December 15, 2024 • 58 mins
In this episode we welcome the legendary Bill Bengen! He is the creator of the infamous 4% rule that is referenced in any quality conversation about retirement and withdrawal rates. There's been spirited debates and lengthy discussions about Bengen's research but there is no one better than the man himself to weigh in on what he thinks about it 30 years later. We talk about the evolution of Bengen's research, his thoughts on market timing vs. managing risk, and he gives us a preview of his upcoming book geared toward consumers.
Thank you to our sponsor:
Resources mentioned on the show: (As an Amazon Associate, I earn from qualifying purchases.)
Bill Bengen on Kitces podcast/blog
📗 Conserving Client Portfolios During Retirement
If you enjoyed this episode, please follow the show on your podcast player and leave us a rating or review. If you want to watch, be sure to subscribe to our YouTube Channel. This helps others find the show and keeps us creating great content for you!
Disclaimer: Our content is for general education and information purposes only. We are not providing financial, legal, or tax advice. Always do your own research or consult a professional before making important decisions.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
I wanted to step through the firston Mars, first on Venus, go out and
actually touch and explore new worlds.
But I graduated just a few monthsbefore the first moon landing.
And it was pretty clear to me that beyondthe moon program, there was nothing
in terms of planetary exploration,except for unmanned vehicles.
I was hoping that we'd be lookingat Mars by now, we're just starting
to look at Mars 50 years later.
(00:23):
So I'm glad I didn't invest a lot of.
time in a, career inplanetary exploration.
It just never happened.
So I ended up going into my family'ssoft drink business, which is something
I had sworn I would never do becauseI had been raised in it since a
kid, but I went and enjoyed it.
end of September of 2008, I got myclients completely out of stocks.
(00:44):
And that worked out well becausethe next two months, the market
just got beat, to death.
And I stayed out probably alittle longer than I should have.
And when you're going to managerisk, I don't call it market
timing, I call that managing risk.
Okay.
Well, you just assess that marketconditions are so antagonistic
toward your portfolio, you oughtto take some protective measures.
You need an exit plan.
(01:05):
But you also need a reentry plan.
And I didn't really havea good reentry plan.
So it took me a little bit longerto back in the market than I did
When I first did my first research,I got a lot of nasty mail, including
one death threat, actually,
Oh,
over, a 4 percent rule.
You're going to threaten myfamily, Is it really worth that?
(01:26):
have not heard that in our research.
So maybe you're here at your firstBill Bengen was needed some security.
Yeah.
It's imagine how people get ultrasensitive, but so you have grown some
thick skin and sure we'll be able tosee exactly what you think in this book.
(02:12):
Welcome back to catching up to FI.
I'm Bill Yount with my cohost,Jackie Cummins Koski, and we're
not too far out from having goneto the Bogleheads conference.
And one of the reasons I went wasbecause of our guests today, Jackie.
Didn't we have fun meeting Bill Bengen?
Oh, my gosh, we had an amazingtime and what an honor.
We had dinner with him and his lovely wifeand got to spend so much time with them.
(02:33):
So it's a real treat today and ouraudience is going to love it too.
Yeah, so we can dive into the material.
Let's do a quick introductionin case there's one person out
there that doesn't know who Mr.
Bill Bengen is.
So our guest today is Bill Bengen,one of the most influential figures
in the financial planning industryand is best known as the inventor
of the famous or infamous, 4 percentrule of thumb, which we'll talk
(02:56):
about, wasn't exactly his intent.
This rule suggests that retirees canwithdraw 4 percent of their savings
annually adjusted for inflation tomake their savings last for 30 years.
Mr.
Bengen's research and publications havemade significant contributions to the
field of retirement planning, helpingcountless individuals and financial
professionals better understand how tomanage retirement funds effectively,
(03:17):
especially in the accumulationphase and not just decumulation.
Bill's groundbreaking workwas published in October 1994.
So guess what?
This is the 30 yearanniversary of this article.
It's hard to believe it's been thatmany years and he's retired now.
So we'll hear about that.
He built his original findings fromextensive historical market data to
(03:38):
determine a safe withdrawal rate.
Beyond his research, Bill has beenan active voice in the financial
community, frequently speaking atindustry conferences, and contributing
to leading financial publications.
His insights continue to shape thestrategies of the FI community,
retirees, and financial professionals.
He's currently working on his nextbook, which will probably be out in the
first quarter, second quarter of nextyear, and is geared towards consumers.
(04:02):
Rather than financial professionalsand filled with a bunch of new ideas on
how we should spend more in retirement.
So Bill Bengen, welcometo Catching Up to Fi.
Thank you for the invitation.
I'm really happy to be hereand look forward to our talk.
Well,, you weren't always afinancial planner, right, Jackie?
Yeah, Bill, we've beendigging a little bit.
(04:22):
And what did you do before?
You got into financial planningand started doing all this
research around the 4 percent rule,
Well, for a few years, I was a drug lord.
No, I'm just kidding.
I'm not.
I
you know, he was a standup comedian.
Yeah, that's right.
Breaking bad right here.
trained, at MIT and you wantedto be a rocket scientist, but it
(04:45):
didn't really work out that way.
Why is that?
That's the way life is, right?
I'm really interested inplanetary explanation.
I want to do the wholeMatt Damon thing on Mars.
I wanted to step through the firston Mars, first on Venus, go out and
actually touch and explore new worlds.
But I graduated just a few monthsbefore the first moon landing.
And it was pretty clear to me that beyondthe moon program, there was nothing
(05:06):
in terms of planetary exploration,except for unmanned vehicles.
I was hoping that we'd be lookingat Mars by now, we're just starting
to look at Mars 50 years later.
So I'm glad I didn't invest a lot of.
time in a, career inplanetary exploration.
It just never happened.
So I ended up going into my family'ssoft drink business, which is something
I had sworn I would never do becauseI had been raised in it since a
(05:28):
kid, but I went and enjoyed it.
I ended up running thebusiness for a number of years.
Then we sold that.
Actually, in the 100th year that wasin our family, we sold the business
and I moved out to California andlooked at alternative careers and
settled on finance advising andsomewhere along there, discovered
something called a 4 percent rule.
Well, what's interesting, too, is,you're a bit of a market timer, too, and
(05:52):
you timed the market really well whenyou sold the family business, right?
Yeah, turned out thatour primary brand 7up.
Which at one time, , was one of thetop three soft drinks, the United
States, shortly after he sold it,lost great amount of market share.
And if we had stayed in business,it would have destroyed us because
that was our primary profit source.
And if we'd lose that itwould not have been good.
(06:14):
So yeah, it worked out well in retrospect.
No one to hold them, no one to fold them,
Yeah, we'll find out later.
You know when to hold themand know when to fold them.
And it's not all about buy andhold, but let's save that for
a little bit of surprise later.
Jackie, we need to hear a littlebit about how Bill Bengen got
into financial planning and why.
Yeah.
Bill, that's an important questionbecause, the research that Bill
(06:36):
Bingham did, In regards to the 4percent rule, , not everybody was trying
to solve problems back then, right?
It was a system where it washeavily around investment
and, , assets under management.
That was the focus and things like that.
However, I guess we should start by maybeyou telling us what problem were you
trying to solve as you, , were in thisfinancial advisory industry, you could
(07:00):
, sort of trotted along like everyone else.
So how did you get started with it andhow did the 4 percent rule and your
desire to want to, solve that withdrawalrate question that everybody was asking.
Yeah
as far as the first part of it, howI got into financial advising when I
moved to California, I took six monthsoff - and just started considering,
at the age of 40, what the rest of mylife would be built around and looked
(07:22):
at a number of alternative careers.
And, I knew that I had a quantityof money that I wanted to invest.
I knew I had financial issues thateveryone else faced and I started
reading about financial advising,particularly the new movement
at that time fee only advising.
And I became very enthused aboutthe concept and I said, I'm going
to have to have somebody do thiswork as financial planning for me.
(07:43):
Why don't I develop the expertise?
So that I can do it formyself and for others as well.
And that turned out to be a great decisionbecause I think I enjoyed financial
advising more than anything else I'vedone in my life, the interaction with
clients, the fact that I could makea difference in people's lives every
single day was very inspiring to me.
Well, interestingly in your practice,you're one of the first flat fee fee
(08:07):
only financial advisors, and thatcame about because of a relationship
you developed with NAPFA, right?
that's correct.
Back in those days, the late eightiesthere was a lot of doubt about whether
Advisors operating at a family basis couldrun a viable practice, believe it or not.
, there was a lot of criticismfrom people who felt it was
not a viable way to manage it.
(08:28):
Of course, that's all turned around now.
It's established itself successfully.
But Yeah, NAPFA was an enormous help andlot of the people I met in my early days
are still friends of mine and it's great.
Sure I miss my clients though.
Now, in case someone doesn'tknow what NAPFA stands for do you
remember what it stands for Bill?
So I've got two Bills here.
(08:48):
If I say your last name,
Bengen, it's not becauseI'm trying to be formal.
So what does NAPFA stand for?
National Association ofPersonal Finance Advisors.
Yeah.
And basically it is anorganization for flat fee advisors.
Is that correct?
Actually fee onlyadvisors, no commissions.
That's the
Okay.
No commissions.
And these days commissions aren'tas, common as they used to be.
(09:11):
Mainly commissions would bein the insurance industry.
Yeah, of course the brokerageindustry, there are practically
no commissions anymore now forpersonal financial products, which
is a wonderful improvement for theindividual investor over 30 years ago.
That's just fabulous.
When you got started a solopractitioner, you didn't scale.
I mean, I think I heard in the podcastyou did with Michael Kitsis that, , at a
(09:34):
max, your practice was about 80 clients.
So that's unique as well.
Yeah, I didn't want todevelop a large practice.
I just wanted to deal with a groupof people who have become very close
with and kind of like the old doctor,, the little black bad, unless I go
to their house, make a house call.
If I have to you can't do that,obviously, if you have a very
large practice, but I enjoyed it.
(09:55):
It was a practice I can operate out of anoffice, which I built attached to my home.
In Southern California.
And it really satisfied me on many levels.
, financial, emotional philosophically itwas a very gratifying way to do business.
Yeah, you took care ofa lot of your neighbors.
And as Jackie mentioned before, youbumped up against a question that had
(10:17):
not been answered in the CFP textbooks.
, what was the rule of thumb priorto your research that ended up with
the safe withdrawal rate of 4%?
Yeah.
When I started, clients were asking meabout that, they were starting to look
20 years ahead, they're all baby boomers,as was I, and wondering about retirement
and how much they should save and whenI get there, how much could they spend?
(10:39):
And.
How should their investments beset up, , to , pair themselves with
retirement and operate during retirement.
So at that point, when I startedlooking at it, I was a newly minted
CFP and I went first to my textbooksexpecting the finances and I.
Couldn't find a single article, in allthose textbooks about this subject.
So the next thing I went to thelibrary to check out financial
publications, magazines.
(10:59):
Of course, back then in the 90s, youdidn't have the internet as a tool.
everything would have to be manual.
I couldn't find anything inpublications that was very specific.
So I called some of my localfellow advisors in the San Diego
area and asked them and theiranswers were all over the map.
And not surprisingly, because atthat point, that issue had not become
something that was top of mind for manyyears, people had basically retired.
(11:23):
And because of short lifeexpectancies, maybe live for 10 years.
If you're just living 10 yearsin retirement, you don't need
to worry about spending rates.
, you can just have ajolly old time spending.
I decided that there were noanswers coming from anywhere.
So I decided to find myself and I justsat down with a computer, a book of data.
And I started using my spreadsheetto explore this new realm.
(11:45):
Here I am 30 years later stilldoing the same darn thing.
Now that's the true engineer right there.
That's right.
so I do have a question aboutthe generation in which you were
working with, you mentioned the babyboomers and this was 30 years ago.
So pensions were very prevalent back then.
that a piece That you saw a lot wherethat was another reason why the whole
(12:07):
withdrawal rate thing just didn'tcome up that much because you've got
that juicy pension that your clientsmay be getting, , every single month
was that part of sort of softeningthe blow of even figuring this out?
Yeah, I think that was before thereally the 401k movement gained
a lot in the corporate world.
Pensions and social securityat that time were the mainstay.
of folks retirement.
(12:28):
Now, of course, thingshave changed considerably.
Pensions are almost passe.
So people have to rely more andmore upon their own resources,
their own saving, to get wherethey want to be during retirement.
Yeah, what do you think about what wecall the retirement savings crisis?
Our audience is an audience oflate starters, predominantly
Gen X, some late boomers.
And then , between 35 and 55 60.
(12:52):
what do you think abouttoday's retirement crisis?
Because of the transition fromthat defined benefit plan to
a defined contribution plan?
Well, it's a lot tougher for folkstoday because they're going to
have to rely on their own savings.
Depending upon what kind of lifestylethey want to live, , that's a decision
you need to evaluate early on.
There's no sense saving vast amountof money if you're going to live
in a cardboard box somewhere, Ifyou're going to have a very modest
(13:15):
lifestyle you don't have to do that.
