain that and read IT, which I strongly encourage folks to do. Let's begin with a chAllenge facing future retirees, those not in the situation right now, but one day they will be. We used to call all of this a three leg and store. We don't do that anymore, doing no, but we should go .

back to IT and reimagine IT. So the three, they going to do a concept which I thought was really good to talk with regular people about financial planner and policymakers. When you think about us do with three lake, it's very sort of baLance and secure, doesn't walk below when you get three lakes.

And when thinking about retired security, those be lays to sister of so security. Your employer provided defined benefit pension plan and your personal savings. Those three things together gave you the incoming needed in retirement or by security.

Well, now those three lakes are much different. So security has as you mentioned, the start of the segment has financial chAllenges where the main trust fund O, S I program to program will be depleted within nine years. The D, B system, many people have a defined benefit pension plan, more if you do your most a government worker, but like four percent of private sectors workers have access to A D, B plan.

And most of all, now have access to retirement savings to a define contribution plan, a or A A four one k and then personal savings is chAllenging for many people. So we needed we think this will they get store? Because our security does he to be solved.

But what does that mean? What does that look like for benefit changes or tax changes? We got to help people have more personal savings. And that defined benefit leg really now is a defined contribution leg. We need to help people understand how they can take those assets they accumulate and convert that into income and retirement because we're got them so used to saving, saving, saving, but they're too afraid to spend, spend, spend retirement. We have to think holistically about what that means for retirement security.

And let's begin with the social security trust front. As I mentioned and as you've just said, there will be deployed in the next decade when that happens, according to current law, benefits is going to get cut. what? Twenty three? Twenty four percent.

So and this is where is important to think about the so security trust on and so for people to understand. And the so security bylaw does not have its own boring authority and when so security warning third pluses, that's when the point when payroll taxes were exceeding benefits being paid out, money was going into this trust pod. And now IT was all going into special issue treasure. So tables basically, and now we're actually collecting less read and they're paying out of been drawing down for that treasury bonds over time. And at what the time gets depleted is so security to only pay out of benefits what IT collects in revenges payroll taxes.

and that's about enough to pay seventy six, seventy seven, seven.

eighty percent. I think it's easy topics. Imagine you going na get a twenty percent overnight.

That's kind of the way that to think about this. And congress has to do something or that's the default. The default is not something.

So I just find IT so funny when ever and we heard all three of them say we heard join, say IT, we've heard kal hara say IT, and we've heard Donald trump say IT, all three of them have been very quick, very delivered to say we're not gonna ch. Social security, of course, what I think they mean by that is that we're not going to reduce your benefits. But what they're fAiling to acknowledge is that by not hatching social security, they are guaranteeing a twenty percent cut ton benefit.

That's exactly. And this is what gets me, you know, when we talk about politicians, I understand, campaign, china, promise everyone a chicken every pot. Now, if you have politicians, promise me to give you the pot is, well, the chicken. But IT really is this. And jane wasn't thinking about so security, because you're right, if they promise to do anything, what they are basic saying is we are giving you the and the deep of the twenty percent benefit cut up when the transfers supplied around twenty twenty .

three or twenty twenty four. So what might individuals do about that? I mean, this show isn't the focus on our policymakers in washington.

The road I don't care what I say right here. They might care what you say, but they don't care what I say. But individual investors and their financial advisers, what actions can these folks tech?

So I think there's two things to good, sir. The first is always good to hope the best but plan for the worst. So the first thing is let's assume that congress does nothing.

The present does nothing with congress. And there is going to be an across the board benefit cut somewhere in the early twenty thirties. Now where are that last for a month, two months, a year till congress?

Sasa, together, we don't know, but people should play with their advisors for having an interruption or security benefits or reduction and benefits which could be temporary or permanent. They should plan for that. And then that be part of their current investment strategy and retirement income strategy.

The upsides, if you planned for the worse and you get something Better, you're just Better off, right? So Better to be Better off than to be worse off. So I think you plan for the worst and hope the best.

The second thing is it's hard for anyone to imagine a congress, whether it's beautiful democrats or republicans letting so security and seniors having in a twenty percent. But at the overnight, it's just hard to imagine. But we have seen congress go to the Cliff and a lot of things, the budget, that ceiling, they just seem to like these spacebar Cliff. And I can no longer guarantee that congress will do something responsible before the irresponsible action actually happens. So I think we've got to plan for and keep pushing politicians to have some actual courage, but we should plan for yeah.

I agree thornly with you. I also do believe that IT will be a Cliff because that gives them political cover. This where they're able to say to their voters, I had no choice but to raise taxes or to reduce the delay benefits because the alternative would have been matures. And this political cover is, I think, what is absent at the moment because they they got ten years. Why do IT now?

