What Gas Station Sushi Can Teach Us About Retirement
by SGL Financial
Our 2 Cents – Episode #226
What Gas Station Sushi Can Teach Us About Retirement
Trust us, this one’s worth it! On today’s Our 2 Cents episode, we’re serving up gas station sushi, Powerball odds, and the bad habits you need to ditch ASAP. Listen in now!
- The Gas Station Sushi Equivalent of Retirement Planning:
- Some things in life are clearly risky like gas station sushi or an email from a Nigerian prince. Trust is a good thing, but in retirement planning, blind trust can be dangerous.
- Are the Odds in Your Favor?:
- Ever wonder how the odds of winning Powerball compare to other unlikely events?
- Stop Doing These Things:
- Stop the mistakes! Here are 5 crucial things Americans need to quit doing—before it’s too late.
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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 the show here today. You’ve got Gabriel Lewit here and Steve Lewit with you.
Steve Lewit: I am here.
Gabriel Lewit: And Our 2 Cents is ready to roll.
Steve Lewit: Yeah, I thought we were going to do 1 Cents for a moment when you left the room.
Gabriel Lewit: Well, I was going to let Steve go solo today, I was just joking with him.
Steve Lewit: Yeah, you concerned me.
Gabriel Lewit: I said, “Steve, you’ve got this.”
Steve Lewit: So folks, we just came out of a heated discussion about trust and verify.
Gabriel Lewit: Well, one of the topics we’re going to talk about today is… Well, we titled it gas station sushi, things that you maybe don’t want to trust.
Steve Lewit: Yeah, it fits in perfectly.
Gabriel Lewit: Right. We don’t have to talk about what we were talking about here, but we’ll get into the show here.
Steve Lewit: It was kind of interesting.
Gabriel Lewit: It was interesting, yeah. We thought about pre-recording what we joke about before the show-
Steve Lewit: What we joke about before the show.
Gabriel Lewit: … because sometimes it’s entertaining.
Steve Lewit: It is, yeah.
Gabriel Lewit: Anyways, yeah, so we’ve got a great show lined up for you today. As I mentioned, we’re going to talk about gas station sushi, other things that perhaps-
Steve Lewit: I’d like to know how you think of these things.
Gabriel Lewit: … are dangerous for your retirement planning, things that you perhaps want to be wary of, and just general things in life that you maybe don’t want to trust 100%. It’s good to have… What’s that thing? A sixth sense.
Steve Lewit: Sixth sense.
Gabriel Lewit: Sixth.
Steve Lewit: Sixth.
Gabriel Lewit: I can’t say that word.
Steve Lewit: It’s a hard one.
Gabriel Lewit: Yeah. Something if your spidey senses are going off, Something on your radar is tingling, I don’t know, you want to be wary of those and pay attention.
Steve Lewit: I have one right now.
Gabriel Lewit: What’s that?
Steve Lewit: I’m going to buy a lottery ticket tonight. I’ve got it, I’ve got it, I feel it, I’m feeling it.
Gabriel Lewit: You and the other 20 million people that buy tickets are all feeling it.
Steve Lewit: Yeah.
Gabriel Lewit: Yeah, we’re going to talk about that here too.
Steve Lewit: I’m really feeling it.
Gabriel Lewit: So today, we’re going to focus really on retirement planning. Obviously, that’s our focus as a firm. I don’t know if we emphasize that enough. Our specialty, if you will, is 100% retirement planning is our core focus, getting people, even if you’re 22 years old, saving up so you can retire. If you are 50, 55, preparing for retirement. If you’re 65 and about to retire, the transition of that timeframe. And if you’re in retirement, how do we maximize and grow your wealth and deal with all the things that come your way? So we do, of course, navigate through a range of different topics. Today, we’re going to do a deeper focus on some things that directly impact your retirement.
Steve Lewit: Absolutely.
Gabriel Lewit: Yeah?
Steve Lewit: Absolutely, I love it, I love it.
Gabriel Lewit: Well, that’s our intro here, so let’s jump right in. So what are the things that perhaps you don’t want to trust 100% or you want to be maybe a little bit wary of that could impact you financially and impact your retirement, what we’re calling the gas station sushi equivalent of your retirement planning? Now, why am I picking on gas station sushi? Well, I, for one, have never had it.