But if you want to have, Some freedomto spend discretionary you're going
to have to save significant amountsfrom your current income to get there.
And, even with 10, 15 years, youshould be able to save a great deal
of money given the compounding effect,
,Yeah, that's exactly right.
That's the message we try and get outto our late starters is it's really
(13:35):
never too late as long as you can atleast have a runway of 10 to 15 years
and you can create financial stabilityand security even if you start later.
It's never too late to start and itgives you financial wellness to do
so, even if you're going to dependmore on something like social security
ultimately or needing to work later.
I agree.
Yeah.
So Bill, you were diving into yourspreadsheets and you said, you know what?
(13:57):
Yeah.
Nobody has the answer to this question.
My clients keeps asking meand I want to figure this out.
So your engineering mind, your aerospacemind goes to work and you start digging.
So we know you didn't getit right the first time.
I guess take us through kind of your,thought process, what things didn't
work, what finally gave you that ahamoment that, , I think this is it.
(14:17):
To lead you to actually publishingthat research for all the world to see.
Sure.
Well, I started with avery simple approach.
I used as two asset classes, us largecompany stocks and us intermediate term
government bonds, like five year bonds.
No one would construct a portfoliofrom less social assets, but I wanted
to a result quickly and simply.
(14:37):
And basically, I took a databasestarting with 1926 and I
reconstructed the investmentexperience of retirees 1926 to date.
And there's a lot more retirees to study30 years later than there was back then,
but there was enough information availablefor me to come to the conclusion that in
the worst case, we're Which turned out tobe somebody retiring in the late sixties.
(14:58):
With that mix of two assets,they could take out 4.
15%.
And I hate that five in there becauseit implies two graded degree of
precision for this kind of research.
, there's a lot of uncertainty in it,but that was the number I came up with.
And that was basicallytaking money out like social
security, where you take out 4.
15 percent the first year.
And then give yourself aCola each year after that.
(15:20):
And what happened though, once thatpaper got published and got a kind
of into the popular realm, the 4.
15 percent got shot in the 4%.
And then it became from a particular.
Unique situation applying tojust one retiree out of hundreds,
it became the 4 percent rule.
You were against rules of thumband your research ended up in
the new rule of thumb, right?
(15:40):
Yeah, unfortunately, I hadno control over that process.
It's just the nature.
I learned a lesson from that.
But , the phrase 4 percent rule atleast gives everybody a frame of
reference to what we're talking about.
So I've stopped fighting it so hard now.
I've even put it on my license plate, Mr.
4%.
, I've given in.
There is the title of the
show, Mr.
4%.
(16:00):
Read the book and you'llsee the movie, yeah.
- curious too, you mentioned the two assetclasses, but what was the asset allocation
to those classes that gave you the rule?
Well, one of the most amazing resultsI achieved in the beginning, and, I've
learned in this research over manyyears that you never assume anything.
You never know when you startputting the numbers together,
what's going to come out.
(16:21):
I drew a chart where I varied the assetallocation, the amount of stocks in
a portfolio and match that against.
The resulting withdrawal rate andamazingly between 40 and 70 percent,
, it kind of looked like devil's towerwith that flat top It didn't make
any difference whether you held 40percent stocks or 50 percent You came
out with the same withdrawal rate 4.
(16:43):
15 Which Totally unexpected.
I thought the thing would peak like MountEverest somewhere in the middle, , and
I didn't know exactly where so there'sroom for conservative and aggressive
investors, but they both get the sameresult important thing Was not to
fall off the edges of this mesa, Ifyou get too light on stocks when a
big stock market decline comes yourportfolio gets too hard and It reduces
(17:04):
the withdrawal rate, the same token.
If you invest too much in bonds,they don't have enough oomph to get
your portfolio, the returns it needs.
And therefore your retirementwithdrawal rate also suffers.
So if you stayed in the middle ground.
You were okay.
And that still appliesto my current research.
So do you think your 4 percentrule resulted in this dogma
of the 60 40 portfolio too?
Oh, no, I think that cameout of, , earlier research.
(17:27):
Some of the work Markwitz did, , inefficient market theory and so forth.
I think that came from the fifties.
My research may have just simplyunintentionally offered some support
and a buttress to that concept.
That's possible, but.
I'm not going to take credit for a noblelaureate's work, I'll tell you that much.
, maybe he should be put up for theNobel laureate prize for economics.
(17:49):
That's a good idea, Jack.
You will have to nominate him,
I know at Bogle has, they hadthat sheet to try to get Jack
Bogle nominated for Oh gosh.
What was the award?
The Congressional Medal of Honor or
something like that.
Did he win that award?
Because he certainly deserved
We hope that he
kudos.
I hope so.
He was a great man.
He was the titan of profession.
(18:10):
Yeah.
Also with regards to the developmentof the 4 percent rule, but variables
you based sort of your individualclient accumulation and withdrawal
strategies on what affects this rule?
Because in reality, the dogma, the4 percent is more of a variable rate
around 4%, just like what you said,between 40 and 70 allocation to stocks.
(18:30):
It's really sort of a 3.
5 percent to 5.
5 percent slider rule.
Yeah, well, I've identified,what I call eight variables
that have taken consideration.
Before you can even hope tocome up with a so called number.
Things like how long are you planning for?
Are you planning for 30years, 40 years, 50 years?
Depending upon the length of timeyou plan for, you're going to
(18:51):
come up with a different number.
Are you taking primarilyfrom a taxable account?
Or a tax deferred account?
Or tax free account?
That will affect the withdrawal rate.
I can look the factors here.
Are you planning to leave aninheritance to your heirs?
That was the, 4 percent rule, ifI can use that term, assumes that
after 30 years with your dyingbreath, you will run out of money.
I don't think anyone's timing isquite that good, but let's say you
(19:15):
want to specifically leave a certainsum of money in your portfolio or
retirement portfolio for heirs.
That will affect yourwithdrawal rate as well.
Your asset allocation will too.
Although if you stay in the middleground, that's not a major factor.
Are you satisfied with index returns orare you going to Try to emulate, , Warren
Buffett or another great investor andtry to shoot for higher returns, which
(19:36):
will lead to higher withdrawal ratesif you're successful, but if you're
unsuccessful, you're kind of shootingyourself in the foot pretty clear.
So, , that, and a few other factorslike portfolio rebalancing frequency,
you have to answer each one of thosebefore you could even hope to come
up with any kind of withdrawal rate.
I think you also mentioned inflation isone of these big factors too, which today
(19:57):
becomes potentially more of an issue.
Can you describe how inflation can affect,
your safe withdrawal rate?
you bet.
Once you've answered to each of thoseeight variables and there are two
more things you do have to consider.
And for years, based on an articleMichael Kitsies wrote back in 2008,
it was pretty clear that stockmarket valuation was important.
I knew from my research that ifyou had a major bear market early
(20:20):
retirement, it was going to reduceyour withdrawal rate significantly.
And because basically the market's goingdown while you're taking increasing
amounts of money out, , puts a lot ofpressure in your portfolio, so reduce
the withdrawal rate, but the connectionbetween the two, although look very
compelling, just weren't close enough.
To form a strong enough correlationand say, yeah, if your stock market is
(20:41):
valued, let's say at P of 20, then youshould take out this withdrawal rate.
And it was a P of 16.
You should take that.
And you just couldn'tfind the correlation.
There was a one factor missing.
I was almost certain it was inflation,but for many years, I couldn't figure out
how to work inflation into the equationuntil one day about three summer goals.
I was sitting there and I said, , Ithink I'm making a mistake.
I'm trying to put stockmarket valuation first.
(21:03):
And then figure what affects inflation.
What if I put inflation as the mostimportant determining factor first and
then stock market valuation second,and the minute I did that, things just
sorted themselves out beautifully.
The correlation was much higher.
So if you know, both those factors.
Stock market valuation, let'ssay using the Schiller P.
E.
ratio, which is available theInternet Also conform a reasonable
(21:27):
estimate of what inflation is goingto be like over the next five years.
I call out the inflation machine.
You can come up with a withdrawalrate, which Pretty accurately
reflect what's happened historically.
hate to use the word predict becausewho knows what'll happen in the future.
, it could be different.
What's happened in the pastin terms of reproducing what's
happened in the past, those twofactors bring it pretty darn close.
(23:43):
So, Bill, I have a question.
For the allocation of the portfolio, didyou include any international in there?
Yes.
Currently I have seven asset classes.
And one of them is international stocks.
Absolutely.
And they haven't been great performerslately, but , it's the nature of asset
allocation is that there are period oftimes when some of your asset classes.
are going through the low point oftheir cycle and they look like duds
(24:05):
but it's proven mistake that if youtry to be too cute with that cause
you usually sell it at the wrong time,just when they're ready to take off.
I keep internationalstocks in my allocation.
As a permanent fixture.
Well, what were the other six?
We'd like to talk about, , how dowe boost this and we have a lot of
folks putting research out therethat gets us to 5% and I think that's
(24:26):
gonna be a tenant of your new book.
Maybe take a step back the day thatyou were an advisor with your clients.
You said you invested your money,just like you invested your clients.
What was that allocation?
And were you an early adopter of theindex funds in your , portfolios.
Yeah.
When I was in practice,I use index funds a lot.
Occasionally I would buy individual stockif I felt really a compelling case for it.
(24:49):
But for the most case, I was satisfiedwith getting market returns international
stocks, emerging markets REITs U.
S.
large cap, big cap, small cap, micro capsome commodities now maybe even Bitcoin.
That's when a small percentagemakes sense to include in portfolio.
Just building a world diversifiedportfolio, , that's so well established.
(25:09):
That's one of the, what I callthe four free lunches that
are available to investors.
That it will increase yourreturns and your withdrawal rate.
But does not increase your risk.
So when you were investing your client'smoney, like you did yours, you didn't
stick to sort of the simple thingthat you use for the 4 percent rule.
You were using multiple assetclasses even at that time.
Yes, that's right.
Part of the reason why I haven't usedso many now is because I had trouble
(25:32):
over it initially finding databases.
So it went back to 1926 and incorporatedall those other asset classes.
That's only the last 10, 12 years.
They've started to become available butthere's still asset classes like REITs
and emerging markets and so forth, whichdon't have good long term databases.
So I haven't been able to workthem into my research yet.
(25:52):
I'm hoping the next round ofresearch, in 2046, I'll have that.
Because we talk aboutearly, mid career, and late.
What would you recommend for, say, anearly saver as far as an asset allocation
and a portfolio for accumulation?
Honestly, you don't see any reasonto have anything other than a hundred
percent equities, if you're lookingat twenties or thirties, because your
(26:15):
goal there is to accumulate capital asrapidly as possible and stocks do that.
Typically when you have such a longtimeframe, you don't have to worry
about volatility market fluctuations.
It's only ways you get near a retirementwhere things get a little dicey.
So I wouldn't be including any bonds.
be just.
Hanging out there in 100 percentstocks, get a well diversified
selection of global equities andsit back and watch it compound.
(26:39):
So are you a fan of saying using oneequity class, meaning the total world
fund where you have, market cap acrossall industries and 8 to 9, 000 companies
that would include international
I don't see any reasonnot to do that approach.
Although I don't know if thatapproach includes any gold.
I think you need to have preciousmetals and gold in your portfolio today.
You may want to have a littleBitcoin in your portfolio today.
(27:01):
I don't know if that approach wouldinclude REITs, or alternative
investments which I honestlydon't know that much about, but.
I know there are a lot of peoplevery high on that concept.
so would you be a Boglehead whereyou'd say VTSAX VTI and chill
for, , the twenties, thirtiesand maybe even forties investors?
yeah, don't think that'sa bad strategy at all.
I think it'll be rewarding overthe very long period of time,
(27:24):
there you go.
that keep it simple philosophy there.
JL Collins, Simple Path to Wealth andI also wanted to , point out, as you're
talking about, , the year in whichyou were doing this research there
wasn't a lot of resources available.
So, , you were doing one thing,, , with your clients, because could
use some of those unique things.
But then during your research,there's not a lot of asset classes
where you even had resources to goback as far as you wanted to go back.
(27:47):
So I feel like this research, , intoday's world with technology
and everything easily accessiblewould have been a lot easier.
But you were doing it at a timewhere things weren't as accessible.
You didn't have a lot of resources.
So you're doing a lot of extra workbecause you were just way before
your time and digging into this.
And you refer to it as a rule of thumbbecause there's so much that has
(28:09):
changed, , since you've done the research.
And I feel like we still talkabout it like you did it yesterday.
It's just so fascinating.
That's true.
Sometimes I feel like they two yearsafter I published my first paper, they
invented the wheel, which would have madeit a lot easier, but, , the internet
came along, computers make Monte Carlosimulation, which I don't use, but a lot
of folks use to do this kind of analysis.
(28:30):
It wasn't possible back then.
So, yeah,
All right, so here's the pregnantquestion for us with our audience.
, you talk about all equities throughwhat time period would you say,
but what if you're starting at say45 or 50 and you plan on a 10 to
15 year window towards retirement?
