Behavior, Budgets, and the World’s Oldest Human
by SGL Financial
Our 2 Cents – Episode #212
Behavior, Budgets, and the World’s Oldest Human
In this episode of Our 2 Cents, the Lewits dive into the power of behavioral economics. They explore why many young adults are still living with their parents, the world’s oldest living person, and why retirees lean on guaranteed income over other assets. Tune in now using the link below!
- Quotes of the Month:
- I never did a day’s work in my whole life. It was all fun.” – Thomas Edison
- “Money can’t buy you happiness, but it does bring you a more pleasant form of misery.” – Spike Milligan
- When Living at Home Becomes the Norm:
- Many Gen Z and millennials continue to rely on financial support from their parents.
- Explore the key factors driving this trend, and find out where the highest number of young adults are still living at home.
- A Remarkable Age Milestone:
- Discover how old the world’s oldest living person is and how she’s reached such an incredible age.
- Retirees Afraid to Touch Savings:
- Learn why so many retirees decide to rely mainly on guaranteed income sources instead of dipping into their other assets.
Request Your Free Consultation Today
847.499.3330
Podcast Transcript
Announcer: You are listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial, and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies, and more.
Gabriel Lewit: Well, hello everybody. Welcome back to Our 2 Cents. You’ve got Gabriel Lewit here and Steven Lewit, the two pennies as we … Oh, well, we-
Steve Lewit: The remaining two pennies-
Gabriel Lewit: You know what’s funny-
Steve Lewit: … in existence.
Gabriel Lewit: Yeah, they are, I think, seriously considering abandoning the penny.
Steve Lewit: I thought they did actually. No, maybe not.
Gabriel Lewit: Well, we talked a little bit about it.
Steve Lewit: Maybe not.
Gabriel Lewit: And we said we’ll have to change our name. It can’t be Our 2 Cents anymore.
Steve Lewit: Think of it-
Gabriel Lewit: Our 2 Nickels.
Steve Lewit: … three generations from now, we’ll say-
Gabriel Lewit: What’s a cent?
Steve Lewit: What’s a cent?
Gabriel Lewit: What is a cent? Yeah.
Steve Lewit: One cent, what does it-
Gabriel Lewit: The minimum-
Steve Lewit: What do they mean?
Gabriel Lewit: The minimum rounding will be a dollar. So that’ll be kind of weird. Well, yes, while we can, we’re going to give you our 2 cents on a variety of great topics here today.
Steve Lewit: You bet.
Gabriel Lewit: And to kick things off, it’s been a little bit, but we have of course, some quotes of the month here now that we are in May. Although, I must say it does not feel like May. I sound like Dr. Seuss just there. It feels like April still. It’s freezing. Every day is cold.
Steve Lewit: If I could say that it’s not May, where would the sun go-
Gabriel Lewit: Today.
Steve Lewit: … today?
Gabriel Lewit: Yes. That’s a good question.
Steve Lewit: I don’t know if the sun exists anymore.
Gabriel Lewit: Well, technically it’s out today, it’s just not hot. It’s cold sun.
Steve Lewit: Yeah. It’s like, what the heck? It’s cold sun.
Gabriel Lewit: What the heck? I was thinking about this the other day. It’s going to be June soon, I feel like. And still hasn’t been a warm stretch at all, other than one warm weekend. What are we going to get June, July, August, September, we get four months?
Steve Lewit: No, it’ll probably be hot in December.
Gabriel Lewit: What a weird year to start things off. But I guess that’s May right, you never know what you’re going to get.
Steve Lewit: Yes, yes, yes.
Gabriel Lewit: But yeah, it is a new month here. We want to start off with some quotes of the month, which we love to do here. So I’ve got a couple lined up for you, Steve-
Steve Lewit: Okay.
Gabriel Lewit: … and our valued lovely listeners.
Steve Lewit: I love quotes.
Gabriel Lewit: Our handsome and beautiful listeners out there, these are for you. Okay?
Steve Lewit: Lovely.
Gabriel Lewit: We’re going to start with Mr. Thomas Edison. Everybody likes Thomas.
Steve Lewit: Everybody.
Gabriel Lewit: He says, “I never did a day’s work my whole life. It was all fun.”
Steve Lewit: Well, Thomas, what have you been drinking?
Gabriel Lewit: How cool?
Steve Lewit: Or smoking, come on.
Gabriel Lewit: How great would that be if that was actually true?
Steve Lewit: Yeah.
Gabriel Lewit: Because you hear those things. Right.
Steve Lewit: I love the enthusiasm of it.
Gabriel Lewit: I love it.
Steve Lewit: If you do what you love, you never work a day in your life. Right?
