Podcast: Big Picture Retirement Interviews Stephen Chen, Founder of Boldin

The Big Picture Retirement Show is a podcast about retirement and estate planning by Devin Carroll and John K. Ross. Devin has been helping people with money related stuff for a while.  In addition to his ownership role at Carroll Investment Management, he’s also the Chief Compliance Officer and half owner of Cogent Advisory Group, an SEC Registered Investment Advisor.  Additionally, he runs an award winning blog that discusses Social Security and retirement related issues: Social Security Intelligence. John is a former Marine and an attorney and senior partner at Ross Shoalmire.  He currently devotes his legal expertise to assisting individuals with their estate planning and elder law needs.  He has published articles on Elder Law and has been featured on radio, television and national publications like the Wall Street Journal. This week they interviewed Steve Chen, the founder of boldin.com about why everyone needs a retirement plan — not just a savings account, but a written outline of how much you want to spend in retirement and how you are going to achieve that goal and much MUCH more. Steve talks about the challenges of financial planning, especially if you don’t have a huge amount of assets, why your retirement plan is wrong, the value of an independent advisor during market turmoil and how your plan can help you manage through different crises.

Listen Now:

Episode 23: The Problem with Retirement Planning

The full transcript of the interview is below.

You might also enjoy the following related resources:

• 6 Tips for Building a Useful Retirement Plan — Not One with a High Thunk Value
• Devin and John’s free guide: Three Steps to a Successful Retirement

