Dudley Discovers the Internet

Dudley was retired. This created a new problem. He had spent several weeks trying to determine whether he and Betty could afford to retire. He had gathered the accounts, estimated what their life would cost and run enough scenarios to conclude that things would probably work out. Probably had eventually been good enough. Now he had to manage it.

Dudley had spent most of his career managing complicated things. Projects involving dozens of people who could attend the same meeting and leave with completely different understandings of what had just been decided.

Surely managing two people and their retirement savings could not be that difficult. Dudley opened his laptop. He started with a simple question.

How much can I safely withdraw from my retirement savings?

This was how Dudley discovered the Internet.

Obviously, Dudley knew the Internet existed. He had been using it for decades. He bought things, paid bills, checked investments, read the news and routinely looked up actors in television shows because neither he nor Betty could remember what else they had been in.

But Dudley had never asked the Internet a retirement question. The Internet had opinions.

There was the 4% rule. Except maybe it should be 3.5%. Or 3.3%. Or perhaps 4.7%, provided Dudley was willing to adjust spending based on market performance, inflation, bond yields, portfolio valuations and possibly the migration patterns of Canadian geese.

Some people said the 4% rule was dangerously outdated. Other people said it remained perfectly useful. Still others said the entire concept of a fixed withdrawal rate was stupid because retirees should use guardrails.

Dudley searched retirement guardrails.

Pandora’s Box.

Guardrails led to dynamic spending. Dynamic spending led to Guyton-Klinger. Guyton-Klinger led to sequence-of-returns risk, which led to bond tents, which led to bucket strategies. Bucket strategies led to an argument about whether bucket strategies were actually strategies or merely mental accounting for people who did not understand total-return investing.

Dudley had been retired for approximately fifteen minutes. He was already behind. He kept reading.

There were Roth conversions, required minimum distributions, capital gains brackets, ACA subsidies, Medicare, IRMAA, Social Security claiming strategies, asset allocation, asset location, tax-loss harvesting and tax-gain harvesting. Dudley initially assumed tax-gain harvesting was a typo. It was not.

Then he discovered something called a Roth conversion ladder. This sounded less like retirement planning and more like equipment he would need to clean the gutters.

By lunch, Dudley had seventeen browser tabs open. By dinner, thirty-two.

Betty walked through the kitchen.

“What are you doing?”

“Retirement planning.”

“I thought we already retired.”

“So did I.”

She looked at his laptop.

“What are all those?”

“Tabs.”

“I can see that.”

Dudley considered explaining sequence-of-returns risk. They had a good marriage. He decided against it.

The problem was not that the Internet made Dudley feel uninformed. That would have been manageable. It made him feel partially informed. This was much worse.

Every answer produced three new questions. Every article linked to another article explaining why the first article was incomplete. Every expert had a chart. Every chart had footnotes. Every footnote seemed to contain another retirement strategy Dudley had somehow failed to consider.

Then he discovered the FIRE people. There was FIRE. FatFIRE. LeanFIRE. CoastFIRE. BaristaFIRE. Dudley searched for a version where you simply stopped working and tried not to do anything stupid. Apparently that was not sufficiently branded.

Still, the Internet had given him something important. Language. Before this, Dudley knew they had money, expenses and Social Security coming eventually. Now he had names for all the things that could go wrong. Dudley felt like he had a complete picture. Unfortunately, he had spent his career believing that once a problem had a name, the next logical step was to acquire software. So Dudley bought some tools.

ProjectionLab came first. ProjectionLab was wonderful. Dudley entered their accounts, expenses, Social Security, retirement dates and assumptions. For the first time, he could see their financial life stretched across decades. It was no longer scattered among statements, websites and the increasingly elaborate collection of notes he kept because he did not trust himself to remember where he had found anything.

Then he changed an assumption. Then another. Then all of them.

What if returns were lower? What if inflation was higher? What if they spent more? What if they traveled more? What if Social Security was reduced? What if they both lived to one hundred? Dudley was pleased to discover that immortality was the first scenario that presented serious difficulties.

The Monte Carlo simulation produced roughly the same results as his investment planner. But now he had charts. This made it official.

ProjectionLab could tell Dudley quite a bit about the future. Unfortunately, Dudley still did not know exactly what their life cost. So he got Lunch Money.

