The Wiser Financial Advisor Podcast

Get Real. Get Honest. Get Clear.
Home » Podcasts » The Economy and You 2022 with guest Dr. Kotlikoff

The Economy and You 2022 with guest Dr. Kotlikoff

In this episode host Josh Nelson talks with Doctor Larry Kotlikoff, professor of economics at Boston University and one of the world’s top economists. 

They engage in a conversation that’s not just about the economy, but it’s also about how the state of the economy today will play a big part in how you plan your finances and spending in the coming months and years. Listen to this IMPORTANT talk about the economy, the markets, retirement income, as well as about younger people and how they can take advantage of what’s going on right now.

Transcript

Hi, Everyone. Welcome to the Wiser Financial Advisor with Josh Nelson, where we get real, we get honest, and we get clear about the financial world and your money.        

       

This is Josh Nelson, Certified Financial Planner and founder and CEO of Keystone Financial Services.

Let the financial fun begin!

Recently I had the opportunity to sit down with Doctor Larry Kotlikoff, a professor of economics at Boston University and one of the world’s top economists. In fact, The Economist magazine named him one of the world’s 25 most influential economists. Professor Kotlikoff has written 19 books and hundreds of professional articles and op eds. He is a New York Times bestselling author, most recently of the book Money Magic. He is also the creator of MaxiFi Planner, financial planning software for individuals that you might want to check out. His columns have been in the New York Times, the Wall Street Journal, the Financial Times, the Boston Globe, Bloomberg, Forbes, yahoo.com, Fortune, and many other major publications. I think that you are going to find this especially helpful right now because we are in uncertain economic times. We talk a lot about the economy, the markets, retirement income, as well as about younger people and how they can take advantage of what’s going on right now. Please pass it along to any friends or family that you think that would benefit from it. Also please click subscribe on your favorite podcast service. When you share episodes, we reach more people, and the Wiser Financial Advisor is about helping people make sense of all the information that’s out there. We are drowning in information right now and don’t have nearly enough wisdom. I’m so glad to have Dr. Kotlikoff on. Enjoy the episode. Have a great week and God bless.

Josh: Larry, welcome back to the Wiser Financial Advisor. How are you?

Larry: Good, great to be back with you, Josh.

Josh: Things have changed a lot from about a year ago when we had our last conversation. Inflation has taken off. We talked about inflation potentially becoming a problem and now it’s a big problem, right?

Larry: If you go this last month April to the prior April, it’s running at 8.3% per year, but on a monthly basis the inflation rate in April was only .3% which is 1/3 of 1%. So there’s some evidence that inflation is coming down because the month before in March the monthly basis was 1.2%. So going from 1.2 to .3, is a pretty big decline. Now part of that was that energy came down from where it was. At core, inflation is running around 6%. If you don’t look at core inflation, leave out energy and food, we’re running around 7% a year. Inflation for this coming year, if you take last month’s core inflation rate and project it for a year rather than looking in the last year, we’re running still very high inflation rate of 7% or so. On the other hand, the markets are projecting more like 4 or 5% for the course of the year and on the long term more like 2.5%. So the markets think this is a supply chain temporary bubble and they might be right.

A year ago, when you and I were talking about inflation, the markets were projecting less than 1% inflation. And how do you actually figure out what the markets are projecting? Well, if you look at the difference between the return on regular bonds for one year and the return on the inflation indexed bonds, that differential is telling you about the projected inflation rate. A year ago the projection was less than 1% but it turned out to be 8.3%.

Josh: Big difference, yeah, and so expectations have changed dramatically. Of course it’s easy to second guess right now, but a year ago, the Fed was telling us that inflation was transitory and they really weren’t that concerned about it. Did they wait too long? We just heard Ben Bernanke say that the Fed got it wrong.

