What’s the Very Least You Should Save? – Episode 295

A live-for-today lifestyle (or a desire to finance a dream house) has some dentists asking, “What’s the minimum amount I can save and still be OK in retirement?” On this episode of the Dentist Money™ Show, Ryan and Matt look at what maxing out today’s spending by saving a minimal amount might mean over the long run—and what tradeoffs you can expect to make so you can still enjoy the future.

 

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Podcast Transcript

Ryan Isaac:
Hey everybody, welcome back to another episode of The Dentist Money Show sponsored by Dentist Advisors, a no-commission, fiduciary, full comprehensive dental-only financial advisor. Check us out at DentistAdvisors.com. Today on the show, Matt and I are talking about the question that a lot of people want to know, myself included, which is what is the minimum amount of money I can save and still be okay in retirement? We’re going to talk about all the pros and cons, the pitfalls, and the things to watch out for when going down that path. And thanks for joining us. If you’re new to the show, welcome, and if you’re not new to the show, still welcome. If you have any questions, go to DentistAdvisors.com, click on the Book Free Consultation link, and schedule a chat with one of our very friendly dental-specific advisors today or go to the Facebook page Dentist Advisors Discussion Group, post a question, we’ll post an answer. Thanks for joining us. 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, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show where we help dentists make smart financial decisions and avoid the bad ones along the way. I am Ryan Isaac, and I’m here joined by the man you all know and love, it is Matt The Hollywood Mountain Mulcock. What is up, Matt? How you doing?

Matt Mulcock:
Yo Ryan. I’m good, man. How are you?

Ryan Isaac:
We’re doing good. We are plugging through summer. End of [July-ski 00:01:26].

Matt Mulcock:
School starting soon for the parents out there with kids that age, which I am not.

Ryan Isaac:
Here, not yet. It’s starting around the country. I think most places usually 1st of August, but here in Arizona, they’ve they’ve started … Yeah, we’re getting rid of summer. I’ve got a question we’re going to answer today … Well, I don’t know if we’re going to answer it, to be honest with you, because-

Matt Mulcock:
We’re doing Q&A episode? We doing Q&A?

Ryan Isaac:
Kind of, yeah. This is a common question. Spoiler alert, we’re just going to fast forward to the end here, the answer is that-

Matt Mulcock:
Start with the end in mind, Ryan. Start with the end in mind.

Ryan Isaac:
Very individual answer here. We will not answer this question for you today because you will have to spend hours with an advisor working on this solution and you will have to spend hours working with an advisor over the course of your entire life, working on this.

Matt Mulcock:
And everyone just shut off the podcast. Everyone just exited right now. They’re like, “Well, this is stupid.”

Ryan Isaac:
But, the question is a really good question. I have actually been calculating this exact question myself lately and-

Matt Mulcock:
And why, Ryan? Why is that?

Ryan Isaac:
We don’t know yet. The vague answer to that question is I’m trying to maybe think about making a very expensive move in my life.

Matt Mulcock:
I’m so jealous.

Ryan Isaac:
From low cost of living to working till you’re 80.

Matt Mulcock:
It’s quite the trade off.

Ryan Isaac:
It might be. It might not be. I’ll let you know when I’m 80. If you’re still tuning in and I’m still doing this at 80, I will let you know how this turned out. We’ll reference this.

Matt Mulcock:
We are for sure going to be doing this at 80. No question.

Ryan Isaac:
I hope so. We’ll be so [inaudible 00:03:05] and cranky and just blunt and we’ll swear a lot, I hope.

Matt Mulcock:
Oh yeah. We’re going to be swearing a lot more. I would love to swear more on this podcast, but the editors-

Ryan Isaac:
Family show.

Matt Mulcock:
It’s a family show. I should have started with that. It’s a family show, that’s first, but then also it would be cut out anyway. So there’s no point.

Ryan Isaac:
It’d be cut. Here’s the question. Matt, you’ve had this from clients though, and we’re going to discuss this. We’re going to try to give you as much clarity and answers as we can on this, but it’s very individual. The question is: what is the minimum amount of money I have to save to make it one day? Not the ideal, not the projected, not the benchmark “What would be good for my income?” Not the conservative low bar, what is the minimum? The perfect bare minimum amount of money I need to save in order to maximize my current lifestyle, which is usually the reason people do this … It’s like, “How do I spend more money, but save just enough-”

Matt Mulcock:
Just enough to secure the future.

Ryan Isaac:
“… so that my future is going to be all right?” Which usually means, having enough money to live in the future, but probably not die passing on millions and millions of dollars-

Matt Mulcock:
Unless that’s your goal.

Ryan Isaac:
Unless that’s your goal.

