Money Guy Show – The Truth About Early Retirement: What You Need To Know

Hosts: Brian Preston & Bo Hanson
Date: December 24, 2025

Overview

In this engaging episode, Brian Preston and Bo Hanson address burning questions about early retirement, asset allocation, and practical savings strategies. With their hallmark mix of expertise and lighthearted banter, they guide listeners through challenges faced by financial “mutants” (savvy savers), clarify common misconceptions, and offer actionable tips on reaching financial independence. The duo also discuss avoiding advisor pitfalls, handling large cash positions, rebalancing portfolios, and the perennial debate of Roth vs. pre-tax savings, all while maintaining a lively, holiday-infused atmosphere.

Key Discussion Points and Insights

1. Early Retirement: Variables and Safe Withdrawal Rates

[01:26–04:13]

• Question: Roshan (35, $1M invested) asks how to adjust assumptions for early retirement before age 50.

• Acknowledgment: Hosts praise Roshan’s impressive savings feat at 35.

• Core Variables: Rate of return, wealth multiplier, withdrawal rate.

• Withdrawal Rate Guidance:

  • Retire at/after 55: 4% rule applies.
  • Retire between 45–55: Use 3.5% rule.
  • Retiring before 45: Go very conservative, possibly 3% or less.

• Planning Tools: Move from "rules of thumb" to Monte Carlo simulations as retirement nears.

• Personalization: Stress the need to factor in life goals, health, kids, and run detailed retirement plans.

  “Those safe withdrawal rates are sort of like back of the napkin planning... You have to do an actual retirement plan, run stress tests, and then you can have security going into retirement.”
  — Bo Hanson [04:13]

2. The Pitfalls of 0% Financing

[07:14–12:42]

• Question: CM asks if it’s ever okay to use 0% financing (e.g., for medical bills) instead of tapping emergency savings.

• General Policy: Both hosts are wary—liken 0% financing to “playing with the rules."

• Risks: Hidden fine print, risk of missed payments, credit dings, and potential behavioral traps.

• Short-term Exception: Using for a genuine, short-term emergency (like a one-off medical bill) may be reasonable, but avoid for consumption or ongoing habits.

  “The arbitrage game you’re trying to play—is it worth it? ...Once you take into account [risks and contracts], it’s just not worth it to me.”
  — Brian Preston [11:14]

3. Advisor Red Flags: Pushing Whole Life or Annuities

[13:11–17:27]

• Question: Jorge (51, 700k in 401k) is advised to reduce 401k contributions in favor of annuities or whole life insurance.

• Analysis: The title "financial advisor" is often misused. Always look for certifications (CFP, CPA) and fiduciary obligations.

• Red Flag: Recommending annuities or whole life before maxing tax-favored accounts is usually self-serving for the advisor.

• Advice: Ask direct questions about compensation and conflicts of interest. Seek a second opinion—trust your instincts (“spidey senses”).

  “What should you look for? You should look for the exit, right? Because that should be an immediate red flag.”
  — Bo Hanson [13:53]

4. Roth vs. Pre-Tax: How to Count Savings Toward 25%

[20:12–24:09]

• Question: Evan wonders if Roth contributions “count more” than pre-tax toward the 25% savings target.

• Answer: Focus on 25% of gross income, regardless of tax treatment—system designed to “work out in the wash.”

• Younger Families: Employer match counts toward 25% for incomes under $100k single/$200k married.

  “Don’t waste mental calories… If you’re saving 25% of your gross income, I don’t think you have to get more complicated than that.”
  — Bo Hanson [21:25]

5. Investing Sinking Funds for Car Purchases

[25:18–27:31]

• Question: Tony G asks if a car sinking fund should go into mutual funds rather than a high-yield savings account if he keeps cars 7+ years.

• Answer:

  • For short-term purchases (≤ 5 years): Keep cash.
  • For goals 7+ years out: Okay to invest as part of a regular investment portfolio.
  • Caution: Begin de-risking and moving to cash when car replacement is within 1–3 years.

  “If you’re getting into that 'halo period,' …don’t get cute…you don’t want to run this thing where one day [your car] wakes up and it doesn’t crank anymore.”
  — Brian Preston [27:02]

6. Handling Large Cash Positions

[27:47–34:16]

• Question: Bags (39, $740k saved, $150k invested, balance in cash) asks how to get invested.

• Diagnosis: Possible fear, inertia, or lack of plan led to large cash buildup.

• Action Plan:

  • Define needed cash (emergency fund, short-term goals).
  • Systematically (monthly) dollar-cost-average the rest into the market.
  • Reference the “Goldilocks Rule” for how many months to stretch out investing—refer to recent show for details.