Larry: We have such a big debt; it’s over 100% of the GDP (Gross Domestic Product). So that’s going to produce a much higher deficit. What Chairman Powell did was raise the interest rate that the Fed lends at to .5, a half a percentage point. When Volcker was confronting the same inflation back in 1979, he raised the interest rate by 40 times that, about 20 percentage points, not half of 1 percentage point. What he did was 40 times more than what Powell has just done. So in many ways what Powell has done has been cosmetic. There’s not a real policy there from what I perceive. But the markets took this as a bad signal and the stock market dropped a lot. But in reality it hasn’t actually done much. If you look at the real interest rates, if you look at the nominal interest rates minus the expected inflation we’re talking about, it’s a pretty big negative number for the course of this year.

The long term inflation index bond rate right now is a half a percentage point. So the long term real return is still quite low and the short term return is negative from what I can tell. Once you adjust for inflation, the rates are still quite low. So if you’re borrowing for a house or a car or a student loan, you’re paying at least over the next 6 to 12 months a negative return on your interest rate. Whether that will continue, we’ll have to see, but there’s a chance that inflation will continue to be high. That’s because first of all, people get into their expectations. You have seven and a half million businesses who haven’t been raising prices for many years because inflation has been low and you don’t want to upset your customers, so you just do it periodically. Then when you do it, you try to anticipate what the inflation is going to be. You want to err on the downside, because you’re not going to have the opportunity to raise prices again because you don’t want to upset your customers who may take off and shop around. So a lot of these seven and a half million firms may be leapfrogging the current inflation. They’re saying, “Let me raise prices by a factor that’s enough to cover the next three years. Rather than raising by 8% this year, I’ll raise by 24%.” That could be part of the process that we’re seeing here. It’s self-fulfilling prophecy and then wages have to be raised because you have to keep workers’ real wages fixed. Then this whole thing gets into the bloodstream of the economy and it becomes very hard for the Fed to talk this whole thing down because of trying to coordinate 7 and a half million decisions, right? That’s where part of the difficulty is.

Part of the other reason that inflation could be a long term phenomenon is that people start understanding how broke the country is. There’s been lots of money-creation, printing money to make money to pay the government’s bills. The Treasury is borrowing all this money and then the Fed is printing money and buys up the bonds that the Treasury sells. The net impact of all this is that the economy ends up with more money and the government ends up being able to pay for things without having raised taxes or used taxes to do it. It’s like if you combine the Treasury and the Fed and the Treasury says, “Well, you know this month we have to pay these security checks. You, the Fed, please just print some money and give it to these people.” That’s in effect what’s going on to some extent. The numbers are hard to decipher because part of what the Fed is printing money to do is to buy up assets. Then later on it can take those assets. So basically, it prints money, buys your asset—maybe you got a bond or stock or something from a company or even a mortgage. I’m the Fed. I buy your mortgage. Now I have your financial paper and you have the money but tomorrow I could take that financial asset and sell it back to you or sell it back to somebody else and suck the money back out of the economy.

So part of what the Fed is doing is printing money to pay for government spending, but part of it is to engage in this financial back and forth, which is not necessarily inflationary and it’s a little hard to figure out from the Fed’s balance sheet exactly what’s what. But countries that are broke end up running inflation. Look at Zimbabwe. Look at Venezuela. Look at the 22 countries around hyperinflations in the last century. Hungary, Germany, Weimar Republic. All these countries were in fiscal trouble. The US is in fiscal trouble.

Josh: What do you think the end game is here for the Fed? You mentioned Paul Volcker who was pretty committed to killing inflation and maybe people don’t recognize this, but Fed Chairman Powell was just reappointed to another four years and the Senate confirmed that. What do you think the end game is for the Fed and will they be committed enough in this case to really knock inflation down?