Matt Mulcock:
If that is your goal, adopt me. I’m up for adoption.

Ryan Isaac:
Please do. Pass it to me. So that’s the question. The first thing I’m going to ask you is have you had this conversation with people? And if so, give me some context about what this conversation is like when people are asking this question.

Matt Mulcock:
Yeah, I mean, it’s what you highlighted. It’s people that are trying to figure out … And what we always tell people is, financial planning done right — in our mind — is striking this balance between living your best life now, while also securing your future. So what that comes down to is what you’re describing right now, which is, this all starts with saving, how much do I have to actually save for the future, again, without sacrificing what I want to do with my life now?

Matt Mulcock:
So the conversation, from my perspective, when this comes up, is I ask a lot of questions, because like you said, we’re not going to be able to answer this as a general-

Ryan Isaac:
Yeah, it’s so individual.

Matt Mulcock:
Yeah, it’s so individual. But that all starts with questions around, “All right. Well, what’s your vision for your life now and your vision for the future?” I mean, your best guess for the vision of the future. What’s your timeframe? What are you trying to do with dentistry right now, with your business? There’s a big, big difference in building a DSO versus running a lifestyle practice where you want to run location with five or six chairs and just find balance. There’s a big difference there. Hobbies, travel, like there’s so many different factors. Your kids, kids’ college. Basically, it starts from my end with a lot of questions to try to uncover the different factors we have to consider when it comes to answering this question of, how much do you have to actually be saving?

Ryan Isaac:
I think this is always the reason why this gets asked, it’s always about the house we live in, isn’t it?

Matt Mulcock:
Oh, I mean, yeah.

Ryan Isaac:
Isn’t it always the house?

Matt Mulcock:
Huge, yeah.

Ryan Isaac:
Last time I had this conversation with a client, the call started with this question. It was like, “We want to do this in our house …” Basically, have a new one that was a lot more expensive-

Matt Mulcock:
Which, really quick, by the way, when that comes up — you know this Ryan — they’re never calling you to ask your advice on that. If they’re calling you to ask you about a house, it’s already been purchased.

Ryan Isaac:
Yeah, the house is happening.

Matt Mulcock:
It’s done. Or it’s already in their mind, like this is happening. I’ve never once ever had someone come to me and be like, “Hey Matt, we’re thinking about this home upgrade.” And I’m like, “Okay, when are you closing?”

Ryan Isaac:
We’re doing it.

Matt Mulcock:
That’s really what I’m asking.

Ryan Isaac:
This episode’s T-shirt is [#TheHouseIsHappening 00:07:06].

Matt Mulcock:
The house is happening.

Ryan Isaac:
The house is happening.

Matt Mulcock:
It’s only a matter of time, just give in.

Ryan Isaac:
It’s always the house. Yeah, so I had a conversation not too long ago, it started this way, “Hey, we’re going to do this thing with our housing. Basically just upgrade it. Really, really expensive. We know you tell us we need to save X amount, but how low can we go before we’re going to be in trouble?”

Matt Mulcock:
How low can we go? I love that.

Ryan Isaac:
What is that limbo?

Matt Mulcock:
I’m playing limbo. Like how low can I actually go here?

Ryan Isaac:
That’s usually when it comes up, it’s usually a housing decision, which is kind of fascinating in itself, really. I mean, that’s such a fascinating topic of personal finance of how much the house drives how our entire lives are going to go, you know? And sometimes it’s not because the house is crazy huge, it could be just because the house is in a really expensive city. We have a lot of clients in really expensive cities and their houses aren’t that big or cool.

Matt Mulcock:
Going through this conversation with a client right now, that is in a very expensive area. And yeah, it’s not that the houses themselves are amazing, it’s just that the area that they happen to live, it takes a lot more to get a normal house.

Ryan Isaac:
So much. And there’s so much that goes into that too because this decision for a lot of people will affect, obviously, where they live, and where they live will affect probably how they work and where they work, it’ll affect their lifestyle, their hobbies, the things they do in their free time with their family, your mental emotional state, your quality of life. But it can also affect how long you end up working, which has a dramatic impact on the way you work today. Are you happy? Are you balanced? Is the way you’re working today, sustainable?

Matt Mulcock:
Yeah. Do you wake up every day saying you hate your life and you want to get out as quickly as possible, or do you love what you do?

Ryan Isaac:
Yeah. A very big difference.

Matt Mulcock:
Very big, yeah.

Ryan Isaac:
So today, I thought we could maybe … I kind of wanted to start with some guidelines on what we normally tell people about a net worth and a savings rate – some of this might be familiar to people — and then I’ll walk through what I’ve done for clients who are trying to get an answer on this, what I’ve done for myself. Let’s get personal here. Let’s just get really close and cuddly.

