Can I Afford to Retire? Making Your Money Last with Dan Goldie

Can you afford to retire—and what do you want life to look like when you do? Financial advisor and former Wimbledon quarterfinalist Dan Goldie joins Farnoosh to discuss his new book, The Retirement Answer: The Six Key Decisions Every Retiree Needs to Make https://www.panmacmillan.com/authors/daniel-c-goldie/the-retirement-answer/9781804094488, and the financial and emotional decisions that shape life after full-time work. From growing up with a single mother facing financial insecurity to navigating his own early exit from professional tennis, Dan shares the experiences that inform his approach to helping people plan for their futures. In this episode: How to figure out what you need for retirement beyond the intimidating headlines. Social Security timing and the tradeoffs of waiting to claim benefits. Opportunities to boost retirement savings in midlife. Why Dan favors flexible withdrawals over a rigid application of the 4% rule. How to prepare for changes in identity, purpose and daily routine. Why retirement can be a gradual transition, including consulting or part-time work. How's midlife going? Fill out Farnoosh's survey https://www.jotform.com/build/262556781257063 and help shape the podcast in 2027. Hosted on Acast. See acast.com/privacy https://acast.com/privacy for more information.

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• 1:34Speaker 03

  Welcome to So Money, everybody. I'm Farnoosh Torabi. We're talking about retirement today. And when we think about it, what comes to mind? Do we want more freedom, more time? Or is there a number in our savings account that we're pretty sure needs another zero? Especially in midlife, right? Retirement can feel like a moving target. You're trying to save for your future while paying for the very expensive present. And beyond the question of will I have enough? There's another question. What do I actually want my life to look like when work no longer sets the schedule? My guest today is Dan Goldie. He's a financial advisor and author of The Retirement Answer, The Six Key Decisions Every Retiree Needs to Make. Before his career in finance, Dan was a professional tennis player and Wimbledon quarterfinalist.

• 2:19Speaker 03

  An injury, though, ended that career at just age 27, giving him an early experience with the challenge of figuring out what comes next. Today, we're talking about how to get beyond the intimidating retirement headlines and focus on your own circumstances. We explore social security timing, why Dan favors a more flexible approach to retirement withdrawals, and the adjustment from building your savings to actually using them. Plus, does retirement need a new name? Because wanting to work less and wanting to stop working entirely are two different things. Here's Dan Goldie.

• 2:58Speaker 03

  Dan Goldie, welcome to So Money.

• 3:01Speaker 04

  I'm very glad to be here, Farnoosh, and I've enjoyed many of your previous episodes. So I'm excited to talk to you.

• 3:08Speaker 03

  Thank you. Well, you know, you hit the nail with your, with your new book. Retirement is such a complex and, and difficult subject for a lot of people to even think about. A lot of people will say, well, I don't even think I am retiring, to be honest, at this point. Life's expensive. I haven't done a really good job of saving. And your book has solutions. In fact, the title is called The Retirement Answer. And we're going to get into so much of it. But I want to start with your origin story because it is unique. I don't think I've ever had a tennis pro on the show before. We've talked about tennis. We've talked about tennis and how much I love it and I love to fail at it. I think it's important to find something that you're good at failing.

• 3:51Speaker 04

  It's a much harder sport than people realize.

• 3:55Speaker 03

  It is. It's like golf. It's like, how hard does hit a golf ball? It's very hard. So you arrived to this world not initially as a financial advisor. First, your first career was in tennis as a tennis champion, first at Stanford and then a Wimbledon quarterfinalist. Your pro tour in 1991 was the retirement for you. Tell us about, make, help us make the connection maybe even about your time in with tennis, your career in tennis, and then what you're doing today, teaching Americans how to live fully in retirement.

