You’re Being Asked To Win Two Bets You Can’t Control. Here’s What To Do About It.

Watch The Podcast:

Listen To The Podcast:

So my parents, they’re doing fine in retirement. Actually, better than fine. And if you ask them why, they’ll tell you a story. Being smart with money, working hard, planning ahead, which they did. These things are true. They did all of those things. But a lot of it comes down to something they had zero control over when they were born relative to the market. They retired into decades that treated them really well. That’s not a skill. That’s timing. And timing is luck. Look, I love them. I’m not taking anything away from them. But I’ve stopped pretending the thing that saved them is something I can copy by being disciplined enough because I can’t and neither can you. And I think that’s the most useful sentence anybody’s going to say to you about retirement this year.

Welcome back to Expand Your Empire. I’m Amanda Taylor, and if you’re new here, this show is for women who’ve already proven they can work. You know how to earn. You know how to lead and manage and fix and hold it together and be the one that people call. That was never the question. The question is the gap between earning and owning, being capable and being free. And nowhere is that gap uglier than retirement.

How This Episode Is Going To Sound

Before I get into it, I want to say something about how this episode is going to sound because it matters. I’ve spent a lot of time in rooms where people talk about this stuff. I’ve done the webinars, the trainings, the conferences. And I have noticed something. The language is bad on purpose. Not stupid bad, complicated bad. Words that could have been three plain ones instead, or percentages with two decimal points when the whole point could have been made with none. There’s a whole vocabulary that exists mostly to make you feel like you need somebody to translate it for you. But you don’t. It was never that hard. Somebody made it feel exclusive and then the confusion itself became the product.

So today I’m going to say this the way I would say it to anybody sitting at my kitchen table. You could handle the jargon. You just shouldn’t have to.

So what we’re covering are two bets that you’re making that you don’t control. There’s the actual numbers for people our age said out loud, which almost nobody does. There’s the whole menu of what you can do about it, all of it, not just the part that that person gets paid to sell. And then the thing I think is really costing us, which isn’t the market and it isn’t how long you live. Now I’m not your adviser. Nothing here is advice about your specific situation. I just want you to take this as a starting point for a real conversation, not a replacement for one.

The Two Bets

I sat in on a presentation recently and I sit in on all the nerdy finance things so you don’t have to. The guy presenting said something that kind of reorganized the way I think about a lot of this. He said there’s two things that you cannot know in advance. And they both start with the letter M. Mortality and markets. How long you live and what the market does. That’s the whole problem. Everything else is detail.

Mortality is an uncomfortable word because we’re talking about death. But nobody gets out of this alive. So it sounds morbid but it isn’t. It’s just a fact that the math has to account for.

So we’ve spent a lot of time asking, will I have enough money to retire? But the question underneath that is enough for how long? And nobody knows. I’m 48. I have no idea whether the money I’m building today eventually needs to support me for 20 years, 30 years, 40 years, or longer. My grandma’s 96, lives by herself, drives, living her best life. But nobody knows this. That’s not a reason to panic. It’s a reason the plan has to work across more than one possible outcome.

So I’ll give you the picture he drew because I think it really made a lot of sense. Imagine you have a grid on the wall, 30 rows across, 30 columns down. That’s 900 squares. You have a couple. They are both 65 years old. Every square on that grid is one version of how this goes. One year she dies, one year he dies. That’s 900 combinations and you’re living exactly one of them. And you don’t get to know which. Now you don’t have to guess it exactly. Nobody does. A decent plan isn’t built to hit one square. It’s built to survive a whole stretch of them. But sit with what that actually means. Your plan has to hold up across hundreds of possible outcomes and you won’t find out which one you’ve got until you are standing in it. That is bet number one.

Now bet number two is the market. And it’s not the one you think. The bet isn’t will the market go up over 40 years. Everybody loves that chart. It always recovers. Look at the history. It is true. That is not your risk. Your risk is what is the market doing in the year or two right when you start pulling your money out.

Why is that different? If the market drops right as you retire, you’re selling your investments at a discount just to buy groceries. And those shares are then gone. They don’t get to be there for that market recovery. You sold them at the bottom because you had to eat. So the same portfolio, same average return over 30 years, has a different ending depending on what order the good years and the bad years show up in. And we don’t control the order.