Yeah. Yeah.
Gabriel Lewit: I was talking to your daughter, my sister-
Steve Lewit: Yes.
Gabriel Lewit: … just the other day and she is not happy with her job.
Steve Lewit: No. She hates her job.
Gabriel Lewit: I remember when she was first coming out of college and she was so idealistic. She was like, “I want to change the world, and I want to do some good thing.”
Steve Lewit: Yeah, I know.
Gabriel Lewit: And now she’s like, “I hate my job.”
Steve Lewit: Once you get into the work world that changes really fast.
Gabriel Lewit: It’s so sad, isn’t it?
Steve Lewit: It is sad.
Gabriel Lewit: It is a little sad.
Steve Lewit: You graduate college, and all your dreams go down the tubes.
Gabriel Lewit: I really do like what I do, but occasionally there’s days where it feels like work.
Steve Lewit: Yeah, absolutely. I love what I do, but I can’t say every day I just love what I do. Sometimes-
Gabriel Lewit: All fun 100% of the time, right?
Steve Lewit: 100%. Oh, I walk in the morning, let’s have a blast today.
Gabriel Lewit: Yeah. Yeah. So we’re going to follow that one up with-
Steve Lewit: I hope there’s a better one. Actually, I like that quote because it has such a positive attitude.
Gabriel Lewit: It is. It is very positive.
Steve Lewit: It’s very positive.
Gabriel Lewit: I would say, I guess if point being, if you’re miserable in your life, it is important to find something that brings you some joy.
Steve Lewit: Yeah. Go do something else.
Gabriel Lewit: So maybe that’s retirement. Maybe we can help you with retirement. If you feel the opposite of that, I’ve done a day’s work every day of my life and it was all miserable maybe it’s time to retire.
Steve Lewit: And if you’re in retirement saying, “I spend every day in retirement and it’s a drag,” then you got to go back to work, I guess.
Gabriel Lewit: Something. Yeah.
Steve Lewit: Something.
Gabriel Lewit: Okay. Now, Producer Gabby, I need you to pull up who Spike Milligan is, because I have never heard of this name.
Steve Lewit: Spike Milligan.
Gabriel Lewit: Yep. Spike. Spikey.
Steve Lewit: How do you come up with these people?
Gabriel Lewit: Well, you just Google inspirational quotes or just random quotes, and you find ones you like. Oh, okay, here, hold on, hold on. Spike Milligan was an Irish comedian, writer, musician, poet, playwright, and actor. Wow. I feel unaccomplished.
Steve Lewit: I feel daunted. That’s very daunting. Wow.
Gabriel Lewit: Comedian, writer, musician, poet, playwright. I wonder if he self-wrote that.
Steve Lewit: He said, I’ll put a joke out on them.
Gabriel Lewit: Yeah. Okay. Spike Milligan said, “Money can’t buy you happiness, but it does bring you a more pleasant form of misery.”
Steve Lewit: I love it. Yeah. Oh yeah. Look, people say, “Well, money is a drag,” or, “Money is the root of all evil,” or, “Money creates all your problems.” But you know what, I’d rather have it than not have it.
Gabriel Lewit: Well, and I thought it went well with Thomas Edison, that quote, in the sense that most people aren’t feeling like they have all fun every day. So what are they working for? This is what I was telling my sister, your daughter, Julia. I’m like-
Steve Lewit: Did you have to repeat that?
Gabriel Lewit: Well, I’m just clarifying.
Steve Lewit: I’m really clear on who she is.
Gabriel Lewit: I told her, I said, “Well, find a job that pays you more money. You might still feel like you’re working, but you’re going to at least have a little more pleasant form of work misery.”
Steve Lewit: And she said?
Gabriel Lewit: “Oh, maybe.”
Steve Lewit: Maybe. I don’t know what I want to do.
Gabriel Lewit: Yeah. That’s the angst of young, which is a great lead-in, I think, to what we’re going to talk about here today.
Steve Lewit: It is, and this is a very big topic.
Gabriel Lewit: It is. We talked last time about, briefly, that we were going to focus today on, basically, people who are sacrificing their own financial future for the benefit of their adult kids.
Steve Lewit: Or supporting their adult kids and don’t know they’re sacrificing their financial future.
Gabriel Lewit: Correct. Yeah. So the concept here comes from, of course, an article. We get a lot of inspirations from various articles that are out there. Half of parents are still paying their grown kids bills. About 50% of parents it says are still financially supporting their Gen Z and millennial children. Gen Z is still the youngest generation.
Steve Lewit: No, no, Gen Z is what, 24?
Gabriel Lewit: Let’s clarify. Yeah. What’s the one after that?
