Why Retirement Spending Is More Than a Budget for Dentists – Episode #604

On this episode of the Dentist Money Show, Matt and Ryan discuss the complexities of retirement spending for dentists, highlighting how habits often continue or increase during retirement. They talk about the psychological aspects, the gradual nature of retirement, and the importance of purpose beyond financial independence. Tune in for practical tips on planning your financial future.

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Podcast Transcript

Intro: Hello, everybody. Welcome back to another episode of the dentist money show brought to you by dentist advisors. Today, we have a great show. Ryan and I talk all things retirement, in true Ryan and Matt fashion. We go all over, the topic of retirement. We talk about spending, finding meaning, just the definition of retirement. We have a lot of fun with this as always. We hope it brings some value to your life, a different perspective. while we share our experience, hope you enjoy the show.

Ryan Isaac: what are dentists going to spend in their retirement years when they’re old? What are you going to be spending when work is winding down and old age is creeping on up?That’s the question for today.

Matt Mulcock: This is a big question.

Ryan Isaac: This is a big question. What have we, let’s start with what we’ve always taught people about spending and spending data that we’ve not only seen from the data, but have seen just in our own practice. Let’s begin there. What have we always seen with spending trends

Matt Mulcock: Two parts of this. So I guess I’ll just answer first. we’ve always told people you’re going to spend what you spend now or more. Like whatever, whatever you’re, whatever you’re spending now in your working years, going into retirement, especially the more data we can gather three, four or five years of data more but like if you’re, if we have three years prior to you retiring of your lifestyle, you know, That’s what you should be planning on spending. That’s what you should plan around. there’s a couple of reasons for that. Not only do we just see this with dentists, right? There’s the, the data or anecdotally what we see from day to day doing

Ryan Isaac: Hundreds of people. I mean,

Matt Mulcock: Hundreds and hundreds of dentists. And we’ve seen, we’ve done this for a long time, so we’ve seen it in our own data, but also I think Ryan, the other part of this too, is I would just say like psychologically. You’d rather plan for that. and it’s better to kind of, like we talk about risk management, most people don’t realize risk management. Part of it goes into that is having some wiggle room in it when it comes to like. Things like spending, right? Um, and so we, we just tell people like, you might as well plan on this, even as opposed to saying what we hear a lot is, Oh, well, no, I spend it now. But like, I’m not going to spend that in the future. It’s like, yeah, it’s super easy to be disciplined in the future. Really easy.

Ryan Isaac: Yeah. Future Ryan totally won’t spend

Matt Mulcock: The problem with the future is it eventually becomes the present and most people are not disciplined in the present. So that we just always tell people plan on what you’re spending now.

Ryan Isaac: What would you say, Matt, to someone who’s like, I hear that, but my mortgage will be paid off before I retire at age 63. That’s a 6, 000 payment. So that’ll just be freed up immediately. What would you say to that based on data and what you’ve just seen

Matt Mulcock: Yeah, I’d say first of all, absolutely. That’s a huge number that will be freed up. The other thing that will be freed up as your time. And when time gets freed up, generally what happens is spending goes up with it. So we’ve seen in most cases, it’s not dollar for dollar. But usually what happens is you replace that, you replace that with something else. There’s another aspect of this psychologically of you feel like that’s like a bonus.

Ryan Isaac: Yes, yeah,

Matt Mulcock: You, now you’re no longer spending 6, 000 and now you’re, whether you would admit it or not, we all do this. We’re all humans. I think psychologically, we think, we look at that 6, 000 that just came off the books. As like almost a bonus, like almost like house money. And I think we see this all the time. So not only are you increasing your time, which increases your spend, but also just psychologically, you’re like, Oh, well, that’s not money I was saving anyway, so I’m just going to spend it.

Ryan Isaac: Yeah,

Matt Mulcock: It’s going to be equal.

Ryan Isaac: It’s gonna be equal, and to that point, when you see people, when debts come off the books, like mid career, that absolutely happens. People are like, Oh, finally that payment’s done, now we’re gonna get that house we always wanted. Now the upgrades are coming. Like, we just Psychologically, you’re used to that money going out the door, you’ll find a place for it. That’s typically what’s gonna happen.

Matt Mulcock: Yeah, that’s exactly right. Or, or again, time’s opening up. So now you’re going to travel

Ryan Isaac: Yeah,

Matt Mulcock: You were doing. One trip a year again, I think we actually see this more with dentists than anybody. If you think about the fact that dentists feel this, like, well, I can’t take a vacation because if I’m not there, I’m not producing. And so that all of a sudden opens up all of a sudden that one vacation turns to three when you’re retired or four, it’s just, again, you’re going to replace that again, maybe not dollar for dollar, but it’s going to be pretty dang close.

Ryan Isaac: What about, Matt? my kids will be out of the house by then, and I won’t spend as much when my kids are adults.

Matt Mulcock: I would say again, true. And I think the most expensive part of life is Ryan, unfortunately, where you are right now, uh, for when it comes to children, uh, when it comes to like that high school, going into college age, I think that’s probably the most expensive time for children. but again, I would say what we see in most cases is you’re a, if that’s the case, two parts, again, you’re going to replace that same thing we just said. You’re going to feel like it’s as bonus, but also kids are out of the house. Well, where are they going? Are they moving across the country somewhere else? Guess what you’re going to want to do. You’re going to want to go

Ryan Isaac: Wanna go see him. Yep. And the grandkids. Yep.

