The Wealth Building Version of a Superfood Diet – Episode 182

What can your food choices teach you about growing your net worth?

On this episode of the Dentist Money™ Show, Reese and Ryan offer some food for thought (or at least offer some thoughts about food) as they talk about how focusing on calories and superfoods is comparable to growing net worth.

With their current diets top of mind, listen in as Reese and Ryan offer some ideas about how eating patterns compare to the “Total Term” calculation and how it provides an effective measurement for growing net worth.

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Podcast Transcript:

Reese Harper: Ryan and I are pretty different when it comes to our likes and dislikes, but one of the things that we have in common has to do with both of our interests in tracking things. What we’ve found is that the closer we pay attention to the details of what we’re tracking, the better our performance. That has to do with the way you eat, the way you exercise, and especially the way you build your net worth.

Reese Harper: Whether you’re measuring fats and proteins or calories, or whether you’re measuring your savings rate, your spending rates and your liquidity, eating the right foods, or hitting the right numbers when it comes to your money habits will lead to significantly better financial health. We want to hear from you, so take time to book a free consultation at our website at dentistadvisors.com. Check out the calendar and find a time that works for you. We’ll call and help you take control of your financial future. Like I always say, it’s better with a buddy. Just give us a call at (833) DDS-PLAN. Enjoy the show.

Announcer: Consult an advisor or 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, a registered investment advisor. This is Dentist Money. Now, here’s your host, Reese Harper.

Reese Harper: Welcome to the Dentist Money show, where we help dentists make smart financial decisions. I’m your host, Reese Harper, here with my trusty old co-host, Sir Ryan Isaac.

Ryan Isaac: Good to be here.

Reese Harper: Welcome again to the studio, young gun.

Ryan Isaac: Yeah, it’s good to be here. We’re going to start today by talking about one of, I was going to say, “Your”, but I’m with you on this. Our favorite subjects.

Reese Harper: It’s either mountain biking or food.

Ryan Isaac: Oh, we should combine the two.

Reese Harper: Mountain biking with food?

Ryan Isaac: That would be cool. Actually, I always mountain bike with food.

Reese Harper: Food biking.

Ryan Isaac: Yeah, food bike.

Reese Harper: Mountain fooding.

Ryan Isaac: We need to do like the food truck version of a mountain bike food truck. What is that? I don’t know what that is. You have a Swedish fish in your hand right now.

Reese Harper: Yep.

Ryan Isaac: This is awesome. Okay, you recently, over the last year, I don’t know, started tracking measuring food, or someone else does it for you and sends it to you.

Reese Harper: No, no. I track it myself in MyFitnessPal. Little bit difficult on days like today when I’m ordering a chicken salad and the restaurant is like, “I don’t have nutrition facts.” I’m like, “How many chicken breasts did you use to put in your salad?” They’re like, “I think one.”

Ryan Isaac: Or four. One of the two.

Reese Harper: I’m like, “Okay.” It’s a little tricky, because-

Ryan Isaac: Yeah, you don’t know.

Reese Harper: Today, I went and got myself a buffalo chicken salad from one of my favorite local organic places, your old Cubbies.

Ryan Isaac: Oh, shout out to Cubbies.

Reese Harper: Shout out to Cubbies. I’m like, “Well, how much chicken does normal come in?” Because I needed double chicken, because I was pretty hungry and hadn’t eaten. It was 3:00 and I hadn’t had lunch. He said, “Well, I’ll put two chicken breasts in if you want.” I said, “Well, how big are the chicken breasts?” Because I kind of need to [crosstalk]

Ryan Isaac: Yeah, how many ounces is this?

Reese Harper: How many ounces is this?

Ryan Isaac: What are we talking about?

Reese Harper: Talking like a six oz?

Ryan Isaac: Is this like, steroid chicken breast I get from Costco that are like 10 ounce chicken breasts that I know don’t exist in the wild, naturally?

Reese Harper: Yeah. This is not my primitive forefathers’ chicken!

Ryan Isaac: What is this?

Reese Harper: Like, what kind am I dealing with? You just don’t know. You kind of get to guess. It makes it a little harder when you’re just guessing at it.

Ryan Isaac: Yeah. You’re just taking a guess. Sorry, I’m going to have to describe it, but I saw this chart. Someone had just posted this. They were making the argument that just measuring food by volume isn’t accurate enough, and you have to measure it by weight. For example, take out a normal tablespoon out of the old kitchen drawer. You get the peanut butter jar. Oh, in your house, you have peanut butter allergies so you don’t do the peanut butter jar.

Reese Harper: Almond butter or sun butter.

Ryan Isaac: Almond butter. Okay.

Reese Harper: Sunflower seed.

Ryan Isaac: You dip the spoon and pull that thing out. If you’re starving, you know you’re going a little overboard on that spoon size.

Reese Harper: Yeah. Therefore …

Ryan Isaac: But you’re still calling it a tablespoon.

Reese Harper: Yeah, I get that.

Ryan Isaac: You know?

Reese Harper: Mm-hmm (affirmative).

