BiggerPockets Money Podcast: “Dude ACTUALLY Retires at 47 Using the 4% Rule (and Never Looks Back)”

Release Date: February 7, 2025

In this episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench sit down with Bobby Beck, a successful early retiree who achieved financial independence (FI) at the age of 47 using the 4% rule. Bobby shares his journey, strategies, and insights, providing a comprehensive look into how he managed to retire early and sustain his lifestyle without tapping into active income sources.

1. Introduction to Bobby Beck’s Early Retirement

[00:00] Mindy Jensen:
Mindy introduces the episode by questioning the practicality of the 4% rule in achieving early retirement. She sets the stage for Bobby Beck’s story, highlighting his success in retiring at 47.

“Do people really retire using the 4% rule? Is it actually possible? Today we're joined by Bobby Beck, who retired at age 47 and is doing just that.”
— Mindy Jensen, [00:00]

2. Motivation Behind Reaching Out

[01:15] Bobby Beck:
Bobby explains his motivation for sharing his story. He wanted to validate the promise of the financial independence movement and demonstrate that the 4% rule can work in real life, despite the non-linear nature of financial journeys.

“I just want to make sure that other people are aware that this is possible and other people are doing it.”
— Bobby Beck, [02:00]

3. Transition from Active Income to Portfolio Reliance

[03:15] Scott Trench:
Scott inquires about the timeline of Bobby’s transition from active income to relying solely on investment income.

[03:23] Bobby Beck:
Bobby recounts ending their jobs in January 2022 and relying exclusively on their investment portfolio since then.

“We have been financially independent and retired early for three years now. We're entering into our fourth year...”
— Bobby Beck, [03:15]

4. Building the Investment Portfolio

[06:01] Bobby Beck:
Bobby details the evolution of his portfolio. Initially, it consisted mainly of savings and 401(k)s. In 2018, inspired by the financial independence movement, he and his wife shifted to index funds, primarily investing in Vanguard Total Stock Market Index Fund (VTSAX, VTI).

“Our portfolio still looks the same. It's super simple... we have single stock in one of the magnificent seven companies... in Vanguard Total Stock Market Index Fund.”
— Bobby Beck, [06:01]

5. Real Estate Strategy and Primary Residence

[10:49] Bobby Beck:
Bobby explains his real estate holdings, including a rental property in Mexico and their primary residence. He distinguishes between total net worth and FI net worth, excluding certain properties to reflect investable assets.

“Our plan is to use the rental property and some of the equity in our current house to buy a house in the future...”
— Bobby Beck, [10:56]

6. Handling Market Volatility During Retirement

[03:36] Mindy Jensen:
Mindy addresses the challenge of retiring during the COVID-19 pandemic, a period of significant market volatility.

[05:27] Bobby Beck:
Bobby describes how they navigated the market downturn by maintaining a cash buffer and adhering to a long-term investment strategy.

“The moment that we retired in 2021, the market went down that year... but luckily we did it bounced back.”
— Bobby Beck, [17:58]

7. Withdrawal and Cash Management Strategy

[19:29] Bobby Beck:
Bobby outlines their withdrawal strategy, initially living off cash reserves and later transitioning to selling stock quarterly to fund their expenses.

“We have about two and a half years of cash in the bank to kind of weather the storm.”
— Bobby Beck, [17:08]

8. Health Insurance Planning Post-Retirement

[21:20] Bobby Beck:
Bobby discusses their health insurance strategy, utilizing the ACA marketplace in California with subsidies during their early retirement years.

“For the first three years we spent about $500 a month on healthcare... this year... it's jumped up to about $1,100 a month.”
— Bobby Beck, [21:29]

9. Tax Implications from Business Sale

[23:09] Scott Trench:
Scott probes into the tax consequences of selling Bobby’s businesses, highlighting the differences between LLC and C Corp structures.

[23:43] Bobby Beck:
Bobby confirms significant tax liabilities from the LLC sale but benefited from favorable tax treatment for the C Corp.

“We paid a big chunk on the LLC side... the first 10 million is tax-free.”
— Bobby Beck, [23:43]

10. Lifestyle Changes and Satisfaction Post-Retirement

[31:40] Bobby Beck:
Bobby shares insights into his lifestyle post-retirement, emphasizing travel and personal fulfillment.

“We travel, we do about four big family trips per year... we have created the life that we want.”
— Bobby Beck, [31:48]

11. Risk Management and Asset Allocation Adjustments

[33:16] Bobby Beck:
Bobby discusses their asset allocation, maintaining a 70% stock, 20% real estate, and 10% cash distribution. He emphasizes the importance of a cash buffer to manage market downturns.

“We think about it right now... our High Yield savings account is yielding more than the bond bonds right now.”
— Bobby Beck, [37:26]

12. Concluding Insights and Philosophies

[40:35] Bobby Beck:
Bobby reflects on the personal growth and opportunities that financial independence has afforded him, highlighting the importance of personal development and health.

“FI is like you won the game of life... it opens up life to look at yourself and deal with personal development.”
— Bobby Beck, [40:35]

[44:15] Bobby Beck:
Bobby underscores his resilience and optimistic philosophy in achieving and maintaining financial independence.

“Life will always catch you on the other side... you have to believe that it'll work out.”
— Bobby Beck, [44:15]

Key Takeaways:

• 4% Rule Viability: Bobby Beck's successful early retirement demonstrates that the 4% rule can be effective when combined with disciplined saving, investing, and strategic asset allocation.

• Diversified Portfolio: Balancing between index funds, real estate, and maintaining a cash buffer provides stability and flexibility during market fluctuations.

• Real Estate as a Financial Tool: Including rental properties can offer additional income streams and diversify investment portfolios.

• Health and Tax Planning: Proactive management of health insurance through ACA and understanding tax implications from business sales are crucial components of early retirement planning.

• Personal Fulfillment: Financial independence opens doors to personal growth, travel, and a lifestyle tailored to individual preferences and values.

Bobby Beck's journey serves as an inspiring case study for those aiming to achieve financial independence early in life. His pragmatic approach to investing, combined with a resilient mindset, underscores the potential of the 4% rule when implemented thoughtfully.