Steve Lewit: I can’t keep-
Gabriel Lewit: Alpha. Oh, we’re back to Alpha. Okay. So the high schoolers are Alpha. Gen Alpha, okay. Well, Gen Z encompasses individuals born between 1997 and 2012, making them age 13 to 28. Yeah. So there’s a good range there.
Steve Lewit: 13 to 28.
Gabriel Lewit: Okay. So Elder Gen Z’s, I guess you’d call it here. Yeah, and then there’s Gen Alpha. That’s the newest.
Steve Lewit: Under 13.
Gabriel Lewit: Yeah, under 13.
Steve Lewit: So, my grandkids.
Gabriel Lewit: That’s good to know.
Steve Lewit: Your kids.
Gabriel Lewit: Oh, I didn’t know that.
Steve Lewit: You didn’t know that? They’re your kids, my grand … Yeah, they’re Alphas.
Gabriel Lewit: Alphas. Cool. I like that.
Steve Lewit: I like that. I do too.
Gabriel Lewit: Yeah, so 50% of parents are still financially supporting their Gen Z and millennial children, and it’s setting them back nearly $1,500 monthly on average.
Steve Lewit: Just think about that. 50% of the kids are not self-sustaining. But I do wonder what that means, support. Are they just paying the phone? A lot of parents will continue to pay the phone bills.
Gabriel Lewit: According to the article, forgetting how-
Steve Lewit: 1,500 a month.
Gabriel Lewit: … they support them, but 1,500 a month. We’re going to break this down a little bit here. So I’d be curious for you listeners out there, our valued, most wonderful listeners, if you email us info@sglfinancial.com, are any of you out there currently supporting your kids financially? I’d love to know and we can share some of that. Just email us, say, yep, me, how much, ballpark, or if you don’t want to say, just say, yeah, I am, large, small, medium. Be curious to see how accurate this really is.
Steve Lewit: Well, just off the top of my head, I know we have a number of clients that are supporting their kids and for good reasons, and for good reasons, but it still is a remarkable number.
Gabriel Lewit: Yes.
Steve Lewit: And some are supporting kids for bad reasons, but that’s what we’re going to talk about.
Gabriel Lewit: And again, Millennials, which apparently, I’m an elder millennial, so that makes me feel old now because we’re back on Gen Alpha. But yeah, so even millennials are still getting help from their parents, people nearing their 40s. But what are they helping them with? Things like groceries, rent, cell phone bills, insurance, tuition still for some, of course the younger ones. But the kicker of all of this is many of those parents feel like they’re putting their own financial future and security at risk. That’s really where this becomes maybe a bit of a challenge.
Steve Lewit: Well [inaudible 00:09:12].
Gabriel Lewit: Because you want to help your kids, but at what cost?
Steve Lewit: Well, you love your kids, and you’ve always sacrificed for your kids. You send them to college, and sacrificing. You bought a house, and you send them all to school, and all the sports things they did, and all the musical instruments, and all of that stuff, and now they’re struggling and what do you want to do?
Gabriel Lewit: Yeah. Now, this breakdown comes a little bit … obviously the younger Gen Z’s are getting an average of 1,813, $1,813 a month while millennials get about 863. So I’m waiting for my check, dad. Just kidding. Where’s my $863 a month? I’m going to invest it.
Steve Lewit: Well, you’ll get it if you come and live with me.
Gabriel Lewit: And it is saying about 92.5% of Gen Zers are actually still working full time, but it’s not enough. And this reminds me, my-
Steve Lewit: Your sister, my daughter, is working full time and guess what, she wants a place by herself. She doesn’t want to share an apartment with two other women.
Gabriel Lewit: I was going to say, this article must hit close to home for you.
Steve Lewit: It does. She cannot afford … I mean she could. If she rented her own apartment, she would have no money to do anything else.
Gabriel Lewit: Well, if she gets a second job or a third job or something.
Steve Lewit: No, I love her. I’m not going to let her-
Gabriel Lewit: Knowing the meaning of hard work.
Steve Lewit: You see, I’d rather sacrifice my retirement for her.
Gabriel Lewit: Oh gosh. Well, also my wife’s brother, who I think is 28-ish, something like that, one of her brothers, she’s got a bunch of brothers. But I think he got a writing degree, if I recall correctly-
Steve Lewit: That is … yeah.
Gabriel Lewit: … and then he went to work as a writer for a small radio station. The guy, he makes no money.
Steve Lewit: Writers don’t make money.
Gabriel Lewit: Loves what he does but makes no money. And so it’s hard.
Steve Lewit: Well, look, you elected not to be a teacher. You wanted to teach history.