Matt Mulcock: What habits were established in regards to the dynamics of money used from your children in you? So if you think you’ve given your kid, and again, this is case by case, but let’s just assume you’ve given your kids whatever they wanted in high school. They just come to you for money. You think all of a sudden they’re in college and that’s going to stop?

Ryan Isaac: I mean, it, 100 percent does not. The habits they begin as, like, mid teenage years are the habits they will start college with. I’m watching that with my kid and some of her friends, and she’ll comment on a lot of that stuff, too, and Yeah, it

Matt Mulcock: Dynamic you’ve created.

Ryan Isaac: You’ll just continue it, which is the whole point of the retirement spending. The dynamic you create in your pre retirement spending is what you’ll do post retirement spending. Yeah, I believe that fully. Okay. So the reason why we, we we’ve always been saying this and teaching this because this is what we’ve seen. And this tends to hold true. a few weeks ago, this was kind of a funny exchange, like maybe a couple of months ago. I don’t even know who sent this email. It’s like a vendor that emails

Matt Mulcock: Yeah, we both got it. And with the same day

Ryan Isaac: It was in within five minutes.

Matt Mulcock: Five minutes of each

Ryan Isaac: Yeah. I immediately forwarded it to you. Cause the, data was this email on some two studies. We’ll talk about that show that retirement spending goes down for retirees. I sent it to you and you had already started drafting an email saying, let’s talk about this on the

Matt Mulcock: I literally was no joke drafting an email when I saw yours come through. And I was like, Oh, I was just sending you a pot. Like this is going to be a good podcast.

Ryan Isaac: Yeah, it’s hilarious. So, well, this is so funny. Um, on my phone, I pulled up like the outline here and it’s a podcast, that Reese had done, like, Nine years ago. I’m spending. It’s the wrong one. I have the, I have the right one on my computer. Anyway, I was like, that was kind of funny

Matt Mulcock: Yeah.

Ryan Isaac: I was like, why

Matt Mulcock: Just go. You, let’s just use that one.

Ryan Isaac: It’s so old that it actually has Reese colon. And what he’s going to say, Ryan colon,

Matt Mulcock: You guys used to

Ryan Isaac: Script. Yeah.

Matt Mulcock: The script. I love

Ryan Isaac: When we were concise and not funny, um, we’re still not, we’re still not funny.

Matt Mulcock: You’re like, were you funny now? I don’t think we are.

Ryan Isaac: Okay. So one of the studies that came through was from JP Morgan and these were like, These are huge studies that were done, and they were recent. I think both of these, if I see the data, they were both 2024 studies. Yeah. And then the other one’s Transamerica. But first, J. P. Morgan’s study.

Matt Mulcock: Hey, wait, before we get into

Ryan Isaac: Yes, yeah, yeah,

Matt Mulcock: Say one thing? so the other thing that we’ve quoted a lot, I’ve quoted it on the show before. This is from the good old fidelity days, we had a lot of study and research done either internally, or we would just pull data at fidelity to share with people and I’ve never forgotten this, this is like pretty well known, like in the financial advisor space of this particular data or the results of this data. And what they used to call it, at least when I was at fidelity, they’d call it the retirement smile, meaning the graph ends up looking like a smile. So I just wanted to double down on this of like what we’ve told people is spend, you’re going to spend exactly what you spend now, or maybe more. The data that we always used at Fidelity was that again, it was pretty robust data was actually what happens is your spending usually will go up in the early years of retirement, depending on when you retire. And there’s some, the intuitive part of this is again, what we said more time. You’re still young ish, you still have the health and you’ve been holding back maybe of traveling and doing the things you want to do. So your spending will most likely go up in those first, let’s say, 5 to 10 years. So if you’re looking at it on a graph, again, it would start at a higher point of your baseline spending. It would gradually come down in your middle years, because you’ve kind of, Scratch that itch. You’re now more of a homebody, or maybe you’ve traveled where you want to travel. You just want to hang with grandkids, whatever. And then it starts to go back up on the backend. That’s where the smile comes in because of health issues later on in your life.

Ryan Isaac: Part Yeah.

Matt Mulcock: So anyway, I just wanted to point that out that I’ve, we’ve also referenced that kind of data, but it’s, it’s consistent with what we’ve said, which is. In a lot of cases, just plan on your spending being the same or even going up early on in retirement.

Ryan Isaac: Yeah, I totally think that. So here’s a few points from, thanks for sharing that from the JP Morgan study that I just think are interesting that we could talk about first here is that, and, maybe there’s some preface here. There is perception when people talk about retirement. And I think this is especially true in dentistry. There’s a perception that it’s an event that happens overnight on a Friday evening, and then Monday morning, it’s that’s it. and that is not the case at all. And especially in dentistry, which offers career opportunities for people to phase out, and phase into other parts of the industry, other parts of the practice, teaching, consulting, leadership, whatever. I think it’s just worth noting that. Well, I mean, do you find that, do you think that’s true that people perceive that retired, like in their heads, they think retirement is this event that just happens on a Friday night and then it’s just over and then it’s like, it’s this cliff that just happens. I think people think that, but that never ever happens for most people.

Matt Mulcock: Yeah. I don’t, I think this is one of the bigger issues, one of the bigger, like non financial issues that comes up with retirement is like defining what it even means to you.

Ryan Isaac: Yeah. Uh huh.