Ryan Isaac: This chart, it had three different foods. It had a half cup of oats, it had tablespoon of peanut butter and it had a half cup of avocado. It showed the difference. Then, they had the actual sizes. They’re both tablespoons, but one spoon that was a generous scooping. Ice cream could be same way, I don’t know. You’re an ice cream guy?

Reese Harper: Yeah. Yeah.

Ryan Isaac: You like ice cream, right? But one’s a generous scooping Then one’s the actual weighed measurement of what it’s-

Reese Harper: What’s a “weighed”?

Ryan Isaac: Like, by weight. In grams.

Reese Harper: Oh, weight. I thought you said, “Wade.” I was like, “Who’s Wade, and where did he come into this picture?

Ryan Isaac: Wade, D. Wade, D. Wade.

Reese Harper: Go Heat. Go Miami.

Ryan Isaac: Okay. Is it still going? Okay. It was interesting, because in this peanut butter example, they’re both tablespoons but one of them’s a generous helping. It’s 43 grams. It’s 260 calories. The one that was actually measured to be a serving size, also on a tablespoon, was 16 grams.

Reese Harper: 43 compared to 16?

Ryan Isaac: Yes and 94 calories.

Reese Harper: As opposed to 200 and-

Ryan Isaac: 260. [crosstalk] The pictures, they looked similar. One’s like, well you can tell there’s a little extra, but it’s the same spoon. One’s a little fuller, but one is like, you know. That’s a massive difference. The oats was the same thing. It’s like one pile is-

Reese Harper: I asked the same thing this morning. I was making, because I try to make this… my neighbor has this little organic what do you call it?

Ryan Isaac: Organic …

Reese Harper: Garden. A garden, those things that we used to have back then.

Ryan Isaac: I was going to say, “dispensary.”

Reese Harper: I went over there and she gave me some Swiss chard, which I was kind of wanting to have. Swiss chard’s really good.

Ryan Isaac: Is that the purple one?

Reese Harper: No, it’s like just green and white.

Ryan Isaac: Okay. It’s green.

Reese Harper: Anyway. I made myself a smoothie this morning, only out of Swiss chard and unsweetened almond milk.

Ryan Isaac: Okay. Whoa.

Reese Harper: And because I wanted to give myself enough fiber.

Ryan Isaac: That’s hearty and that is bitter to the core.

Reese Harper: Yeah. It was intense. I blended it. You don’t really know what you just ate, because I go into MyFitnessPal to type this stuff in and it’s like Swiss Chard in cups. I’m like, “That’s not how it came.” It comes in a giant leaf that’s too big for me to do anything with and I just throw it in the blender and I blend it. Then, everything’s in cups. I’m like, “I don’t know how to measure it in cups.” I barely know how to measure it. I’ve got to put it on a scale to measure it in grams. If you want to get precise, I weighted it on a scale.

Ryan Isaac: Weight is the only way to actually measure food.

Reese Harper: Yeah. Is it?

Ryan Isaac: Yeah.

Reese Harper: I just intuitively assumed that, because it was the only way I could … You can’t fit stuff in imprecise containers.

Ryan Isaac: No. It’s crazy too, because I’ve done this before of taking just a measuring cup, one cup, you know the little plastic ones out of the kitchen and I’ll just go scoop some oats out of it and be like, “Yeah. That’d be a cup of oats.” Then, I’ll measure what I think would be a cup of oats. Then, I’ll actually take the serving of a cup of oats in grams and it’s dramatically different.

Reese Harper: Different, yeah. They’re different. What’s the point of this whole thing?

Ryan Isaac: What’s the big point of this whole thing is, we’re going to talk about something else about net worth, but I read this article about net worth and what do people consider actually wealth, like what number is wealthy. It’s just some vague measurements and that just reminded me of that, of how measuring food is so similar. It’s kind of like this vague, “Yeah. That seems like a cup.” You’re like, “Yeah.” You just doubled your calories and you don’t even know it, but you think you were dead on.

Reese Harper: Today’s podcast, what we’re going to talk about is, would you say what is a lot of money? That’s really the question here, right?

Ryan Isaac: It was a Bloomberg article. When did this come out? This was pretty recent, May, 2019. The title is, How Much Money Do You Need to be Wealthy in America? Then, it was posted in a Dental Facebook forum, too and some cool discussion on this. Well, we’ll just start with that title. Let’s not skip too fast ahead. How much money do you need to be wealth in America? I might have already told you some of these numbers.

Reese Harper: I haven’t heard any of them. I did see that this article is getting spread around, but I haven’t read it.

Ryan Isaac: There was just a big survey, a big study that was done. It was done, by the way, because it’s pretty legitimate, it was done by Schwab, annual survey. What does it take to be considered rich?

Reese Harper: In America, since I’m more informed than the average person, but-

Ryan Isaac: Humble brag.

Reese Harper: On this topic.

Ryan Isaac: It’s true though.

Reese Harper: It’s not a humble brag.

Ryan Isaac: It’s true. It’s just speaking truth.

Reese Harper: That’s just the objective truth.

Ryan Isaac: You spend 90 hours a week doing it … 70.

