Personal Finance Horrors: 13 Frightening Facts – Episode #441

Don’t become a scary personal financial statistic! Here are 13 ghastly financial facts that should frighten you—and what you can do to avoid money’s Grim Reaper. On this episode of the Dentist Money™ Show Ryan and Matt look at how Americans are handling their finances and why saving for retirement and emergencies terrify those who can’t seem to get their finances organized.

 

 

 

 

 

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Podcast Transcript

Ryan Isaac:
Hello everybody. Welcome back to another glorious episode of the Dentist Money Show, brought to you by Dentist Advisors, a no commission fee only fiduciary advisor just for dentists all over the country. Check us out, dentistadvisors.com. Today on the show, Matt and I are still live from the, where we were anyway, from the Productive Dentist Academy, PDA, productivity workshop in Dallas, Texas. Super fun time, great workshop. Great time seeing everybody. Matt and I were sitting at our booth. People were vacuuming, people were slamming doors, they were banging dishes around, they were talking loudly. We loved it, the perfect environment to record a podcast. But we were going through an article we recently found that outline 10 big money mistakes people are making, and we thought there were some very interesting parallels to the world of dentistry and how we see dentists making or not making these mistakes.

Ryan Isaac:
We were kind of on both sides on a few of these subjects. So this was a fun conversation to have and really helpful to go through and think about some of these mistakes that some dentists are or are not making and what to do about ’em. So thanks to Matt. Thanks to PDA for having us again. We love being there. And, shout out to Vacuum guy. About halfway through vacuum guy looked at us, we made eye contact and he was like, “Oh, should I stop?” And we said, “Thank you. Yeah, that’d be great.” And he stopped. Vacuum guy. We got a picture with him later. So shout out to Vacuum guy. Thanks for being here everybody. Enjoy the show.

Announcer:
Consultant Advisor. Conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by dentist advisors or registered investment advisor. This is Dentist Money. Now here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to the Dentist Money Show, where we help dentist make smart financial decisions. I’m Ryan and I’m here with Matt. And we are live.

Matt Mulcock:
In the flesh.

Ryan Isaac:
In the flesh at the PDA, Productive Dentist Academy. Productive conference.

Matt Mulcock:
Productivity.

Ryan Isaac:
Productivity conference. There’s a lot of P words in there, but we’re in Dallas, so we’re live. And it might be noisy. People are vacuuming and…

Matt Mulcock:
You were recording earlier and there was a vacuum going off.

Ryan Isaac:
It’s silent until we start recording, and then they vacuum and they clink plates. But we’re grateful to be here. Shout out to PDA for having us.

Matt Mulcock:
PDA is amazing. We were just talking about this. We have been a partner with PDA doing covets together, collaborations together for six years.

Ryan Isaac:
Yeah, it’s been a lot, man.

Matt Mulcock:
They’re amazing.

Ryan Isaac:
It is amazing. Okay, so, we thought today.

Matt Mulcock:
What did we think, Ryan? [laughter], right as you hit record and introduced, I said, “What are we doing?” And you just went.

Ryan Isaac:
Well what is today even? Today, we’re recording this. It’s September 28th.

Matt Mulcock:
But it’s not coming out till.

Ryan Isaac:
This will come out in a couple weeks.

Matt Mulcock:
Yeah. October.

Ryan Isaac:
Here’s the deal though. Is, as soon as you hit, like September in my mind, maybe like 10th, it’s the fall. September 10th is like the fall to me.

Matt Mulcock:
Yeah. I mean do you want the official fall? ‘Cause my dad will tell you.

Ryan Isaac:
Oh yeah. Equinox.

Matt Mulcock:
He knows all of them.

Ryan Isaac:
What’s the official fall?

Matt Mulcock:
September 21st.

Ryan Isaac:
Okay.

Matt Mulcock:
Is the, oh man, is it the first? That’s the last day of summer.

Ryan Isaac:
How about…

Matt Mulcock:
Or is it the first day of fall? I don’t know.

Ryan Isaac:
I don’t know. But how about we just say when Starbucks puts pumpkin spice on the menu, it’s fall.

Matt Mulcock:
That’s fall.

Ryan Isaac:
It’s sweater weather.

Matt Mulcock:
And you see all the decorations of the Home Depot?

Ryan Isaac:
Yeah. It’s fall.

Matt Mulcock:
It’s fall. Which is like September 1st.

Ryan Isaac:
Being the case, we thought we’re heading into the fall, we’re in the fall and Halloween’s coming up.

Matt Mulcock:
Yep.

Ryan Isaac:
Which is very scary. I guess.

Matt Mulcock:
Okay. I don’t know if this is a hot take or not, but Halloween’s like one of the most, I think underrated fun holidays.

Ryan Isaac:
Agree. 100%.

Matt Mulcock:
I love it.

Ryan Isaac:
I love Halloween so much. Okay. I’m in a weird point of life though, where the early days with little kids, like this Halloween, I will be the first year that I don’t spend with any of my children.

Matt Mulcock:
See, I’m in the heart of the…

Ryan Isaac:
They’re all gone.

Matt Mulcock:
Little kid dress up. So much fun phase.

