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Interview with Rolf Potts, Author of Vagabonding
Erik Bowman • Apr 13, 2020
ERIK: Hi everyone and thank you for joining me today for the first episode of Mastering Monday’s, the interview segment, with our amazing guest Rolf Potts. Have you ever considered travelling to far off lands and staying not just for a few days or a week, but for three weeks, one month, or maybe even longer? If the thought of living in another country and exploring their culture and not just sight-seeing excites you and gets you dreaming about places you have never seen, you must get familiar with Rolf Potts. Rolf is perhaps best known for promoting the ethic of independent travel and his book on the subject, Vagabonding: An Uncommon Guide to the Art of Long-Term World Travel from Random House 2003, has been through thirty printings and translated into several foreign languages. On a personal note, Vagabonding has transformed how my wife and I think about travel and has propelled us to action. We now have some very exciting travel plans in this next year, but that’s for another day. More about Rolf. Rolf Potts is reported for more than sixty countries for the likes of National Geographic Traveler, the New Yorker, Outside, The New York Times magazine, Sports Illustrated, National Public Radio, and the Travel Channel. His adventures have taken him across six continents and include hitchhiking across eastern Europe, traversing Israel on foot, bicycling across Burma, driving a Land Rover across South America, and travelling around the world for six weeks with no luggage or bags of any kind. His collection of literary travel essays, Marco Polo Didn’t Go there: Stories and Revelations from One Decade as a Postmodern Travel Writer (Travelers’ Tales 2008), won a 2009 Lowell Thomas award from the Society of American Travel Writers and became the first American authored book to win Italy’s prestigious Chatwin Prize for travel writing. Though he rarely stays in one place for more than a few weeks or months, Potts feels somewhat at home in Bangkok, Cairo, Busan, New York, New Orleans, and north central Kansas, where he keeps a small farm house on thirty acres near his family. Each July he can be found in France where he is the summer writer in residence and program director at the Paris American academy. And I am honored to have Rolf with me today, so without further ado, here is my interview with Rolf Potts.
ERIK: Thank you for joining me for another episode of Mastering Monday’s. This is the interview segment, and this is the interview segment that I mentioned in the last Mastering Monday email with Rolf Potts. So Rolf is with me today, Rolf thank you so much for being with me today.
ROLF: I’m happy to talk with you.
ERIK: I’m really excited to speak with you. I know that many of the concepts in your book, Vagabonding, have actually impacted my way of thinking about travel, and actually how my wife and I think about travel is a more accurate description, and I want to thank you for that because the information in this book has just truly revolutionized the way I’m thinking about our future travel. We are currently engaging in the planning and the dreaming of what this potential travel is going to look like 2019 and we’re looking at doing an experimental trip of maybe four to six weeks over in Europe or maybe south America, but I thought maybe you could take just a moment and provide a high level summary of your book Vagabonding, which is the source of my inspiration, and how do you experience or how have you experienced long term travel and the primary way that long term travel differs from traditional travel and vacationing.
ROLF: Yeah, well the core idea is to enable people, practically and just as importantly philosophically, in a matter of attitude. Travelling the world in earnest for weeks and months and years instead of just previously allotted vacation time. You should think about how you spend your time and spend your time in a way that enhances your life and causes you to dream. And so quite simply, and I’m not going to knock vacations, because vacations are rewarding activities, but often times vacations are very short term, they are very constricted, they are sort of bought like a commodity. You tend to throw money at a vacation. Whereas Vagabonding is more taking your life on the road. And there are some parts of the world where you can literally spend less per week than you spend at home, with rent and food and everything else. And so you are travelling not as a consumer but just sort of moving through the local economy, finding a way to save money and make it pay out in time. And really just to live those travel dreams that most of us have had our whole lives that we don’t think apply to us. When in fact not only do they apply to us, that we should take practical ways to make sure that they can happen to us.
ERIK: Right, you know as I have listened to your book and read your book, I have done it both ways, that way I can tab it and mark things that are interesting, I have just wondered to myself, “How did you begin doing this?” What was the impotence or the origin of you deciding to travel and maybe you could offer my audience a short story that describes how you became such a world traveler in the first place? And maybe even how that relates to your ability to write about that so poignantly in your books in essays.
ROLF: Sure, well I am a very American soul. I grew up in Kansas, right in the middle of the country. I always loved going on vacations when I was a kid, but I didn’t see the ocean until I left because my family travelled locally but not very much far distance travel. And I really grew up thinking that I would save all of my travels for the end of my life, I didn’t even think about it too much. This describes my travel plans as it was post-retirement. But then as I got older, there were several factors that made me realize that regardless of how you shape things out in your life as a traveler, it’s good to optimize travel now. And so I was in my early twenties when I thought this, but I’m not saying this in a way that should deter the older demographic such as your clients, but I just thought that based on a summer job in Kansas stocking shelves in a grocery store, I really didn’t like it very much. And then I realized that any ongoing work, regardless what relation it was, I didn’t really care for, was sort of what I was in for. I thought I was going to create my own alternative to the American workaholic life – I’ll take a dream trip and then I can go back to being an American workaholic. So when I was quite young, actually I was still in college, I graduated in college and I worked as a landscaper. A good blue-collar job. Saved a lot of money, got a van. Travelled around the United States for about eight months. And it’s still one of my favorite trips, and I have been to many more exotic places since then. But you can only have that first deeply meaningful trip once I guess. And I just realized that travel wasn’t as expensive as you might think it would be. It’s not as dangerous or difficult as you think it might be. Travel was something that I could accept, not just travel in the vacation sense but long-term travel, as something that I could access my whole life. And so I later went and started to run out of money. I went to Korea to teach English oversees for a couple of years. And that is something we can come back to, working oversees and teaching oversees. And that can apply to all different kinds of all ages and demographics. But I saved some more money, and two years working in Korea afforded me two and a half years of travelling around Asia full-time, and that is when I transitioned into being a travel writer. That was twenty years ago this November, nineteen years and eleven months ago that I was still in Korea doing my work. And now I have been a travel writer. That Asia and European and Middle Eastern Vagabonding trip brought home the lessons from my first Vagabonding trip. That travel doesn’t need to be super expensive, you can take your time, you don’t have to micromanage it, you can learn as you go, and it can be a really life enhancing project. And so I have sort of internalized that, it’s not like I have been travelling fulltime for the last twenty years. I alternate periods at home, I actually have a home, a home base at least, back in Kansas. As a travel writer, I am gone most of the year, probably more often than not. But I have a place to come home to. And travel has really enhanced my life and home has enhanced my travels. And it has become a, well it’s a normal way of living for me. And my book Vagabonding, which showed up on your radar, has been out for fifteen years now. And it’s been out as an audiobook for about five years now. And I’ve just had this conversation with many, many, people over the years and often times it’s just a matter of reassurance. It’s just a matter of me reassuring people that it can happen. You don’t have to be an extraordinary Indiana Jones person for this to happen. You just have to make some small adjustments to enable it to happen.