• 4:29Speaker 04

  Well, the transition that I had actually turned out to be pretty easy for me because I have an economics degree from Stanford. And when I was in school, I actually, when I was a senior at Stanford, I had a, an internship with a financial planning firm. And that really opened my eyes to the benefits of financial planning in general and investment management, and then how to retire and so forth. I went through one retirement, a very early retirement because of an injury, an athletic injury. So I stopped playing tennis in 1991. I was 27 years old. Most people play quite a bit longer than that, especially nowadays. But I had injuries and to me, I didn't really enjoy the tour so much.

• 5:14Speaker 04

  I didn't like all the traveling and so forth. So I just transitioned immediately into having my own financial planning firm. That was my transition.

• 5:22Speaker 03

  There was a story too, though. As a child, I'm, I was reading that your mom raised you with some, some financial stress, which is pretty typical in American households. And I'm just curious, we talk a lot about our financial past because it sometimes informs our financial present and future. And I'm just curious how that upbringing influenced your mindset or in your relationship with money.

• 5:47Speaker 04

  Well, it, because my mother was not college educated. She was a bookkeeper. She graduated from high school and she, she understood numbers really well. And I think I inherited that from her, that skill. But I grew up with really no financial help at all. And in fact, I really enjoyed your conversation with Ron Lieber a little while ago about college and how hard it is to deal with the college planning, how expensive it is and so forth. My, my past tells me I'm, I've, I just have a real appreciation for money. And that's really what got me into this business was studying economics at Stanford, having that internship that I mentioned,

• 6:26Speaker 04

  and then just wanting to help people not experience the pain that I felt when I was young. And we just didn't have any financial assets. It was very stressful. It was a scary time. My mother was a bookkeeper, as I mentioned. And if we were one, I'd say one illness away from being on the street because we didn't have any help. She was a single mom. My dad was out of the picture and she made very little money as a bookkeeper. And if she got sick or something, I don't know what I would have done. It was a scary time. And so one of the things that I wanted to do with my financial career was to help people not ever feel that way. Teach them some of the basics about how to save and invest. And even with a little bit of money, you can actually go a long way.

• 7:09Speaker 04

  That was one of the things that I learned when I was younger is like, how did, how to handle not having a lot? And how do you deal with that? And you can do a lot more than you think is what I, what I concluded.

• 7:21Speaker 03

  Mm hmm. A lot of people would say that the retirement formula is broken. And, and as I think more and more about it, I wonder if it's, it's not fair to put upon everyday people, everyday workers, this responsibility essentially to secure their own retirement, starting at 65, especially now with, we're living longer, longevity is now people are living well into their 80s, 90s. Retirement is not just a couple of decades for some. It can be much, it can be double that. And so I wonder what you see as fundamentally what is crippling this retirement formula, where now 79% of Americans, according to Boston College, say that we're now in a retirement crisis.

• 8:06Speaker 03

  And only less than half of working households will maintain their standard of living in retirement.

• 8:12Speaker 04

  Yeah, you're exactly right. That, those are statistics that I put in my book. And I think it is, it's unfair. It's, we're in a situation now, I had written this acronym called PIE. Those were the reasons that I concluded were there for people nowadays. The 401k pensions that we have to deal with. We don't have the old style pension funds that our grandparents had, grandfathers, great grandfathers. Back in those days, post-World War II, people didn't have to do all this retirement planning and worrying. It was done for them by their employer and they were employed by the same company typically, but for 30 or 40 years. We're talking 1950s, 1960s, even into the 1970s.

• 8:57Speaker 04

  Then in the late 1970s, the 401k came to, came into being. And that really changed things for people where now you have, all of us have the responsibility to do all this saving on our own. And we have to manage our retirement on our own. And it didn't used to be that way. And so that's a huge issue that people have to face that they didn't prior to the late 1970s. And then I think you've also, on top of that, you've got all of the income inequality that we're all facing now where it's so hard. A lot of people can't even save enough just to get by, let alone save extra for retirement. So it's a problem. And then also the education, I think a lot of people aren't taught,

• 9:42Speaker 04

  we're not taught in very many schools, how to handle our retirement, how to handle our retirement planning. And so a lot of folks don't even realize the importance of maxing out your 401k if you at all possibly can. You, you'll get a company match typically.