Yeah IT. But to your point though, will be one thing to say, we're not onna touch. So security and being misleading on the chAllenges are ahead of us.

It's also, I think, more misleading and downright IT is ingenuous to start promising additional benefits or to say we're going to taxing tips, we're going to stop taxing. So security benefits for sapiens, maybe not tax. So security for firefighters, please, they're all try to give something in one up each other in this presentin election. But we can't even afford yet to pay for the benefit we promised. Why don't we start to go how we going to pay for first street before we start promising additional benefits?

So given your strategy of hope for the best, plan for the worst, do you think that advisers generally are doing enough to help their clients adjust their expectations of what they are gone to get down the road?

I think they're starting to, and I use the word to start. So usually when we talk to financial advisers and rk, you know this to U. S.

And what risks do you talk about? Your client? No, say.

We talk about one gently rest. We about market risk. We talk about inflation risk. We talk about health risk. Sequence of return risk are now asking to talk clients about political risk. Blues going to be in the White house and congress in the early twenty thirties.

And what does that mean for so security and the income people going to need retirement? That change of talking about IT as a helps people refocus their chAllenges, they able to think about their retirement needs. And so we started seeing some advisers do this. And I think more and more going to do IT as we continue to getting closer and closer trust and decision because you're onna hear more showers like this one.

What is said, state of affairs, that one of the risks we have in our life is the risk of politics. I mean, isn't politics supposed to be benefiting us, not a risk threatening us? It's a sad commentary.

IT is this is coming from my world to buy partisan policy. Cena, I made a joke before. Rec, and you, I heard that is the by part and policy center is actually, this is not a job, but is the only organization registered the district columbia with the word by partisan name. And as an economic, I see as both a demand and a supply problem. And and this leads to what the joke is, is that when I first got here several ago, I had literally had people on the streets saying, you're doing god's work. Thank you for being by a but now today I got attack from both sides, saying, no, we don't want to compromise is our way of the highway and that's clean from both sides, which makes the job of getting these issues, these chAllenges we need to do, done much, much more difficult.

Sad commentary indeed. So again, on the context, given the scenario that we've on ourselves stuck in IT, all comes down to personal action. We can't rely on the politicians to save us.

We don't know what they're going to do or when they are going to do IT. And we're not going to be able to influence them terribly much either in that effort. But what we can do is alter our own personal behavior.

And one of the things that drives mike fraise you sight in your paper, ninety six percent of americans who file for social security benefits, you know, we all get to do this at some point. Ninety six percent, you say, are not getting the maximum from social security that they're entitled to. Four percent of them get IT right.

This is an important thing to read. A one of you all don't understand how the so security biling from you to works. So and this is partly a so security problem because they talk about this and the right is a very misleading way.

Ah we talk about the early eligibility age. Rk, there's age sixty two. We could start getting benefits.

We talk about age sixty seven as the Normal or forward timer age and then there's eight seventy. So let's start receive sixty two. That is actually we should call the minimum monthly benefit age.

But people hear early eligibility and who wants to be late for the retirement? anything? right? No one wants to be late. And so they think that all have to get to early because about delay of losing money. But the way to program watches, if you are scheduled to say, get a thousand dollars at your four time natured to sixty seven, for me, you would get seven hundred dollars, fifty thousand and sixty two, a thirty percent reduction in your .

monthly benefits, and forever.

not just ever, but the rest of your life. If you wait till seventy, you'd get twelve hundred and forty dollars and twenty four percent increase. But the difference with that seven hundred and twelve forty is seventy seven percent rose.

Can you get a seventy seven percent raise in in your monthly income by delay in claiming? And this is what's important, I understand for some people who are eight sixty two, they might actually need the money today if you need to take IT. But if you've afford to delay claiming, IT is one of the most beneficial things you can do to help secure your retirement of any choices you have.

Think goes up basically on average around eight percent per year, eight percent a year. That's a return even the stock market would be jealous about.

And then we start talking about eight, sixty seven, and we called the Normal or full. What's Normal about retiring at eight, sixty seven and four? Like you can get me more, which of course you can.

So we need to change the Normal nature. And I talk with advise and say to start telling people there is the minimum monthly benefit age and the max and monthly benefit here, minimum, maximum dots. Ask me, what does that mean and what .

should I do and forget about middle of sixty seven nonsense.

We get the two n points, and you get works best for you how you can afford to be .

the so sometimes I have had conversations with investors who get that, who understand what you've just described. Now everybody gets, who is listening to this, the eight sixty two versus eight seventy. But then they say, in order for you to get that being extra money, I gotto wait till seventy. That's eight years, but i'm not getting any benefits. What if I started sixty to take the monthly money role in the savings and investments and pile IT up until i'm seventy wouldn't be a Better deal than waiting to seventy.