Steve Lewit: And you don’t want to.
Gabriel Lewit: And I don’t think that if I were walking past a sushi roll inside of a gas station, that I would buy it.
Steve Lewit: Just like the email from the Nigerian prince.
Gabriel Lewit: Well, stop stealing my thunder, man.
Steve Lewit: I have to steal your thunder a little bit here and there.
Gabriel Lewit: Yeah. Now, if you happen to have had good gas station sushi, I applaud you for being here, because you made it.
Steve Lewit: Exactly, you’re still breathing.
Gabriel Lewit: Right. Maybe it’s not all bad, but again, on the preponderance of all the gas station sushi that’s out there, I probably would not choose many of them.
Steve Lewit: No, no, no.
Gabriel Lewit: Okay. So what are the things that perhaps you want to be wary of when it comes to planning for retirement or investing for retirement? We’re going to start off with an easy one that I think is easy, people out there that purport or claim that they’ve developed a foolproof system to time the stock market.
Steve Lewit: Yeah. I actually think this is a very hard one, because people… I talk to so many people who believe either that someone else has a system that they’re buying or they’ve created their own system that works and they really believe it.
Gabriel Lewit: Well, let me put it this way. People, I think, historically are always looking for the silver bullet, they’re looking for the easy road, the thing that beats out something else, the thing that catapults them ahead, the thing that makes them win, and it can be an alluring story. So if you hear this story, “Well, we’ve come up with the system, for sure, that’s going to help you beat the S&P by timing the market, just follow our system,” and some of these people are very believable.
Steve Lewit: Yeah. Like, “Here’s the access to my bank account, look at all the money I made last month.” Well, the stock market went straight up last month, so…
Gabriel Lewit: Well, or it could just be full on fabricated. Or what happens in the world of stock market picking is they say, “Look how we would have done in the last stock market crash,” although it’s what’s called historical back testing. But here’s the thing-
Steve Lewit: Well, they say a little bit more about that. What they do is they incubate 20 different strategies and they find one that worked, then they say, “See?”
Gabriel Lewit: Well look, yeah, let’s say you incubated in 2000 20 different portfolio strategies, and at the end of that decade, 19 of those 20 failed and one of them came out ahead, you could then say, “You know what? Look at…” You don’t tell everybody the back story.
Steve Lewit: About the 19 that failed.
Gabriel Lewit: Yeah. “Hey, we tried 20 portfolios, 19 failed, and only one succeeded.” They just say, “Hey, we were able to figure out this one strategy that beat the market over this last 10-year period. Let’s make sure we use that.” No guarantee it’s going to work in the future, just happened to get lucky, and in fact, the other 19 of them didn’t really work out very well.
Steve Lewit: And folks, this is very common in our industry, incubation of portfolios or incubation of different strategies and then picking the best and saying, “See? This is what we would’ve done, or exactly would’ve done.”
Gabriel Lewit: Yeah. So you want to be wary, anything that sounds, of course, too good to be true, you may want to not put all your eggs in that basket, and not saying you don’t go with some sort of more aggressive satellite strategy for a small portion of your funds, but let’s not bank on your whole retirement on a market timing, we’re going to beat the market type strategy.
Steve Lewit: So, what would that be similar to in other parts of the world?
Gabriel Lewit: I’m not sure.
Steve Lewit: Like the weather forecast or the… I’m sure you’ve got something. Well, the Nigerian prince.
Gabriel Lewit: Well, you seem like you want to talk about the Nigerian prince, so let’s touch upon him, okay? If you get an email… People know this scam by now, so that’s probably why you don’t see it very often. But if you get an email from a Nigerian prince offering to basically, “Hey, I’m trying to transfer some funds, I need to transfer my millions from Nigeria. I’m a prince. I just need you to send me a little bit of money first,” or whatever the scam goes. It’s obviously fake, don’t send anybody you don’t know your money, even if they promise to send you money,
Steve Lewit: Not obviously to everybody.
Gabriel Lewit: Correct, right. But quite plainly to us here-
Steve Lewit: It’s very fake.