Reese Harper: The listeners are also more objectively good at dentistry than I am.

Ryan Isaac: Yes, they are.

Reese Harper: What I would say is though, if you take the average wage of a person in the United States and say, “That’s close to 60,000,” I would say, for that person to feel wealthy, $60,000 of income for someone to feel wealthy, I think that person would feel wealthy, probably anytime they had more than 1 million bucks, that person would feel wealthy. Maybe 1.4 million, a million to 1.4 million, that’s what I would guess. I haven’t read the article.

Reese Harper: Second thing I would say though is, that person’s wrong. Really, for them to be wealthy, it would be more like maybe $1.9 million to $2 million at a $60,000. That would be like, you’re really actually pretty wealthy. The reason I’m doing that math is I’m just taking someone’s average annual income and then, multiplying it by some factor. I multiplied it by 20 in one case and by 30 in another case. Those are pretty good barometers for me.

Ryan Isaac: If you’re making $60, you’re probably spending $40, $45. Right? Just an average family, average living.

Reese Harper: Mm-hmm (affirmative). I think if you had $1 million and you’re making $60,000, you’re going to feel like that’s … That is wealthy for you. Now, that’s where I would guess, if I was going to say for America then, I would have to use the average income as the place I would start. I bet, for a lot of people who make more than the average person, they’re not going to relate to that number, because that’s not a number that everyone should be okay with, but I don’t know. What did you find?

Ryan Isaac: Well, $1.1 million was the what did they call it? They called it, “The doing okay number.” What was they’re exact? I thought this was kind of funny. Oh. To be deemed merely financially comfortable is $1.1 million. That was out of the survey. People said, “$1.1, you’re comfortable.” You know?

Reese Harper: Yeah. Okay.

Ryan Isaac: To be wealthy, to be considered wealthy is $2.3 million, which the study said is more than 20 times the actual median net worth of US households, but $2.3 million.

Reese Harper: More than 20 times the median net worth?

Ryan Isaac: Mm-hmm (affirmative).

Reese Harper: Yeah, so median net worth-

Ryan Isaac: They’re saying like a 20 TT basically. More than a 20 TT would be for the average US household, which is kind of interesting. That’s more than 20-

Reese Harper: I wonder what they used as their average income number for the study. That’s where I would kind of go. A lot of times, these different income numbers, are they surveying the average person?

Ryan Isaac: Yes and they segment it across age groups, which was further interesting, but yeah. $2.3 was the number. This is what I want to talk about. I kind of want to break this up into a few different segments today, because I read this and it just says, “The amount that people said it took to be considered rich averages out to $2.3 million.” The first thing I thought about is, this concept of that it took $2.3 million to be wealthy. What does that even mean? If you had a $2.2 million house that was paid off and $100,000 IRA, is that the same as $2.3 million in an IRA and no house?

Reese Harper: Yeah, I don’t know if they’re … People probably aren’t saying, “That’s the net worth I need.” I bet they’re saying, “That’s the pile of money I would like to have.”

Ryan Isaac: That’s just the number. One of my first thought here then, that we could talk about in respect and calculating, what’s my magic number? That’s what we wanted to get at today. That’s what we wanted to talk about today, this concept of, what’s this magic number for me?

Reese Harper: Because the magic number is specific to the individual. That’s why I was struggling to know … I would give you a different answer, based on each person, because it’s really relative to their spending.

Ryan Isaac: How do you think most people normally do that? What was interesting in that forum that posted this to where I saw this was, everyone was kind of putting in what they thought their number was.

Reese Harper: What did it range from?

Ryan Isaac: Usually, a couple million to … $5 million was so common. It’s funny, because I’ve asked that question probably hundreds of times over the last decade. I’d be like, “What number do you think you need to hit one day?” Just because it’s a really interesting thing to ask people. It’s always a round number and it’s always $5 million. It’s always $5 mullion. It has nothing to do with multiple of spending, or income. It’s always just like, “That’s pretty big and it’s round.” You know? I don’t know. How do you think most people would normally do that, when they’re thinking, “What’s the number?”

Reese Harper: Well, it’s the same way I was doing some pricing research in this last week on how do people know what to pay for things, because for the new app that we’re building, I’m trying to understand … I know what we need to make to be sustainable, the app cost really. The more people are willing to pay, the more features you can build, essentially. The less people are willing to pay, the less features you can build. I’m trying to understand, what do people assume a financial planning app would cost?

Ryan Isaac: Yeah and puts behind it.

Reese Harper: They always reference other things, so they’ll reference YNAB, or they’ll reference Mint, or they’ll reference Personal Capital, or they’ll reference Quicken, what they pay for their annual Quicken membership, or they’ll reference, sometimes, the wrong thing, like QuickBooks.

Ryan Isaac: Or Netflix.

Reese Harper: They’ll be like, “I pay this for Netflix.” I’m like, “I don’t know why you’re referencing that, but I haven’t gotten that.”

Ryan Isaac: Everyone pays a monthly fee for Netflix and it seems reasonable.

Reese Harper: Yeah, well it seems like … for MyFitnessPal I pay $3 a month, so for a financial planning app, I don’t know.”

