Dan Haylett (00:00):

Human beings going into retirement will find every excuse to not spend their money because it it scares the life out of them. Seeing a capital thing deplete scares the absolute life out of human beings. We hate it. And so, it’s completely counterintuitive to enabling a fulfilling retirement.

[Music Playing]

Stephanie McCullough (00:24):

Hey, dear listeners, we need to let you know that Kevin and Stephanie offer investment advice through Private Advisor Group, which is a federally registered investment advisor. The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations to any individual. To determine which strategies or investments may be suitable for you. Consult the appropriate qualified professional prior to making a decision. Now, let’s get on with the show.

Stephanie McCullough (00:59):

This is Take Back Retirement, the show that’s redefining retirement for women. Retirement is an old-fashioned cultural concept. We want to reclaim the word so you can make it your own. I’m Stephanie McCullough, financial planner and founder of Sofia Financial, where our mission is to reduce women’s money stress and empower them to make wise holistic decisions so they can get back to living their best lives.

Kevin Gaines is my longtime colleague with deep knowledge in the technical stuff: investments, taxes, retirement plan rules. He’s a little bit giggy and quantitative, I’m a little bit touchy-feely and qualitative. Together, through conversations and interviews, we aim to give you the information and motivation you need to move forward with confidence. We’re so glad you’re here.

Stephanie McCullough (01:48):

Coming to you semi-live from the beautiful Westlakes Office Park in suburban Philadelphia, this is Stephanie McCullough and Kevin Gaines of Sofia Financial and American Financial Management Group. Say hello, Kevin.

Kevin Gaines (01:58):

Hello, Kevin.

Stephanie McCullough (01:59):

Today we have a special guest all the way from over the pond, yet another Brit in our midst. Dan Haylett is a financial advisor, podcaster, writer, sketcher. He’s just a great thinker on all things retirement. His podcast is called Humans vs Retirement, and we’ll get into his thoughts on this topic.

Stephanie McCullough (02:22):

Dan’s mission is to inspire generations of retirees to grab life and experience true wealth. He works helping people in retirement spend their time and money on what’s truly important. Can you see already why we think he’s great?

Stephanie McCullough (02:37):

His passion for understanding the emotional, behavioral, and financial challenges of life after work puts him in the best position possible to help people have the freedom and confidence to take full advantage of the gift of their retirement years. So, here we go with our conversation with Dan Haylett.

Stephanie McCullough (02:58):

Dan Haylett, welcome to Take Back Retirement.

Dan Haylett (03:01):

Stephanie, it’s an absolute pleasure to be here. Thank you for inviting me on.

Stephanie McCullough (03:04):

Oh, I’m excited for this conversation because you and I met at a conference, and you know it it was all like-minded people in the financial world.

Stephanie McCullough (03:12):

And the listeners might be surprised to know, but when I say like-minded, it’s the people who want to talk about the things that are not math and not numbers, we want to talk about the human side, right?

Dan Haylett (03:23):

Yeah. I’m that really rare financial straight retirement planner that hates spreadsheets, like don’t like them, can’t stand them. Which sounds really stupid to a lot of people, but I don’t like.

Stephanie McCullough (03:35):

Yeah. So, tell us more about that. You’ve said retirement is a human problem. Please elaborate.

Dan Haylett (03:42):

Yeah, I’m sure you will concur in this. When we as practicing retirement planners sit in front of our clients, and I think it becomes acutely you know, acutely aware very early on that this thing is is just not as much of a numbers or maths problem as we believe it is.

Dan Haylett (04:03):

People initially come to a financial advisor, finance planner, retirement planner, thinking that they need to be diagnosed with kind of a money problem. I’ve got a kind of a an enough problem, a pension problem, a 401(k) problem, a social security problem, a whatever this is.

Dan Haylett (04:21):

And I think quickly by asking a couple of really kind of you know just fundamental, foundational questions, you realize that this is actually more of a human problem than it is a math problem.

Dan Haylett (04:33):

And I say that because I think  this is like retirement as a concept is just brand new. What is it? 30, 40 as it’s the years old. And actually, I think I’m starting to work with what I think are first generation kind of retirement rebels.

Dan Haylett (04:48):

You know, these are people that actually don’t understand what retirement means. That they’re looking at their, their parents and their grandparents and going, “Well, actually that thing that they did that they called retirement is completely different to this thing that I’m thinking about that I’m calling retirement.” [Stephanie McCullough overcross: Yeah].

Dan Haylett (05:03):

And so, that kind of led me to go, “Well, this is, as much as the money is part of it, this is a human problem.” And I’ll share something with you that I’ve just thought about.

Dan Haylett (05:13):

This comes from a point of view that when we’re sitting in front of these clients and we’re having these conversations, it becomes, as I said, really quickly apparent that their problems are … and I’ve got five things. I’ve called it the Five Fs of kind of living or grabbing retirement by the proverbials.

Dan Haylett (05:32):

And so, I think about this kind of it’s like figure out who you are and who you want to be, right. So, kind of who we are and who we want to be is fundamental in understanding our identity going forward. And I think there is a big identity crisis when people are moving from a kind of a longstanding career to something a bit of the unknown.

Dan Haylett (05:52):

The other F is find and define your purpose, right. The purpose that we had before we are leaving behind, what does our new thing look like? What is the pullback, the duvet moment, or the bedsheet moment that we need to kind of figure out.

Dan Haylett (06:05):

Form your social networks is number three. So, we we know there’s multiple studies, studies that have lasted nearly a hundred years now in the Harvard study that tells us that our social connections are a big part of living a happy life.

Dan Haylett (06:19):

And actually, it’s the number one challenge for retirees is losing the social connections that work give them. So, they need to form new or build old social connections in a different form.

Dan Haylett (06:32):

People absolutely.. I’m sure we’re going to touch on this later, but people absolutely need to feel free to spend their money no matter what. You’ve worked very hard for this stuff. You now need to go and use it for what it’s there for.

Dan Haylett (06:45):

The psychological challenge of moving from a saving habit to a spending mindset, I think is some of our greatest work because I think it’s such a challenge for a lot of people to be able to do that.

Dan Haylett (07:00):

And then lastly, it’s about filling your time with meaning to create moments and memories. So, figure out, find, form, feel, and fill are those Five Fs. And I think they are the most important things.