Gabriel Lewit: Very fake. So yeah, you don’t want to trust that. The problem with scammers, just to touch upon it, is they’re a little bit sneakier these days. Sometimes now… I keep getting these text messages from Coinbase saying, “You’re trying to get into your account. Here’s your two-factor code. If this wasn’t you, make sure you call this number now.” Because they know it wasn’t me, and so they’re trying to trick me into calling this number, where I would’ve give them my account number to Coinbase. Now, the trick’s on them, I have no money in an account at Coinbase so I have no reason to log in, so doubly clear that it’s a scam. But if you actually had a Coinbase account, you might actually be nervous that somebody’s trying to access it, you inadvertently call this number through this text message, and then you’ve inadvertently just given away your entire account.
Steve Lewit: Yeah. I like the one, “Your Microsoft recurring payment didn’t pay, it bounced. Please call this number right away.” What is that?
Gabriel Lewit: Well, there’s so many. Those are more your traditional just scams and phishing and all those other things you want to be wary of.
Steve Lewit: Now, what do you think about celebrity endorsements?
Gabriel Lewit: Well, yeah. Now, this is back a little bit on track to what we are talking about today, things you should be a little bit wary of, not so much all the scams in the world, which you should always be wary of anything that comes through your emails, your text messages. Never call a number that’s texted to you basically is the rule there, just to round that out. But yeah, celebrity endorsements. Well, do you guys think that every celebrity that ever endorses a product 100% believes that that’s the best product in the world, or they’re just happy to receive the $10 million or $20 million whatever paycheck that the company’s offering to them?
Steve Lewit: Let me see. Well, there are some celebrities that won’t put their name on stuff.
Gabriel Lewit: It’s true.
Steve Lewit: There are some that have a bit of integrity. But yeah, it’s always about the money.
Gabriel Lewit: Yeah. It’s like when you see, I don’t mean this in a bad way, but Kia, the official sponsor car of the NBA, none of the NBA players are driving Kias.
Steve Lewit: Yeah, no Kia for me-a.
Gabriel Lewit: Nothing wrong with Kias, just NBA players tend to be a little more splashy with their Lambos and G-Wagons and things of that nature.
Steve Lewit: But it’s very subtle, it’s very subtle. So there’s this recurring ad I hear every day at the same time in the morning driving in here, and it’s Danica Patrick, who I happen to admire, saying-
Gabriel Lewit: Sure, she’s a great driver.
Steve Lewit: Yeah. Saying, “Buy my collision insurance now and everything’s going to be paid for.” And there’s a little part of me that says, “Oh, well, Danica’s behind it, it must be good.”
Gabriel Lewit: Well, that’s the thing, people admire these various celebrities, for whatever reasons, and then they think that there’s nothing that could possibly go wrong with what they endorse. There were celebrities a while back, I think Tom Brady… No, I don’t know if it was Tom, it was somebody. A bunch of these celebrities were endorsing some cryptocurrencies.
Steve Lewit: Oh yeah. What was it?
Gabriel Lewit: That all went bust.
Steve Lewit: Who was that?
Gabriel Lewit: And they got sued because they didn’t even know what it was, they just said, “Oh sure, they paid me $10 million, so sure.” The problem is people… Yeah, let’s see, it might’ve been some of those guys. But anyhow, just because a celebrity endorses something money-related, you should assume always that they have no clue what they’re endorsing and do your own due diligence.
Steve Lewit: And they’re in it for-
Gabriel Lewit: And that they’re in it for the money they’re getting.
Steve Lewit: … the money they’re getting.
Gabriel Lewit: Not that they’re looking out for you, they don’t know you, how could they possibly know if whatever they’re hawking is a good deal for you?
Steve Lewit: Yes, yes.
Gabriel Lewit: And unfortunately, maybe one out of 100 celebrities is like, “No, I really, really actually like this product, I really do want to endorse it,” it’s ruined by the rest of them just seeking a paycheck.
Steve Lewit: Yeah. We once were on the radio and one of the announcers really researched what we were… Because we had asked, I forgot who it was, it was quite some time ago, but we had asked the announcer, who is fairly well-known of this radio broadcast, to endorse… Not endorse it, but deliver the commercial like he uses it.
