#198 Why save for retirement if capitalism is going to collapse and/or universal basic income will be available. How millennials can lead the next work transition. More information, including show notes, can be found here. Episode Summary Capitalism, universal basic income, socialism, and artificial intelligence are all tied together in America’s current economy. Today’s millennials are asking big questions about the future of the national economy and what place AI has in the job market. On this episode of Money For the Rest of Us, David tackles these questions and contemplates the idea of a universal basic income. The keys to successful capitalism and fulfilling employment are also discussed. Why aren’t millennials saving for retirement? David explains on this episode of Money For the Rest of Us that 66% of millennials have nothing saved for retirement. Why aren’t millennials investing in their own future? Some aren’t committing to a savings plan for retirement because they don’t believe capitalism will exist by the time they retire. Some even think socialism could it be a great retirement plan. There are, of course, many different degrees of socialism, including some that emphasize a market economy. David shares some of the negative consequences of state controlled socialism as practiced in Venezuela and Cuba. Artificial intelligence is not going to take over the world, but it will lead to a cultural shift and a consideration of universal basic income Why artificial intelligence is accelerating rapidly, AI is not going to take over the world as in some dystopian horror story. AI machines do not have the ability to be creative or complete multifaceted, complex tasks. So-called “weak” AI that is currently available can only complete one-track tasks, all of which must be pre-programmed. However, AI machines will eliminate the need for humans to complete repetitive and routine tasks. Since millennials are already shirking these factory-like positions, the only thing that will change in today’s economy once artificial intelligence becomes mainstream is the way we think about employment and entry-level positions. Since AI is set to potentially replace 50% of jobs over the next 20 years, significantly increasing the productivity of the economy in terms of the ability to produce goods and services with less resources, businesses, households and governments will need to grapple with how people will get income to pay for the ample supply of goods and services that will be available. State controlled economies should be feared, not something to look forward to in the American economy A top down, state controlled economy lacks the bottom up, creative dynamism of capitalism, although even capitalism has rough edges that need to be addressed in terms of an adequate social safety net. David explains what is currently occurring in Venezuela. The Venezuelan government has completely destroyed their nation’s economy, with 50% of the GDP collapsing since 2012. High-ranking politicians are using food vouchers as incentives for reelection votes and basic human needs are being preyed upon for political success. Capitalism occurs when passion, creativity, and market needs intersect Capitalism flourishes when people unite their creative passions with market needs. David explains that when people “have their soul in the game,” projects take off and success comes much easier. It starts small, often grows into a full-fledged business, and can grow exponentially from there. But creativity is often dampened in a state-controlled environment. Individuals need to feel fulfilled and excited by their work. While universal basic income could serve as a safety net within the broader scheme of capitalism, it cannot be the only option. Episode Chronology [0:42] David introduces his topic for this episode, “Capitalism is Creation” [1:55] Why aren’t millennials saving for retirement? [6:07] Why artificial intelligence is not going to take over the world [8:45] Massive job decimation due to artificial machines and the idea of universal basic income [11:34] How constrained capacity is eliminated through AI [12:27] Why state controlled socialism is something to fear and the Venezuela case study [16:04] Unique, fulfilling work often starts with an idea and a passion to create [22:40] Investing, just like capitalism, starts small and grows See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#196 Why relying on averages is dangerous given our fate is often determined by extreme events and how we react as financial markets, the economy and our own lives evolve. More information, including show notes, can be found here. Episode Summary As people age, one of the most common questions asked is “how can I survive financially?” The world is filled with unpredictable markets, unforeseen circumstances, and lifestyle events that may impact your ability to be financially secure. On this episode of Money For the Rest of Us, David explains some key concepts for fiscal survival long into old age. You don’t want to miss his insights, so be sure to give this episode your full attention. How you can survive financially even throughout a long lifespan David begins this episode by describing a man he met that is in his 101st year of life. This man has survived long past the median lifespan prediction for the United States and he is still living independently while being financially secure. In order to live happily into old age, you must first survive. You cannot begin to plan for retirement without first having your basic necessities taken care of. After you have secured the main pillars of survival, there are ways to have an investment portfolio last 40 to 50 years of retirement. David explains that “time removes the fragile and keeps the robust.” The longer your portfolio survives, the likelier it is to continue surviving. What truly matters is how you react to the unpredictable risks that enter your life Even the best financial consultants and investment specialists cannot predict the minutiae of life. Markets will rise and fall, family dynamics will shift, and your personal circumstances will always be ebbing and flowing as you age. Long-term financial success comes from understanding how much risk you are willing to take with your investments, evaluating the potential returns, and understanding that “the world cannot be solved, it must be lived.” David encourages his listeners on this episode to be self-aware and understand how to handle dramatic shifts in circumstances. Learning how to properly mitigate negative changes to ensure your financial security is also critically important. So how can you combat these unforeseen variables? In addition to being self-aware and knowing your own decision-making strengths and weaknesses, David explains that there are multiple ways to protect your financial future. You can mitigate the tail risks of stocks by investing in the following different areas: public securities, public entities, gold, land, and single premium immediate annuities. The added layer of Social Security is also a good thing to keep in mind, however, it should not be solely relied upon. The 4% spending rule and the importance of having multiple streams of income Perhaps the biggest idea to take away from this episode of Money For the Rest of Us is the 4% spending rule, as explained by David after he read the article “Does The 4% Rule Work Around The World?” by Wade Pfau. Pfau explains that historically with a US-based portfolio, one could live comfortably financially by spending 4% of your portfolio for the first year of retirement and then adjusting that percentage for inflation in every subsequent year. However, given the high valuations for stocks and the low yields for bonds, a spending rule of less than 4% would be more appropriate, especially considering the possibility of a 50 year retirement. By combining the a conservative spending rule, multiple streams of income, and a high level of self-awareness regarding your tendencies, you can protect your financial future and survive well into retirement. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.