Matt Mulcock:
Let’s just drop the walls, Ryan. Take them down.

Ryan Isaac:
I’m trying to move to an expensive city right now.

Matt Mulcock:
Be vulnerable.

Ryan Isaac:
Yeah, I want to move to an expensive coastal city in California so that I can be near the ocean and surf.

Matt Mulcock:
Yeah, you want to go back to my old neck of the woods and I’m super jealous. I want to join you.

Ryan Isaac:
I do. The answer I’m telling most people publicly is that my family wants to, and my wife’s making me do it.

Matt Mulcock:
Of course, of course you’re going to throw her under the bus.

Ryan Isaac:
So I have to do it.

Matt Mulcock:
She’s a lovely woman, don’t do that.

Ryan Isaac:
It’s her fault. It’s her fault. It has nothing to do with me wanting to surf, kids, and you not having any money for college. I promise.

Ryan Isaac:
Let’s start with total term. Let’s start with the concept of having your net worth be big enough to sustain your spending. Begin wherever you want, explain withdrawal rate, whatever you want. This is a common, familiar concept that we talk about a lot. And by the way, if you’re listening to this and you want some more resources, when Matt’s done talking about this, go to DentistAdvisors.com. Push pause on Matt, then go to DentistAdvisors.com.

Matt Mulcock:
Or don’t. Let me finish and then-

Ryan Isaac:
Let him keep going.

Matt Mulcock:
No, definitely pause me. Just go to the website.

Ryan Isaac:
Go to the website and under the Education Library tab, you can find tons of stuff on net worth and this thing called total term. But Matt, treat us all like dentists who are hearing this for the first time. How do you describe our position on a net worth big enough to retire on one day?

Matt Mulcock:
Yeah, so the metric we use is, again, as Ryan said, we call it total term. So this is if someone walked up to me on the street and just said, “How do I know if I’m ready to retire?” This is the concept I’d explained to them. Total term is our retirement readiness metric. It’s really a snapshot of your retirement readiness, right? So the quick back-of-the-napkin math is take your net worth divided by your total annual spending and that’s going to give you this number, this total term number.

Matt Mulcock:
So let’s give an example. Let’s say you have a million dollar net worth and you have a hundred thousand dollars in spending. So that comes out to, if you take that million dollar net worth divided by a hundred thousand, you get 10. What that 10 is telling us is that you could live off of that net worth, those assets, for 10 years with zero growth. So there’s a lot more that goes into it, obviously, if we’re really having the conversation around getting you … You’re actually in retirement, but this is just, again, a real time snapshot-

Ryan Isaac:
Gauge.

Matt Mulcock:
Just a gauge of, where do I stand right now? So the reverse math of this, as Ryan mentioned, withdrawal rate, a very long standing rule or guideline in retirement planning in the financial world for withdrawal rate, meaning what percentage of my assets can I withdrawal and live on and have them sustain me for the rest of my life? There’s what’s called the 4% rule and basically, back in the nineties, a financial advisor did a whole bunch of back testing and all of these different environments in the market and he determined that 4% of your assets could be withdrawn and sustain you through pretty much any market cycle.

Matt Mulcock:
So what we’re trying to figure out is, is 4% the safe withdrawal rate, or is it something else? The number that we’ve come up with as a total term is 30, that’s kind of our guideline. So again, coming back to my example of like the million, hundred thousand, comes up with 10, what we’re trying to get people to is a 30. What that withdrawal rate would be, if you had a 30 total term, would be 3.3% withdrawal rate. So meaning if you had a million dollars, you could pull out, $33,000 every single year out of your accounts. We feel like that is a sustainable-

Ryan Isaac:
And never run out of a million.

Matt Mulcock:
Never run out of money.

Ryan Isaac:
Million would always remain.

Matt Mulcock:
Never run out of money. Yep. So hopefully that wasn’t too convoluted-

Ryan Isaac:
And maybe even grow.

Matt Mulcock:
That might’ve been too much-

Ryan Isaac:
No, that’s great. That’s never too much, Matt. People want more, not less.

Matt Mulcock:
I know that’s not true.

Ryan Isaac:
Yeah, that’s the way that we gauge this and that’s where we’re going to begin. Now, a few things I’ll say about this is that’s just a benchmark and it’s a conservative benchmark. It’s kind of like the most conservative benchmark, that’s our beginning point, because we know if we’re shooting for that and we missed the mark a lot over the years, maybe you end up spending too much money or you don’t make as much as you thought, you don’t save as much as you thought, you have some tragedies in your life or something that kind of derail your financial progress. We know that if we’re aiming high and we miss it a little bit, or even quite a bit, we still might end up in a pretty good position. So that’s why we’re beginning in that really conservative point. But, there are for sure circumstances where people will be fine if they don’t hit that benchmark perfectly.