Ryan Isaac:
Dude I’m telling you. There’s just a little throwback story, but this would’ve been like 2008, maybe 2009. So it’s just the depth of the recession, Reese and I had just started together. Everything was exciting, but financially horrific. And I was really stressed all the time. And, it was Halloween, probably ’08, ’09 and…

Matt Mulcock:
Which was already a rough.

Ryan Isaac:
That’s what I’m saying.

Matt Mulcock:
October of ’08 was when like. The heart of it. It was so bad…

Ryan Isaac:
Yeah. I had a mortgage from ’05 that I shouldn’t have had, and it was just bad. But Halloween came around. We were in Utah. It was snowing, it was cold. But my first child who is now 18 this year, she was three. And she dressed up in this big pink sparkly thing as a ladybug. So she was like this ladybug costume with this huge winter coat on and a beanie. I held her in my arms and walked her up and down the steps in the snow. Honest, I’m not kidding. It was one of the greatest nights of my entire life. I needed that, those moments.

Matt Mulcock:
Could like, forget everything.

Ryan Isaac:
We were gone for like three hours. And she was over the moon about all this candy, couldn’t believe it. And I remember being so stressed in my life, and that night was one of the greatest nights.

Matt Mulcock:
You forgot everything.

Ryan Isaac:
I forgot it all. I was so in the moment. I still think about that Halloween night. So shout out to Halloween. It is underrated.

Matt Mulcock:
That’s a good memory.

Ryan Isaac:
I tink it’s such a good memory. In light of, Halloween, you found something. We’re we’re gonna say. Let’s talk about some of the scary financial mistakes or decisions. And you found this Forbes article called 13 Scary Financial Statistics.

Matt Mulcock:
That’s a tough word.

Ryan Isaac:
Yeah. Tough.

Matt Mulcock:
I was actually reading it to you and I was like, “I can’t say that word very well.”

Ryan Isaac:
And how to help avoid becoming one. This is very scary. Now this is from 2022. This is last year. A year ago.

Matt Mulcock:
I was to say… Yeah.

Ryan Isaac:
So we’re gonna go down this list and…

Matt Mulcock:
2022. [laughter]

Ryan Isaac:
And so we’re gonna go through, this is from Forbes, scary Financial Statistics, and let’s see how and if they relate to dentists and what we see and if that’s still relevant this year, ’cause this is a year ago. So you start number one.

Matt Mulcock:
Yep.

Ryan Isaac:
And let’s go, let’s hit it number, let’s see what happens.

Matt Mulcock:
Number one. 56% of Americans can’t afford $1000 emergency expense from their savings account. That’s according to bank rate.

Ryan Isaac:
Bank rate. $1000, that means if something happens of a thousand bucks, they can’t pay cash for it.

Matt Mulcock:
Yep.

Ryan Isaac:
56% of Americans. It makes me wonder if a year later it’s even worse. Things feel…

Matt Mulcock:
Oh right now it’s gotta be worse.

Ryan Isaac:
Yeah. Right now. I mean, you’ve probably seen this too, the… Some of the statistics on just grocery inflation alone, some of the prices are three and four times what they used to be 12 months ago or two years ago. It’s unbelievable. I bet this statistic is worse. How does this apply to dentists though? ‘Cause what we’re talking about is emergency fund money, which would be cash you can get your hands on without a penalty. So not like 401K or IRA money within 48 hours or so.

Matt Mulcock:
Yeah, we’d consider this like liquidity.

Ryan Isaac:
Liquidity.

Matt Mulcock:
Yeah, just overall liquidity. It doesn’t have to be in a cash account. It could be in a brokerage account, just money you can get access to.

Ryan Isaac:
One of the ways we measure this, we talk about liquidity being like a stress score. And we like to measure liquidity in terms of how many years worth of your spending are you liquid? So if you spend a hundred grand a year, do you have a hundred thousand dollars of accessible money somewhere that you can get out without a penalty? That would be a liquid score of one.

Matt Mulcock:
Which would be solid by the way.

Ryan Isaac:
That feels good. So we would say, when your liquid score is less than a one, you have less liquidity than you spend in a year, that’s when your stress is gonna be higher. And as soon as that goes above a one into the multi-digits, then your stress levels go significantly down.

Matt Mulcock:
Way down.

Ryan Isaac:
What I think is cool about that though too, is that’s independent of debt levels, which is cool. It’s really crazy. Has nothing like this kind of the opposite of the Dave Ramsey argument, but it has nothing to do with having no debt. It has everything to do with having more liquidity.

Matt Mulcock:
And it’s fun. It’s just really quick on that. I just talked to a dentist about this. It’s really funny when you say that and that whoever you’re talking to about that concept doesn’t have that liquidity. Meaning you’re just talking about it conceptually. Most times we say this and people will disagree. Like you’re talking to a dentist and you’re saying, “Hey, it’s not about your debt load. It’s actually about your liquidity.” And that’s gonna be your main indicator of stress. And if they don’t have that liquidity, they’ll always beg, “No way.” Like there’s no way.

Ryan Isaac:
Yeah, it’s not true. Until they have it.