ERIK: Right, you know when you hear about how you started your travel life, it seems so unique compared to the experience to most people. And I just thought of so many questions as you were describing that. So really, in no particular order, one of them is that yes, our listeners are transitioning from this stage of accumulating wealth so that they can retire and not have to work anymore and maybe they haven’t had a chance to do that. And they may not be interested or physically able even to do a year at a time, but maybe certainly more than a week at a time. Which is where you get that buzz of sight seeing that can be a little unfulfilling as opposed to living somewhere and getting into the culture and getting to know people. One of the other associated, I think, built in limitations that people have, are that they presume they need high end accommodations. They presume they need a granite countertop, a hotel bed of a certain quality. What would you say to those people that are now just considering this maybe after age fifty-five and trying to give them a comfort level about what the accommodations may actually be like and why you don’t necessarily need that fancier four-star hotel feel to truly, truly, enjoy your trip.
ROLF: Well, addressing one thing that you mentioned earlier, which is length of travel. And I have taken some trips that have been eight months, two years. But I have always insisted that travel isn’t a contest. It’s not about how long your trip is but what kind of trip fits your desires and dreams as a traveler. I don’t know if I could travel for more than two years at a time. And I know some people who would travel for six weeks and that scratches their travel itch and it just makes them happy, and I really respect that. I think one thing for your listeners to consider is just how much of a chunk of their year they want to spend travelling. Because they could take a whole year, or they could do a smaller portion of that year that is longer than a typical vacation. As far as accommodation, this is something that shifted slightly for me. There was some dirt bag, hostel, travelling that I did in my twenties that I don’t do now that I am in my forties. I am more likely to rent a car now that I am in my forties. And I am more likely to seek out certain kinds of comfort simply because I can afford it. And you know, in a place like Thailand, you can find a dirt bag guesthouse for ten dollars and it’s fine. There is not much room in it, you might be sharing a little hall with backpackers from all over the world, which is kind of interesting, but an older demographic of travelers can spend maybe thirty dollars and get a place that is clean and beautiful and comfortable. And it is just locally owned. It is not a Hilton or a Radisson, it is just owned by the local people in Thailand or Colombia or Romania. And it’s not an extravagant place, but as I have said in my book, I quote a guy who says, “For all your wealth, you only sleep in one bed.” A bed and a combination is the place where you are going to be sleeping. For most of the day you will be seeing the world. You don’t travel the world to have your best night’s sleep. And actually, the best way to enable a good night sleep, even if you are not in a super expensive hotel room, is to have some good adventures during the day and earn your sleep. I am a big fan of travelling in that local economy. Side stepping, I think there is this assumption that we need a lot of middle men, or we need to plan everything in advance, that a brand name hotel is going to be a better hotel. And I’m not going to knock brand name hotels, but the world is full of cheap hotels, inexpensive restaurants and food stalls, even in a place like Mexico or eastern Europe – bus lines that are wonderfully comfortable and a fraction of a price to the other ways of getting around. This is something that you can research or something you can discover on the road.
ERIK: It almost seems like one of the basic behavior patterns that somebody might need to break is that of preconceived ideas of what it is going to be like. Open yourself up to the idea that it may not be as uncomfortable or that people will be interested in you or being around people you don’t know is actually going to be an enjoyable experience.
ROLF: Yeah, it’s not going to be uncomfortable, but even just slightly changing your idea of what comfort is. Maybe you don’t need a super high thread count sheet. Maybe you don’t need a five-course meal or a personally driven tour car. There are just ways of keeping an open mind to what’s required because I think that there’s a mindset in the US that is tied into a fear of faraway places and what might happen there. But it’s not routed in empirical information. Its routed in workspace scenario. And it’s so easy to be safe and to save money, and to have a great time on the road. Even if your fifty, sixty, seventy, years old. It’s just a matter of being open to that empirical reality rather than the fear.
ERIK: You know that brings me to a quick question which is when you really went on maybe one of your first more exotic trips, to a place you hadn’t been before. And you had less experience under your belt. I’m assuming there was a level of anxiety as you have just expressed, can you tell me just a little bit about what was different about that first or second travel experience oversees? How was it different than what you thought it would be like and talk on how that related specifically about your pretravel anxiety.
ROLF: Well, when you’re asking that question – what popped in my head was actually my USA trip, my very first one before I went overseas, and I lived in a camper for eight months. And I was just worried, should I bring a firearm? What should I do – I was living in a van much of the time. Is that going to create a problem, what am I going to do every day? How are expenses going to shape out? And I just found that just by planning for but confronting those sorts of fears, it’s as if a part of me was waiting for the bad things to happen and they just never did. And each day on the trip I not only became more confident in regard to those fears, I also became more competent as far as granting those things and becoming a savvier traveler. I had weird anxieties like would I be accepted in the youth hostels, what would people make of me? Did I have the right shoes? All of this stuff. And every single case was just something where I walked into each situation and the worst-case scenario never really actualized themselves. And I could use my competence and could jump ahead a little bit in my travel career – in 2010 I went around the world with no luggage.
ERIK: Right, for six weeks, right?
ROLF: Yeah, it was sort of a stunt. Just stuck a few items in a vest, including a little bit of backup clothing. And I had a cameraman with me, and you can find that video series online, the one problem was that I adapted so quickly, that after a week having no luggage wasn’t a challenge. I just washed my extra clothes every day. And I didn’t worry about what kind of junk I had in my pockets, because all my entertainment, all my activity, all my food, was outside of my person. It was in the destination itself. And so that was a trip that I undertook ten years into my travel career, but it reminded me how easily adaptable we are. And I say it in the book, but the way to create the money to travel is to simplify your life, is to downsize a little bit. And an actualization of that is trying to put everything you own in a backpack and trying to go around the world, which you can’t. Travel already forces you to simplify. And in this very extreme case of simplification from my baggage trip, I realized that even having next to nothing, even having two spare pares of underwear, a spare t-shirt, a toothbrush, and a few other things, even that is something that I got used to.
