June 5, 2025 • 11 mins
Host of ‘How to Money’ Joel Larsgaard joins the show to talk about Gen Zers not wanting to start a bar tab, 1/8 wardrobe purchases come from Amazon, and the 4% withdrawal rule.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Joe Larsgard, who is host of how to Monday, how
to Money Sundays twelve pm to two pm here on KFI,
and his social address at how to Money.
Speaker 2 (00:11):
Joel.
Speaker 1 (00:12):
Good morning, Joel, morning Bill. We're such happy campers. Here
is a story. And the way it works is because
I'm incredibly lazy. I don't come up with the stories.
I ask Joel, Okay, what do you want to talk about?
What's in your wheelhouse? And if I like it, we
talk about it. If not, I say, now we're going
to do something else. In any case, a story about
(00:34):
Amazon that one in eight wardrobe purchases comes from Amazon.
Speaker 2 (00:39):
Now a quick aside.
Speaker 1 (00:41):
I happen to be married to someone who lives for
buying from Amazon and buys clothes, and we'll buy three
different sizes and fifteen different colors.
Speaker 2 (00:54):
And returns ninety percent of the boxes.
Speaker 1 (00:59):
And and I'm serious, I had to get an extra
garbage pant. I had to get an extra one of
those garbage cans just for recycle because of the boxes
that I have to take apart and put together.
Speaker 2 (01:12):
I mean, it's crazy.
Speaker 1 (01:13):
So the point is it's costing us all money.
Speaker 2 (01:17):
But how is that possible?
Speaker 1 (01:18):
Because I'm paying for you know, the Amazon Prime, and
I get free obviously, free returns, et cetera.
Speaker 2 (01:26):
So how does it cost you money if I'm paying
for it?
Speaker 3 (01:29):
Yeah?
Speaker 4 (01:30):
All right, So that's a good question, and one your
partner is not alone in that Amazon obsession. And it's fascinating,
like this status came out that like, people buy way
more clothing on Amazon than they even do at Walmart, right,
and think about Walmart has these physical stores and an
online presence all around the country, and people are buying
more than twice as much on Amazon than they are
(01:50):
via Walmart, both physical and online. And so it's just
it's crazy to think about that. And Okay, how why
is this costing us money? And I think it's exactly
what you refer to with the Amazon Prime. It's like
frictionless and people are like, I mean, I wasn't planning
on buying a new skirt or a new T shirt
or some shorts or some socks or whatever it is today,
But my goodness, it's so easy. And I was on
(02:12):
Amazon anyway, and it feeds me, It fed me this thing.
It popped up and I'm like, yeah, I was about
to check out, but yeah, I guess I could use
some new socks, throw them into the cart, you get
them shipped to your house, and for most people, amazing
if your spouse actually does make those returns, Bill, I
have to make the returns at my house because nobody
else is doing it, and sometimes if I don't do it,
it doesn't get done and you're stuck with that.
Speaker 3 (02:34):
Good.
Speaker 4 (02:34):
So, I just think that frictionless reality that Amazon has
created in so many of our lives has led to
just consuming more, buying more stuff, and buy stuff that
we otherwise wouldn't have bought.
Speaker 1 (02:44):
Okay, fair enough, But how again, I'm going to ask
the question, I am paying for the service of being
able to return, how does it cost me? Or how
does it cost you money? Because I'm doing it and
paying for it.
Speaker 4 (02:57):
Okay, so when you're making those returns, it there's a
cost to the retailer.
Speaker 3 (03:01):
Right.
Speaker 4 (03:01):
So even if you're buying stuff and let's say your
spouse buys in a bunch of different sizes, a bunch
of different colors and says I'm probably gonna keep twenty
percent of it.
Speaker 3 (03:10):
And I'm going to return the rest.
Speaker 4 (03:12):
Well, the return looks like it's free for you if
you drop it off at the right place, you jump
through the right.
Speaker 3 (03:17):
Hoops, and you have a package correctly.
