Roaming Returns

040 - How To Eliminate The Worry Of Outliving Your Retirement With Dividend Investing

• Tim & Carmela • Episode 40

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Most retirement plans were created based on individuals living 15 to 20 years into retirement, but people are starting to live much longer than that. This longevity risk has become such a problem that pensions are starting to change the way they payout and how much.

If you aren't one of the lucky ones with a pension, living longer than expected still puts a strain on your own retirement funds. And don't expect social security to pick up the slack. In fact, it might be non existent by the time you reach retirement age. 

The only real way to avoid running out of money in retirement is to take matters into your own hands and to invest in dividend paying stocks that continue to increase their payouts. 

We want you to be able to live longer, happier and healthier, because you can have it all with the right strategy. 

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Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions. If you think inflation is going to be your biggest concern for retirement, think again. In this episode, we're going to cover longevity risk because more and more people are outliving their retirement funds.
That means pensions and social security might go away. But the good news is that you won't have this problem if you implement our investing strategy. And as a bonus, we lay out some wisdom from Tim's recently deceased grandfather and mentor who lived 30 years into his retirement.
Get ready for some gold nuggets. What up, y'all? Yous? Yins? What's the word? Youts. Youts.
What up, youts? Okay, so this week we're going to discuss old people. Old people? The oldest person that I knew just died recently was my grandpa. That's a heck of a tribute intro, Timothy.
He retired from the state of Colorado at the age of 65, like normal people. And the problem for most people, but not him because his pension covered it, was that he lived 30 years in retirement, which is more than twice the amount that pensions were created to. Yeah, so that's the whole point.
Tim just lost his grandfather. He was really, really close to him. But it got us thinking that a lot of other people are potentially going to be or if not currently in the situation where they're going to outlive their pensions or outlive their retirements or outlive social security, deplete social security.
Well, social security, I'm pretty sure, is going to be non-existent for anyone under like 50, just a hunch. Pensions are a thing of the past. I mean, there are some union jobs that still have pensions, but I think only like, I think I have the number somewhere.
It's like 20 some percent of people have a pension. Well, I think that number is probably the federal employees because I technically have one coming at some point. But again, whatever.
It's state and union jobs. State and federal union, yeah. What that creates with the pensions, though, is they actually have a thing that they've implemented into their formula now called longevity risk, which is- A risk we didn't talk about last week.
The week before? Yeah, the longevity risk is living longer than you're expected to. This results in the pensions obviously being paid out for longer than expected and costing way more money than they had originally planned. That problem is such a problem that the insurance companies and pensions funds now actually have to plug that into a formula and it's going to do something in the future.
It's either going to have more lump sum payouts when you retire, you just get a lump sum of your pension and that's supposed to last you through retirement. Or what they'll do is you opt for the monthly payment. The monthly payments are actually then going to be extended for like 40 or 50 years beyond your retirement date.
But then you'll be getting less. You'll be getting actually a lot less than if it was like the 10 or 15 years. So pensions are going to be very difficult to live off of in the future because of this longevity risk that is wrecking havoc.
Havoc. Havoc everywhere. When I got news of my grandpa, I was like, wow, he lived 30 years past when he retired.
That's awesome. So I started looking at the cumulative data. The United States, the average age of retirement is 64.8 years old.
The expected years of retirement is 18 to 21. Pensions were created for 10 to 15 years. So already it's three to six years on average beyond what they were created for.
Life expectancy is now 79.2 years, which then doesn't make sense because that's 15 years. So whatever, the math doesn't add up in the study I was looking at. But 79.2 years is the life expectancy.
That's 10 more years than it was in the 60s and 70s when almost all of the retirement vehicles were first created. 401ks, pensions, IRAs, all that nonsense was created in the 60s and 70s. That's the key takeaway, that that number's gone up.
Now there's some interesting tidbits. Women live six years longer than men. So you go, girls.
And there's a whole host of reasons for that, which we won't get into. People who retire live longer than those that do not retire. I mean, that's no duh.
I thought no duh, but then a lot of the people I know that when they retire, they die like within two years after retiring because they have nothing else to live for. I think there's two different kinds of people. There's the people who, because back at the government, there were a couple of dudes that like were 40 years in working, 40 years, and they were like, it's all they had to live for.
I was like, oh my God, you guys are going to be the ones that die when you leave. So many people would die when they left. And I'm like, how can you live a life that this is the only thing that you have to do? Do you not have hobbies? Do you not have? Most people.
Most people don't. Their life is to work. Yeah, it's crazy.
So those people. Well, you got to think about like, we do the personality type in on the side, like it's a hobby for Carmel, but the personality type, most of the people that are currently retiring are the worker be traditionalists who just work until they die. So it makes sense that like people are dying and like right after they retire because they literally their purpose is to work.
And if they don't have a purpose anymore, then what's the point? But it's starting to slowly get into other personalities that actually have hobbies and interest outside of working, working as in like a hindrance and nuisance. So I think the bullet point that they're talking about here that the people who retire live longer than those who do not retire is probably the people that are like stressed. So the stress factor probably kills them off earlier would be my guess.
Well, it's almost they live almost 10 years longer. So if you retire at 65, you're going to live probably 10 years longer than someone that works till 65. All things considered equal.
The one that shocked me was 50% of people greatly under underestimate the longevity. Like that's crazy to me. Like if you're 65, you underestimate how old you're going to be.