• 10:01Speaker 04

  That's free money. I think a lot of folks don't really understand that. They're just not taught these things. And so those are the three challenges that I think we're all facing.

• 10:11Speaker 03

  What is the formula that you have narrowed down in the formula for how much you need in retirement? There are a lot of numbers thrown out at us. There's always some new survey that says the average amount that you should have saved or want to have saved before you can quote unquote comfortably retire. It's in the millions. That can feel unattainable for so many people. It is unattainable probably for so many people, especially if they're only starting to really focus on this retirement piece of their financial plan in their late 40s or 50s. Some are 60. So realistically, what do you, how should we think about what we quote unquote need in retirement?

• 10:51Speaker 03

  And maybe in describing this calculus, you can instill some optimism because maybe we have it in our heads. It's like this big scary number, but actually, what is it? And actually, how can we get there with stitching together all of the different resources of money and working?

• 11:08Speaker 04

  Yeah, I like to recommend to people that they use financial planning software to really cement that information. And you can find this software online. It's like a hundred, $125. To buy that software where it tells you exactly for your specific situation, how much do you need to save over what period of time? And when can you stop working? I think for most people, it's like you said, it's really challenging. And for the typical family, you've got to start with just saving as much as you can and making sure you get, like I said, the company match and invest your money in the 401k properly, allocate the money properly.

• 11:52Speaker 04

  I've put a lot of these ideas in the book to help everyday investors deal with this issue. For people that can afford to have an advisor, then the advisor takes care of this, or they should anyway. If you're hiring a good advisor, you're going to have someone who has the software, is able to counsel you on exactly what steps you should take and how much you're going to need at what date and so on. But a lot of people I think are going to have to work longer. I really don't see much of a addition. I don't see another way out of that. And maybe even downsizing in retirement to a less expensive location perhaps, or just a less expensive home.

• 12:32Speaker 03

  You write also in your book about, you spend a lot of pages on social security, which is, it's funny, every week I go to look for big stories about personal finance. And some of the most widely read pieces on money on the internet are about social security. Every single week, everybody wants to know what's going on with social security? What's going to happen to it? But for the purposes of this episode, let's talk about the withdrawal of social security. What is your take on this? You call this in your book, claiming social security as something that can be extremely costly. Can you dive more into that for us?

• 13:08Speaker 04

  Yes, it can be costly if you don't wait long enough to at least your full retirement age, which for most people nowadays is 67. It used to be 66 recently, but let's say for current retirees who are looking into the future, age 67 would be your full retirement age. And I would recommend to people, if at all possible, to wait until age 70. Because if you calculate the amount of money you would get over your expected life, and you just mentioned earlier that people are living longer and so forth. So if you lived into your late 80s or early 90s, you'll get quite a bit more money out

• 13:48Speaker 04

  of the system if you wait until 70, as opposed to doing what most people do is they retire and start taking their social security between the ages of 62 and 65. 62 is the earliest that you can take your social security. And if you compare to the amount of money that you would get per month over your expected life to how much money you would get over your expected lifetime per month, starting at age 70, it'd be a huge, it'd be like usually for most people, a hundred, 200,000, sometimes more in lifetime benefits that you would get out of the system by waiting.

• 14:27Speaker 03

  Hmm. Yeah, you have the monthly benefit on average is about just shy of $2,000. But someone who waits until 70 can be closer to $5,200. That's quite a raise you're giving yourself by waiting five, seven years. We've done stories on people who live entirely on social security in this country. Have you ever met someone who's living entirely on social security?

• 14:50Speaker 04

  Well, not, not among my clients.

• 14:52Speaker 03

  Not among your clients. You're not managing their social security.

• 14:55Speaker 04

  They're not in that situation. They wouldn't come to me if they were in that situation. But my mother and my brother are both in that situation. My mother's passed now, but before she passed, she entirely relied on social security.

• 15:07Speaker 03

  And how did she do it? How did she do that?

