Episode 25 | Longevity risk and how to ensure you have enough

Aden and David discuss the importance of longevity risk - the possibility of outliving your investment assets in retirement. 

They explore how life expectancies have changed over time, the concept of a "longevity mindset", and the challenges of balancing spending versus saving. They also cover the tools and frameworks that Capital Partners uses to help clients make informed decisions about funding their retirement lifestyle. 

This episode provides valuable insights for anyone concerned about having enough to support themselves throughout a potentially longer retirement.

• (0:00 - 3:00) How retirement and life expectancies have changed over time
• (3:00 - 9:00) The statistics and trends around increasing life expectancies
• (9:00 - 15:00) The "spender" versus "saver" behavioural tendencies
• (15:00 - 24:00) Making informed decisions about funding a retirement lifestyle
• (24:00 - 32:00) The "retirement multiple" concept
• (32:00 - 43:00) The importance of regularly reviewing and updating financial projections

For more information on Capital Partners visit capital-partners.com.au.

Have a question? Email us ask@capital-partners.com.au.

This episode provides general advice only. Always refer to your financial adviser for advice about your personal circumstances.

Capital Partners Consulting Pty Ltd AFSL 227148 trading as Capital Partners Private Wealth Advisers ABN 27 086 670 788.

Transcript

Welcome to the Purposeful Investor, a podcast for successful families in search of true prosperity. And I'm your host, Aden Wilkins. 

Thanks for tuning in to another episode of the Purposeful Investor podcast. Today we're going to be talking about longevity, risk and the question of the possibility of living so long after retirement that you may deplete your investment assets and how we think about that at Capital Partners. And I'm joined today by Capital Partners founder David Andrew. 

David, thanks for joining me as always. Aden, good to be with you. As always on this podcast, we start off with our little win of the week. It can be something that happened during the week that was a little win. It can be in your personal life, your professional life, or it can be something a little bit different.

So, David, what was your little win this week? I've been working for over a year, probably two years, with a family where we are undertaking the general intergenerational transition of what is really quite a complex business. And it's been really tough. It's been really interesting for me, being a founder, watching the parents in this situation, who are the founders and how emotionally attached they are to the business. And it was funny last week, one of the other advisors who's helping me with this building, Bill Withers, said, you know what this is to the sons. He said, you know what? Your parents had five children and only four of them were human. You know, the fifth was this business. And anyway, the win is that we've really made good progress and we're almost, almost at the finishing line in terms of being able to hand over the leadership of the business, which is very cool. That's awesome. That's a huge milestone. Yeah, it's for them. So my little win, I'm going back to. I haven't done a recommendation for a while, so I'm going to do a little recommendation. It's a TV show on binge called Colin from Accounts. And it's a really easy to watch Australian comedy that I've just started watching this week and, yeah, really enjoyed it. One that you can just put on at the end of the day of work and sort of sit back and unwind. So that's been my little win, watching you and your routine. I'm stunned that you even have time for tv. But anyway, I get it.

So onto the content that we'll be discussing and sort of this, this idea or the concept of longevity risk. And I know on a few previous podcasts we sort of, we've talked about quite often, people come in, say, do I have Enough to retire. And we've talked about that. There's a deeper conversation to be had. But today we're actually going to be unpacking a little bit how we think about that. Actual, the answer to that question here at Capital Partners and sort of that the question around longevity risk being, do I have enough investment assets to be able to fund my lifestyle and be able to provide for my family in retirement? And so I think to really start off that, Dave, it'd be interesting to talk about how that has changed over time with life expectancies and I guess the advances in modern medicine, because people are living a lot longer today than they were, say, 20, 30, 40 years ago. Yeah. Or retirement is a pretty new concept, actually, and it was born out of the Industrial Revolution. You know, the Japanese don't even have a concept for retirement. They have a different concept called the second life. And in the second life, they effectively take on a role as an elder in society. So if you think about it in stages, they're children, Japanese children, and then they learn to whatever the family's vocation is, or working in the fields or whatever it is. And then as they get to later adulthood and it's much harder for them to do the physical work, they transition out and become the primary carers of the children, the primary housekeepers and so forth, while the younger generations are off working. So that's the Japanese model. They don't even think about it in terms of retirement. You never really stop being a useful and productive member of society. There's always a responsibility of some sort. Yeah, you definitely have a purpose of some sort. And I don't know, I haven't seen any research on this, but I wouldn't be surprised if it's linked in some way to the extraordinary longevity, average longevity of the Japanese as a population.