ERIK: You know another aspect, the folks that are listening to this podcast, the fantastic realization is they actually have experience. They’ve been alive for fifty-five, or sixty, or sixty-five years old or more. And they have travelled. And they probably know more than they might even think they know that they could apply to maybe long-term travel. And a lot of them actually are at a point where they want to downsize so they don’t have as many material things. I see that happen as a natural course of events from retiring. So in some respects, the idea of longer travel, less material possessions, or a smaller place to house those, is a natural fit for this. And just a realization that longer travel could be a perfect fit for retirees. That brings me to really this idea that you’ve travelled so extensively, that I’m sure that you run into folks fifty-five plus that are travelling around the world. Some vacationing, some longer-term travel. And as you’ve run into those people, can you just briefly talk a little bit about – what have you found is their rationale at that age for doing longer term travel? How did they overcome some of the barricades to making that happen? The norms and the culture that might naturally preclude that from taking place? And how have they felt differently having been on a trip?
ROLF: I’ve met a spectrum of travelers who are older. Who are around retirement age. And the funny thing is that the happiest ones are the kind that you meet in the hostel and the unhappiest ones are the ones you meet at the resort. And I’m not knocking resorts, and just saying resorts bring out your inner adolescence. I’ve heard so many complaints, people spending a lot of money in a beautiful part of the world who complain because their soup is cold. And they didn’t get another towel at the swimming pool or something. That somehow these small little worries creep into the vacations of even the most expensive travelers. Whereas older travelers who just are relaxed and ease into it and sort of travel on the cheap, sometimes on the same trails as backpackers take, sometimes a little bit more money than most backpacker’s take, they learn to appreciate that it just doesn’t matter if the soup is cold. You are on the other side of the world, you are living your dream. That is the irony that I have found, the happiest retiree travelers I have met are the ones out having adventures. One thing you were talking about earlier, that people of the retirement age have more life experience. Those things are so transferable to the travel experience. I’ve met men and women who have spent their whole life negotiating contracts and clients who are lights out in a market on the far side of the world and there’s no price tags and you have to haggle. They have the most fun, once they realize that it’s just an extension of what they are already good at, they have so much fun while they are doing it. And one corollary to this, I have met a number of people in their fifties, sixties, seventies, that have joined the Peace Corps post retirement. That is totally a separate thing, I’m not suggesting you should join the Peace Corps. They joined the Peace Corps, took their lifelong skills to a part of the world where they were useful and needed, and then they took side trips. It’s a roundabout way of agreeing with you whole heartedly that all of these life skills can actually really resonate through our travels. They don’t have to just be sightseers taking pictures in front monuments. We can actually find connections to these rich lives that we’ve led. And the older we get, I’m going to be fifty in a couple years so I’m feeling older, the older we get the more richness we have in those life experiences. The deepest travel in really such a special way.
ERIK: I think it’s really poignant the way you describe the difference between the traveler that stays in a fancy hotel and somebody who is maybe is doing it on the cheap as you say. Because what happens I think, if you pay a lot of money, you have this artificial expectation, or real expectation, that everything should be a certain way then because you paid the money and you’re setting yourself up for disappointment. Where if you do it on the cheap, all those expectations are out the window and you focus on what’s really important which isn’t the cold or warm soup, but on experienced travel, culture, and relationship. I just think you put that really well.
ROLF: You’re not a consumer. You don’t have consumer complaints because you’re not a consumer. If your soup is cold, who cares? You hung out with nomads, you know? You had an interesting experience. And again, and I don’t want to put a too fine a point on this, in most parts of the world – we have a weird relationship with older people in the United States – in most parts of the world, being older earns you a respect that is uncommon. Being an older person from a wealthy country like the United States, taking an interest in people who might have similar interests on the far side of the world, maybe a core part of the world, celebrity might be a way to stretch it a little bit, but you really are afforded a special measure of welcome and grace simply because you’ve lived a rich life.
ERIK: That’s a great observation. A lot of my listeners, in addition to just hearing about some of these basic concepts that I think they certainly get me thinking and I could listen to this type of conversation all day. But I think people want to start transitioning into, “Ok this idea makes sense. I hear you, I would like to potentially investigate this.” So maybe we can transition into some specifics, actionable ideas that can help them evaluate, if so inclined, how to take action to create these memorable travel experiences. And I don’t know if this question will help you get into that conversation but how might you coach someone who has just retired or is about to retire into an otherwise standard retirement phase and to have them reevaluate travel and evaluate the idea of slow travelling for longer term. Like we said, not for years at a time. But maybe instead of ten days, you do it for four or six weeks. How would you coach them to evaluate that?
ROLF: I would start with a couple things. Gosh, which one should I start with? I’ll start with the goal setting because it sounds like something you’ve done. Did you say you had a trip planned for 2019?
ERIK: We are looking at Argentina, Italy, or even northern Europe. We are still trying to figure that out. And our goal is to stay four to six weeks, and we’ve never done anything like that before in our life. But because of your book, we are definitely putting that on the agenda and I am doing a lot of serious planning and dreaming about it. But it’s going to happen.
ROLF: Even if you’re in a position where you are trying to make this transition, even having a rough estimate, a rough but concrete estimate, of when you are going to leave is very helpful. If you are a little apprehensive, you might say, “I’m not sure if I can do this in the next six months, but within two to three years it is going to happen.” And then, once that goal is in there, once you put it on your calendar, once you put it in your mind, once you’ve admitted to your family and friends that this is what I’m going to do, then there is this delightful accountability that just makes those two to three years so much fun. Because you are thinking about your destination. You’re researching, you hear it’s name on the news, it becomes a part of your life before you even go there. It’s just really a fun thing.
ERIK: Sorry to interrupt, but what I have found is every day when I get home and I have a glass of wine and I’m sitting in my office and I’ve done all of my case work and client communication, that I just want to get on Airbnb and take a look at all of these places I can go and spend amazingly low prices to stay somewhere for a month or two at a time and I am living vicariously right now through the internet and getting so excited about the trip that I don’t think there is much that could turn me away from executing on that now.
ROLF: Yeah, and that goes hand in hand with sort of announcing it. So that people start asking about it, there is basically no way you could pull back. You would be letting down people’s expectations. Another thing, its sort of in tandem with the goal setting thing, and it might even come before the goal setting, and that is decide where you want to go. Because I think, I mean travel is something that’s just normal for people to dream about. Maybe when you were a kid you dreamed of going to Egypt, and now you feel sort of embarrassed about that dream. But maybe you should reexamine it, there is a certain wisdom in that kid part of yourself that longs for another part of the world. And so that’s one way of narrowing down where you want to go. Another thing to be tied into the life experience, you know. As I say in Vagabonding, even if there’s a dumb inspiration for going to a place, it’s always worth it when you get there. There’s been people that have gone to New Zealand because they like Lord of the Rings and it is filmed there. But There’s very little regret for lack of Hobbits. On the other side of the ocean, once you’re in it, if you allow yourself the time, then there are all these surprises that are going to go beyond Hobbits and beyond the dreams that you thought about before. You don’t have to overthink it. If you get excited it, if your pulse ticks up a little but when you look at a map of the Tuscan region of Italy, then I think that is reason enough to go. And then you start setting those goals and it is a part of your life, before you even leave home it is a part of your life. And it just becomes an exciting part of the process.