Matt Mulcock: That’s step number one of all of this. And I don’t think enough people put enough thought into this of like, what does this, what does this even mean? Like retirement’s this thing thrown around a lot. They could mean a lot of different things to a lot of different people. and so, yeah, I think that’s a really good point. People aren’t even necessarily thinking about, I think they’re just thinking like retirement. Like they imagine kind of the proverbial older couple on the beach or the, they’re sitting on the, That you just wake up one day and you’re like, well, I’m going to go out to my deck. Everything’s done now. And it’s just, that’s not the case. It’s not an event. It’s usually a process.

Ryan Isaac: It’s a process. Yeah, you don’t go normally four days a week, full production and then zero or like you used to own the building and now it’s just gone, magically. Everything’s gone. You also don’t crack open all of your retirement accounts simultaneously and tap every dollar at the same time.

Matt Mulcock: We’ll sell it all to cash.

Ryan Isaac: Yeah, yeah, these, yeah, and And I don’t think anyone really actually thinks that, but we are, I, a lot of people kind of just go on with the notion that that’s how it’s going to work because they ask questions around like, what about, you know, the first day of retirement when you’re, what you just said is true. It’s like a slow process of probably a decade, especially in dentistry, where it’s a slowdown, it’s transition to other jobs in the practice or the industry. so what brings that up is one of the points in the JP Morgan study said that over half of the couples in this study Don’t retire simultaneously. So there’s always one partner or spouse still working at least part time. And I think that’s really worth maybe dwelling on for a second, because I know you’ve had these conversations. I have them all the time too. I think maybe all of our biggest financial tools that we have and like the, the thing that we, the biggest advantage we have financially is our ability to work and earn anything. And I don’t care if someone goes from making a million dollars to making like 60 grand, you know, in retirement, cause they’re like going to put in a few hours here and there at a school or teach a little bit, not having to pull that 60 grand out of your portfolio will, I mean, if we ran a spreadsheet or had Robbie sitting here, he could tell us like how exponentially impactful that is to not even have to pull a little bit out, you know, just saving a little chunk of that money, by continuing to work. So this reminded me of the first part of the study saying that half these couples have at least one partner spouse still working at least part time. I think reiterates our experience, validates our experience of what we’ve seen, which is dentists, it’s a very slow process and they’ve got like kind of their toes still dipped in some income producing activity, either them or their spouse or both for quite a long time. And I want to like tell people how good that is. Like, it’s really good if you can maintain whatever it takes, your mental, physical, emotional health, so you can keep having Uh, a little piece of work and economic output and income as you go into retirement. What, what do you think about all that kind of like that slow, that fade or like working as long as possible. We were joking earlier about 29 year olds who fire their retirement and they’re done early. And like, what do you think about working as long as possible though? That’s a whole different thing.

Matt Mulcock: I think this is huge. I’m so glad you brought it up because again, it comes back to this idea of like, what does retirement even mean? And it’s different for everyone. We’re not here judging anyone. Like this is what should be your definition. But. I think one of the risks here is that is what exactly what you’re saying is not totally understanding what retirement, Is going to mean beyond the finances of like what you’re saying, like loss of purpose, loss of like this identity that you have, especially for dentists. You go from I’m the man or the woman, or I’m the person running this thing. this is my baby that I built, assuming you’re a practice owner. Even if you’re not, even if you’re an associate, I put all this

Ryan Isaac: Career is your baby. Yeah.

Matt Mulcock: Your baby. And you think just overnight, you’re going to flip that off, even if you’re financially able to. And. Just go off and live a different, a completely different life.

Ryan Isaac: Especially the more high achieving you are.

Matt Mulcock: Exactly. It’s this paradox, right? It’s a, it’s a paradox that’s created of, I don’t even know where I heard this. It was on another podcast, I think, or maybe it was a client meeting. I really don’t remember. It was on a zoom like thing. So this is where I live. So I don’t know which one it was, but, I’ve never really forgotten this kind of conversation. Again, I forgot the details, but. The person said, I’m convinced that the people that can retire early never will, or they’ll be miserable when they do.

Ryan Isaac: Hmm. I believe it a hundred

Matt Mulcock: Holy cow, that is like, totally right. And again, it has nothing to do with money.

Ryan Isaac: No, no, no,

Matt Mulcock: Um, it’s the, what you just said, the more high achieving you are, The more you’re going to lose your identity when you retire.

Ryan Isaac: Do you see this with, let’s, let’s take a really prevalent example in the industry right now. mid career, maybe mid to later career dentists who aren’t done yet, but sell to DSLs for huge amounts of money. Mathematically, they could be done and they still go works. They do, they, they still are like full time doing something.

Matt Mulcock: They work more

Ryan Isaac: They work more in some cases. Yeah,

Matt Mulcock: They get addicted almost to the, I don’t know what it is, whether, whether it’s the stress, whether it’s the identity, whether it’s the,

Ryan Isaac: That’s just what they cultivated. What it, what it took for 20 years to get to that point is, is the opposite of what it takes to just do nothing. Like the personality that they built over decades to achieve that much is the total opposite of the personality that can just shut it off and do nothing.

Yeah.