Matt Mulcock:
You’re saying if they don’t hit a 30.

Ryan Isaac:
They don’t hit a 30.

Matt Mulcock:
Yeah, yeah, yeah. I agree.

Ryan Isaac:
But they’ll come at costs. For some people, it might be that they have to tap into home equity they never thought they’d have to tap into. For other people, it might be that they lose the security of knowing that let’s say their million dollars that you were explaining in the example, will slowly dwindle over the decades, it won’t always remain a million dollars and feel nice and cozy. It might start dwindling down. They might be in their late eighties and be down to 230 grand. So it’ll come at a cost, but that’s where we’re beginning for someone’s financial independence.

Matt Mulcock:
One thing I was just going to quickly add on this, Ryan, is what I tell people all the time is, so if they say, “Is 30 where I have to be to make this happen?” To your point, the answer is no, not everyone has to be at a 30 or above for this to happen. Where I always tell people is the conversation begins in the twenties. Low to mid twenties, I feel actually comfortable having the conversation and figuring out can we make this happen? 30, just to us, is a very confident, as our boy, Reese Harper, [Haas 00:15:17], would say, that’s infinity mode. Like 30 and above, you’re ready to-

Ryan Isaac:
That’s infinity mode.

Matt Mulcock:
We feel really confident you’re there and we can make this happen.

Ryan Isaac:
A thing to think about too is not all of your net worth is usable, or it’s not always preferable to use.

Matt Mulcock:
Back to the house. Let’s go back to that house.

Ryan Isaac:
Not everyone wants to tap home equity. Not everyone wants to sell a vacation home or the cabin. It’s very nuanced. This is just the beginning. This is why personal financial advice is personal and that’s why, you said this earlier, Matt, the conversation begins when this score reaches your twenties. Mid to low twenties you can start talking about it, but it comes very personal. If you’re at a score of 25, but you’re 60, okay. If you’re at a score of 25, but you’re 52, I’m going to probably worry about-

Matt Mulcock:
Little different. Little different.

Ryan Isaac:
Yeah. So it’s personal financial advice.

Ryan Isaac:
Okay, so that’s the goal target. Let’s get to the savings part. So what we know from the math of how the average dentist is going to have to reach that high of a net worth, and it’s a high net worth, 30 times what you spend in a year. Maybe we’ll get to this in a little bit, this isn’t even the conversation about changes in spending over the years.

Matt Mulcock:
Yeah, just going to say the spending is the whole thing.

Ryan Isaac:
It’s everything.

Matt Mulcock:
So really quick way, like I was saying earlier-

Ryan Isaac:
Yeah, please do.

Matt Mulcock:
… Like net worth divided by annual spending, another way to quickly calculate this is, when you say, how much do I need to retire? The reverse side of this is you can just take your annual spending and do a multiple of 25 to 30, and that’s going to give you a net worth of what you are going to need to make this possible. So again, just easy, quick math, you spend a hundred thousand dollars a year, let’s say, that’d be low for most of our clients. Let’s say you spend a hundred thousand dollars, you multiply that by 25 to 30, that’s 2.5 to $3 million that you’re going to need to make work optional. And most likely, outside of your house.

Ryan Isaac:
What we’ve learned though, is that most dentists need to save a pretty good chunk of money in order to hit these values. We’ve always been big about talking about 20% savings rate. What did we say? 20 for 20? That’s what we always talk about, right?

Matt Mulcock:
Yeah, that was the T-shirt you wanted to do.

Ryan Isaac:
20% for 20 years, 20 for 20. Like someone’s going to be in a good spot if you go 20 for 20. I mean, I don’t know if you’re going to be perfect or done, but you’re going to be good.

Matt Mulcock:
Yeah, I honestly don’t know if that would get you to a 30 just based on there’s a lot of factors here, obviously.

Ryan Isaac:
Yeah, 20% of what? Like 200 grand or a million dollars? It depends. And what are you spending, because that’s the denominator and that’s the whole thing. Again, this is another benchmark. So we have a pretty … I was going to say, we strongly encourage. We’re more like, almost strongly annoying people to save 20% of their income or more. It’s more than encourage.

Matt Mulcock:
Yeah, we’re strongly pestering people to be at 20%.

Ryan Isaac:
It might be a pester.

Matt Mulcock:
Yeah.

Ryan Isaac:
Yeah, there’s the scale of encourage and then pester-

Matt Mulcock:
We’re pestering.