Larry: I don’t think that Jerome Powell has the intestinal fortitude to really try and stop inflation. I think what we’re looking at is the potential for continued high inflation. He’s hoping it’s just the one time supply chain bubble, thinks prices will come back down. Still thinking it’s transitory. And he might be right. The markets seem to agree with him and there is some evidence because the monthly inflation rate did come down a fair amount from the month before. But he could well be wrong. If he is wrong, I don’t see him engaging in putting the economy into recession, because, yeah, part of this is political. We’re going to come up to midterm elections, and he’s I think probably a centrist in terms of his political beliefs. Probably is not a fan of Trump. He’s concerned about doing something that would lead to a return to the Trump administration. You have to be pretty extreme in your political beliefs to think that this is the person to run the country. Now Biden, on the other hand, has been pretty far to the left on a lot of things, but I perceive Biden as more of a centrist than Trump.

Josh: Normally the Fed tries to at least appear apolitical, right, so as they get closer to elections, they tend to not make any extreme moves. Does that mean we’re going to see a bunch of rate increases early on in the year and then maybe not so much in the second half?

Larry: Well, if we’re running 8% inflation and the Fed raised the interest rate up to five percentage points, we’d still have a negative 3% point real short term interest rate. That’s not exactly a problem for somebody who wants to borrow, right? They’re borrowing at a negative rate after inflation, so he’d have to raise the interest rate to something like 12. You’d have to go well beyond where we are. We don’t adjust the deficit for inflation, so the deficit as a share of GDP would look really big even though it wasn’t and it was actually negative because of the way we do our bookkeeping. If he goes that route, there’s going to be a little discussion of not to worry about the deficit because after you adjust for inflation, it’s not really a problem. It’s actually going the other way.

Josh: Right. Revenues are really good right now.

Larry: Yeah, but we still have a long term huge fiscal gap in the off-the-book liabilities. I probably talked to you about that last time. They are about 7 times the on-the-book official debt. We’re talking about eight years of GDP. We’re talking about being short about 6 to 8% of GDP. We need to collect taxes that are 6% higher as a share of GDP than is now projected in order to pay for all the spending that the Congressional Budget Office (CBO) projects. The government is going to be paying for Medicare, Medicaid, baby boomers retirement, defense spending, all the different outlays, all the benefit programs. So let’s say 6% of GDP. Well, to cover that would be another payroll tax. Think about your FICA payroll tax doubling out of your paycheck.

Josh: Yeah, we keep kicking the can down the road. You mentioned Social Security and Medicare and I think we’ve known for decades that these were not sustainable programs without some tax increases. What do you think is going to happen? We see our Social Security statements say that in 2030-something the program is not going to be able to pay out benefits. What’s your personal opinion of what the fix is for that? Politically of course it’s a hot potato, so our politicians keep kicking the can down the road until 2030-something and it becomes an all-out crisis.

Larry: I think there will be. I wrote a book co-authored with Scott Burns, who’s a columnist for the Dallas News called The Clash of Generations. That was probably around 2005 or so. There were a couple books on this with Scott. The first one was The Coming Generational Storm. These books were pretty popular, but nothing changed. And nothing’s changed in the behavior of Congress. You don’t have the President, whether Trump or Obama or Clinton talking about the long term fiscal position of the country. In other countries like New Zealand, Australia, Canada, even in the European Union, all the countries do long term fiscal planning based on what I was pushing for with some coauthors, called generational accounting, fiscal gap accounting. All these other countries do it. We don’t. There was a bill that I worked with members of the Senate to sponsor doing fiscal gap accounting. Only about 7 or 8 senators signed on. That was all you could get. So, we’ve got a big problem that the Congress is not facing.

I think they’re just going to kick it down the road, and then when it comes to running out of money, they’re probably going to do some things that impact younger people. Probably won’t hurt older people unless they’re high income, will probably cut the benefits for higher income but not for lower income people. Younger people are already facing taxation when they retire. About 85% of their benefits will be subject to federal income taxation. So if you look at the replacement rate, what are they going to get? After they have to pay the Medicare Part B Premium and after they have to pay federal income taxes and about 14 states have to pay state income taxes on their social security, their replacement rate will probably be 30 percent to 25%. So social security, which is kind of the base bone of people’s retirement, is going to be even a smaller deal. And then you’ve got the prospect of getting social security at later ages and paying higher taxes along the way. Not just higher taxes on your benefits but also probably higher payroll taxes. They will probably have to raise the payroll tax. So this is all not good. This is sticking it to the next generation.

