NerdWallet's Smart Money Podcast - Are You Too Late for the Gold Rush? Plus: A Retirement Rule That Might Be Broken

Episode Date: January 29, 2026

See what gold and silver highs mean and how to plan retirement spending without the 80% rule. Is gold’s record run a sign you should buy? Do you really need 80% of your income in retirement? Hosts Sean Pyles and Elizabeth Ayoola discuss retirement income rules of thumb to help you understand how to estimate what you might spend after you stop working. But first, senior news writer Anna Helhoski joins Sean and Elizabeth to break down the precious-metals rally with investing writer Sam Taube. They discuss why investors treat gold and silver as “safe havens,” how a weakening U.S. dollar and tariff-driven uncertainty can move prices, and what to consider if you’re deciding between physical metals and gold ETFs. Then, James Bashall, COO and advisor for NerdWallet Wealth Partners, joins Sean and Elizabeth to discuss how to plan for retirement without blindly relying on the 80% rule. They discuss where the 80% benchmark came from, how other shortcuts like the 4% rule and the “rule of $1,000” can shape your thinking, and why running multiple spending scenarios (including a “spending smile”) can help you balance travel, inflation, and health care costs over time. Wondering how to buy gold? You have several options, including bullion, gold stocks, gold funds and gold futures. Learn more about the pros and cons of each: https://www.nerdwallet.com/investing/learn/how-to-buy-gold  If you want to learn more about working with a financial advisor, then visit NerdWallet Wealth Partners at nerdwalletwealthpartners.com/smart Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header In their conversation, the Nerds discuss: gold prices, silver prices, gold record high, investing in precious metals, gold vs silver, safe haven asset, hedge against inflation, hedge against a falling dollar, U.S. dollar decline, dollar index, portfolio diversification, gold ETF, best gold ETFs, physical gold, gold bullion, buying gold coins, storing gold safely, selling gold jewelry, central banks buying gold, geopolitical uncertainty investing, tariffs and markets, market volatility hedge, Goldman Sachs gold forecast, commodity investing, rebalancing portfolio, silver industrial demand, silver for electronics, AI chips silver demand, electric vehicle silver demand, retirement income replacement, 80% rule retirement, retirement spending, 4% rule, withdrawal rate, Monte Carlo retirement simulation, and retirement healthcare costs. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Gold just hit another record high against the dollar. This episode, what it means for your finances and your portfolio. Welcome to Nerd Wallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayala. This episode, we're discussing whether you need 80% of your annual income in retirement. Where did that rule come from anyway? But first, our weekly money news roundup where we break down the latest in the world of finance to help you be

smarter with your money. Our news colleague, Ana Halaski, is back to talk about precious metals. Hey, Elizabeth. Hey, Sean. And yeah, like Sean mentioned, gold has hit a record high, but I'm also thinking about hitting estate sales this weekend and seeing what Grandma Silver's going for, because that's also higher than ever. They've both hit unprecedented levels recently. And it's going to have implications for the economy. So today, our investing colleague, Sam Taub, is here to talk about why investors are flocking to precious metals when uncertainty hits, what drive swings and how politics and the global economy move prices. And we're also going to talk about when it's worth having some physical metals in your portfolio. Sam, welcome back to

smart money. Always great to be here, Anna. So first off, let's do some level setting. You always hear that gold and silver are safe hands. But what does that actually mean? And why do investors steer toward them during times of uncertainty? So the fundamental reason why gold and silver appeal to investors is that they're intrinsically valuable, meaning they're rare and they look pretty, and they're traditional symbols of wealth in cultures around the world. This is an important distinction. When people say that gold and silver are safe haven investments, they don't mean that their price stays level over time.