So fast forward to the late 1890s. The life expectancy at birth for someone in 1890 was about 46 years of age. Now, I read a book recently that was set in that time, and it gave a statistic that said four in five children died in childbirth. Now, I don't think that's right, but it was a huge number. So if you take out the childbirth risk, life expectancy was obviously higher. But thinking about it in terms of the mass migration from agrarian to urban and industrial work, those people in the late 1800s were working six days a week and they were working 14 hours a day. So if you made it to 60 years of age, you were absolutely, absolutely stuffed. You were completely worn out. And so that's where retirement came about. You know, in the, in New Zealand were leaders in, in retirement pensions. But the first European retirement pension was introduced by Baron Chancellor Otto van Bismarck, who at the time was 74, and he was running the country. Not unlike what's going on in America, I guess, but so they basically said, look, if you have given a lifetime of work to your employer or to the state, and it was, in his case, it was the state, you deserve a few years of dignity in retirement because the only other option was that you went to a poor house. So that was the genesis of, of retirement benefits. But what's happened since then as the Industrial revolution has evolved and become technology revolutions and the poor people who set us up in the Industrial revolution really did the hard yards because the lifestyles we enjoy today because of mechanisation and technology are extraordinary compared to the lifestyles they endured, really. And so our lifestyle has become healthier in the, in the main and we're living much, much, much longer. 

So that when you asked that question earlier or how much is enough? What was going through my head was, well, it depends. Yeah. And it's. In our preparation for this podcast, Davy asked me a question. Well, how long do you think you're going to live for? And it's. When you actually think about it. Well, hang on, hang on, let's not skate over that. I asked you to write down a number. What number did you write down? I wrote down 90. Yeah. And I then said, why do you think that's true? And I guess I just extrapolated a little bit of family health history. Sort of reasonably healthy likes, keep active, and then sort of added a little bit onto the median average of the male life expectancy. Yeah. Yeah. So. So my life expectancy at birth is about 83. Yeah. Okay. My dad turns 90 next year and he's still fit and healthy and active. And I know there's lots of curveballs that get thrown at us in life, but I'm thinking about that as I challenged you to, to think about, well, what's really likely. So then when I asked you to reframe that, what did you, what was, what was your response? That it was probably a little bit longer. Yeah. But probably closer to 100 was what he said, what you said. And, and I have the same view. I, I think there's a, Given my family genetics, there's a reasonable probability that I'll live well into my hundreds. And, and I'll give you some examples of why I think that's true. Some statistics in terms of why I think that's true in a minute. 

Yeah, so, so let's, let's go into that because I guess a lot, a lot of the time people might be thinking, oh, it's such a tough question to answer because people probably don't think about it very often. You sort of think you get into your old age, but you don't think, oh, how long do I actually need to fund my lifestyle for? Because it's an unknown. So what do the statistics actually say about life expectancies at the moment? Yeah. Okay, so if you're 30 now, and that's there and thereabouts where you are, give or take a bit, your life expectancy as an Australian male is 82. Yeah. All right, so let's just let that land. But let's go out to say, okay, no, you're 50 now, your life expectancy is 83. By the time I get to 60, my life expectancy is 85. If I make it to 80, my life expectancy is then 89. So there's an upward ticking curve based on survivorship basis. So the longer you do live, the more likely it is that you're going to live longer. But Even let's take 60 because I turn 60 next year. Let's take my median life expectancy of Australian 60 year olds is 85. That's the median. So there's at least a 50% chance that I'm going to live longer than 85. Then you add socioeconomic, education, health and lifestyle factors, it's really possible to tilt the odds in your favour of living much longer. And that's before we've even touched on the extraordinary advances that are happening in medical science. And this doesn't really get talked about in Australia. You know, I read the major masthead newspapers every day and this is rarely discussed, but I study this because it's important to our business. And what I see coming out of the United States in terms of I, I know a guy who, flying to Argentina next month to have his cartilage replaced in his knee. And it's been grown from his own tissue. So he's having his own cartilage reinstalled in his knee. Yeah. Now that costs money. Sure. But over time those sorts of treatments become more and more accessible. We then have, you know, the nuclear medicine and the targeted cancer treatments and so forth. And it really, the advances that are happening in medical science are extraordinary. And I think a great example of that is what happened in the COVID pandemic when the entire medical science Community said we've got to find a vaccine for this thing. And all of a sudden, within about six months, the MRNA vaccine, MRNA technology had been leveraged and changed to create a vaccine for Covid. So stuff, when there's a will, this stuff's happening really, really fast. Yeah. And I think the other part is, I guess it's sort of human nature of once, once we've had advances and not problems have been solved, but we've got better at doing things, we quite often overlook something that's solved such a big problem. Like you look at all the diseases and health events that used to cause a lot of fatalities in the 50s, 60s that aren't problem anymore. And we sort of just go, oh, yep, that's, that's solved, but don't realise the impact that's going to have on people be able to live healthy lives for longer. Oh, totally. And the extent to which that flows into long term population longevity data. Yeah. And so the aim of this podcast, not to scare all our listeners into thinking, oh, you're going to be living to 105 and you've got to be able to fund an extra 10 years, but it is just to probably prompt your thinking a little bit more to think, okay, we might actually be living a little bit longer and how should we be thinking about this and have, like David said, a longevity mindset. So you stay really active, healthy and engaged throughout those, those latter years. 