Josh: Yeah, a lot of the younger people that I visit with recognize what’s happening. When we do retirement projections for them for example, many of them if they’re under 50 will say, “Don’t even include Social Security benefits in my planning, because I think it’s going to go away.” Of course we’ve heard this for years, but I think the reality is that especially for people who have a higher net worth and higher income, they might not get any benefits. There may be a complete phaseout of Social Security and we may see higher income people paying more for their premiums for Medicare.

Larry: Yeah, that’s a nasty piece of work that you have to pay this extra tax or Medicare Part B premiums and that’s true whether or not you join the Medicare Advantage plan or the regular traditional Medicare. It’s based on your income two years before you’re collecting your Medicare benefits. So if you’re 67 and collecting Medicare, it’s based on your income when you’re 65, your adjusted gross income. So if you do something like a Roth conversion at 65, that can kick up your Medicare premiums when you’re 67. The money you take out of your IRA is going to be added to your adjusted gross income at age 65. If you’re taking Social Security benefits at 65, that’s also going to be added to your adjusted gross income. So those two things can mean higher Medicare premiums. You might think, well, it’s not that big a deal, but the way it works is if you’re a dollar higher on your adjusted gross income two years before, all of a sudden you could be paying $800 more in annual premiums. So it’s not smooth; it’s a discontinuous jump in your taxes.

Oh, by the way, I just remembered the name of this Bill in Congress. It was called the Inform Act. The idea was to inform everybody in the country about the fiscal gap, the fiscal condition, the insolvency of the country, fiscally speaking. And only 8 senators supported it.

Josh: It’s not a winning political issue. It’s a long term responsible thing to do, but if you’re worried about getting elected again in two years, you probably don’t care.

Larry: We do have a few senators who are fiscally responsible. Senator Thorne from North Dakota was one of the sponsors. But we couldn’t even get 20 senators to go for this.

Josh: Jumping back to the economy, I think a lot of people right now are worried. They’re seeing inflation. I’m 46 years old. Most of the people in our generation have never seen inflation like this, so it’s a new phenomenon. Where do you see things going over the next year to 18 months, economically and in market conditions too? We’ve seen much higher volatility than we’ve seen here for at least a couple of years.

Larry: I think that we should probably expect inflation to come down, but plan for it to be high personally because if you pulled out of the stock market and have your money in cash and it’s 8% inflation, you’re going to lose 8% by sitting on cash. So how do you protect yourself where you can buy things that are likely to stay even with inflation? Things like housing—that’s why house prices are going up so much. You can have an addition to your home; you can buy land; you can buy artwork. Or, you can buy toilet paper. I wrote a piece for my newsletter at larrykotlikoff.substack.com on what to buy to beat inflation. I talked about how if you have enough room in your basement to buy a year’s worth of toilet paper, why not buy it now? This is not hoarding, but toilet paper is likely to go up with the general price level. Same thing for other things like baked beans and lots of provisions that you might buy.

Josh: Used cars.

Larry: They’re just like toilet paper. So if I buy the toilet paper today, a year from now it might be 8% higher. If I’ve otherwise got my money in cash because I’m afraid of investing in the bond market (which could definitely go down much further if interest rates continue to go up, which they could, especially if inflation stays high) and the stock market is a risky business, as we’ve seen. So let’s say I move my money into cash. Well, the toilet paper is going to rise in value. I get a zero return on the toilet paper investment because it’s going to stay even in real terms because I’ve got the physical paper, so the real return on that investment is zero. Whereas if I leave the money in cash and buy the toilet paper a year from now, I might be losing 8%. So buying things now in advance to deal with inflation is just another way to protect yourself.