And as we're going to discuss later on, both can have some pretty dramatic price swings. But precious metals are safe havens because their prices are supposed to move independently of most other things. in financial markets and the economy, especially money. When currencies lose their value, precious metals have a very long track record of holding their value by increasing in price in that declining currency. Over the long term, even if we're talking about thousands of years, gold is remarkably consistent in how much stuff and ounce of it can buy, even though its money price can vary wildly over time. Yeah, and the prices do seem to change. Gold surged over

$5,000 per ounce this week. What's driving this remarkable run over the last six months? A lot of it is large institutions like central banks and hedge funds and also just really, really wealthy families and individuals, buying gold to hedge against geopolitical uncertainty, things like tariffs and the market volatility that comes with them, as well as hedging against a decline in the value of the dollar. As we talked about before, gold tends to hold its value really well against a declining currency. What about silver? Because its swings have been even more dramatic, even more volatile. What's influencing silver prices? Silver is a precious metal. So it's subject to the same kinds of precious metal trends we were just talking about. But the thing about silver is that

it's also an industrial metal. In fact, most of the global demand for silver actually comes from industrial applications like electronics and photography, rather than things like jewelry and homewares. So another part of the Silver Story is strong demand from things like computer chips for AI and for electric vehicles. So we talked about geopolitical uncertainty. Let's talk a little bit more about specifics. We recently saw a clear example of how gold reacted to geopolitical events. Tensions around Greenland and President Trump's tariff threats escalated. and then prices fell when he pulled them back. How much does single events like these still move gold prices?

And why does that happen? Geopolitical events can cause short-term fluctuations in prices, but those generally don't last. And over the long-term, prices tend to revert to longer-term trends driven by things like currency value. You're going to hear me say that a lot in this episode. In particular, when we're talking about market volatility due to these tariffs, we have to keep taco in mind.

That's the acronym for Trump always chickens out. And I want to say this in as politically neutral a way as possible. Maybe Trump gets intimidated by the market volatility that his tariff threats cause and he backs off because of that. Or maybe his intent is always to use the shock of the tariff threats to force a deal. You could argue either way with that. But the point is, ultimately, a lot of these tariff threats, threats don't last, and neither does the short-term volatility around them, including in gold prices.

Now, for investors who are watching news events play out, they're keeping track of all these factors that play into gold and silver prices, how do you separate short-term headline-driven moves from longer-term trends when you're thinking about precious metals? For the reasons we just discussed, I don't think it really does any good to pay attention to the headline-driven moves, unless you're trying to day-trade gold and silver, which is not something that I personally have a lot of expertise in, and it's not the kind of thing that you'll hear a lot of financial advisors

saying is a good idea to try to do. But for the rest of us, precious metals are just a portfolio diversifier that you buy and hold in order to reduce risk. Now, recently Goldman Sachs had made a pretty bullish call. They forecasted that gold could reach 5,000 over a very gun, in there, but $5,400 by year's end. What's your take on these forecasts? What are the risks for investors if they're going to be buying into this optimism? Again, we got to talk about the distinction

between kind of the short-term reaction to this kind of news and the long-term reaction. In the short term, these kinds of stories are often kind of self-fulfilling prophecies. Traders often interpret an increased price target from a big investment bank as a bullish signal. When Goldman raised that price target on January 21st, I think it was, the price of gold increased a lot more steeply than previously, and it's up about 6% or so since then at the time we're recording this. Now, it's important to note that this is one of those news-driven price movements. And don't get me wrong, Goldman Sachs has some very smart people trying to estimate what the year-end price of gold is going to be. But that doesn't mean that those estimates are perfectly reliable. I mean, we're only a month into 2026, and a lot could happen in the next 11 months that could derail that $5,400 per ounce prediction.

So I don't think it's a good idea to take that prediction as a given and buy into it for the long term. Still, people are getting really excited about gold, about silver. So if you're an everyday investor and you're thinking about adding one of those to your portfolio now, how do they think about entry points? what factors are going to matter when you're deciding whether to buy in? And when should you do that? For everyday investors, precious metals aren't something that's going to make you a big short-term profit. If you talk to different financial advisors, some are kind of skeptical of the idea of including precious metals in a portfolio at all. But others will say that they should make up a small percentage of it, maybe five or 10 percent of it. And they just serve as a diversifier and also as kind of apocalypse insurance.