Yeah, well, I, I think a longevity, nurturing a longevity mindset is one of the most important decisions we can make in our lives. And I do think it's pretty simple. You know, I think a longevity mindset supports a bigger future. You know, about three years ago I asked my dad, you know, and he's now 88, I think. Yeah, 88 he is. And he plays golf twice a week and he works out at the gym and he works out in the pool and he takes regular walks around his neighbourhood. And yes, he's slowing down, but he's still very active in his church and he's active in family and you know, looking after mum. And I said to dad, you know, do you have a sense of a bigger future? And I had no idea what the answer was going to be. But he, but he paused and he said, yeah, you know, I do, I do. You know, I really feel as I have a reason to get out of bed every morning, every day, and that's as an 87 year old. So I don't think this idea of having ambition for a bigger future is owned by the Young, I think anyone can sort of have a bigger future idea. So then the idea of longevity and having a longevity mindset is all about staying active, keep moving, keep moving, keep moving. You know, exercising, if not every day, preferably twice a day, you know, managing stress, you know, whether it's through meditation or whether it's through exercise, but just managing that stress level, making sure there's a strong sense of purpose, eating a really healthy diet, calorie moderation, keeping a healthy body weight. All the government ads around live lighter. There's a lot of medical science around that, maintaining connections, family connections, connections with friends.

 A mate of mine in the US says he's much older than me, but he says one of my ambitions is to make sure that I don't run out of friends because that's what I observe with all my older friends, is all their friends die and then it's what do you do then? So he, he's really actively involved, still in business, bless him, at 80, and he makes sure that he's got younger friends through business. And I think that that idea of working a bit longer, I think there's a real movement afoot in my generation, which is X and probably the latter part of the boomer generation, where they're saying, you know what, I'm not ready to check out completely yet. I'm going to retire from my real job, my grown up job, and then I'm going to have a year off and travel and do some things, but then I'm going to build a portfolio of interests and things, some of which might pay me some money and some of which might not. And I think that's a natural human reaction to the intuition that we are going to live longer and that we are at the age of 60, 65, even 68, retiring if we've got good health, you know, we're still very young. Yeah. And so, so sort of touched on a bit of the longevity mindset there and how we think about that. And where I'd like to move to next in the podcast is we're going to talk about the, the concept of spenders versus savers and people having postponement syndrome, and then close out the podcast by talking about how we actually think about managing longevity risk or helping people make really informed decisions so they're comfortable that they've got enough or what the different levers are at their disposal when they stop working. So I think, I guess with the concept of spenders versus savers, it's pretty much how it sounds. But quite often People might fall into a basket where they either they spend too much or quite often there's people that fall into the basket where they save too much and they have what we call postponement syndrome, where they actually, they're not doing the things that they want to do. So how have you found particularly that second one that play out over the years, dealing with clients? Dave? Well, I do think this is. Everyone thinks that the major role of a financial planner is to allocate your money and manage your money. And I think that's fair. There is a really critical role to be played there because people don't want to do that themselves. But dealing with behavioural psychology of money is just as important and it's becoming more important. And it's an area where, in this firm we're spending a lot of time, you know, educating and training our advisors to be useful for their clients in the area of behavioural psychology. But I think, you know, the whole concept of keeping up with the Joneses, you know, that's the hedonic treadmill, where you jump on the treadmill of life and you work hard and you buy a house and then you want a bigger house and then you want to flash a car and all the rest of it and, and, and never enough is enough. That is essentially the definition of the hedonic treadmill. 