Matt Mulcock: And to, to this point, don’t underestimate and fail to acknowledge. The addiction you have to making money from your efforts, meaning because you might say, or someone might be out there listening and saying, no, man, when I retire, I just got this huge passion to go do X, Y, or Z thing, whatever it is. And I’m my response to that is, is it going to make you money? Because if it’s not, you might, and again, there are situations out there where someone’s like, I’m going to go volunteer at this school and that’s what I want to do. Make no money. I’m like, awesome. I don’t, I think you have to at least sit there and try to acknowledge the psychological impact it’ll have on you by not making money, even if it’s a passion project,

Ryan Isaac: You’re totally right. it’s those people who don’t even need the money cause they’ve made so much, but there, there’s a direct correlation between the effort and the reward of money or wealth building. And it’s, I mean, it should feel good when you’re a high achieving person. It should feel very good to be able to be capable of that kind of stuff. And so,

Matt Mulcock: To this point, Ryan, when you have used as a proxy, good, bad, or indifferent, success, the measurement of success is my ability to generate income. You better be investing in more than assets to make that transition.

Ryan Isaac: Ooh. What do you mean by that? Dig

Matt Mulcock: Like, you better, you better be investing in, well, number one, hobbies and things and purpose, things that can, you can find a purpose in outside of, of your work, but also investing emotionally and psychologically into the work that it takes to find an identity outside of generating

Ryan Isaac: Yeah, your health, your relationships,

Matt Mulcock: Relationship. Exactly. And, and with this mindset of like. It might have personality, like the whole, you know, know thyself, like it might have personality that can walk away, find identity and purpose and other things. And the answer might be no. And that’s okay.

Ryan Isaac: And that’s it. It is. Okay. Yeah. What a paradox actually to think of. I mean, I would say dentists just as a profession are very high achieving individuals, intellectually, financially, from a business standpoint, whether you own or not. I mean, they’re just high achieving individuals in the human race period. It is an interesting paradox because the, the things that drive them to the success that they achieve are some of the, the characteristics that make them skip and ignore the other parts of their own development throughout life. And it can be very, very hard. We’re now on a very different subject than retirement. It does spending

Matt Mulcock: Does this happen? We hope

Ryan Isaac: Think it’s very relevant though. I think it’s really relevant

Matt Mulcock: We never do this.

Ryan Isaac: We never, this is not, we were joking before this, we’ve actually sat multiple times in studio and just talked and then never hit record and then ran out of time and had to leave.

Matt Mulcock: Multiple, I can

Ryan Isaac: Almost did it

Matt Mulcock: Multiple hands. How many times we’ve done that? We’re like, Oh, well, I guess we can’t record now.

Ryan Isaac: Guess we ran out of time. We’ll do this later. I think it’s all relevant though, because that is the typical experience of a dentist and especially a successful high achieving dentist. Now in this study, that’s interesting too, though. Is. So like I said, more than half of the people in this study have at least one spouse still or partner still working at least part time, but the people who have partially that’s considered partially retired, those people spend more money. So I think this validates our experience of dentists still spending more money in retirement or the very least what they were used to spending because dentists are kind of partially retired people. I mean even if you own Let’s say a commercial building and you still have like management of a commercial building. Are you retired? Like, are you done or is it still work? You

Matt Mulcock: Yeah.

Ryan Isaac: Like I, they’re still involved in a lot of ways. If you went from four days down to one, or you go teach a day a week, or you have a partner, a spouse who works part time or something or teaches or something the income, the cycle, what is that? Is that the psychological, the income coming in? So it still feels like you’ve got cushion and you’ve got room to go. You got runway. Is that what it is?

Matt Mulcock: Or you just have, like, I think, I think a lot of us, yeah, I think a lot of us, especially living in America, let’s be honest, we attach value to income we’ve created or we create from. Our selves, our work, our skillset. So, but again, it comes back to this idea that you’re talking about. That I think is so pertinent, even though we go off on these side tangents, we hope they’re helpful. Um, we have fun talking

Ryan Isaac: I like it.

Matt Mulcock: Like it. Yeah. So, but again, I think this critical definition of what is retirement or is retirement financial independence to me, retirement has to be a lot more than I don’t have to work anymore. There’s so much more to it than that. So much more. And Hey, by the way, I’ve talked to plenty of dentists that are like, I cannot wait to hang up my hand piece and go sit on a beach somewhere and rot for three months and never think about anything just with a book in my hand and the water on my toes.

Awesome. If that’s what you want, that is

Ryan Isaac: To a three month rot. A three month rot.

Matt Mulcock: Go rot for three months, rot for six

Ryan Isaac: Rot

Matt Mulcock: Just be intentional about it.

Ryan Isaac: Yeah, now I hear it, but again, those people won’t last much longer. I don’t think they’ll hit three months, even maybe three

Matt Mulcock: Would be shocked. It would be shocking. I think you’d week three and be like, I’m going crazy.

Ryan Isaac: So here’s what’s interesting, in this data where I think. Again, this is, I mean, we built an entire business saying dentists are different and their lives are different and their experiences are different in every possible way. This study was done for people making up to 150, 000. This JP Morgan study,

Matt Mulcock: The first thing I noticed when I

Ryan Isaac: Were you going to notice that too, which is like no dentist by that time,

Matt Mulcock: No.

Ryan Isaac: They’re making more than that.

Matt Mulcock: Yeah. Triple or more.