Ryan Isaac:
… and then restraining order. I don’t know. Wouldn’t that be crazy if someone got a restraining order because their advisor was trying to bug them about saving too much.

Matt Mulcock:
Yeah, how many times have you been arrested about this, Ryan? About savings rate.

Ryan Isaac:
About savings rate.

Matt Mulcock:
Yeah, you’re in front of the judge, the judges is like, “Ryan, really? Again, savings rate?”

Ryan Isaac:
Savings rate, man. What do you want me to do? It’s savings rate.

Ryan Isaac:
Now, let’s tackle this issue of what’s the minimum. So again, it’s so nuanced because it depends if you’re 35 and asking this question, or if you’re 50 and asking this question. It’s so nuanced. If your income and your profitability and your spending and free cashflow … It’s just so many things that go into this. But let me ask you this first, Matt, have you done this with a client before where, let’s say their ideal target savings rate was 25%, but they’re asking how much lower can I go before getting myself into trouble? Have you done that before?

Matt Mulcock:
Yeah.

Ryan Isaac:
Have you had to navigate and calculate before?

Matt Mulcock:
For sure.

Ryan Isaac:
What was that like? How did that conversation go? Or how did you start to work on that?

Matt Mulcock:
Yeah, so basically I let them know, we can run these calculations all day long, but we’re putting numbers into a computer, into this calculator, and life never turns out the way we think it will turn out.

Ryan Isaac:
And also, as Reese Harper’s always said, guesses make messes.

Matt Mulcock:
Guesses make messes. Exactly. I mean, we can run the numbers all day long and … Whenever this comes up, this usually is what, this is part of this conversation from our clients, it’s usually some justification for their future self. So for example, it’ll be like, “Yeah, well, I spend this now, but like, I’m not going to spend that when I’m retired.” Which is a lie, but by the way. You don’t know it’s a lie, but it is a lie. So stuff like that where they’re trying to justify, “Yeah, Matt, you’re telling me I need to save 25%, but really I can go lower because I’m not going to need X, Y, or Z thing when I’m retired.” So that’s-

Ryan Isaac:
Danger zone.

Matt Mulcock:
Danger zone. So that’s a lot of the conversation-

Ryan Isaac:
Tom Cruise, straight up Top Gun danger zone. Don’t go there.

Matt Mulcock:
Yes, the white shirt on the [bullet bike 00:20:31]-

Ryan Isaac:
Collar.

Matt Mulcock:
Popped collar, all of it.

Ryan Isaac:
Danger zone.

Matt Mulcock:
It really is. So I mean, that’s part of the conversation, is it helping them understand that, not only anecdotally, just from our experience, is that not true, but studies show — and this is actually real, this is a real study – a lot of studies show that no, you’re not going to spend less in retirement. So it’s first built around that conversation around your lifestyle now is what your lifestyle is going to be when you retire, somewhere in that range. Then, it’s a conversation around great, we can run these numbers, I can get you to the minimum viable savings rate, that I feel comfortable with telling you. Okay, if we’re saying optimal is 25%, maybe 18% is minimum, but that comes down to the likelihood of having trade-offs in the future or the likelihood of something going wrong goes way up. So you have to understand that.

Ryan Isaac:
The costs.

Matt Mulcock:
Yep, and one of those costs being-

Ryan Isaac:
The costs and the risks.

Matt Mulcock:
… “Hey doc, there’s a solid chance you’re going to have to work longer than you think.” That’s just a fact. You want to lower your savings rate? Most likely, right now you’re telling me 60, you better be prepared … That’s a spectrum anyway, when someone tells me 60, I’m thinking, all right, anywhere as early as 55 as high-

Ryan Isaac:
63, 64.

Matt Mulcock:
Yeah, maybe 65. I look at it like a 10 year spectrum.

Ryan Isaac:
Oh yeah, give or take.

Matt Mulcock:
So if you’re saying you’re lowering your savings rate to this minimum viable savings rate, okay, but now that 60, for me, is actually … I’m banking on you probably looking at like 65 to 66.

Ryan Isaac:
Yeah. I like that you bring that up because immediately … Actually, I’m going to back up a little bit because I’ve been doing this for myself too. I’ve worked really hard-

Matt Mulcock:
You’ve been working all the numbers. You’re up at 3:00 AM, you’re staring at the screen.

Ryan Isaac:
I really am, I’m not joking. If we’re going to decrease our savings rates so you can live somewhere expensive, then it has to be on the table that you work longer. Like that has to be in your brain. And if that is like unfathomable … Fathomable? How do you say it?

Matt Mulcock:
Unfathomable. If it’s inconceivable-

Ryan Isaac:
It’s [incontheivable 00:22:42].