Speaker 4 (03:19):
But and so that feels all nice and good, but
it's obviously it's put into the price of the items
that we're buying. So everything that we buy costs more
because of the friction list returns also that we're able
to get. And it is nice where it looks like
it's free, but it is. Of course, it's functionally put
into the price of the goods that we're buying.
Speaker 1 (03:39):
Yeah, mean, that makes sense, But that's second, third tier
down the road, and it just sort of disappears. And
let's say I'm buying a twenty dollars item where twenty
dollars normally would am I? Am I paying twenty two
dollars for it? Is it a substantial amount? Is there
real money involved in this?
Speaker 2 (03:59):
Yeah?
Speaker 3 (03:59):
I mean I think so.
Speaker 4 (04:00):
There's Actually there's another interesting story I saw in the
New York Post this week, and what they were saying is,
like the way that people in the United States have
gotten accustomed to making returns, many of them have gained
the system. And so it's not even just the fact
that you can return something you decided you didn't want.
Speaker 3 (04:16):
It's that people are.
Speaker 4 (04:17):
Saying are essentially trying to cheat the system, returning stuff
that they otherwise wouldn't be able to return. Some people
are taking items out of electronics, returning the now unusable,
unworkable electronics, and retailers aren't catching it. And so I think,
what this is what's going to happen because of fraudulent
returns and because of the growing number of overall returns
(04:38):
which which eats into the bottom line of retailers. I
believe in the very near future, similar to dynamic pricing
for tickets that we buy, you're going to have like
dynamic return policies. So there's gonna be one return policy
that Bill Handle is held to, and there's another return
policy that I'm held to by certain retailers based on
the way I have returned goods that I've purchased from
that retailer in the past.
Speaker 1 (05:00):
Well, so it's interesting, and again this is because of
my experience here. When a product is let's say you
return a product that's defective, it's the honor system because
you're returning a product you don't like it, and so
you call the retailer and they say keep it. Just
(05:20):
keep it, well, refund the money, just keep it. And
it really is an honor system. It's much like you
know at offices where you have those little boxes of
candy bars and snacks, where they say it's a buck
and it's the honor system. There's no way to check.
And I'll tell you what I do, and people have
seen me on the show. What I do is I
(05:42):
grab a candy bar and take money out of the box.
Speaker 3 (05:47):
See you're the problem. You're the problem here.
Speaker 2 (05:49):
See okay, good enough, Joel.
Speaker 1 (05:54):
We talk a lot about retirement because, first of all,
you you rightly are concerned about.
Speaker 2 (06:02):
It, because it is no fun being old.
Speaker 1 (06:04):
No one wants to put the address of a dumpster
when receiving Social Security checks. And there is a general
rule of four percent. I mean, at the end of
it all, when you retire, you should pull out four
percent of your savings, retirement plan, etc. And that theoretically
keeps you going forever until you die. Actually, the secret
(06:27):
is to know exactly when you're going to die, and
if you can calendar it, you spend all your money
until that last day.
Speaker 2 (06:34):
That's the magic.
Speaker 1 (06:35):
But let's talk about that four percent rule because frankly,
in my life. I'm looking at the five percent rule
and I plan on doing that with my retirement when
I do, so, tell me what's going on and tell
me how wrong I am.
Speaker 3 (06:49):
Yeah.
Speaker 4 (06:49):
I mean, if you go see a psychic, you're right
and you can find that exact date of death. It's
so much easier to plan for retirement. But because we
can't or I haven't met anybody that can accurately predict
that yet, kind of have to like do your best
and go buy rules of thumb. And this four percent
rule of thumb has been around now for many decades.
And this guy, Bill Bengen, he did like a bunch
(07:09):
of studies about market returns and inflation and longevity, and hey,
how long will you pull your portfolio last your entire
retirement if you're drawing down four percent of it? And
that's basically what was the magic number that he found
was like, with inflation and potentially inconsistent market returns, the
vast majority of people are going to be okay taking
(07:30):
four percent of their overall portfolio out every single year.
Speaker 3 (07:34):
And and so that.