Also, you can buy inflation index bonds that are now yielding about 57 basis points for 30 year Treasury Inflation Protected Securities aka TIPS. There are also I bonds that you can buy. You can buy up to $10,000 worth of those in a year and they’re yielding I think 9.2%. If inflation turns out to be where the market thinks, at about four or five percent, for the next six months you’ll earn about 4 or 5% real, which is a good deal. So, I bonds have advantages. If you have less than $10,000 to invest in these things, buy the I bonds. You do that from www.treasurydirect.com

Josh: Yeah, although a lot of questions come up about that because I bonds are a little less liquid in that you’ve got to leave it for a year and there are some penalties if you take it out after a couple of years. But with that big of a spread, that’s a pretty good deal. You can afford to pay a bit of an interest penalty if you have to get out early.

Larry: Yeah, let’s say you’re in your 60s and you have a small amount of money and it’s all in the market and you’re getting very nervous. Well, I would say taking out a chunk and buying 30 year inflation-indexed bonds for a half a percentage point of real yield, will at least maintain your real position plus make something. Now, there’s a risk that if inflation is very high, like 10%, you’re going to pay a lot of taxes because they tax the nominal component of the return to these bonds. So that’s the real risk. I wrote another piece the other day saying that the government should not tax the inflation component of TIPS because this is a risky thing for the elderly. They need to have some safety. But in general I’m saying try and get some base living standard insured by getting into things that are inflation-protected to at least a pretty high extent. And then maybe continue to keep some money in the market, but it shouldn’t be money that you’re depending on to live off of.

My company has a software program which is called MaxiFi.com. It’s coming out in a couple of weeks with something called upside investing. It’s a mode in which you can run the program which helps people build a floor to their living standard in exactly the way I was saying, just by investing in safe assets and then treating money in the stock market as your casino money, your gambling money. You don’t vend out of it until you’ve withdrawn any winnings from the stock market. When you start withdrawing from the stock market, if you haven’t lost it all, it starts going up because every time you withdraw something you turn into safe assets, then you can spend at a higher floor. So it’s upside to your floor the whole way. This is a combination of investment strategy and a spending strategy that leads to a living standard floor plus an upside to your floor. That’s why it’s called upside investing.

Josh: Very good, thank you for sharing that. And speaking of retirees, a lot of people right now, especially people who have retired recently, have been shaken up by all the volatility and inflation and everything. Now they’re wondering, should I have fully retired? Should I go back to work? What would your advice be for people who are retired right now as far as moves that they should make, not from an investment standpoint as much, but what about cutting back on spending—should people be doing that? Should people be making other financial moves right now?

Larry: Well, we always need to update our plans in light of what happens. A lot of financial planning tools have you set a spending target and then when you reach retirement you start spending at that, independent of whether your assets go to zero. The idea is that somehow you have a 95% chance of making your target, but there’s the 5% chance that you don’t—which means you run out of money. People should be adjusting all the time. As soon as the market assets go down, they should spend somewhat less; if the markets go up, they should spend somewhat more. That’s what economics says to do. But you can also kind of insulate yourself from that by saying, “This money that I’ve got in stocks,

I’m not going to depend on it to have my base living standard. I’m just going to let it ride until some age at which I start gradually taking it out. And if there’s anything there I’m taking out, I’ll be able to spend more at a safe level forever.” That’s a different way of proceeding so that you’re not depending on this return on the market sustaining you through retirement. Basically, you’re saying, “If there’s something there, fine. Otherwise I’m just not going to count on it.” That’s the way most people should do it. Even people with a fair amount of money, three of four million bucks should be playing the market but they shouldn’t have so much in there that their basic living standard would be jeopardized.

Josh: How about for younger folks or people that are building their wealth at this point, how can they be taking advantage of this time? There’s volatility and uncertainty which always creates opportunities, right? Where are the opportunities? What should people be looking at or what strategies should people be employing right now?