Matt Mulcock:
Incontheivable.

Ryan Isaac:
Oh my gosh. Inconceivable.

Matt Mulcock:
If you get that reference, you get some swag.

Ryan Isaac:
Shout out.

Matt Mulcock:
Shout out.

Ryan Isaac:
It’s inconceivable — let’s go with that one — then we got to pause this decision and you need to figure out your career anyway because that’s a bigger time bomb than the big house you’re about to buy or whatever. So number one, right off the bat, on the table has to be, can you work longer? Can you see yourself doing this longer than you thought, in some capacity. Maybe it’s not full out like you’re doing now at 40. That’s number one. Number two, you have to have very … And this is where, if you are not financially organized, this is going to be very difficult. You have to be very clear about how your net worth is getting built and are those assets usable? If you’re about to buy a big house, well guess what? That means more of your money is going to be paying down this asset-

Matt Mulcock:
That isn’t, most likely, usable.

Ryan Isaac:
It’s not as easily usable. I mean a house sure is usable, but that means you either got to leave it and go to something cheaper or you got to stay in it and have a reverse mortgage or a line of credit or something-

Matt Mulcock:
You got to re-leverage the property. Yeah.

Ryan Isaac:
… and then be at the mercy of whatever rates and lending is at the time. But it has to go on the table, just like your career, that we might have to tap into assets you don’t think you want to do. So the family cabin and the dream home you’re about to move into, has to be on the table. You have to mentally be in a place where you’re like, “Okay, when I’m 70, this beautiful dream home might not get gifted to my kids because I’m going to have to pull …” Especially if it’s multimillion dollar situation.

Matt Mulcock:
Oh yeah, definitely.

Ryan Isaac:
You’re talking about starting to run out of money, but you’re sitting on two and a half million dollars in a primary residence or vacation home combined. That’s got to be part of the conversation. I know this from experience, we won’t be able to give any kind of help or context or like, “All right, which assets are we going to take first? And what’s the timing and the structure and how our [inaudible 00:24:40] is going to play out,” unless there’s high amounts of organization and communication for many years leading up to that. You can’t be 70 and then throw this on an advisor’s plate. It’s going to be really tough to deal with.

Ryan Isaac:
I don’t know if anyone of you’s surprised listening to this, but there are a lot of people who can’t even wrap their heads around the idea of tapping equity in their house once it’s paid off. They’re 65, they’re 70, beautiful, gorgeous home, it’s totally paid off. I mean, 30 years of your life you pay that thing down and then you turn around a decade later and pull money back out of it. But you have to be willing and open-minded for that. And then the career’s probably bigger than anything. Like personally, I’m sitting in a situation now at 41, I can picture myself doing this at 70. If someone will have me, if you guys will have me, I’ll keep doing this. I’m fine-

Matt Mulcock:
They will have you, Ryan.

Ryan Isaac:
We’ll be 70 together.

Matt Mulcock:
They will have you.

Ryan Isaac:
I can picture it. I’ll probably get kicked off the podcast way before then.

Matt Mulcock:
On The Dentist Money Show, we teach dentists how to make smart financial decisions.

Ryan Isaac:
You’re correct.

Matt Mulcock:
I mean, is that all it takes, Ryan, to make smart financial decisions? Listening to our show?

Ryan Isaac:
Matt, it’s a good first step, but to put your financial future on the fast track, the next smart decision is to go to DentistAdvisors.com. What you do there is you click on the Book Free Consultation button right in the middle of the home screen, and then you schedule a time to talk with one of our very friendly dental-specific financial advisors today.

Ryan Isaac:
Anything else you can think of that has to be on the table when you start saying, “My savings rates going to get lower”? I mean, immediately it’s just work longer and you’re going to have to use assets you probably didn’t want to use.

Matt Mulcock:
Yeah. That’s-

Ryan Isaac:
Anything else you can think of?

Matt Mulcock:
Or spending has to go down. I mean, that’s the thing, like-

Ryan Isaac:
Let’s talk about this for a minute. Here’s what’s been interesting. It’s kind of fun actually to be in the shoes that our clients go through. To be doing the same decisions, even though I’m so stressed out right now.

Matt Mulcock:
Really quick, I want to ask you this just while we’re on this, you going through this experience, have you found that it is far easier to give advice than to receive it or to go through it yourself?

Ryan Isaac:
There’s an entire episode working its way in my head about why we cannot take our own sound financial advice.

Matt Mulcock:
Yeah, okay, I’ve to my wife about this a lot.