And you just gave the answer for thirty seconds ago. By delaying each year, you get roughly eight percent return. So you've got to beat badly the eight percent per year, but realized that the eight percent you're getting from.

So security is that inflation for the rest of your life. So you've got to do not just Better than eight, but even coming for inflation. So maybe I do Better than ten percent a year every year.

You're delaying. You're do for and claiming so you can do that, and that's a good business model for you. But you know at the tough one to meet you for eight years, and I think we also be being able to realized this again, we're talking about the three lakes store.

What we're trying to do when you think about retirement is you're not trying to maximize your return. You're trying to minimize your risk about living your money in, make story of enough to wash rial live and also preserving your lifestyle. So in some, we start talking about this income should be the outcome and retirement. And that's a hard frames because they had people been so used to saving, saving and saving, getting a return, they get to retirement when there is a partial time retirement ever, they do IT. But there are so used to say into a hard time spending, they don't know how much they can afford to spend, they don't know how long they going to need the money for. What the budget can do is help with the spending plan and what talk about so secured and how the claiming strategy fits in, in high motly income, what assets they have, no, taking something asset and converting some of that into a personal pension from year four one k plans are getting some more protective income and happy, so security. But that's how if they start talking to people know about thinking about income as the outcome, retirement, to make sure they have what they need to have the life down, they want, but the rest of the life.

The other comment I get from people is a, what if I die, you know, you telling me you to delay my benefit, and then I die, I end up with nothing, therefore will take the early money. At eight two, at least I get something.

So one joke, one seriousness, a joke is you're dead. You're dead. So everything people have told me, so far as when you died, you can take IT with you.

If I find out that's wrong, i'm really very upset, but i've told that I can't take IT with me. So you league your material concerns behind and that infusion, whether not you made the right so security client decision. However, if you are married, think about your spouse, because spouse of benefit is also determined, survive benefit.

And when you delay, the more money you have and delay cleaning, the Better rock your spouse will be to get Better. Your record or so it's going to see about yourself. Think about yourself, spouse. That's also important. But again, for people who are worry about, like I called to hit the bus strategy, right, they delay cly, so I nally get IT hit by the box the next day, or they die, never get anything.

The name of the program is the old abe survivors insurance prom, right? This is an insurance program, and IT is the one insurance program where you get benefit by a payout for being successful living long ger right. Your house insurance, your car insurance, everything of auto, home flood.

It's a bad event. You live longer. So good at that. So you are awarded for having a successful like to do in the right thing. But think about are the insurance.

You're trying to make sure you maximized your insurance value and you do that by deleting claying. If you're going afford to do so, that helps you, your spouse and make sure you have again. So security is an annual ity and it's inflation to protect the new at last, the rest of your life. No, rose, can you get that kind of guarantee so you're Better off to lying? If you can afford to.

you have another statistics in your paper that kind of shocked me. You said most middle income retirees, that's my phrase, is not yours. Roughly middle class, most of them only get forty four percent of their preretirement pay. Social security, look about that.

This is where IT comes again to the three lakes student, I don't think, but a lot of people realize about the role of so security. So it's a progressive formula. So for people who are basic lower lifetime owners, they get a higher replacing rate for so security, maybe up to seventy, eighty percent.

If you're a higher income earner for the most of your life, you you get a lower place rate, thirty to forty percent. The average american gets get to hear point a lot of forty percent replace, right? As we know feel talking to financial advisers, they have suggested between seventy and eighty percent replacement retirement .

and I are you one hundred?

So let's go with that. The old three lake steel model sume, you are going to get one third from so security, one third from your pension and one third from states that for your income sources. Now people aren't start saving on their own.

The D, B system is now dcs. He lose that protected income. And for most people now, they just get protective income from our security and that's about forty percent. So you're short.

So what financial advisors should do is start talking about those defined contribution plane assets and making sure we can convert with that are create an income street that then adds an additional thirty or forty percent on. So you get your seven to eighty or two percent for one on a percent record. You are going to do more for your kind contribution plan. But that's why need to be think about because so security most to tender reliant, they don't realize it's not going to be everything may think it's gna be replace on a percent of the income.

So a lot of folks would look at their parents and grandparents at their financial security, and they did enjoy that three like a school. They did have the gold watch and the pension. They have social security, they had home equity, and they had a lot of savings, and they were fine.

