Heather and Douglas Boneparth dive into practical strategies for couples managing money together, covering crucial topics for both engaged partners and non-financial spouses.
They discuss engaging the non-financial spouse, password management and legacy planning, knowing your numbers, emergency funds, long-term care considerations, and the importance of communication in financial partnerships.
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Jon Luskin, CFP®, a long-time Boglehead and financial planner, hosts this episode of the podcast. The Bogleheads® are a group of like-minded individual investors who follow the general investment and business beliefs of John C. Bogle, founder and former CEO of the Vanguard Group. It is a conflict-free community where individual investors reach out and provide education, assistance, and relevant information to other investors of all experience levels at no cost. The organization supports a free forum at Bogleheads.org, and the wiki site is Bogleheads® wiki.
Since 2000, the Bogleheads® have held national conferences in major cities across the country. In addition, local Chapters and foreign Chapters meet regularly, and new Chapters form periodically. All Bogleheads activities are coordinated by volunteers who contribute their time and talent.
This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012. Your tax-deductible donation to the Bogle Center is appreciated.
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Show Notes
Bogleheads® Live with Steve Ryder: Episode 43
Bogleheads® Live with Cameron Huddleston: Episode 34
Bogleheads on Investing with Steven Chen: Episode 62
Bogleheads on Investing with Rob Berger – Episode 48
Transcript
00:00:00 Jon Luskin
Coming up on the 91st Bogleheads® on Investing podcast.
00:00:03 Heather Bonaparte
Have you been speaking about your shared goals? Is there one of them that is so motivating to you that it will cause you to want to do these things and to learn how to do them because you know that you being dialed into these things will help the two of you move towards that goal?
00:00:23 Douglas Bonaparte
I know if I sit down and say, “Hey, it is time to review a spreadsheet,” you know, maybe yeah, she’s like, “All right,” runs the other way. Like, that’s guys, if you’re starting the conversation with that analytical stuff that you think you like, but you know deep down you know they do not, well, I got news for you. Sit down, friend. You’re going to want to change your approach.
Hey, Heather, you want to talk about that vacation we’ve been trying to get on at go on at the end of the year? She’s going to be like, “Vacation we want to go on? Yeah, cool. You mind sitting down and looking at how we can move some numbers around to make that not just a great vacation, but an even better vacation?”
Doug, I’m all ears. We are not going out with the Smiths, and we are not going to do that birthday party for our younger one. We’re going to, you know, make these changes. And that is a wonderful way to get the engagement that you’re looking for, a nice little backdoor into a real conversation. So keep these little things, little shifts, little tricks that will get that engagement you’re looking for.
00:01:23 Jon Luskin
Hello everyone. My name is Jon Luskin, and I’m your host for the 91st Bogleheads® on Investing podcast. Rick Ferri returns next month.
For today’s episode, we’ll be featuring Heather and Douglas Bonaparte. We’ll be talking about Money Together, their book, which explores how couples can successfully manage their money together. Included in our conversation is managing healthcare and long-term care expenses as we age, as well as how you can better plan for that stage in life by talking to your family about it.
And stick around to the end where we wrap up our conversation by talking about some unknown risks and how to better manage those. I hope you enjoy the episode.
So one thing I really want to talk about, because this is a theme that comes up a lot, especially for the Bogleheads types, those who are really into personal finance, their spreadsheets, etc., is they’re going to have this non-financial spouse.
So let’s kick it off talking about non-financial spouses. How do we manage that? This question is from username Slow and Steady from the forums. He writes, “For my spouse, we plan everything together and I mostly execute. If one spouse is more interested and hands-on with the finances, what strategies are useful to achieve their goals?”
And then in your book you touch on this, in Heather’s words, “Reworking our contributions freed up my mental space and actual space to become engaged in our finances again.” If one spouse is more interested and hands-on with the finances, what strategies are useful to achieve their goals?
00:03:00 Heather
Let’s start with this. Let’s separate engaging in our finances and having the financial knowledge, right, to back up the work that your spouse is already doing with execution of tasks.
Because I think that we can easily conflate these two things, and this is an important distinction, because there’s a million tasks in a household, in a family, in a couple that we delegate, right, between the two of us.
And it’s okay to delegate certain financial tasks to one person, but it’s the knowledge that we can’t delegate. So I just want to, like, make that point up front. Because look, I’m married to a money expert. I’m never going to be the one driving the ship with our finances, just like I drive the ship with certain things. But the important part about making room for your spouse in decision-making, in planning, in learning, is that I can pick up and do these things for him. So I just wanted to make that point up front.
00:04:00 Douglas
Yeah. In our lives, we reached a point where Heather was doing so much where, you know, dealing with our finances was maybe the one thing she did not have to do. And ultimately, you’ll read that, you know, that came to a head and we made some big changes in our lives to make that space, get her back involved in our finances as a, you know, byproduct of what really needed to be done at a macro level.
So that’s what we talk about in the book, how we ran into that constraint. But when it comes to any other person’s relationship and you have a spouse that’s not the one that executes, I think they need to know how to do that. They don’t need to be the one to do it month in, month out. But if push came to shove, they could do it because we want to plan for the things that aren’t fun to talk about, like what if that executioner here, right, is the one that isn’t around anymore?
00:04:48 Heather
Let’s start with the most basic thing, which I think gets overlooked all the time. And we can all say, like, yeah, that’s obvious, but is it access? Access. Do you have all the passwords autosave to whatever system and program that you guys use?