Ryan Isaac:
100%. It’s hard to do. No matter how smart we are, how well versed or experienced we are, it’s so hard. I mean, we just need a [accountabuddy 00:26:51]-

Matt Mulcock:
And this is why we use each other for advisors. Our advisor group is always bouncing-

Ryan Isaac:
Constantly talking.

Matt Mulcock:
… ideas off each other about our personal lives.

Ryan Isaac:
Constantly. Yeah, let us be your accountabuddy. That’s the thing.

Matt Mulcock:
Exactly.

Ryan Isaac:
I think we’re actually making shirts, accountabuddy shirts.

Matt Mulcock:
We should. We should definitely should.

Ryan Isaac:
I’m not kidding. Yeah, I think we are.

Ryan Isaac:
So I’m going through this exercise, which is fun. It’s not fun. I hope it’s fun in the end, but it’s really helpful because it’s context for what my clients asked me and I like this. One thing that’s been interesting is I was doing the thing where I’m looking at my spending, I’m being very realistic about it, and I’m projecting it out 20, 25 years from now and I was getting pretty depressed at how big it just inflates at normal inflation rates.

Matt Mulcock:
Crap, man. Yeah.

Ryan Isaac:
And then I started doing the math and I’m like, “Well, there’s no way I can save enough money to sustain that.” The thing that I’m learning, that’s kind of interesting, is that not all of your, and this should be obvious, but it was … It’s not at four in the morning.

Matt Mulcock:
Of course, this is why you shouldn’t do this at four in the morning.

Ryan Isaac:
I’m doing spreadsheets at 4:00 AM. But not all of your spending will inflate at the same rate. For example, let’s just say 25 to 30% of your monthly spending in an expensive city is housing.

Matt Mulcock:
Oh, of course.

Ryan Isaac:
That’s totally within range. 30%, for sure. I mean, it’s a mortgage. So property taxes, that can fluctuate, but it’s not giant. Your mortgage is not inflatable, assuming you just hold your mortgage. Especially if you’re refinancing it down over the years. You can’t inflate that at the same rate that you can inflate say medical costs or grocery bills. Probably no answers out of this, but the lesson I learned is that what we always say, speculating on your future spending is really tough to do. There’s no easy way to inflate it perfectly and it’s not healthy to assume that it’ll just get drastically cut. Now, if you’re like me, I’ve got four kids and we’re hitting teenage years, like peak spending with family-

Matt Mulcock:
Most expensive … Your Costco bill like literally gives me heart palpitations.

Ryan Isaac:
Yeah, man. It’s possible that when they’re gone, my expenses go down a little bit. I’ll probably replace those costs with something else I want to spend money on. It’s also possible it goes up. Like many people, kids leave the house and they pay for adult children into their lives and costs go up.

Ryan Isaac:
So here’s my takeaway, the lesson I learned, we can bring this home and then want to hear your thoughts on this, you can add anything to it. Three lessons, I guess, takeaway from me was: the situation’s incredibly personal. Like my situation can’t be a template applied to anyone else and vice versa. That’s just impossible. It’s so nuanced and personal and unique and different. Not because I’m special at all.

Matt Mulcock:
You are a special. Don’t even try.

Ryan Isaac:
But it’s just a unique situation.

Matt Mulcock:
You’re special, yes.

Ryan Isaac:
But I learned that my career has to have longevity. It has to. Which, man, if I’m a dentist and my career’s in my hands, then I start thinking about things like insurance and disability insurance and I start thinking about the activities that I do that endanger my hands and all kinds of stuff.

Matt Mulcock:
Yeah, bare knuckle boxing. You got to stop that.

Ryan Isaac:
Stop the backyard fights, dentists.

Matt Mulcock:
You got to stop the backyard YouTube fights. Yeah.

Ryan Isaac:
We’ve got to stop that. It’s so 2002, let it go.

Matt Mulcock:
I know.

Ryan Isaac:
Number two was that certain assets have to be on the table as usable assets for the future. So if I’m in a beautiful spot I love, I have to be willing to pull equity out of it or sell it one day, which might be tough but it has to be on the table. And number three is that spending is really tough to project into the future. It could be lower. It could be static. Part of it could inflate and part of it could deflate. I don’t know. But it’s really hard to project. So I guess the cautionary tale that I will tell that I’m walking through this myself, so I’ll let you know if this is even advisable.

Matt Mulcock:
We’re going to be a year from now and there’s going to be a whole different tone-

Ryan Isaac:
It’ll be the update.

Matt Mulcock:
Yeah, it’ll be update show.

