VanLife Millionaires Are Leaving MILLIONS On The Table | Making a Millionaire

Summary

Money Guy Show: VanLife Millionaires Are Leaving MILLIONS On The Table | Making a Millionaire

Hosts: Brian Preston and Bo Hanson
Guests: Robert and Carrie
Release Date: March 3, 2025

---

Introduction

In this episode of the Money Guy Show, hosts Brian Preston and Bo Hanson delve into the inspiring journey of Robert and Carrie, a couple who successfully retired at the young age of 54. Their unique approach to financial independence through frugality and strategic wealth management serves as a blueprint for aspiring millionaires. The conversation explores their lifestyle choices, investment strategies, tax planning, and philanthropic goals, offering valuable insights for listeners aiming to optimize their financial future.

---

Guest Background: Journey to Financial Independence

Brian Preston opens the discussion by highlighting Robert and Carrie’s early commitment to living below their means, which was pivotal in their path to early retirement.

Brian Preston [04:30]: "You are a little bit different. A lot of times we sit down and talk with folks who are building towards financial independence, and you guys have done it."

Robert shares their humble beginnings, emphasizing disciplined saving over high income:

Robert [02:37]: "We tried to start off our marriage with the basic premise of living well below our means. We pretty much lived like we were very poor, financial misers for a little while. So that basically set us on a good trajectory."

Their frugal lifestyle included driving old cars, limiting dining out, and maximizing savings, which culminated in their early retirement at 54. Carrie adds to their story by mentioning their decision to homeschool their children and live off a single income, further illustrating their commitment to financial discipline.

Carrie [03:53]: "We lived off just one income. Whatever I made just went to the savings account."

---

Financial Strategies: Asset Allocation and Investment Decisions

A significant portion of the discussion centers around Robert and Carrie’s investment approach, characterized by an aggressive portfolio heavily weighted in equities.

Robert [12:00]: "I would say it's aggressive... We have, we have somebody else doing it... You pay more for peace of mind than for the strategy of it, probably."

Despite their retirement, they maintain an equity-heavy portfolio with about 96% in stocks, which has substantially grown their wealth over time. They also highlight their cautious approach to cash reserves, strategically drawing down from their post-tax investments to maintain liquidity.

Bo Hanson [11:57]: "Y'all are less than 3%. Not that we use safe withdrawal rates to drive, but it is a great indicator of how conservative somebody's retirement is."

---

Tax Planning: Roth Conversions and Required Minimum Distributions (RMDs)

Tax efficiency is a critical topic, with the hosts advising Robert and Carrie on the benefits of Roth conversions. Despite their current low tax rate of 12%, the hosts suggest maximizing Roth conversions to mitigate future tax liabilities associated with RMDs.

Brian Preston [35:24]: "If you began a Roth conversion strategy where you began converting some of those pre-tax dollars to Roth in those early years before you get to RMDs... it's pretty wild."

Bo Hanson underscores the long-term advantages of such strategies, emphasizing the potential to save $1.3 million in cumulative taxes through proactive Roth conversions.

Bo Hanson [41:11]: "Why not maximize this thing with just a little bit? Because like I said... that's a pretty good deal."

Robert and Carrie express concerns about their current tax strategies related to healthcare marketplace dependencies, which complicate their decision-making regarding Roth conversions.

Robert [22:12]: "We use the healthcare marketplace, so which is so dependent upon your income... it's really like you're just sort of guessing at your income."

---

Asset Allocation: Balancing Growth and Stability

Robert and Carrie maintain a robust investment portfolio with substantial pre-tax and after-tax assets. While they currently do not utilize index funds extensively due to concerns about capital gains distributions affecting their healthcare costs, the hosts recommend exploring more tax-efficient investment vehicles like ETFs to enhance their portfolio’s tax efficiency.

Robert [21:23]: "Can I tell you why we aren't doing index funds?... I'm not gonna consume my life with reading when they're doing it and pulling all of my money out so that I don't get capital gains distributions."

Bo and Brian advocate for a more balanced approach, encouraging Robert and Carrie to consider adjusting their asset allocation to reduce risk and enhance growth potential.

Bo Hanson [17:02]: "But the thing, real estate is bad, you know, unemployment, inflation, all these things happen at the same time."

