025: Retirement Planning for the Unwealthy and the Power (and Danger) of Data with Dirk Cotton

Dirk Cotton was a senior executive at a Fortune 500 company. However, after retiring in 2005, he’s found himself busier than ever. He loves to do research, specifically retirement research, and publishes often on his blog, The Retirement Café. He’s also a Thought Leader at APViewpoint, Advisor Perspectives’ online community of investment advisors and financial planners, and provides retirement coaching services in exchange for pizza, craft beer, and charitable donations, among other gifts.

As Dirk sees it, a lot of the best financial advice is only available to people who have lots of money – and that’s why the Retirement Café focuses on retirement planning for the unwealthy – or those with less than $100,000 in savings.

Dirk came highly recommended by Wade Pfau, and his work has proven highly valuable for his readers and his clients alike. Today, Dirk joins the podcast to talk about how his second act as a retirement coach and researcher began, the dangers in trying to predict the future, and the many factors that people often don’t understand or think about as they prepare to retire.

In this podcast interview, you’ll learn:

  • How having achieved financial independence changed the advice that Dirk gives – and why he refuses to be paid for his retirement coaching services.
  • Why so many people get into financial planning and retirement planning when they themselves retire.
  • How the Great Recession taught Dirk that he vastly underestimated the risks in retirement – and why so many retirees don’t prepare for the worst.
  • The impactful questions Dirk asks to get at the heart of what people really want out of retirement.
  • Why children and grandchildren are a potential financial risk in your retirement.
  • Why planners and advisors need to have strong understandings of statistics and probabilities – and the reasons so many people in the financial services industry end up massively misinformed.
  • How to plan your retirement for a variety of different scenarios simultaneously.

Inspiring Quotes

“When you deal with uncertainty, the rationale approach to it is statistics and probabilities.” – Dirk Cotton

“I think people need to back away from their certainty of the future because there’s really not a lot of evidence that says you should be certain about your future.” – Dirk Cotton

Interview Resources

The Retirement Café
Mean Reversion of Equity Returns and Retirement Planning
What is Monte Carlo simulation?
The Black Swan: The Impact of the Highly Improbable (Incerto)

Read The Transcript