Larry: Well, I would say for younger people this might be a good opportunity to buy, because the markets have dropped. Some people argue it’s still quite high and has more to drop, but you know if they also follow this rule of basically not putting everything in the stock market but trying to maintain a floor to their living standard and not relying on money in the stock market. If you spend out of it, you might need to withdraw from the market in order to pay for things and you could be withdrawing right before the stock market goes back up. That’s what’s called sequence of return risk. So if you’re not withdrawing, you’re not facing any sequence of return risk, so the market really has a chance to do quite well with your investment. You just let it ride, and on average it’s going to do quite well because the average return on the stock market in the post war world has been about 6.5% real. The probability that you’re going to have something there and something significant is quite high, so that’s what I would tell young people. Put some money in the stock market, but don’t touch it. Add to it and don’t worry about timing the market. Then when you’re 60 we gradually transform it into something safe and you’ll just have upside to your living standard.

Josh: Yeah, and in particular looking at the long run, obviously we’re going to get through this cycle and move on to another expansion, right? Looking out 5-10-15 years with the amount of technology and medical advances, things like that, do you see right now as being a big paradigm shift where people look back decades from now and say, “Well, that was the point where things did this hockey stick from an economic standpoint, maybe from a civilization standpoint—that we really saw a huge advance?”

Larry: Well, you know there could be something like hydrogen energy comes along or fusion, and suddenly energy becomes free. There’s that possibility because we’ve had some fantastic things happen. The light bulb, the steam engine, gas powered cars, these things have been just phenomenal transformations. The Internet has been an incredible thing, but it hasn’t been as productive in terms of increasing GDP as these other earlier inventions like trains, for example. But we could see something in the future. And of course, if you’re invested broadly in the market, you’re going to take advantage of that and experience higher returns because of that.

Now, I want to get back to a question you raised: Should people go back to work if they’re retired? I would say yes, because as you’re saying, things are volatile. There is uncertainty to the extent that people are relying on the stock market to perform and sustain them through retirement because they haven’t saved enough. And they’re being told not to cut their spending by their advisors. I’m not saying you, but I’m saying, that seems to be the basic methodology of the financial industry: Set this target. Stick to it, independent of anything. To the extent that they’re doing that and running into these problems and seeing the danger, they should try and find a job go back to work. Now, let’s say you’re 63 and you retired early because you were furloughed because of COVID, and started to take social security. You expected to work to 67 and now at 63 you’re taking social security benefits, and social security is telling you that if you earn more than about 20,000 bucks, they’re going to tax $0.50 on the dollar, and therefore you said, “Well, if I earn $50,000 at this job that I go back to, I’m going to lose most of my social security benefits. I’m going to have to pay federal income taxes on the 50K, pay state income taxes and sales taxes when I take my after-tax income and go to the store. It’s just not worth it.”

Well, people should understand that the loss of social security benefits is kind of a phony tax, because when you get to full retirement age, social security is going to apply something called the adjustment of the reduction factor to your benefit. That is going to raise your benefit in light of how much benefit you lost due to the earnings test. So people should not be seduced into retiring early or trapped into it early because they have the wrong understanding about the earnings test. It’s really a phony tax for almost everybody. The MaxiFi.com software does figure this all out for people, figures out what’s optimal, see what happens if you earn more money and go back to work. How much will your lifetime benefits be reduced by not going back to work? That’s really important. I would say we have millions of early retirees who think that it just doesn’t pay to go back to work because they’re facing the loss of social security benefits. For most of these people, that’s not the case.

Josh: And there are plenty of jobs right now.

Larry: Plenty of jobs, and things happen. You could live to 100. You could live to 98, which is the age my mom passed. Nobody thought she would go beyond 88. People are living longer. They’re coming into retirement with very few assets, very little in the way of savings, because baby boomers haven’t been good savers. Basically, Uncle Sam has said, “Well, we’re taking a lot of money from you. We’re going to take care of you with social security.” And then the employer said, “We’re contributing to a retirement account and the stock market has done well and you should contribute a bit.” But all this saving for people by the government and by the employer has been about 1/3 of what was needed, especially in this slow return safe return environment. And some people have done quite well in the stock market but others have not.