But that it makes a lot of sense coupled with the fact that people fear that they're not going to be able to afford their retire to retire. But same time, if you ask someone at 22 years old, what do you expect to like when do you expect to retire? And then when do you expect to die? I could see that number being off a lot off a lot because they don't know anything yet. If you're 22, I'm sorry, you don't know anything yet.
The other point that I took out in all the studies I was looking at was the older you are, the longer past the 79 median life expectancy age you'll live. I think that has to do with health stuff because they say that if men can get past their 50s, 60s without heart attacks or strokes or something, that's usually when they're in the green. I think that's where that comes from.
But the biggest thing that I took out of all the studies that I was looking at was when you ask people what their biggest concern about retirement financing is, they said inflation. And that's not even close to true. It's actually life expectancy.
Life expectancy matters way more than inflation when it comes to your retirement finances. Because if you live to be 95, inflation won't matter at that point because you'll run out of retirement money generally by the time you're like 75. So you have 20 years of like, what the hell do I do now? Inflation, whatever.
Inflation has no meaning at that point. It's very interesting. Now we got some other data here.
Only 22% according to the Federal Reserve in 2022, 22% of people have the luxury of a pension. So that's what I was saying before. Pensions are on the way out 401ks and IRAs are the new vehicle for retirement.
Wait a second. I just heard something yesterday about pension bailouts. Did the government just bail out a whole bunch of pension companies? I don't know.
Probably. It seems, I mean, it's possible that they will do anything to keep the baby boomers happy. That seems like ludicrous.
Don't we have a big enough deficit as it is? That again, strain on Social Security. I don't know. That whole thing doesn't add up right.
The trouble with that number is in a pension, if you don't know, like if you never had the luxury of having a pension, you work and you take out 6.2 or 6.5 or 7% of your paycheck and they put it right into your retirement funds. So you don't have to do any of the allocations, any of the contributions, any of that stuff comes out automatically. It's like a pre-tax automatic take out of your paycheck that you talk about for a pension.
Yeah. OK. Whereas if you don't have if you're part of the 78% that has to rely on a 401k or an IRA, you actually have to set up your contributions and choose how to invest your money.
And the government workers for you feds. That's what the TSP is. OK.
According to Vanguard in 2023, the average 401k balance at the at the date of retirement was two hundred and thirty three thousand is around there. So I think most people wouldn't be able to live on two hundred thirty three thousand. I could.
Carmela could. I'm assuming a lot of people to listen to this could because they know how to invest their shit. But majority of the average Americans, they wouldn't be able to last 30 years or 15 years on two hundred thirty three thousand.
It boils down to a lack of education, a lack of awareness and having bad money management skills going into the end of the thing, because that is like step one, because if you can't manage one hundred dollars, you can't manage one hundred thousand dollars. Mm hmm. Mm hmm.
Mm hmm. True. A 2022 study by Consumer Finances, I don't know who the hell they are, found that only 46 percent of households have any retirement savings at all.
So once you start digging into the numbers deeper, you start to see a more troubling trend of 54 percent of households have no retirement savings whatsoever at all. The study also I'm sorry that a 2023 Yahoo Finance study found that 37 percent of retirees, people that are older than 65, have zero retirement savings. That number is more troubling.
And they also found that 50 percent of women and 47 percent of men between the ages of 55 and 66 have zero retirement savings. So there is a large chunk of the population that is literally just going to be relying on Social Security. Back to what I said earlier, Social Security for people under 55 probably won't be there.
Or if it's going to be there, it's going to be a lot less. If you haven't done it, you go into Social Security and you put in your social number and it'll bring up like your estimated monthly payment if you retired today. That number is going to be much smaller because they're going to have to pay off 50 percent of people retiring Social Security.
And apparently pension bailouts, probably not with the same color money, but still put stress on the system any way you look at it. Those numbers are huge. And the Yahoo Finance survey also found that from anyone that's working age, which would be 16 in some states, 18 in some states, 14 in some states, whatever the whatever the minimum is, 28 percent of all working Americans have zero retirement savings.
And if you went on the Social Security website and looked at what the average monthly payment for Social Security was in 2023, it's only 1767 a month. So what we're getting at is a lot of people are fucked. OK.
OK. And the thing is, it goes back to that analysis paralysis, I'm assuming that they know they're screwed and because they're screwed, it causes anxiety, which anxiety makes them overwhelmed and scared. And then they just put it off, put it off, put it off.
And then at some point it becomes too late. And then they resign to the fact that they have to live until they or work until they die. That's why we've been beating the table about you have to invest.
Get educated, get invested early as you can take advantage of compounding. If you're under 55, you should be investing. Go back and listen to the screener episode to get rid of some of that analysis paralysis.
Invest early. Invest often. Only 46 percent of households have any retirement savings.
That's not even that doesn't like break it down to what they have. Yeah. But look at the age gap.
One the ones that are closest to retirement. That number is huge. Forty seven.
Fifty and forty seven. Yeah. Don't have retirement.
That's crazy. Crazy. Yeah.
Crazy people. Don't let that be you. The objective, I think, unless you like work where you love, which is an option, I guess for some people, I don't know.
Having to work until you die seems very pointless. I feel like when it's when you have to work, very sad thing you love. It causes an unconscious stressor on that whole thing because you never know if something's going to happen and you can't work anymore.
That's one of the things that like we're all waiting for that to happen to my dad. My dad landscapes. He has his own business, his health starting to deteriorate, and he thinks he can literally just work until he dies because his spending habits are so out of control.
I'm talking so out of control that he just he's in the mindset that like if he needs money, he can just work more hours. He takes on debt to have like a reason to work, I think it's this really, really screwed up like circle jerk that he does. I mean, he's already had two knee replacements.
