Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I’m your host Marco Santarelli. We have an interesting show today, a little bit different than normal because I have a very well known high profile. Well credentialed economist on the show today Dr. Lawrence Kotlikoff, and I think economists see the world a little bit differently than most other people, including people in the financial space. So it’s an interesting convers and I have a long list of questions that I can’t possibly finish on today’s guest interview, but I hope you enjoy it. There’s some interesting perspective in terms of retirement and social security, and whether you should hold debt, pay it off early, how long you should wait until you retire or should even retire at all. So it was an interesting conversation offline and online, but anyway, enjoy today’s show. And if you have any comments or thoughts about it, you know, by all means, contact me at passiverealestateinvesting.com. And just let me know if you’d like more guests like Larry, who I’m bringing on the show here today. But with that, I hope you enjoy the show and we will see how this unfolds.
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Welcome back. It is my pleasure to welcome Dr. Lawrence Kotlikoff. He is the New York times bestselling author of many books. He is a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, and last but not least President of Economic Security Planning, Inc. A company that specializes in financial planning software. He has so many more credentials I can go on and on. The economist magazine did rank him among the 25 most influential economists in the world. He is the number one New York Times Bestselling author of a book called Get What’s Yours, The Secrets of Maximizing Your Social Security and a more recent book Money Magic, which I literally just ordered. And I’ve been reading the book summary. So I’ll be honest. I haven’t read the whole book yet Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life. And with that, Larry, welcome to the show.
Great to be with you, Marco. Thanks for having me.
Well, it to have you on, I’ve been looking forward to this. I’m gonna tell you that this will probably be, not be our typical or conventional conversation that we have on this show. You’re coming from a slightly different perspective. I think on some of the things that we talk about and have talked about over the years on the show. So it’ll be very interesting to get your take on some stuff. Let’s just start very high level with you. You have so many cred, just, this is more my old curiosity. Why did you choose to become an economist?
<Laugh> well, it was actually in the first paragraph of the book money magic that just came out in January. I was thinking about becoming a doctor and had to take introductory biology and they had me dissect a frog. <Laugh> the idea was you, you put the, you sedate the frog, you cut open its chest, you reveal its heart. And then you put, I think, some set of choline or something on the heart, you stop it from beating and then you start rubbing it back to life. And so I did this the first time I was horrified and the teaching assistant comes over and says, you did a great job, do it again. And this and record. And so this goes on for like two hours. We, I killed the frog and revived it about 50 times when I left the class, I was an economist, I was majoring in economics.
<Laugh> that was the very that’s great. So, you know, I just got excited by economics ability to do good things for, you know, for all kinds of entities starting with households. And I got very interested in personal finance. I do. I work on all kinds of topics from climate change bank reform, taxation, social security, health reform, written 20 books money magic to the 20th. So very interest in big macro issues, but also how can you help people using economics at the household level? And so I started a company financial planning software company. Our main tool is called maxify.com, ax, ifi.com. It delivers the economics approach to financial planning, which is very different from conventional planning. And I know your podcast is focused on people who are investing in real estate and the program is set up to allow you to enter as many, any real estate investments as you have, and to see whether, Hey, does this make sense?
How do I deal with the cash flow issues of that, but the basic idea of economic space planning. And I’ll just say this real quickly for things it’s and very different from what you would experience going to a financial planner or using their software. It’s first of all, what are your resource we’re gonna figure out from those, including any real estate holdings you have, what can you spend on a discretionary level basis after you’ve paid your, for fixed expenses, like paid off your debts and paid off your taxes and paid off, paid for the kids to go to college, those off the top expenses. So here’s your discretionary spending power. How do you smooth it out over time? So like a squirrel, you have the same amount of a acorns to eat in the winter when you’re retired and the summer spring and, and fall when you’re working.