---

Charitable Giving: Legacy and Philanthropy

Charitable planning is another focal point, with Robert and Carrie aiming to donate 20% of their wealth—10% to their local church and 10% to other charities. They discuss the challenges of determining the optimal timing and mechanism for these donations, balancing their desire to give generously with ensuring their financial stability.

Robert [55:11]: "We want to at least give 20% of our wealth away, 10% to our local church, and then 10% to other charities."

The hosts emphasize the importance of strategic philanthropy, suggesting methods like donor-advised funds and qualified charitable distributions to maximize tax benefits and legacy impact.

Brian Preston [58:06]: "We did it through other mechanisms... like running capital gains and using carry forwards to optimize your donations."

---

Advice from Hosts: Optimizing Financial Health

Brian and Bo provide actionable advice to Robert and Carrie, focusing on enhancing their cash reserves, re-evaluating their asset allocation, and re-prioritizing their financial goals now that they have achieved financial independence.

Brian Preston [65:37]: "Item number one of homework is cash reserves. Right. For a retired financial independent couple, your cash reserves are probably in a different spot."

They encourage the couple to move beyond mere financial independence to "abundance," which involves intentional living, legacy building, and thoughtful generosity. The hosts advocate for continuous financial planning and reassessment to ensure long-term stability and fulfillment.

Bo Hanson [61:45]: "You have tremendous levels of time. Another one of those levers that, as a planner, I would be trying to pull."

---

Conclusion: A Blueprint for Aspiring Millionaires

Robert and Carrie's story exemplifies how disciplined savings, strategic investments, and thoughtful financial planning can lead to early retirement and a fulfilling life beyond work. The hosts’ guidance on tax planning, asset allocation, and charitable giving provides listeners with practical steps to optimize their own financial journeys. By moving from financial independence to abundance, individuals can not only secure their financial future but also create a lasting legacy that reflects their values and aspirations.

---

Notable Quotes:

• Robert [02:37]: "We tried to start off our marriage with the basic premise of living well below our means. We pretty much lived like we were very poor, financial misers for a little while."

• Carrie [03:53]: "We lived off just one income. Whatever I made just went to the savings account."

• Brian Preston [35:24]: "If you began a Roth conversion strategy where you began converting some of those pre-tax dollars to Roth in those early years before you get to RMDs... it's pretty wild."

• Bo Hanson [41:11]: "Why not maximize this thing with just a little bit? Because like I said... that's a pretty good deal."

• Bo Hanson [61:45]: "You have tremendous levels of time. Another one of those levers that, as a planner, I would be trying to pull."

---

Final Thoughts

Robert and Carrie's experience underscores the importance of intentional financial planning and the impact of small, disciplined decisions over time. Their journey from frugality to financial abundance highlights the potential for individuals to not only achieve financial independence but also to utilize their wealth in meaningful and impactful ways. The Money Guy Show episode serves as both inspiration and a practical guide for listeners striving to navigate their own paths toward financial security and fulfillment.

Transcript

[Brian Preston]

Ryan Reynolds here from Mint Mobile. I don't know if you knew this but anyone can get the same premium wireless for 15amonth plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to [e-mail].

[Robert]

Switch upfront payment of $45 for 3 month plan equivalent to 15 per month. Required intro rate first 3 months only then full price plan options available. Taxes and fees, extra fee full [e-mail].

[Brian Preston]

Robert and Carrie have unique lifestyle. You guys were able to retire at age 54. That means you must have made every single financial decision correctly. But is such a frugal lifestyle cost them huge opportunities.

[Bo Hanson]

But do you consider cheap still or do you think you're.

[Robert]

Oh, I'm still cheap. I mean we still.

[Brian Preston]

Let's dive in and find out.

[Bo Hanson]

Welcome to Making a Millionaire where we help our guests discover their great big beautiful tomorrow. I'm your host, Brian, Brian PRESTON Joined by Mr. Bo Hanson.

[Brian Preston]

That's right. We are so excited that we can help walk you through the stories of millionaires and millionaires in the making. And today is no different. Brian, we are right now sitting down with Robert and Carrie. How are you guys doing today?

[Robert]

We're doing great, man.