00:05:04 Douglas
Can you log? Have you logged in? Can you log just the act of having that access and logging in every now and then just to look at an account balance or see where things are? Keep it fresh. You don’t need to do that every week or even every month, maybe a few times a year if you’re the person that’s not driving the ship.
That way, it’s a familiar feeling to you and you’re never, you know, like, becomes like riding a bicycle in a way. Because God forbid you find yourself in the position where you are now driving that ship, you know, you’re not, you’re already starting on second base. Like, hey, this is familiar. I’ve logged in before. I may not know how to place a trade. I may not know how to get that withdrawal done, but I can figure that out pretty easily because I’m familiar with the UX and UI. Those little things go a really long way.
And the other thing I would say is, like, if, you know, you’re getting someone who’s maybe not interested on top of not active in actually doing the things on the day-to-day or the week-to-week, this is the golden age of financial content. There are so many ways to get a partner who is traditionally uninterested interested in the way that they like to learn or on the topics. I mean, there’s no shortage of wonderful podcasts like this one or Instagram accounts or TikTok accounts, you know, where we take.
00:06:22 Heather
This might be the only time you’ll ever hear him say, “Go find a Finfluencer that you like and follow them.”
00:06:28 Douglas
If that is your gateway drug into being more, you know, active with your financial life, go for it. Absolutely.
00:06:37 Heather
I’ll throw another thing in there too. Have you been speaking about your shared goals? Is there one of them that is so motivating to you that it will cause you to want to do these things and to learn how to do them? Because you know that you being dialed into these things will help the two of you move towards that goal.
00:06:59 Douglas
Watch how this actually works. So you want the real, like, what’s actually said here. I know if I sit down and say, “Hey, it is time to review a spreadsheet,” you know, maybe yeah, she’s like, “All right,” runs the other way. Like, that’s guys, if you’re starting the conversation with that analytical stuff that you think you like, but you know deep down you know they do not, well, I got news for you. Sit down, friend. You’re going to want to change your approach.
Hey, Heather, you want to talk about that vacation we’ve been trying to get on at go on at the end of the year? She’s going to be like, “Vacation we want to go on? Yeah, cool.” You mind sitting down and looking at how we can move some numbers around to make that not just a great vacation, but an even better vacation?” Doug, I’m all ears. We are not going out with the Smiths, and we are not going to do that birthday party for our younger one. We’re going to, you know, make these changes.
And that is a wonderful way to get the engagement that you’re looking for, a nice little backdoor into a real conversation. So keep these little things, little shifts, little tricks that will get that engagement you’re looking for.
00:07:59 Jon Luskin
Thank you for listening to the episode so far. You can subscribe on your favorite podcast platform of choice, including YouTube, to make sure that you don’t miss out on any future episodes. And to help more people get this free financial education, be sure to comment or leave a review. And now back to the 91st Bogleheads® on Investing podcast.
Wow, so many great things in there. One quick nerd note for those folks who aren’t nerds when it comes to tech, UI, UX, just, you know, what a website looks like, how to use it, stuff like that. I love how you framed life goals first, and then we’ll get into numbers. Absolutely. That’s a fantastic idea for engaging that non-involved spouse.
And then with respect to sharing login information, we touched on this on a previous Bogleheads® Live episode. I’ll link to that in the show notes. Cybersecurity with Stephen Ryder. And then we also did another episode. You can check those two out where we talk about some of the resources, how you can best do that with your spouse. My family, we use OnePassword. How do you guys share logins? What’s best practice for making sure that that other spouse has access to everything?
00:09:04 Douglas
So what we do is I’ve used LastPass for the longest time, and I said, “Heather, I don’t care which one you use. Just like, we got to get in the habit of doing that.”
And we actually ended up using a password through, you know, we use macOS and we use iPhones, and I was able to export everything out of LastPass to there. That is what we’ve now put ourselves into.
And literally, as of a couple of weeks ago, the ability to access each other’s passwords and be able to log in anywhere we need to is finally in place.
00:09:35 Heather
There’s also now a legacy function on or a legacy designation that you can make on, right, on the iPhone.
00:09:42 Douglas
Through the kind of macOS infrastructure, you know, Heather has the ability and I have the ability to submit to Apple like, “Hey, I need to be able to access her phone or her computer.” And you basically if she were to die.
00:09:55 Heather
I worry about continuity to me. Like, that’s something that I worry about. It’s not so much, do I because we make sure that now we each have access to all of our joint accounts and everything like that. Those are all saved. We’re using similar password managers. Like, we’re on the same page. But I worry about continuity, and that legacy designation makes a big difference in how I sleep at night.
00:10:13 Douglas
And by the way, you don’t need a piece of software, you know, to, you know, get at this. I wrote a piece a long time ago called The Death Note, and I think that’s a very important, you know, document to put in your safe where on a piece of paper you have those logins and passwords and context. Like, what is the most essential amount of information that you would need to give your partner? God forbid they can’t get to you. You’re dead or incapacitated. So that’s like the hard version of what we’re talking about using cool tools and software. I like both approaches.
00:10:45 Heather
There’s nothing wrong with having an analog backup for these things.
00:10:48 Douglas
100%.
00:10:49 Heather
I’m still maybe that makes us shows our elder millennial age that I’m like, we’re straddling both worlds, but I feel better knowing that we’re using password managers, that function together, but that we’ve also got this backup.