• 15:09Speaker 04

  Cutting costs, managing her costs. She was an expert at, she influenced me greatly. And so I, I spend too little myself and she just managed her costs. She, she rented, she didn't own a place when she was living the last, let's say 10 or 15 years of her life. She rented and she rented a fairly inexpensive place and she made, she made it work. She didn't spend a lot of money on entertainment. She didn't go out to eat a lot or do anything that I think a lot of people, it's like I said in the beginning, I think you can save more, you can adjust your spending more than you think you can. There's some things, maybe you, maybe you don't go out to eat all the time. Maybe you cook in your, at home. Maybe you make sure you get rid of any high cost debt you have.

• 15:54Speaker 04

  There's some basics that my mother followed that allowed her to make ends meet and be fairly comfortable on that social security income.

• 16:05Speaker 03

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• 19:55Speaker 03

  For clients you meet where they're in their mid 40s to 50, they're probably, you could say 12, 15 years away from fully retiring or semi-retiring. What are some ways they can turbocharge their retirement, their approach to retirement investing? Let's say they've done everything K over the years. They've been investing in the 401k. Maybe they also have a Roth IRA. They're, they've got equity in their home. Maybe they're looking to downsize eventually and use some of that, tap some of that equity. But what are the things that people in midlife are just not seeing that will be their reality in retirement, financial reality that would, it would behoove them now to put, take some

• 20:39Speaker 03

  steps to, to make sure that they're protected better in retirement?

• 20:44Speaker 04

  Well, once you reach the age of 50, you get the, I can't remember what they're called, where you get-

• 20:50Speaker 03

  Oh, they catch up contributions.

• 20:52Speaker 04

  The catch up contributions for the 401k and IRA and so forth. So, once you hit 50, gotta take advantage of that. If you're a little bit behind, then that's a real easy way and a tax, a tax advantaged way of saving more because you've hit that magic 50 mark and the government now allows you to save more in your 401k or your IRA and that'll grow nicely over the years. So, that's one thing folks can do. And then again, if you at all can cut back on expenses some and try to find a way to put away more money, maybe even money above and beyond your 401k, if at all possible, get that into some kind of taxable investment account and let that grow.

• 21:37Speaker 04

  But for sure, you gotta, you gotta max out your, your 401k.

• 21:41Speaker 03

  Yeah.

• 21:42Speaker 04

  That's essential. And then you get the company match. Hopefully your company does allow a match. So, you know, these would be the kind of things, some of the things my mother did when she, when she was managing her expenses.

• 21:53Speaker 03

  And if you don't have a 401k, I guess you can always use a traditional IRA, right? You focus a bit on your book on the timing decision, when to retire. This is a mindset complexity, less a financial one for some people, you argue. So, what do you think people should do to ready themselves for that time? And what is the right time?

• 22:18Speaker 04

  Well, I think it's different for everyone. It might be a little later than you're hoping, depending on your financial situation. But also what I think a lot of people don't realize is that retirement is a mindset shift. It's a completely different, for a lot of people, it's a completely different setup. I'm going to be facing this myself in a couple of years where I'm used to working and saving and working hard and building up my business and so forth. And then in a couple of years from now, that's when I plan to retire and I'm going to have to find a way to deal with not having social connections at work and all of the other psychological issues that come with being retired.

• 22:58Speaker 04

  There's a lot of psychological challenges that people face when they're retired that they don't face when they're working. So, for example, when you're working, you don't have to deal with your own healthcare costs because it's usually taken care of by your company. But when you're retired, especially if you're pre 65, if you retire a little bit early, then you're going to have to deal with how to manage your, your costs for healthcare before you turn 65 and you can enter Medicare. So psychologically, there are many challenges where you have to think about, well, how am I going to manage my time in retirement? You don't want to be bored.