Ryan Isaac:
Yeah, it’ll be the update show. I mean, my experience is just tread carefully and do not, I guess, underestimate the amount of math and organization and checking and checking and checking and rechecking and rechecking the numbers that is required to do this because the risks go up and you put yourself in future jeopardy of not having the money you wish you had by making some of these decisions. I said this in the beginning, so no one can be mad at me, this wasn’t an answer to the question. There’s no conclusion here other than-

Matt Mulcock:
We literally spoiled it at the beginning, you probably already-

Ryan Isaac:
I told you.

Matt Mulcock:
If you made it to this point after that spoiler, congratulations.

Ryan Isaac:
Thank you for being here. I told you though, there’s no specific answer other than the three takeaways: career longevity, projecting your spending, and what assets you’re going to use. And all of those things not only takes an incredible amount of work upfront to be organized and understand them in context, but it is something that has to be worked on multiple times per year with a third party accountabuddy. And that’s the end of my rant. Matt, what do you have to say about all this?

Matt Mulcock:
I love it. I mean, I think everything you said, obviously, I completely agree with. The theme that I’m hearing here throughout this whole discussion, and when we talk off-air, as they say-

Ryan Isaac:
Off the record.

Matt Mulcock:
… when you’re radio DJs like us. No, but when we’re off-air and we’re talking with advisors or we’re talking to clients, the theme here is, to me, as I hear this, is understanding that all of this is just navigating trade-offs, that’s all this is, and understanding what trade-offs are there. So when you’re talking about, even again, the three categories you mentioned or what you’re going through in your own life right now, you’re making a trade-off, understanding that you’re investing in your lifestyle for you and your family. You guys have decided this, knowing that financially, it maybe takes away some of your buffer. It’s not like you’re, obviously, living paycheck-to-paycheck at this point, of course, but maybe you’re saving less, maybe more of your assets are going to be in your home, and maybe you have to work longer.

Matt Mulcock:
But you’ve had this conversation with your family to figure this out and to acknowledge that those trade-offs are there. I know we always joke guesses make messes, but at the end of the day, really, there is some guesswork that is inevitable and that is unavoidable. And so you’re doing your best to put the odds in your favor, to find this balance, and understand, “Look, these are the trade-offs if I make this decision now or the most likely trade-offs. I’m okay with it and we’re going to move forward with that.” And then you’re going to-

Ryan Isaac:
Those are the risks I want to take.

Matt Mulcock:
… you’re going to reassess on a regular basis, which again, comes back to the idea of having an accountabuddy that you’re talking to on a frequent basis, multiple times a year, to review and go over-

Ryan Isaac:
Where you’re at.

Matt Mulcock:
… where you’re at, and has my life changed?

Ryan Isaac:
Is it bad? Is it fine? Is it good?

Matt Mulcock:
Yeah, and do I really feel good about this trade-off? This is why, again, this is financial planning, not a financial plan. You got to have this communication going on at all times.

Ryan Isaac:
Well, thanks for all the input, man. Yeah, listeners, thanks for being here-

Matt Mulcock:
As always.

Ryan Isaac:
… and sticking around with us. It’s been fun to explore this. Sometimes we get to, as advisors, explore things personally, like go through things, make decisions that you are also making as our clients and listeners and-

Matt Mulcock:
I mean, we’re people too.

Ryan Isaac:
We’re people too. Advisors are people too.

Matt Mulcock:
We’re humans too. And believe me, we’re going through these, as Ryan’s highlighted, we’re having these same conversations in our own personal lives. I’m sitting down with my wife multiple times a month and I mean, she hates it because I’m always bringing this stuff up. But again, we’re going through this all the time. House upgrades and vacationing and moving places-

Ryan Isaac:
Spending, saving, debt-

Matt Mulcock:
Spending, saving, all of it. We’re in the same boat.

Ryan Isaac:
Yeah. Investment portfolios are the same, the conversation’s the same-

Matt Mulcock:
Do I pay off debt or do I invest? I’m going through that right now.

Ryan Isaac:
I know. Same stuff. And it feels good. I think that’s a good invitation though, too. It feels good to hire someone who knows your situation. So if you’re thinking about hiring somebody and you’re looking for that help, DentistAdvisors.com, it’s all we do, that’s all we know.

Matt Mulcock:
This is literally all we do.

Ryan Isaac:
It’s all we do.

Matt Mulcock:
Like I don’t even know my kids. I don’t.

Ryan Isaac:
You just only know dentists.

Matt Mulcock:
It’s all I know.

Ryan Isaac:
Reach out to us if you want to have a chat, DentistAdvisors.com, click the Book Free Consultation link and have a chat with one of our advisors and/or — do both — go to the Facebook page Dentist Advisors Discussion Group, post a question, we’ll post an answer. Thanks for being here with us and we’ll catch you next time. Take care, Matt. See you later, everybody.

 

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