Gabriel Lewit: I don’t recall what you’re talking about, but that’s okay.
Steve Lewit: That’s okay, because as you get older, things slow down a little. I remember though.
Gabriel Lewit: There you go, that’s all that matters.
Steve Lewit: He never did it, by the way, for a different reason, but he was actually looking to see what it was.
Gabriel Lewit: Yeah, yeah. Well, hopefully they do actually research what they endorse, but assume that they don’t, that’s the idea here. Just like you would hope that the gas station sushi really was freshly rolled that morning, but chances are, it might’ve been sitting there for a week, you just don’t know.
Steve Lewit: Or a few days.
Gabriel Lewit: Okay, yep. Other things to be wary of, high-quality duct tape from the dollar store.
Steve Lewit: Yes.
Gabriel Lewit: Right? Will it be as strong as the full-priced duct tape? I don’t know.
Steve Lewit: I don’t think so.
Gabriel Lewit: If it were, why would you ever pay more than the dollar… Well, the dollar store is no longer a dollar store anyways. Generally, it’s like a $1.50 store now. That’s why they changed it to below five, or five below, because-
Steve Lewit: All right. So now, I have a question for you. You go into Walgreens and there’s Tylenol in Tylenol box and then there’s the Walgreens Tylenol, less expensive, which one do you buy?
Gabriel Lewit: Well, I go with the brand name-
Steve Lewit: Yeah, I go with the brand name too.
Gabriel Lewit: … generally. I look for them on sale though. If you wait at Walgreens, everything always goes on sale.
Steve Lewit: Yeah. But they could be exactly the same, I just don’t trust that they’re exactly the same.
Gabriel Lewit: Well, I think scientifically, I believe they actually are.
Steve Lewit: I think they are, I think they are, but I still spend more money buying the brand name.
Gabriel Lewit: But I assume that there’s a, whatever acetaminophen is, is there a cheaper version of it-
Steve Lewit: Exactly.
Gabriel Lewit: … that isn’t quite as effective as… I don’t know. It’d be like saying, if you buy a grape for your wine, there are cheaper lower quality grapes than higher quality grapes, so you can buy the $2 wine bottle, because it has grapes in it, it’s the same ingredient, but it’s a lower quality grape. I assume that’s the same with drugs, but I could be wrong because I know nothing about drug manufacturing.
Steve Lewit: Not every grape is great grape.
Gabriel Lewit: I don’t even know how you make acetaminophen.
Steve Lewit: Acetaminophen.
Gabriel Lewit: Whatever it is. You think I could pronounce the words on the back of-
Steve Lewit: Yes, acetaminophen.
Gabriel Lewit: Whatever it is, okay?
Steve Lewit: You can pronounce this, you’re capable.
Gabriel Lewit: There we go, there we go.
Steve Lewit: Everybody’s laughing at you in the room.
Gabriel Lewit: I will be the first to raise my hand and say I mispronounce a lot of words, as does every human on this planet.
Steve Lewit: Almost.
Gabriel Lewit: Okay.
Steve Lewit: Let’s move on.
Gabriel Lewit: Okay. Last but not least, you should probably never trust the weather forecast more than three days out.
Steve Lewit: Yeah, I was thinking of that too. I don’t trust the weather forecast-
Gabriel Lewit: Three hours out.
Steve Lewit: How many times have we heard 22 inches of snow tomorrow, and then it-
Gabriel Lewit: Two inches.
Steve Lewit: … we get two inches of snow.
Gabriel Lewit: Yes. Really, really highly incorrect, but better than nothing, that’s the idea, better than nothing.
Steve Lewit: At least we know it’s snowing, yeah.
Gabriel Lewit: Okay. What do you do with all this information? Well, you have a healthy dose of skepticism on things that sound too good to be true, be wary of anything that’s asking for your financial information always.
Steve Lewit: Be wary of your neighbors telling you how great their portfolios are.
Gabriel Lewit: Be wary of things being hawked as the next best thing by celebrities and do your own research, make sure things are being explained. That’s what we do here at SGL Financial with investment advice. We have independently researched everything we provided to you, we compare them to other things. We really do aim to ensure that the advice we give is best-in-class.
Steve Lewit: And we teach you how it works.
