The elephant in the operating theater
US Medical costs are out of control. But rather than dealing with that, voters will be faced with political policy decisions based on whether the govt should pay for it.
At whatever stage one is at in one’s life, knowing that we all have an expiration date is a constant consideration in all things that we do. Yet few of us actually see the forest for the trees in our lives, and our planning is often done reluctantly rather than strategically. In this episode I’m going to attempt lay out the facts of life expectancy and how the current planning of the financial services industry & government policy needs a serious amount of rework.
Talking about the end of something can be depressing. This is not meant to be depressing at all, but to at least shine a light on the facts surrounding the human experience and our existence. If we do not accept reality at whatever stage in life we are at, we have little ability to plan and organize to have the greatest quality of life as we march towards that end.
Why is this important to being unconstrained? Because ultimately we hold ourselves enslaved by often outdated dogma and social mantra. In fact, if you were to embrace government and social policy in regards to life planning, you’d never give yourself permission to actually enjoy and live your life to the fullest. We make choices everyday to forgo the immediate while planning and preparing for the future. Some of that is prudent, but most of the time the future is unknown and the only thing we have to go on are generalized statistics.
The news media celebrates those that reach a ripe old age. Not a week goes by when I don’t see a human interest story on media somewhere of someone reaching the age of 100. In the UK, they often knight people who do that. The recent story of Captain Sir Tom Moore, the “national inspiration” who recently died and raised almost 33m pounds for NHS Charities in Britain, tugged at the heart strings. The fact that people saw a long life as a national inspiration, clearly tells us that we all yearn for a long life. A life of purpose, a life of meaning. That maybe one day we can, like Sir Tom, inspire a nation or give to so many.
But while we are watching those news stories, the millions that die at far younger ages never make much of a blip on the human interest news ticker. The normal causes of death are not COVID19, unlike what the media tell you, but are the typical complications of poor health or sudden heart attack, longer illness such as cancer or sometimes an abrupt and unexpected end due to a road accident or some other human misfortune.
So everything that we do each day is a compromise between what makes us and our loved ones happy that day, versus what will provide all with the security for the future. If you are lucky enough to live in a country or have some form of counterparty that will underwrite your own security in your latter years, it takes a lot of stress away. But more importantly, it allows you to live each day now to the max rather than having to sock away and defer the immediate for some future protection.
There must be balance here though. What is the point of living a life where each day you constantly defer enjoyment to the future, when you have no idea if the future will ever come? I’m not talking about some national crisis like war or some unexpected world event such as a pandemic, but just the basic simple reality that we all have an expiration date.
Some will put their faith & trust in belief in religion or a higher power, and defer the fate of their lives to them. Others will take full control and reject the divine. Most of us – a hybrid of the two. Whatever your position, it is all really due to us living in a world where our existence is not under our full control and that makes anyone feel scared and afraid.
There is also a natural difference in people as to how conservative they might be to their lives, in view of a future. Many wish to throw caution to the wind and live for the moment, while others will only live for a future that they cannot guarantee.
And that brings me to the financial side of life planning. Clearly if you have no money, you are enslaved. Either you will die because you cannot meet your physiological needs, or you will be 100% reliant on counterparties to provide for you and typically that means the bare minimum – probably at a level that is only a few steps higher than just survival. Not a life anyone would wish to have, to be honest. The amount of social security provided to retirees or the amount of disability payments from welfare to people is typically so low that you can barely get by with it. Clearly we need a better solution, and if the onus is on us to provide it, then we must plan and strategize around that.
When I see the default position of most Americans to sock money away into a 401K or IRA program because it is some level of stress relief that when they come to an age that they can access the money, at least it will be there for them. But few actually use due diligence to see whether that is prudent for them. Following the herd down this path typically has minimal financial benefit to the 401K holder, but allows the counterparties that control those funds to enjoy the use of them. Yet it is often easier to just put the blinders on, go to work, defer that benefit until the ripe old age of 65 or whatever, and just focus on raising your family or just existing.
At least that is how it is painted to us. Just put your money and faith & trust in your banker or government, and you’ll be just fine.
How many of you actually believe that? How many of you actually believe that should you fall on hard times, a counter party will be there to bail you out? Most of the people that I talk to complete reject giving up control to a counterparty. Yet they openly embrace their IRAs or 401K, favoring some slave master to “match” their contributions to it. They never ask the question, “What exactly am I doing here, and what am I doing it for?”