He's already had, has it been one or two hip replacements? I think it's just been one hip replacement. I'm assuming he's going to probably have another one. And then I assume at some point he's going to have like a shoulder joint.
He's soon going to be a Terminator. Yeah, he's basically going to be the bionic man. And that man just keeps going, keeps going, keeps going.
But at some point, like that goes back to what I was saying before, that like a baby boomers in general have been taught the only way to live is to work. So like he has that. Well, and the way his personality is, too, like he really does have an identity completely etched into his ability to perform and achieve and work.
So he's got a like basically I think he feels if he doesn't work, he doesn't know who he is. But there is going to come a day where that's going to happen to him because his health is declining. Like they found a spot in his lungs that he's disregarding.
He's not doing things different. Like he won't stay on stuff that he's supposed to stay on. And it's like the writing's on the wall, in my opinion, and his spending habits like me and my brothers are all kind of like terrified for what the heck is to come with this man because he has no retirement set up.
He won't give us the money to invest it in a way that makes sense because he just doesn't believe in anything. So we have to. Yeah, he's going to be a pain in the butt, creative with how we are going to afford him in the future.
It's it is that's a whole other can of worms that. But his father lived to be 90 and he had lung cancer like three different times. Like my dad's got long term genetics.
So it's like if somebody is going to be living to that that age, but they are forced into retirement, they're going to be cranky. They're going to be just a pain. And then again, if we're not going to want to deal with them, any type of like living assistance.
Well, that was one of the like the email I'm coming up with in a couple of weeks is going to be about assumptions. And one of the biggest faults with people when they have assumptions is they're going most people assume they'll retire at 65. My dad is 66 now and he has no desire that works above and below that age.
There's a lot. There's going to be a portion of the population that assume they'll retire at 65 that actually develop health problems and stuff in their 50s that won't be able to work until they're 65. And it's also above that where there's going to be people that think they're going to retire at 65.
They hit 65 and they're like, oh, I don't have any money to retire. So I'm going to keep working. So like that's the assumption email is going to be interesting.
But that is one of the biggest misconceptions that people have is they'll retire at 65 or 66 or 67. And that's majority of the time. That's not the case.
It's either earlier or later, just based on factors. What Tim and I keep trying to do with my dad is we're trying to get him to like wind down a little bit so that he can have some days off to give his body time to recoup because he's still working like he's in his 20s. Like that man works seven days a week, sunup to sundown.
He just doesn't know how to quit. He doesn't want to quit, but I think he's starting to feel the toll. So it's like he needs to come up to some level of balance.
Otherwise, he is really going to destroy his body and then have exorbitant health expenses in retirement with no retirement set up, which is another one of a huge problem. One of the another one of the assumptions that I've encountered so far researching for that email is that people assume that their Medicare or their health insurance will cover their body breaking down when they get older. And most of the time it doesn't.
So they're actually going to have these really extravagant health care bills that they don't plan on. And that's another thing that's crazy. My parents are dealing with the whole my dad doesn't want to deal with admin crap.
So he always is like, oh, just sign me up for this, whatever. This sounds good. So he gets those salesmen and then they talk him into pretty much signing up for all this crap.
And then when it comes time to his surgeries and stuff, they don't cover anything. So he's been paying into something that didn't do anything. And then he still has to pay out of pocket.
So it's just it's been I mean, I feel bad for the boomers in a lot of regards that they're just getting hosed right and left because they it's like they don't know how to manage the negative expectations of other people. Well, there's something going on there. Just put your head down into your entire life.
Yeah. Those are the grindstone. It's very, very sad.
And when it comes time to pick your head up and look around, you can't really do it. So. Oh, my God, the world's changed around me.
I don't know what to do. I'm going to keep working. That is my dad.
One of the like one of the best illustrations of how, like my parents and my grandparents trying to use Facebook and the Internet and shit like that is hilarious. I'm not great, but I can navigate. And the generation after me, Carmela's generation can like just do wonderful things with Facebook and the Internet.
So like that's just a prime example of how the generation that you were born in is going to dictate how like you interact with the technology, which is required to actually get good health care, which is required to actually pay most of your bills now because banks are all online, direct deposits and things like it's just fascinating. Like my dad still writes checks. My dad still lived your whole life with cash and checks.
But now it's cards. And now, like for me, I've lived my whole life with checks, cash and cards. But soon it's going to be like cryptos and automatic wire transfers and stuff like that.
Yep. So it's very like you have to adapt. And there are certain people that can adapt.
And but this this whole thing kicked off with Tim's grandfather. I think Tim's grandfather had some good wisdom. So much with me.
Pardon me. I referred him as like my mentor, even though he never wanted to be one. He was the one that told me never live a life where you have regret when I got to be his age.
So that's where I get my my Yolo and my mentality of just if I want to do it, do it. You rip it off like a bandaid. He also told me that to live the life I want my way.
He didn't tell me how to afford that. So I guess that's like the beauty of being a mentor is you don't actually have to explain the nuts and bolts, just the general premise and let the person figure out how to get there. That works for some people.
It works for me. I figured out how to get my life to where I want to be. And he taught me so much to be a better man than my father was.
My father was a piece of crap family. He made one of the things he tried to teach me was family is everything. But we we disagreed on that.
Family can be everything, depending on the circumstances, if family is willing to accept you for the black sheep who have different mentalities, different strength, different weaknesses in the rest of the family. I think he did a good bit of traveling and he did have some form of health, like he was out in nature. He was always out in nature.