Ryan Isaac: Oh. You’re a premium guy.

Reese Harper: I think a lot of times, when it comes to wealth management we do the same thing. When we think about our number, we’re actually referencing some other thing that is …

Ryan Isaac: Yeah. It’s an anchoring kind of thing.

Reese Harper: An anchoring point. I know now, the point is the median household cost, the cost of a home in the United States continues to escalate quite a bit. That price becomes a new anchor. I think at some point, there was probably this idea that I’m a millionaire. $1 million was a lot of money until like 1990, or 1985.

Ryan Isaac: Oh, yeah. Even the sound of that, “He’s a millionaire. She’s a millionaire. She’s worth 1 million bucks.” We wanted to take a break for just a second, to remind you how easy it is to book a free consultation with one of our dental specific advisors. What you do is, you go to dentaladvisors.com. You’ll see a big, green button that says, “Book free consultation.”

Reese Harper: Can’t miss it.

Ryan Isaac: Click that button and book a time that works for you, or you could just call us at (833) DDS-PLAN. Let’s start a conversation about how we can help you with your finances.

Reese Harper: No one really went to two, or to three. They just kind of thought, “I think I’ll hedge and go higher.” I think $5 million’s the next stop after $1 million.

Ryan Isaac: It for some reason is. Yeah.

Reese Harper: It’s like-

Ryan Isaac: There is no station two, three and four.

Reese Harper: There isn’t.

Ryan Isaac: Next stop.

Reese Harper: It’s not that precise for people. Unfortunately, that number is too much for most people to accumulate.

Ryan Isaac: We’ll give some context on that. If you had $5 million to spend, spendable net worth, because I want to talk about this in a few minutes. I want to talk about the difference of I keep calling it $5 million that’s sitting in different assets. That makes a massive difference and how much is liquid, versus not liquid. To give some context, if I’ve got $15 million in, let’s just say, it’s $5 million in an account I can spend out of, what could I draw indefinitely forever, or what could I spend and run out in 20 years?

Reese Harper: I would feel safe saying $16,000 a month. You could do that, which coincidentally is what a lot of dentists are used to spending. $5 million’s probably not-

Ryan Isaac: That’s our average.

Reese Harper: Yeah. It’s probably not a bad number for most people, but I think it could range, depending how long you want it to last.

Ryan Isaac: $16,000 a month, if you-

Reese Harper: You would never run out of money and you’d never deplete.

Ryan Isaac: You’d never run out of that $5 million.

Reese Harper: Most people won’t be able to accumulate at that level during their working career. The average dentist will struggle to do that. Also-

Ryan Isaac: It might be closer to two to three, when it’s all said and done with home equity, selling maybe a building, a practice and accumulating assets.

Reese Harper: That same $16,000 a month, you could probably accumulate in the three’s, like $3 million, $3.5 million range.

Ryan Isaac: It would probably be gone by the time you’re [crosstalk]

Reese Harper: You’d probably spend it all and you’d have to retire kind of a normal age of $60 to $65.

Ryan Isaac: Okay. Maybe push work out as an associate a day, or two a week.

Reese Harper: That’s a big difference. Let’s say you could be on the low end, you could be a $3.2 to $3.3 and the high end could be $5.5, if that was your desired spending amount per month that you wanted.

Ryan Isaac: Yeah. This is why it’s just funny to talk about these numbers, because that makes a massive difference in lifestyle, because if we’re just talking about the average dentist and there’s this range which, I’ve got to save between $3 and $5 million, the three number, let’s say that’s attainable, while also kind of living a good lifestyle and working a normal life career span. Where the other one is more sacrifice. It’s less spending. It might even be longer working, just because you’ve got to accumulate more money.

Reese Harper: Yeah. If you’re trying to accumulate $5 million in net worth, or portfolio value, if you’re not wanting to include your house in that, if you’re trying to accumulate $5 million and let’s say you start at age 35, as a point where you’re kind of done and ready to dig in, even if you worked clear to you’re 65, you’re still going to have to grow your net worth at $150, $160,000 a year. For people that make $200 to $250,000 that might not be realistic for people to accumulate that much, but it might be realistic for them to accumulate $3.2 to $3.5.

Ryan Isaac: Just know that by the time I’m in my late 80s, or 90s, it’ll probably be close to spent.

Reese Harper: Yeah. You’re only going to grow your net worth a certain ratio. Just backing up to what we’ve talked about before, I really think it’s important to just slow down and paint the picture of lifetime income, because everyone’s going to have a certain amount of earning throughout their life. That’s just going to be money you make every year, multiplied by the number of years that you work. Someone who earns $200,000 for 30 years makes $6 million and someone who earns $300,000 for 30 years makes $9 million. Someone who earns $150,000 a year for 30 years only makes $4.5 million. These different-

Ryan Isaac: Yeah. Very different opportunities.

Reese Harper: You have different opportunities to go and pursue, but you’re also not used to the same lifestyle. You’re used to your own lifestyle at your own income level. You don’t have to be stressed out about, “Well, I should have got more, or less.”