Matt Mulcock:
And they circle back around once they have it. And I’ve had this happen a lot. It’s just happened recently with a client and they brought it up and they’re like, “Man, you have told us this for so long that once we had that liquidity, our debt load is basically the same over the last few years.” It’s like you wouldn’t, dwindling down, but they’re like our stress level. ‘Cause they’ve gotten above that one, that one point. And they’re like, “holy cow, this is exactly what you said.” So like when you actually are living that and you feel it, it’s amazing versus what the concept is.

Ryan Isaac:
What you think it is. And the reverse of that is true also, where I’ve had, and you’ve seen this too, where people, they like sacrifice tremendously for a long time to get rid of all of their debt and then the stress is still there. I’m like, crap, but we don’t have any, so here’s what I was just thinking would be interesting. $1,000 is kind of low for the average debt.

Matt Mulcock:
Yeah. I was going to say the only difference is this is just low.

Ryan Isaac:
Based on the people we work with. If it’s a $10,000 emergency, do you think most people we work with are prepared for $10,000 emergency?

Matt Mulcock:
I wanna say, yes.

Ryan Isaac:
I don’t think it’s a problem at all.

Matt Mulcock:
I don’t think, yeah.

Ryan Isaac:
Unless it’s a brand new, like we do work with some younger career, new dentists, new grads, associates. I, so new grads and associates account for like a quarter of our clients, right? It’s about 24, 25%.

Ryan Isaac:
Yeah. 75% of our clients roughly are practice owners.

Ryan Isaac:
Practice owners. So I would say… I would put that number at that statistic. 75% of our clients I think could handle a $10,000 emergency.

Matt Mulcock:
I think that’s probably true.

Ryan Isaac:
What about a $100,000 emergency?

Matt Mulcock:
Oh, that’s probably.

Ryan Isaac:
Do you think half our clients could handle a $100,000 emergency? They’re like, the access to a hundred grand.

Matt Mulcock:
Yes.

Ryan Isaac:
I think so too.

Matt Mulcock:
Half, Yeah.

Ryan Isaac:
I think so too.

Matt Mulcock:
Yeah. ‘Cause we hop on this so much. When you come on board, it’s like, that’s the first thing.

Ryan Isaac:
What’s priority number one?

Matt Mulcock:
We’re getting you organized. And then once we get you organized from a strategy perspective, we’re gonna look at what’s your stress score. Where’s your liquidity?

Ryan Isaac:
Stress score. What’s your stress score?

Matt Mulcock:
What’s your stress score.

Ryan Isaac:
Your liquid stress score. TMR registered trademark.

Matt Mulcock:
Done. It’s already filed.

Ryan Isaac:
Copyright C.

Matt Mulcock:
It’s already filed.

Ryan Isaac:
Number one. I like that. Number two, I’ll read the even numbers. Only about two in three adults could pay a hypothetical $400 expense. Okay. So we’re still on this cash situation.

Matt Mulcock:
What can I say, It’s like kind of a rewording of the last one.

Ryan Isaac:
But now two and three, only two. So two thirds of people could pay a $400. So it’s just a lower bar. So before 56% of people can’t afford a thousand bucks. Now we’re saying that one third, so 33% of people can’t afford $400. That’s the reverse of that.

Matt Mulcock:
Yep.

Ryan Isaac:
We don’t have to go into that, but that’s really interesting. That’s just boiling down that statistic to even smaller dollar amounts, which just shows, again, I just, I think this shows the power of liquidity. What did we just coin it? What did we just trademark?

Matt Mulcock:
Stress score.

Ryan Isaac:
Yeah. Your liquid stress score.

Matt Mulcock:
Your liquid stress score.

Ryan Isaac:
Yep. Dude, I love that.

Matt Mulcock:
I know we are brainstorming live on the air.

Ryan Isaac:
Yeah. You’re seeing it happen right here, folks. You’ll be able to go back. Number three.

Matt Mulcock:
Number three, 24% of consumers have no savings set aside for emergencies.

Ryan Isaac:
This is all like emergency cash stuff.

Matt Mulcock:
The first three are all liquid stress score.

Ryan Isaac:
24% have no. Okay. So I like how they did this though, because one of them set the bar, a thousand dollar emergency. Number two was a $400 expense. I mean, just times these by 10.

Matt Mulcock:
Yep.

Ryan Isaac:
And then you can start to think about dentists. I think that’d be fair. 24% of people have no savings at all. You know what’s interesting though? I think that’s, that might be, I don’t think it’s that high, but that could be, it could be close to that when you’re talking about a new graduate, like a brand new, new graduate associate. That, I mean…

Matt Mulcock:
You’re saying no cash whatsoever.

Ryan Isaac:
No cash. Like you’re just graduating. He got a giant student loan.

Matt Mulcock:
You got a lot of debt.

Ryan Isaac:
No net worth. It’s negative. And you’re just practice shopping and career shopping. And that could be a fair statistic.

Matt Mulcock:
Yeah. And then like the first six months of your associateship, you just need to be putting cash away.

Ryan Isaac:
Trying to save up your first thousand.

Matt Mulcock:
Yep.

Ryan Isaac:
All right. Number four, $8,942. What is that number? That is the average credit card balance for US households. Okay. So this is interesting. 8,942.