So that’s consumption, smoothing. And then the next thing is the software is figuring out Safeways to raise your living stand, like being smart with social security, Roth conversions housing decisions real estate decisions. Is this gonna make me more money on balance then the, the third thing would be how do you deal with risk? How do you we have a big inflation risk right now. How does that impact for example, the advantage of having a mortgage or not. And then the fourth thing, there’s actually five legs here. The fourth thing would be pricing decisions like marrying Joe versus marrying Frank based on my living standard. These are lifestyle decisions, but they all have living standard prices. And then the fourth, the last thing is looking at my investment risk. If I’m investing at risk, let’s say 50, 50 stocks and bonds, and I’m spending in an aggressive way through time. And the program lets you set, you know, both things that you’re doing. How does your living standard, if you do the Montecarlo simulation spread out through, as you’re adjusting, you’re spending every year in light of how well you’re doing on the market. What’s the downside risk? What’s the upside risk? Is this worth it versus more conservative spending and maybe more conservative investing? So those are the five legs smoothing raising, ensuring pricing, and then looking at the risk-mitigating investment risk the downside finding,
Well, there’s a lot to chew on there. You’ve packed a lot into a very short period of time. So just to peel off a layer to let’s talk about consumption, smoothing for a moment because it seems to be a very core part of your book and what you talk about. And I don’t think a lot of people understand what you mean by that. So could you maybe just elaborate a little bit on what consumption smoothing is and why it’s important in terms of your financial planning and thinking about retirement? Although I will tell you that there’s probably a lot of people who listen to this show that don’t believe in quote-unquote, retirement, they’re happy doing what they do live life, you know, continuing investing, whatever they may be, but they don’t wanna just sit on the sofa, watching TV popcorn. So, you know, that’s maybe a different topic, different question, but let’s start with consumption.
I’m of that view too. I think retirement is like financial suicide for a lot of people, but <laugh> maybe psychological suicide too. I’m 71 and I’m just starting to work going. I’m just starting out from my perspective, the I have a, you know, physically the ability to do it, thank God, and a job with tenure. So I, you know, I not everybody’s in that lucky boat, but the idea of consumption, smoothing very simple suppose you just had a, a 60-year-old who had no social security, nothing except a million-dollar, 10 million in assets. And then the question is how can this person what can that person spend over the rest of their life year and year out in today’s dollars? So on an inflation-adjusted basis so that they can spend exactly the same amount every year. That’s pure consumption, smoothing.
If they live to the maximum age of life, let’s say a hundred. So that’s for 40 years now, they may want their living standard to kind of be higher for a while. And then when you’re maybe at 80 start, gradually decline our software accommodates that. So not everybody wants to have a perfectly smooth living standard, but what they don’t wanna have happen is they hit some point like 82. And all of a sudden they realize that they’re outta money and they’re gonna have to drop from, you know, spending 80,000 a year to spending 10,000 a year. That’s consumption disruption. That’s the last thing an economics wants to put PE an economist wants to put a person into that kind of position where their plan fails. Whereas conventional planning is all about plan failure. How do I minimize plan failure? It’s like a, it’s like a, let me figure out a plan for you where you’re where the chances of your starving to death are really small.
Well, economist would be horrified by that approach. We, we, we never want anybody to get anywhere near starvation. So we wanna make sure that, that they can have, nobody wants to have their living center drop like that they, they don’t want to you know, they want it to be as smooth. And if it changes, it’ll change smoothly, but not abruptly. That’s the idea. And you can figure this out with advanced algorithms, techniques, taking account all the taxes, you know, so you might say, well, gee, that’s kind of an easy problem. Let’s just take the 10 million and divide by 40, but you can’t, it’s not that easy because you have to deal with federal and state taxes, Medicare part B premiums. The person had social security benefits that would be in rated. And and then, you know, if he had real estate, when is the the money coming out of the real estate, there might be cash flow issues he might be taking.
He might have, let’s say 2 million in, in, in the bank. A lot of real estate he wants to start selling when he is, he takes those screened 70 take his retirement account money at 72, and he could have a high living standard after, you know, 70 it’s up here, but down before 70 it’s here because he can’t get it that money. So maybe that, that plan is just not optimal, cause it entails too many, too much of a cash flow problem. So let’s modify the plan and see if we can get something that’s smoother in terms of the living standard and the program, the program never wants you go into debt. So I don’t, you know, the and, and there’s ways obviously to do deal with that. You, you could take your retirement account withdrawals earlier.