Dan Haylett (07:15):

And by the way, I’ve not mentioned a number once. Maybe the spending thing is where we get involved in making sure we can create frameworks around this. But this is not about investing, this is not about the amount in the pot. This is not about asset allocation.

Dan Haylett (07:30):

This is about those five things because no matter how much money someone’s got, if they haven’t figured out or they haven’t gone through those five things, the money will have no meaning and have no impact. So [Stephanie McCullough overcross: Hmm], that’s a very long way for me to intro that thing, but I think it’s so cool.

Stephanie McCullough (07:47):

No, I love it. I think it’s huge.

Kevin Gaines (07:49):

Yeah. I mean, it really touches on — well, I’ll put it this way, first conversation stopper we probably all have with a new client or prospect is they say, “I want to know how much I can spend in retirement.” And we, we do not answer that question. We just reply with a question of, “Well, what do you want to do?”

Kevin Gaines (08:09):

And 9 times out of 10, 19 out of 20, it stops the conversation. Because unfortunately, most people don’t think of that in their 30s, 40s, and 50s. It’s only as they’re actually approaching retirement that it occurs to them maybe, hopefully it’s not a money thing. It’s what do I want to do thing.

Kevin Gaines (08:32):

But we do, as an industry, we do, frankly, a shitty job of talking to people about that. Which is again, one of the reasons we wanted to have you on, because you do a great job talking about that.

Dan Haylett (08:44):

I think it comes back to that point that, I mean, I’ve heard lots of good people that I respect say this. It’s that kind of you know there’s a huge amount of knowledge and experience sitting in financial advisors and retirement planners head and sometimes we get to you know we want to unload the textbook.

Dan Haylett (08:59):

It’s kind of like you know you want to unload the diagnosis of the problem of the technical thing. And it’s not that–I don’t think it’s a fault of people, right. It’s a fault of the overall industry that is wiring and training people in a way that doesn’t connect that. And I think we need to get…what we need to do is, as you said, tackle the foundations first.

Dan Haylett (09:22):

Because I think Mitch Anthony said something really cool, and I’ll completely get this wrong, but something like there are two things you need to understand in retirement, what you’re going to do with your time and how how much you’re going to spend. And you can’t figure out number two until you figure out number one right.

Dan Haylett (09:36):

So, like they come in, it’s this kind of like, how much? “Well, I don’t know. I mean, you tell me what you want to do.” Oh, and by the way, that question, what do you want to do with your time? I mean, unpack that. I mean that, how many layers do you want to go there?

Dan Haylett (09:50):

And actually, until we figure that out, knowing that it’s actually a problem that can’t be figured out because life happens tomorrow and the next day and the next day and the week after. So, it’s a continuous like guide and walking life and going through with people.

Dan Haylett (10:04):

We could continuously evolve that question and understand it and narrow down the options. That’s where this stuff is transformational. Not how much can I spend, see you later, go and spend that. Because the markets will fall by 10% in the next three years. And you’ll start questioning whether you can or can’t and pull everything back.

Dan Haylett (10:22):

And human beings going into retirement will find every excuse to not spend their money because it it scares the life out of them. Seeing a capital thing deplete scares the absolute life out of human beings. We hate it. So, it’s completely counterintuitive to enabling a fulfilling retirement.

Stephanie McCullough (10:41):

Ah, I don’t know which direction to go in. There’s so many good things to talk about. I want to get back to the whole spending issue because I see that with people.

Stephanie McCullough (10:49):

But before that, talk a little bit more about the who you want to be and how maybe listeners could start to think about that question themselves. Whether they’re looking forward to retirement or they’ve already left one career for something else. Like how do you even approach that question?

Dan Haylett (11:06):

Yeah, yeah.  I think it takes quite a bit of soul searching. I mean, I mentioned in my presentation at the conference that we met at, Stephanie, that hm Simon Sinek’s work is kind of very widely known. And many of your listeners, and I’m sure you have read the book, start with why.

Dan Haylett (11:20):

I love Simon Sinek. I think he’s got it wrong. I think it’s start with who, and I think there’s a layer down in this.

Dan Haylett (11:28):

And, because I think (and this comes to like money stories or what people call money) until you kind of figure some stuff out about yourself, i.e. who you were, who you are now, and who you want to be, and understand the relationship of those three things with money and career and time, it’s a real struggle to kind of think.

Dan Haylett (11:53):

And so, I think a lot of people will start to plan their retirement, I think will start to think about their retirement. Think, “Why am I retiring and what am I retiring to? And how am I going to do this?”

Dan Haylett (12:02):

And like anything, I do believe a little bit of soul searching just beneath that and going, “Well, actually I need to figure out the impact of money in my childhood because it will absolutely impact me. What I’ve observed with my parents, and my grandparents, and work colleagues, and uncles, and brothers and all that stuff that I’ve seen will actually impact me.”

Dan Haylett (12:20)

How many people have you worked with that have gone, “I don’t want to be like my parents.” And something along that, right.

Dan Haylett (12:26):

It’s kind of like, ——either blow the whole lot within two years and had to go back to work. Or they never spent a penny and I had to deal with a massive kind of issue at the end of it and I was really annoyed at them.”

Dan Haylett (12:36):

They don’t want to be like their parents or they say that and then they go down the path of being like it because they’ve got these kind of ingrained belief systems that they’ve observed from people. So, we need to kind of figure that out.

Dan Haylett (12:49):

And a lot of people won’t like to do it, but we know how transformational that is. So, just go back a little bit, figure out who you are today. So, your career, your status with your community and your workplace. What brings you joy, all of that stuff.

Dan Haylett (13:04):

Understand some what those things you’ll lose because when you think about retiring from a thing, there are things that you will lose that are lifestyle motivators.

Dan Haylett (13:13):

So, a lot of people, I think underappreciate the lifestyle motivators that come from work. They believe that work provides them with a paycheck. But work provides you with so much more.

Dan Haylett (13:23):

And then figure out like who you want a bit of … I mean, we’re a bit rubbish as human beings about kind of predicting the future. And it’s a bit challenging for us to kind of put ourselves in the future and figure out who we’re going to be. But I encourage everyone to give it a really good go.