ERIK: You had mentioned in the book, Vagabonding, adventure. And you actually just spoke about it briefly a second ago, you dedicate an entire chapter to adventure. What are some examples of adventures that retirees might pursue on their trips that are more appropriate to how they might want to experience the world?
ROLF: Well the kind of adventure I advocate in Vagabonding is very much applicable to retirees. Because it’s not hang-glide across a canyon type adventure. It’s not the tour operator extreme sports definition of adventure. It just means, leave yourself open for some unpredictability. Go to the bus station and take a bus to a village you’re not necessarily familiar with. And see what happens when you get there. Or go into that market that seems strange but smells wonderful. Maybe move your wallet to your front pocket and dive in. It’s those small adventures that are sort of outside your expectations and plans that I consider to be not only the best adventures but the most memorable experiences. Even neurologically, we tend to remember surprises better than routine. That’s open to everybody. Just use common sense, if there is one disadvantage besides somewhat compromised mobility when you get older, sometimes the older people are seen as a mark. For pickpockets and stuff like that. Exercise common sense if you go to a delightful pub in Bucharest and you come out five beers in and its two in the morning, get a cab. Don’t walk home in the name of adventure. So keeping in mind to use common sense, just be unpredictable, maybe in a controlled way, but unpredictable.
ERIK: Great. I’m going to skip around a little bit here but when it comes to these adventures which almost always are going to involve interacting with the local people, in those different countries, how should they approach authentic interaction with the community that they travel to? Such as this local involvement in a way that is not going to put them at additional risk or at least give them a level of comfort?
ROLF: Well adding on to what I just said, if you hire a walking tour guide for the day, odds are he or she will have family and friends in the city and you can sort of befriend these people. Maybe tip them a little bit and just use them with a structured experience into a window of a less structured experience. And I mean there are ways to meet people on the street but even in the internet age there are meet ups. Meetup.com. There’s websites, there’s social media posting about activates that are going on in the city. If there is a painting class in Paris or in Buenos Aires or wherever you are, maybe go to the painting class. Painting classes are popular with an older demographic of people. Suddenly you’re there, maybe their English is as bad as your Spanish, but you are trying. You are speaking in very simple terms and a smile is a great form of currency. I could talk about ways to meet people randomly on the street, but I think that the time you have interacted with people on meet ups and group tours or organized classes, you’ll have the instinct to interact in the street in the places you are.
ERIK: Sure, that makes perfect sense. The little bit about philosophical discussion here is there is this natural desire I think for many people when they retire if they haven’t done much travel and they’ve been looking forward to it so much that when they finally do retire and they don’t have a constraint of working nine to five, that they might binge travel. And there may be this subset of people that really look back and have enjoyed that, but I think, and the studies would actually show, that binge travelling doesn’t offer the type of fulfillment that they thought they were going to get. So how do we coach them to overcome this natural desire to go on ten separate trips in two years hitting each place for a week at a time, which might be the intuition to actually move in that direction?
ROLF: Well I think this is something, it’s a normal thing. The study of the younger aristocrats in the grand tour of Europe in the 18th century, they were often would fit as many things as possible, they were list driven. Well now we have this new phrase that nobody used twenty years ago, the Bucket List. There is this movie called the Bucket List. A list of things you want to do. And I think this is particularly acute for people who’ve just retired as there is just a built-up desire and they want to do everything. They are finally set free and they want to do everything on their bucket list. And so what happens is that they end up micromanaging their bucket list in a way that doesn’t really optimize the best experience of each place. They are ticking things off the list. They find a great one-week tour here, and a couple months later another tour there. And they are just sort of barely brushing up against the bucket list. I think the best kind of bucket list is the kind that gets you at the door, and once you are at the door you can sort of put it in your back pocket and not really think about it. Because regardless of the bullet points on your bucket list, it’s the between spaces – it’s the smaller experiences, the relationships and the surprise experiences that are going to happen that really make them memorable. Even after retirement, you still have a big slot, if you have the health for it, a big slot of time to do things. Even if you don’t, I’m a big believer, and I’m not going to knock anybody who wants to have a glass of wine with their patients, but I’m a big believer in the slow and nuance experience of a single place more so than the rushed experiences, ten places, in that same amount of time.
ERIK: I mean it’s almost analogous to your work life, you’ve been working so hard and feverously. You have this rat race buzz going in your head and vacations end up feeling a lot like that. To your point then – by slowing down, number one, you’re not as physically exhausted because you’re approaching it in a slower, less physically demanding way and mentally demanding way. And it’s a much more comfortable experience overall that you can look back on and your memories are even if not every single specific moment is remembered, your overall impression is – that was a comfortable, exhilarating, and emotional experience that I enjoyed. And I just think back to – we went on our first big trip, we have four children, so the six of us went to Mexico to an all-inclusive resort in 2018 and we were gone for seven days and it cost an ungodly amount of money to do that. The food was mediocre, there were no people to actually build bridges with because you were actually boxed off inside of this resort. There were no true experiences, we did go scuba diving for a couple of hours. That was the one thing I remember, is that one experience. And other than that, my best day was the last day before we left and it was the day that I finally took a moment to just sit on the beach and read a book and look up at the palm trees and the blue sky and sit there and appreciate that moment. And yet, I wasn’t doing anything necessarily, and it was still my most enjoyable moment.
ROLF: Yeah, again that is sort of the consumer experience where you are comparing your expectations versus what is delivered. Just being in a place and not worrying about what’s included because you are sort of creating your own menu. And I think you mentioned we live these workaholic lives, and we rush and we work really hard, and that transfers to the kind of travel we do, especially at the end of the career. You can spend your whole life having one-hour lunches, not knowing how weird that is in Italy. So allowing yourself to go to a place where that is all you do. You wake up, I am using Italy as an example, you wake up, you have a coffee, you go for a walk. You sit down for lunch. The service is slow but you realize that it is slow because Italians favor their lunch. You have pizza like you’ve never had it before, you’ve had pasta like you’ve never had it before. You realize hot chocolate is this delicious warm sludgy thing that’s somewhere between pudding and the liquid hot chocolate we have in the United States. And maybe you go for an afternoon walk, and maybe you hit a couple of sites. And by home standards, you’ve done nothing. But you’ve actually experienced Italy. I think it’s understandable why we get into these micromanaged mindsets when we travel because that’s how we live our day at work.