[Brian Preston]

I am so excited to talk with you guys because you are a little bit different. A lot of times we sit down and talk with folks who are building towards financial independence and they're trying to get there and they're trying to get to the top of the hill. And you guys have done it. You guys are now on the other side of the equation getting to live in your financial abundance. And I'm excited to dive in. So walk us through, what's your story? Who are you guys? Where are you from? What'd you do? How'd you end up here in studio with us today?

[Robert]

Well, we both are, we are from, we graduated college. We grew up in middle class families. Maybe mine was a little lower class, lower, lower middle class than hers. We were both, I think primarily the first to graduate college. We were blessed to not have, have college debt. We, we both did well in high school and had, we, you know, had our scholarships and things to be able to fund a lot of that. So we were set on a good footing to come out of that. We both, we both worked for a living, worked hard in high school and then as well as in college and then, and then afterwards, and then ever since then, we've, we, we tried to start off our marriage with the basic premise of living well below our means.

[Brian Preston]

Yeah, that's great.

[Robert]

And so we, we pretty much lived like we were very poor, I think misers, if you want to call it that, financial misers for a little while. So that, that basically set us on a good trajectory. And then ever since then, we, we, we were blessed to, to, to make more money. We were never, never really rich in terms of income. I was just an entry level IT manager at the, at the greatest. Never, never anything beyond that. But we, we live below our means and, and saved and, and then ultimately we were able to retire at age 54. So we have two kids. They're both in their, their late 20s. They both have advanced degrees and are doing really well and on their way as well.

[Bo Hanson]

I think you're underselling yourself on your success and the fact that that discipline muscle obviously was very strong, worked incredibly well because we'll share in a minute how successful you guys are. But I loved how you talked about you. Essentially small incremental decisions that discipline stacked on top with enough time really created some amazing things. Carrie, did you want to add anything to this journey? Because you have also been some adventure seekers too.

[Carrie]

We, I was just going to say, and I, I did not work for a lot of years. We homeschooled both of our kids all the way through high school. But when we got married, we knew that I probably wanted to stay home with the kids. So we lived off just one income.

[Bo Hanson]

That's incredible.

[Carrie]

Whatever I made just went to the savings account. But yeah, since we've retired, we hiked 600 miles of the Appalachian Trail and then we bought an RV van, and we've lived in it for two and a half years full time, and then just recently bought a house.

[Brian Preston]

That's amazing. So, okay, so you guys were able to retire at age 54. That means you must have made every single financial decision correctly. Like, you did everything right. Was that your experience coming through, making financial decisions?

[Robert]

I usually tell people, I say financial independence comes at maybe a million good decisions. And then you try to shelter from the ones, the bad ones that you make.

[Brian Preston]

You just avoid the catastrophic ones. Right.

[Robert]

We all make bad decisions. I, you know, and I'm sure we'll talk about some of those. I think about, I think about like a Roth. IRA was one of those that know when Roths first came out, because we're older, we remember when they came out. And I remember telling her, because there was also a lot of talk back then about a federal sales tax, that there was talk about getting rid of the income tax and the federal sales tax. And I said, I don't know that I trust that they're going to honor a Roth correctly. Because if I did a Roth and paid taxes on it and then all of a sudden they do a sales tax, am I going to get credit up? Yeah, doubled up. So we never did Roth. Okay, so just as an example, like we never did Roth.

[Carrie]

Lack of trust of the government help.

[Bo Hanson]

But not from Atlanta or from the Georgia area. And you talked about the Fair Tax. We're both from Georgia. That is the John Linder Neil boards. You obviously got you scared and you ended up not doing the Roth ira. I think Clark Howard would be very disappointed in that. But it's, But I couldn't help but notice those. When you started talking about these things, I was like, that's an Atlanta influence going on right there.

[Robert]

So I just remember our first year when we had a, we were doing okay. I, I did a pretty, I had an interesting job in college that set us. We had at least some savings. And then, but we, and then I had a decent job coming out of college and we lived like we were dirt poor. We, we drove our 12, 15 year old cars that the paint was peeling off. We went out to eat once a. Once a month and it was usually like Wendy's. Like, it was like a hap, not a Happy meal value. Their value meal, of course, is like, can we keep it under 10 bucks once a month to go out to eat? And that our big, you know, thing. And I remember we were at church and they had a marriage retreat and we went on this marriage retreat and I realized on the bus going on the marriage retreat, I said, we never paid for it. And the church thought we were so poor they sponsored you. We got a scholarship. And I mean, to be honest, we probably had like 30 or $40,000 in the checking account at that point and.