Ryan Isaac: So what, what’s interesting though, just from percentages, I think that’s, it does, it is interesting to see the data. So by retirement age, 60 to 64, the average spending for this, this study is about 75 grand, which means that it’s, people are spending about 50 percent of their, and you just laughed at 75 Greg’s. You’re like, we have clients spending that per month. No joke, like actually no joke, no kidding. I have clients right now spending that per month. No kidding. So that is kind of funny, but to me, that tells a story of how people’s spending trends as a percentage of their income. So in this study, we’re showing that people are spending about half of their income, which right off the bat, if we look at our data from our dentists, our dentists on 25 and 33%, like a quarter to a third of their income in healthy situations is their personal spending

Matt Mulcock: And there’s a reason for that. Right. It’s, it’s, it’s simply because the percentage goes down as the income goes

Ryan Isaac: The income goes up? Yeah, higher income.

Matt Mulcock: We’re talking about 150 K earners here. You know, we’ve done this data before and we’re, we’re going to roll this out here pretty soon with the new wrapped episode. but the last time we did this, it was in the four hundreds for average income. So it’s apples to oranges. Yeah.

Ryan Isaac: Yeah, very different as a percentage. This is interesting though the decline From this study the decline from age 60 to 70 in spending as a percentage is about 13 percent Meaning what these people are spending at 60 Goes down about 13 percent at 70. But what it goes down from 60 to 80 is it’s over 30%. It’s over a third. So this also measures with, it also tracks with what we’ve always taught Matt, which is. Your spending is going to maintain pre retirement into retirement. It might even spike in early retirement because all the time on your hands But it will go down eventually as you near your 80s Purely out of physical and time limitations like you just don’t feel like getting on a plane that much or shopping that much or going traveling that much so purely because of like physical limitations in 80s, which is What the data has shown before that we’ve talked about. I think this bears the same kind of thing. what I thought was really interesting too, is, where did it say this? it also said that the house households, around this income mark also splurged in the first few retirement years. I think that also tracks with dentists. You were saying that earlier, you finally have all this pent up demand for like travel and spending and. You’ve got like, and it also psychologically feels different when you’ve got that much liquidity. If you just sold a business, you’ve got seven figures sitting liquid in a bank, plus everything you’ve saved and you’ve got some rental income, some social security, it just feels like a chunk of money to do some playing with. Like you got some walk, you got some walking around money.

Matt Mulcock: Walking around, some, some walking around money.

Ryan Isaac: Well, hold on. What’s the movie with Will Ferrell. And he’s talking about, is that Gator

Matt Mulcock: I’m walking around money. Yeah.

Ryan Isaac: Cause I’m walking around money in his

Matt Mulcock: Yeah. It’s the other guys. So good.

Ryan Isaac: Other guys, one of the most underrated comedies ever made the other guys. a couple of things from the JP study that I thought was interesting. And these were the categories that changed a lot. So no, no question. Everyone knows this healthcare expenses goes up with age. I thought this was interesting. Housing is the largest consistent expense. But it decreases over time. So I think that’s interesting in terms of, how people behave with houses. We downsize, but we don’t downgrade like the percentage that it occupies in our spending is pretty consistent. No one goes from the million dollar home to the 300, 000 home. Sorry. We just don’t, we don’t do it.

Matt Mulcock: I rarely if ever

Ryan Isaac: Just want to do it. So housing stays consistent. I thought that was interesting. And then travel and entertainment was a big category that declines. It says in this study significantly after age 65.

Matt Mulcock: Which again, it makes, it makes sense. It makes sense because again, you’re on the youngest side of retirement. If you’re retiring, let’s say late fifties or early sixties, you want to splurge, you want to do your big trips. You want to do all that after a while, whether 10 years in, I think you kind of start to lose your, your luster for that.

Ryan Isaac: Yeah. You’re like, we did it.

Matt Mulcock: You just adapt to it.

Ryan Isaac: Yeah. You get used to it. It’s exciting for awhile. You have the time and the money and the health still hopefully. anything else you want to say about the JP, any of the data or the chart that you’re seeing there? If not,

Matt Mulcock: The other one that I thought was interesting that, maybe, I’m not surprised, maybe I am surprised, but the spending declines significantly with age, except for two categories. The healthcare, which we already knew, but higher charitable contributions.

Ryan Isaac: I was going to say, yeah. So yeah. Talk about that. That’s

Matt Mulcock: Well, I just thought that was interesting. And I wonder, I wonder it, it doesn’t say it here, but the first thing I thought of nerd alert, financial advisor coming in. the first thing I thought of was, qualified charitable distributions with RMDs, so you can like donate your RMD. Via qualified charitable distribution to eliminate the taxes. So I was like, Oh, maybe that’s what it is. They’re like doing it more from a tax perspective, or maybe elderly people just start to feel more, a different, a different purpose in life. And they’re like, I want to give to other people.

Ryan Isaac: They’ve shaded all, they’ve, they’ve shed all that like jaded middle life, like cynicism. They’re like, I love people again. Like I, when I was a kid,

Matt Mulcock: Yeah

Ryan Isaac: You’re like, you’re nice when you’re a kid, you’re nice when you’re old, you’re like giving away money. What about Matt? Do you think, Oh, go ahead,

Matt Mulcock: Well, the other thing I think is interesting about this particular thing is it breaks down the top retirement fears and what the top one is running out of money. But the data shows that people that retire have higher charitable contributions.

Ryan Isaac: Mm hmm.

Matt Mulcock: Kind of like, Oh, it’s

Ryan Isaac: Those are those are they’re Juxtaposed

Matt Mulcock: Just juxtapositions a

Ryan Isaac: Are they juxtapositioned?