Matt Mulcock:
That’s gone up by the way. This is 2022. That’s for sure gone up.

Ryan Isaac:
That’s for sure gone up. Now, how does credit card balances apply to dentists? If you, again, if you just look across our client base, I think the majority of people we work with and everyone holds credit cards, but I do think the majority of people are paying them off.

Matt Mulcock:
Yeah. Like every month?

Ryan Isaac:
Every month.

Matt Mulcock:
Yeah. They’re just using it as like a rotating credit line.

Ryan Isaac:
Mostly business. I don’t… And maybe this is like selection bias though I don’t think a lot of the people we work with struggle with high credit card balances that just never get paid off.

Matt Mulcock:
Yeah. We see it occasionally.

Ryan Isaac:
Not like people don’t carry… People carry five, maybe $10,000 and carry it for a few months. It doesn’t seem like that’s a, not like nobody does, but it doesn’t seem like that’s a huge, huge problem.

Matt Mulcock:
It’s very very rare. The one thing I will say on this that we’ve seen as people hire us or they come. Yeah. Start working with us is what a very common concept with credit cards and savings is what we call the illusion of savings. The problem with credit cards is you might be, so let’s say someone’s been listening to us for a long time and they’re like, Hey guys, I started setting aside money on a regular basis. I’m doing this what we call reverse budgeting where I’m just putting money away into a different account every single month. But then what they’re not realizing or admitting to is that their credit card balance is actually also growing.

Ryan Isaac:
Oh yeah.

Matt Mulcock:
So that can happen because a credit card again is not, it’s a credit line so you can add, it’s growing over the course of a month or two or three, whatever. So again, we’d call that the illusion of savings. It’s like you think you’re saving money, but you’re really just racking up your credit card debt. We’ve seen that for sure.

Ryan Isaac:
Okay. What percentage out of all the dentists we work with, would you say carry a month to month personal credit card expense that aren’t paying off.

Matt Mulcock:
Less than 5%.

Ryan Isaac:
Yeah. I was gonna say less than 10.

Matt Mulcock:
Yeah, it’s single digits. Low single digits.

Ryan Isaac:
It’s gotta be single digits actually.

Matt Mulcock:
Yeah. And it would only be in situations, I would guess most cases that I just, I’m looking, just thinking anecdotally of like, if that’s happening, it’s in certain times of their life.

Ryan Isaac:
True. Yeah.

Matt Mulcock:
It does, we very rarely if ever see that on a regular basis. Where it’s like extended periods of time.

Ryan Isaac:
Yeah, you’re right. Okay. Credit cards, folks, there you have it.

Matt Mulcock:
What number are we on?

Ryan Isaac:
Five. You’re five.

Matt Mulcock:
Is that me?

Ryan Isaac:
You’re odd.

Matt Mulcock:
56% of workers say they expect to have less than $500,000 saved for retirement, including 36% forecasting less than $250,000 in savings.

Ryan Isaac:
This is so frightening because I don’t know if…

Matt Mulcock:
That is the scariest one.

Ryan Isaac:
Is there a statistic on here about average spending? I’m curious. I don’t think there’s a statistic about average…

Matt Mulcock:
No.

Ryan Isaac:
Spending. What this, I mean $500,000 if you took $500,000 and you said, how long could I make that last as an indefinite annuity forever. It’s like…

Matt Mulcock:
Your passive income number.

Ryan Isaac:
What is, these are so great. Your passive income number. Yeah. It basic. Yeah, exactly. Take 4% of that $500,000, that’s 20 grand.

Matt Mulcock:
Let’s just say.

Ryan Isaac:
So if you have $500,000 and you want to never spend that, but you just wanna pull interest off that as a passive income source, then you, that your passive income number on half a million dollars is 20 grand. 20 grand a year?

Matt Mulcock:
Yep.

Ryan Isaac:
That’s really scary man. The average, I’m thinking the average dentist that we track this data is spending like 16 grand a month. Is that about true? 16, 17 a month?

Matt Mulcock:
Yeah. We just did this ’cause we’re presenting, APDA, we’re doing a retirement readiness presentation. And so I just run over this data again. As of this year, we had gathered all this data. Our average. Yeah. Monthly spending was just under, it was like 15,995. So was like 16 grand basically a month.

Ryan Isaac:
So let’s say…

Matt Mulcock:
So it’s like 191 for the year.

Ryan Isaac:
In this statistic, let’s say average American non-dentist is spending half of that per month. Let’s say they’re spending eight, seven or something. That’s gotta be fairly close.

Matt Mulcock:
It’s gotta be pretty close.

Ryan Isaac:
$500,000 can provide an indefinite passive income number of 20 grand a year. And if the average person’s…

Matt Mulcock:
It’s not gonna cut it.

Ryan Isaac:
Spending 678 per month. So that means, well if you’re spending eight per month, that’s 96 grand a year. And then how, that’s like, it’s barely more than five years if you’ve got $500,000. And then what’s the other statistic they say they’ll have 250?

Matt Mulcock:
Yeah. It says 36%.

Ryan Isaac:
36%.

Matt Mulcock:
Say they’ll only have 250. So cut that number in half. Now you’re talking 10 grand.