Ryan Isaac: Yeah, because you’re spending $14, but the higher earner’s spending like $40 a month.

Reese Harper: Yeah, or maybe $21 and you’re spending $12, or someone’s spending $19 and you’re at $9, because you’re used to that, because that’s a ratio of your income that you’re just used to. I don’t think people need to feel really intimidated, but they do need to be realistic about what’s possible. Not all people are going to need an arbitrary $5 million number. They’re going to need a precise range that goes somewhere between 20 times what you spend in a year and maybe as high as 35 to 40 times what you spend in a year, if you want to leave-

Ryan Isaac: Preserve and leave stuff behind?

Reese Harper: Yeah. Leave all your portfolio and just live on the interest, you’d need 35 to 40 times, or 30 to 35 minimum. Of course, the rates of return that you earn can affect how long your portfolio lasts, but if we’re just kind of assuming normal averages-

Ryan Isaac: Yeah. Standard stuff.

Reese Harper: That’s where it people can get a better sense for what they’re going to accumulate to. We did these usability studies last week in the app on trying to figure out how we do a retirement calculator. We’re trying to figure out the right way to show someone a retirement calculator and have them come up with their own magic number.

Ryan Isaac: Yeah. Paint the picture a little bit here, because this is kind of the interface that someone’s looking at as you’re hearing them talk through these ranges, because it’s pretty interesting.

Reese Harper: Yeah. We sit down. We plug someone into the computer and we bring up the iPhone on the screen. We have them take their mouse, as if it’s their finger and they click around and do some things. We try to learn what they’re going through. A couple things that I learned that were really interesting were, when we get to a retirement calculator, what is it that people want to know? There were some things that I learned where I’m just like, “Man. I didn’t realize that was such an important issue,” because knowing what I know in my head, sometimes I skip over things that some people just don’t skip over. I wasn’t doing the interviews. I’m just observing, because I don’t want people the be assuming that-

Ryan Isaac: You’ll force people to-

Reese Harper: They might say nicer things about the app, or_

Ryan Isaac: You’ll leave them with your tricky questioning skills.

Reese Harper: I think that they’ll be nicer to me, than they would be to Todd Reynolds, who’s a hard genius UX designer.

Ryan Isaac: Shout out to the design genius.

Reese Harper: He says-

Ryan Isaac: They’ll be mean to Todd, because they don’t know Todd. [crosstalk]

Reese Harper: They’ll just be direct with them. They’re just like, “I don’t like that,” but it’s been really positive so far. I haven’t had a lot of negatives. In fact, I get texts everyday like, “I can’t wait for this. Can you get it out to me?” I’m like, “Dude, there’s only like four of us working on this. It’s hard to speed this up. I’m sorry. Now I know why I’m not going to complain about technology to people as much anymore.”

Ryan Isaac: Because of how hard it is to build and maintain and invent the right stuff.

Reese Harper: Yeah. It’s really hard. It’s super hard. We put this retirement calculator up in front of them. The first one I designed had way too many sliders.

Ryan Isaac: Inputs. Yeah.

Reese Harper: It made them pick their spending. It made them pick their return that they were going to earn.

Ryan Isaac: What do you mean, “Sliders?” Like, you can put your finger on this little thing and slide it to higher spending, or lower spending, like left and right, left and right on a phone.

Reese Harper: Yeah. You can move left, or right on the phone. You can go, “Well my personal spending’s at $4,000 a month.” Then, I drag it to the right and it goes to $9. Go back and forth and that was good. Personal spending was a really critical variable.

Ryan Isaac: Yeah. They want variable yeah.

Reese Harper: They want to be able to move that to decide how big their net worth was going to be. They also would say things like, “Well, it depends on what my returns are. I want to just know how much I need to get in return to kind of get retired as fast as possible.” That is kind of a common request. It’s like, “I want to know what I got to do and how fast I can get it done to get there.” There’s not a lot you can do, unfortunately about, if the calculator says, “If you spend half of what you’re spending right now and earn a return that’s really high and you can be done really early,” even though people, they like to toy with the numbers to get it to that point, I don’t think it was that motivating, or that doable

Ryan Isaac: A sales blog post. Clicks. Yeah.

Reese Harper: Because it’s like, “Well, I can’t cut my spending in half.”

Ryan Isaac: I can’t get like an 18% annual guarantee.

Reese Harper: I can’t get a 12% annual fixed return with no variance at all.

Ryan Isaac: It’s no downside.

Reese Harper: Then, we changed the app to kind of create a really, really simple framework to just, before we project things out, let’s just decide what your magic number needs to be. All you have to know is what you’re spending right now, on a monthly basis to live on and kind of think about whether that income would be a good income for you to live on later.

Ryan Isaac: Yeah. I want to slow you down a little bit too, because you’re talking about specific jobs that need to get done for people. You’re talking about one, huge job, which is figuring out, “What is that number going to be?” Which is going to always be a reflection of what is the number today? The number in the future is a reflection of what’s happening today. You’ve got to know that and you have to know how it trends and changes over time.

