Interview with Doug Orchard, Director of The Baby Boomer Dilemma

The Baby Boomer Dilemma came about because of Doug's work with David in the past. After a podcast crowdfunding event last January, Doug received enough funding to get things off the ground.

The Baby Boomer Dilemma is based around the simple choice families face between a defined benefits plan or a defined contribution plan.

During World War 2, there were price wage controls in place, and it was illegal to lure recruits away from other companies with a higher compensation. This became the basis of the corporate pension.

Right now, we have the opportunity to reevaluate our assumptions about retirement. Essentially, should people go for a big pile of money with a deferred compensation plan or go for something guaranteed?

Doug has conducted several thousand interviews, but the most impressive interview Doug has done is with Olivia Mitchell. Not only was she charismatic, she had an incredible depth of knowledge on both social security and economics in general. When it came to annuities, she was the one that discovered that you could draw more in retirement by incorporating an annuity than with stocks alone, up to 40% more.

The film dives into pensions, both corporate and public, and the global issue of social security. The Baby Boomer Dilemma is not unique to America.

Doug's other favorite interview was with Dr. David Babel, an economist at UC Berkeley. One of the most interesting things about Dr. Babel is that his dissertation was one about inflation, and as the expert on the topic, he decided the most important place to put all of his money was in annuities.

Economists disagree regularly on just about everything, but the one thing they all tend to agree on was the mathematical value of having guaranteed lifetime income in retirement.

According to the father of the 401(k), the 401(k) is a disaster for the average investor. While it has done some good, there are plenty of risks involved. Nearly every top economist recommends that some portion of the plan should include some level of annuitization in the accumulation years of someone's life.

If you lose 20%-30% before retirement, it's essentially impossible to make it up.

Generally people tell you to stick to the plan of consistently accumulating dollars in your stock portfolio, and that works during the accumulation years, but that rule works against you once you start taking money out.

If the stock market goes down when you have to take money out of your portfolio to fund your lifestyle in the first ten years of your retirement, you're in big trouble.

In Tax-Free Income For Life, the essential message is that when you take your lifestyle needs and subtract your pension and social security, that gap is what should be covered by a guaranteed lifetime stream of income.

The Baby Boomer Dilemma is built around a narrative largely inspired by The Social Dilemma. The options were either an immense number of charts and graphs, or build the information around a compelling story, so they went with a story.

The story may have been dramatized, but a lot of the reactions from the actors in the movie are genuine to the situation being explored. Doug wanted people to feel the emotions of the story in particular, because he wanted to make something that moved the needle for society.

Nothing has seemed to really make an impact in terms of the trajectory of the national debt or the direction society is going. That's the impetus for the message of the Baby Boomer Dilemma.

Doug never planned to own an annuity before David's book came out. Prior to that he didn't realize the value of annuity and how it can be done.

It's impossible to be an annuity skeptic after seeing the most intelligent people laying out the mathematical case for their benefits. 

78% of all businesses with three or more employees are owned by Baby Boomers, and most of those businesses will be sold in the next decade. The $10 trillion that will change hands or fail to sell will pose serious issues in the next ten years.

People who sounded crazy in 2006, are now at the forefront of the taxation conversation. Even if we taxed everyone in America at 100% for the next ten years, we would still have a tough time dealing with the existing debt.

 

Mentioned in this Episode:

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