Gabriel Lewit: Teach you how it works.
Steve Lewit: There’s nothing hidden here. Kind of a rule here, folks, is that if you don’t understand something, we don’t want you to buy it or use it. You need to understand it, and hopefully it gives you peace of mind by understanding it.
Gabriel Lewit: Yeah. But if you trust the process, if somehow that gas station, if they really wanted to sell their sushi, they’d probably write on there, “Freshly delivered fish every day.”
Steve Lewit: Three days ago.
Gabriel Lewit: Right? But they’re probably not doing that because that’s not the case. Yeah, anyways, moving on. Well, if you have questions on that, which you probably don’t because there’s not a lot to question, you can always call us or email us, sglfinancial.com, info@sglfinancial.com. Let’s just do a little segue here about the Powerball, which is still pending.
Steve Lewit: I’m buying a ticket. It’s $1.3 billion that I’m going to win tonight.
Gabriel Lewit: Yes, it is tonight, yeah.
Steve Lewit: Tonight.
Gabriel Lewit: So, by the time you hear this show, chances are somebody may have already won this.
Steve Lewit: I’ll still come in in the morning, I just want you to know that.
Gabriel Lewit: Well, good, I’m glad to hear that.
Steve Lewit: Do you know 60% of the people that win Powerballs and lottery tickets go broke within three years?
Gabriel Lewit: I don’t think it’s three years, but many of them do in fact go broke, which is interesting. Now, I just wanted to cover today, just for fun, the odds. So whether someone wins or not, I thought this was still interesting, so the odds of winning the Powerball are 292,201,338-to-1.
Steve Lewit: Yes. Now, what’s the odds of lightning hitting you?
Gabriel Lewit: Well, that’s what we were going to compare this to. So the odds of being struck by lightning apparently is 960,000-to-1.
Steve Lewit: So, I have a better chance of being hit by lightning than winning the Powerball ticket?
Gabriel Lewit: In other words, you could be hit by lightning 300 times, and that’s more likely than pretty much winning the Powerball.
Steve Lewit: That’s exactly right. Now, here’s the trick. Now, here’s the real question. If I buy 10 tickets, do I have a better chance of winning?
Gabriel Lewit: Of course you do. You have 10 times more of a chance.
Steve Lewit: No, you don’t.
Gabriel Lewit: But your chance is still infinitesimally small.
Steve Lewit: Each ticket is the same chance.
Gabriel Lewit: If you have two tickets, you have definitely a higher chance than if you have one ticket, that’s just mathematics. But your chance is still very, very, very small. It’s two out of 292,201,338, so it’s a very small percentage.
Steve Lewit: All right, think of it this way. If I roll the dice, whether I roll my dice 10 times or 20 times, the chance of getting a seven is the same.
Gabriel Lewit: Yes.
Steve Lewit: Well, it’s the same with the lottery ticket.
Gabriel Lewit: I don’t know what point you’re trying to make.
Steve Lewit: I’m trying say that it’s fuzzy math.
Gabriel Lewit: Sure. Not really. If you buy more tickets, you slightly, very, very, very, very, very slightly, go from essentially impossible to win to still essentially impossible to win plus one.
Steve Lewit: Okay. I will endeavor to prove my point in a different venue.
Gabriel Lewit: There you go. Well, I wanted to give a couple of other stats. Your chances of being apparently killed by a bee sting is 6.5 million-to-1.
Steve Lewit: Really?
Gabriel Lewit: Being attacked by a shark, 5 million-to-1, which is just why I don’t go in the ocean.
Steve Lewit: Wow.
Gabriel Lewit: Being attacked by a grizzly bear, 2.7 million-to-1. Winning an Olympic medal, 662,000-to-1, I thought it’d be harder than that. Hitting a hole in one, 12,500-to-1. Well, to me, that seems literally impossible. I think if I hit 12,500 shots from a par three… I don’t know. I guess that’s a lot of shots.
Steve Lewit: That’s a lot of shots.
Gabriel Lewit: Maybe one would randomly go in.
Steve Lewit: Yeah, I think you’d have a good chance.
Gabriel Lewit: Yeah, could be right. Well, anyways, winning an Oscar, 11,500-to-1. Being injured by a toilet, 10,000-to-1.