Josh: If I remember correctly, a year ago you said that you never plan on retiring, so that kind of simplifies your retirement plan, correct?

Larry: Yeah, I’m in the great, luxury position of being a tenured professor and I can keep at it.

Josh: You’re having fun at it, right?

Larry: Yeah, I’m having as much fun as ever and as productive as ever, so if it’s not a physically challenging job, I think that you can go back to work. There are lots of advantages to working. It keeps your mind challenged. And you can only play so much golf. There are only so many series you can watch on TV and so many trips you can take. At some point it’s better just to hang in and work.

Josh: Yeah, in some fashion right? A lot of employers are flexible these days because of the shortage of workers. They’ll let people go down to 50% time, 20% time, 40% time. They’ll let people continue on in some capacity or retire and contract back to the same company and work in a consulting capacity. There are a lot of opportunities out there right now.

Larry: Yeah, and remote work; I have a friend who works from Bali. He’s having a great time.

Josh: Yeah, absolutely. Certainly it’s been a big paradigm shift with COVID. A lot of negative things came from it, but it has caused this shift where now it’s acceptable to work remotely, in some cases 100% of the time. Some of our clients that work at companies have to make some nominal effort to show up back at an office from time to time now, but for the most part, employers have been letting people continue on with their remote work.

Larry: Yeah, and of course, that’s more competition. You can have a remote employee from India work with you. In my software company we have a terrific programmer who’s Romanian. We pay him as much as we pay a US worker; we could actually pay him about half but we don’t think that’s appropriate. But this is still a double-edged sword. It’s permitting competition by other workers with US workers.

Josh: Let’s shift to your new book, Money Magic. Tell us what’s the premise that people should latch onto there.

Larry: Well, I go through almost all aspects of financial decisions. It’s pitched to people of all ages. The first chapter is My Daughter, the Plumber. I’m pointing out that plumbers can make more than doctors. When I was a kid it was, “My son, the doctor.” I think that line goes back to the Middle Ages even. But now it’s, “My daughter, the plumber,” because A) daughters become plumbers and B) they can earn more money that way than being a doctor, or at least as much as a PCP. Specialists or surgeons earn much more. I don’t want to suggest otherwise.The point is that we need to look at all the occupations, things that we haven’t thought of. Choose an occupation, and the job that nobody else wants will get you the highest compensating differential premium. For example, being an undertaker may pay a premium over being a plumber.

There’s a chapter called Marriage for Money. There’s a chapter called Don’t Borrow for College.

There’s a a chapter about Divorce Without Divorce War. Invest Like an Economist , where I talk about this upside investing. Get House Rich Rather Than Be House Poor. There’s a chapter about how to set your own taxes using retirement accounts. All these decisions can lower your lifetime taxes. There are lots of ways to rescue a bad retirement, on the housing front, on the work front, on the social security front. There’s a whole chapter about my 10 Top Secrets to Social Security Maximization.

Josh: So if people are creative and adaptable, there are a lot of things that they can do. What’s the best way for people to find you these days?

Larry: www.kotlikoff.net is my website. If you go there you can sign up for my newsletter. It’s either a free subscription or a paid subscription. So far I’ve made everything free in terms of what I provide people so I don’t know if I’m ever going to change that. You can also find access to MaxiFi.com there and then there are also links to buying the book. The book has gotten great reviews; I think people will find it of great value.

Josh: Well, thank you so much. It’s always interesting to hear your perspectives and you’re out there a lot too. You write quite a bit and speak quite a bit, and I think you’re a great example of what we teach clients: that regardless of how much money you’ve got, people always have a need for growth and a need for giving back, serving, contributing. You’re a great example of that, so thank you.

Larry: Thank you, Josh.

This episode has been prepared for informational purposes only and is not intended to provide and should not be relied upon for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors. Investment advisory services offered through Keystone Financial Services, an SEC registered investment advisor.