Dan Haylett (13:35):

Think of a 3, 5, and 10 year window. I think most people struggle beyond 5. They might be able to get to 10. Beyond that you haven’t got a clue whatsoever. But, I think that.. I think that’s just a foundational, fundamental thing that start with who and figure out those kind of three phases, past, present, and future.

Stephanie McCullough (13:53):

Because it does drive everything, right. I mean, I think so many of us have been programmed to want what the world tells us to want or what our neighbors look like they want and the path we think we’re supposed to be on.

Stephanie McCullough (14:08):

So, it can be jarring sometimes to realize like, “Oh, that’s actually not that important to me. I don’t care about the country club or you know the fancy car. I want to do this other thing. Kind of go against the grain a little bit.” But that’s the key to really finding a fulfilling path for your future.

Dan Haylett (14:27):

Yeah. I’ve got a question for you guys right on this. I think it’d be really interesting to hear your thoughts, right. Do you think this is yeah you know a modern-day retirement, as I said before, this is kind of something that people are kind of coming into and there’s no, there’s no framework for this? They can’t observe people that have done it before.

Dan Haylett (14:42):

In an information rich always on world with mobile phone, do you think that thing is actually worse than it’s ever been?

Dan Haylett (14:49):

Like there are people now in their 50s retiring that are now, actually being influenced massively about the comparison, thinking about, not thinking about what’s true to them, but going, “I’m observing the people around me and I need to have this and I want that.”

Dan Haylett (15:05):

And I think that I’m seeing that a bit more. I don’t know whether you guys are seeing that.

Stephanie McCullough (15:08):

I feel like it, I think that comparison is worse. It’s in your face everywhere. The proliferation of media, but also just our phones are showing us at all times what… whoever decided to friend us on whatever social media is doing. And of course they’re only showing you the best things. So, yeah, I see it.

Kevin Gaines (15:26):

Yeah, no, absolutely. I mean, as humans, that’s one of our flaws anyway is that we want to keep up, inherently want to keep up with the Joneses. And guess what? On your phone or just this environment we live in today in general, it’s a lot easier to see what the Joneses are doing.

Dan Haylett (15:44):

Yeah. I wrote something about, you know about the human quirk of absolute and relative kind of outcomes. And I think wa—- I’d love listeners to kind of Google this stuff.

Dan Haylett (15:55):

Look at how we behave in absolute terms and relative terms and stuff like if we are earning a £100,000, but everyone around us is earning £50,000, that feels good, right. If we’re earning £150,000 and everyone around us is earning £200,000 or dollars, then that doesn’t feel as good.

Dan Haylett (16:19):

Like in relative terms, in in absolute terms, we’re earning more. But in relative terms, it feels rubbish. And it’s the same with comparison. It’s like you just don’t know.

Dan Haylett (16:28):

And we leave, the trouble is at the moment, I think we … and again, a real try and have this conversation with people I work with and encourage any listeners just to think about this in a bit more detail, think of stuff in absolute what means to you and don’t think of stuff in relative terms.

Dan Haylett (16:45):

Because if you start thinking in relative terms, nothing said gonna be —you you are always going to compare up right, and it’s never going to be enough.

Kevin Gaines (16:51):

Yeah. I want to get back to something you had mentioned earlier, which is looking at, or basically your life is defined within the structure of your work. I mean, that’s kind of how you you view a lot of things. Your schedule, your spending and everything like that. Then as you come to retirement, that structure disappears.

Kevin Gaines (17:14):

How do you help people start thinking of that structure changing earlier instead of them coming to you expecting it to be like a light switch of it’s like, okay, here’s work Kevin, flip a switch, “Hey, I’m retired Kevin.” And now, I can embrace all the possibilities, which if you’re trying to flip a switch, is really, really hard to do.

Dan Haylett (17:39):

You mentioned a really good work context, right. I think there’s a context thing here. I think I try and share stories of people that that have either come to me too late and it’s kind of like actually they retired and they were too late and they went back to work within nine months because they hadn’t figured this stuff out and all of that stuff. And you think—-

Dan Haylett (17:57):

And you mentioned even like a timeframe here. Look, I think three to five years out from pushing the button is is about or kind of really making that transition. Whether it’s a transition to kind of reduced hours, part-time work, more time volunteering, annoying people at the local DIY store or whatever it is that you kind of want to do. I think a good three years is a transition, right.

Dan Haylett (18:23):

And because… And we have a couple of exercises we go through with people about of– about what you are retiring from and to. So, the way that I try and frame this is go, “I think it’s more important to plan what you’re retiring to than what it is you are retiring from.”

Dan Haylett (18:39):

So, too many people focus on the from. They’re at a point where they’re going, I’m retiring from work because of it’s like age, don’t get on with it anymore, physically can’t do it anymore, all that stuff. There’s kind of what are you retiring from?

Stephanie McCullough (18:55):

Can’t deal with the office politics anymore. I’m fed up.

Dan Haylett (18:58):

Exactly, exactly. And there’s the whole bunch of people that actually get forced this, right. [Stephanie McCullough overcross: Yeah] So, and I think when you get to a point in life that you feel like you’re on the path towards thinking about the next phase of life, people call it the second act or the third phase or whatever it is.

Dan Haylett (19:15):

I mean, I don’t like retirement, but we need to stick with it and use it and redefine it, I think [Stephanie McCullough overcross: Yes]

Dan Haylett (19:19):

But I think if you realize you’re on that path … and I think big thing for me is that if you are say 55 plus, I think you should have an attitude that you are always kind of three years away from not having work anymore [Stephanie McCullough overcross: Hmm]. You have an attitude that you just don’t know what’s around the corner.

Dan Haylett (19:36):

It depends what you do. If you own a business, you could maybe have a bit more control, etc.

Dan Haylett (19:41):

But if you think like that, then you can actually have a bit of a playbook in place to go, “Well, actually, if this thing starts going the wrong way, I know that I’ve got some freedom and some choice to be able to think about what this looks like.” I’ve already thought about the first two years and what it means.

Dan Haylett (19:56):

I think there’s a couple of exercises, right. It’s kind of focus on what you’re retiring from, so what you’ll miss and what you can’t wait to get away from. And I think there’s an exercise that I go through where I get people to kind of rank certain statements in kind of a one to five importance.