And we'll talk more about what I mean by that later. So that's a long-haul investment. And I don't really think the entry point or the timing really matters much if you're talking about a time horizon of years or decades. So on the flip side, does timing really matter when you're thinking about selling or taking profits in precious metals? Are there any signals that you would look for in that case? Again, for a typical long-term investor,

Precious metals aren't a way to get rich. They're just a small, static component of your portfolio. If you're investing for retirement or something like that, you're probably not going to try to take profits in the small portion of your portfolio that might be invested in precious metals. But I will say this. After years where precious metals have outperformed the stock market, which includes last year,

you'd probably want to rebalance your portfolio. And what that means is that you, You sell off the pieces of your portfolio that have done better than the rest, and you buy a little bit of the pieces of your portfolio that have underperformed so that you bring everything back to its target mix. So after 2025, if you have a gold allocation in your portfolio, you're probably going to be selling off some of your gold holdings just to bring that portion of your portfolio back down to the 5% or 10% allocation that you're targeting.

Now, if you're trading gold, again, I don't know that much about precious metals day trading. We talked about Goldman's $5,400 per ounce price target for the end of 26 earlier. I'd say if gold goes above that level well before the end of the year, that might be a good place to throw in the towel and take profits. But again, that's my uneducated opinion. Sam was so much up in the air, and all of these commodity prices swinging so rapidly. What are some of the common mistakes that investors who are new to precious metals are going to make? A lot of people who are newly into precious metals are interested in physically owning them. And I think maybe we should talk about the pros and cons of that.

Earlier, I touched on how precious metals are intrinsically valuable and also how they can kind of be apocalypse insurance. And what I meant by that is if something really, really bad happens, like a war or a huge economic or something else that disrupts the financial system and people's ability to cash out conventional investments like stocks and bonds, physical gold is still physical gold. I find that in a lot of cultures and in a lot of families that have faced severe adversity in the recent past, maybe they've had to flee from their homeland or something. You sometimes find this tradition of passing down some gold jewelry or silver homewares or something. And in these families, Grandma will often tell you that it's kind of insurance in case

things go really bad again. And there is some validity to that use case for physical precious metals. Gold, ETF shares, or silver futures contracts aren't necessarily going to hold their value and be redeemable in a doomsday scenario, but Grandma's jewelry or the family silverware actually might. Now, having said all that, on the flip side, keeping precious metals physically can be kind of a pain in the way that, like, other investments usually aren't. Right. Like, if you're not Scrooge McDuck and you don't have a vault filled with gold coins to swim in. Exactly. And you've got have the diving board for that, too. That's really important. Yeah. You have to keep your bullion safe. And that might mean, like, paying for a safety deposit box. And that's, that's an ongoing cost that could

eat into your returns. And you also have to take care of it. Like silver in particular has to be protected from the air or else it like oxidizes and darkens and then you have to polish it and it's a whole thing. And you also have to find a trustworthy buyer and physically take it to them if you want to sell it. We have an article about how to buy gold that discusses some of these pitfalls of keeping physical precious metals and the lead editor of the nerd-wit-warial, wallet investing team, Ariel O'Shea, has an entertaining story that she recounts in that article about some of the difficulties and complications that she found when she was trying to sell some gold jewelry that had been in her family. So point being, there's a case for physical

precious metals as doomsday insurance, but as a portfolio investment, you're probably better off buying shares of a gold ETF or something. It'll be a lot less of a hassle. Switching gears slightly, what does the silver and gold rally mean for the U.S. dollar? Well, I think the better question is what the U.S. dollar means for the silver and gold rally. Yeah, some portion of the increase in price in precious metals is just that the dollar isn't what it used to be. And gold and silver are fulfilling their historical role of holding their value when the currency is in the toilet. The U.S. dollar index, which measures the value of the dollar against a basket of other currencies, is down about 11% over the past year, which is a pretty huge slide for the world's reserve currency. Usually it just bounces around by maybe a percent or two, but 11% is really big.

If you look at the price of gold in another currency, like the euro or the Swiss franc, it is still up, but it's up by a lot less than the dollar price of gold. All right, one last question, Sam. What are some of the big news stories right now that are still up in the air that could move the needle one way or another? There's a lot that I can think of, but, you know, what's in your perspective? There are a number of things. We just talked about how declines in the value of the dollar can push up gold. And there are quite a few uncertainties right now about what's going to happen next to the value of the dollar. One of those is a story that involves the Japanese yen.