Full Transcript of Steve Chen’s Interview with Big Picture Retirement

Devin: The Big Picture Retirement Show does not provide specific tax, legal, or financial advice. Listeners are encouraged to seek out their own advisors in these areas. Hey everyone and welcome to the Big Picture Retirement Show where we deliver insight on what you need to know for a meaningful and successful retirement. If you are planning for or living in retirement, this is the show for you. I’m Devin and back today with my is my co-host John. Hey John. John: Howdy. Devin: John, we’ve talked about building a plan and some of the roadblocks to getting started. It’s the foundation of what Big Picture Retirement is about. It’s about make a plan, right? John: Right, sure, yeah. You always want to have something planned out in advance, it’s going to save those crises when they come, you’re going to weather the storm if you’ve planned correctly. Devin: Right, yeah. It’s not about making this big, massive, comprehensive financial plan that people pay three or four thousand dollars for then set on the shelf somewhere and forget about but it’s about identifying some actionable steps that are coming ahead, knowing how you need to get from point A to point B and then once you start getting some confidence in your ability to plan, maybe from point A to B to C all the way out to S or T. John: That’s right. All the while, not necessarily planning for what you hope is going to happen but then also planning for those unexpected hurdles. Devin: Yeah, yeah. That’s why a plan is just that. It’s a living thing, right? John:  That’s right. Devin: You know, I tell people quite often when we do a retirement plan for them that one thing I know about this, mister or miss client, it’s wrong. They generally take a lot of consolation too because we know though that building this plan that something is going to throw it off. We don’t know exactly what it’s going to be but if we use that as a plan and we say okay, this is the guide, I never have to make adjustments, I never have to plan or change anything, it’s not going to be that great of a plan. It’s going to be wrong. John: Right, I tell folks when we complete an estate plan, we sign their will, their trusts, their powers of attorney, all of that stuff. I’ll say look, this is like going to the doctor. You go to the doctor, you have a full check up, doctor says you’re healthy, that doesn’t mean you’re healthy next year. It means you were healthy a year ago and you may still be healthy but if you don’t go in and get another check up, you’re going to have a problem. Devin: Yeah, no doubt. I was at a conference and I ran into a guy named Steven Chen. Steven is the founder of boldin.com. I went on the site and I started poking around a little bit, it’s a pretty interesting site. He has retirement calculators that are on there specifically for the do it yourself crowd or people who maybe think they’re they do it yourself crowd, then once they start doing some of the planning, they want to reach out and get some additional help. I went on there and I used these tools for myself and man I don’t like it when I run those retirement calculations for myself. It generally gives me some output that’s hard to take, frankly. John: Sure. Devin: Maybe my goals are too high for retiring with the amount of money that I would like to have. But yeah, no, it’s not any fun to see that but one thing’s for sure, I know what it’s going to take to reach my goal. I thought that was a great website so I reached out to him and I say hey Steve, would you like to come on the show? And he did. Let’s check out what he has to say. Steve, welcome to the show. Steve: Hey Devin, thanks for having me. Devin: You know, I was reading on your site and there’s a story that you put on there that you tried to help your mom with retirement planning but you were hitting some roadblocks. It seems like maybe you couldn’t find the tools or something out there and that led you down the road where you ended up today but I’d like to hear a little bit more about that. Steve: Sure, yeah, happy to share it. Yeah, basically the reason this got started is that my mom came to me when she was in her early 60’s. She was making the transition to retirement, she actually came to my brother and I. Essentially, she was having a financial challenge. She needed to borrow some money so we said yeah, of course, we’re here to help you and if necessary we’ll lend you money or give you money but we’d prefer to take a look and see what’s happening. Luckily for us she was cooperative so we basically dug into her financial situation using spreadsheets and found lots of issues. She had run up $20,000 of credit card debt. We’re like hey, you’re paying four to five thousand dollars a year of interest here, did you know that? We looked at other things like she was living in a 4000 square foot house on 10 acres of land with two people and the cost of [inaudible 00:04:43]. We found a lot of financial inefficiencies. We worked with her to tune up her situation and it wasn’t about saving and investing, only, I mean, that was part of it but it was a lot about expenses and being a lot more efficient and making informed choices. In the course of doing this, we were looking around for a financial advisor to help her but because of her net worth, which was under $250,000, she wasn’t that attractive to financial advisors and we didn’t find too many that really specialized in retirement. We said all right, well, if she’s running into this problem and she’s college educated, small business owner, white collar worker who should arguably know better than to have $20,000 in credit card debt, we’re like all right, if she can run into this problem, probably lots of people can. We looked around, we said there’s 75 million Baby Boomers out there, they’re all heading towards retirement, this is going to be a giant problem, maybe there’s something we can do about it. We started boldin.com. Devin: Awesome. The issue that you were having then with her was you were looking for someone who could help her, someone who was qualified but most of them wanted to work with someone who had investments to manage, right. Steve: Yeah, I think what we saw was most people were focused either on folks that were younger and building assets or if they were older and my mom was in her 60’s at this point that had more than half a million dollars or ideally a million dollars. There are experts out there but there’s a relative shortage of experts compared to the number of people that are facing retirement and facing these big, complicated decisions. It’s not just about your money but it’s healthcare, it’s tax optimization, it’s how do you use home equity, do you work part time, do you downsize, do you relocate, there’s all these different pieces that come together. We’re trying to help people figure that out. Devin: Yeah. There’s a tsunami of people who are in that age group and will be moving through that age group for a while now and you’re right, for some of those, there’s not enough help out there. What was the number used a moment ago? 75 million Baby Boomers? Steve:  Yeah, there’s about 75 million Baby Boomers in the US, about 120 million people over age 45, that’s the US alone. Then in Europe, there’s another 326 million people over age 45. I used 45 as the cut off age because I think at that point for a lot of people, it becomes a real thing. Their parents are getting older, they’re looking forward and