Dan Haylett (20:12):

And it comes up with a bit of a score around actually are these lifestyle motivators or economic motivators that you get from work? And a lot of people are very surprised because they think it’s going to be very heavily skewed towards economic motivators. And it’s not.

Dan Haylett (20:26):

I actually haven’t had one person that has got more economic motivators than lifestyle. I’ve got quite a people that are 50/50, but a lot of people are kind of, and it’s like, “Ah, so, I get a lot from work that isn’t pay. Okay. So, let’s kind of unpack that.”

Dan Haylett (20:42):

And then this is about, I think, one of the tips that I give to people is that I believe you need to be more structured, particularly early on in retirement, about how you’re going to fill your day because your time is almost filled for you with work.

Dan Haylett (20:56):

There’s a sense of autonomy with your time. You go to work, there’s probably projects that are put on your desk. There’s people that either certain things that will happen. You need to be more intentional with your time. So, time is more important when you’re retired, but you need to be more intentional with it.

Dan Haylett (21:13):

And I would encourage people to go into kind of micro level. So, not only do you want to know how you’re going to spend your Sunday afternoons, how do you spend. Wha–what does 9:00 to 10:00 look like on a Sunday? What does the 11:00 to 12:00 look like on a Sunday? Are they certain things that you want to do and certain things that you want to get to?

Dan Haylett (21:31):

It doesn’t mean you absolutely kind of have to stick to them because the beauty of retirement is a bit more than that. But if there’s some scheduling around this, then I think you can really start to think about it.

Dan Haylett (21:40

So, a good three years away, think about what you don’t want as a sudden shock to this. What you want to do is retire once and retire amazingly. It’s not kind of I feel like I need to go back because I haven’t figured this thing out.

Dan Haylett (21:55):

And really work on how you’re going to spend your time, figure out who you want to spend it with, when you want to spend it, and work on what I call those go-go years.

Dan Haylett (22:04):

The most important time in your retirement is probably up to your early 70s. Because that’s when health and time is on your side. And plan those out as detailed as you possibly can. Because the more detail and the more structure you put it, put around it, the more that people can hold you accountable to doing those things.

Stephanie McCullough (22:22):

Hmm! And the structure and the accountability is around the stuff you want to do, right. Instead of getting pulled into what things other people put on you or or things you feel like you have to do.

Dan Haylett (22:37):

Absolutely. And that’s part of the planning process if you figure out what’s really important and figure out those things that you want to do. I wrote something recently about the two most powerful words in retirement are yes and no.

Dan Haylett (22:49):

It’s kind of say yes kind of scary growth stuff [Stephanie McCullough overcross: Hmm] because we want to keep going and say no to things that suck up your time and energy. And we need to get —-I think that’s a great life lesson. I mean, I struggle with that a lot.

Dan Haylett (23:03):

But I think even more important in retirement, when actually you are owning your time more than you’ve ever done, and there’s more importance on your time.

Dan Haylett (23:10):

Get really good at saying yes to scary stuff that will kind of get you out of your comfort zone, and push you, and grow you as a person. Because we’re growth beings, we love to push forward. And say no to things that truly does suck up your time and you don’t want to do.

Dan Haylett (23:24):

So, I think, you know that’s a tip that I would give anyone to think about that framework.

Stephanie McCullough (23:30):

I like it. Okay, let’s get back to the overcoming frugality. Moving from a saving habit to a spending mindset.

Stephanie McCullough (23:37):

I certainly have clients and I know people who don’t have a problem with the spending side, but I think I would’ve been surprised at the beginning of my career at how many people, like you say, it’s this habit they’ve been building up that nest egg, they’ve been building up that pot of money.

Stephanie McCullough (23:52):

And to see it go down, whether from markets doing their thing, but even more from their own actions, from spending. It’s like they’ve forgotten what the money was for. Like wait, why were you saving it this whole time? You’ve gotten there, here you are.

Stephanie McCullough (24:07):

What do you see are the human tendencies here?

Dan Haylett (24:12):

So, there’s so much to unpack here. I mean, it’s really interesting I mean, when I first start working with people, I did a kind of–I’d start talking about this stuff relatively early on and I get the kind of comeback or the phrase, “Oh, don’t worry, we won’t have a problem spending our money, right.”

Dan Haylett (24:27):

And I kind of take it and I’m like okay. No, I mean a lot I don’t mention anything. In my head, I’m going, “Yeah, you will. Yeah, you will.”

Dan Haylett (24:39):

And then you get through it and then you show them visually kind of money depleting and you can see the kind of the white starting to come in. And it’s like, “Oh, well, so you’re saying that I’m not … the capital’s going down. Oh no, I wanted to live off the dividends in the …”

Dan Haylett (24:55):

“Oh, no, no, no, no, no, no. Oh, no, that doesn’t feel nice. I won’t have any problem spending the return. Oh, that’s not what this is about. Like what you’re going to …”

Dan Haylett (25:06):

So, those conversations are really interesting, right as you go through. And I just think we have to understand that I think the predominant influence of our family, our parents and our grandparents were one of a savings influence, right.

Dan Haylett (25:23):

They didn’t have a pot of invested money like modern day retirees had. They had like final salary type pensions that provided an income. So, they weren’t spending any capital effectively, were they really? And not in the way that these modern day retirees are doing it.

Stephanie McCullough (25:40):

That’s a good point.

Dan Haylett (25:43):

So, for years we’ve gone save, get a job, have a pension, put some money into salary, save for house deposits, save for college education, save for children’s first house, save for holiday. I mean, everything’s saving, right.

Dan Haylett (25:58):

And actually, spending is very easy when the money’s coming back into replace the spending, isn’t it, from a psychological point of view. So, people go, “I’ve had no problem spending before.”

Dan Haylett (26:07):

And well, that’s because you’ve been earning a quarter of a million dollars a year, right. Of course you’ve had no problem spending before. You’ve been spending well but earning well and you’ve never seen like a depletion of anything.

Dan Haylett (26:18):

And so, I just think like people listening to this just need to give themselves a bit of grace and a bit of kind of time to think it’s okay because we’ve never experienced this before. And we will absolutely start to question the money’s longevity right but when it comes to it.