Think about when Doug and I travel together. I know this is like very dark, but I think about our kids and I think about how, like, my parents, God forbid, something happened to us or whatever, like, how would they be able to access this stuff? And like, knowing that somewhere there is this piece of paper that they would be able to access makes me feel a lot better.
So it’s not just about us, but it’s about us thinking about our kids and about all that too.
00:11:23 Douglas
Yeah, yeah, yeah. They know how to open a safe.
00:11:25 Heather
Make it easy for the boomers. Let them open up a safe.
00:11:27 Douglas
Open a safe and read, and you’re good to go.
00:11:30 Jon Luskin
Yeah, I love that. Emergency letter. It’s so important. I’m glad to hear that you guys are doing that and you’ve created a plan for that. We also touch on that topic on those other episodes if folks want to learn more about that one.
This episode of the Bogleheads on Investing podcast, as with all episodes, is brought to you by the John C. Bogle Center for Financial Literacy, a 501(c)(3) nonprofit organization dedicated to creating a world of well-informed, capable, and empowered investors. You can show your support by making a tax-deductible donation at boglecenter.net/donate.
And now back to the 91st Bogleheads® on Investing podcast. And so I think that sort of covers another question we had about legacy planning. This one was from username USAFPerio from the Bogleheads® forums. That user asks about setting up that non-financial spouse for success in case that financially savvy spouse dies first. So emergency letter, right, that informal resource is setting them up for success on OnePassword or LastPass. Anything else?
00:12:31 Heather
I would like to add something to that, which is maybe not technical, but I think it is very important. He’s like, what is she about to say? It’s so important if you work with any professionals, financial professionals, lawyers, tax professionals, the best way to create continuity is to attend the meetings. Be there.
You don’t need to be the one driving the ship, but there should be no world in which the first time you are meaningfully engaging with professionals in your financial life that are a part of helping your family operate financially, the first time you are engaging with them should not be after, God forbid, something happens with your spouse.
00:13:13 Douglas
Make sure your partner’s there. Heather’s absolutely right. No better way to get on the same page and have that knowledge than both attending these very important meetings.
00:13:23 Jon Luskin
One thing that Rick Ferri says on this exact topic is that if you’re that financial spouse and you want your non-financial spouse to work with whatever advisor, tax professional, estate attorney you have in mind, they have to meet them.
Because if the only information they have about that person is a line item on your emergency letter, they’re probably not going to reach out. And for those Bogleheads® out there, the consequence might be that instead they’re going to go meet with the friendly big bank rep down the street, right? So if you do want your spouse to work with whoever you’re working with, they should have that introduction ahead of time.
00:14:04 Heather
Sometimes the spouse that’s been disengaged is just intimidated to show up to the meeting and feel like they’re wasting their quarterly meeting time on questions that they feel like they should know.
Those “shoulds” really keep a lot of I’ll speak for on behalf of women here. I think they keep a lot of women out of the conversation. Confidence, a lack of confidence, not knowledge is the barrier here for many women.
00:14:30 Douglas
I think it might even be twofold. I’ve had on several occasions the non-financial spouse tell me that they were afraid to ask a stupid question or demonstrate that they were doing something wrong to the dismay of their spouse or the advisor in this case. And the truth was they weren’t doing anything wrong. The thing they were doing wrong was not engaging and being part of that conversation. And that’s not their fault for the way that they felt.
00:14:54 Heather
So we write a lot about this in the book, like where this comes from, where the disengagement comes from. That’s a big topic in Money Together. And we talk about it in the sense that I think a lot of people, we all have missteps. We’re all young once. We all yolo-ed it once. We all found ourselves in a financial situation that was not ideal, like in our 20s.
And it’s how we hold on to those so-called mistakes and what messages those create in our ongoing relationship with money that can be incredibly damaging.
And one thing you don’t want as the partner who is more involved, the partner who is the one more financially engaged, is to be reinforcing those messages. And there’s lots of ways that that happens. It’s not just important yet, like to be more engaged, but also to be examining what the reasons are you don’t want to be engaged.
00:15:47 Jon Luskin
So related to the topic of getting that non-interested spouse involved or gosh, I mean, this is important for both members of the household. You talk about knowing the numbers. You wrote, “Your most important job is to become intimately familiar with the numbers that exist in your life and the numbers that you’re trying to get to, to be honest about how much you spend and how much you want to spend. Without honesty around everything, you can’t be sure you’re hedging enough.”
And so certainly this is going to be important if that non-financial spouse has to take over in a worst-case scenario. But again, it’s equally important just to help you get to where you want to go in terms of meeting your financial goals.
00:16:25 Douglas
There has to be context for the decisions that you’re making day to day. What you don’t want to do is be so like, so wrapped up around it that, you know, your day to day becomes miserable or you’re thinking too critically about just decisions that you should be making effortlessly.
Non-financial spouse is not absolved from knowing how money comes in and out of your life, how money is made, how much it is, how much you’re spending each month.
But there has to be context for big purchases. There has to be context for lifestyle that you’re trying to live. And by sitting down regularly and getting on the same page with numbers, which is not a one-time thing, this is why we want you to build a practice around working with your partner.
00:17:14 Heather
Gaining more context around your numbers puts you in a position to more critically examine the lifestyle that you’re living now, what you want for your future, and also just to embrace the idea of being nimble in a way that isn’t framed around failure. Like, oh, we’re spending too much, so it’s not always about reduce, reduce, reduce.