And I have to warn you guys, this is really complicated. and I'm kind of hanging on for dear life trying to understand the story myself, so bear with me here. Japan's currency, which is the yen, has been really, really weak in the last few years. It's been really, really low in value, and that's starting to become a real problem for Japan's economy. It's causing a lot of painful inflation over there, and it's making the Japanese people, frankly, poorer in purchasing power terms. Now, Japan is a U.S. ally. and it's also one of the world's largest economies. It's the second biggest in Asia after China,

and it's pretty important to the global economy as a whole. So this is something that we've decided is kind of our problem, too. And there have been whispers that there might be some kind of coordinated U.S. intervention to support the price of the yen in recent days. This would basically be a thing where we buy and hold yen, which could actually kind of devalue the dollar against the yen to an extent. So that could push the dollar down and gold up even more. It's dramatic stuff.

The other potentially bad thing for the dollar is that there's a possibility of another government shutdown coming up. I think it's like the deadline is this weekend, if I'm not mistaken. It sure is, Sam. It's Friday after midnight. Great. Lovely. And when we can't get it together to fund the government like this, international investors lose confidence in our economy. And they tend to sell dollar denominated assets, which depresses the dollar.

And they also tend to buy alternative investments like gold. So that's another evolving story where gold might gain from our misfortune. All right. Well, we'll be keeping track of all that stuff. Thanks so much for joining us today, Sam. Thanks for having me on. And for listeners, we are going to be keeping an eye on the government. and shutdown situation and yeah, Nerval will be on top of it.

All right. Thank you, Anna. And I love that you guys touched on gold being a hire loom because I remember as a kid, my mom, having stashes of gold and indeed selling them when money was short. So now I know why she was doing that. Up next, we answer a listener's question about how to estimate how much of your current income you might need in retirement. But before we get into that, a reminder to send us your money questions. Do you want to know if you should be buying gold or the smartest way to budget for your summer vacation? Or are you in the market for a new credit card, but not quite sure how to find the one that best fits your situation?

Whatever your money question is, we want you to send it to us by leaving us a voicemail or texting us on the nerd hotline at 901-730-63. That's 901-730 Nerd. You can also email us at podcast at nerdwallet.com. Or leave us a comment on Spotify or YouTube. In a moment, this episode's money question. Stay with us. This episode is sponsored by Rula.

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I understand that you'll no longer be saving, and you likely won't have a mortgage payment anymore, but it seems that increased health care spending in your senior years and inflation would at a minimum require 100% of your current income to survive in retirement. Thanks in advance, Amanda. To help us answer Amanda's question on this episode of the podcast, we are joined again by James Bashel, C-O-O-O-N-Advisor for NerdWallet Wealth Partners. And our lawyers want us to say that NerdWallet Wealth Partners LLC is an affiliate of NerdWallet, Inc. Welcome back to Smart Money, James.

Yeah, thanks to having me, guys. Hey, James. So I want to just dive right in and talk about the percentages around retirement savings because a lot are thrown around when it comes to saving and spending for retirement. Like you should save between 10 to 15% of your income. You can live off 80% of your peer retirement income in retirement. And we'll break down whether that 80% rule is still useful. But just to lay things out really clearly to start, can you explain why planners have used 80% as a benchmark historically?

So I think the 80% originally came about because there was this, assumption that about 20% of your pre-retirement costs were actually associated with work. So commuting to work and your cost of your day-to-day, buying clothing for work, et cetera, et cetera. So as a result, when you retired, you no longer had to spend that 20%, therefore 80% of your expenditure was going to be enough. In your work as a financial planner, do you actually use the 80% rule? Okay, that's a really good question. No, absolutely not.

The reason for it is, it's not as simple as that. If you look at your expenses today and say, what am I going to spend in retirement? You're going to have a very different list of expenses. So I often have clients say, well, I spend, you know, $10,000 a month. Therefore, in retirement, I'm going to spend $8,000. I say, great, but like, what's going to change? Do you want to travel? Yeah, but I travel now.