That would be the thing to do and, and probably would save your lifetime taxes. And, and you could see that your lifetime spending could end up being higher because you don’t wanna put all your withdrawals into a situ in a position where you’re in a very high tax bracket. You want to try and smooth your tax bracket including the social security tax bracket. You know, social security is very discreet. You, you got, you reach some threshold of your modified, adjusted, gross income, and then all of a sudden you’re paying taxes on social security. So right. Whether Roth is gonna work for you or not depends on whether or not you’re taking social security, it’s, it’s very individual specific. But so, but the book was, is not kind of like here’s how to run the software. The book money magic is for people that don’t wanna run software and just say, look, here’s all the things I learned in 29 developing this program and running it for a lot of people and people running it and asking me questions, cause mostly we’re selling it to households or running it themselves.
Here’s what I’ve learned, all the tricks and in black and white to raise your living standard safely and to make decisions appropriately.
Right, right. Larry, I don’t wanna make too many assumptions here, but I would assume that the whole concept with consumption smoothing is that the people that you are talking to are focused on have predominantly all fixed income investments or assets. So they’re tied to a fixed income. It may or may not be in inflation adjusted, but here’s the key thing I was thinking about. I would assume a lot of those are depletable meaning that they only pay out for a fixed period of time X number of years. I guess that’s really my main question. And the reason I’m asking you, this is in the back of my mind, I’m thinking for those people who have assets like income producing real estate, that don’t deplete, they continue to generate passive income year after year after year is consumption, smoothing less important to those people because they have an inflation hedge asset that continues generating passive income.
Well, there’s got two questions wrapped up in that. One is, you know, think dealing with inflation. So let’s set, set inflation away aside for a second, but you know, you might have a out of real estate and you wanna leave it for your kids, but you also want to spend, have a decent living, a certain living standard that you want to enjoy if you continue to live. So the program can let you specify end of life, bequest, you can specify you’re not gonna sell the real estate assets, or you can specify that you are gonna sell them. What you really wanna see is gee. If I leave this much for my kids, let’s say, if I don’t sell these 10 properties that I might own, what’s my living sooner gonna be and will be smooth and will be high enough or should I sell three of those properties?
And at what ages would it be optimal terms of my lifetime taxes, which of these plans? And you can set up alternative profiles is gonna give me the highest lifetime discretionary spending. That’s the bottom line there’s two kind of things which is lifetime discretionary spending, but also the smoothness that you can achieve. And the program is trying to, for any, any plan it’s figuring out the lifetime spending, so you can compare across plans, but then it also shows you the annual spending and you can see how, you know, the level and also whether it’s perfectly smooth or not. And if you’re all these questions that people that have real estate you know but then the, the other thing you’re raising is inflation. So how do we protect ourselves in this crazy environment with inflation? I would say people in the real estate area who have real estate investments, including homeowners, if they can borrow more in general on the kind of a anti mortgage person, if you read the book, it’s pretty clear that in normal times when inflation is low, that taking, for example, your stocks, even from your IRA let’s say you’re not in a penalty situation.
You’re 62. You could cash out your IRA, take those that money and pay off your mortgage in normal times without high inflation risk. That might be, I showed and talk about a case in the book where I was able to raise somebody’s living standard by about $70,000, or might even been higher, forget exactly the number, but because of the differential now that you might say, well, gee, that’s crazy because the stock market is yield such a high return compared to the mortgage, but the risk adjusted basis right now, the stock market is yielding nothing in real terms. And it’s yielding 2.2, 5% in nominal terms. If we’re thinking about a 30 year risk, you take that stock money, you cash out your stocks and you buy nominal treasuries for 30 years, you’re gonna get two and a quarter. If you’re paying 4% of on the mortgage, that’s a, you know, one point 175 basis point differential there, pure arbitrage opportunity.