Maybe you’ll realize in doing it that you literally have everything you ever wanted right now and that this goal that you had set out for five years ago that you thought would look like that actually looks like this and you’re already there. That’s what the context is.
00:17:50 Douglas
When we do planning in practice, right, it’s always fun. People who feel the need to, you know, sacrifice lifestyle to an uncomfortable level in order to get to whatever goal it is they have, or let’s say take on an exorbitant amount of risk in the way that they invest. And remember, we sit down and we show them like, you need like a six and a half percent rate of return, you know, to get there, but you need to get that consistently. And they’re shooting for, you know, 12, right?
I have yet to meet someone who has successfully reached financial independence and has looked back and said, man, I wish I took more risk. I regret not having invested in that thing. They got to the goal. They’re enjoying their retirement or their financial independence. And I think, again, that’s the context that we need to have when we think about, you know, what it is that you’re doing day to day versus what you’re doing over the long term.
00:18:45 Jon Luskin
Yeah, certainly. And working with a lot of Bogleheads® and FIRE types, very frugal. It’s sometimes so curious to me that I’ll do a retirement projection for them and everything looks great, right? Just huge savings, massive savings rate. Can probably retire earlier than they initially thought.
They didn’t know this for the simple fact that they just weren’t looking at the numbers themselves, tracking that spending. Tracking spending, it can sound so boring and tedious. Always encourage folks, please don’t make this a manual process. Please don’t use a spreadsheet and manually enter every single receipt you get. I mean, there’s people who try that almost always fail because it’s terrible. No one wants to do that.
00:19:26 Douglas
Good behaviors done in bad ways, right? Like, this is going to rob you of the joy that you get out of life, right? So I’m all for minding your money, but I’m very much against robbing yourself of the opportunity to enjoy the fruits of your labor.
I love the tools that are out there. There are so many good ones. There’s ones that do a heavier lift on the expense side. There are ones that get you a little bit more manual.
There’s a good amount of time where I actually did it very manually. Like, I would download the credit card statements in Excel and I would start sorting them out. And after eight months of doing that.
00:20:06 Heather
That elder millennial in straddling the digits.
00:20:09 Douglas
I wanted to practice what I preach. When we tell clients, if you are truly that curious and that aghast at your spending and you don’t know where it’s going and you’re using this tool or that tool, you got to go to the raw data and check it out. And I just wanted to see what that process actually felt and looked like. It was pretty miserable. It was extremely time-consuming.
I got to learn a lot that I then could use in my future approach to how we would manage our spending. I’m more interested in that you have a system, that you stick to it regularly, and you find what works for you, and you’re able to share that information with your partner so you can have meaningful conversations around your spending.
It shows up as, hey, we went out to dinner four times this week and, you know, we both agree, like that fourth one with our friends, we just saw them last week. Why did we do this? We didn’t really get the value or fulfillment out of that decision. And you change your behavior because of that. That’s what we’re looking for.
Not like, oh, you know, we shouldn’t have gotten the cocktail at dinner. That’s the counterpoint to it. No, you’re going to go out and have fun. And you like a cocktail with your meal. Good. Go get that meal. Do the cocktail thing, right? Don’t ruin the experience itself. But did you need to do it twice that week? Or did you need to go out with that same group of people? How did you really feel about it? Did you get what you needed out of it? If it was the law of diminishing return, go change the behavior.
00:21:37 Jon Luskin
Yeah, I think when people do track their spending, they’re going to find it’s probably not that one-time cocktail that’s make or breaking them. It’s almost always housing and transportation.
00:21:46 Douglas
These are the big movers, of course. Look, it’s either death by a thousand cuts or the haymaker that’s punching you in the face, right? And by the way, the death by a thousand cuts, we feel like we can make those changes a lot easier. I can stop having the coffee, the cocktail. But you got to do that at scale to really like move the meter versus the harder thing.
00:22:04 Heather
That’s why it’s so infuriating, it’s so infuriating when you read these headlines and you see all the talking heads talking about if we just cut the latte, we’d be able to buy a house. Childcare is a crisis in this country. I’m not going to spend 30 minutes talking about it.
But the notion that it is something that is like a moral or behavioral failure of young parents of today to not be able to afford their cost of living when 30 percent of their income is going to private childcare before the public school age. There’s another reason to not hyper-focus on these little things that rob us of the joy when there are larger things that are really eating away.
00:22:53 Douglas
I also think on the big ones, like let’s say it’s rent. And we live in a high cost of living area of the Northeast outside New York City. There’s this dilemma of putting the toothpaste back into the tube, right? You’ve experienced the two-bedroom, $6,000-a-month apartment. You’re doing great. You’re working a big job in the city.
And, you know, there are, by the way, $4,000-a-month two-bedroom apartments as well. Now, that’s some decent scratch, but, you know, that $2,000 a month, it’s $24 grand a year back in your pocket. So yes, I agree, the big things like where you live and all that really do move the meter.
But what tends to happen here is we experience something and then we’re unwilling to make that sacrifice. This is why we go to the small things, because it is less uncomfortable, right, to stop doing the small thing than it is changing a big thing the most. Or it is the
00:23:47 Heather
Maybe the fact that we live here. Oh, yeah. Or like live here at all.
00:23:52 Douglas
We’re going to give up the social life that we have, the arts, the entertainment, the access to things. And it’s hard. You know, you just don’t pick up and go to Florida, Texas, Washington State all that easy.