Cool. But now you get 20 days of PTO. Now you've got 365. What is your comparable travel cost going to be? And they go, oh. Yeah, that's something I haven't thought about. Yeah, maybe I should bump my travel budget up a bit. And then there are other costs that come down.

As we said, commuting to work suddenly is not a factor. You know, someone was commuting in from the suburbs and the train every day, spending $30 a day on transport. That cost is gone. So there's a given a take, and I think it's not equal. And so it's really important to have a more grounded view of what the difference is going to be. There are critiques on both sides of the 80% rule that it might be too much or too little to live on. you think about that? I would earn the side of too little because I really want to encourage my clients

to live life. And you don't want to feel like, okay, cool, I'm retired. Now I've got to go into my shell and not do anything. You've worked really hard to get there. You want to be able to enjoy your retirement. So when you get that 80% cap in many ways, you're immediately starting from a more restrained base. And that's less aspirational. And often when we have these conversations with people, we're looking forward, and we want retirement to be something aspirational. So expanding that budget a bit means there's more work to be done today, but it means there's also more to look forward to in the future, which makes that work today worth doing. That seems like a smart way to plan. I always like to be a little bit more conservative and save more than you might think you would even need. That way,

you have a cushion, right? And our listener pointed out some key reasons why 80% might not be enough, notably health care cost and inflation. A report from Fidelity found that retirees may be more than $170,000 just to cover health care costs in retirement, assuming they retire starting at age 65. And I'll add that a lot of retirees may have a big surge in spending right when they retire because they might be traveling a lot and taking advantage of this newfound freedom while they're still healthy. I also imagine kind of like you said, James, that spending isn't level from one year to the next, which can compound the questions of how much to spend and how much to save. So how do you think people to try to get an accurate plan for their retirement spending, given all of these uncertainties.

I think the inverse is often more useful, and I'm sure we're going to go into one or two of those rules of thumbs, where it's kind of a what about the 4% rule in reverse. So when you look at your retirement spending, a lot of our planning actually planned through multiple iterations of what your spending could be. And there are different ways of planning. So if you plug it into planning a software, they give you options of, you know, inflation-adjusted spending, which is in year one, you're going to spend X and we're going to increase that with inflation every single year. An alternative is what they're called a spending smile, where you spend more today and then dips the older you get, your health such deteriorate, you're taking fewer trips, you start doing more stuff

at home, and then it goes up again at the end because to the point of that fidelity study, your healthcare costs go up. Healthcare costs are going to be more towards the tail end. So through running multiple iterations through planning software, we're able to see do you have enough to cover the uncertainty of what that shape is actually going to look like. And that often is a better solution than trying to be too granular, which is a little bit of a guessing game that isn't going to make you feel confident in your retirement. I don't know why this conversation is making me feel a little sad.

It's reminding me of my mortality. And I love what you said James about, yeah, I'm going to die. Oh, my God. But I love what you said, James, about you've worked so hard and you want to actually use the money that you've saved, right, versus penny pinching your whole retirement. We've talked a lot about the 80% rule, and I feel like that's the one that circulates around a lot, but there's also the Rule of 1000. Can you explain that to us, James?

So the Rule of 1000 is now converting the thought process from what, as a percentage of your current expenditure, can you spend in retirement, to now what assets do you need to support your expenditure? And the Rule 1,000 is basically saying, well, for every $1,000 in monthly income you want, you should have about $240,000 saved today. The way they populated that is they say, well, there's probably a 5% withdrawal rate with a 5% growth rate, which means your assets are remaining net flat year on year, but you're funding that $1,000 of expenditure.

And what's important there is the conversion from spending to an asset base. And I mentioned previously when we were talking about that 80% rule, which is sometimes it's easier to actually look at, well, what can you afford rather than what do you want? Because spending is a bit of, you know, how much can I spend? Rather than if I gave an item to budget, you'd spend the elements of budget. So let's actually constrain it. And we often say within our practice, you know, the beauty of life happens within constraints.