You're always shifting the goalposts. And interestingly, we don't see a lot of that with our clients. I think, I think any financial advisory firm like ours does attract a certain type of client and our personality attracts a similar personality. So our clients tend to be pretty grounded, pretty sensible. But the spender versus saver, it's a simplistic distinction, but I do think it's right in that some people really do struggle to find the balance between spending today and enjoying the moment versus saving for the future. And at some point we're going to do this. We've mentioned this book before, but the book Die With Zero basically says make sure you carve out exactly how much, well, exactly an amount of money that you're going to live on for your life, then work out how much you want to give away, then work out how much you really want to spend on experiences, and then basically either give away or spend the rest. And there's a lot of research that suggests that our real enjoyment comes from experiences and helping others. And so the spender, saver thing, let's, let's. So we talked a bit about the spender, let's talk about the saver. And I Suspect you've seen this where people hold back. Yeah. And it is. It is so often rooted from money characteristics or like behavioural instinct from growing up. And people. Quite often it would be that was. You'd sort of hold out when you're growing up. And so once you've sort of accumulated some wealth, people find it really, really difficult to actually spend that. And if you don't understand the psychology of money and where that decision making is coming from, you can sort of go, oh, well, why are you holding back? But it's. It's why we do spend so much time on that, like you mentioned, Dave. Yeah. So I. I know someone who grew up in what, by any measure would be an affluent family. Right. And now she's in her 60s and in some respects does struggle to spend money for enjoyment. You know, there's this real sort of handbrake of, oh, you know, can we afford to do that? Should we do that? You know, I'm not too sure this is wise. And she's also a very modest person, so. So that sort of feeds into the way she is, how she shows up in the world. But I've thought a lot about this and I reckon part of it is the fact that her dad was in a business that was quite risky, so it was kind of feast or famine, you know, when things went really well, there was a lot of money, but they could go through periods where it was pretty tough. So I just wonder whether the way she was brought up calibrated her to think it could always go bad. You better be careful. And I can relate to that. As a business owner, having founded a business 25 years ago, I was always looking over my shoulder thinking, oh, my God, what's going to come that's going to blow me out of the water? So. So I get that. So what do we do about that? Delayed gratification or postponement syndrome, as you quite rightly called it. And I think, again, this is an area where a good financial advisor can really help because they're not just talking about how the money gets invested, it's really crunching the numbers, really doing the numbers and staging spending in such a way that if you spend this amount of money, like a lot in the first 10 years of your retirement, and then we reduce the amount of spending in the next 10 years of retirement and we just create scenarios and just test different scenarios to say what's possible, because that allows us to introduce a concept that I love. This is one of my brain fade moments where I introduce this term into the business called Living Rewards. And it speaks to the idea that you should enjoy what you've created during your lifetime and find the balance between future security and enjoyment today. And whether that's helping kids or, you know, living in a house that you sort of think, oh, well, I never thought I could afford that house, but you're telling me I can afford that house. Okay, cool, let's do that. That's the sort of thing that I'm talking about. 