If you got a couple of grandparents there, you’re out the door tomorrow because there’s your childcare. But if it’s literally starting your whole life for the sake of tax savings or lower cost of living, you got a couple of kids, you’re in mid-career, it sounds, for most people, it sounds downright impossible.
So you’re going to go stop a lot. You’re going to go, you know, stop your spending on lattes. And that’s also not going to really work.
00:24:25 Jon Luskin
Yeah, as you guys know, I feel your pain on the childcare front. It is brutal. And it’s one of those expenses that you probably don’t have a lot of wiggle room on.
And with respect to the toothpaste comment, I’ll get this question sometimes. The lake house, the vacation home, I’m like, ooh, you know, be careful. That is a large and difficult expense to cut, right? Unlike the latte, right? The latte is a lot easier to cut that out.
00:24:46 Heather
We talk about that all the time. Doug’s position is, go on another vacation. You want to go there? You’re going to go back there another time of year. We’ll go back a second time of year. You don’t need a vacation home there. You can just go there another time.
00:24:58 Douglas
$500 a night or, you know, $25,000 a year guaranteed and you’re going to be there three times. Like, come on, what are we talking about here?
00:25:08 Jon Luskin
Yeah, and it’s $25,000 a year, like forever, right? Until you can unwind yourself from that thing.
00:25:12 Douglas
But if you sign up for my short-term rental subscription class today, I will show you how you can leverage yourself to the hilt and buy seven properties this year and do cost segregation. Sorry.
00:25:26 Heather
He’s kidding.
00:25:28 Douglas
Easy lawyer. It’s okay. They know I’m joking.
00:25:31 Jon Luskin
Speaking of lawyers, since I don’t have a lawyer telling me not to say this, I will mention a couple account aggregation tools that the folks that I work with like a lot. So not endorsement for me, but I can tell you what the people are using. You know, when I work with them, they say, hey, I’m using this thing and I like it already. Quicken remains a popular pick. Monarch Money, and then You Need a Budget. Those are the tools that I find Do It Yourselfers using most often, especially now that Mint is gone. All right.
Let’s talk about age gaps. We got an interesting question from username JLee from the forum. Shares, my partner and I have an eight-year age difference on top of the normal odds that women are living longer. So potentially a 15 to 16-year difference in life expectancy. How can we plan so that the elder partner gets to enjoy, but the younger spouse can be confident that the nest egg will support her in longevity? Any thoughts on age gaps between spouses?
00:26:28 Douglas
Yeah, I think it requires there to be a little more, you know, methodical planning, obviously, right? But I’ll go through some key concepts that come into play here. There’s something to be said about risk profiles because now you’re planning for a longer time horizon for one partner than the other.
So one person actually will have more time. So how you divide up your investments and attach different risk profiles to it is something you’re going to want to pay attention to. That younger spouse has more time on their side. They can afford to be more risky. So maybe stop batching everything together in terms of how you’re viewing risk. So that’s number one.
Two, your withdrawal rates are actually going to vary here. So again, decoupling one withdrawal rate that you would be using for the household, and now you have two different withdrawal rates, or you might want to vary it to see how that impacts the analysis. And also keep in mind that, you know, you’re assuming, if you’re using software or just trying to map this out yourself that the older spouse is obviously going to pre-decease the younger spouse. No guarantee of that, but that’s the assumption.
00:27:29 Heather
Expect the unexpected, but fair enough.
00:27:31 Douglas
Always plan for the unexpected stuff. But if you’re going off statistics and what’s likely going to happen here, understand that not only would the withdrawal rate might drop down, but that’s because the amount of income needed, the lifestyle, is being reduced at that later period of time.
Really, in my heart of hearts, professional-grade software and planning software does a really good job of allowing you to play around with these variables. I think this is actually a very difficult thing to do if you’re busting out a spreadsheet. Hopefully, you’re really good at that or really good at math. You’re not running Monte Carlo simulations on your own and stuff like that.
00:28:01 Heather
Almost too. I mean, look, we’re big believers that you’re not just one homogeneous unit. Nobody is, right? We’re not just a blob, the Bonapartes, Heather, and Doug, and then there’s the stuff we do together, yours, mine, and ours.
00:28:14 Douglas
I like the blob.
00:28:15 Heather
I like the blob too. You know, but I think that, like, there is something to be said about maybe the spouse who is a little bit older. Maybe their goals should be prioritized a little more if it’s important to them to travel.
00:28:28 Douglas
Heather’s point being like, hey, I’m ready to travel the world and my, you know, older partner is now 78 and having a hard time, like, being mobile. That’s not the vision, I’m sure, that they had when it comes to that. So you’re talking about satisfying some of the individual goals of the older spouse here should be prioritized while also allowing whatever shared vision of retirement. I think it’s just going to look very different for a couple in this scenario.
Also bringing into, I didn’t mean to joke around about, like, mobility and health, but this is such a big part. The years in which you get to enjoy financial independence. Like, you know, if you’re fortunate enough to make it out of the workforce in your, you know, early to mid-60s, what I hear from clients is, wow, I really got a 10, 15-year period, you know, to get in the fun stuff. They say to me all the time, they’re worried about their health failing them and they’re not able to do the fun things, whether it’s travel or what have you.