So if I give you that constraint of great, the rule of 1,000 says you can spend $10,000 per month. Go live your best life. That's sometimes a better way of framing it for someone than saying, well, like, let's bottom up calculate how much you want to spend and, well, do I want the pair of shoes or not? And like, does that add on to the 10,000 or not? So there's a bit of confusion that can come from that inverse thinking. And then, James, which one would you say is better for who? So if I had to choose between the 80% or the $1,000 rule, because we know money has a lot to do with psychology and values and personality types. So which is better for whom? I'd like to add another one in there. So we spoke about the 80% rule. We spoke about the rule of 1000.

There's another one which actually I think is probably the easiest one to conceptualize, and that's the four percent rule. And that's probably the one I lean on the most, which is you can withdraw 4% of your retirement savings annually to fund your retirement. Now, that 4% is a pretty simple number to understand. Okay, multiply your house to base by 4%. That's how much you can withdraw. But on top of that, it's a little bit of financial math that's going on in there.

So if you withdrew 4% every year, effectively you could draw that 25% times, 25 times 4 is 100%. So you know, you've got 25 years locked in at that exact 4%. But there's obviously inflation and there's market growth and all those things. But I think about 4% is it basically assumes that you are withdrawing the growth from your portfolio, which means your portfolio is still retaining value over time, which means you're not limited to just 25 years of retirement or 30 years of retirement. That 4% rule for me feels, to your point, Sean, you were saying you prefer to be on the more conservative side when you're planning, or the risk-averse side. 4% feels very conservative and risk-averse and something that's very manageable.

It's also very understandable. And so I actually prefer that to the 80%, to the rule of 1,000, just because it's a much quicker number to calculate in your head. Now, you're also a good question, Elizabeth, which one should each person be doing? Well, very few people are good at tracking their expenses. I don't know about you two, but most people are pretty bad at knowing what they're spent. I think there are studies out there that say, like 95% of people, underestimate how much they spend. So when you say, today I spend $1,000 a month and in retirement, I only need $800, there's a huge risk there that you have got the $1,000 completely wrong.

So when you do the inverse rules, when you're looking at your asset base and you're giving yourself a budget to work within, that's actually a much safer way to work when looking at your retirement because it gives you the constraint that says, hey, once you've spent that budget, you're out, no more spending, which is a much safer way of going than like, yeah, I've only spent 300 bucks this month. Meanwhile, the credit card bill says you spent $2,000. So, James, when you're working with clients, do you tend to steer people toward one or the other?

I imagine that actually giving people the option of which to choose might not be the best idea. As I said, I mean, I think I mentioned it just now, but I actually don't use these a lot. So the 4% is like a nice back pocket thing to have. I rely much more heavily on the actual statistical processing of where people are at. And that is using Montecalo analysis that's running thousands of simulations of the future

could look like, because we want to have the variability of each of these factors considered in the plan to make you feel good. When we oversimplify things, we often kill the complexity from the equation, and that's sometimes to our detriment, because it's a complex thing. And we need to work within these boundaries. I think people find these rules of thumb so appealing because they give people something to latch onto when these variables might. might be really hard to follow or confusing if they're doing it on their own.

100%. Yeah. And that's where the simpler, the rule of thumb, the better, but also with a big caveat of oversimplifying, it could be too detachment. And when it comes to something like planning and actually executing your retirement, I just think these rules of thumb are too simplistic. That's why I'm a little annoyed by them when it comes to kind of boots on the ground financial planning.

But just to get people started and thinking about how much they might need to save, I think it's a decent jumping off point. 100%. I might have been steered also because I do not at the moment use a portfolio manager. I just use these benchmarks and a calculator to determine how much I need to save for retirement. And what you're saying, James, really resonates in terms of I love the idea of having different simulations and being able to see different outcomes based on all these different factors. So I might need to book an appointment with a financial planner.

Yes. We're here for you. That's all job. Something else to think about is how the experience and expectations of retirement are changing. Now, according to a recent report from T. Roe Price, 37% of U.S. respondents expect to work part-time during retirement. That is definitely not me. I assume this is because the amount people save for their retirement and what they're getting from Social Security simply won't be enough to cover their expenses. So, James, how does the expectation of working in retirement change the amount people should plan to save in their work?

working years and then live on in retirement? I think this comes back to the principle of financial independence. So retirement is such an old, almost antiquated principle that I think the origin of it was something like, you know, at the age of 60, you became less useful on the factory floor. So they retired you to head off and die by 62. You know, that's not the reality anymore. If you're 60 and you're finishing work, you know, a wealthier person in America is expected to live in their 80s, I'm not 90s. So you've got quite a long period there that you need to plan for with a lot of variability and uncertainty.