The industry calls this sequence of returns risk. Now you know it. So when somebody says it in a meeting, don’t blink. But the name isn’t the useful part. The useful part is this. It’s not whether the market drops. It’s when.

So go back to those squares. You’ve got hundreds of possible outcomes for how long you’ll live and no way to know what the market’s doing the year you need it. Those are our two bets. And again, neither one of them is ours to make.

The Trap

And that’s what gets me. We’re told constantly that if we just try harder, save more, budget better, be more disciplined, then we’re going to be fine. Which puts the whole outcome on your effort. And that is the trap this show exists to name. You’ve been overfunctioning your way through a problem that really doesn’t care how hard you work.

The Real Numbers

So let’s put some real numbers out here because we do deserve the honest version. For people between 45 and 54, the average amount in a 401k is about $189,000, but the middle person has about $68,000. That’s a big difference. And this is why it happens. If you put 10 people in a room, nine of them have 50 grand and one has 10 million. The average in that room is now over a million dollars. And every one of those nine people would read that number and feel like a complete failure. So that is what the term average does. It gets dragged up by whoever’s at the top. But the middle number, that $68,000, is much closer to reality. When you see a headline that says the average Gen Xer has almost 200 grand saved and your stomach drops, you might not be behind. You might be normal and the headline is misleading you.

Two honest notes. That’s just 401k money. It doesn’t count IRA and investment accounts, a pension if you were really lucky, the equity in your house or a business you own. The whole picture is usually better than that one number. The rule of thumb most of the industry uses is you should have about six times your salary saved by age 50 and 10 times by age 67. So if you make $120,000, that’s $720,000 by age 50 and $1.2 million by age 67. Put that next to $68,000 and you can see the size of the thing we’re not talking about.

And then there’s the other shoe. The big firms all publish forecasts for what the market does next. Vanguard, JP Morgan, Fidelity. I will spare you all of the decimal points because you don’t really need them. But they disagree about plenty and they do agree on the direction. The US stock market is expected to return a lot less over the next 10 years. They could be wrong. Forecasts usually are in one way or another. But the so what is the only part that matters. My parents got rescued by a market that ran hot for decades. That is the luck that a lot of people got. And the people whose entire job is modeling this are telling us in their own careful way, maybe don’t count on that same kind of luck.

So yes, balances are lower than the target. The market, nobody’s promising to bail us out. There’s no pension really. And social security checks average about $2,000 a month if you’re lucky.

The Only Piece Of Math In This Episode

Before I give you the options, I want to hand you one thing. And it’s the only piece of math in this episode. And once you have it, everything else gets comparable.

You have probably heard the 4% rule. It says that you can pull out about 4% of your savings in your first year of retirement and probably not run out over 30 years. This guy worked out the whole equation in the 90s and it has just stood as the default ever since. People ask, well, why is it only 4% when stocks supposedly do better? It’s because that number has nothing to do with what your money earns. It’s what you can safely take out when you have no idea what’s coming. The gap between those two things is the price of not knowing.

So most people use that rule to answer how much can I spend. But flip it around and it does something better. It turns any stream of income into a price tag. Take any amount of guaranteed income, multiply it by 25, and that’s roughly what you’d need saved to produce the same thing for yourself as the market would. $10,000 a year in income needs about $250,000 of savings behind it. If you want $50,000 a year, you need about a million and a quarter. Hold on to that math. It’s how you’re going to be able to compare everything on the menu against everything else in those same units. And you’ll be able to do it in your head, which is the point.

The Whole Menu

There is a menu and it has way more on it than any one thing. And almost nobody has showed you all of the options.

One: Wait to claim your social security if you can swing it.

Every year you wait past your full retirement age up to age 70, that check goes up permanently, automatically, supposedly backed by the federal government. Now put that price tag on it. Claiming at 62 got one couple about $46,000 a year. If they waited until 67, that was $65,000. So waiting five years was worth about $19,000 a year for life. $19,000 times 25. To produce that much from your own savings instead, you’d need roughly another half million to get there. Waiting is worth a half million. And nobody’s going to earn a commission telling you to wait on your social security, which might be why they’ve never put it that way.