Matt Mulcock: Yeah. They’re

Ryan Isaac: Yeah, you’re scared of running out of money But they tend to give more I wonder if people man This is probably a whole other episode. it makes me wonder if people on the charitable thing, if they give more because maybe something changes in them, but maybe they see the lump sum of money that they’re sitting on that feels like maybe it’s bigger. Maybe it is bigger than they can spend. Maybe it’s not as big, but it seems bigger while they’re still also scared. Maybe you can just two things are true at the same time. They are scared of running out of money, but they’re like, I feel more charitable and I’m seeing all this money sitting here. I don’t know. Interesting. The transamerica study. So what I thought was interesting about this, there’s this pie chart in there and I don’t know. And sometimes I’m like, marketing’s a little misleading because when I read this email, I thought there’d be, I

Matt Mulcock: Are you talking

Ryan Isaac: Would be, I thought there’d be some like irrefutable evidence that re you know, people are spending less money in retirement. And I thought this is kind of a, this would be a cool change because it would take a lot of pressure out people. But in this pie chart, it’s like 50 percent of the people in the study, in the trans America study, which was pretty big. I can’t remember. It was a pretty big study.

Matt Mulcock: This thousands of people.

Ryan Isaac: Yeah. I found it said it decreased. But that wasn’t quantified. It just said a decrease in expenses. The other half either stayed exactly the same or went up. So it was like 40 percent and then 10%, 40 percent stayed the same and then 10 percent went up. So when I saw the pie chart, I scrolled down to it. I was like, all right, that doesn’t, you know, the 50 percent to decrease, what did it decrease as a percentage? If you go to the JP study, not much,

Matt Mulcock: Yeah

Ryan Isaac: Not much. some notable things I thought was interesting from this one, from the transamerica one. that I think people would find interesting. The median age for when people take social security is 63. I know you probably have talks about this with people. I just had one with a client this week. Even when people don’t need the money, do you find more clients just taking social security earlier, starting the payments earlier? And if you put it on a spreadsheet, people know this, it takes like into your eighties for it to catch up or

Matt Mulcock: Yeah, about 80 is the benchmark or sorry, is the breakeven point. Yeah, I actually,

Ryan Isaac: Then 80, you don’t even like, you’re not even spending the money anymore. You know,

Matt Mulcock: I know it’s actually interesting that you brought this up. I just talked to a client about this who literally just retired this year. and we, we’ve been planning this for like three years and social security has come up multiple times. This is not a specific advice to anyone out there. This is general, just

Ryan Isaac: Not advised consultant attorney or a CBN.

Matt Mulcock: But I’ve actually shifted my perspective on this depending on the situation, but I used to in my fidelity days, again, coming back to like my origin story here. the narrative was always delay, delay, delay, as long as you possibly can.

Ryan Isaac: Yeah. Cause the money’s more, it’s

Matt Mulcock: well, you, you

Ryan Isaac: 1500

Matt Mulcock: Eight. 8 percent a year in income, every year you do it after you’re qualified. So it’s like, Oh man, this could be significant. I’ve actually shifted my focus a little bit or my, my opinion. I actually am more like. No, I think you should take this money now in most cases, in a lot of cases my client in particular, I was like, Oh, I don’t know. It’s the

Ryan Isaac: Are they wealthy? Is your client in this case? Are they wealthy without this money? Are they

Matt Mulcock: They, they do fine but it definitely takes a lot of pressure off of their portfolio

Ryan Isaac: Oh, then it’s then for

Matt Mulcock: They would be fine either way. Like I told him this, I said, you’ll be fine. Either way, I see a scenario in which you’re fine. there’s some things happening in his life of like big expenses he wants to make. And I just said, listen, based on what I’m seeing, not only that, the psychology of this, of just having income coming in, you just retired, and now he’s rushing a few things that he was gonna wait on. And I was just like, listen, I think you need this money. Just psychologically. you want this income coming in. So I’ve actually started to tilt more. So in more cases, take your money now. Don’t like, just take it out of the government’s hands. You put it in your pocket

Ryan Isaac: And you’ll be taxed on if you take it early cause you probably have other income and, but you’ll still get, yeah, like, like you said, you put it on a spreadsheet. The break even for that taking early versus weight is like 80.

Matt Mulcock: And to your point, you’re not even spending it anymore.

Ryan Isaac: You’re now you’re statistically anecdotal. Your spending is already going down by 80. for sure. I’ve run the same thing. I’m sure you have too, with very wealthy clients who don’t even remotely need their social security and they still take it early for that exact reason. They’re like, yeah, just take it out, tax it. And then I’ll just put it back in an account. Might as well start. yeah, anyway, that’s

Matt Mulcock: And the max it’s taxed, by the way, the max amount it will be taxed is 85 percent of it.

Ryan Isaac: Yeah.

Matt Mulcock: So it’s not even a hundred percent taxed.

Ryan Isaac: A hundred percent of it’s taxable.