He was always traveling. He walked like he we had cars, but he always would walk to the bus station. The bus station was like a mile or two from the house.
He always walked to the bus station to go to work. And then when he came home, he walked back his days off. He was always out tinkering in the yard, playing with flowers, playing with trees.
We would travel all the time. We saw probably 90 percent of the United States just traveling. So he was big on nature.
He loved nature. He wanted his family to love nature. Some do, some don't.
I personally think the only reason my dad's gone as long as he's gone is because he is outside all the time and he does work. So he gets a lot of exercise. But I think if he didn't have that, because that man's like diet is terrible.
He like sucks back bubble gum, Coke, like sugary. You know, the part that's fascinating that I just found out during the funeral services was my grandpa had an abnormal heartbeat. It was some some defect, defect, defect in his heart.
And he still lived to be 95. So, well, that was what was crazy with my grandfather. He lived to be 90, despite the fact that he had lung cancer like three times.
He had like missing fingers. He like didn't have hearing. He had all these other things going on.
And he just was like and when he died, like I guess his tumor and his lungs came back a rear end and he just kind of had a weird pain and they found it. It was like ginormous. And he kicked off like fairly soon right after that.
So he I'm guessing that's a example of how to pay attention to your body, I guess, because any time you had a problem, you go to the doctor, the doctor, but I go, here's what's going on. I don't believe in doctors as much as he did, but he was OK with that. But it's still a body awareness.
Whereas my dad, on the other hand, he basically like completely disregards the fact that he has pain because he comes from the mindset of no pain, no gain. Push through it. You're a weak person if you don't basically tough up.
And it's like that, like if you actually have like a health condition, like he has a spot on his lungs. Like, what are you doing? I mean, that's why he's basically blown both his knees out completely. But they even couldn't believe he was even working on the knee deterioration that he had for as many years as he did his first one.
They had to get pre-approved because he was like below the age that they usually do them at because of wear and tear and longevity stuff. But like he was up and walking and going places and doing stuff like a couple of days after surgery. And some of the older people that he has as clients that have had those surgeries were like down and out for weeks upon months.
Like my dad, just I don't necessarily think that's a good thing in some components, but it's good in others. Well, but the lack of health, he doesn't care about his own health enough, and that's his detriment. And we definitely had an episode talking about that.
I think his like one of the biggest differences between your father and my grandfather was, is my grandfather had things outside. Yes. Of work.
He had passions and joys and loves outside of work. And your father doesn't. He does not.
Other than movies. But I know he's like a movie addict. So like one of the things that he taught me indirectly was to have things you love, find what you love.
If it's basketball, basketball is killing me, but I'll still keep playing it. If it's riding the bike, if it's taking walks, if it's writing poetry, if it's reading books, if it's going to church, if it's volunteering, whatever, find passions outside of your everyday routine and it gives your life more meaning. You'll live longer in your retirement years if you actually do have passions like that's that goes hand in hand.
Absolutely. I guess. But that's like one of the like I have a checklist that I learned from my grandfather, but then a checklist that I use what my grandfather taught me to create.
And I actually have amended what he was talking about. The first one is you must decide the life you want to live, how you want to live it and then live it your way. And that's exactly what we're doing.
We're hoping to inspire you guys to do the same. The key part there is live it your way. Like if you want to be a nomad, be a nomad.
If you want to live in New York City and deal with all that fun, this live in New York City, whatever you decide that you want to do with your life, do it your way. And my brother's a really good example of this. Like he's working for a government contract and he keeps getting deployed overseas to like combat zone.
It is stressing him out. His health is starting to decline. He's been he keeps going back.
He just had a new baby now. I think his son's almost a year old. And he actually said something to me yesterday when he picked me up or took me back to my car after us doing a hike.
He was like, I really don't want to go back to that job. I'm like, Gary, so don't go back to that job. Nobody's forcing you.
My dad is insistent he should stay there. And I'm like, don't let him and his really bad behaviors and misery with life dictate you and your happiness. My brother wants to build like these greenhouses and actually start producing foods and things.
And I'm like, pursue your passions. And he's really, really, really invested a lot of money into the stock market, into crypto, into gold, into all these different things. Like he really is going to be set.
So he has no reason financially to not go pursue stuff. He's even taking flight lessons right now because the job that he currently has is allowing him to do that. And they're reimbursing.
I'm super freaking jealous, but I'm pushing him to go do that because it's something he wants to do. And I think I can kind of ride his coattails to fly in whatever plane he ends up buying. So I already flat out told that ties into the second thing on my checklist.
The second thing is then you have to create a way to afford. Yes. Living the life that you want to live without working again.
I'm so glad he knew. So that basically can be broke down and say you want to build greenhouses like Gary does. Well, then you have to determine what's the startup cost for greenhouses, how much money are you going to need up front to build these greenhouses, how much are you going to need for your everyday bills like insurance and rent or mortgage and everything.
So then you actually have to create a budget so that you can then determine, OK, I need this much per month to do this passion project or this passion job or whatever I want to do rather than work. The third part is you have to actually invest and have investments that generate money. We were just talking about budgeting yesterday.
I think Tim is on to something. The reason people don't invest is because they wait to see what they have left over to invest. You should really try to shoot for like 200 a month, 300 a month, 400 a month, and then figure out your living expenses around that.