This is what our audience wants to know.
What would you do thenwith your asset allocation?
(28:53):
I still think if you're 45 stillwant to be looking at a very,
very heavy equity allocation.
I think when you get withinfive years of retirement is a
time when you start looking.
To play a little safer.
To a certain extent may depend uponyour assessment of market valuations.
I mean, if the stock market is valuedlike it is today and you're 45 and
starting to save, I'd really have a lotof reservations about going a hundred
(29:16):
percent stocks, I'd be concerned about,something happening in the next few
years where I could lose a lot of money.
But in general, if you're in a periodof time where stock market stocks
are reasonably valued and there'sno reason not to, I would be looking
at a hundred percent stocks up towithin five years of retirement.
So my question today is given valuationsin the variables you talked about, is 70
(29:37):
30 kind of the new 60 40 for that reason,
Are you talking about people inretirement or for those accumulating?
accumulating?
Don't think 60, 40 ever should beused for an accumulation phase until
you get toward the very end of it.
I think keeping it as pedal to themetal and stocks for long as you
can handle it, it's going to giveyou the greatest benefit in terms of
(29:58):
what you accumulate for retirement.
so I have a question around.
You listed out some of those items, thosevariables that you got to think about.
I know that these are factors, but I thinksome people overlook them, especially
today's the Social Security part.
Because that could obviouslycover a chunk, right?
of what you need to live on.
And then if you have a pension, evenif it's a frozen pension, a lot of our
generation, if you're in your fortiesand fifties, you might've experienced
(30:21):
where you started at a job that hada pension and then it got frozen.
So it might not be as big.
And then these days you've gotside hustles and things like that.
So feel like sometimes wejust sort of ignore that but
makes a big difference, right?
Yeah, it really Some thingsjust cannot overlook.
,Yeah, when you came up with the 4 percent rule, that was really for decumulation.
(30:42):
For a safety factor.
That was the worst case scenario.
But the 4% rule gets useda lot for accumulation.
Do you think in some ways it's better tohave a fixed 4% rule for accumulation,
4% of your expenses so that you canfigure out really how much do I need?
And then after you get to that FI number,then you sort of start looking at all
the variables and asset allocation.
(31:04):
And for decumulation.
And this is talking aboutthe decumulation stage
accumulation.
Do you think it's in some ways usinga fixed and more dogmatic 4 percent
rule as a better rule for accumulation?
don't think the 4 percent rule hasa place in the accumulation stage.
Once again, the goal of accumulationis to accumulate as much capital as
(31:25):
possible, as rapidly as possible,while the goal in retirement is to
Maintain , a nest egg as long as youcan under the influence of withdrawals.
, those withdrawals put a lotof stress on the portfolio.
You don't have to worry about thatduring the accumulation stage.
So I would just close your eyes, holdyour nose and put it all in stocks and
(31:47):
So, so let it happen so I thinkbill, are you sort of referencing
the 25 times your expenses?
Like how do you know, in order to comeup with the 4 percent rule, , to know
how much you need to accumulate, , we100 by four and that you get 25 times.
So that's the number we use allthe time in the Phi community.
As far as how big does your nestegg need to be so that on the
(32:08):
back end, you could take out 4%.
So we do 25 times your expenses.
if you invert the four percent,that's how you get that.
Exactly.
That seems reasonable.
And for folks who have really long timehorizons, like the fire folks, , 30,
40, 50 years, even though my currentresearch says we're closer to 5 percent
than 4%, when you look at a reallylong time horizon, you probably should
(32:29):
be closer to four, maybe low fours.
So the 25 rule probably makes sense.
So,, what's interesting to metoo is, doing our research, we
realized that you're not a completefan of the dogma of buy and hold.
Tell us your story about how youtook your clients In and out of
the market and did market timing.
(32:49):
So I want to hear the story about how youreally worked and how you knew that things
are coming here and I needed to protectmy clients and protect their capital.
Yeah I remember
Back in 2008, those wholived that bear market.
We'll never forget that.
was late in August of 2008 and the markethad declined significantly already.
But if you remember at that time, wewere dealing with a banking crisis.
(33:10):
We had Lehman brothers And other things.
And every day there just seemedto be worse and worse news coming
out over the press about thehealth of the financial system.
So the end of September of 2008, I gotmy clients completely out of stocks.
And that worked out well becausethe next two months, the market
just got beat, to death.
And I stayed out probably alittle longer than I should have.
(33:32):
And when you're going to managerisk, I don't call it market
timing, I call that managing risk.
Okay.
Well, you just assess that marketconditions are so antagonistic
toward your portfolio, you oughtto take some protective measures.
You need an exit plan.
But you also need a reentry plan.
And I didn't really havea good reentry plan.
So it took me a little bit longer toback in the market than I did today.
(33:52):
Of course I use a third party.
Subscription service that helpsassess the risk in the market.
And they recommend, , whatpercentage of your equity
allocation you should maintain.
If I had that tool back in 2009 I wouldhave been back in the market in April and
may and got almost all of that, , upswing.
So you need both sides of theknife, so to speak it's not
(34:14):
enough to get out of the market.
In the long run, you want to be inthat stock market to get those returns.
You have to be very careful not to beovercautious and cheat yourself basically
of the returns that are available.
what's interesting is youtimed it also back in 2002.
I mean, your client.
Benefited twice from your ability.
Then what was the systemyou used to get out of it?
(34:36):
How did you know thingswere, , bubble esque and you
needed to protect your clients?
I didn't have that thirdparty subscription service.
Then it was just my general knowledgeof the markets and I feel of the markets
that there was so much speculationhad gone on for such a long time.
And that so many abuses had built up.
That hadn't been paid for andthe bill always comes due.
(34:56):
That's one thing thatcomes true in markets.
The bill always comes due.
So if you have a long period ofspeculation and very high returns that
don't seem justified by fundamentals,that's probably about to be reversed.
And that was my generalfeeling about things.
But it's such a thing, even back in2000, there were places to hide in 2000.
I've done well in REITs, emergingmarkets, small cap value.
(35:17):
That was not the case in 2007 2008.
There was almost nowhere except U.
S.
Treasuries and gold, to avoidcatastrophe and carnage.
Bill, I have a question.
So today you're obviouslymanaging your own portfolio.
Do you have any, , older clientsthat you've had for a long time
where you're managing their moneytoo, or are you completely out
of doing it for other people?
(35:38):
Yeah, I just do for myself, my family.
I keep in touch with a lotof those older clients.
Unfortunately, their numbers arediminishing, which is very sad to
me, but their money is managed bythe firm to which I sold a business
back in San Diego, , back in 2013,and they're very happy with it.
I was very, very careful who I sold to.
Somebody I thought was philosophicallyvery close to myself, had very
(35:58):
reasonable fees and was a NAFRA member.
I trusted those folks and they'vedone a great job for my clients.
And they tell me that, , years later.
So it makes me feel good, but Ireally think that's the most important
decision that a financial advisor hasto make when they divest themselves
of their practice, who are they'regoing to hand their clients off to
that they can trust so their clientscan feel a sense of continuity,
(36:18):
One of the reasons you figured out thatit was time to sell your practice and
time again out of the market was becauseyou could no longer invest your money
like you invested your client's money.
Can you tell us about, , your glidepath out and what you use currently
today for a retirement portfolio?
Yeah, well, 2013, , bull market continuedvaluations were starting to rise again.
(36:40):
And I became really annoyedabout all the meddling from
government entities in the market.
And I didn't think, , in the long run,it was going to end well, although.
Look, here we are nine years past10 years past 11 years and , the
bull market has continued on.
So you never know.
But I just felt it was becomingincreasingly difficult for me
to do the kind of job I wantedto and feel comfortable with it.
(37:02):
Plus, , I was going tobecome be a good grandfather.
And I needed more time for that.
I spent an awful lotof time in my practice.
, that was not a 40 hour job weekends,whatever it took to take care of clients.
So it just seemed like the time was right.
Just like when we sold our familysoft drink business, , back in the
late eighties, the time was right.
Well, I think everybody wants tohave you as an advisor now because
your timing has been impeccable onmultiple times and your timing to get
(37:26):
out of the business was impeccable.
What do you use today?
I mean, you're a conservative guy,how do you manage your portfolio?
Are you managing it still for growthbecause of generational wealth
or, , how conservative are youbecause of your fear of market risk?
I
Well I'm managing money for myselfconservatively and then I'm managing
money for my children and my.
Grandchildren who havemuch longer time horizons.
(37:47):
So they have different assetallocations that I have.
tailored them just as I did whenI was an advisor based upon,
, their so called risk tolerance.
So it's different for each one,but I don't have anyone fully
invested in equities right now.
My service is recommending a hold about.
55 percent of what you normallywould have in equities.
And I've followed theiradvice at this time.
(38:08):
I think there's a lot of risk inthis market, primarily because of
evaluation, but other factors as well.
I agree with them.
I don't think it's the time to be fullyinvested in stocks for anybody, except
those with very, very long time horizons
people want to know today, and youseem to have a crystal ball and
have a little bit more market riskand fear now, what's your prediction?
Are we on the verge of a bubble?
(38:29):
It seems like everything's,, got a certain equanimity.
Everybody's happy.
There's, , greed, but not anoverly robust amount of greed.
Do you have a prediction for our audience?
And we'll hear it here first.
Well, I like statement thatJohn Kenneth Galbraith once made
about financial forecasting.
He said, the only purpose offinancial forecasting is to
(38:49):
make astrology look credible.
was like, that satisfies me.
I don't make forecasts becauseI'm not very good at it really.
very different.
Markets are subject to somany different influences.
I can't predict.
I don't even try.
I follow that third partyadvice on allocation changes.
But beyond that, I don'ttry to forecast recessions.
I don't try to forecast market crashes.
(39:11):
Cause anybody who seems to tryto do that doesn't do very well.
So would I expect to do well on that?
There you go.
If you've got the genius building andtelling you that he cannot predict
the future, please don't listento other people that are claiming
that they can predict the future.
Well, , avoid the financialpornography as some folks say, right?
(39:31):
That's right.
You ever heard of Mark Twain,his definition of a gold mine.
He said a gold mine is a hole inthe ground with a liar at the top.
And I think that's, as muchfor financial forecasting.
In my opinion,
Yeah.
then
Bill,
good Oh,
Bernstein also says, and I thinkyou ascribe to this is when
you won the game, stop playing.
that's great advice.
(39:52):
Unfortunately, Mark Twain wentbankrupt in the late 1990s.
He was a guy who invested in all kind ofhigh tech schemes, high tech for the day.
And he was very, verywealthy at one point.
He lost almost all of it.
Wow.
He had to go on a lecture tourlater in life or work globally to
raise money to get his fortune back.
,He's the example of a modern day professional athlete that , comes into a
(40:14):
lot of money and then ends up bankrupt.
Like we hear about in the media.
he allows people to talk him into schemesthat, if he had just invested down the
middle, we would be hearing about himas a financier, not just a great author,
Yeah, down that simple middle.
so Bill, I'd love to know your thoughts.
You spent much of your life inthe financial planning industry.
In my opinion, definitely a standoutthat is a credit to the financial
(40:37):
planning industry as a whole.
Things have changed quite a bit,, back in the day it was asset center
management, financial planning wasvery, very closely tied to investments,
but today you have a lot of do ityourselfers, a lot of our listeners are
do it yourselfers, you were as well,but now you've got advice only where
it's hourly, there might be a quarterlyfee, flat fees and things like that.
(40:58):
You started out back in the day, sort ofdown that road, but There's been a lot of
changes now and even more on the horizon.
I would just like to know from your lens.
are your thoughts on the financialplanning industry as a whole?
Well, I think it's evolving and in manyrespects in a good way if People can get
advice through hourly fees or low costmedia, and it's good quality advice.
(41:21):
I think that's great.
The more people that get soundfinance advice, the better,
because people need it.
It's a very complex field.
It's easy to make bad decisions,be ruled by your emotions.
You need to have an objective thirdparty with good sound knowledge of
principles to advise you on that.
So I hope that it continues to expand andmore and more people can get to use it.
(41:45):
Great.
Agreed.
I agree too.
I'm going to a financialadvisor right now.
I'm a DIY or, but what you need toknow, just like the timing issues
is when to stop being that becauseit becomes too complex and you
don't want to have blind spots.
And I've used sort of the age of 60 whenI'm planning on retiring at say 63 as a
time to Get a comprehensive evaluationof the plan get to a point of security
(42:08):
that at 63, I'm ready to rock and roll.
so, , Bill we want to hear aboutthis book that is coming out.
You talked to us a little bit aboutit at the vocal heads conference.
We chatted a little bit about it today.
So we're so excited because you'reso well respected, , clearly
you are one of those people.
That loves to solve hard problems and iswilling to, go down the path of doing it.
(42:32):
And so a lot of your work gearedtowards, , professionals, the
financial planning industry, butthis book is more for consumers.
So tell us more about it.
Exactly right.