Matt Mulcock: Exactly

Ryan Isaac: Another interesting thing from this study And from this transamerica one many retirees stop working earlier than planned Do you think I was gonna say do you think dentists retire earlier than they think they’re going to as a whole? They don’t because like the ADA studies, it’s almost 70 years old now, but our clients are a different

Matt Mulcock: Different breed

Ryan Isaac: Every time I tell a client averages, I’m like, I have to couch this with an asterisk that this is an average for our client base, I mean, for the 600 plus of you, you are special people. You you’re, you’re doing things. You have behaviors and systems and processes and disciplines and successes that are not average across your industry, across your peers. so when I say this, Or I’m asking this, do you think our clients in your experience so far will and have retired earlier than they thought or in, retire, let’s say started slowing down sooner than they thought

Matt Mulcock: Yeah. I’ve seen,

Ryan Isaac: Or have the ability to,

Matt Mulcock: Yeah, I’ve seen both. and this is again, off the cuff, just general, like what I’m kind of thinking is my

Ryan Isaac: You can’t back this up with any facts at

Matt Mulcock: No facts, no data, but just my general vibes, but here’s kind of what I’ve experienced. The younger you say you’re going to retire, the more likely you’re going to work beyond that point, the more average or later you say you’re going to retire, the earlier you’re going to, or like, you’re most likely going to retire sooner. So I’ll give you an example. When I talk to people who are like, I’m out of here at 45 I’m like, funny joke, you know, like, no, you’re not. And, and, and I’ve, I’ve yet to see any client that I have that I’ve talked to that, and I have a couple of mine I’m thinking of right now that I’ve been working with for years, that when they came on board, they’re like, Matt, I’m out of here in three years. Like, I’m retired in three years. Well, I’ve been working with them for longer than three years, and guess what happens every single time? I could do this a little longer. I’m

Ryan Isaac: Of like it and almost the more the more successful they become the pressure keeps going down And they’re just like this actually isn’t so bad. It’s rather fulfilling.

Matt Mulcock: Yes,

Ryan Isaac: Create. It’s a creative outlet.

Matt Mulcock: Yes.

Ryan Isaac: Yeah.

Matt Mulcock: But flip this, flip this. The clients who tell me I could do this till I’m 70, like my dad did. And I’ll just kind of, I’m just going to chill. Most cases, I don’t think they’re making it to 70. I think you start to get burned out in that mid to late fifties,

Ryan Isaac: That’s

Matt Mulcock: No matter what you’re doing.

Ryan Isaac: Such a good call. Yeah, what an interesting mental emotional dynamic around work and success and of needing to, of having to, why you’re in it for the first place. Yeah, that’s really interesting. I think there’s one more thing I wanted to say. Oh, I thought this was interesting. A top financial priority in this trans America study was paying off debt, which shows that people are going into retirement with debt. Still. What did you think about that? Cause I was like, Oh, I didn’t expect to see that as a, I mean, it makes sense. Logically, that’s a top priority. Get rid of debt when you’re in retirement, but people having debt to still get rid of that is just, man, we are not in the day and age anymore of like our, let’s say grandparents and older generation where you’re just debt free forever. You know, like you do business school, life, housing, cars, like debt free forever, we’re just in a different world. Debt is just a tool that feels like it’s going to be with us forever. But that just shows, I mean, this wasn’t a study of dentists. This is just ordinary, average, non superhero people, normies, as they’re called outside of the Avengers.

Matt Mulcock: Normies, these are the

Ryan Isaac: That’s interesting, man, that people are, these are the muggles, yeah, the mudbloods. Uh, but they’re, they’re going into retirement still with debt to pay off. What did you, yeah, that, that you saw that too, that was like interesting.

Matt Mulcock: Based on the people, to your point, these are non dentists that, it’s house. Most people, I think it’s just their, I’m, I’m going to assume it’s, it’s their house or car other, like, you know, be these people like, yeah, driving around a car every they’re buying a new car every three to four years, just continue to recycle that debt. And then I’m going to guess their mortgage is in most cases.

Ryan Isaac: Yeah, I would say so too. I just thought it was really interesting. and I, it makes me want to reiterate all the time for a dentist that getting to a point of financial independence where, or at least work is optional, is not independent of having debt. It’s just your net worth. So your net worth has debt.

It can have debt. If your net worth is big enough, work is optional and that’s independent of having debt or not. And so, if dentists are carrying debt to build good companies And grow and they know what they’re doing. then it’s, it doesn’t concern me to go into retirement, quote, unquote, with debt, which doesn’t bother me.

Matt Mulcock: Well, like you said, it’s just a calculation. I know plenty of plenty of dentists who are financially independent with, with debt on the back, like significant debt on the balance sheet, because they’re running multi location type businesses, practices kicking off cashflow. They’re independent financially with their whole situation, but they still got debt. Like that’s not, those two things are not mutually exclusive.

Ryan Isaac: Not, not anymore. anything else you want to say about any of this data for you? Like wrap up or anything. And I have a question for you.

Matt Mulcock: No, I mean, I think it’s good. I’ll just summarize that it backs up what we’ve seen for the most part. Uh,

Ryan Isaac: That was my question. Fine. Now my question was, does this change your mind on how you view spending for a dentist going

Matt Mulcock: Not at all. Not at all.

Ryan Isaac: Me, me either.

Matt Mulcock: Reason it being I think it’s fun to go through. I think it’s fun to go through and see, get some perspective. I would say again, my biggest reason being is this data. Number one is like, okay, 50, 50, you might increase or might decrease who knows. but also it’s not based on dentists and, I am not sitting here being like the young kids being like, this is my truth, but I’m just saying that I, this is like, this is like the, where I’m, over indexing on what I’ve seen over seven years of doing this, Ryan, you longer than that, and hundreds and hundreds, if not thousands of dentists we’ve engaged with, I focus more on that. What we see then than this. And by the way, if you’re going to over index on one or the other in your own life, I’d rather you say, I’d rather you plan to spend what you spend now, then try to pretend like you’re, you’re not and be kind of screw yourself.