So you have to risk adjust, but now getting back to the inflation risk, given how, how much risk we’re facing right now with inflation, having a bigger mortgage allows you to hedge inflation. Because if, if inflation takes off, you get to pay back in water, done dollars. So how could you make an suppose you had your real estate and what could you do to engineer an inflation hedge? You could borrow money on the real estate via mortgage. Yeah. And then take that money and buy inflation index. Now if the, if inflation takes off, you went on the mortgage and you’re safe on the investment on the inflation in next month. And so that’s a, a very good inflation hedge. And, and so people that are in the real estate business, I think should have bigger mortgages these days than what they would otherwise have as a hedge against inflation. Let me put it that way.
Yeah. Yeah. I’m surprised to hear you say that, but at the same time, not surprised cuz that’s my thinking as well, because you have an inflationary environment you’re paying off the mortgage every month and every year with cheaper and cheaper inflated Fiat dollars. So it’s really stacked in your favor to have that debt. Right. And I’ll, I’ll also add, and you know, this, that when it comes to income producing real estate, it’s your tenant. That’s actually paying your mortgage off for you, not you, if you’ve got positive cash flow, you’re covering your expenses and debt service through the rental gross rental income. And so why not build a portfolio and have inflation increase the price and, and destroy the debt.
Yeah. I mean your hedge. I mean, cause you have a real asset, right. And the rental income you can raise with inflation and and then your, and then you’ve got this extra fill, which is extra twist, which is you get to pay back the the cost of the investment in water down dollars.
Yeah. So for those people listening here that are in retirement, or maybe let’s just say approaching retirement and you know, they’ve got different types of vehicles that they’re gonna lean on. You make a recommendation to delay your retirement by two years, I don’t fully understand that. Why do you suggest people delay their retirement for two years?
Well, it’s, you know, it’s very individual specific. So I never, I don’t think I’ve ever said everybody should delay the retirement by two years. I think I’ve said right, everybody should, should see the living standard implication of retiring later and also retiring earlier. Cuz some people may just love being at the beach, right. And surfing. If you can afford it, you need to know the price of things. I, I make the analogy of suppose you went to a supermarket and there were no prices listed of any of the products. And you went through, you put and your cart would work like this. You, after you put a hundred dollars worth of groceries into the cart, your credit card’s automatically charged. You don’t have any option to a and then, so you’re gonna walk out of the store with a hundred dollars worth of groceries, but not a hundred dollars worth of value.
The same thing. When you’re buying, putting your lifestyle decisions into your card, you need to know what they cost because you’re gonna otherwise buy the wrong lifestyle. And that’s part of you know, the title subtitle of money magic is more money, the less risk and a better life. The better life is economic says let’s price out decisions. So there’s a chapter on marry for money. There’s a chapter called divorce without divorce war. The first thing I talk about is understand how much divorce is gonna really cost you, price it out. I talk about there’s the first chapter is called my daughter to the plumber and pointing out that, that plumbers now can make more on a lifetime basis in terms of their lifetime spending capacity than PCPs. So <laugh>, you know, what do you wanna do? You know, you still may wanna become a PCP, but there’s a lot of risk there because you’re gonna be borrowing.
And if you know, you can’t stand the site of one at the end of the day you know, you’re, you’re gonna be stuck with that student loan that can be horrendously large and you can’t discharge it through bankruptcy. The, the government will attach your wages. They’ll attach your social security benefit. When you’re 99, you can be having your social security benefit doc, because you haven’t paid off your and loan. You took out when you were 28. So it’s all about risk avoidance to your living standard. And also, you know, the smoothing and raising and seeing, you know, seeing how it spreads if you’re investing at risk and that, you know, with real estate real, estate’s obviously risky as well. So you have to kind of think through scenarios where the real estate does well and the real estate doesn’t do well to understand whether this is a a good investment.
I’m just trying to understand what you said about the plumber making more than, you know, a professional, like a doctor or someone mm-hmm <affirmative>. Is that be because they’re taking on debt or is it because there’s some other element of risk that I’m just not picking up on here?
Well, it’s, it’s really the cost of college, four years of college. Then you’ve got four years of medical school. Then there’s three years where you’re an intern and a resident where you’re getting paid pretty modest level. Then you finally, I’m a doctor, you get paid a pretty high salary, but now, now you’re gonna be treated by the tax system poorly, because you’re gonna be faced with a very high, you know, you’re gonna be very, very high tax bracket. So you put all that together. Plus the borrowing and, and the federal student loan, borrowing rates are very high and especially for graduate school programs, then there’s also parental loans. You can only borrow around 31 KK as a college student, but then they’re getting parents to borrow as much as, as the parents wanna borrow to get the kid through college.