Lunch Money connected their accounts and started organizing their spending. This was also wonderful. For approximately six minutes. Dudley discovered categories. Groceries. Dining. Utilities. Insurance. Travel. Home improvement. Shopping. Subscriptions. Transfers. And Uncategorized. Uncategorized offended Dudley personally.

Every dollar had gone somewhere. It had a merchant. It had a purpose. It had a history. There was absolutely no excuse for it to be wandering around without a category.

Dudley began fixing transactions.

Betty walked through the kitchen again.

“What are you doing now?”

“Categorizing.”

“What?”

“Money.”

She kept walking.

Dudley created rules. Then he created better rules.

Then he discovered that the same merchant could represent entirely different kinds of spending. Costco was particularly troublesome. Costco could be groceries. Costco could be household supplies. Costco could be clothing. Costco could be pharmacy. Costco could also be a $317 transaction neither Dudley nor Betty could adequately explain three weeks later. Dudley considered creating a category called Costco. This felt like surrender. He kept working.

Eventually Dudley could explain, with considerable precision, how much they had spent on groceries during the previous ninety days.

Then Betty asked him to get the salad dressing.

Dudley opened the refrigerator.

He looked.

Betty waited.

“It’s on the door.”

“I know.”

More waiting.

Betty walked over and pointed to the bottle approximately fourteen inches from his face. Dudley took it.

“Thank you.”

Betty looked at him.

“You can track every dollar we’ve spent for three months.”

“Yes.”

She pointed at the dressing.

Dudley considered the evidence.

“Different system.”

Betty walked away. Dudley continued.

He found Social Security calculators, Roth conversion calculators, tax calculators, portfolio analyzers and retirement income planners. Each answered a slightly different question. This created another problem. The answers did not always agree.

So Dudley made a spreadsheet. The spreadsheet compared the tools. Then Dudley realized he had entered the same Social Security estimate into four different systems. This seemed inefficient.

He added a tab to track assumptions. Then account balances. Then taxes. Soon Dudley had created a spreadsheet to manage the software he had purchased to simplify retirement. This felt entirely reasonable to Dudley. Betty was less certain.

“How many retirement programs do you have?”

“They do different things.”

“How many?”

“That isn’t really the right question.”

“How many?”

Dudley thought about it.

“Define program.”

Betty smiled.

This was going better than she had expected.

Dudley now had more information about their financial life than he had ever possessed. He could see their spending, investments, future income, taxes and probability of success. He could model recessions, inflation, early death, long life, bad markets, good markets and several theoretical futures in which he and Betty apparently developed a much stronger interest in international travel than either had previously demonstrated.

The tools were genuinely useful. That was the problem. Each one solved something. None of them solved everything.

ProjectionLab knew what their financial life might look like thirty years from now. It did not know what they spent at Costco last Tuesday. Its tax calculations cared deeply about a future Roth conversion but had no opinion about whether Betty wanted to spend February somewhere warm.

Lunch Money knew about Costco but did not particularly care whether Dudley should convert forty thousand dollars to a Roth IRA four years from now.

The portfolio analyzer knew their allocation but had no idea what kind of life the allocation was supposed to support.

And the spreadsheet knew whatever Dudley told it.

This was both its greatest strength and an increasingly obvious weakness.

One afternoon Dudley sat at the kitchen table and looked at everything he had assembled.

Account balances. A budget. A forecast. Monte Carlo simulations. Withdrawal strategies. Tax projections. Investment allocations. Social Security estimates. Spreadsheets. Charts. So many charts. He had successfully transformed the retirement finances of two people in Iowa into the finance department of a small regional hospital.

And yet he still had trouble answering one surprisingly basic question.

How are we actually going to run this?

That was when Dudley finally understood the problem. The Internet had given him knowledge. The tools had given him visibility. The spreadsheets had given him somewhere to put the things the tools disagreed about. All of it was useful. Some of it was probably necessary. Taken together, it was completely ridiculous. Dudley did not need another calculator. He did not need another article. He absolutely did not need another spreadsheet. Probably.

What he needed was a way to bring all of this together. Something simple enough that Betty could understand it without spending three weeks on the Internet. Something simple enough that Dudley could understand it without opening thirty-two browser tabs.

They needed to be able to answer three questions. What do we have? What do we need to spend for the life we want? How long will it last?

Dudley looked at his laptop.

Thirty-two tabs. Four calculators. Several financial tools. Multiple spreadsheets. Two retired people. Three questions.

This seemed like an excellent opportunity to make things simpler.

Which, given Dudley’s track record, should have concerned everyone.