The honest caveat, because you do deserve the real version. Social Security is projected to run short sometime in the early 2030s, right around when a lot of us would start claiming. It doesn’t mean it completely disappears. It means it could shrink by roughly a fifth unless Congress does something. They fixed it once before in the 80s so there is a precedent, but nobody can promise they’ll do it again this time. Don’t build your whole plan assuming it shows up exactly as promised, but also don’t write it off. Plan on a smaller version and let the rest of the menu cover the difference.

Two: Build a short-term reserve that still pays you.

Not two or three years of expenses sitting in cash earning nothing. Inflation is still working while your money sits there. The point of this bucket isn’t to have cash. The point is having money you can reach without being forced to sell long-term investments during a bad market. This can be money in a short-term relatively stable place that’s still producing something. A high yield savings account, a money market fund, a life insurance policy, a short-term treasury, a ladder of short-term instruments coming due at different times. And you don’t necessarily need two or three years of your entire lifestyle sitting in your bank account. If social security, rental income, business income, or any other guaranteed source is already covering those expenses, this bucket only needs to help cover what other sources don’t.

If the market falls right after you retire, you’re not selling investments at the bottom just because your mortgage is due. You’ve got another place to pull from. You’re giving your long-term money more time to recover. That’s the job of this short-term bucket. It’s not about maximum growth and it’s not about dead cash. It’s liquidity, income, and time.

Three: A bond ladder.

That’s a fancy name for a simple thing. Instead of buying one big bond, you buy a bunch that come due in different years. One next year, one the year after, and on down the line like stairs. Money shows up on a schedule whether or not the stock market is having a moment. It won’t grow much. It’s not supposed to. Its whole job is to be predictable. After a few decades of drama, predictable could sound pretty good.

Four: Part-time work or leaving in stages instead of all at once.

And I want to be careful here because just work longer is exactly the advice that makes women like us want to break something. That’s not what I’m saying. Even a modest amount of income in your 60s changes the math a lot. Every dollar you don’t pull out is a dollar that stays invested and keeps growing, and it shortens the stretch that your savings have to cover. It’s not about working forever. It’s about not needing your entire nest egg to carry the whole load starting on day one.

And the ownership piece is the part I actually care about. There’s a difference between having to take a job at 64 and choosing to keep running something you’ve already built. One is a fallback. The other is an asset. Build the second one now while you have the leverage and it stops being a fallback.

Five: Long-term care insurance or at least an actual plan.

This is the version of the living a long time bet that wrecks people. Not living long, living long and needing really expensive help. It’s a different problem from running out of income and it needs its own answer instead of getting filed under just deal with it later with everything else we’ve been putting off since 2008.

This lands on women especially. We live longer. We’re more likely to be the one giving the care for free and more likely to be the one who eventually needs to pay for it because there’s nobody left to do it for us.

Six: Guaranteed income for life, or an annuity.

Yes, this is on the menu. It turns a chunk of your money into a paycheck you cannot outlive by contract, however long you live, whatever the market does. I won’t get into the machinery. But there are four things that matter.

What it solves: it solves both of those bets at the same time. It’s the only thing on the list that answers what if I live a long time and what if the market’s ugly when I need it, with one move.

What you have to give up: the access and the upside. That money’s committed. You can’t easily pull it back in a lump and it won’t ride a great market the way your investments would.

Fees: generally around half percent to 1% a year. Anybody who won’t tell you the fee in one plain sentence isn’t telling you something.

Who this fits: someone with no pension who wants a floor under her basic expenses, seven to twelve years before she needs the money, late 50s to mid 60s.

If a smaller slice of your money is covering your basic paycheck, the rest of it gets to stop being scared. It doesn’t have to play defense. It can go be aggressive because it’s not the thing that’s keeping your lights on. Guaranteed income gets sold as the cautious choice. But what it actually does is let the rest of your money stop being cautious.

And none of these cancel each other out. People who do this well usually run two or three together. Some guaranteed income, some cash, some money still in the market, maybe a little income bridging those early years. You don’t have to pick one right answer. You have to know the menu exists.

Why You Haven’t Seen All Of This Before

Why haven’t you seen all six of these options in one place? Maybe sometimes you have. There are plenty of planners who do this well and cover all of it. Social security timing, cash, insurance, taxes, debt, the whole picture. If that’s your person, keep them.