Ryan Isaac:
So a lot of these people are thinking though that, I don’t know, between two to $5,000 a month maybe, or 4,000, 4,500 in social security is gonna have to cover some of their stuff.

Matt Mulcock:
They’ve got it. Those people, those people we’re in a great spot here with all the rattling and banging dishes.

Ryan Isaac:
We literally chose to do a podcast next to the kitchen door.

Matt Mulcock:
Yeah. Where they’re coming in and out of…

Ryan Isaac:
The excellent, catering staff though, honestly…

Matt Mulcock:
They are amazing.

Ryan Isaac:
They’re providing fantastic service, friendliness, smiles and good food, including buttery, crispy croissants.

Matt Mulcock:
They’re amazing.

Ryan Isaac:
And delicious cakes.

Matt Mulcock:
I’ve had three pieces.

Ryan Isaac:
But we’re sitting next to the door where they’re just banging the carts as loud they possibly can.

Matt Mulcock:
Banging carts.

Ryan Isaac:
I think they’re having a drinking game that says, can you break decibel levels by banging a cart against the door next to the two idiots with mics. That’s the game they’re playing right now.

Matt Mulcock:
They’re like, who are these clowns recording in the open… The open room, wherever everyone’s just sitting.

Ryan Isaac:
So I’m just thinking… In this study most people are probably thinking, here’s how much I can save. Social security’s gonna have to make up a piece of that, and then home people are gonna be spending their home equity. It’s gonna be a real. This is gonna be a really interesting thing to see, generations and whether or not there’s houses to pass down to errors in children because I think people are gonna be spending money out of it.

Matt Mulcock:
That’s actually a really interesting point of doing a very long-term study over the next 10, 15, 20 years and generationally how we look at houses so differently from now, from here on out. You just look at like what’s happening with the “starter home” and also on the…

Ryan Isaac:
Starter. Whatever… That means anymore.

Matt Mulcock:
In certain areas of the country, including Salt Lake City. It’s, the idea of a starter home, just it doesn’t exist right now, but also on the flip side to your point, how do people view their home in retirement? I think that concept is also shifting a little bit Of like, are you just automatically gonna pass this thing down or are you gonna have to access like in this study, 56% of people only have $500,000 in retirement and 40% or just under 40%, 250 grand, if you own a home, you are gonna basically be required to use your house.

Ryan Isaac:
Yeah, you’ll be required to take it out. Which I think is gonna be an interesting, like you’re saying mind shift because the house has been an untouchable thing that you just pass down to people that they just fight about later.

Matt Mulcock:
I think people just don’t think about it as part of their…

Ryan Isaac:
An asset.

Matt Mulcock:
And, and for, to be honest, from our standpoint, we’d like you to think about it not as part of your assets.

Ryan Isaac:
Ideally.

Matt Mulcock:
Ideally?

Ryan Isaac:
Yeah.

Matt Mulcock:
But you might have to…

Ryan Isaac:
How many people have you done planning for where you’re like, you have multiple seven figures in a house you live in, what do you think you’re gonna do with that money? Unless you have the opportunity to have very, very high income and save on top of that?

Matt Mulcock:
Sure.

Ryan Isaac:
That’s gonna be tough. Number six, only 22% of Americans near retirement say they have enough money to retire, down from 26% in 2021, and this is 2022, so 2021 was 26%, they thought they had enough, then it’s 22%, and now it’s less than probably 22% I bet in this year it’s just keeps, I think this is speaking to people feeling inflation?

Matt Mulcock:
Yep.

Ryan Isaac:
And their lack of savings over time. When we don’t really live in a day and age where most people have like built-in pensions or anything anymore either.

Matt Mulcock:
Yeah, along these lines of being, it being specific, we have now have again the.

[laughter]

Ryan Isaac:
I was just gonna say, we are now entering the portion of our podcast where people are vacuuming.

Ryan Isaac:
Vacuuming as well. So, okay so as far as retirement goes in this respect for dentists, we talk about the statistic all the time where the average age for retirement has hovered right around for the average American has hovered right around like 62, the age of 62 ish.

Ryan Isaac:
Oh yeah, yeah, yeah, yeah.

Matt Mulcock:
61, 62 kind of in that range for dentists according to the American Dental Association, it’s been seven to eight years later.

Ryan Isaac:
Longer, yeah.

Matt Mulcock:
Longer. So the average dentist is retiring around 68 to 69, it’s been hovering around that for like 10 plus years.

Ryan Isaac:
And that’s from the ADA.

Matt Mulcock:
That’s from the ADA.

Ryan Isaac:
Yeah.

Matt Mulcock:
So again, this applies directly to dentists as well. Like I bet, I’ll ask you Ryan, 22% of Americans nearing retirement say they don’t have enough money to retire, what percentage would you say dentists say that right now?

Ryan Isaac:
So thinking of our client base again this is like can we have some selection bias to it because of it just, it just will.

Matt Mulcock:
Yeah.

Ryan Isaac:
They’re gonna be more prepared, they’re gonna build higher net worth sooner in their careers.

Matt Mulcock:
I see what you did there, little plug.

