There are seven equations that, if understood, will put you in the best possible position to tackle your retirement plan. Today we speak with business professor Moshe Milevsky about these equations, which he’s written extensively about in his best-selling book, The 7 Most Important Equations for Your Retirement. After introducing Moshe, we dive straight into the first equation that maps out the longevity of your money. Following this, we talk about determining how long you will live by comparing your biological and chronological ages. Regarding the third equation, Moshe provides his insights into evaluating the usefulness of an annuity plan, and at what age they become relevant to you. We then chat about what annuity plans are offered in Canada versus elsewhere and why people don’t want to buy annuities during a bull market. Despite the popularity of the ‘4% spending rule’ — which we also unpack — Moshe discusses the importance of being adaptable with your retirement spending rates. Reflecting on the key theme of another of his books, we explore the question of whether people are stocks or bonds. Moshe shares some investing advice for younger listeners and touches on what the ideal mix of stocks, bonds, and human capital looks like. For the last equation, we look into the impact of probability frameworks and why financial advisors need to understand the math behind retirement plan probabilities to make meaningful recommendations. Throughout our discussion, Moshe presents coherent answers and pragmatic advice. Tune in and learn more about the equations needed to build the best possible retirement plan.

Key Points From This Episode:

0:00 Introducing today’s guest, Professor Moshe Milevsky, and his work.
3:25 Mapping the longevity of your money according to Moshe’s ‘Fibonacci Equation’.
6:22 Understanding the difference between your biological and chronological age.
10:03 Introducing the concept of annuities and how they can be valued.
14:04 Moshe shares his thoughts on how much insurance companies factor in biological age.
18:30 – Canadian annuity plans versus elsewhere; “The shelf feels empty here.”
25:25 Establishing your ideal retirement spending rates – flexibility is important.
31:08 What your mix between stocks, bonds, and human capital should be.
40:54 Details on the life of Andrey Kolmogorov and his effect on understanding probability.
47:24 Keeping finance students engaged in this industry.

Books From Today’s Episode:

Are You a Stock or a Bond? — https://amzn.to/3ovR2Lv
Pensionize Your Nest Egg — https://amzn.to/3gTGOAI
Retirement Income Recipes in R on Amazon — https://amzn.to/34zMnAe
The 7 Most Important Equations for Your Retirement on Amazon — https://amzn.to/2TvAVPG

Links From Today’s Episode:

Moshe A. Milevsky — https://moshemilevsky.com/
Moshe A. Milevsky on Twitter —  / retirementquant  
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/t....
Rational Reminder Website — https://rationalreminder.ca/podcast/122
Benjamin Felix on YouTube —    / @benfelixcsi  
Braden Warwick on LinkedIn —   / braden-warwick-a40b48a3  
PrARI Model — https://www.cannex.com/index.php/serv...
IBM Annuity Study — https://pubs.aeaweb.org/doi/pdfplus/1...