Gabriel Lewit: Way back when. Yeah.
Steve Lewit: Way back when.
Gabriel Lewit: Way back when.
Steve Lewit: And you were like, you’re going to have $300,000 in college debt because dad wouldn’t pay for that.
Gabriel Lewit: You showed me the value of hard work. Make the kids these days figure it out. Right?
Steve Lewit: Yeah. Let them figure it out.
Gabriel Lewit: But yeah, would’ve been too much debt to make, I think at the time, the starting teacher salary was like $32,000. And I was like, “Well, that doesn’t math out.”
Steve Lewit: It’s really interesting because being of an older generation, a boomer, I’m the leading edge of the boomers. I would never live at home. My first apartment was in a place in New York called LeFrak City, which is still there. We used to call it Cockroach City.
Gabriel Lewit: Oh, that sounds pleasant.
Steve Lewit: It’s all I could afford, but I wasn’t going home. There was no way I was going home. But the attitude today is so much different. That’s not a judgment, I’m just saying it’s different.
Gabriel Lewit: Well, the bank of mom and dad may be shutting down soon. It says here, about 37% of parents plan to stop providing financial support to their adult children within the next two years and another 28% will freeze their aid in three to four years. So basically 65% say in the next three to four years, the bank is closed.
Steve Lewit: Yeah. Well, you and I have been down that road with clients before, the bank is closed until the child opens the bank again and says, “What do I do mom and dad? I can’t find a job. I can’t do this. I can’t do that.”
Gabriel Lewit: I’m going to put you on the spot a little bit with Julia, right?
Steve Lewit: Is that my daughter? Yes.
Gabriel Lewit: I didn’t want to repeat it because I figured you got the hint by now.
Steve Lewit: I did.
Gabriel Lewit: At what point are you going to say you got to get out of the house?
Steve Lewit: Well, here’s-
Gabriel Lewit: I’m just curious, when do you draw … what’s she get 40 years old and still living at home? You good. I’m just curious.
Steve Lewit: No, no, no. I think at 24 I’m still okay. She’s working full time. She’s saving a lot of money. She’s trying to figure out her life.
Gabriel Lewit: So, three to four years, bank of dad’s closed?
Steve Lewit: No, I think a year or two, I’m going to say-
Gabriel Lewit: So, you’re in the year or two camp.
Steve Lewit: Yeah, but I’m not saying the bank is closed. I’m not going to throw her out because I think she’s got a good head on her shoulders. She’s not trying to avoid it. We talk about it. We talk about these kind of things. I don’t feel she’s leaning on me or the family to support her. She’s just saying, “Look, I don’t know what to do. Is it okay if I stay here for a while?”
Gabriel Lewit: Well, I’m just curious-
Steve Lewit: Which is-
Gabriel Lewit: …. what your while is? And maybe folks, if you’re out there and you’ve got your-
Steve Lewit: So, okay-
Gabriel Lewit: Hold on, let me just clarify.
Steve Lewit: Okay.
Gabriel Lewit: If you’re out there and you have kids living with you, what is your while? Is it permanent as long as they want to? Do you put a boundary on that? It’s an interesting question, I think. Of course, if you kick them out of the house, do you help them financially again with their own place? We’re kind of interspersing different topics here, but it’s all related to this sense of how do we help our kids and where do you draw the line and then go back to focusing on your own retirement and finances.
Steve Lewit: So, what you don’t know, and actually nobody knows that we are talking to here today, is that kicking a kid out of the house is one of the hardest decisions I’ve ever made. Because your older brother was living at home and he wasn’t cutting the mustard. And guess what we did?
Gabriel Lewit: Kicked him out. Yeah.
Steve Lewit: And now, well,
Gabriel Lewit: And guess what, he landed on his feet.
Steve Lewit: And he landed on his feet. But honestly, you know-
Gabriel Lewit: It’s like the birds of spring here, right, they’re nudging the little birdies out of the nest. They got to learn how to fly.
Steve Lewit: I have to deal with this every day. This is what I deal with.
Gabriel Lewit: Well-
Steve Lewit: You’re not a poet.
Gabriel Lewit: Well, here’s the other question. How do you do that without your son or daughter feeling resentful?
Steve Lewit: Of course they’re resentful. Look, we didn’t know if he was going to wind up as a bum on the streets or he’ll figure it out.
Gabriel Lewit: Yeah.
Steve Lewit: It’s a big decision. It’s really, really hard. Your kids are still young, but when you got another adult and they’re in trouble or they can’t get it together-
Gabriel Lewit: Maybe there’s a bridge in between to gap this, You give them a tent in the backyard for as long as they like that and then that could motivate them to …
Steve Lewit: Oh my God, we’re trying to have-
Gabriel Lewit: I’m teasing by the way.