Steve Lewit: I’m not going to delve into that in any depth.
Gabriel Lewit: And bowling a perfect 300 game, 11,500-to-1. In other words, if you went to the bowling alley-
Steve Lewit: Wait a second, they tracked getting injured by a toilet?
Gabriel Lewit: That’s what the stats say, okay?
Steve Lewit: How do you track that?
Gabriel Lewit: I don’t know. Maybe you went to flush and you missed the thingy and you fall and you hit your chin on the toilet, I don’t know.
Steve Lewit: How do you get injured by a toilet? That’s absurd.
Gabriel Lewit: That’s my thought. You don’t have a slow closing toilet lid and it actually slams on your hand or something. I don’t know. Figure it out, lots of ways.
Steve Lewit: I’m trying to visualize getting hurt by my toilet.
Gabriel Lewit: Yeah. Apparently, being hit by debris from a plane, 10 million-to-1. So going back to the lottery, 300 million-to-1-
Steve Lewit: I’m going to stay in my house.
Gabriel Lewit: … it’s a low chance, it’s a pretty low chance.
Steve Lewit: I’m never going out.
Gabriel Lewit: But you don’t win if you don’t buy.
Steve Lewit: And I’m not going to the bathroom anymore.
Gabriel Lewit: You don’t win if you don’t buy, so there you go.
Steve Lewit: I’m getting my ticket tonight.
Gabriel Lewit: Good luck.
Steve Lewit: I’ll report in tomorrow.
Gabriel Lewit: Best of luck to you.
Steve Lewit: Thank you.
Gabriel Lewit: All right, to round out our show here today, we’re going to talk about five crucial things that if you’re after age 50, and even if you’re below 50, you may want to just know about these things, that you should probably avoid or stop doing to make sure you can enjoy your retirement, all right? There are, of course, probably more than five, but we’re going to just pick five of these things. Number one is stop carrying high interest credit card debt.
Steve Lewit: Huge.
Gabriel Lewit: It is interesting/sometimes discouraging to see how many clients nearing retirement are still carrying a lot of high interest credit card debt, and how much we try to teach and explain the risk in that is the interest rates are so high, almost 30% for a lot of cards, that if you make these monthly payments, you will never, ever, ever pay off the debt.
Steve Lewit: Which is exactly-
Gabriel Lewit: Which is exactly what they want.
Steve Lewit: … what they want you to do is to never pay off the debt.
Gabriel Lewit: Oh, my balance isn’t increasing. Sure, but you paid $30,000 of credit card debt, you might’ve paid $9,000 that year in interest only and you never nicked a dollar off your balance. The credit card company would gladly take your $9,000 a year for eternity. It’s a great deal for them, right?
Steve Lewit: Oh yeah. No, I was thinking of how many of our clients actually have a lot of credit card debt, and I would say, interestingly enough, we do have clients, it’s a smaller than larger percentage.
Gabriel Lewit: I’d say about 15% to 20%, if I was just ballparking-
Steve Lewit: 20%.
Gabriel Lewit: … come to us nearing retirement, still with some form of credit card debt, which is lower than the study here-
Steve Lewit: The national average.
Gabriel Lewit: … it says 52% of adults aged 50 to 64 carry credit card debt, which has a lot of ripple effects. It hurts savings because you’re using that money to pay off this debt that never goes down. And there are ways out of it, that’s not the goal today. But just number one thing, try to pay off your credit card debt as you get closer to retirement so you can enter into retirement feeling generally debt-free, maybe the only debt remaining being, say, a mortgage or a car loan, what we would consider not bad debt.
Steve Lewit: Exactly. And if you have a high interest rate on your mortgage and you can afford it, you might consider paying that off as well.
Gabriel Lewit: Now, we talked about one of these on a previous show in much more detail, but especially if your own retirement is at risk due to this, but try to stop supporting your adult children, if you can. Try to re-prioritize your own retirement, try to help them fly out of the nest on their own.
Steve Lewit: Yeah, launch them.
Gabriel Lewit: Which can be hard, it can very hard.