Speaker 4 (07:35):
Has been kind of it's interesting because it got rounded
down even the original rule he had found that it
was like four point one five percent, but he rounded
it down to four just because it was it's gonna
stick in people's minds better. Well, he has gone back
to the drawing board and ran more numbers, and you
said five percent. Actually it's closer to five percent now,
according to Bill Bengen, he says, four point seven percent
(07:58):
is what you can more likely take draw down from
your portfolio every single year in retirement and not run
the risk of exhausting it.
Speaker 2 (08:08):
Yeah, and that leaves, and then the principle is left.
Speaker 1 (08:11):
You start with a million dollars, you pull out five percent,
that's fifty thousand dollars a year. Add so security to that,
let's say three thousand dollars a month. Now you're an
eight thousand dollars one hundred grand a year. I mean,
you're going to be fine at one hundred thousand dollars
a year. I mean that really, you can really do
a nice job with your dumpster at one hundred thousand
dollars a year. But you know the other issue. I
(08:35):
talk to some money people and they say, you may
want to take out more initially because at the end
of your life, as you get older.
Speaker 2 (08:43):
You're not going to spend as much money.
Speaker 4 (08:46):
Well, that's the other thing. There's so many things to
factor into this. That's why this is also like a
rule of thumb, not an actual hard and past rule.
And there's just so many different things that that people
have to consider when they're trying to figure out, well,
how much will I need for my retirement portfolio.
Speaker 3 (09:01):
I think this is good news on a couple fronts.
Speaker 4 (09:04):
If you can delay social Security, it means you need
even less because you're going to get a bigger Social
Security check. And on top of that, it means you
actually might have to save up less than you think.
I mean, sometimes people get those numbers from the retirement
company commercials, the broker's firm, saying your magic number is
four million dollars, that's how much you need to save up,
and I think it boggles people's minds and like, I'm
(09:25):
never going to get there. And when you realize that
you can take a larger percentage of your portfolio every year,
you know, keep most of that principle intact, and survive
retirement incredibly, well, then it means you can, instead of
trying to save up more and live life high on
the hog with just more money coming in, you can
just deprioritize how much you need to have in reserves
(09:47):
when you reach retirement, which might sound like terrible advice
from someone who wants you to have a great life
in retirement, but for a lot of people, what that
means is skimping out on life in the here and now,
spending less on these of release. Yeah, and so you're
investing so much for those future years, and then you're like,
am I actually going to be alive to enjoy them?
So I think this should give people a little bit
(10:08):
of a sigh of relief. Yeah, maybe I can spend
something close to that upper four low five percent range
in some of those retirement years, not run out of money,
and not feel like I have to break my back
during those working years to a mass even more than
I actually need.
Speaker 2 (10:21):
Yeah.
Speaker 1 (10:21):
My mother died at ninety eight, and her retirement plan
was terrific. She ran out of money when she was
about eighty five, but she had a secret retirement plan
named Bill Handle and let me tell you when you
know what. When she passed away, I became fairly wealthy
(10:44):
because I didn't have to pay one hundred thousand dollars
a year to support her. But hey, that's the other issue,
and we'll do that probably in the next few weeks.
If you need care in your elder years assisted living,
you are screwed beyond unscrewed.
Speaker 4 (11:03):
Oh that's another subject for another day. Is long term
care insurance and when does it make sense? Because it's
quite expensive and the average person doesn't have the money
to fund a long term care plan because of how
expensive they gotten. The premiums have gotten out of control,
and for some people it's necessary, but for others it's not.
Speaker 3 (11:21):
So we could definitely talk about that one of these days.
Speaker 1 (11:23):
Yeah, my mom lost it at ninety three. She was
in so serious de men. She didn't know where she
was and I kept her at that place. I should
have put her on the sidewalk. She wouldn't know the difference.
Speaker 2 (11:36):
Okay, we're done, John, damn right.
Speaker 1 (11:40):
I am Joel this Sunday twelve to two pm here
on KFI. He's at How to Money, Joel. Catch you
over the weekend, Joel, Take care.