Dan Haylett (26:37):

So, that’s my point. It is a habit. As human beings, we have been conditioned, and I think the wider financial industry has been at fault for this, right.

Dan Haylett (26:46):

They’ve conditioned savings products, savings products, save more, save more. You need a million pounds, a million dollars in a pension. Keep saving, keep saving, keep saving. If you want enough, keep saving.

Dan Haylett (26:57):

And I think my problem is, and you talked about timescales, Kevin, in this as well, the problem is if you don’t build up to this, what you are effectively doing is going, “I’ve had this saving habit and Monday morning I’ve got to now, 180 degree this, I’ve got to flick the switch and go, I’ve now got to spend the money.”

Dan Haylett (27:18):

“Now, I know I’ve been saving for this moment, but I’ve actually not prepped myself psychologically to go, I’m seeing this thing.”

Dan Haylett (27:26):

And then it comes down to the point of that spending the capital. The money is there to spend, and give, in order for you to do the things that you want to do before you either can’t do them because you can’t you are unable to do them or you can’t do them because you’re not here anymore.

Dan Haylett (27:46):

And so, a sense of reality to try and bring into this around what are you waiting for? Procrastination is the thief of time. And you kind of go, “Well, oh, not quite yet, not quite yet, not quite yet.” And then you go, “Oh no, it’s too late. I can’t do it now.”

Dan Haylett (28:01):

I think we need to help people unlock that when it comes to … and there’s lots of research. I like research and evidence and science. I think that’s a really good thing to present to people.

Dan Haylett (28:12):

And there’s huge amounts of evidence now, that says real time spending falls in retirement by about 1% a year. You know, you will spend less in your 70s than you do in your 60s. You’ll spend less in your 80s than you do in your 70s. And so, people believe that they have to have this continuous like upline in spending.

Dan Haylett (28:29):

And actually, the reality is that you don’t. There’s a great study over here, and I would imagine it’s, it involved a bit in the states as well, but they’ve done this study, age 90 on average, retirees still have about 70% of their starting net worth on the table.

Stephanie McCullough (28:49):

Wow.

Kevin Gaines (28:51):

I believe it.

Dan Haylett (28:52):

Yeah. So, that’s a 30-year journey. So, they’d done a study, and it was people age 60, got to age 90, and they’d only spent 30% of their their wealth. Because don’t forget that’s a 30-year investment journey that they probably invested in a portfolio that’s got stocks and equities in it. I mean, like they just don’t spend it.

Dan Haylett (29:13):

And so, people are fearful of running out of money. And when I hear that, I present evidence to suggest that, by the way, you are never going to run out of money. Because that’s my point about retirement with a hundred percent success rate is a hundred percent failure rate, right. If we are going to never run out of money, you’re going to fail in this. So-

Stephanie McCullough (29:31):

So, say a little bit more about that because you know, I don’t think the listeners really know Monte Carlo inside and out, right. But when we say in our world a hundred percent success rate in retirement, that means right, kind of no matter what occurs in all the scenarios we can think of, you’re going to have enough. Is that right, Dan?

Dan Haylett (29:49):

Yeah, I, I mean, absolutely. So, from our speak, absolutely. But also, I think when a client comes to us, I think they– I do believe without any, without talking to people like us, I think they believe a hundred percent success rate is having money left at the end, right. I think that’s what they feel.

Dan Haylett (30:05):

And obviously, you want some money left at the end, right. You don’t want– But I think their version of success is that to continue to be frugal and to have this thing for the rainy day [Stephanie McCullough overcross: Yes]. I need to always have this thing for the rainy day, and that’s success. And if I sacrifice life in the meantime, at least I’ve got this thing that I’ll never touch. But weird, I don’t get that.

Dan Haylett (30:30):

So, it’s kind of saying that, yeah, from a Monte Carlo or kind of a success rate of a planning point of view [Stephanie McCullough overcross: Right], then of course it’s a failure because ultimately all you are doing, you’re not … and so, there’s investment returns. You’re not spending your money, you’re being frugal. You’ve got an amount of money left on the table.

Dan Haylett (30:48):

It’s not the money that that annoys me. It’s the memories and experiences that you haven’t got when you could have got them that you’ve left behind. Forget the pounds or dollars. It’s those things that you could have done.

Stephanie McCullough (30:58):

Ding, ding, ding, ding, ding, ding, ding. That’s the thing.

Kevin Gaines (31:02):

Here’s the thing about the Monte Carlo or the percentage of success scenario. In order to get that a hundred percent, that means the worst possible situation out of 10,000 possibilities, 100,000 possibilities, you still succeed.

Kevin Gaines (31:19):

Which means the market plummets the moment you retire, inflation goes through the roof, you are sick the entire time, but it doesn’t kill you.

Kevin Gaines (31:30):

I mean, the worst possible scenario, and you still have enough money. Which means all these other times you end up with so much more money than you ever thought possible.

Kevin Gaines (31:41):

And what could you have been doing to enjoy your life?

Dan Haylett (31:46):

I think do you know what’s really, really important, Kevin, I think is how our clients, people, the public people that aren’t kind of financial professionals, people that are seeking retirement advice, I think it’s really important what they hear and how they hear it. How we as financial professionals frame this for people.

Dan Haylett (32:05):

So, a couple of things for me is that you we can’t and people return– that people can’t view their retirement as success and failure. This is not binary outcome. It’s not black or white [Stephanie McCullough overcross: hmm]. This is the chance of future adjustments, right. That’s how I would reframe this.

Dan Haylett (32:20):

So, if your plan on a Monte Carlo thing and and says there’s an 80% success rate, now there’s a 20% chance that in the future, you’ll just have to make some adjustments to the plan.

Dan Haylett (32:33):

Now, if we don’t believe that we’re going to make adjustments to our life and our plan going forward, then we’re sorely mistaken. Life isn’t just this line that goes from A to B, it’s got every wiggle in the middle.

Dan Haylett (32:45):

So, I think that’s one thing for me, the framing around …and and actually if we frame it like that, if I said to someone, “Oh, by the way, there’s a 35% chance in the future that we’ve got have a that we’ve got to make some future adjustments.” That sounds okay.