That's what I did when I invest like I get whatever I get per month in paychecks and dividends and sometimes unemployment, depending if we're working for her dad or I literally will just invest first and then I'll just figure out my bills after. But I have a general idea of what my bills are going to be because they are pretty much they're fairly consistent. So if my bills are generally, say, between a thousand and fifteen hundred a month, I know like if I'm getting over fifteen hundred, I'm going to have X amount to invest.
So then I'll just invest first. First thing I do with my money is invest and then I pay. And when you're first starting out with this, you might need to analyze your expenditures first to get an idea of what you might think you can invest.
Or maybe you want to start there first where you literally have a target that you want to invest and then you go and calculate and figure out what you're spending and then pare that down and get rid of the stuff that's swap out the things for cheaper alternatives. That's why I always put money into worthy and I always put money into bullet shares just in case my estimates for my bills for the month are off. I can then liquidate some worthy bonds or I can sell some bullet shares and then just put it back into my checking account, pay my bills.
But I always invest first and I put money into my quote emergency funds and high yield savings accounts just in case my estimates for my monthly bills are off. But I'm still investing. It's still compounding and it's making more than if I just leave it.
And if you leave it in the bank, you're not making any money on it. The bank's making money on it. And that to me is stupid.
I'm sorry. That's just stupid. If you have money in the bank, it's stupid.
Yeah. Especially if you have it in certain banks. And I actually have this problem right now.
Like I have a good chunk of change in my checking because I have so much money coming in and out. And that makes it really hard to justify moving money out. That takes three to five days to transfer into something that's only going to earn interest for maybe a month to then move it back in.
So I've actually been trying to figure out a system to make that easier and more streamlined. Just share that at some point. Just think if you were one of those people that had like, say, OK, you had ten thousand dollars in your emergency checking account and say Signature Bank or SVB Bank, Wells Fargo or one of these banks, Bank of America, like collapsed and you have to go through all this nonsense just to get your your FDIC insured money back.
Wouldn't it be better to just have that money in your brokerage account and bullet shares that then you can transfer back to a bank account or open up another bank account with to pay your bills with? Like, I don't believe in holding money in banks because you don't know what banks will be around. Yeah. But even if it's one of the but I'm not I'm not a prepper where I want a bunch of gold and silver either.
I don't like the whole concept of housing gold and silver. And then you need a safe and you need like weapons to defend your gold and silver. Like, I just don't like that concept.
Other people do. That's fine. That would be my brother.
But like, again, at least they actually have money set aside for emergencies in gold and silver as opposed to having it in bullet shares. Yeah. And however you do that is up to you.
Like, but you sign up for the obligations for whichever method. And I do believe we touched on that. You should establish a breakdown of what you're putting into emergency fund versus what you're putting into portfolio.
And it makes it just know what the general consensus. I think they say six months bills should be six months to a year that you should have set aside into a savings slash emergency fund because you don't want to take money and put it into investments to then have to liquidate it because you don't have a savings account or that emergency fund set up because it defeats the purpose. And when you have stuff invested and you have to liquidate it before it can mature, mature, as Tim says, Mature. Then you potentially take a loss and that's where people lose money in the stock market. They don't have their emergency funds dialed in. And that's a huge thing that is very easy to get rid of.
That's a huge risk that people can navigate very easily. We did discuss mitigate risk. Mitigating risk, one of the ways to mitigate risk is not having to sell anything.
Yes, so having your emergency fund. If you can actually have it set up where you can sell when you want to sell, goes back to point one. You live your life your way.
Same with investing. If you can set it up so you can sell when you want to sell, however many shares that you want to sell, that's a way better situation than having to sell to cover your bills. Yes, and that is another component of when you're in your retirement years.
Almost a desperation concept. Would you rather sell off your assets? That's a huge problem that I have with most of the stuff I read about retirement. They don't really identify that the better option than selling stuff off each year to pay for your retirement is to invest in income stocks and then just collect dividends and maybe have to sell like 1% of your portfolio if you've underestimated.
Or if it's a weird year or if somebody cuts a dividend or something. But like in the general consensus. But having to sell off stuff to afford living is stupid.
Especially when it's unnecessary. If it's unnecessary, why would you do that? Why would you set yourself up for that? Because then you're at the mercy of whatever valuation the market is at. And if it's a really bad year like COVID and you had to liquidate to be able to survive, dude, you're like severely puncturing a huge hole in your nest egg.
And the fourth step is to just kick ass, take names, do whatever you want the rest of your life. But then I'm going to actually apply this to investing portfolio. So you must decide how you want to live your life and live your life your way.
Well, right now we have 1,300, 1,400, between 1,300 and 1,400 coming in each month in dividends. So I would actually decide to live my life the way I want to, knowing that my budget is 1,300 to 1,400. Ideally, we'd like to have it up to about 2,000, which is exactly why we're pushing through getting this condo renovated to sell to have an extra like 50 to 60,000 to dump in to be able to make some more money.
Because if I know if I know I'm bringing in 1,300 to 1,400 a month in dividends, ideally, I would like to just 75% of my dividends or 70 or 60. Like the ideal situation would be 50 to 60% of your dividends are used to live off of and then 40 to 50% is reinvesting. I know that's not feasible for vast majority of people investing.
The reason why is you then are compounding 40 to 50% of your dividends and you have enough to live off of 40 to 50% of your dividends. But other people might be willing to work a few more extra years. I am not.
Tim is not. Because I have literally been working since I was like five because my dad's crazy. I grew up on a farm.
I've been working since I can remember. So that's what I mean. I am so tired of obligation and I really want to live how I want now.