Speaker 3 (11:49):
Thanks Bill,
Joe Larsgard, who is host of how to Monday, how
to Money Sundays twelve pm to two pm here on KFI,
and his social address at how to Money.
Speaker 2 (00:11):
Joel.
Speaker 1 (00:12):
Good morning, Joel, morning Bill. We're such happy campers. Here
is a story. And the way it works is because
I'm incredibly lazy. I don't come up with the stories.
I ask Joel, Okay, what do you want to talk about?
What's in your wheelhouse? And if I like it, we
talk about it. If not, I say, now we're going
to do something else. In any case, a story about
(00:34):
Amazon that one in eight wardrobe purchases comes from Amazon.
Speaker 2 (00:39):
Now a quick aside.
Speaker 1 (00:41):
I happen to be married to someone who lives for
buying from Amazon and buys clothes, and we'll buy three
different sizes and fifteen different colors.
Speaker 2 (00:54):
And returns ninety percent of the boxes.
Speaker 1 (00:59):
And and I'm serious, I had to get an extra
garbage pant. I had to get an extra one of
those garbage cans just for recycle because of the boxes
that I have to take apart and put together.
Speaker 2 (01:12):
I mean, it's crazy.
Speaker 1 (01:13):
So the point is it's costing us all money.
Speaker 2 (01:17):
But how is that possible?
Speaker 1 (01:18):
Because I'm paying for you know, the Amazon Prime, and
I get free obviously, free returns, et cetera.
Speaker 2 (01:26):
So how does it cost you money if I'm paying
for it?
Speaker 3 (01:29):
Yeah?
Speaker 4 (01:30):
All right, So that's a good question, and one your
partner is not alone in that Amazon obsession. And it's fascinating,
like this status came out that like, people buy way
more clothing on Amazon than they even do at Walmart, right,
and think about Walmart has these physical stores and an
online presence all around the country, and people are buying
more than twice as much on Amazon than they are
(01:50):
via Walmart, both physical and online. And so it's just
it's crazy to think about that. And Okay, how why
is this costing us money? And I think it's exactly
what you refer to with the Amazon Prime. It's like
frictionless and people are like, I mean, I wasn't planning
on buying a new skirt or a new T shirt
or some shorts or some socks or whatever it is today,
But my goodness, it's so easy. And I was on
(02:12):
Amazon anyway, and it feeds me, It fed me this thing.
It popped up and I'm like, yeah, I was about
to check out, but yeah, I guess I could use
some new socks, throw them into the cart, you get
them shipped to your house, and for most people, amazing
if your spouse actually does make those returns, Bill, I
have to make the returns at my house because nobody
else is doing it, and sometimes if I don't do it,
it doesn't get done and you're stuck with that.
Speaker 3 (02:34):
Good.
Speaker 4 (02:34):
So, I just think that frictionless reality that Amazon has
created in so many of our lives has led to
just consuming more, buying more stuff, and buy stuff that
we otherwise wouldn't have bought.
Speaker 1 (02:44):
Okay, fair enough, But how again, I'm going to ask
the question, I am paying for the service of being
able to return, how does it cost me? Or how
does it cost you money? Because I'm doing it and
paying for it.
Speaker 4 (02:57):
Okay, so when you're making those returns, it there's a
cost to the retailer.
Speaker 3 (03:01):
Right.
Speaker 4 (03:01):
So even if you're buying stuff and let's say your
spouse buys in a bunch of different sizes, a bunch
of different colors and says I'm probably gonna keep twenty
percent of it.
Speaker 3 (03:10):
And I'm going to return the rest.
Speaker 4 (03:12):
Well, the return looks like it's free for you if
you drop it off at the right place, you jump
through the right.
Speaker 3 (03:17):
Hoops, and you have a package correctly.
Speaker 4 (03:19):
But and so that feels all nice and good, but
it's obviously it's put into the price of the items
that we're buying. So everything that we buy costs more
because of the friction list returns also that we're able
to get. And it is nice where it looks like
it's free, but it is. Of course, it's functionally put
into the price of the goods that we're buying.