ERIK: You know you just actually explained to me what would be an example of the best day ever in Italy. And that’s why we’ve actually chosen Italy and the visualization that I was picturing in my head while you described it is was what I’m hoping to have. Exactly like that, so it was so interesting. You’ve said it exactly as I have been visualizing it and I just get more excited about it every minute.
ROLF: And it’s there you just have to allow yourself to experience it, that happens every day in Italy.
ERIK: Right. You mentioned in your book, you go over some three very specific tips in one of the earlier chapters and one of the tips that you mention is that of journaling. Why do you think journaling when somebody travels is so important?
ROLF: Journaling, I’ve come to realize, one I’m a writer and it is sort of a natural thing for me. But journaling is almost like the old-fashioned version of your camera phone now. But it slows you down, it’s something that, it’s a ritual of paying attention to what you are doing. I’ve never knocked travel photography too much because unless you are taking just a bunch of generic pictures, you are trying to find a way of framing your experience in a way that is memorable. And photos are fun to go back to – well so are journals. And actually, journals go a couple layers of complexity beneath a photograph because you can reflect on what you’ve seen. And you can use a journal to just write down the date and event, but you can also reflect on the day and the event. You can draw connections to the life you lived before and in the ways we’ve discussed, I think there are ways that travel will remind you what was enjoyable about your life back home and your hobbies and your talents. So a journal is a way that in the end of the day or in the morning when you are having coffee in that café, you can just write it down to remind yourself, to remind yourself to be grateful. But also remind yourself to keep paying attention. And then over time those journals are something you can go back to, months later in the dead of winter, when your suntan is gone, and your back home. You can open that journal and remind yourself of how confident, or happy, or good at problem solving or whatever went into that journal. And just sort of remind you who you were at that moment. So it’s a way to pay attention, it’s a way to have a conversation with yourself.
ERIK: As much as pictures are, I think they are visual, and we rely on visuals a lot as human beings, by the same token if you just think about any book you’re reading, there’ll be a few pictures, but pages and pages of words and that is where the meat on the bone is, if you will, it’s in the words where you are really uncovering those details. And I’ve been starting to journal on my own, just on my daily life here in Colorado, and ever since I heard that tip in your book, I’m looking forward to journaling about the experience. I can’t wait to actually do that too, so I just think it’s a great tip so that’s why I pulled that one out. Maybe we can get tactical for a moment. One question that I think that a lot of retirees would have is if I am travelling abroad, you know there is more the industrialized countries like Germany, and Italy, England, Japan, maybe even Argentina. But then you might be going off the beaten path periodically, and those types of instances, both of those – the industrialized nations and otherwise, how does medical insurance work? To make sure that if you have an issue, that you be taken care of and the insurance that you have in the United States translates.
ROLF: Well, one thing is to check with your health insurance company and just sort of see how it applies to oversees situations. My health insurance doesn’t have an oversees situation, so I buy travel insurance. Check with your local insurance, if they don’t cover overseas that is find. There are all kinds of resources online, I have them in the book and on vagabonding.net/resources. Of places you can go and find a travel insurance policy that applies to your own specific situation.
ERIK: I didn’t even know anything like that existed. So travel insurance covers medical care overseas?
ROLF: It does, but here is the funny thing. Overseas medical care usually doesn’t cost very much. Like in the developing world, I can go to the pharmacy and self-prescribe stuff. If I know what my sickness is, the pharmacists are not going to ask for a prescription. It sounds dicey, but it’s just how it works. Another thing, in a place like India or another developing country, medicines are so much cheaper than they are in the US. I think the United States is an outlier in how expensive it is for healthcare. I’m not necessarily saying your clients should do the same, but what I do is I just get disaster insurance. I buy travel insurance that will give me the helicopter flight out of the developing country to a first world hospital if something terrible happens. It almost never happens, but if I fall of a cliff and crush my leg, and there’s no hospital in Bangladesh or Nepal that can attend to that, then I have this insurance that will cover the expensive medivac to the first world hospital. Past that, I mean sickness is fairly common. Usually it’s just stuff like traveler’s diarrhea, the kind of stuff you get from eating unfamiliar food. And there is self-medication – if you get traveler’s diarrhea you can eat rice or yogurt or other bland foods. You take a few medicines and you sort of flush it out of your system. I guess it depends on the country, but I usually just go with the disaster insurance and call it good.
ERIK: I have two more questions – the first one is very tactical. What I am finding out during my investigation is I feel like I can find accommodations, even during the high season in Europe, relatively inexpensively. No more than my mortgage is, I can stay for a month over in Italy in a place that we can call our own and our own single-family dwelling, if you will. But the travel, the air travel – your primary travel to get you to the other country and back to your point of origin, certainly if you use standard methods of researching flight and travel – can be quite expensive. That alone will cost more than all of your staying in a particular country for a month. Do you have any tactical tips, and certainly if you have relevant resources on a website, please mention those, on how people can get more savvy about their initial travel to and from their primary destination?
ROLF: Well one consideration is the off season. It can be very expensive to fly to Paris, for example, in July, but it can be very affordable to fly to Paris in March. So if you don’t mind taking an extra coat and enjoying Paris in the almost spring time, then you can save a lot up front. Actually, that savings goes across the board. Anytime you are in a place where it is tourist low season, there is going to be more availability, there will be shorter lines at attractions. Even hotels are going to be cheaper. One thing to keep in mind, if you are willing to not plan every hotel in advance, hotels are haggleable almost everywhere in the world. Just do a lot of research, and this is something that can happen while your dream is coming two years or six months away. Is that often times flight prices are cheaper far in advance. There is a flip side – sometimes they are cheap on the last planes as well. But often times there are cheaper airlines that they aren’t the Delta’s or the Lufthansa type airline.
ERIK: I have seen as I have been doing my investigation, that if I am willing to break it into two separate tickets, and I use Norwegian Air as an example, to get me from New York or Boston over to someplace in Europe, as opposed to looking for a flight that is an all in one with one airline from Denver to Europe. That if I add two plane tickets together, one to New York, then Norwegian air to get me wherever else I am going, that that combined cost may be have the price of the roundtrip ticket to Europe from Denver direct.
ROLF: Correct, there’s more strategies that the time we have to discuss in the podcast. But that is a great one, it’s a stepping stone approach. Since we don’t have time to talk about flights full time, one thing to do is to just turn on your favorite radio station, brew a pot of coffee, and a couple of weekend mornings, just searching around on flight search engines. Googling search terms like cheap flights. The more you tinker, the more you learn. And there are flight consolidators, there are mailing lists that will send you alerts when certain flights and certain airports, including Denver, get cheap. And so without being too specific, I’ll just say that a good four to six hours of internet research can save you hundreds if not thousands of dollars down the line. Just by familiarizing yourself with the normal prices, with the seasonal cycles, and the with these special airline websites and consolidators.