Dan Haylett (33:00):

“Oh, by the way, actually there’s a 50% chance at some point in the future, we’ve got to make some future adjustments.” I still think that sounds okay. If I say, “Oh, by the way, there’s a 50% chance your plan will fail.” I mean, that’s horrendous. I woluld– I wouldn’t accept that.

Dan Haylett (33:14):

So, I think making sure that people understand that, that it’s a future adjustment led thing, you know, life isn’t linear and there are spending adjustments and life will naturally kind of ebb and flow and that spending will come off as you get older.

Dan Haylett (33:25

And then the other thing is I like to frame this thing in the way kind of chance of overspending or underspending [Stephanie McCullough overcross: hmm]. So, if we can, if the Monte Carlo simulation or the financial plan that someone says has got like a 75% success rate, I would say that’s a 75% chance that you’re going to underspend. [Stephanie McCullough overcross: Ohhh]

Dan Haylett (34:47):

Yeah, So, And then reframe that again. Oh, by the way, let’s go 50%, which on Monte Carlo simulations would scare the life out of financial planners, right.

Dan Haylett (33:56):

So, I’ve got clients with a 50% Monte Carlo simulation, and I’m very comfortable because there’s a 50% chance that they’re still going to underspend because the outcomes are so wide.

Dan Haylett (34:08):

Now, if I see this thing tracking along the wrong way, then of course we have discussion. There’s a cash pot over here to make sure that the markets don’t dent this thing. We’ve done that.

Dan Haylett (34:17):

There’s a thing over here. We know that you’re going to spend hard over the next five years. We’ve identified the trip here, and the gift there, and the trip there. We know that’s not going to be in tenure, da da da. Planned life on top of it.

Dan Haylett (34:28):

You, you know. And for the listeners hearing this, I think trying to frame this in a way that makes sense. This is not success or failure, this is not binary, this is not black or white.

Dan Haylett (34:38):

This is about future adjustments, continuous chance of underspending when there is a chance of overspending, then great financial professionals like yourselves have got stuff in place to make sure that that doesn’t happen. That’s kind of what it’s about.

Kevin Gaines (34:53):

And, yeah, I think that’s an excellent point. When we get back to the you know like the flaws of the financial planning software that most of us use, is it assumes you don’t make changes, it just plugs in. Whatever it starts with is ongoing and never ending.

Kevin Gaines (35:14):

But, but let’s face it, we’re going to make adjustments as we go along. And a lot of people, unfortunately, advisors as well, don’t necessarily always understand this. Or to your point, they do a really lousy job of explaining it.

Kevin Gaines (35:33):

How do you get your clients comfortable with the idea of, I guess, variability or willingness to make adjustments?

Dan Haylett (35:44):

Yeah, I try and have conversations about getting comfortable with uncertainty. So, I think that’s kind of the the you know … I try and get people to go back in their life and go, how many times was you uncertain about the decision that you’ve made, and things worked out or you you made future adjustments to things and all that.

Dan Haylett (36:01):

And actually, you’re not going to do that alone anymore, so we’re going to walk this with you and be behind you. I try and make sure they’re comfortable with that.

Dan Haylett (36:10):

So, being comfortable with uncertainty, knowing that this isn’t a straight line, and there will be future adjustments that we’ll probably have to be made.

Dan Haylett (36:21):

And actually, getting people prepped in advance, I think is really important. So, go back to the days when COVID first kind of hit, I had a conversation with someone yesterday and that’s like four or five years ago, which is stupid. Like it feels like it was two years ago, so-

Stephanie McCullough (36:37):

Right, right. Over four.

Dan Haylett (36:39):

Yeah, I know. I mean, in a world where it felt like everyone was panicking, we made some phone calls to people and those phone calls were like, I was like, “Is it how are you feeling?” They were like, “Yeah, no, I’m good.”

Dan Haylett (36:50):

We’ve talked about this, haven’t we? Like we’ve done that scenario. Markets are down, we know what’s going on. We know we can continue to spend. Oh, by the way, we’re actually not spending a lot more anyway now, because things have locked down. I know it’s a unique situation.

Dan Haylett (37:03):

But I think one, get comfortable with uncertainty. Two, like pre-prep yourself for the things that will happen. It’s not a when, it’s not an if sorry, it’s a when [Stephanie McCullough overcross: Right]. Markets every three to five years will do that. And every kind of 5 to 10 will do that. And every 15 will see a big thing. So, what does that mean? And we know the playbook when that might happen.

Dan Haylett (37:27):

I think that getting comfortable with, with kind of living in a world of kind of there’s a chance of running out of money. But if that chance becomes, becomes too big in my eyes, then we, we will make some adjustments to this and we will kind of then reevaluate what to do going forward.

Dan Haylett (37:46):

But yeah, that—that’s tough conversations because we, a human beings are certainty animals. We like the letters A and B and a lovely straight line between them and get to this thing. We love certainty. We seek out certainty. And I think the financial industry has preyed on certainty for years, right. It’s kind of they’ve tried to deliver certainty for people. But I think that one phrase, getting comfortable with uncertainty, knowing that this is a– we’re guiding you along the journey. We’re doing this together, and we will react when we need to react in these particular frameworks then that helps that conversation. Does that make sense?

Stephanie McCullough (38:21):

Hm, hm. Totally.

Kevin Gaines (38:21):

Absolutely.

Stephanie McCullough (38:22):

So, how have you aided people in seeing that the fact that their balance is going down over time is a good thing, right, instead of like that panicky feeling.

Stephanie McCullough (38:33):

I had one client who literally, without discussing with me, went back to work, got a new job that she hated because she didn’t like the idea. She hadn’t even spent any of her money, but she didn’t like the idea that she was going to have to start spending her money.

Stephanie McCullough (38:49):

So, I made her quit. It took about nine months, but she finally quit this second job. And we like, we’ve done a thing where we have a little trick where we’ve got two accounts and like this one’s going down, but we haven’t touched this one yet. And of course, we’re going to start filling from the other.

Stephanie McCullough (39:03):

But like what have you seen work? I really do struggle with this.

Dan Haylett (39:07):

Yeah. So, a couple of things. I’m a massive believer in the we need to give money, what what I call asset, … forget asset allocation, right. We need asset location and asset assignment. So, where our money is held and what it’s for. I, I’m a big, I think every pound and pence, dollar and cents, I forget I’m an international audience.