But here’s what nobody says at the start of the meeting. Every professional you talk to has a compensation model. Mine included. And how someone gets paid can shape what they recommend, even when they’re acting in good faith.

Say your adviser is paid a percentage of the money they manage for you every year on whatever stays in the accounts they control. Common model, perfectly legitimate. But it also means that moving money out of those accounts, maybe into an annuity, maybe into a different investment, into paying off your house, it reduces what they earn. It doesn’t make them dishonest. It makes them a person with a payment model.

I’m not telling you to fire anybody. I’m telling you to know how the person across the table gets paid and to notice which options never come up. It’s not being cynical. It’s being the same clear-eyed woman you are in every other negotiation you’ve ever run. You would never sign a contract without knowing the other side’s incentives.

What’s Really Going On

What I think is really going on has nothing to do with being bad at money. People hear this and they totally zone out. We don’t trust our own judgment on a decision that plans our future. Not the social security decision, not the cash decision, not the guaranteed income decision, not even the basic decision to sit down and look at the numbers.

Part of that is what I said at the top. You can’t choose between options you were never given in language you could use. Confusion isn’t a personal failing when somebody built the confusion in. But the other part is when you don’t feel competent at something, freezing feels safer than choosing wrong. So the accounts sit right where they are. Not because that’s the plan. Because nobody’s plan is a plan. It’s just what happened while you were too unsure to move.

And I want to name why this hits you, my listener, so specifically. If you’re the woman who handles everything, good at work, good at home, the one people call, then a place where you don’t feel competent is unbearable. So you avoid it. Not out of laziness, out of self-protection. It’s easier to be excellent at 11 things than a beginner at the 12th.

That’s the real cost. It’s not the market dropping. It’s not living a really long time. Those are just facts that you plan around. The damage is in the years spent not deciding because not deciding doesn’t protect you from either bet. It just guarantees you’re not doing anything about them while the clock is still running.

Where I’ve Landed

So here is where I have landed on all of this. You might not be behind at all. The number you’ve been measuring yourself against was probably the wrong number. And if there’s a real gap between where you are and where you need to be, it almost certainly isn’t because you didn’t save hard enough. It’s because you’re being asked to win two bets you can’t control using a set of tools that nobody ever laid out for you honestly, all in one place, in words you could actually use.

And the answer isn’t just to work harder at it. That’s the reflex. And I think it’s wrong. Effort doesn’t fix this one. Structure does. Deciding once how your income gets made and then letting that structure do the work instead of you. Which is the whole point of this show. The goal was never to be the most capable woman in the room forever. It’s to build something that holds without you holding it.

One Thing To Take With You

Pick the smallest thing on that menu. The one thing you could do this month, not this decade. Usually that’s some sort of cash cushion or pulling up your social security statement and seeing what waiting is actually worth. That takes 10 minutes to set up an account online. Go do that. Just the one.

Because said it before and I’ll say it again. Confidence shows up after the first decision, not before it. It never once showed up first. Not with money, not with anything else, not for any of us.

So the one small thing, go do it. You don’t need me for that. But here’s what you can’t do alone. You can pull your social security statement in 10 minutes. What you can’t do from your kitchen table is see how that number lands next to your 401k, your IRA, whatever cash you’re sitting on, the equity in your house, the business you own, and tell you whether that whole arrangement actually produces a life.

That’s not a discipline problem. That’s six moving parts nobody’s ever put on one page for you. That’s why I do my wealth strategy calls. The link is in the show notes.

Alright. I’m Amanda. Thanks for being here. Go make one decision. And until next time, keep building.

Do this after you listen:

Pull up your Social Security statement and find out what waiting is worth in dollars. It takes ten minutes and it’s free. That’s the whole assignment.

When you want the full picture:

I run a wealth strategy call where you walk out knowing three things, what income your current assets are positioned to produce, where the gap is between that and the life you’re planning on, and which levers could close it. Not a slide deck. Not a product pitch.

Book here:

The Wealth Strategy Intensive | Expand Your Empire

Want more from Amanda, subscribe to on the GenXHer Money Substack:

https://genxhermoney.substack.com/

Nothing here is advice about your specific situation. Guarantees on insurance products come from the company that issues them, not the government.