And that, and that loan may end up in the kids’ lap. I there’s no, you know, it’s the pay parents’ legal obligation, but it could be the kid’s moral obligation because the parent could say, look, I borrowed all this money. Hey, congratulations. You graduated work graduation ceremony. I’ve been paying the interest on this for the last four years. I don’t wanna tell you about this mortgage. It’s $200,000 and, but it’s all yours. Now. You’ve got a job and you get to pay this off. I did my best. I wanted, I didn’t want to get you, make you anxious, but here’s your $200,000 loan <laugh> that you have to repay that may well be going on across the country. We have a huge increase in parental loans and they’re the interest rate. Those is really high. So it’s like 5% right now when you can two and a quarter on treasuries.
And then <laugh> the, you know, the, to, to bar to go, to go to medical school, it’s around also five, 6%. So this is terrible policy that the federal government’s engaging in the federal government is scamming people through that program. Because 40% of the kids who start college never graduate. So I have a chapter that’s called, don’t borrow for college. I looked at this carefully and I came to the conclusion that this is just far too risky for anybody to borrow, to go to college, any significant amount beyond maybe five, $10,000 because 40% of the kids don’t even finish college. So why should I, you know, think about all your listeners, where they borrowed, they take out a mortgage to invest in a real estate property that right before they even invest in it, they know there’s a 40% chance that that thing is gonna be worthless, right? They wouldn’t, they wouldn’t get near it. They wouldn’t get miles near it, but that’s what we’ve got 18 year olds doing borrowing money to invest in something, which ahead of time has a 40% chance of paying off nothing. Okay. Borrowing money privilege of having dropped outta college.
Right. Well, you know, you’re making me think here for those listening here that are thinking about college or just starting college and for the parents listening to this that have kids that are about to go to college, in your opinion, do you think college education is actually worth it for most people today?
Well, it is. If you’re not you know, if you’re low income, you can get scholarships and grants. If you’re high income, it doesn’t matter. Your parents can afford it. If you’re middle income, it’s very expensive. And so do I wanna spend 75,000 a year going to, well, I’m a professor at Boston university. I’ll mention Boston university. Do I wanna borrow $75,000? My parents and me to have them meet with me or maybe go to a community college and take courses online <affirmative> for certificates and grades. I give the example in the book of somebody who wants to get a job with IBM and quantum computing. And so should they go to a top school and, you know, go into Hawk or should they take 20 online courses for grades and certificates in quantum computing at Stanford, Yale, Harvard, M BU they all have these programs and you can get a grade and a certificate.
Now at the end of the four years, you don’t have any student debt, you send your 20 certificates to IBM and say, would you like to hire me? I’ve done really well in all these programs. I know a lot about comput, quantum computing, or would like to hire the, the graduate in English from Williams college. They’re gonna hire you. So you would’ve gotten a, a top rate education because Stanford faculty are teaching, you know, there’s these courses, MIT sitting right now at MIT, I’m about to give a guest lecture. I know that they’re top faculty teaching these online courses, especially when we’re talking about things that are very technical. They’re not gonna just have anybody teaching about quantum computing and those courses right there available. So this is the kind of way you can get a top-notch education on the cheap that’s part. You know, as I say, in the book the simplest way to make money is not to lose it.
Right? Exactly. So you cover a lot of ground in the book and we don’t need to go into every area. So let’s kind of start to wind things down here with something you talk about a lot. In fact, you even have a book specifically about social security, kind of a two part question, but start with a specific question first, you know, how can someone maximize their lifetime social security benefits? I know you talk about this and it’s related to delaying it in terms of age, right? What, what would you tell people?