Stephanie McCullough (39:28):

It’s okay.

Dan Haylett (39:30):

Every dollar and cents needs a job, right. [Stephanie McCullough overcross: Yeah] It needs a job. Otherwise, it’s meaningless. So, for me, the two things are asset location. So, where it’s held.

Dan Haylett (39:40):

And predominantly in in my mind, keeping this really simple, it’s kind of cash or stocks, [Stephanie McCullough overcross: Yeah]. Right? Or stocks and bonds like an investment portfolio, but ultimately stocks, rihgt. [Stephanie McCullough overcross: Yeah].  And then you time segment that.

Dan Haylett (39:56):

So, you go, this cash, the location of the cash is really important because I want you to tell me what the non-negotiable items, non-negotiable things that you want to do over the next three years, that if the market’s fell by 15%, you would be really annoyed that you felt like you couldn’t do.

Dan Haylett (40:16):

Or your brain would start ticking off and you’d start reading the papers and you’d start questioning whether you can do this. What are those things?

Dan Haylett (40:22):

And I picked three years because again, I think timewise, it’s really difficult for us to kind of stretch ourselves out, right.

Dan Haylett (40:28):

So, think over the next three years, new car, home improvements, children’s weddings, big holiday, 60th birthday celebration, all this stuff. Outside of the normal expenditure that you’re kind of thinking about, what are those things?

Dan Haylett (40:39):

Oh, by the way that goes in cash, I don’t care the interest rate, I don’t care all this stuff, I don’t care about return. That’s money that needs to be set aside for you to feel free to spend no matter what happens. That money is located in cash and has a job.

Dan Haylett (40:51):

The assignment is what I call Spend with Freedom [Stephanie McCullough overcross: Yeah]. So, that’s the bucket. Spend that with freedom, don’t worry.

Dan Haylett (40:58):

You can have kind of an an emergency cash bucket. You can have this thing that allows you to go into cash to generate some or draw some income if the markets fall by a certain level and et cetera. But that’s another story. So, spend with freedom.

Dan Haylett (41:11):

And then that means the investment part is located in stocks and predominantly stocks and bonds. Because the job of that is to provide you with an income now and in the future and protect you against, which I think the number one risk in retirement is inflation, right. The cost of future purchasing power.

Dan Haylett (41:29):

And then, so if I’ve got three years here, what happens to the markets here actually is irrelevant, right. So, you kind of go, “Well, the markets are down 10% in the last two months, Dan.” Who cares?

Dan Haylett (41:41):

It doesn– I mean, we’re not taking money for the next two months out of here, right. I mean, it’s drawing an income. We can take income and we know the, the parameters that we can take the income from, but it’s got its job.

Dan Haylett (41:52):

So, that spend with freedom bucket is the most important work that we do with clients on an annual basis. We ask them to give us two numbers over the next 12 months and over the next three years, what is those extra ordinary things that you would be … and I actually kind of say, what would you be really, really annoyed with that you couldn’t do? And that’s the things that I want. So, that’s kind of one thing that I do.

Dan Haylett (42:18):

And very quickly on another thing is, I’m a big believer and I’ve done some sketches around this, and I’ve written about this, but I’m a big believer in giving your money away with a warm heart, not a cold hand.

Dan Haylett (42:29):

So, this is now, about going to people. Well, but surely you would want to spend your money. And when I say spend, I include giving it away, right.

Dan Haylett (42:40):

So, as a wrap here, spend your money on the things and the people that are most important to you now, or in the future whilst you’re alive, to see the benefit and the impact of the thing that you’re spending your money on.

Dan Haylett (42:54):

Because there’s a whole body of research about what you know giving away money makes us feel amazing. Particularly if we see the impact of it and we see … you know how many

Dan Haylett (43:03):

I mean, I’ve had clients sit there and go, “My parents died with loads in the bank, and I yet struggled buying a house and buying my first car.” And they’re going, “I don’t want my children to do that.”

Dan Haylett (43:14):

So, actually, I think that is having a positive impact on some of my clients because they’re going, “Well, actually, I really want to help them while I’m alive. I don’t want to see them struggle. What’s the point in giving my money to them at the end of my life when they’re 50 and they probably don’t need it. It just kind of ends up going somewhere that’s not needed.”

Dan Haylett (43:32):

So, I think trying to frame ourselves, spend with freedom bucket, and make sure that we feel like we are going to see the benefit of our money, do things for the good that we want it to do for the people that we want it to do for.

Dan Haylett (43:43):

So, you take away that legacy thing, right. Your legacy can be left well before you are dead, and you can see your legacy in motion. You can see the thing work. So, we’d like, I’d love that personally.

Dan Haylett (43:56):

And I think the vast majority of people that we would work with would want to see that too. They’re just scared about the whole running out of money thing. And I think we can help people get over. It takes time. It’s not a one and done thing, right.

Dan Haylett (44:09):

I think people become more comfortable, give away more regularly, maybe in more volume as they get along their journey.

Dan Haylett (44:18):

So, it’s kind of I think put the oxygen mask on yourself first. Look after yourself. You’ve got a good window to kind of spend money and your children will probably want you to spend money on yourself and go and enjoy your retirement.

Dan Haylett (44:29):

But there’ll be a point when it starts becoming more apparent that there’s going to be a load of money left. So, let’s have a good program of giving that away and seeing that impact the people you want to.

Dan Haylett (44:38):

I mean, just a very quick story. I mean, I’ve got clients that it’s taken a while to get them there, but they’re absolutely giving their money away now, in not massive volumes, but they’re doing it regularly to the children at certain moments.

Dan Haylett (44:51):

And they read Bill Perkins book, Die with Zero. So, I think it’s a great book and I’d encourage … I mean, there’s some parts that I think are a little bit … but the message is really cool in that book.

Dan Haylett (45:01):

But then what they’re doing now, is they’re bringing forward gifts of items. So, that guy has –the wife has got her nans and moms — so, it was her nans, was her mom’s, and now, is her ring. This kind of a ring. And it was in her will to pass down, but her daughter loves the ring.

Dan Haylett (45:20):

And she’s like, “I’m in this mode of kind of giving people now.” And she’s give her the ring as a birthday present now, instead of on her death. “I want to see her wear this. She loves it. I think I’ll never wear it. I want to see her wear it.”