So we can have a whole separate conversation on why prioritizing health should be a big part of anyone’s retirement plan. It’s often unsaid and almost the most important part of it. But this is an area where, hey, yeah, maybe you need to think a little bit more about the years in which the two people are able to enjoy the joint things they have.
And if you have to accelerate some stuff for the person who’s older based on their health or based on longevity of things, then yeah, you’re going to want to shuffle the deck a little bit there and then plan the financial things around there. Maybe it means increased savings rates today. Maybe it means adjusting risk profiles today. All of these things. It’s not just one solve for this. It’s quite complex. I mean, I’ll give it that.
00:30:11 Jon Luskin
I think with respect to the financial planning piece, there are some great do-it-yourself tools that are out there. We actually had Steven Chen on in a previous episode talk about his offering, formerly New Retirement, now Boldin. So I’ll link to that in the show notes. That’s Rob Berger’s number one choice when it comes to do-it-yourself financial planning. And Rick interviewed him in a previous episode. I’ll link to that as well so folks can check that out.
So relatedly, long-term care is potentially going to compromise the financial well-being of that younger spouse. Any tips for dealing with the expenses of long-term care, especially with respect to the challenging insurance market for that product?
00:30:51 Douglas
Yeah, and what a very different landscape long-term care has become from maybe when we started our careers. It wasn’t that unaffordable relative to today’s premiums, but what did we notice?
Massive mispricing, right, in premiums to what the cost of care would actually be. And now we live in a world where it’s really hard to see the value depending on what these premiums look like for individuals. You’re going to pay a ton of money for a long period of time. And you look at the ROI on that and you start to see some things that aren’t very attractive use of capital. So are we really now pigeonholed in the self-insurance world?
Now, I could take this to the, what are you doing to keep your health up as much as possible? Truly, that is a recommendation that I have. And I don’t want to come off as, take care of yourself. That’s going to, it’s not going to solve everything, but it’s going to do a lot for you, right?
And I now make it a practice to talk to my Boomer clients, my older clients to say, and you see a lot of other advisors, they’re not health experts, but you can say this is a very big part of your retirement planning, which is maintaining your health. You want to keep costs down? Did you break a sweat this week? I don’t know the last time, you know, certain grandparents have broken a sweat doing exercise. That’s good for them.
So between financial planning around it and actually, you know, taking a look at what you can set aside for the event that you’re going to need long-term care, we talk about this in the book a lot too, the conversations you need to have with the people in your life to set the expectations. I hear all the time, we don’t want to be a burden to our kids and all of a sudden that’s what they want, but they didn’t do anything to prevent being the burden to their kids.
So communication is such a huge factor here. If you’re someone who’s worried about long-term care and your ability to afford that and you’re going to need to lean on children or family, please do not wait until something happens to have that conversation. That’s what creates the bigger strain.
00:32:52 Heather
And talk about the strain on a nuclear family here is the parents, the siblings who are unmarried and/or dependent adults. We’re not having the conversations that need to be had, not just about who, but how.
00:33:09 Douglas
This is so tough. Like, and without getting into too much detail of our own lives, but we have these conversations with our own family members. And while they’re listening and while we’ve mapped it out and we’ve showed them, hey, this is what this could look like, and this is what your concern is, here’s how we solve for it, to then execute on that has proven to be extremely, extremely difficult. So I would only advocate for the sooner you can have these conversations, the better.
As people get older, they clam up. They don’t want to talk about it. They don’t want to face these things. That’s one half of the difficulty of it. The other half is they’re not great at executing on that, right? The actual doing of it, it becomes super uncomfortable. You get set in your ways and you rather deal with the thing that’s going to, you know, fall like a house of cards at some point in time than actually make the uncomfortable changes like moving, like sacrificing certain expenses, or maybe you have to pull back this idea of what kind of traveling you were going to do. So you got to, again, very, very tough. And you’re talking about family relationships here too. So you know emotions are going to run high.
00:34:19 Jon Luskin
You’re right. These conversations are hard as someone who has parents themselves, right? And has done it. Man, I’m curious. Any other thoughts or guidance on that topic area, especially for those of us who are that sandwich generation?
00:34:34 Heather
I’ll share something because we saw it in some of the couples that we interviewed that found themselves in unexpected situations, really sandwiched between a dire medical event for a parent and raising young children. I think one of the most important things is understanding that care is a circle of support. Onus is never just on you.
There are people you can pay. There are communities that you can join. There are people out there in the world that are in the same situation as you and have navigated the administrative burdens, the financial burdens before. And it’s important that you don’t just feel like it’s all on you and that there’s not resources out there available to you.
The circle of support should never just be you. That could be, like I said, not just other folks who have been in your position, not just outside caregivers, but it can also be your parents’ friends. They didn’t all just disappear when something happened. Painting this as a web of support that needs to be put together, I think that will help ease, if not the financial burden, then at least the emotional and mental burden of a dramatic event or even something that slides into happening over time.
00:35:54 Douglas
Yeah, this strikes at the heart of getting more comfortable with these uncomfortable conversations around money. You know, the worst things happen when you don’t communicate and better things happen when you do.
00:36:04 Jon Luskin
Any thoughts or guidance if that conversation doesn’t go as planned, i.e., hey, Mom and Dad, the estate planning documents that you got off freeestateplanningdocuments.com probably aren’t legit. Why don’t we go pay some money to a real estate attorney? You can afford it to put together some real documents. No, it’s fine. I don’t want to do that. Any?