Yeah, I like how you mentioned scenarios, David, because I guess I think the way that all of us think about it here is I really don't like telling people how to spend their money or how much they can spend. And it's not, not our job, it's not our job, it's not not our money. And while at times, sometimes you can have an accountability conversation, but all our job is, is to give people informed information to make informed decisions, say, well, this is what this would look like. Or if we changed a little bit, this is what this would look like. Or these are the different levers at your disposal. And that's, that's where the gold lies. Because people can go, okay, well, and it's, then that's the conversation, well, if we really want to do that, this is sort of the trade off. Or if we want to do this, this, that's what it could look like. So it's really just about giving people the information to have the courage to make those decisions. Yeah, yeah. I think I was thinking on the way into work today about a client who sadly passed away a while back. And he was just such a good client and such a good investor, so disciplined and so sensible and. But he, everywhere he went, flew first class. He was a, he was a doctor. And he just sort of said, oh, there's no way I'm sitting up the back. He said, I've earned, I've earned the right to sit up the front. And at the time I was much younger and had a different perspective on the world. And I used to think, how could, how can you do that? How can you spend that much money on. But he rationalised it. He said, well, you're, you keep telling me I'm not going to run out of money. You keep telling me that this is not like. I kind of did infer, I think that he was being a bit silly spending that much money on first class airfares. We had a very good relationship so I could be open with him. But he said, look, you know, you're telling me that I'm Fully funded, that I'm going to be able to help my kids educate their kids, that I'm going to be able to contribute to causes that I care about, that, you know, if I die, my wife is going to be okay. And all the boxes, the framework that we designed that for him represented a good life as far as money was concerned. All of those boxes were ticked. He just said, I'm flying first class, otherwise I'm not going. And I kind of think that's maybe where living Rewards came from, was just coming to terms with what's your, what's your special trait? What's, what's going to really. What's going to really give you a sense of satisfaction. 

So, let's actually delve into how we think about building out tools and frameworks that for clients to be able to live. Be able to live their rewards and be able to do those things at Capital Partners. So I think one of the tools that we use initially when we first meet with prospective clients and new clients, but also that we continually update over the course of client relationships is financial modelling. And as we talked about before, the whole purpose behind that is to help inform decision making and so to look forward, knowing that we can't predict the future. Build in some buffers for safety and sort of say, what does the future look like if we look at your financial resources and what you want to do? And so I think that that's a really powerful tool in terms of helping clients be able to understand what that could look like in terms of longevity of their investment assets. Yeah. And look, just about anyone can build a spreadsheet, right? So I've got X dollars, and if I save X dollars a year for the next 10 years, my balance is going to look like this. I think just about anyone can do that, and I encourage people to play with that if that's their mindset. But it's really hard to build in the layers of complexity. So savings is a factor, drawdown is a factor. So you've got two types of drawdown. Market drawdown, which is when the market falls and your account balance reduces. And then you've got actual drawdown, which is money coming out of the portfolio for lifestyle, travel, whatever it might be. Then you layer it with tax, so it's not easy to do that. But the biggest impediment, I think, for people diying this is building in buffers for safety. In the prep for this podcast, Aden always asks me a whole bunch of really good questions. And we were talking about the global financial crisis. And I said, you know what, I've never thought about this before, but we had clients who were in retirement phase in the GFC and their portfolios had gone down. I think the worst portfolio in retirement would have been 24%. So let's just say, I'm just using the numbers because it's convenient. Let's say you've got a $5 million portfolio, you know, or a $4 million portfolio, and it's almost a 25% fall. That's a million dollars, 1.25 million on a $5 million portfolio. And you think, my goodness, that's confronting. But do you know what? We did not have one single portfolio failure in the GFC where people stayed in their seats, kept their seatbelts fastened and let the markets do what markets do, which is recovery. And for people who are not retired, it's brilliant because you're continuing to contribute, so you're buying investments at lower price and so your dollar cost averaging investments, and I'd never really thought about it in that context before of not a single portfolio failure. Which is, which is amazing. Right. And it's quite often we get a question or what's the worst case scenario? What's the backup plan? And like we said before when we were talking about this, the worst case probably hasn't happened. Yeah. 

By building those buffers for safety into the plan, we can, we can build out the highest probability for success for our clients to be able to spend what they want and achieve the goals that they want to achieve. Yeah. And when you say, you know, what's, what's the worst case scenario? You know, we don't honestly answer that with a number or a, or a view because we haven't invented the future yet. The future is yet to unfold. But it's really easy to forget what's going on in financial markets, which is, and I've talked about this before, and I will talk about it again, and I'll be unapologetic about talking about it again, is that we are backing human ingenuity, we are backing human inventiveness. And even for boring products that we use every day, someone is producing those for a profit. And they're always looking for ways to do it more efficiently and more effectively. And they're always looking for ways to reinvent that thing, whatever that thing is. And so the markets are a very good proxy for the march of human ingenuity. And so when things get really crappy in the world and markets do take a tumble, as they inevitably will, it is the resilience of humans as a global population who will ultimately come together to solve those problems. But there will be war and there will be pestilence and we will have to deal with all of these things. But there's a lot of research being done and I think we should have a chat about that, about what the maths behind portfolio failure can look like. Yeah, so you've sort of termed it a retirement multiple, Dave, and that's looking at essentially a number multiplied by your annual expenditure that can reasonably give you the best possibility of being able to fund your lifestyle in retirement. So the figures that uses a 20 to a 25 times multiple of annual expenditure. So what does that actually mean? Yeah, I use the retirement multiple because it's a game that everyone can play at home. All right. But it's very simplistic. But let me go back a bit and we'll put some of this information in the show notes so that people can get the real context. There's been a lot of academic research done around this in terms of portfolio failure and what they're doing. Simplicity at a simple level. Just explain. 