My first book I wrote for professionalsback in 2006 was an expensive book,
, like a textbook kind of a thing Had alimited sale base there for but over
the years, I've gotten awful lot ofcommunications from non professionals
(42:55):
asking me questions about the 4 percentrule, how it works, , how to implement it.
And so I just thought.
For my next book, let'swrite it for everybody.
Let's lay it out straight.
Let's try to avoid technical chardon.
Basically prepare what is in effect,a cookbook, how to prepare your
own retirement withdrawal plan, andmost importantly, how to manage it.
I mean, there are a number ofbooks that offer advice on how to.
(43:16):
Calculate your withdrawal rate.
I don't see many books.
I'd tell you, once you have yourplan in place, how do you manage it?
How do you monitor it?
What do you look for?
Every plan is subject to problems.
if you're looking at 30, 40, 50, yourtimeframe, it'd be a miracle that you
didn't run off plan at some point.
You have to know what to look for and youalso have to know what to do about it.
(43:38):
So I'm spending a lot of time in thisbook telling people using examples how
they should manage their plan once theyset up 5 percent or 6%, whatever it is
they use , for their withdrawal rate.
I think that's equally importantto setting up the plan itself.
So, hopefully people will find somethinguseful there that they can do themselves,
or at least if somebody was doingit for them, understand the process.
(44:00):
So what were the new things you found?
You have a different concept of assetallocation now, and what were some of
the other new things in your researchthat are coming out that we can look
forward to reading in your book?
I like the idea of what's calleda glide path, which was developed
about 10 years ago by two otheradvisors, Michael Kitsies Wade Pfau.
(44:21):
They looked at the idea.
And asked the question what if wedon't want to use a fixed asset
allocation during retirement?
What if we want to vary ourstocks in some regular way?
And they said, let's particularlylook at a situation where we start
out with a low percentage of stocksand increase it steadily over time.
Intuitively, it doesn't seem anyreason that that should be any
(44:42):
more successful on fixed income.
Turns out it is very successful thatyou can add a significant amount to
your withdrawal rate by adopting thatglide path, starting at 40 percent,
maybe increasing one or two percenta year throughout your retirement.
And the reason is that If you encountera big bear market early in retirement,
and you're only at 40 percent stocksinstead of 60, you don't get hurt as bad.
(45:04):
Meanwhile, after the bear market is over,you're increasing your stock allocation,
you're buying into the recovery.
And that's why it makes it sosuccessful and why it does add
in almost every single case.
Every of the 400 retireesI studied benefited.
By using that kind of approach, that'swhat I call the second free lunch in
investing, , diversification being thefirst one, the glide path approach.
(45:24):
And it's not well knownnot well understood.
Think it's a great strategy and I gaveit quite a bit of time in my book.
is there going to be a new rule of thumb?
Is 5 percent the new 4 percent andthen what asset classes are you
adding to this to sort of, as yousay, supercharge your withdrawal rate?
Yeah, think you're right.
If we're going to use the termrule, 5 percent is much closer
(45:47):
to the truth than 4 percent now.
And that's a reflection of allthe additional asset classes
that put on in the last 18 years.
The seven asset classes I use now are U.
S.
large cap stocks, U.
S.
small cap stocks, U.
S.
micro cap stocks, U.
S.
mid cap stocks.
International stocks.
Those are five equity classes.
Then I use U.
S.
(46:07):
intermediate term government bonds.
That's from the original research,, like five to seven year treasuries.
In addition a small amountof cash or treasury bills can
be used as a proxy for that.
You need to have a cash account toaccumulate money for withdrawals anyway.
, so I built that into themodel at a 5 percent level.
And what percentages do you potentiallygive to each of these classes?
(46:28):
What I would call a standard allocation Iuse 55 percent of equities, 11 percent in
each of the five equity classes 5 percentin the money market fund or cash account.
And the remaining 40 percentwould go into bonds generally.
just use intermediate termtreasuries, us government treasuries.
Although you could, introducecorporate bonds and junk bonds and
(46:48):
a of things you could add to that.
Yeah.
many asset classes now.
So what is the workingtitle of the book again?
Supercharging the 4 percentrule, spend more in retirement.
All right, I think that is a great title.
, it encourages people to spend more and Ithink sometimes we have trouble with that
and it will be out sometime in 2025.
and I don't know if you have a list oflike early reviewers, but if you need
(47:11):
early reviewers, we'd love to be onthat list we'll definitely share it with
our audience when that comes out becausewe want to know what's on your mind now
and thank you for gearing it toward.
Consumers, do it yourselfers, andpeople that are very interested in this
stuff that might not be a professional.
I think that'll be very helpful.
Yeah.
ever since I started talking aboutthis book, it's amazing how many
(47:33):
emails I receive from non professionalssaying, when is this book coming out?
What's it about?
, I want to get it.
And it's very gratifying to knowthat there will be people out there
I'll actually look forward to.
might
So you did get my email.
Okay, that's great.
I'm just.kidding.
I'm one of those people.
you might get some pushbackand criticism from the Bogle
heads in the simple portfolio.
Now once again, you'regoing against the grain.
(47:55):
Well, , I try to call him as I see him.
do the research.
I come out with certain conclusions.
spend a lot of time doublechecking them and I feel
comfortable with what I'm doing.
So if.
What I say is not accepted immediately.
I'm used to that.
When I first did my first research,I got a lot of nasty mail, including
one death threat, actually,
(48:16):
Oh,
over, a 4 percent rule.
You're going to threaten myfamily, Is it really worth that?
have not heard that in our research.
So maybe you're here at your firstBill Bengen was needed some security.
Yeah.
It's imagine how people get ultrasensitive, but so you have grown some
thick skin and sure we'll be able tosee exactly what you think in this book.
(48:38):
Terrific.
Well, and, again, reminding ourselvesthat we have a late starter audience in
your thoughts, I don't know if you'vegiven much thought to the late starters
because of our retirement savings crisis.
Do you have any specific adviceor tips for those folks out there?
For advice for late starters in general,
Right.
yeah, you got to save aggressivelydepending upon your goals,
(48:58):
depending upon what lifestyleyou want to have in retirement.
And not everybody needsto live life to the nine.
So life, in my opinion Successdepends more upon friends and
family , and doing things you enjoyand not having vast amount of money,
but those are personal choices.
Carefully about the kind ofretirement you want to live.
And plan your saving accordingly.
(49:19):
Make sure those two coordinate.
You don't want to over save.
That just means you're starvingyour current needs for future
needs that may never appear.
And once you decide upon a savingcourse, be diligent about it.
Stick to it.
Do it without exception becauseyou start missing saving.
It's easy for those to multiply,and you start feeling short of
your goals, and you get frustratedbecause you're falling behind.
(49:41):
I have a bill you don't rule ofthumb here that I like to ascribe to.
I want your thoughts on it too.
Because of, , things like burnout,corporate burnout healthcare
burnout, a lot of burnout out there.
I subscribe to the, , work 20years for the money and then the
rest for joy to get to freedom.
If you start with that pay off yourdebt in five , And then work 15 to get
to your nest egg, and then you're free.
(50:03):
So that means, , whenever you start andideally you do say, My 30 because in
your 20s, you're trying to figure it out.
And the average person thatfeels like they're late, maybe
in their 30s up until 40.
And we do have a large audience inour community that are like that.
And they feel like they're late.
But the great thing is, if theystarted 35, , they're done by 55.
(50:24):
And, that's a good career andthat's a balanced approach and
maybe the, accumulation rule shouldbe a savings rate of 25 to 50%.
You don't need to save necessarily over50 because then you end up in deprivation
like a lot of the early fire folks.
What do you think about thebillionth rule of thumb?
I like to me, it evokes commonsense, it achieves a good balance
(50:45):
between your long term goalsand what your current needs are.
I'm gonna write a book now
now
yeah, you're right.
I was about to say it ain't exactly BillBengen quality or Bill Bengen level.
But good try.
I just want to warn you,a book is a lot of work.
I mean, I'm supposed to be retired.
I've got over a thousand hours intothis book this year, so I don't know
how that fits the definition of retired.
(51:07):
Well, I mean, you'reliving your best life.
You're doing what retirees need to do.
You can't just retire from somethingyou need to retire to something.
And keeps you alive a lot longer.
Right.
Yeah, well, look at these showbusiness figures George Burns and
Bob Hope that lived to a hundred.
They were doing things
they just loved.
they didn't care about their age.
They were just doing thingsthat they were passionate about.
(51:28):
And it is really critical to maintainyour passion throughout your whole life.
, Bob Dylan says in a song people areeither busy being born or busy dying.
So you have to make that choice.
so Bill, I don't know if youever review this, but you have a
Wikipedia page and that tells useverything we need to know about you.
Very interesting.
But is there any.
(51:49):
Where else people can find you orshould they just look out for the book
Yeah.
I am in the process of designinga website in which I can use then
directly to communicate to folksthe latest results, my research.
, my research is very chart heavy.
I rely very heavily on charts toguide people to my conclusions.
And my book will only contain afraction of the charts that really are
(52:12):
necessary, because of all the variables.
So I'm going to use that website toprovide charts for folks that they
can download that are more applicableto their individual situation.
Then let's say that thegeneric that I have in my book.
kind of a contemporary and a thoughtleader in some ways like Paul Merriman.
Do you know Paul Merriman?
And it seems like your thoughts on assetallocation and, , use and percentages
(52:37):
of assets, because he has a 10 Fundsfor Life where he gives 10 percent to
each of 10 different asset classes.
And you have sort of a 7Funds for Life approach.
Have you met the man?
Have you guys talkedabout your approaches?
No, I haven't.
That's my loss because I admire himbecause I've read about him and I'm
familiar with his work and I misseda chance at the Vogel conference.
understand he was there to do that.
(52:58):
So hopefully I'll catch up withhim sometime in the near future.
Well, maybe we'll have to haveyou back on with Paul Merriman and
just have a think tank information.
It would be great.
So do you have any final thoughts?
Did we cover everything here?
Or is there anything on thehorizon for Bill Bengen that
we haven't heard about yet?
No, except, this book will notbe my last word in the subject.
(53:18):
There's still so many issuesI need to look at and so many
things I want to share with folks.
I expect to be doing this as longas I can live, ? So stay tuned.
Maybe I can get us to 6%, whoknows, but I wouldn't count on that.
We should probably have him onwith Frank Vasquez because I
think he'll love your philosophy.
He's a big fan of say the riskparity approach, which is a little
(53:41):
bit different, but yours is a littlebit of a risk parity approach too,
with regards to your allocations,everybody has a different thing.
Thought, but I'm just so happy tobe able to hear the ideas of all
the thought leaders of the industry.
And I know our audiencefeels the same way.
Jackie, do you have any final thoughts?
only that as soon as that websiteis out, that will be amazing.
(54:01):
I am one of those visual learners,so I love the charts and graphs.
Thank you for doing that.
So we will definitely share thebook and all the new stuff that you
have coming out with our audience.
But I, on behalf of everyoneelse that has benefited from your
research, just want to say, thank you.
Thank you for . At a time in historywhen nobody was doing this, you said,
let me be the one to do the research.
(54:22):
Exactly 30 years later, it's still living.
It's still the subject of somany conversations and it's
still referenced and cited.
So you have made a footprinton the financial world.
So just a big thank you for that.
very kind of you to say that.
And I really enjoyed this conversation.
It was terrific.
Yeah, I want to know what thename of the website before we
go, what do we need to , bookmark?
(54:44):
Oh, my goodness.
I don't have the URL for it.
I mean, I'm in such anearly stage of development.
I don't even have the URL for the website.
Well, I'll forward that to youas soon as I get it, though.
So you can see how excited we are.
I hope we get to see you maybeat another Bogleheads conference
next year, if you can make it.
I encourage everybody to tryand meet you and meet your wife.
And maybe we should have her on nexttime because she must have a very
(55:06):
interesting perspective on what it'slike to be married to the Bill Bengen.
Oh, well.
Her bad luck.
Her misfortune.
,No, she's terrific.
We're actually newlyweds.
we only got married 18 months ago.
We each lost Our spouses threeyears ago, about the same
time, met in bereavement group.
(55:27):
And that's where our romance started.
Uh, so it's been great.
also you didn't, you didn't go onmatch.com or was it Bumble I could
have seen Bill Bengen on Tinder
You never know.
That's a beautiful love story.
It was lovely meeting her andit just goes to show our lives
go through so many phases.
(55:47):
Obviously yours has as well.
So, yeah, we enjoyed meeting her and we'dlove to have her on the podcast sometimes.
I'll ask you about that.
She's terrific.
Quite frankly, can'timagine my life without her.
We both understand the valueof having lost spouses.
Which we consider the worst thing thatcould possibly happen to a person.
We both appreciate now the value of havingcompanion, which we feel so closely to
(56:09):
and treasure our relationship beyond all
Again, I feel the same way andthat's a key component to retirement
in my mind, and longevity is apartner to see the world with.
So.
I agree.
, it has been an honor to talk to you.
This is one of the highlights of my year.
We have been honored to talk toso many leaders in this field.