OK, so let me drop the proverbial “turd in the punchbowl” here. I’m going to lay some statistics on you that might have you change your strategy:
In Sept 2019, Yahoo Finance reports 64% of Americans aren’t prepared for retirement and 48% don’t care.
Forbes magazine, in an article in 2019 titled, “The Average American can’t save enough to retire”, state “Say you want to stop working at 65. You’re in good health and your family tends towards long lives. You expect to reach 90, having been retired for 25 years.”. This is where the financial services industry’s head is at, or at least what they are tell you is fact.
Suze Orman famously stated that you need to save $5 million to retire. Most of the financial services industry rejected this outright – with often extreme prejudice. She criticizes the FIRE movement based on their numbers.
AARP will give you some blended number based on government welfare payments from social security + your savings, etc. to get you through retirement.
You can see that each person here (who have their own personal bias of course) has a different answer, making the whole thing as confusing as possible. There are tons of blogs and websites out there of people in the FIRE movement waxing philosophically about how to calculate your FI number. Some say $1 million is enough, to draw down $40K per year of income. Some say less. Some say more.
Again, the jury is out on who has the right answer. It sounds like something I constantly get back from my lawyer when I ask them a specific question. “It depends”.
Now I’m not going to go into detail as to why the whole concept of retirement is stupid. I’ve done that in so many other podcasts and articles at beunconstrained.com so I don’t need to repeat it all here again. But all of these people chasing windmills with the question of “How much do I need to retire?” are asking the entirely wrong question. And they are doing this because they have been pre-programmed to think that is the right question.
Meanwhile our entire financial services industry profit from this hypnosis. Every $1 that you put into an IRA or 401K that is managed by those massive corporations – you know, the ones with the biggest skyscrapers in the center of the city that you live in or near – take your hard earned money and speculate with it, backed by Fed Reserve low cost money and insurance, and make 20% on it, while you are paid a paltry 2 or 3% in your so called “conservative” investment. And you want it conservative because god forbid your entire business model here is that at the ripe old age of 65, you want to get off the working train and settle for a final chapter of leisure and relaxation. And the last thing in the world you want at the age when you can’t or won’t fix an upside down yield curve is risk.
Maybe by then you have amassed enough money that 2 or 3% withdrawal rate will allow you to maintain some semblance of a standard of living that is a poor man’s version of the previous quality of life and lifestyle that you once enjoyed.
Now let’s get real. If there is one thing that you take away from this episode and hopefully it burns an indelible memory in your psyche is the life expectancy in the United States. Now other countries will have their own (unfortunately most of western Europe have longer life expectancy due to the habits of life and better control of work/life balance), but substitute your local numbers here for the ones I will unveil in the USA.
These statistics are from the CDC (the Center for Disease Control) in the United States. Yes, that CDC. The one that have been dealing with the pandemic, vaccine rollouts, etc. So they have standing here with these numbers.
For the past few years, I’ve been basing all of my calculations on life expectancy on numbers that I got from about 2016. Those numbers showed that the average US male has a life expectancy of 79.3 years.
Obviously people live much longer than that. But if you have an average, that means that at least half of the people live less than that. So while you might want to bury your head in the sand, or call me out because your Uncle Charlie is 90 years old, he is not the norm. Yet the financial services industry will tell you that you should plan your retirement as if you are going to live until Sir Tom in the UK – 100 years old. And they continue to promote the myth that life expectancy is going up because of advances in technology, etc. so you should be thinking of living until at least 90 years old.
WRONG! Let’s blow that one out of the water.
Fact: The CDC published their 2020 life expectancy numbers a month or so back, and the results are downright shocking. The US male average life expectancy has DROPPED to 75.1 years, while US female life expectancy dropped to 80.5 years.
Holy crap! That’s a major drop. I mean to put context on this, if you were on your deathbed and someone said to you, “How about I give you an extra 4.2 years of life?” you’d take it, right? You’d embrace that so hard. You’d plan your bucket list, you’d setup your kids for the future without you, etc. 4.2 years is a huge gift to anyone that is down to their last minutes.
But we don’t respect time, do we.
Now you could say, “But Myles, those numbers are due to COVID deaths. We are in a pandemic, you know.”. OK, so if that was the case, how about we go to the 2019 numbers from the CDC.
In 2019 the published life expectancy numbers for a US male was 76.3 years.
That’s a hell of a lot worse than the 79.3 that I thought it was. 3 years lost.
So if these numbers are “averages”, why is it that our government policy regarding social security, or the financial services industries definition of when you are eligible for a pension, etc. have fixed years?
If we assume eligibility for full social security at 67 years old, according the very same government numbers on life expectancy, you get a wonderful 8 years in total to enjoy it.