saying hey, maybe I have kids and college or whatever but I’ve got a lot of things to balance. Aging parents, my own retirement, college education, this is a real thing for me. In 10 years I’ll be 55 or whatever, if they’re older they’ll be 60 and it’s like okay, what’s going to happen at that point in my life? Devin: Yeah. You know, I know John, my co-host here, he refers to these folks as the sandwich generation where they’re taking care of parents and children at the same time but you’re right, they start to get to an age and you look at this, I know, because I’m there. Where you start to go okay, it’s time to really get serious about the way I plan. Maybe I was a little lackadaisical in my 30’s and into my early 40’s but now I’d better really start buckling down and make sure that I’m not just dreaming here but I’m actually putting something down on paper and planning. That’s the important part, right, in building a plan. Turning those dreams into a goal is all about articulating that somehow on paper, right? Steve: Yeah, I think there’s been this concept of building a plan, a financial plan, a retirement plan for a long time and a lot of advisors offer it. Historically, it’s been like what you said, a paper based plan that might have high thunk value. You know, you build this big document and then write it all down and the nobody looks at it, right? We’re saying all right, now the reality is most people don’t want to plan because it sounds scary and two, if they do plan, they’re not really following up on it. We think that what needs to happen is it needs to become a living document. They create a plan and really the process of planning gets them organized, helps them see where they stand today, and what’s possible for the future. Then by building it an maintaining it over time, they’ll have a sense of confidence that like okay, look, I understand how this could play out from a very real perspective. I see how I’m going to claim social security and how that’s going to work in my life and I want to make a good decision about do I claim it at 62, do I claim it at my full retirement age of 67, do I take it at 70 so I can get maximum benefits? All the other pieces that go along with that, is there a way for me to use home equity? Should I get an annuity? How do I draw it out in my savings in a very tax efficient way using my qualified and unqualified assets? There’s all this complexity around that, that’s the income side of it, and then there’s also the expense side. Should I move to a place that has lower expenses, that’s more tax friendly for retirees, that has great healthcare, has great cultural programs available? A lot of people are moving to university towns or do I move to Mexico for five years and live there and have a very low cost of living and how does that work? Is there an expat community I can hook up with? We’re trying to help people explore all these things and see what’s possible and then stay on top of it so that they can really feel confident about what they’re doing. Devin: You know, all of the stuff that you’re describing really describes why we started the Big Picture Retirement podcast because there’s so much more to planning for a successful retirement than saving money. There’s a lot of considerations that go into it and a lot of pieces to that puzzle, there’s no question about it. It can seem overwhelming, there’s no question about that either. It’s the old proverbial drinking from a fire hose. If you’re looking at those massive plans that you were talking about a moment ago and you’re going okay, there are 15 action points that I need to take and often it’s the paralysis by analysis, nothing ends up happening because it’s too much to tackle at one time. As a result, I’ll sit down with clients in my office and we’re going through a retirement plan and I’ll ask them a simple question like how much money do you need in retirement? You know, a basic question and their response is often either a blank look or they’ll say you know what, I don’t know. Some of that, they’ve gotten there because they did nothing because it seemed overwhelming. Starting with those small steps can be critical when you’re starting to plan through this. Thinking about the amount of money you need during retirement, identifying all of those assets that you’re going to have, and then identifying a savings goal. You have at boldin.com which is your website, you have a tool that can help people to start to identify some of these things, right? Steve: Yeah, that’s right. I think a lot of the things that you’re describing, you know, we see out there. People, they’re definitely worried about this problem. The biggest concern we see people having is will I have enough money or how much money do I need or am I going to out live my assets? It’s really, different flavors of the same question. Will I have enough and where do I start? What’s involved? I think what we’re seeing is people do want help and some people want help, they’re going to go and read a lot of articles. We’ve created a tool that helps them go through this in an automated way and has access to online content to get educated so they can own it themselves and feel confident that they’re doing the right things and taking the right steps. Some of those folks that are on our site, they raise their hand and say look, now I have a better sense of the scope of this problem and I do want to talk to an advisor because I see where they can add value, if it’s helping me be smart about my asset allocation and investing or my tax optimization or my estate planning. I think what we’re going to see is this mix of online solutions and then human augmented or humans augmented by computers. But it’s going to be this combination. Devin: Yeah. You stepped in with the retirement planning calculators that you have to help to fulfill some of these individuals that are out there that may be do it yourselfers or maybe they’re getting started, they don’t need a full blown financial advisor yet and maybe by using one of your tools they identify that wait a minute, I need more professional help. But you’re there to serve that gap, those people who don’t have a relationship yet or at least don’t have a relationship with someone that’s doing planning for them and giving them an outlet for a free retirement plan. They can come to this site, it’s all input data that they’re going to put in themselves, and then get some great output. I know I tried this personally on mine and I liked it, I thought it was great. In fact, I liked it so much that quick note to my listeners here, if you go to SocialSecurityIntelligence.com, in the right hand sidebar, you’ll see where I’ve actually put a link to this retirement planning software. It’s good stuff but you can also go to boldin.com, I know. Steve, after someone goes in and they create a plan, let’s say they go to your site, they’ve created this plan, they printed it out, and maybe they have a lot of work to do but they’re 45. What do they need to do on an annual basis? Steve: I think when we look at the market we’re like there are people who are approaching retirement, right? Pre-retirement, some call it 45 to 60 and then there’s people that are making that transition 60 to 70, somewhere in there, and then there’s people that are living in retirement. If you’re coming into retirement, yeah, you have more time to make different moves. We don’t expect people to come in here and be on the site daily but I think the idea of getting