I encourage people to go back in ourepisodes and just, , enjoy all of
(56:32):
the great minds that we're able tohave on here and just want to again,
say, thank you, thank you to Jackie.
Thank you to Bill.
And we will see you nexttime on Catching Up To Fi.
Happy anniversary to your article.
Thanks so much.
Enjoyed it, folks.
All right.
Bye bye.
I wanted to step through the firston Mars, first on Venus, go out and
actually touch and explore new worlds.
But I graduated just a few monthsbefore the first moon landing.
And it was pretty clear to me that beyondthe moon program, there was nothing
in terms of planetary exploration,except for unmanned vehicles.
I was hoping that we'd be lookingat Mars by now, we're just starting
to look at Mars 50 years later.
(00:23):
So I'm glad I didn't invest a lot of.
time in a, career inplanetary exploration.
It just never happened.
So I ended up going into my family'ssoft drink business, which is something
I had sworn I would never do becauseI had been raised in it since a
kid, but I went and enjoyed it.
end of September of 2008, I got myclients completely out of stocks.
(00:44):
And that worked out well becausethe next two months, the market
just got beat, to death.
And I stayed out probably alittle longer than I should have.
And when you're going to managerisk, I don't call it market
timing, I call that managing risk.
Okay.
Well, you just assess that marketconditions are so antagonistic
toward your portfolio, you oughtto take some protective measures.
You need an exit plan.
(01:05):
But you also need a reentry plan.
And I didn't really havea good reentry plan.
So it took me a little bit longerto back in the market than I did
When I first did my first research,I got a lot of nasty mail, including
one death threat, actually,
Oh,
over, a 4 percent rule.
You're going to threaten myfamily, Is it really worth that?
(01:26):
have not heard that in our research.
So maybe you're here at your firstBill Bengen was needed some security.
Yeah.
It's imagine how people get ultrasensitive, but so you have grown some
thick skin and sure we'll be able tosee exactly what you think in this book.
(02:12):
Welcome back to catching up to FI.
I'm Bill Yount with my cohost,Jackie Cummins Koski, and we're
not too far out from having goneto the Bogleheads conference.
And one of the reasons I went wasbecause of our guests today, Jackie.
Didn't we have fun meeting Bill Bengen?
Oh, my gosh, we had an amazingtime and what an honor.
We had dinner with him and his lovely wifeand got to spend so much time with them.
(02:33):
So it's a real treat today and ouraudience is going to love it too.
Yeah, so we can dive into the material.
Let's do a quick introductionin case there's one person out
there that doesn't know who Mr.
Bill Bengen is.
So our guest today is Bill Bengen,one of the most influential figures
in the financial planning industryand is best known as the inventor
of the famous or infamous, 4 percentrule of thumb, which we'll talk
(02:56):
about, wasn't exactly his intent.
This rule suggests that retirees canwithdraw 4 percent of their savings
annually adjusted for inflation tomake their savings last for 30 years.
Mr.
Bengen's research and publications havemade significant contributions to the
field of retirement planning, helpingcountless individuals and financial
professionals better understand how tomanage retirement funds effectively,
(03:17):
especially in the accumulationphase and not just decumulation.
Bill's groundbreaking workwas published in October 1994.
So guess what?
This is the 30 yearanniversary of this article.
It's hard to believe it's been thatmany years and he's retired now.
So we'll hear about that.
He built his original findings fromextensive historical market data to
(03:38):
determine a safe withdrawal rate.
Beyond his research, Bill has beenan active voice in the financial
community, frequently speaking atindustry conferences, and contributing
to leading financial publications.
His insights continue to shape thestrategies of the FI community,
retirees, and financial professionals.
He's currently working on his nextbook, which will probably be out in the
first quarter, second quarter of nextyear, and is geared towards consumers.
(04:02):
Rather than financial professionalsand filled with a bunch of new ideas on
how we should spend more in retirement.
So Bill Bengen, welcometo Catching Up to Fi.
Thank you for the invitation.
I'm really happy to be hereand look forward to our talk.
Well,, you weren't always afinancial planner, right, Jackie?
Yeah, Bill, we've beendigging a little bit.
(04:22):
And what did you do before?
You got into financial planningand started doing all this
research around the 4 percent rule,
Well, for a few years, I was a drug lord.
No, I'm just kidding.
I'm not.
I
you know, he was a standup comedian.
Yeah, that's right.
Breaking bad right here.
trained, at MIT and you wantedto be a rocket scientist, but it
(04:45):
didn't really work out that way.
Why is that?
That's the way life is, right?
I'm really interested inplanetary explanation.
I want to do the wholeMatt Damon thing on Mars.
I wanted to step through the firston Mars, first on Venus, go out and
actually touch and explore new worlds.
But I graduated just a few monthsbefore the first moon landing.
And it was pretty clear to me that beyondthe moon program, there was nothing
(05:06):
in terms of planetary exploration,except for unmanned vehicles.
I was hoping that we'd be lookingat Mars by now, we're just starting
to look at Mars 50 years later.
So I'm glad I didn't invest a lot of.
time in a, career inplanetary exploration.
It just never happened.
So I ended up going into my family'ssoft drink business, which is something
I had sworn I would never do becauseI had been raised in it since a
(05:28):
kid, but I went and enjoyed it.
I ended up running thebusiness for a number of years.
Then we sold that.
Actually, in the 100th year that wasin our family, we sold the business
and I moved out to California andlooked at alternative careers and
settled on finance advising andsomewhere along there, discovered
something called a 4 percent rule.
Well, what's interesting, too, is,you're a bit of a market timer, too, and
(05:52):
you timed the market really well whenyou sold the family business, right?
Yeah, turned out thatour primary brand 7up.
Which at one time, , was one of thetop three soft drinks, the United
States, shortly after he sold it,lost great amount of market share.
And if we had stayed in business,it would have destroyed us because
that was our primary profit source.
And if we'd lose that itwould not have been good.
(06:14):
So yeah, it worked out well in retrospect.
No one to hold them, no one to fold them,
Yeah, we'll find out later.
You know when to hold themand know when to fold them.
And it's not all about buy andhold, but let's save that for
a little bit of surprise later.
Jackie, we need to hear a littlebit about how Bill Bengen got
into financial planning and why.
Yeah.
Bill, that's an important questionbecause, the research that Bill
(06:36):
Bingham did, In regards to the 4percent rule, , not everybody was trying
to solve problems back then, right?
It was a system where it washeavily around investment
and, , assets under management.
That was the focus and things like that.
However, I guess we should start by maybeyou telling us what problem were you
trying to solve as you, , were in thisfinancial advisory industry, you could
(07:00):
, sort of trotted along like everyone else.
So how did you get started with it andhow did the 4 percent rule and your
desire to want to, solve that withdrawalrate question that everybody was asking.
Yeah
as far as the first part of it, howI got into financial advising when I
moved to California, I took six monthsoff - and just started considering,
at the age of 40, what the rest of mylife would be built around and looked
(07:22):
at a number of alternative careers.
And, I knew that I had a quantityof money that I wanted to invest.
I knew I had financial issues thateveryone else faced and I started
reading about financial advising,particularly the new movement
at that time fee only advising.
And I became very enthused aboutthe concept and I said, I'm going
to have to have somebody do thiswork as financial planning for me.
(07:43):
Why don't I develop the expertise?
So that I can do it formyself and for others as well.
And that turned out to be a great decisionbecause I think I enjoyed financial
advising more than anything else I'vedone in my life, the interaction with
clients, the fact that I could makea difference in people's lives every
single day was very inspiring to me.
Well, interestingly in your practice,you're one of the first flat fee fee
(08:07):
only financial advisors, and thatcame about because of a relationship
you developed with NAPFA, right?
that's correct.
Back in those days, the late eightiesthere was a lot of doubt about whether
Advisors operating at a family basis couldrun a viable practice, believe it or not.
, there was a lot of criticismfrom people who felt it was
not a viable way to manage it.
(08:28):
Of course, that's all turned around now.
It's established itself successfully.
But Yeah, NAPFA was an enormous help andlot of the people I met in my early days
are still friends of mine and it's great.
Sure I miss my clients though.
Now, in case someone doesn'tknow what NAPFA stands for do you
remember what it stands for Bill?
So I've got two Bills here.
(08:48):
If I say your last name,
Bengen, it's not becauseI'm trying to be formal.
So what does NAPFA stand for?
National Association ofPersonal Finance Advisors.
Yeah.
And basically it is anorganization for flat fee advisors.
Is that correct?
Actually fee onlyadvisors, no commissions.
That's the
Okay.
No commissions.
And these days commissions aren'tas, common as they used to be.
(09:11):
Mainly commissions would bein the insurance industry.
Yeah, of course the brokerageindustry, there are practically
no commissions anymore now forpersonal financial products, which
is a wonderful improvement for theindividual investor over 30 years ago.
That's just fabulous.
When you got started a solopractitioner, you didn't scale.
I mean, I think I heard in the podcastyou did with Michael Kitsis that, , at a
(09:34):
max, your practice was about 80 clients.
So that's unique as well.
Yeah, I didn't want todevelop a large practice.
I just wanted to deal with a groupof people who have become very close
with and kind of like the old doctor,, the little black bad, unless I go
to their house, make a house call.
If I have to you can't do that,obviously, if you have a very
large practice, but I enjoyed it.
(09:55):
It was a practice I can operate out of anoffice, which I built attached to my home.
In Southern California.
And it really satisfied me on many levels.
, financial, emotional philosophically itwas a very gratifying way to do business.
Yeah, you took care ofa lot of your neighbors.
And as Jackie mentioned before, youbumped up against a question that had
(10:17):
not been answered in the CFP textbooks.
, what was the rule of thumb priorto your research that ended up with
the safe withdrawal rate of 4%?
Yeah.
When I started, clients were asking meabout that, they were starting to look
20 years ahead, they're all baby boomers,as was I, and wondering about retirement
and how much they should save and whenI get there, how much could they spend?
(10:39):
And.
How should their investments beset up, , to , pair themselves with
retirement and operate during retirement.
So at that point, when I startedlooking at it, I was a newly minted
CFP and I went first to my textbooksexpecting the finances and I.
Couldn't find a single article, in allthose textbooks about this subject.
So the next thing I went to thelibrary to check out financial
publications, magazines.
(10:59):
Of course, back then in the 90s, youdidn't have the internet as a tool.
everything would have to be manual.
I couldn't find anything inpublications that was very specific.
So I called some of my localfellow advisors in the San Diego
area and asked them and theiranswers were all over the map.
And not surprisingly, because atthat point, that issue had not become
something that was top of mind for manyyears, people had basically retired.
(11:23):
And because of short lifeexpectancies, maybe live for 10 years.
If you're just living 10 yearsin retirement, you don't need
to worry about spending rates.
, you can just have ajolly old time spending.
I decided that there were noanswers coming from anywhere.
So I decided to find myself and I justsat down with a computer, a book of data.
And I started using my spreadsheetto explore this new realm.
(11:45):
Here I am 30 years later stilldoing the same darn thing.
Now that's the true engineer right there.
That's right.
so I do have a question aboutthe generation in which you were
working with, you mentioned the babyboomers and this was 30 years ago.
So pensions were very prevalent back then.
that a piece That you saw a lot wherethat was another reason why the whole
(12:07):
withdrawal rate thing just didn'tcome up that much because you've got
that juicy pension that your clientsmay be getting, , every single month
was that part of sort of softeningthe blow of even figuring this out?
Yeah, I think that was before thereally the 401k movement gained
a lot in the corporate world.
Pensions and social securityat that time were the mainstay.
of folks retirement.
(12:28):
Now, of course, thingshave changed considerably.
Pensions are almost passe.
So people have to rely more andmore upon their own resources,
their own saving, to get wherethey want to be during retirement.
Yeah, what do you think about what wecall the retirement savings crisis?
Our audience is an audience oflate starters, predominantly
Gen X, some late boomers.
And then , between 35 and 55 60.
(12:52):
what do you think abouttoday's retirement crisis?
Because of the transition fromthat defined benefit plan to
a defined contribution plan?
Well, it's a lot tougher for folkstoday because they're going to
have to rely on their own savings.
Depending upon what kind of lifestylethey want to live, , that's a decision
you need to evaluate early on.
There's no sense saving vast amountof money if you're going to live
in a cardboard box somewhere, Ifyou're going to have a very modest
(13:15):
lifestyle you don't have to do that.
But if you want to have, Some freedomto spend discretionary you're going
to have to save significant amountsfrom your current income to get there.
And, even with 10, 15 years, youshould be able to save a great deal
of money given the compounding effect,
,Yeah, that's exactly right.
That's the message we try and get outto our late starters is it's really
(13:35):
never too late as long as you can atleast have a runway of 10 to 15 years
and you can create financial stabilityand security even if you start later.
It's never too late to start and itgives you financial wellness to do
so, even if you're going to dependmore on something like social security
ultimately or needing to work later.
I agree.
Yeah.
So Bill, you were diving into yourspreadsheets and you said, you know what?
(13:57):
Yeah.