Reese Harper: Yes. That’s a hard job. That’s a really good conversation for you to have with your financial advisor on a regular basis is, “Is the way I’m spending right now, is that good for my income level and is that sustainable? Will I be okay? Am I spending too much? Too little?” This is a good conversation to have. It’s a little bit scary to have that conversation, because it’s a painful thing. No one wants to be told they’re spending too much and that you’ve got to change everything. Everyone wants to just be like, “It’s okay. Right?”

Ryan Isaac: It’s fine. It’s no big deal.

Reese Harper: “Don’t talk to be about it.”

Ryan Isaac: I can do this.

Reese Harper: It’s like diet in food. You don’t really want to-

Ryan Isaac: You know.

Reese Harper: You know you shouldn’t go eat a burger again.

Ryan Isaac: Again, for the fourth time today. Then, they’re double patties every time.

Reese Harper: Yeah, but you’re like, “Well, I don’t care. I’ll take the double.” When I’m at Shake Shack and I’m in the airport.

Ryan Isaac: Oh, but you have to Shake Shack. You have to.

Reese Harper: They’re like, “Do you want a single, or a double patty?” I’m like-

Ryan Isaac: You’re like, “I’m at Shake Shack. What do you think I’m going to do?”

Reese Harper: I’m like, “I don’t want to have to pick that.”

Ryan Isaac: Is this Wendy’s. This isn’t on every corner.

Reese Harper: I personally, I like to go with the singe, but it’s because I like the vegetables.

Ryan Isaac: Good for you.

Reese Harper: For the most part, there’s not quite enough meat in the single.

Ryan Isaac: No there’s not.

Reese Harper: Anyways, you-

Ryan Isaac: That’s one massive variable, huge job.

Reese Harper: Spending. I just feel like the spending calculation that people go through, that’s kind of your primary variable. The second thing that we ended up doing was, just saying, “Look. There’s this thing called the TT score. For those of you who have been listening for a while, all that is, we have to teach you something about retirement planning that you probably don’t already know. There was a lot of things we could have taught you about. We can teach you about withdraw rate, which was really confusing and no one really understood that.

Ryan Isaac: They just [crosstalk]

Reese Harper: Withdraw rate is the percentage that you can pull from your portfolio, that makes it be a reasonable withdrawal. That is essentially the same thing as saying, “A TT score,” but in a different way. A TT score measures your net worth divided by your annual spending. It kind of shows you a number. When that number is a 20, that means you could last for about 20 years if none of your investments grew at all. If it’s a 30, it means you could last for 30 years, if none of your investments grew at all, but as we all know, your investments will grow. When you’re at a 20, there’s a certain return that you could hit, that would make you go into what we call beast mode, of infinity mode.

Ryan Isaac: I just went, “Okay.” I didn’t know we called it that. This is new.

Reese Harper: I had to come up-

Ryan Isaac: Can you unlock that on the app?

Reese Harper: Yeah. You just hit infinity mode. Basically, what that means is-

Ryan Isaac: It’s like the Tesla financial planning app you’re trying to build.

Reese Harper: You have a big enough portfolio now to where you’re hitting a return now that makes You go on forever, like the Avengers.

Ryan Isaac: That’s beast mode. Okay. Agh. Spoiler alert.

Reese Harper: That is infinity mode, or something. I don’t know if beast mode’s the right word, but I liked it anyway. Infinity mode, essentially, there’s a different return you’re going to have to get at a 20 TT score. Right?

Ryan Isaac: To maintain it.

Reese Harper: If you have a net worth that’s 20 times your annual spending, you’re going to need a higher return to go into infinity mode, than if you had a 30. If you’re at a 30 TT score, you essentially have a bigger chunk of wealth. You can get a lower return and still go into infinity mode there.

Ryan Isaac: There should be a chime for unlocking infinity, like you hit in the app. It’s like, “Chime.”

Reese Harper: I like infinity mode. It just makes sense to people. I’ll give Todd the credit for that.

Ryan Isaac: I like that. Okay.

Reese Harper: He, one day, was just like, “Isn’t it kind of like infinity mode?” He’s a designer that doesn’t have a strong financial background and as we were going through this-

Ryan Isaac: He loves video games maybe. He’s from the 80’s.

Reese Harper: He’s just like, “This infinity mode concept makes sense.”

Ryan Isaac: Yeah. That makes sense.

Reese Harper: I think the important thing to remember, when you look at your retirement projection, or this article, any of the stuff we’ve been reviewing today is that, the bigger that your net worth is over your spending, relative to your spending.

Ryan Isaac: Yeah. Those are the two end results.

Reese Harper: $3 million divided by $100,000 is a 30, but $2 million divided by $100,000 is a 20. You want to make sure that you’re at a higher multiple of your spending to go into infinity mode. Everyone’s going to go. Some people, you don’t have to go into an infinity mode.

Ryan Isaac: Yeah. A lot of people don’t care if they leave money behind. That’s not a primary objective.

Reese Harper: Think about Guardians of the Galaxy.

Ryan Isaac: Okay. Let’s do it.

Reese Harper: What’s the name of the main character? I’ve already forgot.