Steve Lewit: I’m looking at Katie, our producer. We’re trying to have a serious discussion.
Gabriel Lewit: Maybe it’s a glamping tent in the backyard, like a combo.
Steve Lewit: God willing, I’m here in 20 years when three of your kids are living in your house-
Gabriel Lewit: Backyard in the tent.
Steve Lewit: … and you’re going to tell me, “Yeah, I put up tents for the kids. And I said, guys, go out there and live, you’re not living here anymore.”
Gabriel Lewit: They can come in for breakfast. I’m teasing. No, actually, where are the youngest adults living with their parents? Actually, it’s saying here, about 18% of US adults 25 to 34 are living with their parents. The bulk in higher cost of living, no surprise, states like California and the lowest is in Lincoln, Nebraska. Good for you Lincoln, Nebraska. 2.9% of adults 25 to 34 are living with their parents compared to Vallejo, California the highest at 33%.
Steve Lewit: Wow, 33%.
Gabriel Lewit: Mm-hmm. Mm-hmm.
Steve Lewit: Wow. So is that a documentary on the parents, the kids, or the economy, Gabriel?
Gabriel Lewit: I think it’s all of it. We’ll switch gears here in just a second, but things are so expensive right now. I’ve talked to some younger clients. People are like, “You have younger clients?” Yeah. We’ll talk a little bit about this in a second, but I’ve got some younger clients in their mid-20s and they’re like, “We can’t buy a house right now.”
Steve Lewit: Yeah, impossible.
Gabriel Lewit: My home, not counting any improvements to, it went up about $350,000 in value in the last four years-
Steve Lewit: Amazing.
Gabriel Lewit: … just sitting there.
Steve Lewit: Amazing. Yeah.
Gabriel Lewit: I thought it was a reasonably pricey house when I bought it. Now, it’s like, really, that’s what you have to pay for this house. I just had a client yesterday, she’s quitting her job because she’s unhappy with it. She’s in content marketing and she was making about $100,000 a year, and she says that the market out there, she’s going to take a pay cut if she gets a new job.
Steve Lewit: That’s right.
Gabriel Lewit: And she’s thinking about going-
Steve Lewit: That’s right.
Gabriel Lewit: … out on our own as a freelancer.
Steve Lewit: Which is hard. Which is hard.
Gabriel Lewit: Which is hard also. So it’s hard out there. Things aren’t keeping up with inflation. Things are way more expensive for houses, for cars, tariffs, we haven’t fully seen the impact of that yet. Makes sense why parents are helping their kids too. And maybe it’s temporary and these things will all shift and change over the next couple of years.
Steve Lewit: Yeah, but I’m thinking a deeper question is, did parents get soft? I hate to put it this way, but I’m going to. Did parents get soft on their kids and say, “Oh honey, I’ll take care of you.” Because as I’ve said, when I grew up, and again, this is not, I’m right and they’re wrong, but the parents would not have their kids. It’s like, Johnny, get out and go figure it out and just do it.
Gabriel Lewit: A little bit tougher maybe, right? Who knows?
Steve Lewit: Yeah, yeah.
Gabriel Lewit: So yeah, I think it’s an interesting discussion in conversation, and maybe there’s more to talk about on this.
Steve Lewit: Well, where we didn’t go yet, Gabriel, is that you have to ask yourself, am I supporting my kids, at what expense of my retirement am I supporting the kids? Because a lot of folks are giving money to their kids, and then we run numbers for them, and say, “You can’t afford to do this.”
Gabriel Lewit: Well, I also go the opposite folks, which is I have some clients that have plenty of money that are not supporting their kids.
Steve Lewit: Exactly.
Gabriel Lewit: They say, “I want to leave my kids a bunch of money when I’m 80 or a 590 when I pass away.” And I say, “Well, maybe they could use it now.” There’s also the opposite angle we could take there were maybe if you can financially afford it, should you help now while stuff is hard. Helping on the down payment, etc.
Steve Lewit: Get them off the starting line.
Gabriel Lewit: So that’s what we wanted to cover today folks. Just food for thought there for you to think through. If you’ve got questions on that, of course, let us know how we could help. Our phone number here is (847) 499-3330 or go to sglfinancial.com and click contact us. If you want copies of any of these articles and reference reports and studies that we use, please let us know because we’re always happy to send those off your way.
Steve Lewit: Do we post those, Kate?
Gabriel Lewit: Not by default.
Steve Lewit: The article. No?