And I am okay with knowing that $1,300 a month is all we have right now until we have some compounding condo sold. So basically, what we're doing is working alternative things right now to allow that to compound bare minimum. And then once we do hit the road and we don't have these extra expenses.
But then we'll be able to say, okay, we need to compound more money than these couple of months. So let's go to this national forest for a few weeks, not use gas, not use like go to museums, not do any of that stuff. And we'll actually do a lot more biking and hiking, which are all free and we absolutely love.
I'll do some photography, which I absolutely love. And to listen to books, read books. I mean, there's so many things you can do when you have your free list versus expenditures list.
But then it's like, I know I'm going to be out in certain cities and places like we just had a love child pop up in our genealogy thing in my family. She's actually pretty cool. We're going to go out to Indianapolis because it's on the way out to New Mexico when we head out to Tim's family reunion in July.
And I'm already pre-allocating going to a few museums because that's what I want to do in that city. I want to see Meow Wolf. Meow Wolf.
Well, that's in Albuquerque. Meow Wolf. Meow Wolf.
But I don't know. I feel like we're beating a dead horse sometimes. But you have to create a portfolio that has dividend increases, growers.
If you do that, you're set. If you get Main Street Capital or you get Hercules Capital or you get Trinity Capital or you get, I don't know, Pfizer or Triple M or these ones that keep growing their dividends every year. It's like pay raises.
Then taking out dividends won't be a problem. And you should be able to have some to put back into your portfolio because what you got in 2023 is going to be less than what you got in 2024. If you can live off what you lived off of in 2023, you can do the same thing in 2024 and take the extra money and reinvest it.
It just seems like it's a no-brainer. To me, it's simple, but it might not be. I don't know.
No, it is simple. It is simple. It's just what you're willing to do.
And it really does boil down to willingness of the individual. Just like we said, we are not willing to work a normal job anymore because there's just specific headaches that I literally do not want to tolerate. And that's why I can't get behind the gold and silver and the precious metals because there are some years where they're worth more than other years, but you're not getting any money back.
You literally have to sell your gold or you have to sell your silver or you have to sell your, what is it, palladium? Palladium. To actually have money. That, to me, doesn't make sense.
And we are unwilling to store, house, and protect said gold assets. That is us. More expenditures.
You have to pay for the storage. You have to pay for the protection. But if you are willing to do all that, by all means.
And everybody is going to be different individually. And that's the beauty, I think, of knowing yourself, putting things in alignment with yourself because finance is like no different of an area. Everybody's going to have different time horizons.
Everybody's going to have different goals. And everybody's going to have different things they want to do with the money. Some people are going to be OK working 30 years.
Some people, this will give them enough of an FU fund where they can be like, I hate this job. I want to go work in this job that pays half of the amount and be happy. And I have that growing and building dividend account to then be able to do that.
So it's kind of like early retirement, even though you're still working on a passion project. If you're working currently, set aside 30% into an emergency fund. Then in a year's time, take the emergency fund and take your vacation and do whatever you want to using your emergency fund.
Once you see, once you get a taste of the freedom that comes with doing whatever you want, this will make more sense. You become addicted. And then it's harder and harder to come back to that job.
It's harder and harder to come back to this life that you're living in, the conventional lifestyle. If it's not for you, it's so hard to come back the more and more. And that was with us.
It just got harder and harder. I can't do this anymore. I can't do this anymore.
We have to find an alternative. And the reason people like, I've heard a lot more people saying that old people are warning them off of retiring when they're 55, 60, or excuse me, 60, 65, because they'll want to go back to work because they don't have anything to do. That's the lack of a purpose, passion, passion project.
You got to have alternate hobbies. You got to have things that you're interested in before you even hit retirement age. Otherwise, you are going to sit around twiddling your thumbs and be miserable at that point.
That is not the type of life you want or situation you want to be in. Like you don't. Sounds like extrovert problem to me.
Extrovert? Yeah. I think it's more workhorse problem. It sounds like an extrovert problem.
I think extroverts could literally just go to karaoke bars and be completely sad. That could be a hobby in itself. Or like nosy people.
They can't be nosy when they're home by themselves and they have to go to work so they can be in everyone's shit. They're probably the ones that are like hanging out in the, oh my gosh, I can't even tell you. Some of the places that we'd work with with dad, they would stalk the mailman.
I'm not even kidding. These old people would literally be like hovering in the windows. You'd see them poking out.
And I'm just like, what kind of existence do you have to live to like be up in your neighbor's business, to be poking out windows, to be like sit down on the porch. Every time we see it, I comment, I'm like, I can't get over how much they hate their lives that they have to be as soon as the mailman shows up, they have to go out to the mailbox. I'd like to me like there's we go weeks at a time without checking the mail.
Yeah. Our mailman has to hate us for the other reason where we're like, why is our mailbox so full? I can't put any more crap in here. If that's the highlight of your day, checking the mailbox.
Damn. Damn. That should never be the highlight of anyone's day.
I know. I know. But to finish this off, I found this awesome quote.
This is probably the best quote ever about living life your way. Read it, Tim. Read it.
I love it. Life should not be a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out and loudly proclaiming, wow, what a ride. That is totally like our mantra for sure.
That is both of us. How you should live life. When your time's over, you should be like, I lived.
Yep. I lived. And that actually we're going to do an episode at some point about death because this is one of the reasons people freak out about death.
It's not that they're scared of dying. It's the fact that they're scared that they haven't lived enough yet. That goes back to what my grandfather told me.
I think I was 12 or 13. I forget the exact age. We were sitting there in the kitchen table.