Ryan Isaac:
Yeah, it’s true.

Matt Mulcock:
I mean, our clients, our clients.

Ryan Isaac:
Ask Vanguard, do people who hire financial advisors, do they get higher returns in their accounts? Just ask Vanguard that question, they put out studies out. So they’re gonna build their net worths higher and faster and usually safer with less mistakes along the way. In our client base, I think it’s gonna be rare, honestly, that people aren’t prepared for retirement, when we mean prepared, we’re just saying if you take their net worth at a time in their life when they wanna stop working, their passive income that they’re gonna get from net worth, what we would call your net worth passive income score.

Matt Mulcock:
Yeah, we would just call it now and we just invented that, we just invented that.

Ryan Isaac:
What is your net worth Passive income score?

Matt Mulcock:
Yep.

Ryan Isaac:
I think it’s gonna be adequate to pay for their expenses many, many of them not even including the equity in their house.

Matt Mulcock:
Yep.

Ryan Isaac:
Or social security, which will just make it even more secure. The average dentist though, I think the statistic from the ADA speaks to that the average dentist retires later than the average American, not just because they wanna keep working, but because they don’t have enough money and they spend more than the average American.

Matt Mulcock:
I would agree with that.

Ryan Isaac:
That statistic probably tracks with the average dentist who isn’t doing something proactive either on their own or with an advisor so number seven.

Matt Mulcock:
Is this me?

Ryan Isaac:
I don’t know, yeah.

Matt Mulcock:
Yeah. I’m on the odds.

Ryan Isaac:
You do that.

Matt Mulcock:
Only 23% have a written plan for retirement while 40% have done some planning, but don’t have a formal plan.

Ryan Isaac:
Dang it, I wanna go find this statistic we use in some of our presentations of of like goal and accountability that like, that those statistics of like.

Matt Mulcock:
Yeah, yeah yeah.

Ryan Isaac:
One percent of people.

Matt Mulcock:
Goes down the line, it’s like.

Ryan Isaac:
Do you remember.

Matt Mulcock:
When you… So I mean, I’m gonna mess up the numbers ’cause we’re just riffing on this, but it’s something like, when you’re setting goals, the first step is you like, write it down or you say, “Okay, I have a goal.” And you’ve got like a 5% chance of actually achieving that goal.

Ryan Isaac:
Yes.

Matt Mulcock:
And then once, and then there’s like different things, once you write it down and you set a date, it goes to like 50% do you have it in front of you?

Ryan Isaac:
I’m looking, just keep going, I’m gonna find it.

Matt Mulcock:
And then it goes all the way down to, so kind of builds, right? And the ultimate factor here is you have a 95% chance of achieving a goal when you have a specific accountability partner.

Ryan Isaac:
And a date.

Matt Mulcock:
And a date and something like.

Ryan Isaac:
That’s it.

Matt Mulcock:
Something stated formally with someone else.

Ryan Isaac:
Yeah, which is crazy and in that data, adding the accountability partner jumps the likelihood of achieving your goal by like by a ton, it’s a lot. Even like, having the goal stating it having a date attached to it the next and again, don’t ask us, ask Vanguard the most trusted anti-advisor establishment in the world, who makes a ton of money from having advisors, which is funny now. But, their data, what’s the report they put out? It’s every few years they.

Ryan Isaac:
It’s the Vanguard or advisor alpha.

Matt Mulcock:
Advisor Alpha Report. So Vanguard Advisor Alpha Report, I think we have the latest copy on our website, they just show the same thing, it’s just because human behavior, we’re just not good at sticking to things, that’s the bottom line. So when we have a third party accountability, someone who has our best interest in mind knows us very well, we’re just so much more likely to stick to something so very interesting. What was that statistic? 23% have a written plan for retirement. So what would a written plan for retirement even look like? When I hear that, I think a lot of people would think, oh yeah. Financial plan, I’m gonna like, put it in some software, print it out, put it in a three ring binder, and there’s my written plan. When I think of a plan as a planner, I think a plan is like kind of a, it’s a standing communication appointment you have with your third party person because your plan changes constantly every time something little or big changes in your life. So a plan to me is this evolving thing that you’re communicating with someone, it should be written somewhere.

Matt Mulcock:
Sure.

Ryan Isaac:
It should have some data and some statistics, but it’s like an ongoing communication pattern, that’s what a plan is and it lasts for half a century right?

Matt Mulcock:
Totally, I think most people think of a financial plan as a noun. It’s a thing, right? We write it down we have a formal plan, like you said, a three ring binder. We look at planning, the act of planning literally as the action, the verb of like, we are on, we are constantly planning, thinking, changing expectations and goals, it’s a constant, it’s a lifelong process.

Ryan Isaac:
Yeah, it’s a lifelong process. Number eight was really similar, 37% of people have not done any planning. What was the statistic that Victoria found recently in our presentation of the, where people get their financial advice, like percentages of…

Matt Mulcock:
Oh, yeah.

Ryan Isaac:
She’s sitting here, we can just yell at her. Hey, Victoria, what percentage of people get their financial advice from social media? Or what was that statistic.

Matt Mulcock:
Do you remember?

Ryan Isaac:
She’s going to yell back to us in a second.