Gabriel Lewit: Yeah. If you want them, let us know and we’re happy to send those to you. Now, for a brief interlude, I have, I think, a positive story to share.
Steve Lewit: All right.
Gabriel Lewit: Okay.
Steve Lewit: I’m all in.
Gabriel Lewit: All right, so British woman 115-
Steve Lewit: No really?
Gabriel Lewit: … becomes world’s oldest person.
Steve Lewit: Really? I thought the oldest was 122, somebody in some foreign country somewhere.
Gabriel Lewit: Well, let’s unpack this a little bit here. A woman from the UK has become the oldest person in the world at the age of 115 and 252 days. Ethel Caterham, good name, who lives at a care home in Lightwater, Surrey reached the milestone following the death of Brazilian nun, Sister Inah Canabarro Lucas, who was age 116.
Steve Lewit: Wow.
Gabriel Lewit: Okay.
Steve Lewit: Wow. Can you imagine all the things she’s seen in her life?
Gabriel Lewit: Ms. Caterham was born on August 21, 1909, and is the last surviving subject of Edward VII. That’s crazy.
Steve Lewit: That is crazy.
Gabriel Lewit: Okay, so what’s her secret to longevity? Here’s what we’re … oh, is that a picture of her? Oh yeah, she looks very nice. She looks great. She’ll probably live to-
Steve Lewit: This is amazing, folks. You can’t see the picture-
Gabriel Lewit: Yeah, Ethel-
Steve Lewit: But this lady does not look 115 years old.
Gabriel Lewit: Yeah, I guess I wouldn’t, per se, have a picture of what 115 looks like, but not-
Steve Lewit: Not like that. She looks great.
Gabriel Lewit: Okay. She said the secret to her longevity was never arguing with anyone. I listen and I do what I like. So she wasn’t married probably.
Steve Lewit: No, right.
Gabriel Lewit: Because you argue with your spouse-
Steve Lewit: Do you have any-
Gabriel Lewit: You can’t do what you do, what you-
Steve Lewit: Do you have any friends? Did you live in isolation? What did you do?
Gabriel Lewit: And then on her 115th birthday, she received a letter from the King congratulating her on a truly remarkable milestone, and he hoped that Ethel enjoyed her incredibly special day.
Steve Lewit: Wow. That’s amazing.
Gabriel Lewit: Yeah.
Steve Lewit: What’s more amazing is that the fastest growing population in the US are people over 100 years old. It just blows my mind.
Gabriel Lewit: Well, I know you have that quote. I’m not sure it’s 100% accurate, but it is a very … percentage wise-
Steve Lewit: It’s by percentage.
Gabriel Lewit: Yeah, so I think you-
Steve Lewit: By percentage.
Gabriel Lewit: Sometimes you need to clarify that because it’s not like there’s tens of millions of people turning 100.
Steve Lewit: By percentage, of course. Yes.
Gabriel Lewit: Yeah, okay.
Steve Lewit: Yes. I should clarify that.
Gabriel Lewit: If there was two people turning 100 and then four turned 100, it increased by 50%.
Steve Lewit: That is correct. Okay.
Gabriel Lewit: I’m putting that out there.
Steve Lewit: Here’s the question, guys. Look this up. How many centennials live are alive in America?
Gabriel Lewit: Okay, let’s see. Let’s see what Google AI says for us. In 2024, this is … Google AI is helpful, isn’t it?
Steve Lewit: It is.
Gabriel Lewit: It just gives you the answer.
Steve Lewit: I love it. I love AI.
Gabriel Lewit: It estimated 101,000 people in the US are age 100 or older, projected to more than quadruple … This is what you’re talking about.
Steve Lewit: That’s what I’m talking about.
Gabriel Lewit: … to around 422,000 by 2054. But they only make up 0.03% of the overall US population.
Steve Lewit: So, when you start looking at age in the population and where you are, this is a terrible way to put it, but I forgot the real number, but if you’re 65 years old, you’ve outlived 80% of the people in the world or something like that. So it is really strange and it’s a little scary, I think.
Gabriel Lewit: Yeah. Well anyways, congratulations to Ethel.
Steve Lewit: Yes, Ethel.
Gabriel Lewit: We are excited for you. Hopefully you will reach 120 or something cool.
Steve Lewit: Yeah, go for it.
Gabriel Lewit: Keep going.
Steve Lewit: Set the bar high.