Steve Lewit: Launch them into the world, that’s called toss them out of the house. No, this is a big deal, because we do have many clients that support their adult children living at home, and they can’t get out of that because they love their kids, and at the same time, they’re really undermining their retirement. I’ve got my kid on the one hand, I’ve got my retirement on the other hand, and what do I do? It’s a very difficult situation.
Gabriel Lewit: It is. Indeed, it is. Now, look, if you’re 50 and you’re still helping your child right out of college, that’s one thing, but if you’re 60-
Steve Lewit: That’s different, you’re earning a living.
Gabriel Lewit: If you’re 60 and your child’s 32 years old, maybe it’s time, maybe it’s time. All right, well, the next one is continuing to procrastinate on more savings. Oftentimes, it’s, when you’re in your 20s, “I can start saving more when I get to my 30s,” and when you’re in your 30s, “I’ll definitely double down and save more when I’m 40,” and then when you’re 40s, “Yeah, I should definitely start doing that now.” But all of a sudden, you’re 50, well, the time is a-ticking. And so, there is this thing called catch-up contributions designed to help people that are at 50 who have not unfortunately saved as much as they maybe should have.
Steve Lewit: Well, it’s hard.
Gabriel Lewit: A really good time to start thinking about doing so and kicking that procrastination habit to the curb.
Steve Lewit: Yeah. And I’m not sure it’s always procrastination, Gabriel, sometimes it’s really hard, you’ve got kids growing up, you’ve got college education.
Gabriel Lewit: Sure. It’s very challenging, very, very challenging to balance.
Steve Lewit: It’s really, really difficult. So all of a sudden, the kids are leaving, you’re spending less at 50 and you say, “Hey, I’m behind on my retirement savings,” and that’s when you’ve really got to put your pedal to the metal and up your game in saving.
Gabriel Lewit: And it could be hard. Let’s say you did save some money because the kids are finally out of the house, in theory, if you’re following the other rule, which is not continuing to support them, you might finally have some extra savings. You could say, “Great, I could go on a trip or travel or this or that.”
Steve Lewit: Yeah, we can spend more.
Gabriel Lewit: You finally have that extra cash flow. But maybe it’s going to be also important for you to save that. Okay, the last two ones here to round things out would be, well, I’m going to stick with this one first, stop neglecting your health, if you have been neglecting your health. 50s is another milestone.
Steve Lewit: Got to do that speed walk.
Gabriel Lewit: We talked about on the last show, speed walking.
Steve Lewit: You bet.
Gabriel Lewit: People have pointed out to me that I tend to speed walk through the office, which I do. And then, I was thinking about this, that’s going to make me very healthy.
Steve Lewit: I’m going to rename you Flash, Flash Lewit.
Gabriel Lewit: Maybe I just have long legs.
Steve Lewit: When he goes to the restroom, folks, it’s a one-second intermission.
Gabriel Lewit: I wouldn’t say that, but that’s okay. I do walk fast though, to coffee, to the printer, to the other offices I’m visiting, wherever. I tend to be on high speed walk mode because it’s healthy, Steve, because it’s healthy.
Steve Lewit: Yes, that’s the only reason. It has nothing to do with nervous energy.
Gabriel Lewit: There’s zero nervous energy, I just like getting back to work.
Steve Lewit: All right, okay, I’ll leave that at that.
Gabriel Lewit: Yes, all right. Well, last but not least is being perhaps too aggressive in your 50s or late 50s when it comes to your investments. You might want to reassess, especially right now with where the market’s at, do I want to be 100% stocks? Even though you’re now in this phase of life where you’re maybe five to 10 years away from retirement, that’s a little different than when you’re 20 or 25, where you may be, of course, or are recommended to be 100% all stocks. So it’s something to be aware of. We do start creating plans for people to retire, bucket plans, in their 50s, mid-50s. Usually, before then, you’re not really thinking about where am I going to get my income from, you’re just trying to think about, do I have enough saved up?
But that will subtly start to shift, and maybe there’s a small bucket of your money that we make a little bit less aggressive, it could even be a buffered aggressive account to give you a little bit of downside protection if the market were to go down. And this ties into what we were talking about on the last show, fuzzy math, because you don’t have as much time to get back to break even as you near or enter into retirement. So keep in mind, you lose 25% was the example we did last show, it takes you, say, the following year, 33% just to get back to breakeven.