00:36:24 Heather
Preaching to the choir. You’re preaching to the choir on that one. I think, unfortunately, there is a piece of this that you can only control what you can control. You can’t force people to do things, but I think a little bit of tough love goes a long way.
They think they don’t want to burden you and you need to say to them, you are, in fact, burdening me. You are, in fact, putting us in a situation that’s going to be incredibly difficult for us because you don’t want to do this now. You may have your reasons why you think that this isn’t the time or the place, but I implore you to consider the fact that you’re putting me in a worse reactive situation down the road.
00:37:08 Douglas
That’s the one that really grinds my head.
00:37:10 Heather
But that’s tough love. That’s tough love and that’s really hard to do. And I’m not claiming that that’s easy to do. It’s something that I think we and a lot of folks in our generation deal with all the time.
00:37:20 Douglas
Some things you can’t solve for. And what you can control is how you go about your relationship with that individual. I’m not advocating for you to cut anyone off or cease talking to them. I’m going down the road. Heather goes down here, which is, hey, fine. That’s your decision. I would like then to just be able to show you what we’re going to be dealing with as a result of this decision.
Now, if this is what you want for yourself and your legacy and us as your children, by all means, continue doing that. That might result in cataclysmic family drama. And that’s what you’re going to have to deal with. Go get your therapist. Go get your cocktail. Go do what you got to do to basically cope with that fact. But if you don’t try, you’ll never open the door to the fact of that person saying, this is not what I want for anyone, and maybe convince them to go down a different road.
00:38:14 Heather
It’s really hard, but I think it also could be very freeing if you get to whatever the final answer is, which is what are your expectations, not only of us, but do you understand now that we’ve all talked about it, you understand that this is the result of you not being unwilling to either make changes, to make arrangements, to you understand this is the outcome of that.
If their answer is yes, I understand and I DGAF, and that is their answer, at least everyone’s cards are out on the table. You can’t make somebody do something.
00:38:52 Douglas
Then act accordingly after that. Truly, you know? And by the way, if you’re going to then continue, well, they don’t care and I guess we’ll just deal with it. Like if that’s your attitude towards it, then you should, you know, then don’t complain when it happens.
00:39:05 Jon Luskin
Yeah, I think there’s certainly a lot of wisdom in your thoughts there, folks, right? I mean, you do what you can. And then, man, it’s up to them.
One thing that is a cruel set of circumstances is that the older you get, while your capacity diminishes, your confidence increases. And that can be, man, that shows up in this situation with, you know, working with those parents who, you know, they think they know and understand what’s best, but ooh, yeah, it’s a tough one for sure.
00:39:34 Heather
It’s tough.
00:39:35 Jon Luskin
Jon Luskin, your podcast host, jumping in here to make a post-episode edit. I just want to stress the importance of having this conversation early. You do not want to delay because of the risk of cognitive impairment setting in. Given that cognitive impairment, it’s possible that your message won’t land. So make sure to speak with your family sooner rather than later. And now back to the episode.
I think there are some topics that are very important that get rarely discussed. And one of that is going to be disability insurance. You touch on this in the book. Lots of families purchase life insurance, but never consider the lesser event of falling ill, being unable to work. What’s some guidance you can provide on the importance of disability insurance? How should couples be thinking about this in their financial lives?
00:40:23 Douglas
So how I think about this, number one, you know, lean heavy on group benefits, assuming you have them, right? One of the best ways to be able to protect your income is hopefully be in a place where you can afford yourself some group benefits. That is the cheapest and easiest way to go about that. Now, that’s not obviously available for everyone here.
The second is, hey, do I go out and purchase insurance, supplemental or primary, you know, long-term disability insurance on my own? And again, I just mentioned could be expensive, could be difficult to underwrite depending on your health situation. And yes, there is the ability to also generate, whether it’s a sinking fund or a contingency or a larger cash reserve to combat against this risk. All of these things are on the table.
And we can still come back to your health and the things that you can control and do to put yourself in a better position. And then there’s just, hey, can you accept the fact that there are things out of your control that you’re going to have to contend with? So it’s a sliding scale. It’s a giant spectrum of how do we go about doing this? Not everyone can just, you know, in be in perfect health and go by the largest long-term disability insurance policy out there and blow $5,000 a year on a Cadillac policy.
And what I’ve noticed in practice is just how creative you need to start being in terms of getting disability insurance. One strategy has been, hey, can you belong to a professional association based on what you do or your craft? That is often a wonderful way to pick up group, you know, benefits that you otherwise wouldn’t be able to get if you’re, you know, you own your business or you’re an entrepreneur and you don’t have any group benefits.
Us as financial planners, get this through the Financial Planning Association or FSI. And I ask you, hey, do you have a professional association that you belong to or can belong to as well to get affordable benefits, specifically disability, that has proven to be a really great way to obtain affordable coverage?
00:42:18 Jon Luskin
Now, getting into the nitty-gritty of long-term disability insurance is out of the scope of this episode. So be sure to check out Episode 39 of the Bogleheads® Live Show, where we do get into the very details of long-term disability insurance, including talking about the shortcomings of those group policies, what you might get through work or through a professional association, and why you want an individual disability policy instead. I’ll link to that in the show notes for folks to check out.
Let’s talk more about managing those unknown risks. Cash is the best hedge against the unknown. Doug suggesting at least six months is even more better. Under what circumstances?
00:42:57 Heather
That’s what you do for a living, I think, too.