Well, so there’s a, a chapter called my 10 top secrets for maximizing your lifetime benefits in the money magic book. So the, you can’t count on dying on time. You have to think of your planning horizon as being your maximum age of life, because that’s what economic says. You, you know, you might make it that, that long. A lot of people do. My mom died in 98. Yeah. The chances are very small. So then you respond to that by, by planning systematically to have your living standard drop. As you get older, not to drop off the, the chart, but to drop smoothly. That’s how we economists say, you deal with that mortality risk optimally, but you have to worry about the worst case scenario, which is you do make it to a very old age and you wanna have insurance against that. If you weigh, if you take your social benefit at 62, you get one number.
If you take it at 70, you get a, your retirement benefit, you get a 76% higher number adjusted for inflation. So there’s an enormous gain from waiting. And you might say, well, I’ve just retarded 62. I’ve got my IRA in the stock market. I wanna cash that out. I want to take social security early to get, to have something to eat, eat from well on a risk adjusted basis. That’s a, that’s a mistake on a risk adjusted basis. The stock market shielding nothing in real terms, whereas waiting to get social security seventies got an enormous gain. In real terms, it just a crystal clear that you don’t want to be taking about 85% of American households should be American workers should be taking social security at 70 their retirement benefit only about 6% are. So that’s 0.1 0.2 is we have 13 different social security benefits.
Nobody knows about most of them, apart from the retirement benefit. So you need to benefit because if you don’t apply for all the benefits that are available, you won’t collect them. They won’t call you up and tell you that’s a big deal. Yeah. And then there’s a whole lot of other secrets like widows are being systematically screwed out of potentially hundreds of thousands of dollars by not knowing to time taking widows benefits and return benefits so that they don’t do it simultaneously if they’re young widows. So, and then we’re talking, if you think about people that are, have been furloughed and took social security early, because they lost their job in COVID and now they got called back to work. They think they’re gonna lose all these benefits because what’s called the earnings test. But it turns out that social security, once you reach full retirement age, we’ll reimburse you for all the benefits you lost under the earnings test.
So it’s like a fake false tax to induce people not to go back to work. It was implemented in a period where people thought there was a fixed number of jobs, wanted to get kick the elderly out of the workforce and let younger people come into work. It’s a terrible, terrible poll. See that people need to understand. So they don’t get conned into not going back to work because they think they’re in a, you’re gonna lose, you know 50 cents on the dollar and social security benefits at the margin. So there’s lots of things that people need to know about social street. Cause it’s the biggest asset. Most people have financial asset. If you’re low income for middle income people, it’s like the second biggest. And even for the rich it’s second or third largest financial asset
That begs the question is social security being miscalculated by the government, or is it really just a big Ponzi scheme or maybe both?
Well, in terms of the overall financing, it’s 59 trillion in the red that’s in the trustees report in table six F one that came out two months ago. So it has the entire fiscal operation for the last to seven decades and the postwar with under Republicans and Democrat, as I would describe as a massive Ponzi scheme.
<Laugh> okay.
You look at the fiscal position of the country in an overall comprehensive basis, put everything on the books, not just the official debt, but all the unofficial liabilities like social security, like I’m getting social security benefits. That’s a liability on uncle Sam. It’s not on the books. It’s not recorded in the official debt. It’s on that debt clock. It’s in times squares, right? So, and it’s like two and a half times the social security unfunded liabilities two and a half times the official debt put everything on the books. We’re short 8% of GDP forever. So if we want to keep spending what we are spending well, we, we have plan to spend in terms of about outlays. We have to raise taxes by 8% of GDP. That’s like a 40% across the board tax. Like every, every federal tax has to go up by 40 50% forever.
That’s not sustainable
That shows you from day one, or we have to cut benefits dramatically or spending <affirmative>. But just to give you an example, social security all social security expenditures, about 4% of GDP. So we’re talking about being short two, two social security programs. That’s the magnitude of our problem. We’re in worse fiscal shape than any other country you might say, well, this speaks to taking social security benefits early because they’re gonna be, but I don’t think they’re gonna do that. I think they’re gonna tax the raise taxes on the benefits, but not, not cut the benefits themselves. And I’ve run simulations in our software where even if there’s a 25% benefit cut, starting in about 10 years, it’s still is much better to be patient with your retirement benefit. For sure.
