Forward Guidance: Marc Lichtenfeld on Retirement Budgeting and His New Book

by Samuel Taube, Research Correspondent, Investment U


Samuel Taube: Joining us today by phone is The Oxford Club's Chief Income Strategist Marc Lichtenfeld, and we are discussing his new book You Don't Have to Drive an Uber in Retirement: How to Maintain Your Lifestyle without Getting a Job or Cutting Corners.

Marc, thanks for joining us again.

Marc Lichtenfeld: Hi, Sam. Thanks for having me.

ST: What was your motivation for writing this new book?

ML: You know, it's funny. I have two friends who are quite wealthy. They sold businesses in their 30s and 40s, and they live a lifestyle that a lot of people would be jealous of.

They golf during the week. They volunteer at their kids' schools. They travel when they want to. And they're worried about running out of money someday.

So if these two guys who are in the top 1% are worried about running out of money, then what does that mean for everyone else?

And clearly, people are very worried about running out of money. A recent survey found that 45% of retirees believe they have to work in retirement - not that they want to work to give something back or to mentor young executives or young workers... but that they have to work to pay the bills.

My motivation was to help people take control of their retirement - to give them what I call a "sustainable retirement" where they don't have to work. They don't have to cut corners. They can maintain their lifestyle.

The subtitle of the book is "How to Maintain Your Lifestyle without Getting a Job and Cutting Corners." So it's really about living the lifestyle that you want. It's not about selling your house and moving into a smaller house or clipping coupons. It's the dream retirement that everybody has - living their lifestyle but not running out of money.

ST: That's a powerful motivation. That 45% statistic is pretty grim.

In your view, what is the shortfall that is causing people to run out of money or think that they're going to run out of money in retirement? Is it because people are under-saving? Or are they underestimating healthcare expenses? What do you think is the main factor?

ML: I think it's both. People certainly have under-saved, and we all know the statistics of all the people who have nothing saved for retirement. And this book isn't about that. I can't force you to save. I can't convince you to save. If you're not saving already, reading this book isn't going to change anything.

But one of the other main areas I think is causing a lot of problems for people is they don't understand how much healthcare is going to cost them in retirement. Right now, the average 65-year-old couple will spend $394,000 on healthcare - out-of-pocket healthcare - for the rest of their lives... from 65 on.

That's a ton of money. If you're 55 - not in retirement yet - you're going to end up spending about $464,000 on average once you turn 65. That's going to put a huge dent in anybody's retirement. So that is a major factor.

And life gets expensive too. People want to enjoy when they are healthy enough to visit the grandchildren and travel and go to the theater and go out to dinner with friends.

All those things add up. And unfortunately, some people haven't invested for long enough and they haven't set budgets. They haven't taken into account how much retirement is actually going to cost them.

ST: It seems like it. I've heard a number of those estimates on the average healthcare cost for a retired person or retired couple over the years, and it seems like every few months the amount goes up.

ML: Yeah, I mean healthcare costs are skyrocketing, and the president has said he's going to try to do something about that, and we'll see if he's able to.

Right now, drug companies are one of the biggest lobbies in Washington, so there is a lot of motivation for Congress not to do a whole lot about it... So we'll see what happens. Hopefully they can get the rising costs under control, but I think it's going to be difficult.

ST: We'll have to see. Now, in this book, you detail a few common investment scams and bad investment ideas that often target retirees. Can you give us one or two examples today?

ML: Sure. So just to be clear, I'm not really talking about scams. To me, a scam is the "Nigerian prince" scam where you get an email saying "Give me $10,000, and I'll deposit $1 million into your account"... something that's clearly illegal.

What I'm talking about though are just really bad investments, and they're investments that a lot of seniors have. And I say they're not scams because they're not illegal. Often these investments do deliver what they say they will.

The problem is you can do so much better investing on your own and not paying exorbitant fees... Investing for the long term without restrictions and penalties and all kinds of problems where they just take a very simple concept of investing for the future, and they make it very complicated and very expensive. A lot of seniors have these products, so I try really hard to steer people away from them.

ST: I think I can guess this from some of your previous Wealthy Retirement articles... Would an example of one of these products be certain reverse-mortgage schemes?

ML: Absolutely, yeah. I'm not a fan of reverse mortgages at all.

And let me make one thing clear - and I mention this in the book - when I say these products are wrong, they're not wrong for everyone, but they're wrong for most everyone.

So there are some people where a reverse mortgage is an absolute lifeline. It's the only source of money that they have, and they absolutely need it.

For most people, reverse mortgages are terrible, terrible ideas. They are very expensive, and you don't necessarily get all the money you think you will because of how expensive they are. They can be a big pain in the neck for your heirs or for your spouse if the paperwork isn't done right.

You could get a reverse mortgage, and after you pass away, your spouse - or, let's say, an adult child who's living in the house - could be forced to move if things aren't handled properly. So I think they're terrible, terrible investments for the vast majority of people.

ST: Now, one last thing. The book comes out in March. It's available for pre-order now. I understand that if our listeners pre-order, there's a special bonus in it for them?

ML: Sure. So I have a bonus chapter that's not included in the book, but if you pre-order you get the bonus chapter, which is "How to Save Money Every Time You Visit the Doctor."

And as I mentioned, this book isn't about downsizing your house and cutting corners. It's about really simple, everyday ways of saving a bunch of money. And one of the ways you can do that is when you visit a doctor.

People think the doctor gives you your bill... and that's what you have to pay... but that's not always the case. There are some pretty simple ways you can save money when you go to the doctor, whether it's maybe $50 for a routine visit to hundreds or even thousands of dollars depending on why you're at the doctor and where you're visiting the doctor.

It can really save you a tremendous amount of money. And in fact, I think any of the chapters in the book can.

The book is broken up into several sections. One is an income-generating section. Another is a money-saving section. And even just one chapter from the cost-savings section more than pays for the book many times over.

I'm a little biased, but I think there are a lot of really good tips in here on how you can save a bunch of money.

ST: Yeah, sounds like it. If you're interested in Marc's upcoming book, You Don't Have to Drive an Uber in Retirement, then click the pre-order link at the bottom of this transcript and you will receive that bonus chapter Marc was just talking about.

Marc, thanks so much for joining us.

ML: Sure, thanks again for having me.

Click here to pre-order Marc's upcoming book on Amazon.

Then click here to claim your bonus chapter.