00:43:00 Douglas
Heather’s right. My lukewarm hot take is to go more conservative and do the six to nine month cash reserve, but there’s reasons for that. My reasons, so my elder millennial trauma is showing here in this recommendation of six to nine months.
So my lived experience of starting our careers in the Great Recession and raising children and running a business during a pandemic leads me to believe that, hey, I’m going to personally sleep better at night knowing that I have a larger margin of safety there for me. So I have a number of subjective reasons that push me towards a higher amount. For what I’ve described, I could even go as high as a year. For my retirees, I go as far as two years. But let’s get subjective with this. How do you feel physically? How do you feel about the world around you?
00:43:48 Heather
What’s your family situation? Do you have kids?
00:43:51 Douglas
How do you feel about your health? How do you feel about your job, right? Are you going through a transition? Are you having a kid right now? Are you, you know, starting a new job, starting a business?
Depending on what the answers are to these questions would push you either into wanting more cash or if the world’s great, you’re super tight at your job, you got tons of non-qualified assets, non-retirement assets, and things are just great. You feel durable as ever. Business is booming. Yeah, three to six months might be the way to go because you want to deploy more cash into productive assets and take advantage of that and maximize the opportunity there.
Now, if the opposite is true, oh my God, I think I’m going to get fired. I’m 20 pounds overweight and then the worst shape of my life and we’re expecting our third child, you know, maybe, you know, that nine months of cash. I know that’s huge and I often get flack for it.
Dude, no one’s saving six to nine months. I get it. Be aspirational. I want you to have something. Let’s all agree to that. But if those are the factors you’re contending with subjectively, then yet, you’re probably going to want to lean more conservative and hoard that cash because the opportunities of the market or investments don’t feel as good as that conservative pile of cash is.
00:45:01 Jon Luskin
I think Heather made a good point that I want to echo your job. Certainly those higher paid executives, that job search can take quite some time.
00:45:12 Heather
It sure can. I’ve seen it. I see it more now than ever as I kind of enter this new decade and I have a lot of friends reaching middle managements and upper management and it is not easy to make those transitions and you’ve really probably assimilated to a certain lifestyle and.
00:45:30 Douglas
Along. Along that line, it’s also very sector-based. Like, you know, imagine you’re an AI engineer. You’re going to have a job for a while, you know? But if you’re, let’s say, in a marketing department.
00:45:41 Heather
Marketing. I was just going to say.
00:45:42 Douglas
Advertisement department where like hiring has stopped. They’re strongly looking at that very AI tool that is doing a lot of the functions here. I think you need to be very cognizant of your position, your station in life, where you are, what it looks like in terms of the labor environment for your specific job, and factor that into maybe I should be holding more cash, right?
I would expect that if I do get laid off, my time out of the workforce is going to be greater than, hey, I’m a highly desirable engineer and this was just the company I was working for wasn’t it, it wasn’t me or my talents and they’re hiring across the board. I’m going to go, you know, I’m going to go over here now and get hired tomorrow.
00:46:20 Jon Luskin
Yeah, I worked with someone not too long ago, middle management, blew through his emergency fund in six months looking for a job. I mean, he was still interviewing when I worked with him.
00:46:30 Heather
I know so many people.
00:46:32 Douglas
Got a couple of clients dealing with this right now and it’s hard, you know, it’s tough, but thank God. Thank God we developed a large cash reserve and we put that into practice here because it really shows up and comes through.
00:46:43 Jon Luskin
Anything else you folks would like to discuss or mention before I let you guys go?
00:46:48 Heather
That money is a practice. You don’t win. It’s not a game. You win once and then you’re done forever. This is work you do continuously.
You should just always strive for better, always strive for better communication, more honesty, more curiosity in your partner, and just to be nimble when things change because they’ll change subjectively and they’ll change in the world around us. So the better positioned you’ll be really comes from the way that you and your partner treat each other. That’s how you reach that goal that we set out for people and that we want for people, which is just to become this unstoppable financial team together.
00:47:23 Douglas
Yeah, just be curious. I love finding new things about, we’ve been together forever, but you know, through the communication that we have and building that practice, we get to learn new things about each other and that is just absolutely wonderful that you can be with the person you love and think you know everything and then you find something new and you get to talk about that and explore that a little bit more. So be curious, build a practice around it and you will be unstoppable.
00:47:47 Jon Luskin
Thank you for joining us for the 91st Bogleheads® On Investing Podcast. For more things Bogleheads, make sure to check out videos from the 2025 Bogleheads® Conference on YouTube. Also on YouTube, you can find countless shorts from both the conference and the podcast.
Speaking of YouTube, be sure to leave a comment on those conference videos as well as this episode. What do you think? What did you learn? What did you agree or disagree with? Who should we have as a future guest or a future topic for a future episode? I want to hear from you.
Are you looking for more financial education? Be sure to check out bogelcenter.net where we have a treasure trove of information about personal finance, all geared towards do-it-yourselfers, and it’s all available for free.
And a thank you to the numerous folks who helped make this show possible, including Jeremy, always helping with transcriptions, Ross, our video editor, and a huge shout out to Glen for making the countless shorts for both the YouTube channel conference videos and the podcast episodes. And a thank you to Scott Holmes for the corporate presentation music we’re using for the outro music of the episode.
Lastly, know that this episode is for education and entertainment purposes only. It’s not to be construed as tax, financial planning, investment, or legal advice. Check with your professionals before making any decisions.