Gabriel Lewit: Now, I think what that also indicates there is longevity is a real thing when you think about planning. So we do always talk about longevity. Also, related to longevity and spending, there’s another interesting article here, which we’ll just spend a couple minutes on today. Here’s the title. It says, Retirees Afraid to Touch Savings, Investments, Relying Instead on Lifetime Income. So let me read the opener here, and we’re going to talk a little bit about this. Despite the abundance of wealth that many retirees accumulate over their lifetimes, new research reveals a paradox. And this is an interesting one because I talk about this all the time. Retirees tend to spend far more from guaranteed lifetime income sources like social security, pensions and annuities than they would from their own savings or investment portfolios.
Steve Lewit: Yeah, it’s really strange. If someone has guaranteed income, even if they bought an annuity to themselves, if they have a guaranteed income pension, annuity, they say, “Oh, I got plenty of money, I’m going to spend it.” But if we said to them, “We’ll draw that money out of your savings,” which is almost the same thing.
Gabriel Lewit: Oh yeah.
Steve Lewit: They’ll say, “No, I don’t want to touch my savings.”
Gabriel Lewit: Case in point. I had a client that was 72 and was complaining that they had things that they’d like to spend their money on, and I said, “Well, your plan looks good. You can take some money out.” “No, no, no.”
Steve Lewit: “No, I don’t want to touch that.”
Gabriel Lewit: “Yeah, I don’t want to touch it. I don’t need the money.”
Steve Lewit: Yeah, I don’t…
Gabriel Lewit: Which look, is fine. There’s nothing wrong with that.
Steve Lewit: It’s fine.
Gabriel Lewit: Nothing wrong with that. Here’s the funny part. A year later, 73, has to take out, I think, it was like 15,000 for an RMD. And I said, “Okay, so we’re talking this out …” required minimum distribution, sorry. When you turn 73 or 75, you’re forced to pull money out of a qualified pre-tax retirement account.
Steve Lewit: Which is an IRA, 401k, 457 and so on.
Gabriel Lewit: Okay, now, you have to take it out, pay the taxes, but you don’t have to spend it.
Steve Lewit: You can go reinvest it.
Gabriel Lewit: This person was in say a 12% tax bracket, so they pull out $15,000, they’re going to owe, I don’t know, $1,700, whatever it was. So she could have taken the remaining $13,300, put it right back into an investment account and keep it saving and growing. Instead, they said to me, “Oh, I could spend that RMD.”
Steve Lewit: Exactly, which is exactly the same thing as taking money out to spend it.
Gabriel Lewit: I’m just thinking to myself, I’m like, “What is this weird phenomenon?” And this happens all the time.
Steve Lewit: Well, it is because people feel, look, I worked so hard to get these savings. I worked so hard to accumulate the money, I’m not going to pull it out and just spend it. But if they have to pull it out or that you have an annuity or a pension or so on, they’ll say, “Well, I think I could spend it.”
Gabriel Lewit: Yes. So this is what’s called behavioral finance. It’s a perfect example of behavioral finance and it’s such an interesting thing, I think, when you think about it, what causes someone to spend, what causes them not to spend.
Steve Lewit: Why we make the decisions we do. We make them out of fear, we make them out of the unknown, different things move us.
Gabriel Lewit: Now, this continues on. I think this is a great short article. The implications are great for financial advisors seeking to help clients maximize both financial security and quality of life and retirement. But I’m going to circle back to that. According to retirees spend lifetime income, not savings, which is the title of a new study by David Blanchett and Michael Fink, which are terrific researchers by the way, of retirement income.
Steve Lewit: They are fantastic.
Gabriel Lewit: Okay. Retirees consume about 80% of their lifetime income, on average, compared to only about 50% of their savings and other income sources, even among wealthy retirees who could comfortably dip into their portfolios, they reduce their spending from the investment sources and those remain modest compared to lifetime income. Now, this seems to me really simple. You’d say to a client, “Hey, put some of your money into a guaranteed lifetime income source and you’ll feel really comfortable spending it.” But there’s this weird ironic problem with that. There’s only one guaranteed lifetime source that you can put your money into, which is called an annuity. And the moment as an advisor, I could even have this study right in front of me and bring it up, and you say, “Hey, why don’t we put some of your money into this annuity?” What do most many clients-
Steve Lewit: “Oh, I heard so many bad things about those.”
Gabriel Lewit: They think you’re trying to push the annuity on them.
Steve Lewit: Yeah, you’re just trying to sell me on annuity.
Gabriel Lewit: But from our vantage point, what’s so interesting is we’ve worked now with thousands of clients and the ones that do spend most comfortably-
Steve Lewit: Are the ones that have the annuities. Truly.
Gabriel Lewit: And the ones that never spend and are always worried about their money are the ones-
Steve Lewit: Or they don’t worry about their money, but they just spend less.