But part of the reason they were fine is that they also didn't live very long. They were dead in their sixties or early seventies. We are in a totally different scenario, because not only or two of the three legs of the school week or not existent longevity is gona compound the chAllenge that much more so because we're going, I going to die in our seventies, were going to live into our nineties or beyond. So IT creates a very big chAllenge. And IT raises the question, therefore, what policy changes do we need to this entire retirement framework that's gonna a be relevant for the future, retiree's for the folks not in their sixties, but the folks in their thirties and forties?

So glad you mention longer gevalia ick, because according to sot security that statistics they put out, about one out of every three sixty five rules today will live at least until eight ninety, and the world of seven will live to age ninety five. Numbers are just getting Better for the Younger generation who has Better access to health care, Better floods, safe teachers in our cars.

not to mention the medical innovation and technological development, thanks to A I and other technologies that are gone to revolutionized healthcare.

yes. And that's no reason why application for people delaying. So security thing is this possible seventy, because they're going to need that higher income and they get to higher age in the eighties and ninety one have more health care expenses.

That makes sense for that to your point about policy where I think congresses needs to do and policymakers is, again, start thinking holidays, ally about retirement and that three related store. So one here, we need to make sure. So security solid, right?

What of that are not I advocating what we benefit changes, tax changes and mix of two. But IT needs to be solved and so that people know to be there for them and what they will get when they hit retirement. So it's got to be solved.

And we have to make sure that people have access to a defined contribution plan and then they participate when they have access. Those are policy changes. And we should do something to make IT easier to help. You will convert some other assets into protecting incoming tirely, but there through annuity or continuity, that helps safer and delco iming. So security, something that helps him get additional income need, and we can do tax breaks for that.

The third thing I would say is, and this is little more tRicky because you mention the house, so my grandparents for depression error babies, they paid cash for everything about the house and a movie for the house that pay cash, cars and travel. What we are seeing that over time is each successive generation is taking on more debt. Now you can argue they are getting more asset solar debt income ratio assets to Better, Better.

But we're seeing more, more people now retired without paying off their house first. Most people will paid off their house and retire. And so I think we need to start changing that framework.

Can not look at the house is a piggy bag, but think about IT as party assets. You're going to have retirement that my paper long term care. So don't use IT to buy a boat sakes, but think about this part of an asset base that you might need later on the life to take care of long train care. And then what can congress student the policy side thinking about that? You did a lot of work, rick, and helping get secure one and secure to across the line, what do we like secure, meet, point out that can remove barriers or help with people converting some of their assets, their homework ity into income they could use in retirement.

And we found a question for E. J. And all of that is incredibly helpful information.

I talk to my advisers who are listening to this right now. We have awful lot of advisers tuning into this podcast. What do you want them to be doing and saying to their clients?

So a few things. One is, when speaking to the clients themselves, make sure you talking about expanding planned retirement. How do I get income as the outcome retirement and think holistically about their assets.

Think about protection as an asset class, talking about income as a asus, not just to according your bones, but think about insurance and so security and how that all fits into porfolio that you could use this income in retirement. I think the risk of asia, they are trying to help minimize risk retirement. I would also speak directly to the advisers. So i've talked to some advisers to dear point, ric amplico, for taking benefits at sixty to so security. And the advisers do that, something that they want to lead more assets under management for them to manage and makes them make my family.

oh my.

What I would say is that is a short sighted, Peter I boys, not for the long term. It's severe .

conflict of interest that is entirely self motivated. IT is not in the clients best interest. And if you're a client, you an advice or telling you overly unless you've got cancer and your doctor told you your dead six months, I would find a new advisor.

So yes, but I I also have some research to back up. Why is Better to help people defer having so security? And even if you take some money out of the assets under management to do a bridge strategy to the first claiming, what we have found is that the research crazy, we call license to spend.

So rick, you and I have a job. We get income. That income from our job is to our budget.

Congress called a budget constraint. I do that income. We spend and we say something, we spend up to that. We found that people retirement to have an income. So security, maybe a pension or protect the income on top of.

So security also have a budget constraint and IT becomes a license to spend, and they spend up to that and then the rest of the assets they leave for the advisor to manage. And what we found is two weeks won, that money stays there. And individuals, investors are less likely to be concerned about market fluctuations.

They don't want to sell the bottom because they the income coming into spending and they don't to worry about IT. So the acid stayed and don't turn over. And we find that at the point of death, look back at like the H.

R S. We find that people who did this strategy had more asset that death than if they hadn't done IT. So at the end of the time, there's more money for the quest force powers is more money for the manager to manage. So everyone comes out Better thinking about the long term than the short term are.

And that is the peer definition of financial planning focusing on the long term that Jason Victoria, P. H. D, cheap economist of the bypass san policy center. Jason, always a pleasure to have you on the podcast. Thanks again for joining us.

Thank you, my friend. Good to see.

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