Podcast Episode 13 – Interview With Larry Kotlikoff

I can not even begin to tell you how excited I was to conduct this interview with Larry Kotlikoff, economics expert extraordinaire.

Larry is an economics professor at Boston University and is probably most famous for warning anyone who will listen that Social Security, Medicare and Medicaid are doomed in their current state. We can only continue to rob from the future to pay for today for so long. At some point, there will be a reckoning and when that happens, what then?

Do we become like Argentina? In this interview Larry talks about how in the early 20th century Argentina was one of the wealthiest countries in the world.  But look what government policy has done over the last 100 years.

The people haven’t changed. The natural resources haven’t changed.  Yet, Argentina is forever a “developing” country today.  Why?

Think that can’t happen here? Think again my friends, think again.

Government policy is probably the single, most important issue when it comes to analyzing a country’s financial well-being.  Just compare various countries and city-states.  Cuba vs. Hong Kong.

Singapore vs. Venezuela. Taiwan vs. most of China. Ironically, it’s the Guandong district of China that for years lead the way in economic development.  Why is that? I’ll let you figure that one out.

Larry’s work has been an integral part of my life, both as a consumer AND as a professional financial planner.

Whenever I am asked “What’s a good book to read on financial planning”, my recommendation is Larry’s book with Scott Burns’, “Spend Till The End”, bar none.

I can not recommend this book enough.

On top of that, if you are a professional financial planner or just a consumer wanting to understand your own personal financial planning and/or Social Security,  you really should get the software from Larry’s company, Economic Security Planning.

This is the only software I’m familiar with that actually runs consumption-smoothing models as opposed to simple “you need 80% of your pre-retirement income, Mrs Smith.”  See my complaints about that here.

The software at Economic Security Planning actually takes into consideration pre-retirement CONSUMPTION and then extrapolates into what you’re going to actually consume in retirement.

Let me give you an example.

My wife and I have  4 kids and live on 1 income.  The bills for kids come at us fast and furious. In fact, many say it costs $200k to raise 1 child.  We have four!

Now, when the kids are grown and out of the house are we going to have similar household expenses? Heck no…well, I hope not!

Why doesn’t modern financial planning software reflect this simple reality? Larry and I both have thoughts on that, which we discuss.

Other topics we cover are the insanity of this two party political system we have, especially given that neither party has any will to tackle what is coming down the pike, massive, massive budget shortfalls.  At some point, the credit card MUST be paid.  When, where, how? Who knows? But it’s going to have to be dealt with, by someone.

Maybe a third party will be an option?  I frankly doubt it.  But in case you’re interested, Larry had a couple options he highlighted which I link below.

The Inform Act. 
Modern Whig Party
Serve American Movement

I’ll add the Libertarians because I believe in freedom.   Will the Libertarians make any more headway than what we’ve seen? Doubtful and Larry explains why that is.

If you want Larry’s most recent posts, just click the links below.  He writes a LOT.  And, again, it’s not rocket science stuff, like you come to expect from most modern economists, to their shame, in my opinion.  Is the modern economics industry simply writing in order to appeal solely to themselves? It certainly seems so.  Which is why guys like Larry are so refreshing.

Larry also talked about an upcoming Supreme Court decision which could have HUGE ramifications on small business selling products inter-state. This could be huge, folks.  So stay tuned!

I could have had Larry on for 2 more hours, easily, but hey,  I’m not going to ask a guy to spend his entire Sunday evening talking to me.  But some of the other questions I’d have liked to have his opinion on are:

What’s his thoughts on Universal Basic Income?

What’s Larry’s take on Universal Health Insurance?

While I am NOT a fan of Nancy Pelosi, not the in the least, I felt her argument in favor of Universal Health Care was the best made; if people don’t need to worry about how to pay for health care that will open their creative juices.    (In fact, I’d argue we’d have more people self-employed and enjoying their work as opposed to staying in the grind for jobs they hate just so they can have health care.  Definitely don’t believe the solution is a government take over but vouchers make a ton of sense to me.)

And just a myriad other questions.  But there is this thing called time constraints.  So, maybe one time I’ll get Larry back on and we can discuss this other stuff.

So, if you feel I missed some stuff, by all means let me know.  Or just read Larry’s stuff. I guarantee you’ll find it as informing as I do.

Larry’s personal website.

His new post on Seeking Alpha.

© Copyright 2018 Heritage Wealth Planning