Yeah. I’ve heard it said that social security is more like, so social security. So that’s the way I look at it, but I like the way you call it a Ponzi scheme. <Laugh>
It’s a Ponzi scheme, but it’s for at the individual level, it’s maybe, you know, an enormous and for the rich and you’re, I think you’re listeners are probably a higher income than most. We have to realize that an absolute term high income people have the most to to gain from optimizing their social security.
Hmm. That’s an interesting statement.
Yeah. I mean, proportionally, it’s a bigger deal for poor people, but absolute terms in terms of absolute real dollars, it’s a much bigger deal for the rich. And of course, if you’re patient, you not only get a higher benefit for the rest of your life, but you have more of your resources are now coming inflation protected form because you know, you get the coal every year. So in this environment, you gotta be doubly careful about taking social security too early. You want to be, this is the cheapest way to buy an inflation. The only inflation index annuity you can buy out there is by buying it from social security, by giving up benefits for a while, low benefits to get a higher inflation adjusted stream. That additional stream is like buying in a, a real annuity. And the price is giving up the benefits. Maybe for eight years, that that are lower.
Larry, that’s a, a golden nugget takeaway for our audience right there. So let’s just wrap it up, tell our listeners how they can find you, your work, your software, and the domain name for that. And we’ll put it all in the show notes as well.
Okay. Well, the book is Money Magic. You can buy that in Amazon
Everywhere, everywhere.
<Laugh> Money Magic, Kotlikoff. The software is maxifi.com, MaxiFi.com. But if you forget any of this, just go to see if you can remember my name, name, Kotlikoff and go to kotlikoff.net. And there’s links to the software links to the book and to other books. And all my, every column I write, which I write a lot of columns for the media and also professional articles are all posted there. So people can see everything I’m up to for better or worse. Yeah.
Yep. Well, we’re gonna put all that on the website and in the show notes, it’ll be put in our newsletter. It’ll be everywhere. So it’ll be easy for people to click and find, but anyway, thank you so much, Larry, for your time. I know you have a talk coming up. I think you said at MIT. Yeah. Is that, is that correct?
Yeah. Couple minutes. Yeah.
Well, it’s been an honor having you on the show. We’ll probably have you back on later in the year or, you know, when it makes sense to see what you know is happening with the economic tide that we’re looking at here and Ukraine and all that. So thank you for taking your time and coming on the show today.
Yeah. love, love being with you, Marco and happy to come back.
Have a good one. Thank you.
Stay safe. Bye-Bye
You too. I hope you enjoyed today’s show and our guest today. Very interesting person. Honestly, I have a list about three times, as long as what we talked about in terms of questions and things I wanted to pick his brain on. It’s an interesting perspective of actually asking finance-related questions to an economist because they see and view the world a little bit differently than I think other people who are in the finance financial space. So that doesn’t necessarily mean I agree with everything or disagree with everything he has to say. I’m clearly in agreement with a lot of the stuff that he was talking about, although I’m a big proponent and fan of having cheap interest rate based mortgages to acquire income-producing assets that don’t deplete that last for a long period of time, like income-producing real estate that you could literally buy and hold forever and forever.
I mean, you know, you hold it and you pass it on to your kids or your heirs, and it just continues to generate and is a good inflation hedge. And I don’t think he disagrees with that, but you know, his focus is certainly more on social security annuities, the stock market, the pros and cons of that and whatnot. But anyways, it’s very interesting. I’ll have Larry back on in the months to come. Other than that, if you haven’t remember to subscribe to the click, that button, it literally takes you just two, three seconds. If you have questions about real estate investing, just let me know. If you go to passiverealestateinvesting.com, you can click on the Ask Marco button or link and submit your question. And I will cover them in my Ask Marco episodes, if you haven’t been to the show for a while here, maybe just go to the catalog, catch up. You could pick and choose the episodes you wanna listen to on the topics that are of interest. So you can go back at any time and just catch up on some of the stuff that we’ve talked about recently, especially the stuff related to economics and what is going on in our environment with inflation and the world. That is it for today. Thank you for tuning in and listening. And we will see you all on our next episode.
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