  “Let’s remove the emotion… Systematically work this into the market… it’s literally a win-win situation.”
  — Bo Hanson [31:02]

7. Counting House Savings Toward the 25% Rate

[37:26–39:58]

• Question: Dan asks if saving for a house down payment (an appreciating asset) counts toward his 25% long-term savings rate.

• Answer: No—it’s a current use asset, not for future financial independence.

• Follow-Up: Only savings toward retirement, investments, or long-term goals count for the 25%.

  “Does this count as discipline? Yes. Deferred gratification? Yes. But saving for a house is NOT your financial independence goal.”
  — Bo Hanson [38:05]

8. Emergency Fund and “After-Tax” Assets

[46:06–49:43]

• Question: Jarrett N’s emergency fund is depleted; should he cash out after-tax assets (potentially at 0% capital gains)?

• Advice:

  • If truly underfunded and risk is high, tap after-tax investments.
  • Use this phase to triage: is the shortfall a temporary “season” or chronic?
  • If chronic, major lifestyle changes or expense reductions may be needed.

  “If this is just the way it is, you’ve got a bigger problem lurking... None of it’s going for long-term savings, none for the cash reserves. That’s a problem.”
  — Brian Preston [48:49]

9. Rebalancing Across Accounts

[53:32–56:53]

• Question: Brad asks how to rebalance across multiple accounts (401k, IRAs).

• Guidance:

  • For most accumulators, keep it simple: target date or three-fund solutions.
  • Factor in available choices in 401k, use other accounts to “fill the gaps.”
  • Focus on savings rate and simplicity over complexity or “fancy” strategies.

  “Don’t do what you think rich people do… Focus on the savings rate and a three- or four-fund strategy.”
  — Brian Preston [56:02]

10. Is There Ever a Bad Time to Buy Index Funds?

[56:54–61:51]

• Question: Cato notes high PE ratios and index concentration, wonders if there’s ever a bad time to buy index funds.

• Hosts’ View: No—market timing is futile. Always be buying; long-term, markets trend upward.

• Alternative Analysis: If you avoid the market, alternatives (e.g., real estate) are complex and come with different risks.

• Historical Wisdom: Citing Nick Murray: “If you think the market’s high now, wait ‘til you see it in a decade” [57:19].

  “When should you break the rule [‘buy low, sell high’]? The answer: always be buying. That's how compounding works.”
  — Brian Preston [58:46]

Notable Quotes & Memorable Moments

• “I hope you know how far, far out ahead of the curve objectively you are from your peers.”—Bo Hanson, to Roshan [01:56]
• (On 0% Financing) “Odds are, you’ll be fine. But if something happens that wasn’t prepared for, the outcome could be incredibly negative.”—Bo Hanson [08:07]
• “Ask your advisor: ‘If I do this, how does that benefit you?’ That’s when your spidey senses should start to tingle.”—Bo Hanson [15:05]
• “If you get too ‘cute’ with your car sinking fund, you could end up with a country song—stock market gets its teeth kicked in, you lose your job, and the car breaks down.”—Brian Preston [27:17]
• “Be careful not to be house rich and retirement asset poor.”—Brian Preston [45:16]
• (On investing in high markets) “Long-term—even if you invest at the world’s worst time—as long as you keep saving, you’re rewarded.”—Bo Hanson [58:33]

Fun & Banter Highlights

• Brian and Bo’s playful debate over “Santa wear,” Han Solo cosplay (“Han Bolo”–Bo), and Chewbacca (“Chew Brica”–Brian)
• Lighthearted aside about holiday distractions: “Did you not notice the wreath?” [34:36]
• Family gift wishlists and breakfast casseroles: “The Money Guy Cookbook coming 2026!” [53:14]

Timestamps for Key Segments

• [01:26] Early Retirement Planning Variables
• [07:14] 0% Financing for Emergencies
• [13:11] Red Flags with Financial Advisors
• [20:12] Roth vs. Pre-Tax Savings Counting
• [25:18] Car Sinking Fund Investment Strategy
• [27:47] Large Cash Position: How to Invest Systematically
• [37:26] Saving for a House vs. Long-Term Savings Rate
• [46:06] Emergency Fund: When to Use After-Tax Investments
• [53:32] Asset Allocation & Rebalancing Across Accounts
• [56:54] Should You Ever NOT Buy Index Funds?

Tone and Takeaways

Brian and Bo use practical, straightforward language with relatable analogies and a few jokes to keep things light. They encourage rigorous, thoughtful planning for financial independence, advocate for transparency and fiduciary responsibility from advisors, and urge listeners not to get hung up on market timing.

Bottom line: Stay the course. Be systematic, be disciplined, always be buying, and use your money to build a life you love.

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