He was eating a piece of bread with butter and drinking a seven up. It wasn't a seven up that time. This is before the doctor told me he couldn't drink sugar anymore.
So he had a piece of bread and butter and a seven up. And he just goes, Tim, when you get to be my age, make sure you have no regrets. I was like, oh, that seems random.
OK, cool, man. Sure thing. But then I thought about it for like a week or two.
And then the week or two became a month. I was like, damn, that was actually really profound. Profound.
Profound. Holy crap. And then I started to gradually implement it into my life where I don't want to be 70 and have the regrets that I didn't hike the Grand Canyon or I didn't skydive or I didn't take time for a hike up a mountain or just sit in the wilderness and paint a picture or whatever the case may be.
I don't want to have any regrets. And the way to that lifestyle for me, which is why we actually created this whole thing, income investing for nomads, because the best way to do that for me is a nomadic lifestyle, living in a van, just going wherever I want to go, doing whatever I want to do for as long as I want to do it. I know it sounds selfish, but to live a life with no regrets, you generally have to be selfish.
And I can tell you a lot of the older clients my dad has when they'll actually start talking to us. They're always so I don't want to say jealous, but they're so envious of the fact that we figured it out so much earlier than them. And they're like, wow, I wish I would have known that.
Wow. I wish I would have done that. Wow.
I wish I would have whatever. That's every time you say, I wish I would have. That's actually a regret.
That is a regret that is stemming from a regret. It might not be a regret at the time you say, I wish I would have. But the more that you dwell on it, the more you'll determine, oh, my God, I'm regretting not doing that in my life.
That's what any time I wish is used. That's a regret. Pretty much any time anything comes to my like, is it if it's an option to do and I think about it and I want to do it and then I'm like, well, maybe I try to rationalize out of it.
I do this thing where I future project in five years, 10 years to my deathbed. If I literally put myself on my deathbed and it's something I would have regretted, I absolutely pull the trigger because I don't want that to happen. Like, no, thank you.
And actually, I have a really awesome quote. I don't know if I've shared with you, but it basically says, you're never going to regret not mowing the lawn. Climb the damn mountain.
I love it. That's like one of my favorites, especially since my dad landscapes and I've been mowing grass since I was like able to walk. He taught me other stuff, but that's for me.
That's private. It is. Well, I was watching the funeral because I couldn't actually go to New Mexico, which sucked, but I was like, oh, my one cousin, like zoom the funeral and like, listen to these people talk about everything that they taught him.
He was masterful and that he taught everybody different things, but he taught them what they needed to learn. And that's a great mentor that they dictated. Like the stuff he taught me, he didn't teach any other of my cousins or my aunts and my aunts or uncles or my great great cousins or whatever the second cousins.
I don't know what second cousins. I don't know what the hell they're called. But he taught everybody like love nature, work hard.
If you're going to do something, do it right. Maybe that's have integrity. Yeah.
And like stuff he taught me is like, dude, the best thing he taught me other than the regret thing is that the quiet ones most of the time are the smartest, strongest and funniest people in the room. And it's OK to be quiet because I'm not loud. I know it sounds like what we are.
We're doing a podcast. But if you ever saw if you ever see me in real life, you're like, wow, it seems like the weirdo sitting in the back corner with a hoodie up and not saying anything. Where is this guy at? Like, oh, he's in the van.
I can't even tell you how many times we're over at my parents house and stuff. And Tim will be sitting on a chair like over somewhere. And everybody's like, where's Tim? I'm like, he's right over there.
And they're like, don't even know that you're in the house. It's so freaking hilarious. It's OK to be quiet.
Absolutely. It's OK to be different. It's OK to.
Be yourself. Be yourself is the best. The best.
And that goes back to what we said previously about knowing yourself. You have to know yourself. And I at the time, I don't think I said it.
Not sure. I don't remember. But knowing yourself financially as well as personally, there are two different things.
But you should know yourself. They have to coexist in both areas. And know what you love to do.
If you know if you know that you love to ride a bike, well, then save save your money up in bullet chairs to buy the bike that you want, not the one that's the cheapest, because I've done that. Cheapest ones suck. So what I've been doing the last two years is I've been putting a little bit here, a like I think it's going to be probably about twenty seven hundred dollar carbon bike.
So when we're out riding or I guess I'm riding, I don't know if she's riding. Whenever we're out in nature and I'm riding around, it's going to be a bike that's lightweight, that's able to go up the mountains. Because the one I have currently weighs like 30 pounds.
Is it freaking kills me driving up mountains on it? Hey, if you can go on that, you can you're going to you're going to throw me in the dust when you actually get a good bike. But that's another thing. It's like he didn't say to live intentionally, but he was he taught like the financial components of stuff.
If you want something, make sure you have money to pay for it, pay for it on credit. Stupid. So if you want if you know you're going to want like a new car, you need to save up for the new car.
You shouldn't buy a new car. It's like the worst investment ever. You should buy a used car.
But that's a whole other conversation, which we will do at some point. Like the worst investment ever in the history of humankind is new cars. And continuing to buy new cars.
It's the only thing I know of that you buy it. And as soon as you own it, it's worth like 30 percent less. Yep.
As soon as you drive it off the lot. That is insane to me that people are like, I need a new car. Like, really? Just buy a used one.
You're saving 30 percent. It's like buying a stock that's overvalued. You can buy the exact same make and model just a year older for 30 percent less.
I mean, damn. Damn. But yeah, like he taught me, if you want something, know yourself enough to know what you're going to want, save for it, which is what I use the bullet shares and the worthy for.
