Episode 231 - How Much True Liquidity Do You Have?

Summary

In this episode, Ryan Burklo and Alex Collins discuss the concept of true liquidity and its importance in retirement planning. They explain that true liquidity goes beyond cash reserves and savings, and involves considering what assets will be accessible and how to turn them into income during retirement. They highlight the risks of relying solely on market-based assets for income in retirement and the potential for compounding losses. The hosts introduce the concept of true liquidity as a way to mitigate these risks by having a separate bucket of money that is not correlated with the market. They provide examples and calculations to illustrate the impact of true liquidity on retirement outcomes. They emphasize the need to start building true liquidity before retirement to ensure flexibility and avoid relying on market performance during critical years.

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Takeaways

True liquidity goes beyond cash reserves and savings and involves considering what assets will be accessible and how to turn them into income during retirement.
Relying solely on market-based assets for income in retirement can lead to compounding losses and increase the risk of running out of money.
True liquidity can be achieved by having a separate bucket of money that is not correlated with the market, providing stability and flexibility in retirement.
Building true liquidity should be started before retirement to ensure flexibility and avoid relying on market performance during critical years.

Chapters

00:00 Introduction
00:36 Misunderstanding of Liquidity
02:31 Planning for Retirement
03:12 Explanation of True Liquidity
07:14 Effects of Market Losses in Retirement
08:11 Concept of True Liquidity
10:07 Example of Market Performance
13:35 Importance of Pre-Retirement Liquidity
19:13 Building True Liquidity
21:24 Question of the Day