What were you doing 8 years ago? For the younger listeners, that might seem like a lifetime, but considering if you were 30 years old, 8 years prior you were probably graduating college or something like that. And the older you get, the shorter 8 years feels like. Hell, I’ve lived in the same house for almost 20 years and it only feels like yesterday that we moved here. So 8 years? That’s back to 2013 – 5 years after the global financial crisis. The 2nd term of the Obama presidency. The year of the Boston Marathon bombing, the year when the supreme court recognized same-sex marriages, etc. It wasn’t that long ago.
The time period from then to today is how long (statistically) you have left to live after you retire, if you follow the direction of the governments and bankers.
And look, what drives down these numbers when since 1980, the average American spends 25x more on health care to get this incredible life expectancy increase? While the average salaries only went up 1.6x? Well in 1980, again according to the CDC, the life expectancy for an average US male was 73.7 years.
What a great return on investment. Spend 25x as much on health care, and we’ll give you another 1.4 years of life.
Yet the vast majority of the human population in the USA can’t afford to go to a doctor if they get sick, are living pay check to pay check, can’t afford time off work, are over stressed, eat shit which we call “food” because it can be delivered to them in minutes so they can get back to the office and do the bosses bidding, live in constant stress of losing their jobs or being homeless, and finally are hypnotized to spend more time worrying about politics that doesn’t serve them, than they do about looking into the mirror at their own lives and answering the question, “Am I happy?”. Those that can’t will use what surplus cash they have (or debt that they are allowed to take on) and spend it on crap made in communist countries that we don’t need, on websites that lure you in for next day delivery or some other instant gratification. They think of medical care as “retail therapy” yet the friction between spending money is lower and lower as we move away from the ritzy shopping malls of the past to the glossy websites of today and the future.
We defer even the simplest tasks of going to the grocery store to third parties with the embracement of Insta-cart, or we don’t cook at home because it takes too long, whining about the washing up of the dishes, yet we all have technology that does that for us. We don’t spend time to grow food or buy from local vendors at the farmers market, because the super market that has the supply chain so well dialed in can provide the same food to us for half the price as the local farm. The concept of farm to table is a distant myth to most.
Meanwhile the pollution and debris fields that we create, particularly with plastic waste, ends up eeking into the food ecosystem as fish digest minute amounts of it, and then we eat the fish, and…. Well you get it.
We are killing ourselves. So yeh, the statistics are right.
Is this going to change soon? I can’t see that happening. So let’s get back to the money side of this story.
Here you are today…. Working a job, having money taken from you by the employer or you volunteering it up to invest in some 401K that your company allows. Or maybe an IRA or some such other “financial vehicle”. You keep working at your job and time to time you check on how well your 401K is doing. Some government politician wants to pat themselves on the back by telling you, “I’m doing such a great job for you – I mean look at how your 401K is doing?”.
But if you wait until you hit some magic retirement date, it will be too late. You will get at best 8-10 years to spend it based on statistics. And the chance of that getting better in a post-pandemic world is next to zero.
We turn to virtual realities to escape the inevitable world we live in. Sometimes you get a win here or a win there, maybe you bet on Gamestop or Bitcoin. Maybe you bought Tesla or Apple stock when it was worthless. Maybe you found some loophole somewhere that others don’t have, and you have saved up enough money.
Do you take the red pill? Do you leave The Matrix now? Do you quit your job? Do you “retire”?
Well what do you expect to be doing with your precious time in a post-employment world? Will you do something of substance because you know your passion and purpose in life? Probably not because the very same employment system stopped you from discovering any form of evidence that might tell you what that purpose or passion actually is. You left education in high school to go immediately into education in college, to study something you never knew you wanted to do or be, and you came out the other end with student loan debt and where the vast majority of people never actually work in the field of their study or degree from college.
The 4+ years of lost opportunity back then were considered an acceptable cost of entry to the “middle class”, but there is no middle class anymore. The 78% of people living pay check to pay check are making more than the average salary.
Imagine if you were 75.1 years old and someone said, “Hey I’ll give you back those 4 years you lost in college?”. What would the value of that time be to you? Priceless.
Imagine if you lived a life of purpose without stress, where you had the time to choose the food that you put into your body, exercised regularly and had access to high quality, affordable and available health care when you needed it, so you could be pro-active against things that could kill you.
Imagine if you used the very same hacks that the wealthy Gamestop Reddit folks did to make bank out of a flaw in the financial system, but you used those hacks to gain years, maybe even decades of time in your life. So you could tilt the odds in your favor and live a life like Sir Tom did?