The concept is they're looking at what markets have done essentially since the 1900s, because that's the most reliable data set that we've got. And they're building diversified portfolios. A diversified portfolio retirement portfolio of around sort of 50 to 60% growth assets, shares and so on, and then 40 to 50% in government bonds. The more secure part, probably my favourite piece of research, which we'll put into the show notes, is by Dr. Michael Drew, Professor Michael Drew, and Dr. Adam Walk, who are friends of our firm. They're from Griffith University or were, and basically they've come up with a matrix that says it's all about how much you draw down from your portfolio. Because if you're drawing down too much from your portfolio, then if your portfolio takes a tumble, it can be really hard for the portfolio to recover. All right, now with the retirement multiple, if you say, okay, I want to have $100,000 of retirement income and I apply a retirement multiple of 20, that means I need $2 million of capital and what that $2 million of capital will deliver you with a 20 times multiple is a 5% drawdown. So you can withdraw 5% of your entire portfolio to live off every year in retirement forever and your portfolio should never fail you. Now, a 5% drawdown rate. I've chosen 5% drawdown rate as the starting point because that's really the tipping point where this thinking gets a little bit risky. 6% drawdown is riskier. 7% is riskier. If you're drawing down 10% of your portfolio each year, it's very likely that you're going to run out of money. If you want to stay really, really safe, you would use a 25 times multiple, which means if you want to withdraw $100,000 a year to live on in retirement, you need $2.5 million, which is equivalent of a 4% multiple portfolio drawdown every year. The likelihood of portfolio failure at the 4% rate is quite low. You know, there really haven't been any circumstances in history where a 4% drawdown rate has caused portfolio failure later in retirement. And of course, if you go lower, 3% drawdown rate, 2% drawdown rate, all of a sudden you are really buffering your portfolio in such a way that you're going to be leaving a lot of money to your heirs. Now, this is a really lovely simplistic model because it enables people to calibrate in, okay, fine, I get that if I draw down 4%, I'm really quite. If I draw down 3%, I'm really, really safe. If I draw down 4%, I'm pretty, pretty safe. And if I draw down 5%, yep, I'm safe. But any much more than that gets challenging. It's fine. The problem with that being such a simplistic model is that it assumes that it's never looked at again. And Drew and Walk are very clear in their research that this is not a dynamic model. It's set it up, let it run, will it fail? And they'd just test it over many, many, many different series of data. But that's not the reality. Yeah, well, and like we say so much things change over time. That's why it's so important for us at our regular meetings to check in with clients and ask if anything has changed here or if you would like anything to look different. Exactly. Most of the time, things do change, of course, and that's why we adjust the model and say, okay, these are the levies at your disposal, or this is what this could look like. So that's the importance of making sure that you continue to review and update the financial projections. Yeah, the biggest thing that changes, probably the two biggest things that changes are market conditions. Okay, the market's gone down. Is there anything I should do? And you know what? Generally speaking, the answer is no. Play on, continue. And clients don't really like hearing that. They said, but hang on, the world's going to the.