And that's where working helps. And that is, if you're at, let's say you're 60 and you've got a really robust asset base and you feel pretty good and you're healthy, you could live to 100. Okay. Now you're planning for as long as you worked for to not work, assuming you enter the workforce the age of 20. Let that sink in. Like that's pretty mind-boggling that now you're going to be retorting.

for as long as you didn't work. Now, two things come into the case there. The first is that's a long time to live off passive income, to be truly financial independent. But secondly, it's a long time to not have the purpose and meaning of work. And I think it's important to factor in that psychological component. So if we get a lot of positive elements to our life that come from working, from being productive, from contributing to society. And that's where I think a lot of particularly younger generations are looking at retirement saying, well, I'd like to do something. I don't necessarily want to have to do what I was doing before I retired, but it doesn't mean I'm not going to get paid for the thing that I am doing in retirement. And that's what financial independence is. Financial independence

is about giving you the choice to do with your time, what you want to do. And if that means taking a lower paying job that you really love, maybe you're recording podcasts, which is a pretty cool job, then you're able to do that and do it on your own time and your own schedule, maybe not as same intensity as it was pre-retirement. It reminds me of a listener who came on at some point last year, and they said that they weren't saving for retirement yet because they don't plan on retiring if they can have it their way. So how should people then approach saving if they go, well, I think I want to be working until I'm 90?

So there's some risk management there, which is really important. And that is, we have this as well with a lot of clients, specifically higher-running clients. Let's take the AI situation that we're currently seeing with the risk of employment as a really good example of this. You've got a lot of tech employees who have earned a lot of money for the last 15 years. We've been through this crazy mega tap, tech, boom.

Okay, think of the Googles, Amazon's, Facebooks, these massive companies that have created so much wealth for people, they might be assuming that they're going to keep earning at that rate in perpetuity. So great. I'm now 40 years old. I've been nailing it for 15 years in this job. I'm going to continue to nail this until I'm 85. I'm just going to earn the same and spend what I'm spending now, not save anything until I'm 85, at which point Social Security look after the difference. There's a massive issue there, and that is what happens if you get made redundant? And the risk

of AI is showing that all to us in real time. And that is in the tech sector, we're seeing this massive redundancy being created by AI taking people's jobs. So you're assuming if you're not saving anything today because you're going to work in perpetuity, that the opportunity to work in perpetuity is going to exist. And that's a risk that you're not taking. And that's where saving is actually a risk management tool as well as a life enabler down the line. So it's both sides, which is really important to look at. What I'm trying to manage in my personal friend group is a lot of people who see or imagine this incoming AI job apocalypse and think, why bother saving it all? Because we're not going to be working anyway. It'll be like the science fiction story,

the time machine, where we're all just living in caves. Really? Yes. Wow. You don't have that with your friends? I think it's a really good question to ask, but it's also important to remember if you go back to the early 2000s, people say the same thing about the internet. It's like, oh, like, what a bookstore is going to do? Because Amazon's selling all the books. Yeah. It's like, yeah, they sell a lot of books. But yeah, they probably are fewer bookstores, but we have a lower unemployment rate now than we had then. Why did that happen? I think there's, and if you think of a day, if you look, think of your 24 hours you have to spend in a day, there's always something that doesn't get done. When we introduce AI, it makes us way more efficient, allows us to do more things. I feel like people

will get reallocated to those other jobs, which means there's still going to be jobs to be done. They just kind of look different. And in the meantime, you can't still really rely on these chatbots to give you accurate information. So I think we're okay for the time being. At least in the short term. Yeah. So save what you can. And it's better to hedge in that direction versus not be prepared at all. Yeah. So James, what we're really getting at in this conversation around the rules is that planning for retirement, saving for retirement is really an individual project. And a rule that might be right for one person, might not be right for another. And then, you know, maybe some of these rules actually aren't great at all. So for those of us hoping to get a somewhat sensible grip on how much they might be spending in retirement and then therefore how much to save, can you just talk us through kind of simply what you think is a good place to start and how you do it personally?