Ryan Isaac: A million percent. And so the step or like the next step or the other side of that of planning to keep spending more than you think, or at least what you’re still spending means you have to save more. Then the average person who’s spending might go down. The awesome thing about that. And you’ve seen this so many times I’m doing, I’m dealing with some like pretty hard, tragic stuff with some clients this week who are benefited from the fact we’ve pushed each other to save so much and they’re, they now have resources to help themselves in these, in these tough times. And so what I’m getting at is. Even if it’s true that you find a way to really reduce your spending after you’re done working for some, some way you figure it out, if you ended up saving more than you needed to, it just means you’re going to see within that, like that seven to 10 year window, you’re going to start to see like, Oh, I actually have more than I thought sooner than I have. Great news. Also, and no question, life will throw stuff at you that you will demand money from you when you’re not expecting it and you don’t want to give it and just over indexing on the savings is just going to prepare. It’s just going to keep you safe and give you more options sooner in your life. So yeah, when I saw this email, I was excited to be like, Oh, it would be, I mean, how cool would it be to go to our clients and say like, The new target savings rate is not 20. It’s like 14. Now you can spend more,

Matt Mulcock: Yeah

Ryan Isaac: You know, you don’t have to save as much in your retirement accounts. Enjoy your life. That would be fantastic. I was looking forward to that, but my opinion is not moved or changed either. So

Matt Mulcock: Yeah. I still, I still think we are conservative in other areas of our business that we’ve started to back off a little bit on. but yeah, I think savings rate, 15 to 20 percent is still your target should be your target. you’d rather be wrong that way than wrong the other way, which is

Ryan Isaac: Ooh. And maybe conservative back off. Like you don’t have to have a 30 total term.

Matt Mulcock: Nope,

Ryan Isaac: That’s for the next episode.

Matt Mulcock: That’s what, let’s do that again,

Ryan Isaac: What do you really, what is your, what re what your freedom number do you really have to hit?

Matt Mulcock: Yeah. Yeah. I think 30 TT has always been a nice aspirational target.

Ryan Isaac: Very conservative.

Matt Mulcock: Conservative. And one of the dark side or one of the bad parts of us telling 30, 30, 30, 30 is. It can be discouraging.

Ryan Isaac: Yeah. It can be

Matt Mulcock: Good to aspire, but also for a lot of dentists out there. They’re like, well, what the, I’m not going to get that. It’s like, you don’t need 30. There’s more nuance to it.

Ryan Isaac: There is more nuance to it. Um, okay. Matt, is there anything? Heck yeah, we did. That’s how, that’s how Netflix does it, dude. So

Matt Mulcock: Damn you next episode button.

Ryan Isaac: I know I just finished Peaky Blinders.

Matt Mulcock: Ooh, good one. I finished a season two of shrinking.

Ryan Isaac: Oh, very good. Wait, that’s out.

Matt Mulcock: season two’s done, it’s done now. it’s my favorite, it’s my fa I ain’t gonna say

Ryan Isaac: Made me cry.

Matt Mulcock: It’s my favorite show I’ve ever, I’ve ever seen. It’s my number one show.

It’s so good.

Ryan Isaac: What’s the one that just came back? Severance is back.

Matt Mulcock: Is it out

Ryan Isaac: Go watch. Yeah, I think this Friday it’s back. Severance is back. And my college daughter just told me to go start Dexter old, but she’s

Matt Mulcock: Oh, never saw Dexter.

Ryan Isaac: Anyway.

Matt, is there anything you want to announce that might be happening in the summer of 2025 real fast?

Matt Mulcock: You know, Ryan, I actually

Ryan Isaac: Of your mind. If there’s not, don’t worry about it. We

Matt Mulcock: Only a few spots left. Only a few spots. No, I’m just kidding. yes, I would love to share. huge thing coming up. Second annual dentist money summit. What is the dentist money summit? You might ask Ryan one might be asking. You did ask that, it is a two day event. We’re like minded dentists. Like all you listeners out there, come listen to some incredible speakers. We have a whole new speaker lineup. from all different parts of, in all different industries and it’s going to be so much fun. The theme here is plan for the present. So very, very different than, you know, come learn about clinical type stuff. This is really more like how to find meaning in your money. Um, we do have an incredible speaker around specifically to investing this year. This is going to be great. We have a, a doctor coming, a Harvard educated doctor coming to talk about burnout. it’s going to be, it’s going to be incredible. So June 20th and 21st parks at Utah, same place as last year. we do have spots left. We’re not pulling any crazy marketing schemes. However,

Ryan Isaac: Chair out

Matt Mulcock: We’ll pull an extra chair, but I will say I did, I did I’ve said this a couple of times and it’s true. Like, you know, last year was our first year. we are already seeing, we’re measuring from, you know, where we were last year to this year, absolutely higher attendance already. We’re not sitting here saying we will sell out, but there’s a very decent chance it will. So DentistMoneySummit. com check it out.

Ryan Isaac: Bada bing. Thanks for everyone for being here. I’ll catch you next time. Thanks, Matt. Bye bye now.

Keywords: retirement spending, financial planning, spending trends, retirement psychology, financial independence, spending habits, healthcare expenses, charitable contributions, debt in retirement, financial independence

Behavioral Finance, Retirement Plans, Spending