Steve Lewit: We hear this a lot too, Gabriel, what would you say to someone who comes in and says, “I’ve got to be aggressive in the market because I need more income”?
Gabriel Lewit: This is really one that I do think is a Catch-22. It’s alluring. I just actually had this the other day, I had a client who is 77 years old, did not save enough for retirement, this is a true story, has about, I think, $200,000, and when they stopped working, which we were generally roughly planning around age 80, so in two years, he needs $50,000 per year is what his cash flow said.
Steve Lewit: Yeah, you’re not going to make it.
Gabriel Lewit: Okay. So if you’re 80, and he’s healthy, let’s say you’re going to live till 90.
Steve Lewit: So, he gets some Social Security.
Gabriel Lewit: But over and above Social Security, you need $50,000.
Steve Lewit: Over and above Social Security?
Gabriel Lewit: You need $50,000, and you have $200,000 saved up-
Steve Lewit: Yeah, that’s four years.
Gabriel Lewit: … it’s not going to last very long. So he’s saying to me, “Well, I’ve got to make more money in the next two years, I’ve got to be more aggressive.”
Steve Lewit: Exactly.
Gabriel Lewit: Well, what happens if in two years the market drops 40%, or even 20%, and instead of having $200,000, maybe you went up even to $240,000, and then you lost 30%, you’d be at $160,000.
Steve Lewit: So, my bet-
Gabriel Lewit: You’d be even less than where you had before, right as you’re about to retire. So this is a hard one, nobody wants to be more conservative when they know they need more money, but if that backfires on you, it’s feast or famine.
Steve Lewit: So, he has two choices, he can roll the dice, or he can cut his budget and live on a lower quality of life.
Gabriel Lewit: Well, it’d the same individual would look at you and say, “I can’t cut my budget.”
Steve Lewit: Exactly, yeah, yes.
Gabriel Lewit: But the other option would be maybe you get 7%, 8% returns instead of grand slams, but you don’t strike out and lose the game.
Steve Lewit: Yeah, it’s a tough one.
Gabriel Lewit: It’s a tough one, and this is the hard balancing act…
Steve Lewit: I think the point is that what I think a lot of people don’t really realize is that you’ve got one shot to get a right in retirement, basically. So let’s say you retire at 65 and you don’t have it right, and you come in at 77 or 75 and say, “Hey, I missed the mark here, can you help me?” What’s the answer to that?
Gabriel Lewit: Yeah.
Steve Lewit: Well, it’s too late. You don’t have time on your side, we don’t have enough fire in there to make the water boil.
Gabriel Lewit: Well, that’s why we’re mentioning these things as being things for paying attention to or eliminating when you’re 50, because you still have time then. Even if you had to work till 70, it’s not anyone’s usually number one goal, but not the end of the world. But making sure you’re on track, I think, is where we want to make sure.
Steve Lewit: And paying attention to something that’s far off in the future. It’s like the folks that… Getting a trust, for example, or estate planning. We have very wealthy people that have no estate planning, so they put it on hold, they don’t pay attention to it. I’m getting the circle-
Gabriel Lewit: You’re getting the rap sign.
Steve Lewit: I’m getting the rap sign.
Gabriel Lewit: The hook, yes.
Steve Lewit: I’m enjoying this though.
Gabriel Lewit: Well, that’s great. We can talk more afterwards. But our listeners have their lives to get back to, their commutes might be over, we’ve got to get them off to work.
Steve Lewit: Darn, I thought this was the most important thing in their lives.
Gabriel Lewit: So, we hope that you enjoyed spending-
Steve Lewit: Oh my God.
Gabriel Lewit: … 30 minutes with us here today. We always enjoy talking about these things with you. If you have any questions on any of this, give us a call, 847-499-3330, or go to sglfinancial.com, click contact us. And as always, send us your questions, send us your requirements for topics you want to see on the show, anything we can do to make this interesting for you, let us know, info@sglfinancial.com. And if you have anybody else that might be interested, click that forward button, send it off to them. Either way, we will see you next week on the show.
Steve Lewit: Okay. Stay well. Stay well, everybody.
Gabriel 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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