Nobody has the answer to this question.
My clients keeps asking meand I want to figure this out.
So your engineering mind, your aerospacemind goes to work and you start digging.
So we know you didn't getit right the first time.
I guess take us through kind of your,thought process, what things didn't
work, what finally gave you that ahamoment that, , I think this is it.
(14:17):
To lead you to actually publishingthat research for all the world to see.
Sure.
Well, I started with avery simple approach.
I used as two asset classes, us largecompany stocks and us intermediate term
government bonds, like five year bonds.
No one would construct a portfoliofrom less social assets, but I wanted
to a result quickly and simply.
(14:37):
And basically, I took a databasestarting with 1926 and I
reconstructed the investmentexperience of retirees 1926 to date.
And there's a lot more retirees to study30 years later than there was back then,
but there was enough information availablefor me to come to the conclusion that in
the worst case, we're Which turned out tobe somebody retiring in the late sixties.
(14:58):
With that mix of two assets,they could take out 4.
15%.
And I hate that five in there becauseit implies two graded degree of
precision for this kind of research.
, there's a lot of uncertainty in it,but that was the number I came up with.
And that was basicallytaking money out like social
security, where you take out 4.
15 percent the first year.
And then give yourself aCola each year after that.
(15:20):
And what happened though, once thatpaper got published and got a kind
of into the popular realm, the 4.
15 percent got shot in the 4%.
And then it became from a particular.
Unique situation applying tojust one retiree out of hundreds,
it became the 4 percent rule.
You were against rules of thumband your research ended up in
the new rule of thumb, right?
(15:40):
Yeah, unfortunately, I hadno control over that process.
It's just the nature.
I learned a lesson from that.
But , the phrase 4 percent rule atleast gives everybody a frame of
reference to what we're talking about.
So I've stopped fighting it so hard now.
I've even put it on my license plate, Mr.
4%.
, I've given in.
There is the title of the
show, Mr.
4%.
(16:00):
Read the book and you'llsee the movie, yeah.
- curious too, you mentioned the two assetclasses, but what was the asset allocation
to those classes that gave you the rule?
Well, one of the most amazing resultsI achieved in the beginning, and, I've
learned in this research over manyyears that you never assume anything.
You never know when you startputting the numbers together,
what's going to come out.
(16:21):
I drew a chart where I varied the assetallocation, the amount of stocks in
a portfolio and match that against.
The resulting withdrawal rate andamazingly between 40 and 70 percent,
, it kind of looked like devil's towerwith that flat top It didn't make
any difference whether you held 40percent stocks or 50 percent You came
out with the same withdrawal rate 4.
(16:43):
15 Which Totally unexpected.
I thought the thing would peak like MountEverest somewhere in the middle, , and
I didn't know exactly where so there'sroom for conservative and aggressive
investors, but they both get the sameresult important thing Was not to
fall off the edges of this mesa, Ifyou get too light on stocks when a
big stock market decline comes yourportfolio gets too hard and It reduces
(17:04):
the withdrawal rate, the same token.
If you invest too much in bonds,they don't have enough oomph to get
your portfolio, the returns it needs.
And therefore your retirementwithdrawal rate also suffers.
So if you stayed in the middle ground.
You were okay.
And that still appliesto my current research.
So do you think your 4 percentrule resulted in this dogma
of the 60 40 portfolio too?
Oh, no, I think that cameout of, , earlier research.
(17:27):
Some of the work Markwitz did, , inefficient market theory and so forth.
I think that came from the fifties.
My research may have just simplyunintentionally offered some support
and a buttress to that concept.
That's possible, but.
I'm not going to take credit for a noblelaureate's work, I'll tell you that much.
, maybe he should be put up for theNobel laureate prize for economics.
(17:49):
That's a good idea, Jack.
You will have to nominate him,
I know at Bogle has, they hadthat sheet to try to get Jack
Bogle nominated for Oh gosh.
What was the award?
The Congressional Medal of Honor or
something like that.
Did he win that award?
Because he certainly deserved
We hope that he
kudos.
I hope so.
He was a great man.
He was the titan of profession.
(18:10):
Yeah.
Also with regards to the developmentof the 4 percent rule, but variables
you based sort of your individualclient accumulation and withdrawal
strategies on what affects this rule?
Because in reality, the dogma, the4 percent is more of a variable rate
around 4%, just like what you said,between 40 and 70 allocation to stocks.
(18:30):
It's really sort of a 3.
5 percent to 5.
5 percent slider rule.
Yeah, well, I've identified,what I call eight variables
that have taken consideration.
Before you can even hope tocome up with a so called number.
Things like how long are you planning for?
Are you planning for 30years, 40 years, 50 years?
Depending upon the length of timeyou plan for, you're going to
(18:51):
come up with a different number.
Are you taking primarilyfrom a taxable account?
Or a tax deferred account?
Or tax free account?
That will affect the withdrawal rate.
I can look the factors here.
Are you planning to leave aninheritance to your heirs?
That was the, 4 percent rule, ifI can use that term, assumes that
after 30 years with your dyingbreath, you will run out of money.
I don't think anyone's timing isquite that good, but let's say you
(19:15):
want to specifically leave a certainsum of money in your portfolio or
retirement portfolio for heirs.
That will affect yourwithdrawal rate as well.
Your asset allocation will too.
Although if you stay in the middleground, that's not a major factor.
Are you satisfied with index returns orare you going to Try to emulate, , Warren
Buffett or another great investor andtry to shoot for higher returns, which
(19:36):
will lead to higher withdrawal ratesif you're successful, but if you're
unsuccessful, you're kind of shootingyourself in the foot pretty clear.
So, , that, and a few other factorslike portfolio rebalancing frequency,
you have to answer each one of thosebefore you could even hope to come
up with any kind of withdrawal rate.
I think you also mentioned inflation isone of these big factors too, which today
(19:57):
becomes potentially more of an issue.
Can you describe how inflation can affect,
your safe withdrawal rate?
you bet.
Once you've answered to each of thoseeight variables and there are two
more things you do have to consider.
And for years, based on an articleMichael Kitsies wrote back in 2008,
it was pretty clear that stockmarket valuation was important.
I knew from my research that ifyou had a major bear market early
(20:20):
retirement, it was going to reduceyour withdrawal rate significantly.
And because basically the market's goingdown while you're taking increasing
amounts of money out, , puts a lot ofpressure in your portfolio, so reduce
the withdrawal rate, but the connectionbetween the two, although look very
compelling, just weren't close enough.
To form a strong enough correlationand say, yeah, if your stock market is
(20:41):
valued, let's say at P of 20, then youshould take out this withdrawal rate.
And it was a P of 16.
You should take that.
And you just couldn'tfind the correlation.
There was a one factor missing.
I was almost certain it was inflation,but for many years, I couldn't figure out
how to work inflation into the equationuntil one day about three summer goals.
I was sitting there and I said, , Ithink I'm making a mistake.
I'm trying to put stockmarket valuation first.
(21:03):
And then figure what affects inflation.
What if I put inflation as the mostimportant determining factor first and
then stock market valuation second,and the minute I did that, things just
sorted themselves out beautifully.
The correlation was much higher.
So if you know, both those factors.
Stock market valuation, let'ssay using the Schiller P.
E.
ratio, which is available theInternet Also conform a reasonable
(21:27):
estimate of what inflation is goingto be like over the next five years.
I call out the inflation machine.
You can come up with a withdrawalrate, which Pretty accurately
reflect what's happened historically.
hate to use the word predict becausewho knows what'll happen in the future.
, it could be different.
What's happened in the pastin terms of reproducing what's
happened in the past, those twofactors bring it pretty darn close.
(23:43):
So, Bill, I have a question.
For the allocation of the portfolio, didyou include any international in there?
Yes.
Currently I have seven asset classes.
And one of them is international stocks.
Absolutely.
And they haven't been great performerslately, but , it's the nature of asset
allocation is that there are period oftimes when some of your asset classes.
are going through the low point oftheir cycle and they look like duds
(24:05):
but it's proven mistake that if youtry to be too cute with that cause
you usually sell it at the wrong time,just when they're ready to take off.
I keep internationalstocks in my allocation.
As a permanent fixture.
Well, what were the other six?
We'd like to talk about, , how dowe boost this and we have a lot of
folks putting research out therethat gets us to 5% and I think that's
(24:26):
gonna be a tenant of your new book.
Maybe take a step back the day thatyou were an advisor with your clients.
You said you invested your money,just like you invested your clients.
What was that allocation?
And were you an early adopter of theindex funds in your , portfolios.
Yeah.
When I was in practice,I use index funds a lot.
Occasionally I would buy individual stockif I felt really a compelling case for it.
(24:49):
But for the most case, I was satisfiedwith getting market returns international
stocks, emerging markets REITs U.
S.
large cap, big cap, small cap, micro capsome commodities now maybe even Bitcoin.
That's when a small percentagemakes sense to include in portfolio.
Just building a world diversifiedportfolio, , that's so well established.
(25:09):
That's one of the, what I callthe four free lunches that
are available to investors.
That it will increase yourreturns and your withdrawal rate.
But does not increase your risk.
So when you were investing your client'smoney, like you did yours, you didn't
stick to sort of the simple thingthat you use for the 4 percent rule.
You were using multiple assetclasses even at that time.
Yes, that's right.
Part of the reason why I haven't usedso many now is because I had trouble
(25:32):
over it initially finding databases.
So it went back to 1926 and incorporatedall those other asset classes.
That's only the last 10, 12 years.
They've started to become available butthere's still asset classes like REITs
and emerging markets and so forth, whichdon't have good long term databases.
So I haven't been able to workthem into my research yet.
(25:52):
I'm hoping the next round ofresearch, in 2046, I'll have that.
Because we talk aboutearly, mid career, and late.
What would you recommend for, say, anearly saver as far as an asset allocation
and a portfolio for accumulation?
Honestly, you don't see any reasonto have anything other than a hundred
percent equities, if you're lookingat twenties or thirties, because your
(26:15):
goal there is to accumulate capital asrapidly as possible and stocks do that.
Typically when you have such a longtimeframe, you don't have to worry
about volatility market fluctuations.
It's only ways you get near a retirementwhere things get a little dicey.
So I wouldn't be including any bonds.
be just.
Hanging out there in 100 percentstocks, get a well diversified
selection of global equities andsit back and watch it compound.
(26:39):
So are you a fan of saying using oneequity class, meaning the total world
fund where you have, market cap acrossall industries and 8 to 9, 000 companies
that would include international
I don't see any reasonnot to do that approach.
Although I don't know if thatapproach includes any gold.
I think you need to have preciousmetals and gold in your portfolio today.
You may want to have a littleBitcoin in your portfolio today.
(27:01):
I don't know if that approach wouldinclude REITs, or alternative
investments which I honestlydon't know that much about, but.
I know there are a lot of peoplevery high on that concept.
so would you be a Boglehead whereyou'd say VTSAX VTI and chill
for, , the twenties, thirtiesand maybe even forties investors?
yeah, don't think that'sa bad strategy at all.
I think it'll be rewarding overthe very long period of time,
(27:24):
there you go.
that keep it simple philosophy there.
JL Collins, Simple Path to Wealth andI also wanted to , point out, as you're
talking about, , the year in whichyou were doing this research there
wasn't a lot of resources available.
So, , you were doing one thing,, , with your clients, because could
use some of those unique things.
But then during your research,there's not a lot of asset classes
where you even had resources to goback as far as you wanted to go back.
(27:47):
So I feel like this research, , intoday's world with technology
and everything easily accessiblewould have been a lot easier.
But you were doing it at a timewhere things weren't as accessible.
You didn't have a lot of resources.
So you're doing a lot of extra workbecause you were just way before
your time and digging into this.
And you refer to it as a rule of thumbbecause there's so much that has
(28:09):
changed, , since you've done the research.
And I feel like we still talkabout it like you did it yesterday.
It's just so fascinating.
That's true.
Sometimes I feel like they two yearsafter I published my first paper, they
invented the wheel, which would have madeit a lot easier, but, , the internet
came along, computers make Monte Carlosimulation, which I don't use, but a lot
of folks use to do this kind of analysis.
(28:30):
It wasn't possible back then.
So, yeah,
All right, so here's the pregnantquestion for us with our audience.
, you talk about all equities throughwhat time period would you say,
but what if you're starting at say45 or 50 and you plan on a 10 to
15 year window towards retirement?
This is what our audience wants to know.
What would you do thenwith your asset allocation?
(28:53):
I still think if you're 45 stillwant to be looking at a very,
very heavy equity allocation.
I think when you get withinfive years of retirement is a
time when you start looking.
To play a little safer.
To a certain extent may depend uponyour assessment of market valuations.
I mean, if the stock market is valuedlike it is today and you're 45 and
starting to save, I'd really have a lotof reservations about going a hundred
(29:16):
percent stocks, I'd be concerned about,something happening in the next few
years where I could lose a lot of money.
But in general, if you're in a periodof time where stock market stocks
are reasonably valued and there'sno reason not to, I would be looking
at a hundred percent stocks up towithin five years of retirement.