a plan, getting organized, knowing where all your stuff is, being on top of it, and then coming back quarterly and updating it as things change in your life and as you go through this transition because no one can predict the future, right? Devin: Right. Steve: Who knows what’s going to happen with tax law, what’s going to happen with the market. Everyone’s feeling good right now because the market’s going up but you know what? Historically markets have big corrections and if people see a big correction, then I think a lot of people are going to be re-assessing what they’re doing. That definitely happened in the 2008, 2009 correction. I think it’s more of a quarterly thing and staying on top of it and then as you get closer, our tool does things, it has key days. Okay, here’s when you decided you wanted to claim social security for you or your spouse and here’s how you’re going to start rolling over your assets and maybe here’s when you thought you might want to transition and put some money into a ROTH IRA. It helps you lay those things out, those steps, and then remind you to do it and then you can do it yourself or if you raise your hand and say you want to talk to an advisor, we have a network of advisors that we can help get connected up with that are IRAs and will act as fiduciaries which we believe is super important. Devin: Yeah, absolutely, I agree with that. That’s an episode on its own right now. We’ve talked about that some but that’s a very important point there at the end. You build a plan, you’re running the plan, life is still happening, and then you talked about a market decline. I’ve been through a couple of these now as a financial planner and they’re nasty, they feel horrible. Steve: Yep. Devin: You’re going through it, the news is awful, everybody pessimistic, the sky is falling, and emotions start to creep into it a little bit. As you said, you start to adjust your plan, some people’ll even think do I want to put money into something that’s losing this much? There’s a lot of worry and things like that because we have this built in negativity bias that makes us pay attention to the things that are dangerous, right? That’s how they’re able to sell news too. They get on there and they really preach to that negativity bias and get our attention with it. What’s the best way to run a plan when things go to hell? Steve: That is a great question. I think, also, you’re highlighting one of the key values of financial advisors. Having a third party coach, someone that you can talk to who’s an expert about what’s happening when there’s a crisis adds so much value because a lot of times what historically happens with retail investors is they tend to buy when things are going up or when markets are high and then the market crashes, they freak out, and they sell at the bottom. That crushes their returns. Versus if you held on or even bought at the bottom of the 2008, 2009, you’ve had an amazing run for the past several years. It’s a historic run. I think the main value of having a plan is that one, you’re organized, you have visibility into how this is going to work. For a lot of people, they’re looking for I’m going to work til 65, I’m going to retire, I have a pile of money. They haven’t really thought about how am I going to decumulate and turn that money into income? If you build a detailed plan that says okay, look, I’m going to have this stream of income from social security, from myself, and my spouse and we know we’re claiming it efficiently, I think I’m going to work part time and instead of having to make $150,000 a year, I only have to make $50,000 a year which is relatively easier for you if you’ve been making larger sums of money. You can feel probably a lot more confident that that’s doable. Hey, I’ve set aside this rainy day fund so that I don’t have to freak out if the market goes down. I think having that visibility of how I’m going to manage my situation in the event that bad things happen. That’s the whole idea behind planning, that’s why you buy insurance. I’m sorry, you buy home insurance if your house burns down or flood insurance or earthquake insurance if you’re like us out here in California, whatever it is. I think having a plan that you understand gives you so much more confidence and then you can think back, okay, this is what we said we’re going to do when this scenario happened. That’s something we’re actually looking, our tool supports this but we actually want to make it explicit. You can have scenario A, B, and C for your plan so you can be like hey, I’m in a good situation, all these great things, I’m traveling to Europe, blah, blah, blah. Scenario A is it’s great, scenario B it’s okay, and scenario C I understand what I’m going to do if things tighten up and I can manage through this for a few years. Devin: Yeah. I think that’s excellent advice. I’ve noticed that individuals who have a plan and have a basic understanding of what they own generally do fair better through those bad markets and I’ll often equate it to I don’t have to understand the way the internal combustion engine works in my vehicle to be able to safely drive it. I have no idea how the gas gets from the tank and explodes in a cylinder but I don’t have to know all of that. All I have to know is when I turn the wheel, it’ll turn and the gas pedal will make it go faster and it’s the same way with investing and having a retirement plan. You need to know the basics, you need to know what lane you’re going to run in, and it’ll go a lot smoother when things do start to go south on you. Steven, listen, thank you so much for coming on the show today. Before we go, our listeners have already heard they can find you at boldin.com but is there anything else they should know, any place other than that that they can connect with you? Steve: Sure. We’re on Twitter and Facebook but I think the main site is really, the main place is on the web at boldin.com. We are always interested in getting more users on the site, getting their feedback. The tool is evolving quickly. We’re trying to build an active community, a lot of people of both consumers that are using the tool and expert advisors like yourself that are helping us evolve it and make it better. Devin: Perfect. Well, Steven, thanks again for coming on. Steven: Devin, thank you. Devin: Well, John, I thought that was a great interview with Stephen. John: Yeah, no, that was a good one. Devin: You know, I think his website’s going to be very successful with putting some of these tools out there, especially free tools. Man, we have a retirement planning tool that I use for my clients and we pay well over $1000 a year for that thing and he’s doing a lot of the same things free. John: Yeah, that’s awesome. Devin: Yeah, it’s good stuff. I think our listeners need to go to the site, check it out, sign up for a profile, and start using that tool. Also, something else our listeners need to do. Go out to bigpictureretirement.net/steps and download the guide you and I have written, Three Steps to a Successful Retirement. John: Yeah, no, that’s a good guide out there. Devin: It is, yeah. It has all of the three steps in there that we think someone should take to make sure they have a very successful retirement and it’s good stuff. If you could go out to iTunes and give us a rating, that will sure help more people find this show and the more people that can find this show, the more people we can help with this content. Until next time, have a great week.