Matt Mulcock:
She’s…

Ryan Isaac:
This is the advantage of sitting here live.

Matt Mulcock:
We put her on the spot.

Ryan Isaac:
And anyway, so, I mean, I think that tracks number eight, 37% of people don’t have, have not done any planning the previous one was people just didn’t have a written plan. I mean, right there though, that’s, what is it? That’s 60% of the people have not done any plan or have not written it down at all. Which is kind of wild. Oh…

Matt Mulcock:
Here we go.

Ryan Isaac:
Thank you Victoria. Victoria…

Matt Mulcock:
Look at her.

Ryan Isaac:
We just want to say, want you to say hello.

Victoria Hughes:
Hey guys, what’s up?

Ryan Isaac:
That’s Victoria, advisor with dentist advisors, she’s amazing. Okay, she just handed me this statistic 79% of Americans representing the millennial are Gen Z Age groups shout out. Gen Z, millennials.

Matt Mulcock:
Millennial, shout out.

Ryan Isaac:
No. Gen-Xer is on here? Have gotten advice, financial advice from social media.

Matt Mulcock:
How many, what percentage?

Ryan Isaac:
79%.

Matt Mulcock:
79%.

Ryan Isaac:
Which, okay.

Matt Mulcock:
Which is why we’re upping our game on social media.

Ryan Isaac:
This is why…

Matt Mulcock:
Literally starting this weekend.

Ryan Isaac:
Although, we are just posting mostly goofy TikTok in funny voices no financial advice. Here’s the thing, it’s, totally the vacuum’s getting closer by the way.

Matt Mulcock:
It really is getting closer, we’re going to have to wrap this up. He’s inching closer to us as we speak.

Ryan Isaac:
He’s making eye contact now at this point, it’s a game…

Matt Mulcock:
He is, he knows what he’s doing.

Ryan Isaac:
It is a game to him, dude and we’re… It’s a standoff at this point, it’s a standoff. Okay, so here’s the thing. Old people like us…

Matt Mulcock:
He just pointed at me and pointed at the…

Ryan Isaac:
He turned it off, he is so cool, we’re going to wrap it up. Okay, so old people like us, we will make fun of, a statistic like that like the young generation getting their financial advice from TikTok.

Matt Mulcock:
Young Whippersnappers.

Ryan Isaac:
But look, that’s just the way that information’s being delivered now, so what does that mean? It just means people have a responsibility, old people like us have a responsibility to deliver financial information that’s maybe healthier and more helpful, through these means of people are getting it through.

Matt Mulcock:
That’s the thing, really quick on this to…

Ryan Isaac:
But that… ‘Cause people aren’t going to print anything in a binder, they’re just going to go to TikTok right?

Matt Mulcock:
Exactly and we joke around, like you said, of like these young idiots, but.

Ryan Isaac:
: Whippersnappers.

Matt Mulcock:
Whippersnappers.

Ryan Isaac:
Yeah.

Matt Mulcock:
But TikTok is just a tool.

Ryan Isaac:
Ruffians.

Matt Mulcock:
Ruffians.

Ryan Isaac:
Okay.

Matt Mulcock:
But these TikTok is simply a tool.

Ryan Isaac:
It’s just a tool.

Matt Mulcock:
And we need to, like we’ve talked about this like all jokes aside, we need to start embracing something like that more because they’re going to use it no matter what we say so let’s just…

Ryan Isaac:
So you might as well make it helpful for people.

Matt Mulcock:
Yeah, use the tool and start fighting back, you know.

Ryan Isaac:
Fight back, dude.

Matt Mulcock:
We’re going to fight back.

Ryan Isaac:
Fight the cause. Number nine, let’s cruise.

Matt Mulcock:
Okay, number nine.

Ryan Isaac:
We’ve got 12, 13 of these? Go, go.

Matt Mulcock:
Yeah. Okay, here we go. 44% of retirees said this is a good one, 44% of retirees said their expenses in retirement are higher than expected.

Ryan Isaac:
Higher than expected?

Matt Mulcock:
This is a really good one.

Ryan Isaac:
So the myth is that once you retire, you spend less money.

Matt Mulcock:
Every, I’m sure…

Ryan Isaac:
Everyone thinks that.

Matt Mulcock:
Most, people, I’m going to say everyone, but most people think.

Ryan Isaac:
I hope it’s true ’cause…

Matt Mulcock:
Yeah, that it’s less.

Ryan Isaac:
Yeah, ’cause I’m spending so much money with all these teenagers, man. What am I supposed to do?

Matt Mulcock:
So here’s what actually…

Ryan Isaac:
Tell them not to eat.

Matt Mulcock:
Here’s what…

Ryan Isaac:
Or eat shoes, or play water polo?

Matt Mulcock:
Here’s what the game people play, right? They say this is always the go-to when they say, oh, well my mortgage is X and by the time I retire, my mortgage will be gone and that’s gonna, so I’m no longer gonna be spending that whatever that amount is on my mortgage, so let’s say it’s four grand a month. And then my response to that is, okay, that is true, your mortgage will be gone. We can even see that on an amortization schedule.

Ryan Isaac:
Yes.