• 23:39Speaker 04

  A lot of people, there's some studies that I mentioned in there that, where people need a certain amount of stimulation, a mental stimulation during the day if they're not working, if they don't have that structure of work. You have to try to set that up for yourself in retirement to structure your day in a way that you feel like you're accomplishing something. And the other thing is also if you're working and you're like, you know, have had a good career and you're leading a team or something, how are you going to replace that with not working anymore? You know, the feelings that you get when you're an expert in something and people look up to you. You know, that's hard to replace in retirement. So, there's these challenges. When you're talking about when should I retire?

• 24:22Speaker 04

  I, I bring the point up that, well, when, should you retire at all? And when might that be?

• 24:28Speaker 03

  Should we call it something else? I feel like the word retirement, it's, it hasn't aged well in, you could argue. And if we're saying now, okay, well, actually, think about retirement as not quitting your job or quitting working entirely. Think about still making some money and think about maybe not tapping social security until you're 70. It feels like we're calling it this thing that has really evolved and we're stuck. We have this, the name, it hangs us up a little bit. And I wonder if there's a better, have you ever thought about that? A better way to describe it? One person, one time told me, let's call it refirement because a lot of people get going in retirement.

• 25:07Speaker 04

  Well, I think that would be helpful. I'll have to think about what would be good, but it is true. I, I agree with you that retirement has become this thing that people think, well, it's, it happens on day X. Okay, I'm retired now. And I think for most people, not only can they not afford to do that, but it's, it's just so much harder. I know with my own client base who can't afford to retire, I made sure that they can do that, but many of them still continue to consult and do part-time work after their quote unquote, official retirement date. And I might even do that. So, I do think that's important to not think of retirement as this instant transition where everything changes on a certain day. It's a, it's a transition period. It takes time.

• 25:51Speaker 04

  Some people, it takes years to adjust your, yourself to some new reality.

• 25:57Speaker 03

  Yeah.

• 25:58Speaker 04

  I think it's healthy to do that. And then you also might be getting benefits from working part-time where you get some of the benefits that you got from your job. Maybe people look up to you and you're the older person, so you have more experience. And so, there's, there's a lot of benefits. I know, I think a lot of people, I'm forgetting the statistic, but it's more than half of retirees work part-time.

• 26:19Speaker 03

  Yeah, I believe it. I believe it. But also, are they really retirees? It's like, they're just people in their 60s who have decided to not work 50 hours a week at a desk job, that they want to maybe do a little bit more free work, freestyle work. Let's talk a little bit about what, what is another traditional approach to retirement in, in retirement is the withdrawal strategy of 4%. That's shifting also. Can you talk a little about how in your practice, you've been fine tuning this, this withdrawal rate?

• 26:51Speaker 04

  Right. Well, what we do is we use that financial planning software I was telling you about where it allows you to know, okay, how much income can I generate from my investment portfolio and how much do I need? 4%, that 4% rule, it was actually never meant to be a rule. It was designed by a financial planner back in 1994, based on his research of that being a number that worked, if you look at all previous 30-year rolling periods, that 4% number was the amount that made all of those 30-year periods work for a retiree. But that is not really realistic because it ignores a bunch of things like taxes and

• 27:35Speaker 04

  expected returns on investments that shift over time. This 4% number has become too, too fixed, in my opinion. So, you can start if you're, if you're, for example, if you're willing to adjust your spending during bad economic periods, you can actually, the studies show that you can start your retirement period with a higher withdrawal rate than 4%, considerably higher. 5.2 to 5.6% is, those are the numbers that I've seen. But you have to be willing to adjust down your spending when you need to, if markets aren't favoring you and so forth. But using 4%, I think it's, it's too conservative-

• 28:17Speaker 03

  Yeah.

• 28:17Speaker 04

  -in general and it's, and it's too restrictive. People don't just spend 4% of some investment portfolio every single year. It, it changes. When you get older, you spend a different amount than when you're younger. And so, you don't want to be locked into this 4% rule because it's not consistent with a whole bunch of things, but it's not consistent with how you spend money in retirement. You don't spend the same amount every month for the rest of your life.

• 28:45Speaker 03

  How do you like to invest your clients' money when they're in their 60s? How aggressive is, is, is too aggressive?