Ryan Isaac: That’s Quill.

Reese Harper: He’s not going to go into infinity mode. He doesn’t care. He’s living in the moment mode.

Ryan Isaac: He’s in the moment though. Yeah. Yeah. Today mode.

Reese Harper: He wants to live in the 1980s with the walk men. He likes life that way.

Ryan Isaac: Yeah. It’s a good life.

Reese Harper: Some people, like Tony Stark’s obsessed with infinity mode. The fact that he’s going to die, it really bothered him and it was like death was this thing. I just think that all of us just ultimately got to reconcile. We don’t have to go into an infinity mode to be good with our life, or our money, but that’s a big different between spend down mode. A terminal portfolio, where you’re predicting the end point-

Ryan Isaac: It’ll be gone at some point.

Reese Harper: I just don’t like retirement calculators. This is the thing where we got to. Everyone was going, “Well, what age am I going to retire? What age am I going to die?”

Ryan Isaac: When am I going to die. If we could build that app …

Reese Harper: What’s my inflation going to be? What are my returns going to be? I’m like, “You don’t know any of that. You don’t know when you’re going to die. You don’t know when you’re going to retire.” All you know is that, at a 20 multiple of your spending, you’re probably going to definitely run out of money at some point, you just don’t know exactly when it’s going to be.

Ryan Isaac: Be an associate to your late 60s, if you’re shooting an aiming at a 20 multiple. Probably work a little longer.

Reese Harper: Yeah. I just feel like it’s a little bit not honest and not transparent to tell people, “Well, you’re fine with a 95% security rating.” All these financial planning tools, they create these probability analyses that tell you what percentage of probability you have at not outliving your money. It’s either something, or 95. They never could have 200. Right?

Ryan Isaac: Yeah. Yeah.

Reese Harper: You get to this 95% probability and it’s like, “You’re great, all based on these 30 variables.” I’m just like, “I don’t know.”

Ryan Isaac: Yeah, but that’s the problem, because it’s based on inputs that you put in there, based on a static life that never has surprises. How many of our clients that are in retirement mode call out of the blue and they’re like, “You know what? We’re just going to do it. We’re going to do that month-long European trip we’re doing it.”

Reese Harper: We’re gone.

Ryan Isaac: “We thought about it. We’re still in good health. We’re doing it.” That wasn’t in the plan. That wasn’t part of the variable in the Monte Carlo calculation software printout.

Reese Harper: If I looked at that client before they were going to retire and they were at a 20 TT score, I would look them in the eye and be like, “That’s fine.”

Ryan Isaac: We’re coming after home equity at some point.

Reese Harper: We’re going to have to probably tap into the house equity.

Ryan Isaac: You’re not leaving it behind.

Reese Harper: Yeah. There’s not going to be a lot of inheritance here for the great great’s-

Ryan Isaac: But enjoy it.

Reese Harper: But enjoy it. I think that’s kind of more realistic of an expectation that you should have.

Ryan Isaac: What I like on this interface, it’s kind of hard to describe it. If you’re looking at your phone and this slider, which is like, “Am I going to have a lot, or there’s a lot left over. Am I going into infinity mode, or is it going to be like I’m squeaking by and it’s going to run out?” Run out mode’s on the left. The slider slides to the right to infinity mode. I like how it changes from dark red to orange to green, because it’s that connotation, where it’s like, “Okay. If I’m towards the left and I’m at a 20 TT.” I’m like, “I’m going to spend this thing down. I’m in this red zone here,” which is the opposite of a red zone in football, because it’s not-

Reese Harper: Yeah. You don’t want to be in the red zone in the app.

Ryan Isaac: In the app. Don’t be in the red zone in the app.

Reese Harper: Hopefully, this helps people kind of see that I think ultimately, the important thing here is that your financial advisor needs to constantly looking at your personal spending and looking at your net worth growth, in order to give you a proper expectation for the right point in time when work is optional for you and what big changes you should be making to either the value of your practice, the sell date of the practice, whether there should be an associate or not, whether expansion is needed, or whether you can keep going at the status quo, the way you’re going now, it’s just important to have a really firm handle on what your personal number is. You’ve got to know your magic number. That is not just one input.

Ryan Isaac: Yeah. It’s not. We can wrap things up with the other thought that I had is, when people say this number like, “$2.3 is the magic number. That’s how to be wealthy,” it makes a huge difference on where that $2.3 is sitting. Which is, if you go to our website, for those of you who have listened for a while, we have this elements table. The bottom row is five elements. That tracks where your net worth is located, how much is liquid, how much is sitting in real estate, versus a business, or 401ks. The distribution of that will make a big difference too in retirement. That’s what’s interesting about a study like this, if you just ask the average person, “What’s wealthy?” “Oh. It’s $2.3 million, or it’s $5 million.” If most of that’s in a house, that’s different than if most of it’s sitting in a brokerage account, or it’s in a business you still have to sell one day. It’s still operating and fluctuating.