If I want something, I just put money in there every month or whatever. That way, I'm getting interest while saving up for my whatever I want. And then I buy it.
And then we live and we have fun and we have no regrets. That's one thing that I had to teach Carmela, like when we first started going out, like I have fun with everything and she was super serious, but she's gotten better about it. I mean, I had a half and half mode.
It's just that I was so. We can even be working a shitty job with her father, like tan barking, and I can still have fun because I'm like doing whatever I like, hitting rocks out of the flower bed or I'm watching the birds while I'm doing what I like. Have fun in everything you do.
It makes it easier, even if it's something you don't like. But ultimately, just do what you want to do. That way, you don't have to worry about doing stuff you don't like.
And that is the point. And then that whole what is it outliving your pension and outliving your retirement is that risk. If you set things up the proper way, like we're talking about with dividends and having all this stuff continuing to grow, you literally never have to worry about this.
Ideally, every human should outlive their pension. Every human should outlive. And they should enjoy outliving their pension.
Yes. It's one thing to I mean, it's one thing to outlive your pension. It's another thing to actually enjoy what you're doing to the point that, oh, I don't have any more money in my pension.
Whoopsie daisy. We are proponents of the quality of life, not years of life. That's why.
But if you have a portfolio where you have income stocks, it doesn't matter what your 401k or what your pension does, because that's just extra whatever you want to do. Whatever you want to do money. Speaking of which, her crypto portfolio is smoking.
Holy crap. If you didn't listen to the cryptocurrency, I feel bad for you because you're missing out on 60 percent. Shitloads of money.
Down 60 percent. Now I'm up like 30 percent. She's up about 20 percent of what you put in.
She's gained 80 percent in the last, I want to say, nine or 10 months. It's insane. We told you guys about it.
We probably will do another one. Yeah, we'll have to do an update at some point. At some point.
But if you glossed over that episode or you didn't listen to it, yeah, you shot yourself on the foot. Because it is a cyclical like it's like it's more cyclical than the stock market. Like you pretty much know what Bitcoin is going to do three years before it does it.
So you can set yourself up every time it has. It does the same thing. And the alt coins all do the same thing.
And it's a pattern if you. So we'll probably do that again in 2025. Say we're going to sell most of our crypto into whatever.
And then we'll do another one saying here in 2026 is when you should start buying. We'll get to that at some point. This episode's a little bit all over.
But if you didn't do crypto, sucks to be you for real, man. Holy crap. Like I'm up.
You can catch the next upswing and we'll have it more. And I've actually been back again, been taken like I invest. I put like $100 every two or three weeks into Coinbase and I put it into crypto and I put like $100 into bullet shares and I put like $200 into Worthy.
Like if you do that and you see that it adds up to the point where you're like, wow, dude, like I didn't even know. But I have like damn near $15,000 saved and I've only been making like what I make. That shows how much that's gone up.
That's crazy. But the thing is, like the people who used to have pensions, like the company did it for you, did all the investing for you. It was like the Lazy Way, the index fund, in our opinion.
And then they converted over to the 401k, where it's like even if you're investing in that account or putting money into that account, you actually have to put that money into investments to get it to do anything for you. So it's like it's giving you more of the onus, which a lot of people obviously are struggling with. You really have to learn how to self-manage finance.
Financial literacy is huge. Well, it goes back to the original point that I made numerous times now. No one's going to care about your money as much as you do.
Nobody. Nobody. Nobody's going to care about you as much as you.
So you really need to start like covering all the things that you need. That's my grandpa. That's my grandpa teachings for you.
He didn't teach me that, but that's grandpa. I'm a grandpa teaching you all that. Like nobody is going to care about you or your money as much as you do.
Period. Facts. Even financial advisors.
Don't use them because it's the same freaking thing. Don't they don't care. The more you outsource, the more fear you're going to have.
So if you are trying to get rid of that analysis, paralysis and anxiety like you got to learn this stuff. You really do know what we've been trying. We've been trying to teach y'all.
So ends. Yins, Yutes. Yeah.
My God, is that how you're going to wrap up? That's it. All right. So next week, I think we have the dividend aristocrats.
Next week, we're going to do economic moats because it's going to be a two parter. It's going to be economic moats. And then we're going to do aristocrats, achievers, kings and all that in the week following that because they kind of go together most of the time.
Majority of time. If it's a dividend, dividend aristocrat, it has an economic moat. So I'm going to do economic moats first and then we'll do the list of the.
We did talk about that. I forgot. And I'll give you a few examples of ones that are good values that pay a dividend that increases every year.
So we just talked about where you should have dividends in your portfolio or stocks in your portfolio that increase their dividends every year. It's common. And you'll see why.
Because next week will be the reason that they're doing that is because they're remote. Like they can do whatever the hell they want because they have no competition. Yep.
Moats a different way of saying monopoly. They have a monopoly. They have no competition, meaning they're the forefront runner.
They're the big shit cheese. All right, y'all. So next week, economic moats.
I would tune in for that for real. That's super important. And again, start thinking about what you really want to be doing with your life.
And that's why I know I mentioned it before. Like when I first talked to an individual, the very first thing I asked them is money is not an option. What would you be doing? And if you have no idea, go back to that love episode on February 13th or 14th and think about what you love and then start adding more of that stuff.
You'll start wanting to get rid of the stuff you don't like. Yep. If you just ask yourself that question, you write down stuff that money is not an option.
What would you do with your life? That right there is your passion projects. If money wasn't an issue. All right, guys.
Thanks for tuning in. See you next time.