Imagine if you had time to spend with the family and not at the office. Imagine if you didn’t have the need to embrace “retail therapy” because there was nothing sick in you that needed the therapy?
Imagine that your actions showed your kids, your community, a path out of this mess. A path that refutes the CDC statistics, avoids banksters and sharks who want to steal your investments.
Now I’m not going to tell you the answer here. Because that answer is different for every living human being on this planet. I don’t know your financial situation, what village you live in, what city is your domain, what stage of life you are at, etc.
I only ask that you spend time – and I mean more than some mere glimpse – at trying to paint the picture of imagination of what your world could be. And then maybe you would want to reside in it for a very long time.
We give up our control of our future to being just another data point in a statistical chart that clearly isn’t working. We are told to not embrace our own future, and to give it up to the state or the country or social mantra. And as I have said over and over on this podcast and through all of my articles, teachings, speaking events, etc. we must wake up. This isn’t working. And if you pretend it is, it comes at your peril.
I’m not trying to tell you that you don’t need some insurance policy in life. But the best way to avoid the adverse events that require insurance, comes from the pro-active actions you take today. That might be a change in diet. It might be a change in employment. It might even be a change in the country you live in. Maybe you feel like I do and that is the benefits of the 21st century with technologies and easy access to things has come at a massive cost that a void is left in all of us. A lack of community, basic human kindness and supporting each other. I see this directly when I visit countries like Italy or Mexico. And I’m not trying to single out any one country for this, but a society based around family, shared value for each other, and an “If you fall down, we’ll pick you up” is not some political statement. It is real life there.
We are all trying to live a long life. We are all trying to win at this. But we all know we have a life expectancy and that we only get one shot at this life. No one wants to screw it up. That doesn’t mean you sell out your rational thought, you gut feelings of what is right or wrong, etc. to some banker with a 401K plan, or some faith and trust that your government will pay you a reasonable income to live when you are old. I personally would never put something as critical as that in the hands of a counter party I had no control over. Sure, when I’m in my final 5 years of life or so, and my mind is going and I can’t manage things anymore, maybe I should plan for that. But that doesn’t happen at the age of 65. So why am I investing all of my hard earned money on the basis that it does?
The answer to all of this, in my mind, is financial sustainability. Owning things that make you an income with a minimum of your physical labor. It is why the statement, “The rich don’t have jobs” is true. They own assets and the assets pay them to own them. The assets are typically inflation proof and they have a minimal amount of time required to manage the assets. The rents collected from your portfolio of real estate pays for your living costs. The dividends from your business investments, or the blue chip stock dividends that you get. The annuity on the insurance policy or the vending machines that you empty with the coins, etc. Those things mean you don’t have to work. And they keep going when you are 65, 75 or 85. If even managing those things gets to be too much, then you can sell them and draw down on the cash from it, or you could just give up a small percentage of the income and put the management in the hands of a property manager.
Your choice, but ultimately it is about breaking free. Because once you have established a reliable and regular cashflow that covers your living costs, are you not your own social security fund? And if you diversify them (even over international regions), the you can reduce or mitigate the risks of any one point of failure. That’s just sensible.
We call that smart. Smart income, actually. It is a core part of why financial sustainability works. I live this way and have for a long time. I still can choose to work on projects I believe in if I want. Or not. It is my choice.
I do know, however, that if I want to reduce my life expectancy, it will more likely come from psychological stress. That might not be stress related to not having enough money, but the empty feeling that comes from leaving the traditional work force and realizing now you have to make it on your own. The older you are, the longer you leave it to come to this point, the more at risk you are for physical health related issues from this transition. There are countless studies out there of corporate pension program numbers that don’t look favorably at life expectancy after retirement.
So how about we remove retirement from the dictionary entirely. How about we focus on investing in assets that pay us to own them. And little by little, piece by piece, we build that up to a point where it provides you with the income levels you need to be secure and get your time & freedom back.
That’s not going to be taught to you in some university or promoted in some financial services investment seminar. This is just me, a regular guy – a contrarian, telling you what is often attributed to Albert Einstein. “The definition of insanity is doing the same thing over and over again and expecting a different result.”. I’m no Einstein here, nor do you have to be to see the bleeding obvious.
And one last statement – Albert Einstein died in 1955, at the ripe old age of 76 years old. Statistically he lived longer than the average US male in 2020. And in 1955, the statistical average US life expectancy was 66.7 years. Not bad – 10 more years of life. Way to go, Einstein.