Speaker 1 (03:39):
Yeah, mean, that makes sense, But that's second, third tier
down the road, and it just sort of disappears. And
let's say I'm buying a twenty dollars item where twenty
dollars normally would am I? Am I paying twenty two
dollars for it? Is it a substantial amount? Is there
real money involved in this?
Speaker 2 (03:59):
Yeah?
Speaker 3 (03:59):
I mean I think so.
Speaker 4 (04:00):
There's Actually there's another interesting story I saw in the
New York Post this week, and what they were saying is,
like the way that people in the United States have
gotten accustomed to making returns, many of them have gained
the system. And so it's not even just the fact
that you can return something you decided you didn't want.
Speaker 3 (04:16):
It's that people are.
Speaker 4 (04:17):
Saying are essentially trying to cheat the system, returning stuff
that they otherwise wouldn't be able to return. Some people
are taking items out of electronics, returning the now unusable,
unworkable electronics, and retailers aren't catching it. And so I think,
what this is what's going to happen because of fraudulent
returns and because of the growing number of overall returns
(04:38):
which which eats into the bottom line of retailers. I
believe in the very near future, similar to dynamic pricing
for tickets that we buy, you're going to have like
dynamic return policies. So there's gonna be one return policy
that Bill Handle is held to, and there's another return
policy that I'm held to by certain retailers based on
the way I have returned goods that I've purchased from
that retailer in the past.
Speaker 1 (05:00):
Well, so it's interesting, and again this is because of
my experience here. When a product is let's say you
return a product that's defective, it's the honor system because
you're returning a product you don't like it, and so
you call the retailer and they say keep it. Just
(05:20):
keep it, well, refund the money, just keep it. And
it really is an honor system. It's much like you
know at offices where you have those little boxes of
candy bars and snacks, where they say it's a buck
and it's the honor system. There's no way to check.
And I'll tell you what I do, and people have
seen me on the show. What I do is I
(05:42):
grab a candy bar and take money out of the box.
Speaker 3 (05:47):
See you're the problem. You're the problem here.
Speaker 2 (05:49):
See okay, good enough, Joel.
Speaker 1 (05:54):
We talk a lot about retirement because, first of all,
you you rightly are concerned about.
Speaker 2 (06:02):
It, because it is no fun being old.
Speaker 1 (06:04):
No one wants to put the address of a dumpster
when receiving Social Security checks. And there is a general
rule of four percent. I mean, at the end of
it all, when you retire, you should pull out four
percent of your savings, retirement plan, etc. And that theoretically
keeps you going forever until you die. Actually, the secret
(06:27):
is to know exactly when you're going to die, and
if you can calendar it, you spend all your money
until that last day.
Speaker 2 (06:34):
That's the magic.
Speaker 1 (06:35):
But let's talk about that four percent rule because frankly,
in my life. I'm looking at the five percent rule
and I plan on doing that with my retirement when
I do, so, tell me what's going on and tell
me how wrong I am.
Speaker 3 (06:49):
Yeah.
Speaker 4 (06:49):
I mean, if you go see a psychic, you're right
and you can find that exact date of death. It's
so much easier to plan for retirement. But because we
can't or I haven't met anybody that can accurately predict
that yet, kind of have to like do your best
and go buy rules of thumb. And this four percent
rule of thumb has been around now for many decades.
And this guy, Bill Bengen, he did like a bunch
(07:09):
of studies about market returns and inflation and longevity, and hey,
how long will you pull your portfolio last your entire
retirement if you're drawing down four percent of it? And
that's basically what was the magic number that he found
was like, with inflation and potentially inconsistent market returns, the
vast majority of people are going to be okay taking
(07:30):
four percent of their overall portfolio out every single year.
Speaker 3 (07:34):
And and so that.