A good place to start is getting a good grip on what you spend today. That's a really simple thing to do. And using tools like monarch money or rocket money or the like where you've got these amazing spending aggregators that can look at your past data and tell you what you spend your money. on, that'll give you a really robust base to understand, well, where is your money going and how is that going to change in the future? I think importantly, you can then, as the next step, use something like 4% rule and say, great, if I live the same life, what do I need my asset base to be, to get there? Now, I just saying that out loud, I hear my brain goes into overdrive of like, what about inflation, market returns, like time to retirement, how I can you live for? You've got all

these variables which are going to kind of undermine the simplicity of that, just knowing your expenses and applying 4%. The next step, therefore, is actually to get a robust financial plan in place. And that's where using a professional who can help you run your data through a statistical tool, some kind of planning tool, is going to really give you the peace of mind that the future sector and allow you to really build a plan that's going to help you execute on that for the future. One thing that I'm thinking about right now is the people on the other side of the 80% rule who are not thinking about an AI apocalypse and not wanting to save, who are saving too much or maybe overthinking and stressed and worried and always thinking

they don't have enough for retirement? What advice do you have for them? It's such a good point. And I think I mentioned a previously on the podcast. We're often telling our clients to spend more rather than to save more because by virtue of setting up a time with a financial advisor, you're probably on the more risk of her side from the outset. I think the way to think about it is we want to live life throughout our life, not just for the future. And this is quite philosophical and, you know, take it from when it comes. But think through that scenario where we've often seen this with clients where one spouse dies sooner than expected and they're ultimately unable to live the future they had planned to live. And they wish they'd lived more along the way.

So what we like to propose to people is really even it out. So you're living as good life, today as you will in the future. What you don't want to do is create an imbalance where you're living too much today at the expense of the future. Okay, that's going to leave you, Sean and your friend's case, with absolutely nothing in the future to live off of, which is going to mean they have to go work in a grocery store until they die because they've got to fill in the gap. Equally, you don't want to be on the other side, which is imbalance to the not living at all today in the hope of living someday in the future that might never actually happen. There's a lot of uncertainty and a lot of uncertainty and mortality. What we like to do is really balance the two and find the equilibrium as to how

much you can spend today and spend in the future such that you're going to be fine along the way. And that is the point that I've watched this so many times. People just exhale and go, I'm okay. I feel like you're telling me that I should clear out all the things in my shopping cart right now. That's what I feel like you're saying. You should. Yeah. Put that 24-R-all in place. Get it out of it. But hey, at the same time, you know that you're saving plenty for retirement a little. Elizabeth. And James, you said the word balance. And I think that that's so key when it comes to so many aspects of financial planning and even just managing your budget or getting the right insurance for you. You want to make sure that you have that right balance of spending in the right places for the right value product, but not overstraining yourself, not restricting yourself too much or indulging too much. It's all about finding that steady, sustainable way of managing your money. Yeah. Okay. Well, James, do you have any other advice or recommendations for those who are trying to figure out just how much other income? they might be able to live on in retirement, even if it's not 80%. I think it's really important at the base they all to have a plan.

You know, it can be your own plan that you've come up with yourself. It can be a plan that you've built with someone else. But the most important thing is not to bury your head in the sun and hope it's all going to work hard in the future. Having a plan is what allows you to have a baseline against which to make decisions. And that's going to make you feel psychologically confident that you're going to be okay. And that's the very first step. Now, how good that plan is, is the next step.

I truly believe that working with a professional is hugely value creative. So find someone who can work with you and who can help you at a robust statistical analytical finance level, who has got years of finance qualifications and experience to help you make a really robust plan because the piece of mind you'll get from that is going to be invaluable. Well, James, thank you so much for coming on. and sharing your insights today. Yeah, thanks for having me. That's all we have for this episode.

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