So my question today is given valuationsin the variables you talked about, is 70
(29:37):
30 kind of the new 60 40 for that reason,
Are you talking about people inretirement or for those accumulating?
accumulating?
Don't think 60, 40 ever should beused for an accumulation phase until
you get toward the very end of it.
I think keeping it as pedal to themetal and stocks for long as you
can handle it, it's going to giveyou the greatest benefit in terms of
(29:58):
what you accumulate for retirement.
so I have a question around.
You listed out some of those items, thosevariables that you got to think about.
I know that these are factors, but I thinksome people overlook them, especially
today's the Social Security part.
Because that could obviouslycover a chunk, right?
of what you need to live on.
And then if you have a pension, evenif it's a frozen pension, a lot of our
generation, if you're in your fortiesand fifties, you might've experienced
(30:21):
where you started at a job that hada pension and then it got frozen.
So it might not be as big.
And then these days you've gotside hustles and things like that.
So feel like sometimes wejust sort of ignore that but
makes a big difference, right?
Yeah, it really Some thingsjust cannot overlook.
,Yeah, when you came up with the 4 percent rule, that was really for decumulation.
(30:42):
For a safety factor.
That was the worst case scenario.
But the 4% rule gets useda lot for accumulation.
Do you think in some ways it's better tohave a fixed 4% rule for accumulation,
4% of your expenses so that you canfigure out really how much do I need?
And then after you get to that FI number,then you sort of start looking at all
the variables and asset allocation.
(31:04):
And for decumulation.
And this is talking aboutthe decumulation stage
accumulation.
Do you think it's in some ways usinga fixed and more dogmatic 4 percent
rule as a better rule for accumulation?
don't think the 4 percent rule hasa place in the accumulation stage.
Once again, the goal of accumulationis to accumulate as much capital as
(31:25):
possible, as rapidly as possible,while the goal in retirement is to
Maintain , a nest egg as long as youcan under the influence of withdrawals.
, those withdrawals put a lotof stress on the portfolio.
You don't have to worry about thatduring the accumulation stage.
So I would just close your eyes, holdyour nose and put it all in stocks and
(31:47):
So, so let it happen so I thinkbill, are you sort of referencing
the 25 times your expenses?
Like how do you know, in order to comeup with the 4 percent rule, , to know
how much you need to accumulate, , we100 by four and that you get 25 times.
So that's the number we use allthe time in the Phi community.
As far as how big does your nestegg need to be so that on the
(32:08):
back end, you could take out 4%.
So we do 25 times your expenses.
if you invert the four percent,that's how you get that.
Exactly.
That seems reasonable.
And for folks who have really long timehorizons, like the fire folks, , 30,
40, 50 years, even though my currentresearch says we're closer to 5 percent
than 4%, when you look at a reallylong time horizon, you probably should
(32:29):
be closer to four, maybe low fours.
So the 25 rule probably makes sense.
So,, what's interesting to metoo is, doing our research, we
realized that you're not a completefan of the dogma of buy and hold.
Tell us your story about how youtook your clients In and out of
the market and did market timing.
(32:49):
So I want to hear the story about how youreally worked and how you knew that things
are coming here and I needed to protectmy clients and protect their capital.
Yeah I remember
Back in 2008, those wholived that bear market.
We'll never forget that.
was late in August of 2008 and the markethad declined significantly already.
But if you remember at that time, wewere dealing with a banking crisis.
(33:10):
We had Lehman brothers And other things.
And every day there just seemedto be worse and worse news coming
out over the press about thehealth of the financial system.
So the end of September of 2008, I gotmy clients completely out of stocks.
And that worked out well becausethe next two months, the market
just got beat, to death.
And I stayed out probably alittle longer than I should have.
(33:32):
And when you're going to managerisk, I don't call it market
timing, I call that managing risk.
Okay.
Well, you just assess that marketconditions are so antagonistic
toward your portfolio, you oughtto take some protective measures.
You need an exit plan.
But you also need a reentry plan.
And I didn't really havea good reentry plan.
So it took me a little bit longer toback in the market than I did today.
(33:52):
Of course I use a third party.
Subscription service that helpsassess the risk in the market.
And they recommend, , whatpercentage of your equity
allocation you should maintain.
If I had that tool back in 2009 I wouldhave been back in the market in April and
may and got almost all of that, , upswing.
So you need both sides of theknife, so to speak it's not
(34:14):
enough to get out of the market.
In the long run, you want to be inthat stock market to get those returns.
You have to be very careful not to beovercautious and cheat yourself basically
of the returns that are available.
what's interesting is youtimed it also back in 2002.
I mean, your client.
Benefited twice from your ability.
Then what was the systemyou used to get out of it?
(34:36):
How did you know thingswere, , bubble esque and you
needed to protect your clients?
I didn't have that thirdparty subscription service.
Then it was just my general knowledgeof the markets and I feel of the markets
that there was so much speculationhad gone on for such a long time.
And that so many abuses had built up.
That hadn't been paid for andthe bill always comes due.
(34:56):
That's one thing thatcomes true in markets.
The bill always comes due.
So if you have a long period ofspeculation and very high returns that
don't seem justified by fundamentals,that's probably about to be reversed.
And that was my generalfeeling about things.
But it's such a thing, even back in2000, there were places to hide in 2000.
I've done well in REITs, emergingmarkets, small cap value.
(35:17):
That was not the case in 2007 2008.
There was almost nowhere except U.
S.
Treasuries and gold, to avoidcatastrophe and carnage.
Bill, I have a question.
So today you're obviouslymanaging your own portfolio.
Do you have any, , older clientsthat you've had for a long time
where you're managing their moneytoo, or are you completely out
of doing it for other people?
(35:38):
Yeah, I just do for myself, my family.
I keep in touch with a lotof those older clients.
Unfortunately, their numbers arediminishing, which is very sad to
me, but their money is managed bythe firm to which I sold a business
back in San Diego, , back in 2013,and they're very happy with it.
I was very, very careful who I sold to.
Somebody I thought was philosophicallyvery close to myself, had very
(35:58):
reasonable fees and was a NAFRA member.
I trusted those folks and they'vedone a great job for my clients.
And they tell me that, , years later.
So it makes me feel good, but Ireally think that's the most important
decision that a financial advisor hasto make when they divest themselves
of their practice, who are they'regoing to hand their clients off to
that they can trust so their clientscan feel a sense of continuity,
(36:18):
One of the reasons you figured out thatit was time to sell your practice and
time again out of the market was becauseyou could no longer invest your money
like you invested your client's money.
Can you tell us about, , your glidepath out and what you use currently
today for a retirement portfolio?
Yeah, well, 2013, , bull market continuedvaluations were starting to rise again.
(36:40):
And I became really annoyedabout all the meddling from
government entities in the market.
And I didn't think, , in the long run,it was going to end well, although.
Look, here we are nine years past10 years past 11 years and , the
bull market has continued on.
So you never know.
But I just felt it was becomingincreasingly difficult for me
to do the kind of job I wantedto and feel comfortable with it.
(37:02):
Plus, , I was going tobecome be a good grandfather.
And I needed more time for that.
I spent an awful lotof time in my practice.
, that was not a 40 hour job weekends,whatever it took to take care of clients.
So it just seemed like the time was right.
Just like when we sold our familysoft drink business, , back in the
late eighties, the time was right.
Well, I think everybody wants tohave you as an advisor now because
your timing has been impeccable onmultiple times and your timing to get
(37:26):
out of the business was impeccable.
What do you use today?
I mean, you're a conservative guy,how do you manage your portfolio?
Are you managing it still for growthbecause of generational wealth
or, , how conservative are youbecause of your fear of market risk?
I
Well I'm managing money for myselfconservatively and then I'm managing
money for my children and my.
Grandchildren who havemuch longer time horizons.
(37:47):
So they have different assetallocations that I have.
tailored them just as I did whenI was an advisor based upon,
, their so called risk tolerance.
So it's different for each one,but I don't have anyone fully
invested in equities right now.
My service is recommending a hold about.
55 percent of what you normallywould have in equities.
And I've followed theiradvice at this time.
(38:08):
I think there's a lot of risk inthis market, primarily because of
evaluation, but other factors as well.
I agree with them.
I don't think it's the time to be fullyinvested in stocks for anybody, except
those with very, very long time horizons
people want to know today, and youseem to have a crystal ball and
have a little bit more market riskand fear now, what's your prediction?
Are we on the verge of a bubble?
(38:29):
It seems like everything's,, got a certain equanimity.
Everybody's happy.
There's, , greed, but not anoverly robust amount of greed.
Do you have a prediction for our audience?
And we'll hear it here first.
Well, I like statement thatJohn Kenneth Galbraith once made
about financial forecasting.
He said, the only purpose offinancial forecasting is to
(38:49):
make astrology look credible.
was like, that satisfies me.
I don't make forecasts becauseI'm not very good at it really.
very different.
Markets are subject to somany different influences.
I can't predict.
I don't even try.
I follow that third partyadvice on allocation changes.
But beyond that, I don'ttry to forecast recessions.
I don't try to forecast market crashes.
(39:11):
Cause anybody who seems to tryto do that doesn't do very well.
So would I expect to do well on that?
There you go.
If you've got the genius building andtelling you that he cannot predict
the future, please don't listento other people that are claiming
that they can predict the future.
Well, , avoid the financialpornography as some folks say, right?
(39:31):
That's right.
You ever heard of Mark Twain,his definition of a gold mine.
He said a gold mine is a hole inthe ground with a liar at the top.
And I think that's, as muchfor financial forecasting.
In my opinion,
Yeah.
then
Bill,
good Oh,
Bernstein also says, and I thinkyou ascribe to this is when
you won the game, stop playing.
that's great advice.
(39:52):
Unfortunately, Mark Twain wentbankrupt in the late 1990s.
He was a guy who invested in all kind ofhigh tech schemes, high tech for the day.
And he was very, verywealthy at one point.
He lost almost all of it.
Wow.
He had to go on a lecture tourlater in life or work globally to
raise money to get his fortune back.
,He's the example of a modern day professional athlete that , comes into a
(40:14):
lot of money and then ends up bankrupt.
Like we hear about in the media.
he allows people to talk him into schemesthat, if he had just invested down the
middle, we would be hearing about himas a financier, not just a great author,
Yeah, down that simple middle.
so Bill, I'd love to know your thoughts.
You spent much of your life inthe financial planning industry.
In my opinion, definitely a standoutthat is a credit to the financial
(40:37):
planning industry as a whole.
Things have changed quite a bit,, back in the day it was asset center
management, financial planning wasvery, very closely tied to investments,
but today you have a lot of do ityourselfers, a lot of our listeners are
do it yourselfers, you were as well,but now you've got advice only where
it's hourly, there might be a quarterlyfee, flat fees and things like that.
(40:58):
You started out back in the day, sort ofdown that road, but There's been a lot of
changes now and even more on the horizon.
I would just like to know from your lens.
are your thoughts on the financialplanning industry as a whole?
Well, I think it's evolving and in manyrespects in a good way if People can get
advice through hourly fees or low costmedia, and it's good quality advice.
(41:21):
I think that's great.
The more people that get soundfinance advice, the better,
because people need it.
It's a very complex field.
It's easy to make bad decisions,be ruled by your emotions.
You need to have an objective thirdparty with good sound knowledge of
principles to advise you on that.
So I hope that it continues to expand andmore and more people can get to use it.
(41:45):
Great.
Agreed.
I agree too.
I'm going to a financialadvisor right now.
I'm a DIY or, but what you need toknow, just like the timing issues
is when to stop being that becauseit becomes too complex and you
don't want to have blind spots.
And I've used sort of the age of 60 whenI'm planning on retiring at say 63 as a
time to Get a comprehensive evaluationof the plan get to a point of security
(42:08):
that at 63, I'm ready to rock and roll.
so, , Bill we want to hear aboutthis book that is coming out.
You talked to us a little bit aboutit at the vocal heads conference.
We chatted a little bit about it today.
So we're so excited because you'reso well respected, , clearly
you are one of those people.
That loves to solve hard problems and iswilling to, go down the path of doing it.
(42:32):
And so a lot of your work gearedtowards, , professionals, the
financial planning industry, butthis book is more for consumers.
So tell us more about it.
Exactly right.
My first book I wrote for professionalsback in 2006 was an expensive book,
, like a textbook kind of a thing Had alimited sale base there for but over
the years, I've gotten awful lot ofcommunications from non professionals
(42:55):
asking me questions about the 4 percentrule, how it works, , how to implement it.
And so I just thought.
For my next book, let'swrite it for everybody.
Let's lay it out straight.
Let's try to avoid technical chardon.
Basically prepare what is in effect,a cookbook, how to prepare your
own retirement withdrawal plan, andmost importantly, how to manage it.
I mean, there are a number ofbooks that offer advice on how to.
(43:16):
Calculate your withdrawal rate.
I don't see many books.
I'd tell you, once you have yourplan in place, how do you manage it?
How do you monitor it?
What do you look for?