Speaker 4 (07:35):
Has been kind of it's interesting because it got rounded
down even the original rule he had found that it
was like four point one five percent, but he rounded
it down to four just because it was it's gonna
stick in people's minds better. Well, he has gone back
to the drawing board and ran more numbers, and you
said five percent. Actually it's closer to five percent now,
according to Bill Bengen, he says, four point seven percent
(07:58):
is what you can more likely take draw down from
your portfolio every single year in retirement and not run
the risk of exhausting it.
Speaker 2 (08:08):
Yeah, and that leaves, and then the principle is left.
Speaker 1 (08:11):
You start with a million dollars, you pull out five percent,
that's fifty thousand dollars a year. Add so security to that,
let's say three thousand dollars a month. Now you're an
eight thousand dollars one hundred grand a year. I mean,
you're going to be fine at one hundred thousand dollars
a year. I mean that really, you can really do
a nice job with your dumpster at one hundred thousand
dollars a year. But you know the other issue. I
(08:35):
talk to some money people and they say, you may
want to take out more initially because at the end
of your life, as you get older.
Speaker 2 (08:43):
You're not going to spend as much money.
Speaker 4 (08:46):
Well, that's the other thing. There's so many things to
factor into this. That's why this is also like a
rule of thumb, not an actual hard and past rule.
And there's just so many different things that that people
have to consider when they're trying to figure out, well,
how much will I need for my retirement portfolio.
Speaker 3 (09:01):
I think this is good news on a couple fronts.
Speaker 4 (09:04):
If you can delay social Security, it means you need
even less because you're going to get a bigger Social
Security check. And on top of that, it means you
actually might have to save up less than you think.
I mean, sometimes people get those numbers from the retirement
company commercials, the broker's firm, saying your magic number is
four million dollars, that's how much you need to save up,
and I think it boggles people's minds and like, I'm
(09:25):
never going to get there. And when you realize that
you can take a larger percentage of your portfolio every year,
you know, keep most of that principle intact, and survive
retirement incredibly, well, then it means you can, instead of
trying to save up more and live life high on
the hog with just more money coming in, you can
just deprioritize how much you need to have in reserves
(09:47):
when you reach retirement, which might sound like terrible advice
from someone who wants you to have a great life
in retirement, but for a lot of people, what that
means is skimping out on life in the here and now,
spending less on these of release. Yeah, and so you're
investing so much for those future years, and then you're like,
am I actually going to be alive to enjoy them?
So I think this should give people a little bit
(10:08):
of a sigh of relief. Yeah, maybe I can spend
something close to that upper four low five percent range
in some of those retirement years, not run out of money,
and not feel like I have to break my back
during those working years to a mass even more than
I actually need.
Speaker 2 (10:21):
Yeah.
Speaker 1 (10:21):
My mother died at ninety eight, and her retirement plan
was terrific. She ran out of money when she was
about eighty five, but she had a secret retirement plan
named Bill Handle and let me tell you when you
know what. When she passed away, I became fairly wealthy
(10:44):
because I didn't have to pay one hundred thousand dollars
a year to support her. But hey, that's the other issue,
and we'll do that probably in the next few weeks.
If you need care in your elder years assisted living,
you are screwed beyond unscrewed.
Speaker 4 (11:03):
Oh that's another subject for another day. Is long term
care insurance and when does it make sense? Because it's
quite expensive and the average person doesn't have the money
to fund a long term care plan because of how
expensive they gotten. The premiums have gotten out of control,
and for some people it's necessary, but for others it's not.
Speaker 3 (11:21):
So we could definitely talk about that one of these days.
Speaker 1 (11:23):
Yeah, my mom lost it at ninety three. She was
in so serious de men. She didn't know where she
was and I kept her at that place. I should
have put her on the sidewalk. She wouldn't know the difference.
Speaker 2 (11:36):
Okay, we're done, John, damn right.
Speaker 1 (11:40):
I am Joel this Sunday twelve to two pm here
on KFI. He's at How to Money, Joel. Catch you
over the weekend, Joel, Take care.
Speaker 3 (11:49):
Thanks Bill,
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