Dan Haylett (45:32):

So, not only is kind of the planning work that we do about giving money, I think giving time, giving energy, giving possessions that you might have, that you kind of think would’ve been left post death. Is it—And their mindset and their joy and their happiness has gone through the roof, right.

Dan Haylett (45:50):

It is totally different speaking to them now, about what they’re doing and what they get joy from. Which is magical.

Stephanie McCullough (45:57):

I mean, that’s what we’re trying to help people do, right. And they look at us, they think, “Oh, you’re the money people.” Yeah, but the money is just a tool. We’re trying to help increase the quality of life.

Stephanie McCullough (46:11):

Alright, Dan, this has been great and obviously we could go on forever and ever because we love this stuff, but we need to let our listeners get on with their day. So, where can people find you if they want to follow you? You’ve got a lot of good content in the world.

Dan Haylett (46:25):

Yes, so, the main place to visit is my website. So, I’ve got a podcast, I do a lot of sketching, I write a lot. I’ve got a face for radio, but I still try and video some stuff. So, will-

Stephanie McCullough (46:39):

You do that.

Dan Haylett (46:41):

You can have a look at me for that. So, Humans vs Retirement is the name of the podcast, but it’s also the name of the website. So, humansvsretirement.com, have a look at the podcast. I’ve got a load of sketches.

Dan Haylett (46:52):

So, a lot of the stuff that I’ve talked about today, I try and sketch out and make it a bit more punchy and hard hitting. They’re all free to download and people can go and get them.

Dan Haylett (47:01):

So, that’s the main place. But I’m on Twitter or X (whatever it’s called now) and I’m on LinkedIn, so happy to connect to anyone. Yeah.

Stephanie McCullough (47:09):

Awesome. Thanks so much for being with us today.

Dan Haylett (47:11):

Thank you so much for having me and it’s been cool talking.

Kevin Gaines (47:14):

Thank you.

[Music Playing]

Kevin Gaines (47:19):

Alright, Stephanie, I really don’t know where to start here. I mean, the man’s, not only did he speak my language, he’s actually, another redhead. I mean, it literally could be me with a cooler accent.

Kevin Gaines (47:31):

But probably one of the more interesting things I think we discussed, and this may get a little bit more esoteric, is understanding that the retirement structure today is not the retirement structure a lot of us grew up learning.

Stephanie McCullough (47:51):

Or this, or actually seeing an action, right yeah.

Kevin Gaines (47:53):

It’s not this pension heavy, monthly check, external monthly check heavy port. It’s, we’re on our own. Good news is we have a lot more flexibility. Bad news is, it does create a little bit more uncertainty, but it’s also something we’ve never seen before or not used to seeing [Stephanie McCullough overcross: Right]

Kevin Gaines (48:17):

We saw for a hundred years people had pensions and now, all of a sudden we’re trying to readjust our thinking [Stephanie McCullough overcross: Yup]. And, and it’s different.

Stephanie McCullough (48:29):

It’s a big switch from accumulating and being proud when you see that pot of money, whether it’s in your 401(k) or your investment account or wherever goes up and then all of a sudden what you have to actually deplete it. Even though we know intellectually this is the reason we were saving it, it’s still a hard switch.

Stephanie McCullough (48:49):

I like his stories about clients are like, “Yeah, we’ll have no problem. Oh wait, what? What do you mean?” It is difficult.

Stephanie McCullough (48:57):

But I really appreciate his reframing of it. Just like we’re going to have to make adjustments if things don’t go as we maybe anticipate. And guess what, things are not going to go as we anticipate. Life’s going to force adjustments on us anyway.

Stephanie McCullough (49:15):

So, his whole idea of getting comfortable with uncertainty and that it’s partly our role to help people frame that and expect it as just normal. I think that’s interesting for the listeners hopefully, but also, a wake up call for people in our profession.

Kevin Gaines (49:34):

Oh, it really is. I mean, just again, the conversation of how to phrase things. A lot of the tools we use are geared more towards saving for retirement as opposed to spending in retirement [Stephanie McCullough overcross: Yup].

Kevin Gaines (49:51):

When we’re actually in retirement, the conversation is how do I spend as much as I can without guaranteeing total failure?

Stephanie McCullough (50:03):

I think we do have to acknowledge that Dan lives in the UK, and and healthcare is handled differently over there. So, maybe the potential looming scary costs of long-term care or major health concerns in later life might be a little different, right. So, I think we have to put that out there.

Stephanie McCullough (50:25):

And yet I really appreciate his bringing us back to the idea of you know don’t wait until the end of your life to give things away, even if it’s modest amounts.

Stephanie McCullough (50:36):

I think that should be, and it is increasingly in my work with clients, it’s part of our regular conversation is the giving part, whether it’s to family or causes or whomever. How can we do it? How can it fit in?

Stephanie McCullough (50:50):

Because it is a way to bring meaning and often learning and social connections and other bits that he was talking about at the beginning that make retirement successful in a human sense, right. Giving money can be connected to some of those things.

Kevin Gaines (51:07):

When you’re dead, are you really going to see the people enjoying the money? Depending on your philosophy of the afterlife, maybe, maybe not, but wouldn’t you rather see it today?

Kevin Gaines (51:18):

So, incorporate that into your thinking as you’re trying to embrace this great unknown, which is really the post-working years is this unknown. It is completely open. It’s a blank canvas that you can do anything with.

Stephanie McCullough (51:37):

We hope you enjoyed this conversation. We hope it was food for thought. We look forward to continuing the discussion with you. Thanks so much for being with us. We’ll talk to you next time. It’s goodbye from me.

Kevin Gaines (51:46):

And it’s goodbye from her.

[Music Playing]

Stephanie McCullough (51:51):

Be sure to subscribe to the show and please share it with your friends, show notes and more information available at takebackretirement.com. Huge thanks for the original music by the one and only Raymond Loewy through New Math in New York. See you next time.

Voiceover (52:06):

Investment advice offered through Private Advisor Group, LLC, a registered Investment Advisor. Private Advisor Group, American Financial Management Group, and Sofia Financial are separate entities. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. This information is not intended to be substitute for individualized tax advice. Please consult your tax advisor regarding your specific situation.