Reese Harper: Yeah. It’s very different if it’s sitting in a business. If it’s sitting in a house, or a retirement accounts, or liquid assets, or investments, a rational person would treat all those things the same and just be like, “It’s all my net worth and I’ll use it when I need to in the most tax efficient way.” A lot of people just, they have a home that they want to pay off free and clear and then, never use that money ever again. They don’t want to borrow against their house. You kind of eliminate that portion from your net worth.

Ryan Isaac: Yeah. You might have had three, but now $700 is gone?

Reese Harper: Yeah. To me, that’s just a really important thing to pause and kind of note. If you’re the type of person that really wants to pay off a house free and clear and own it forever, that is a big part of your net worth, that you’re basically just saying is gone like, “I’m never going to be able to use that again for my living.” It will reduce your monthly housing cost by whatever rent would be in your neighborhood, but it’s a big pile of money that you have sitting there, that’s never going to grow at all. For a lot of people, it’s not realistic to think that they’ll never need that money, especially if they’re in an expensive city, where their housing costs are high.

Ryan Isaac: Yeah, or remodeling. How many clients have you talked to that have a paid off mortgage? They’re in or near retirement, but they’re like, “This thing needs a $200,000 overhaul now. We’re going to stay here, but …”

Reese Harper: Yeah. Or way more, right? Way more expensive, too.

Ryan Isaac: We got to put the master on the main, so we can stick around and move a laundry room and the patio’s leaking.

Reese Harper: Yes. Yeah. I think you’ve really just got to make sure that you’re conscious about which assets you’re going to be able to use for retirement income and which ones you’re not going to be able to use.

Ryan Isaac: I was just going to say. We’ve mentioned a few of the main jobs that need to be done. These aren’t static jobs. These aren’t a measure at once then, that’s just what it is. These are year to year they change, they fluctuate. You have to know how they’re trending, but one of them’s spending. One of them’s this total net worth number, but the other one is, how is your net worth split up in all these assets? Where is your net worth located and how are those trending? I was just having this conversation with a client this week, we were just emailing about this.

Ryan Isaac: He was saying, “I noticed that x percent of my net worth is sitting in real estate and this is in my business. This is liquid. This is 401k.” That makes a difference on where he’ll get money from in the future. It made a difference to him on how he wanted to accumulate in the future, too. It made him stop and go, “yeah. I haven’t looked at this, this way before. I would kind of like to push the brakes on more real estate. I just want to get more liquid, before I kind of get to this final phase of my career.”

Reese Harper: Yeah. We’re talking about a lot of different jobs here. If we had to summarize today’s conversation around jobs, it would be like, track your net worth, the number and the progress and the speed at which it’s growing really accurately. We’d say, “You have to track how your net worth is diversified among real estate, liquid assets, retirement assets and business equity.” We’d also probably say, “Track your personal spending,” as a job we’ve talked about today. Really determine what the monthly nut is that is going to be driving your retirement assumption.

Reese Harper: Then, make sure that you’re looking at this projection and making the right business decisions strategically today to maximize the value of your business, but not over-invest in it in a way that essentially starts lowering your net worth return. There is a point down the road when once you know what your number really needs to be, there’s a limited amount of resources that you should continue to give to your business, or in some cases, you need to give more, because your value’s just not there. That’s the only place you’re going to be able to reach your goals from.

Ryan Isaac: Yeah. Okay.

Reese Harper: These are a lot of jobs going on in this net worth area, but a really critical part of financial planning for sure.

Ryan Isaac: Yeah. I was going to leave us with a little tweet from James Clare, who’s the author. He writes a lot about behavioral psychology and behavioral finance. He sent this tweet a while ago. I’ve always saved this, about what real wealth is. He says, “Real wealth is not about money, but real wealth is the following,” I’ll be curious what you think, “One of them is not having to go to meetings.” I don’t know if you’d agree with that, or not, “Not having to spend time with jerks, not being locked into status games, not feeling like you have to say, ‘Yes,’ and not worrying about others claiming your time and energy.” That’s what he said real wealth is. We started with real wealth being a defined number and that’s what James Clare said real wealth is. I like the don’t spend your time with jerks.

Reese Harper: Yeah. I think that one’s very good. I think everyone has a different definition. Right? Isn’t that kind of the point here?

Ryan Isaac: Yeah.

Reese Harper: I think some of the things, you relate to. Some, I do. Some, I don’t. I think everyone’s definition is probably more than just a number.

Ryan Isaac: Yeah. I would agree with that. All right. Well, thanks everyone for listening. We’d encourage you to do two things. Number one, join our Facebook group. We have a lot of great discussions and polls. We poll topics for the podcast from your questions in there. That’s the … What’s it called on Facebook? Dentist Advisors …

Reese Harper: Discussion group.

Ryan Isaac: Discussion Group. Pretty straight forward title. You can get there by going to dentistadvisors.com/group, or contact us. Go to our website, dentistadvisors.com. Schedule an appointment with one of our advisors, have a chat about your situation, your number, your spending, where you’re headed. You can go to our website. Click on the big button that says, “Book free consultation,” or call us at (833) DDS-PLAN.

Reese Harper: Carry on.

Behavioral Finance, Investing