ERIK: Great advice. My final question is – if you were to recommend one or two steps, so this might be a little larger concept than a tip, one or two steps that a retiree can take that can make their next trip their best trip ever, what would you recommend?
ROLF: My advice would sort of consolidate what I have already talked about. And that’s to give yourself permission to go slow. Even before then is treat your goal. Put your goal on the fridge or the wall or on your smart phone. And think about it and research it and dream about it, and make it a part of your present life. And in that way, you can’t talk yourself out of it. Number two, go slow, go slow slash don’t micromanage. Again, I am not going to knock the travel industry, but they like it when we micromanage because then they can upsell all of the stuff. Go slow, don’t micromanage, and this may sound weird but establish a beachhead. When you have that four-week trip and your dream destination, spend the first weekend literally in one place. Have those long lunches and just sort of acclimate yourself. Spend that first week in a beautiful place, be it a beach or along a city plaza. And just relax, get used to the time zone. Take long meals, take long walks. And that is really a very concrete way to enable that slow travel, for travel can seem like a distraction. And I think if you literally push yourself to spend your first week of your four-week or your four-month trip in one place, then you can really see for yourself how rewarding that slow kind of travel is. And then, I guess my last big picture advice is, that any given trip doesn’t have to be the end all. It doesn’t have to be the bucket list kicked forever, it doesn’t have to be the last big blast before you go back home and live your normal retired live with your normal routine. And even at any age, travel can become part of your cycle of life as you are older. You might go to Tuscany and have this little apartment that you rent every winter, and it just becomes a part of thing. Don’t set limits on how travel can serve your retirement time. Because if you allow it, it can really just become a dynamic part of the way you live as a retiree.
ERIK: Excellent, well Rolf I want to thank you so much for joining me today. I think that your insight is just so valuable for those that are interested in looking at a different way of travel. My hope is that anyone that listens to this podcast reads your books Vagabonding. Can get just one idea or concept that will allow them to truly enjoy their next travel experience differently than they ever imagined they could. So I just wanted to thank you so much for your time today.
ROLF: You bet, I love talking about this sort of thing and I really wish the best to the listeners and hope that they can have some life enhancing travels.
ERIK: So that’s Rolf Potts, author of Vagabonding. Everybody go out there and enjoy this day, because as I always say, it’s the last one you will have that’s just like this.
You’re listening to uncommon sense, a podcast by Bowman Financial Strategies. I’m your host, Erik Bowman, and thank you for joining me today. Hi everyone and thank you for joining me today. This is Erik Bowman, owner of Bowman Financial Strategies. Our topic today is required minimum distributions or more commonly known as RMDs. Erik: (00:32) To some of you, it may come as a shock that you cannot keep your retirement funds in your retirement account indefinitely. Generally speaking, you really must start taking withdrawals from your IRA, your simple IRA or your SEP IRA or even your qualified retirement plans such as a 401k or 403B when you reach 70 and a half. Roth IRAs by contrast do not require withdrawals until after the death of the owner. Your required minimum distribution or RMD is the minimum amount of taxable distribution that you must take out of your retirement account each year. Once you reach 70 and a half. Erik: (01:16) The RMD poses all sorts of conundrums for retirees, like how is it calculated? Who calculates it, when is it due? What happens if I don’t take it and what if I don’t want to take it? And the list goes on. Today I’m going to cover the basics of an RMD. Who does it apply to? Calculations and resources to further educate yourself and of course some potential strategies that may alleviate some of the challenges surrounding RMDs, namely taxes. Erik: (01:52) So let’s start from the beginning. When you turn 70 and a half, you are required to take an RMD from your retirement account, an IRA, for example, by April 1st of the following year. For all subsequent years, you must take the distribution by December 31st of that year. For example, if you turn 70 and a half in August of 2020 you must make your distribution by April 1st of 2021. If you choose to do that, you would also have to calculate your 2021 RMD and also take that in 2021. So in actuality, in the first year that you decided to take that RMD, you would actually have to take two distributions. Now you don’t have to delay until April 1st you can take your RMD in the year that you turn 70 and a half. Erik: (02:49) An exception to this rule applies to 401ks, also known as a qualified retirement plan, which is the terminology that’s used to describe an employer sponsored 401k, 403B, 401A, just to name a few. For these accounts, you must take an RMD by April 1st of the year following the year you turn 70 and a half or upon retirement, whichever is later. If you’re still gainfully employed for example, and you have an act of 401k and you’re 72 years old, you don’t have to take an RMD from that qualified plan that you have at that current employer, even though you’re older than 70 and a half. However, once you retire, those RMDs are due by April 1st following the year that you retire. And one really big caveat and a mistake that you do not want to make that is even if you are working and you’re older than 70 and a half, if you have an IRA in addition to your 401k, you still must take your required minimum distribution from that IRA. Don’t make that mistake and I’m going to be talking about the penalties the IRS can impose if you fail to take your RMDs. Erik: (04:07) here are a few other points that may save you some headaches and money in the future. If you have multiple qualified plans or multiple 401k’s, meaning maybe you’ve worked at previous employers and you have simply left your money behind at those various employers 401ks and you have not moved them into IRAs, you must calculate the RMD for each account individually and then take the distribution from each of those respective 401ks by the deadlines. By contrast though, if you have an IRA or multiple IRAs, you can calculate the required minimum distribution for each IRA individually. Add those together and take the total sum of those as a distribution from one of your IRAs. Now, depending on how you’re investing your assets, this may be a beneficial thing to do. It certainly seems a little bit simpler than making a distribution from multiple IRAs. Since 403B’s are considered qualified plans, you might think that the same rule applies. Erik: (05:09) However, it is a little bit different. If you have more than one 403B tax, sheltered annuity account, also known as a TSA, you can total the RMDs from each of those 403Bs and then take them from any one or more of the tax sheltered annuities. So I mentioned penalties a little bit earlier. So let’s gather round and chat about this one. Most people are aware that if you take money out of an IRA before 59 and a half, that you will pay a 10% penalty on that distribution in addition to the taxes. And that’s not fun and should be avoided in most cases. By comparison, if you fail to take your RMD on time, you will pay a whopping 50% penalty to the IRS. Yes, that’s a 5- 0% penalty. So if you were supposed to take $10,000 out and you failed to do that, by the respect of deadline, you would literally owe a $5,000 