Gabriel Lewit: … are the ones that don’t have it. And this isn’t to say it’s good or bad, but it’s also ironic because as advisors, if we were to position this to you, they have such a negative rap that people think you’re just trying to push them on people. Even though there’s a lot of really interesting data about the value that they can bring both psychologically with behavioral finance, but also numerically in the sense that it’s a very efficient form of income. If you were to live to 115-
Steve Lewit: Imagine.
Gabriel Lewit: … like Ethel-
Steve Lewit: She cleans up.
Gabriel Lewit: … she cleans up if you had a guaranteed-
Steve Lewit: It’s like getting a pension to 115, getting your social security, and then you buy an annuity, it pays out until you’re gone.
Gabriel Lewit: Right. So yeah. So it’s just interesting. I thought worth sharing. We’re not going to get into the details of annuities here. Are they good, are they bad? Usually I find if you think that they’re bad out there, you kind of turn it off. You don’t even explore it. Maybe you should at least consider exploring it. We do, of course, offer a vast investment menu. Annuities are one small piece of it. They fit for certain people. They fit for someone that likes this idea of spending without worrying about how long they’re going to live.
Steve Lewit: Yeah. If guaranteed income makes you feel comfortable, then you’ve got to go get it. You can’t get more social security. You probably don’t have a pension. So you create your own pension, which is what annuities are all about. If you like the idea and you feel secure and it gives you peace of mind, then you have to look at it.
Gabriel Lewit: Yeah, and folks, if you’re not familiar with them-
Steve Lewit: You learn the pros and cons, you get the scoop on it, and then you make a wise decision about what to do.
Gabriel Lewit: Yeah. If you’re not familiar with them, you don’t lose the value of your account balance. There are old-school annuity types where you put money in and it’s gone just like your pension has no account value.
Steve Lewit: Yeah. We should do a whole show on this, but old-school annuities, you gave the insurance company 200,000 bucks and you died two years later and it’s gone.
Gabriel Lewit: Yeah. New ones are not like that. Right?
Steve Lewit: It’s a bad deal.
Gabriel Lewit: You have an account balance. You may even have an enhanced death benefit, but you still get that benefit of the lifetime income guarantee, which from a behavioral finance perspective, is really my point today, might allow you to feel more comfortable spending. Maybe you turn around and spend some of that money on your kids or grandkids, people who need help. Some of you in your late 70s or early 70s, or anywhere around that age, you might have grandchildren that are Gen Z’s.
Steve Lewit: Yeah. There’s products coming out now, Gabriel, that are not annuities, that have income writers on them. So they’re like an annuity, but they’re not like the old annuities. The whole world of income. Think of it, you got 10,000 baby boomers are retiring every day, and what do they need?
Gabriel Lewit: Yeah, income.
Steve Lewit: They need income. So the whole market is responding to that with these very, very unique deals and structures to provide guaranteed income because that’s what makes people happy.
Gabriel Lewit: And just for full transparency and clarity, we are not pushing them. We would show you these as an option in your plan if you are interested and if you’re not interested, we don’t even have to talk about them.
Steve Lewit: That’s so important because there’s so much negativity out there about annuities. When we raise that word, people say, “Oh, he’s trying to sell me on annuity.” We don’t care really what products you own. We have no vested interest in a specific product. All we’re looking to do, Gabriel, is say, “What is the best product to reach this goal?” If we have a goal of growth, what’s the best way of getting growth? Is it the market? Is it stocks and bonds? Is it structured products? Is it ETFs? What is it? Annuity, same deal.
Gabriel Lewit: Yep. So lots that we could talk about there. Maybe we will dive deeper into that on a different show. So yeah, we covered a lot of ground today. Spring, we’ve talked about people turning 115, kids in the house, kids getting out of the house, tents.
Steve Lewit: I’m having so much fun.
Gabriel Lewit: My goodness.
Steve Lewit: I’ve got Thomas Edison working in my soul. Right now, he’s speaking through me.
Gabriel Lewit: There you go. There you go.
Steve Lewit: Yes. There it is.
Gabriel Lewit: Well, if you’ve got any questions about financial planning, retirement planning, helping your kids doing better for your kids, planning for your retirement guaranteed income, whatever it is, give us a call (847) 499-3330 or go to sglfinancial.com, click contact us. We are happy and looking forward to hopping on a quick 15, 20 minute call with you to dive into these further.
Steve Lewit: Yes.
Gabriel Lewit: So meanwhile, we hope you have a wonderful day. Try to stay warm.
Steve Lewit: Just stay warm.
Gabriel Lewit: My goodness. Have a wonderful rest of your week and weekend.
Steve Lewit: Stay well everybody.
Gabriel Lewit: Bye now.
Steve Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at (847) 499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.
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