Matt Mulcock:
But what you don’t think about is how much more time you’ll have on your hands, how much more traveling you will do. How much more eating out you will do, how many more hobbies you will most likely do that… And studies show this, right? Studies show this that you are spending…

Ryan Isaac:
‘Cause you got time.

Matt Mulcock:
Will be somewhere between 85% up to over 100%…

Ryan Isaac:
Of what you spend now.

Matt Mulcock:
Of your pre-retirement spending. Like you will be in that range, you should just count on spending exactly what you spend Now in retirement.

Ryan Isaac:
Most.

Matt Mulcock:
And, ’cause if your plan is to say, “oh, well I’m gonna cut spending in retirement in the future” It’s really easy to be disciplined, your future self is always the most disciplined version of yourself.

Ryan Isaac:
Yeah, like always, next Monday’s the diet, January is the gym.

Matt Mulcock:
Yeah, diet starts on Mondays, my future self is disciplined. I’m brilliant, I’m like so locked in on every aspect of my life.

Ryan Isaac:
Good habits.

Ryan Isaac:
Great habits, I never mess up I never make mistakes but then my present self shows up to the future and it’s like, oh actually that’s not true.

Matt Mulcock:
Crack this the party shows up hammered and just punching holes, and wall.

Ryan Isaac:
Super drunk and overweight and you know what I mean?

Matt Mulcock:
Spending money on Amazon.

Ryan Isaac:
Spending money on everything I want.

Matt Mulcock:
Junk shopping, Amazon.

Ryan Isaac:
Exactly, exactly. So again.

Matt Mulcock:
That’s a good one.

Ryan Isaac:
This is important one, just if you’re planning out there and you’re going through this process of figuring out your passive income score and all this stuff, base your retirement passive income needs based on your current spending or higher.

Matt Mulcock:
And studies also show that we underestimate our current spending too, so add those together.

Ryan Isaac:
By about 30%.

Matt Mulcock:
By about 30%. So add those together. We are spending more money than we think right now, and we’re going to spend more money than we think in the future than we are right now.

Ryan Isaac:
Always.

Matt Mulcock:
Let’s end with number 10 because the last few on here were actually, they’re just statistics of like, interest rates, inflation, what the S&P did.

Matt Mulcock:
Let’s just end with 10.

Ryan Isaac:
And it just says like don’t be a victim of those things, but it’s like they just are so you just deal with them. But number 10, 51% this is really fascinating. 51% of adults have delayed at least one important life decision in the last year for financial reasons. Which means, buying a house, moving, starting a business, having kids, taking a vacation, doing something important in their lives, they’ve delayed it at least one big important one because of finances, you just don’t have enough money to do it.

Matt Mulcock:
I do wonder what percentage of this, ’cause it’s up 20% from 2007. I do wonder what percentage of this has everything to do with real estate like buying a house…

Ryan Isaac:
With buying with buying, in 2022.

Matt Mulcock:
‘Cause like, I bet because most, or a lot of people are. ‘Cause it’s saying a, a big financial decision, right? Because of money…

Ryan Isaac:
Housing.

Matt Mulcock:
It’s got to be most of that being housing.

Ryan Isaac:
Well, one the bullet points here was the average rate at the time of this reporting a year ago, 6.89% was the average mortgage rate.

Matt Mulcock:
And now it’s up over seven.

Ryan Isaac:
Over seven, so that it’s got to be one of them. Okay, so how do you combat that though? I think number one, we always say this, number one, the way to combat that is just be organized you can’t even make financial decisions with any kind of like low stress state of mind unless you can just see everything in one big picture, so being organized is like the first step to battling this. Like, putting off, ’cause maybe, you’ve known people like this, clients like this that are putting off decisions like that ’cause they don’t think they’re okay or they’re ready for it, we can’t have the cabin, we can’t go on that vacation, I can’t retire and you’re like, yeah, you can.

Matt Mulcock:
And they’re like…

Ryan Isaac:
Here’s the numbers.

Matt Mulcock:
What?

Ryan Isaac:
Here’s the math, they’re blown away. So anyway, organization, before the crowd, literally before 300 people walk out the doors…

Matt Mulcock:
They’re about to walk out.

Ryan Isaac:
Right behind you and the vacuums kicking back up, shout out to vacuum guy for stopping though, that was pretty sick, I like that guy.

Matt Mulcock:
He’s the man, he looked right at me. He pointed at his mic, here at his vacuum, gave me a thumbs up and turned it off.

Ryan Isaac:
Shout out to vacuum guy’s.

Matt Mulcock:
What a freaking homie.

Ryan Isaac:
Hey, let’s go get a picture for our Instagram for with vacuum guy.

Matt Mulcock:
We’re going to.

Ryan Isaac:
Okay. Anyway, thanks Matt for being here.

Matt Mulcock:
Yeah, thanks Ryan.

Ryan Isaac:
Thanks for PDA, for having us again we love being here every single year. We’ll do it until the end of time.

Matt Mulcock:
We’d love you PDA.

Ryan Isaac:
If we’re invited and, thanks all you for listening. We’ll catch you next time on another episode of The Dentist Money Show, goodbye now.

Finance 101