Money For the Rest of Us

Episode 545: Burnout, Breaks, and the Courage to Spend with David Bach

Host: J. David Stein
Guest: David Bach
Date: November 19, 2025

Brief Overview

In this episode, J. David Stein interviews David Bach, renowned personal finance author and former financial advisor, best known for "The Automatic Millionaire." The conversation focuses on finding the courage to spend after years of saving, the importance of sabbaticals and mini-retirements, and the psychological barriers to enjoying wealth. They also discuss Bach's proposal for a flat tax on retirement account withdrawals, his move to Florence, Italy, and the broader lessons he's learned in finance, work, and life.

Key Discussion Points and Insights

1. David Bach’s Early Introduction to Investing and Teaching Financial Literacy

• Bach shares that he began attending his father’s investment classes at age nine and was teaching peers' parents about municipal bonds by age 13.

• Quote:

  "By the time I was, you know, like 13 years old, I was teaching my friend's parents why they should be buying municipal bonds and not CDs... Who is this kid?"
  (David Bach, 03:04)

• He stresses the importance of early financial education, lamenting that basic money skills aren't taught in schools, which financially sets many up for failure.

• Quote:

  "This book should have been taught to you. Everything inside the Automatic Millionaire. You should have learned the basics of financial planning before you graduated high school."
  (David Bach, 04:14)

2. Career Shift: From Wealth Advisor to Financial Educator

• Bach explains his decision to leave a successful advisor role at Morgan Stanley to focus on teaching financial literacy to millions.
• Discusses his family’s involvement in finance and the development of his first seminars and books, "Smart Women Finish Rich" and "Smart Couples Finish Rich."

3. Mini-Retirements and Sabbaticals: The Courage to Take a Break

• At age 46, Bach took a year off, which he attributes to overcoming burnout and gaining renewed creativity and energy.

• The inspiration stemmed from a business coaching program that prompted him to rethink the culture of relentless income growth.

• Quote:

  "What if instead of 10xing my income, I 10x my free time?"
  (David Bach, 12:51)

• Bach and Stein discuss the American and European approaches to taking breaks, noting that in Europe, multi-week and even multi-month sabbaticals are normalized.

• Quote:

  "In Europe, where I live, they just call this a summer. ...In Europe, people don't work in August. And many people don't work for the whole summer."
  (David Bach, 17:26)

• Bach’s burnout story resonates for listeners in their 30s–50s feeling tired and stuck, suggesting many are actually burnt out, not just aging.

4. Moving Abroad and Designing a Post-Work Life

• Bach’s family planned to move to Florence, Italy, for nine months—six years later, they’re still enjoying the lifestyle.

• The move was inspired by a poignant encounter with an older couple who didn’t get to enjoy their retirement due to unexpected illness.

• Bach highlights three stages of retirement:

  • Go-go years (60s): best decade, healthy, active
  • Slow-go (70s): health and social changes
  • Won’t-go (80s/late 70s): reduced capacity/mobility

• Quote:

  "The next 10 years of your life should be the best 10 years of your life. And what too often happens in retirement is that people wait to enjoy their retirement... Retirees have a hard time spending money and the biggest reason is they're afraid of running out."
  (David Bach, 19:49)

• Recommends the "ultimate arbitrage": earning in the U.S., living abroad for a better lifestyle at a lower cost.

• Quote:

  "Make your money in the United States and then move abroad and enjoy it."
  (David Bach, 23:57)

5. Psychology of Spending: Why Retirees Struggle to Enjoy Their Money

• Money is often hoarded out of fear of running out or tax consequences.
• Bach and Stein agree that the U.S. culture often conditions retirees to be "financially numb," fearful to spend what they worked decades to accumulate.
• Quote:

  "We have programmed people into financial numbness... The only people who should wait to take Social Security are the ones that desperately need the money... If you don't need Social Security, the moment you can take it, you should take it."
  (David Bach, 41:42)

6. The "12% Flat Tax" Retirement Withdrawal Proposal

• Bach introduces a bold retirement policy idea: an 8-year window where anyone could withdraw from retirement accounts at a flat tax rate (proposed at 10%, 12%, or 15%).

• The aim: unlock trillions in stagnant retirement savings, stimulate the economy, and allow retirees to enjoy their wealth.

• Research was conducted using modern AI tools and language models (ChatGPT, Gemini, Perplexity).

• Quote:

  "Trillions of dollars would come out of these retirement accounts. Trillions would go into the economy because the money would move around..."
  (David Bach, 31:38)

• Stein raises potential criticisms:

  • Benefits older and already wealthy cohorts disproportionately
  • Could reduce intergenerational equity
  • Bach responds: the majority of 401k and IRA millionaires are "ordinary people" who saved diligently.

• Addresses psychological resistance—primary reason people don't spend is to avoid paying ordinary income tax on withdrawals.

• Quote:

  "The number one reason people are not taking the money out is they don't want to pay ordinary income tax."
  (David Bach, 43:41)

Notable Quotes & Memorable Moments

• On Recharging After Burnout:

  "Didn't recharge my batteries. It gave me a brand new phone, it gave me a new battery."
  (David Bach, 14:54)

• On Learning from European Lifestyle:

  "I've learned a whole other lifestyle. Money is a tool to free you to live your best life. And one of the saddest things I've learned... is too many people wait too long to get to that golden moment."
  (David Bach, 17:26)

• On Living Life Now Rather than Waiting:

  "Don't wait for your 60s to enjoy your go go years, because I'm 65, and my husband's 67. He just retired. We both have stage four cancer. ...If I can give you any... advice, if you can do it, do it now."
  (Anecdote retold by David Bach, 20:00)

• On Retirement Spending:

  "There are two phases to investing, and for retirement, there's save and invest... and there's spend and enjoy, and that's stage two."
  (David Bach, 23:49)

Timestamps for Important Segments

• Intro & Episode Overview – 00:01
• David Bach’s Early Financial Education – 02:37
• Smart Women Finish Rich & Seminars – 05:50
• Move to New York for Media & Teaching – 08:59
• Sabbatical/Mini Retirement at 46 – 12:04
• Impact of European Lifestyle/Cultural Differences – 17:25
• Moving to Florence, Italy, and Retirement Stages – 19:49
• The Psychology of Spending in Retirement – 41:43
• The 12% Flat Tax Proposal – 29:42
• Discussion and Criticisms of Proposal – 34:29

Language and Tone

The conversation is open, warm, sometimes humorous, and always pragmatic. Bach is candid about his own journey, his family, and his views on life’s "second act." Both he and Stein encourage listeners to thoughtfully balance financial prudence with courageous spending and enjoyment. The episode feels part masterclass, part fireside chat—rich in personal narrative and actionable insights.

Useful Episode Takeaways

• Balance Saving and Spending: Don’t wait too long to enjoy wealth—health and opportunity aren’t guaranteed forever.
• Take Breaks Seriously: Sabbaticals and mini-retirements can provide a psychological and creative "reset," not just a temporary recharge.
• Rethink Retirement Structures: Consider policies and personal strategies that make it easier to enjoy money in retirement.
• Lifestyle Arbitrage: Earning in a strong economy while living elsewhere can drastically improve quality of life.
• Financial Education is Key: Both for individuals and for family dialogue—teach kids about money early!

For more, visit moneyfortherestofus.com or explore David Bach’s updated works and his proposal at iraflattax.com.