• 28:54Speaker 04

  I think that people should be a little more aggressive than they might be thinking. You like this rule that you might've heard of or your, your audience might've heard of, which is take 100 and then-

• 29:05Speaker 03

  Or 110.

• 29:06Speaker 04

  -your age minus 100 or whatever. And so, if you're 60 years old, you should have only 40% of your money in stocks. I think that's too conservative. I think, again, because you said we're living longer and so forth. And if you're investing in a diversified portfolio that is properly diversified, I think you can have a higher percentage allocation. My clients typically don't go much below 50% in stocks, even when they're older, even when they're 70 or 80 years old. So, a 60-year-old to me would still be maybe 60% in stocks, maybe 65%. Some people even stay at 70% stocks, like where they were when they were growing their wealth in their 50s. But you have to be diversified and when, so what, you had asked me, how do I invest my clients' money?

• 29:50Speaker 04

  I put the money in what I call systematic evidence-based funds, which are funds that have characteristics that are very similar to index funds, meaning they're broadly diversified, they're tax efficient, they're very low cost, but they don't force themselves to track a popular index or a public index. Because I believe that index funds have a structural disadvantage over these other ones. And these are funds that your, your audience can buy these funds. It's not reserved only for advisors. Anyway, if you can find these funds that are very similar, they have all the advantages of index investing, but they don't force themselves to track an index.

• 30:34Speaker 04

  There's, that's what I would have your audience look for.

• 30:37Speaker 03

  So when you say they don't, they're not forced to, what are they investing? What are they tracking?

• 30:42Speaker 04

  They are, well, they're not tracking anything. That's the whole point. They're investing in a way that allows them to be able to trade patiently. So they capture the returns of, let's say it's an asset class, a broad asset class. So it could be stocks that are similar to what you'd find on the, on a public index, like the S and P 500 or something. So we have, just to give you an example, we have, I put these examples in the book so people can see sample portfolios if they're interested in doing it this way. You can have different asset classes, one of which being large growth stocks. That's what the S and P 500 is. So you can capture that return of that asset class

• 31:25Speaker 04

  without forcing yourself to mirror some kind of index. Cause indexes for the S and P 500, there's 500 names typically. And you, you want to be able to buy and sell patiently and own more things than are just listed in the S and P 500. Same for small stocks, same for value stocks. I don't know if you've talked with your, your listeners about the difference in these characteristics of these categories, but value stocks tend to outperform, small stocks tend to outperform. Other things you might look at are international stocks, international value, international, small emerging markets, all of these things, if you combine them all together. And so it's not as hard as I'm probably sounding. You just, you buy these funds.

• 32:09Speaker 04

  They're not index tracking funds. They have very similar characteristics to these index tracking funds. And you might have, if you were doing it the way I would do it, you might have six or eight or even more of these funds blended together.

• 32:25Speaker 03

  So as we wrap here, Dan, for someone listening, to do just one thing after this episode, they haven't read your book yet, they don't have a full plan yet. What's the single highest leverage decision that they should tackle this week to help them retire more successfully?

• 32:41Speaker 04

  Save as much as you can and invest your retirement money as efficiently as possible. We just talked about it. So in, in funds that have low cost, low turnover, tax efficiency, if, if you have a taxable account, that's what I would have people focus on is doing those things.

• 33:02Speaker 03

  Yeah. Check your 401K, check your investments, take advantage of the match, automate those payments because that's proven. It's the best way to stick with, stay the course. Dan Goldie, thank you so much. Your book is called The Retirement Answer.

• 33:16Speaker 04

  Thank you, everybody.

• 33:18Speaker 03

  Thanks for coming on the show.

• 33:23Speaker 03

  Thanks again to Dan Goldie. His book is The Retirement Answer. And as a reminder, I would love to know your midlife musings. I've got a very easy to fill out survey in the show notes where I'm capturing your questions, your thoughts about money, work and all the things in midlife as we prepare for So Money 2027's reboot into the midlife arena. Thanks for tuning in and I hope your day is so money.

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