To Hell in a hand basket out there and you're telling me, play on, I can keep spending the same money that I've been spending for the last five years. Yep, yep, yep, get on with it. That's fine. People are so reluctant to do that. I remember a conversation with a client, Jeff, fabulous guy, very senior, retired, very senior executive and clever, clever man. And he just said, you know, I'm not enjoying this global financial crisis thing very much. He said, I think we'll put our major travel on hold for a couple of years. I say, you know, Jeff, you don't need to do that. He said, yep, I think I'll do it, though. I think I'll just feel better doing that. And this is the sort of thing that changes in a drawdown event that enables us to be a little bit more aggressive in terms of how much we encourage our clients to spend. And without that, you're probably going to end up with a lot more money at the end of your life than you ever expected to. And there's no prize for that other than your kids potentially appreciating it, hopefully. But the other thing, the big thing that changes along the way, other than outside conditions, is the. Your personal priorities. What's the money for? You know, we don't have grandkids at the moment, so I don't know what it feels like to have grandkids. Sorry, that's not quite true. I do have an adoptive, you know, like someone's adopted us as, as a grant, as grandparents, and that's kind of cool. But I've seen situations where a client's goals have changed, such that in their 60s, didn't have grandchildren, life's good, let's travel. You know, we, we know we've really got no limits on what we can do. Then when grandchildren come along, they sort of say, you know what, it's pretty tough out there. 

As young parents, I wouldn't mind contributing a bit just to get their mortgage down, take a bit of pressure off, so that, you know, Mary, our daughter, not her real name, of course, so Mary, our daughter doesn't have to work full time. I think that'd be really nice if we could do that. So the goals change, the what's the money for? Conversation changes. And I just think that is such a lovely part of the work we do that we can have this dynamic, iterative conversation with clients over many, many years as their life unfolds and becomes clearer for them. And we just say, most of the time it's cool because we can say, yep, Yep, yep, you can do that. Yeah, carry on. And I guess linking it sort of back to part of the conversation we had at the start of the podcast about retirement and people maybe sort of retiring from their proper job, we said, but then stepping into something else. I've had quite a few conversations with clients recently, are sort of getting to the end of their tether with what they're doing at the moment and want something that's a little bit more hands off, but still that challenge. And so sort of being able to put together projections, say, well, what does that look like if we stepped back from this role in a couple of years doing something a little bit different? And it's, it's a really, really powerful conversation for people to go, oh, so you're saying I don't have to do this for this long and I can, I can change what it looks like. Yeah, totally. Such a great conversation. So, so here's the thing. Peter Drucker was the leading management consultant in the world during the 1990s, and he said something along, I'm paraphrasing his quote, but he said something along the lines of, you know, in the Industrial Revolution. Sorry, modern workers are so different to workers in the Industrial Revolution. When workers in the Industrial Revolution got to age 60, they were utterly exhausted. Knowledge workers of today reaching 60 are merely bored. Now. 

Therein lies a challenge. So if it's thinking about this in terms of, is it boredom or is it genuine exhaustion, or is it just a desire for freedom, let's think very carefully and thoughtfully about curating a retirement. I really don't like the word retirement. I prefer to use the word renaissance because that's what I intend for mine to be, where I take a place as an elder in my family in my. In this business, in community. I think eldership is a really powerful, really, really powerful concept that we should do a podcast episode about. I, I like, I like the idea of more people in their 60s moving into eldership roles and being useful on a continuous basis. So I think that's a, a really good note to sort of close out the podcast on. So we've talked about longevity, having a longevity mindset, and hopefully, hopefully challenge our listeners to think a little bit more deeply around that life expectancy and having really challenged themselves to build out a longevity mindset as they move throughout life. And we've sort of touched on as well the concept of spenders and savers and delayed gratification, but also how at Capital Partners, we really build out tools to help our clients make really informed decisions throughout their lives. I'm going to take the opportunity too, to say that a lot of this thinking comes from a book that's being written at the moment called the Ambitious Retirement from Retirement to Renaissance and A Life you Love. And if I make it public on the podcast, then I'll have to finish it. Yeah, that's a challenge you've set yourself, Dave. And also, as always, we'll make sure there's some interesting anecdotes and data in the show notes for you. Because, you know, taking hold of these numbers as we talk about them quickly isn't easy. And being able to just go to the show notes in the episode and to be able to have a quick look at those, those data points can be useful. 

Dave, thanks for joining me on today's podcast. Always a pleasure. We love being able to share our insight and guidance. So if you know someone in your community that may enjoy our podcast, please share it with them. As always, we encourage all of our listeners to share their questions and ideas that they would like to know more on. You can email us@askapital-partners.com that's askapital-partners.com David, Andrew and myself, Aden Wilkins, are authorised representatives of Capital Partners Private Wealth. ABN 27086670, 788 AFSL 227148 thank you and see you next time.