penalty to the IRS in addition to income tax on the total amount. The IRS wants their taxes and they will get them one way or another. So don’t let this rule catch you by surprise. Erik: (06:27) So let’s talk a little bit about the actual distributions themselves. You actually do have a couple of options. First, if you’ve calculated your RMD for the current year, you can actually opt to take the full calculated amount in one lump sum anytime up until December 31st of that year. The one exception, of course, is your first year of required minimum distributions. You do have until April 1st of the following year, but that is only for year one. Another option is you may also choose to take periodic distributions over the course of the year to meet your obligation. You also want to take into account income, cash flow and expenses to help guide you here. But there could be strategic and tactical reasons why you might want to spread that out on a monthly or quarterly basis over the course of that year as opposed to making one large lump sum distribution. It’s a little synonymous with the concept of dollar cost averaging when you’re buying into stocks and bonds and other investments that you get a better average share price potentially by buying in over time. Same on the way out when you’re making distributions from your IRA. It could be beneficial to take smaller amounts out over a 12 month period and in that case in, if there was a declining market, you may have actually saved yourself some principle over time. Erik: (07:56) Okay, now onto calculations. How do we determine how much you must withdraw each year? No surprise here. It’s not the same every year. It’s kind of complex and it totally depends on your unique situation. The IRS publishes a table called the uniform lifetime table. It’s table three on the IRA RMD distribution worksheet that’s available on our website on this podcast page. For example, your first IRA distribution for the year you turn 70 and a half, requires you to know your exact balance of your IRA or IRAs on December 31st of the prior year. You then take this balance and divided by 27.4. Seems like an odd number but it’s a joint life expectancy number. So by dividing that balance by 27.4 the answer to that equation is the exact amount you must make as required minimum distribution. You need to do this for every single retirement account you have unless one of the exceptions I mentioned or other exceptions that your financial professional mentions may apply to you. Erik: (09:06) In the next year, when you turn 71, you will take the prior year’s 1231 balance and divided by 26.5 and by the time you reach 114 yes, the table actually goes out to 115 and older, you will divide by 2.1. So 2.1 is the divisor for one 14 it drops down to 1.9 when you reach one 15 and stays there if you happen to live longer than that. But what you’ll notice is that each year that goes by, the lower number in this equation gets smaller and smaller, which means the amount of money you have to distribute from your account becomes a larger portion of that account every single year. Erik: (09:53) another exception that we see periodically, it’s not an everyday occurrence, but it could be your situation. So this is an exception to the rules on that table and that is if your spouse is the sole beneficiary of your IRA and he or she is more than 10 years younger than you in this case, the IRA utilizes another table for you to calculate your distribution. The IRS wants more money from you while you are alive so that when your IRA is left to your younger spouse, who by the way can usually take RMDs based on their age and spread that out over a longer period of time. Well, there’s going to be less money in that account to spread over a supposedly longer lifespan of your younger spouse. It’s just another way of the government saying, we would like to ensure that we get these tax dollars sooner than later, but don’t forget that it is a totally different calculation with a different bottom number on that fraction when you’re calculating your RMDs, if your spouse is more than 10 years younger than you. Now there are many, many other rules regarding RMDs. If you’re a 5% owner of a company for example, and you’re still working in that company and you have a 401k, you’re not allowed to continue to delay RMDs, passed 70 and a half. You actually still have to take them per the original rules, but just know that you really should be talking with your financial professional before you solidify any of your RMD calculations or distribution strategy. Erik: (11:30) So relating to strategies, the name of our company after all is Bowman Financial Strategies and we really try to look for opportunities to save our clients money, save them on taxes and just to be efficient when it comes to the distribution of their assets during the retirement stage of their life. So relating to strategies, one of the challenges to a moderately high net worth individual is that you may have a pretty substantial retirement account. When you turn 70 and a half, you’re going to be forced to take a large taxable distribution if that account has grown and you haven’t made any distributions up until then. So for example, if you have a $3 million IRA under current law, your distribution that’s required the year you turn 70 and a half is roughly $109,000. Imagine you began taking your social security benefits at age 64 because you wanted to get it while the getting was good, you are afraid it was going to run out. Erik: (12:26) And that’s a separate topic. So you don’t take any meaningful distributions from your IRA from age 64 to age 70 and a half. Now you find that not only is your social security payment forever reduced because you filed early, but now you’re forced taxation at 70 and a half, maybe significantly higher than it otherwise would’ve been. All this is to say that your social security filing strategy should include understanding how your retirement accounts will be impacted by RMDs and ultimately how much in taxes you may pay by appropriately timing your social security filing, potential Roth conversions and IRA distributions along with distributions from your non-qualified brokerage accounts and other income streams, you may be able to significantly lower your tax burden over the life of retirement. Erik: (13:20) Well, I’m afraid I only scratched the surface on RMDs and all of the moving parts and potential strategies. Suffice to say it is complex penalties can be onerous and there may be strategies available to you that could lower your taxes significantly under the right circumstances. If any of this information is compelling to you and you want to learn more, I would love to hear from you. You can email me at E R I K @bowmanfinancialstrategies.com. That’s E R I K @bowmanfinancialstrategies.com. You can call our office at (303) 222-8034 and just simply schedule an appointment to come on in, have a cup of coffee and allow us to perform some analysis for you. Thanks so much for your time and I hope you have a great day. Thank you for joining me for Uncommon Cents, the Bowman Financial Strategies financial education series. I’d love to hear your feedback on financial topics you would like to learn more about. Just drop me an email at Erik, that’s E R I K @bowmanfinancialstrategies.com or go to the Bowman Financial Strategies website and send me a note on our contact page. In addition, you can always search for topics of interest in my archive on our podcast page at www.bowmanfinancialstrategies.com/podcasts. Have a great day. Disclosure: (14:52) This communication does not constitute federal tax advice and may not be used as such. Please consult a qualified tax professional for tax advice or assistance. In addition, investment advisory services offered by ChangePath LLC, a registered investment advisor, Change Path and Bowman Financial Strategies are unaffiliated entities.