Every plan is subject to problems.
if you're looking at 30, 40, 50, yourtimeframe, it'd be a miracle that you
didn't run off plan at some point.
You have to know what to look for and youalso have to know what to do about it.
(43:38):
So I'm spending a lot of time in thisbook telling people using examples how
they should manage their plan once theyset up 5 percent or 6%, whatever it is
they use , for their withdrawal rate.
I think that's equally importantto setting up the plan itself.
So, hopefully people will find somethinguseful there that they can do themselves,
or at least if somebody was doingit for them, understand the process.
(44:00):
So what were the new things you found?
You have a different concept of assetallocation now, and what were some of
the other new things in your researchthat are coming out that we can look
forward to reading in your book?
I like the idea of what's calleda glide path, which was developed
about 10 years ago by two otheradvisors, Michael Kitsies Wade Pfau.
(44:21):
They looked at the idea.
And asked the question what if wedon't want to use a fixed asset
allocation during retirement?
What if we want to vary ourstocks in some regular way?
And they said, let's particularlylook at a situation where we start
out with a low percentage of stocksand increase it steadily over time.
Intuitively, it doesn't seem anyreason that that should be any
(44:42):
more successful on fixed income.
Turns out it is very successful thatyou can add a significant amount to
your withdrawal rate by adopting thatglide path, starting at 40 percent,
maybe increasing one or two percenta year throughout your retirement.
And the reason is that If you encountera big bear market early in retirement,
and you're only at 40 percent stocksinstead of 60, you don't get hurt as bad.
(45:04):
Meanwhile, after the bear market is over,you're increasing your stock allocation,
you're buying into the recovery.
And that's why it makes it sosuccessful and why it does add
in almost every single case.
Every of the 400 retireesI studied benefited.
By using that kind of approach, that'swhat I call the second free lunch in
investing, , diversification being thefirst one, the glide path approach.
(45:24):
And it's not well knownnot well understood.
Think it's a great strategy and I gaveit quite a bit of time in my book.
is there going to be a new rule of thumb?
Is 5 percent the new 4 percent andthen what asset classes are you
adding to this to sort of, as yousay, supercharge your withdrawal rate?
Yeah, think you're right.
If we're going to use the termrule, 5 percent is much closer
(45:47):
to the truth than 4 percent now.
And that's a reflection of allthe additional asset classes
that put on in the last 18 years.
The seven asset classes I use now are U.
S.
large cap stocks, U.
S.
small cap stocks, U.
S.
micro cap stocks, U.
S.
mid cap stocks.
International stocks.
Those are five equity classes.
Then I use U.
S.
(46:07):
intermediate term government bonds.
That's from the original research,, like five to seven year treasuries.
In addition a small amountof cash or treasury bills can
be used as a proxy for that.
You need to have a cash account toaccumulate money for withdrawals anyway.
, so I built that into themodel at a 5 percent level.
And what percentages do you potentiallygive to each of these classes?
(46:28):
What I would call a standard allocation Iuse 55 percent of equities, 11 percent in
each of the five equity classes 5 percentin the money market fund or cash account.
And the remaining 40 percentwould go into bonds generally.
just use intermediate termtreasuries, us government treasuries.
Although you could, introducecorporate bonds and junk bonds and
(46:48):
a of things you could add to that.
Yeah.
many asset classes now.
So what is the workingtitle of the book again?
Supercharging the 4 percentrule, spend more in retirement.
All right, I think that is a great title.
, it encourages people to spend more and Ithink sometimes we have trouble with that
and it will be out sometime in 2025.
and I don't know if you have a list oflike early reviewers, but if you need
(47:11):
early reviewers, we'd love to be onthat list we'll definitely share it with
our audience when that comes out becausewe want to know what's on your mind now
and thank you for gearing it toward.
Consumers, do it yourselfers, andpeople that are very interested in this
stuff that might not be a professional.
I think that'll be very helpful.
Yeah.
ever since I started talking aboutthis book, it's amazing how many
(47:33):
emails I receive from non professionalssaying, when is this book coming out?
What's it about?
, I want to get it.
And it's very gratifying to knowthat there will be people out there
I'll actually look forward to.
might
So you did get my email.
Okay, that's great.
I'm just.kidding.
I'm one of those people.
you might get some pushbackand criticism from the Bogle
heads in the simple portfolio.
Now once again, you'regoing against the grain.
(47:55):
Well, , I try to call him as I see him.
do the research.
I come out with certain conclusions.
spend a lot of time doublechecking them and I feel
comfortable with what I'm doing.
So if.
What I say is not accepted immediately.
I'm used to that.
When I first did my first research,I got a lot of nasty mail, including
one death threat, actually,
(48:16):
Oh,
over, a 4 percent rule.
You're going to threaten myfamily, Is it really worth that?
have not heard that in our research.
So maybe you're here at your firstBill Bengen was needed some security.
Yeah.
It's imagine how people get ultrasensitive, but so you have grown some
thick skin and sure we'll be able tosee exactly what you think in this book.
(48:38):
Terrific.
Well, and, again, reminding ourselvesthat we have a late starter audience in
your thoughts, I don't know if you'vegiven much thought to the late starters
because of our retirement savings crisis.
Do you have any specific adviceor tips for those folks out there?
For advice for late starters in general,
Right.
yeah, you got to save aggressivelydepending upon your goals,
(48:58):
depending upon what lifestyleyou want to have in retirement.
And not everybody needsto live life to the nine.
So life, in my opinion Successdepends more upon friends and
family , and doing things you enjoyand not having vast amount of money,
but those are personal choices.
Carefully about the kind ofretirement you want to live.
And plan your saving accordingly.
(49:19):
Make sure those two coordinate.
You don't want to over save.
That just means you're starvingyour current needs for future
needs that may never appear.
And once you decide upon a savingcourse, be diligent about it.
Stick to it.
Do it without exception becauseyou start missing saving.
It's easy for those to multiply,and you start feeling short of
your goals, and you get frustratedbecause you're falling behind.
(49:41):
I have a bill you don't rule ofthumb here that I like to ascribe to.
I want your thoughts on it too.
Because of, , things like burnout,corporate burnout healthcare
burnout, a lot of burnout out there.
I subscribe to the, , work 20years for the money and then the
rest for joy to get to freedom.
If you start with that pay off yourdebt in five , And then work 15 to get
to your nest egg, and then you're free.
(50:03):
So that means, , whenever you start andideally you do say, My 30 because in
your 20s, you're trying to figure it out.
And the average person thatfeels like they're late, maybe
in their 30s up until 40.
And we do have a large audience inour community that are like that.
And they feel like they're late.
But the great thing is, if theystarted 35, , they're done by 55.
(50:24):
And, that's a good career andthat's a balanced approach and
maybe the, accumulation rule shouldbe a savings rate of 25 to 50%.
You don't need to save necessarily over50 because then you end up in deprivation
like a lot of the early fire folks.
What do you think about thebillionth rule of thumb?
I like to me, it evokes commonsense, it achieves a good balance
(50:45):
between your long term goalsand what your current needs are.
I'm gonna write a book now
now
yeah, you're right.
I was about to say it ain't exactly BillBengen quality or Bill Bengen level.
But good try.
I just want to warn you,a book is a lot of work.
I mean, I'm supposed to be retired.
I've got over a thousand hours intothis book this year, so I don't know
how that fits the definition of retired.
(51:07):
Well, I mean, you'reliving your best life.
You're doing what retirees need to do.
You can't just retire from somethingyou need to retire to something.
And keeps you alive a lot longer.
Right.
Yeah, well, look at these showbusiness figures George Burns and
Bob Hope that lived to a hundred.
They were doing things
they just loved.
they didn't care about their age.
They were just doing thingsthat they were passionate about.
(51:28):
And it is really critical to maintainyour passion throughout your whole life.
, Bob Dylan says in a song people areeither busy being born or busy dying.
So you have to make that choice.
so Bill, I don't know if youever review this, but you have a
Wikipedia page and that tells useverything we need to know about you.
Very interesting.
But is there any.
(51:49):
Where else people can find you orshould they just look out for the book
Yeah.
I am in the process of designinga website in which I can use then
directly to communicate to folksthe latest results, my research.
, my research is very chart heavy.
I rely very heavily on charts toguide people to my conclusions.
And my book will only contain afraction of the charts that really are
(52:12):
necessary, because of all the variables.
So I'm going to use that website toprovide charts for folks that they
can download that are more applicableto their individual situation.
Then let's say that thegeneric that I have in my book.
kind of a contemporary and a thoughtleader in some ways like Paul Merriman.
Do you know Paul Merriman?
And it seems like your thoughts on assetallocation and, , use and percentages
(52:37):
of assets, because he has a 10 Fundsfor Life where he gives 10 percent to
each of 10 different asset classes.
And you have sort of a 7Funds for Life approach.
Have you met the man?
Have you guys talkedabout your approaches?
No, I haven't.
That's my loss because I admire himbecause I've read about him and I'm
familiar with his work and I misseda chance at the Vogel conference.
understand he was there to do that.
(52:58):
So hopefully I'll catch up withhim sometime in the near future.
Well, maybe we'll have to haveyou back on with Paul Merriman and
just have a think tank information.
It would be great.
So do you have any final thoughts?
Did we cover everything here?
Or is there anything on thehorizon for Bill Bengen that
we haven't heard about yet?
No, except, this book will notbe my last word in the subject.
(53:18):
There's still so many issuesI need to look at and so many
things I want to share with folks.
I expect to be doing this as longas I can live, ? So stay tuned.
Maybe I can get us to 6%, whoknows, but I wouldn't count on that.
We should probably have him onwith Frank Vasquez because I
think he'll love your philosophy.
He's a big fan of say the riskparity approach, which is a little
(53:41):
bit different, but yours is a littlebit of a risk parity approach too,
with regards to your allocations,everybody has a different thing.
Thought, but I'm just so happy tobe able to hear the ideas of all
the thought leaders of the industry.
And I know our audiencefeels the same way.
Jackie, do you have any final thoughts?
only that as soon as that websiteis out, that will be amazing.
(54:01):
I am one of those visual learners,so I love the charts and graphs.
Thank you for doing that.
So we will definitely share thebook and all the new stuff that you
have coming out with our audience.
But I, on behalf of everyoneelse that has benefited from your
research, just want to say, thank you.
Thank you for . At a time in historywhen nobody was doing this, you said,
let me be the one to do the research.
(54:22):
Exactly 30 years later, it's still living.
It's still the subject of somany conversations and it's
still referenced and cited.
So you have made a footprinton the financial world.
So just a big thank you for that.
very kind of you to say that.
And I really enjoyed this conversation.
It was terrific.
Yeah, I want to know what thename of the website before we
go, what do we need to , bookmark?
(54:44):
Oh, my goodness.
I don't have the URL for it.
I mean, I'm in such anearly stage of development.
I don't even have the URL for the website.
Well, I'll forward that to youas soon as I get it, though.
So you can see how excited we are.
I hope we get to see you maybeat another Bogleheads conference
next year, if you can make it.
I encourage everybody to tryand meet you and meet your wife.
And maybe we should have her on nexttime because she must have a very
(55:06):
interesting perspective on what it'slike to be married to the Bill Bengen.
Oh, well.
Her bad luck.
Her misfortune.
,No, she's terrific.
We're actually newlyweds.
we only got married 18 months ago.
We each lost Our spouses threeyears ago, about the same
time, met in bereavement group.
(55:27):
And that's where our romance started.
Uh, so it's been great.
also you didn't, you didn't go onmatch.com or was it Bumble I could
have seen Bill Bengen on Tinder
You never know.
That's a beautiful love story.
It was lovely meeting her andit just goes to show our lives
go through so many phases.
(55:47):
Obviously yours has as well.
So, yeah, we enjoyed meeting her and we'dlove to have her on the podcast sometimes.
I'll ask you about that.
She's terrific.
Quite frankly, can'timagine my life without her.
We both understand the valueof having lost spouses.
Which we consider the worst thing thatcould possibly happen to a person.
We both appreciate now the value of havingcompanion, which we feel so closely to
(56:09):
and treasure our relationship beyond all
Again, I feel the same way andthat's a key component to retirement
in my mind, and longevity is apartner to see the world with.
So.
I agree.
, it has been an honor to talk to you.
This is one of the highlights of my year.
We have been honored to talk toso many leaders in this field.
I encourage people to go back in ourepisodes and just, , enjoy all of
(56:32):
the great minds that we're able tohave on here and just want to again,
say, thank you, thank you to Jackie.
Thank you to Bill.
And we will see you nexttime on Catching Up To Fi.
Happy anniversary to your article.
Thanks so much.
Enjoyed it, folks.
All right.
Bye bye.
Popular Podcasts
NFL Daily with Gregg Rosenthal
Gregg Rosenthal and a rotating crew of elite NFL Media co-hosts, including Patrick Claybon, Colleen Wolfe, Steve Wyche, Nick Shook and Jourdan Rodrigue of The Athletic get you caught up daily on all the NFL news and analysis you need to be smarter and funnier than your friends.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com