You’re listening to uncommon sense, a podcast by Bowman financial strategies. I’m your host, Erik Bowman, and thank you for joining me today. Hi everyone. My name is Erik Bowman and I am the owner and founder of Bowman financial strategies. Thanks for taking the time to listen to this podcast. Today, I’m going to be discussing the three primary risks in retirement. Erik: 00:34 At Bowman Financial Strategies, we work every day helping clients who are transitioning from accumulation to distribution to do so wisely and confidently. I’ve seen the success stories, worked with many challenges facing retirees and helped my clients craft income plans they are confident will meet their needs for the entirety of retirement. Importantly, these plans are built to provide stability and to support your standard of living regardless of market conditions. Getting motivated to take the necessary steps to create an effective retirement plan can be challenging. However, not crafting an effective plan can be catastrophic to your retirement. It’s often been said that your retirement outcome is a result of your retirement income and never truer words have been said. You have worked hard, saved during your careers and budgeted wisely, knowing that the day was going to come when you will need to replace your income without working. Now you have an accumulated bucket of money to retire with and the primary goal many times is to maintain your current standard of living you enjoy now plus add in more travel. 00:34 At Bowman Financial Strategies, we work every day helping clients who are transitioning from accumulation to distribution to do so wisely and confidently. I’ve seen the success stories, worked with many challenges facing retirees and helped my clients craft income plans they are confident will meet their needs for the entirety of retirement. Importantly, these plans are built to provide stability and to support your standard of living regardless of market conditions. Getting motivated to take the necessary steps to create an effective retirement plan can be challenging. However, not crafting an effective plan can be catastrophic to your retirement. It’s often been said that your retirement outcome is a result of your retirement income and never truer words have been said. You have worked hard, saved during your careers and budgeted wisely, knowing that the day was going to come when you will need to replace your income without working. Now you have an accumulated bucket of money to retire with and the primary goal many times is to maintain your current standard of living you enjoy now plus add in more travel. Erik: 01:43 Well one method is to invest in the stock market, hope you’re diversified and allocated correctly, and hope to get enough of a return, and hope that the market doesn’t crash and take your retirement with it. At Bowman Financial Strategies, we don’t ever use the word hope in our retirement plans. Our plans are designed to remove anxiety knowing that all three risks in retirement are addressed appropriately. The Bowman Financial Strategies income planning process known as the LiveWell formula focuses on three primary risks in retirement, and every recommendation in our plans directly addresses these primary risks. The risks in order are sequence of return risk, inflation risk, and longevity risk. To further break these down, let’s look at them one at a time. Erik: 02:37 The first risk: sequence of return risk. I also call this early retirement market timing risk. This risk is represented by the risk of significant negative market returns in the early years of retirement. You only have to go back to 2007 through 2009 to witness over a 50% drop in the U.S. Stock market. It’s been over 10 years since that low and the markets have marched steadily upwards since then with very few exceptions. And with markets routinely setting new highs, some would say that the potential for continued growth for the next 10 years is less likely than a significant drop during that same period. If you are just starting retirement and you’re fully exposed to potential market losses like 2009, and many seniors were and are, your future retirement plans may change dramatically requiring an unpleasant adjustment in your standard of living to make ends meet. We seek ways to limit early retirement market timing risk by using fixed or guaranteed rate of return solutions to reduce the exposure to pure stock market. Erik: 03:50 The second primary risk is: inflation risk. And this is really the opposite of the market timing or sequence of return risk because inflation risk is the risk that your assets and income may not get enough of a return and be able to keep up with the ever rising costs of goods and services. If your income never increases or your assets never increase the rate of return, but the cost of a gallon of milk doubles in 10 years, your effective purchasing power has just dropped significantly. Accounting for inflation is critical to a good income plan. By failing to plan for inflation, you may misjudge the amount of money you can spend each year in retirement, finding yourself running out of money a decade sooner than you planned. This leads once again to a catastrophic change in your standard of living if you run out of supplemental income sources like IRAs, in addition to social security and pensions midway in retirement. We typically address inflation risk by having professionally managed stock and bond portfolios for our clients that are appropriately allocated for their timeline and risk tolerance. Erik: 05:00 The third primary risk is: longevity risk. This risk can be further divided into two types of risk, longevity risk associated with income and longevity risk associated with health care expenses. Income risk is the risk of running out of income sufficient to cover your essential expenses in retirement. Having enough guaranteed income to meet your essential needs or a floor of income provides not only a financial advantage but also a psychological one. Your confidence and baseline income allows you to live anxiety free and stick with the long term plans related to your invest-able assets that may be in the stock market that are dedicated to long term inflation protection. The other longevity risk is healthcare risk, which is the risk that you may experience deteriorating health that require the assistance of qualified professionals to help you with the six basic activities of daily living also known as A.D.L.s. Contrary to what many believe, health insurance and Medicare do not pay for long term care expenses. Erik: 06:05 If you don’t have a strategy in place, you are considered “self-insured”, quote unquote. This means that if you experience a health condition requiring assistance with the six activities of daily living, you will need to spend down your assets until you have $2,000 (at least that’s the requirement in most states to be eligible for Medicaid as well as some income thresholds that if you exceed would make you non eligible). But if you even are eligible for Medicaid at some point, then your state Medicaid program may help. And as former president, Ronald Reagan said, “don’t worry, I’m with the government and I’m here to help.” So most people don’t look at Medicaid as the primary route to take care of their health care expenses later on in life if they have the resources to help plan against that risk. Erik: 06:54 Now that we understand the three basic risks, that being: sequence of return risk, (you don’t want to lose a lot of money early in retirement), inflation risk, (we still need to seek growth with our retirement assets because things will get more expensive and over a long 30 year lifespan in retirement or more, things can get significantly more expensive.) And then finally, longevity risk. And that would be the risk associated with assuming that you can figure out how to have guaranteed income streams that will last as long as you live, no matter how long that is, and then the long-term care expenses that are also commonly associated with longevity. Once we gather all of your required information, we then begin using sophisticated financial software to calculate the maximum annual income using agreed upon assumptions and always addressing those three financial risks in retirement. Thanks a lot for joining me today. I truly appreciate your time. If you ever have any ideas of topics that you would like to have me discuss here, please drop us a line. You can send me an email at erik@bowmanfinancialstrategies.com that’s E R I K @bowmanfinancialstrategies.com or you can simply give us a call at (303) 222-8034. And finally you could go to our Facebook page and you can drop us a note there as well. Thanks again for joining me today. I hope you enjoy the rest of your week. Erik: 08:20 Thank you for joining me for Uncommon Sense. The Bowman Financial Strategies financial education series. I’d love to hear your feedback on financial topics you would like to learn more about. Just drop me an email at Erik, that’s E R I K @bowmanfinancialstrategies.com or go to the Bowman Financial Strategies website and send me a note on our contact page. In addition, you can always search for topics of interest in my archive on our podcast page at www.bowmanfinancialstrategies.com/podcasts. Have a great day. Disclosure: 08:56 This communication does not constitute federal tax advice and may not be used as such. Please consult a qualified tax professional for tax advice or assistance. Any references to protection, guarantees or lifetime income refer to insurance products, never securities products. Insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company. In addition, investment advisory services offered by Change Path, LLC, a registered investment adviser. Change Path and Bowman financial strategies are unaffiliated entities.