[Brian Preston]

Just never lived like that.

[Robert]

Because we lived that literally.

[Brian Preston]

The millionaires next door, I mean, that's literally what you're defining.

[Robert]

And I remember just like begging our pastor. I'm like, we can afford to pay, you know, for.

[Bo Hanson]

But I do have to ask, because these things you guys have, y'all transition. Because I understand some of those early discipline good decisions that might seem extreme to your peers and relatives are what were those small decisions that led to big results down the road? But did you have a transition at any point in time where y'all actually started leaning More into the experiences and things like that.

[Robert]

Well, I would say, I mean, you. You know those better than me, probably. We had a lot of good experiences and we've been able to travel and do cruises even.

[Brian Preston]

So, not just in your retired state, but even while you're working, while you're raising kids.

[Carrie]

Right. We were able to take the kids to Europe a couple times, and we've done a lot of. Done a lot of great things.

[Brian Preston]

That's awesome.

[Bo Hanson]

So. But do you consider cheap still or do you think you're.

[Robert]

Oh, I'm still cheap. I mean.

[Brian Preston]

We still book.

[Robert]

We still book inside guaranteed cabins on a cruise ship and hope to get upgraded. We still, we don't. We don't buy the drink package. We don't, you know, we won't buy a soft drink on the cruise ship. I mean, it's. If we buy one, that's like, that's a big deal. So. So. But we'd much rather do a lot of experiences, I mean, at lower costs.

[Bo Hanson]

Than your basic life, essentially, by doing these things. And just to give you guys credit, we pay for all of our guests to have nice hotel rooms. And you guys, you brought the RV on wheels.

[Brian Preston]

We're going to be just.

[Bo Hanson]

Is that out. Thank you. Or was that how to be just. You're more comfortable because you got everything set up the way you want it.

[Robert]

Well, it was. We didn't know it was pretty cool this time because of the weather, but it was when we're doing this. But no, we enjoy it. And then we also. I'm just always a cheapskate.

[Brian Preston]

I love it.

[Robert]

It's like, I love it because it.

[Brian Preston]

Sounds like you are. But you're still able to enjoy life and that sort of thing. So I'm curious now. So again, you're in financial independence, right? You're in retirement. You're doing the things that you want to be doing. What are some of your concerns now? Like, what are the things that obviously, I imagine while you're working, you're so worried, are we gonna have enough? Are we gonna be able to retire? Are we gonna be able to get our kids through college and out of the house? But now it's a different set of are we's. And so what are the are we's you have now? What are the things that you guys think about when it relates to, like, financial goals or concerns?

[Carrie]

I mean, I think you're always thinking, is that the right amount of money? How much can we spend each year? Because you don't know how long you know you need this money to last or how much you're going to need in future years. And so it's a, it's always a little bit of an equation to try to figure out what the right answer is.

[Brian Preston]

How have you guys been answering that? Like, how do you answer the question? Or how have you answered the question, do we have enough and how much can we spend?

[Robert]

We don't, we don't think of it as how much can we spend. I mean, to be honest, that's never. We don't do like a, oh, if I take 4% of my net assets, I could, then I'll just go spend that amount. It's like, what is the life. Lifestyle that we're trying to live? And then, and then how does that really fit with this? I will say, related to that, one of the questions that we have, that's a complicated question. I don't know how to say it really well, but it's. We use the healthcare marketplace, so. Which is so dependent upon your income.

[Brian Preston]

Yeah.

[Robert]

And your income is so difficult to predict. Like, you know, with how you, what capital gains are and, and dividends and things like that. It's really like you're just sort of guessing at your income. And it's such a huge variance on that. About the choice that you make about healthcare. Because if it, if all of a sudden we have really higher income, then a different choice would probably have been a better choice.

[Brian Preston]

That's right.

[Robert]

Using the marketplace. So you don't want to let to wag the dog too much. But that is definitely one of the things. Every year when we do our taxes, we're like, I don't know, how much money did we make last year?

[Carrie]

I mean, part of it is we just know you're going to pay taxes. So if you do this, you'll pay taxes on this money. If you do the other thing, you'll pay taxes on the other money. And you just have to be okay with that.

[Brian Preston]

Okay, great.

[Robert]

We're also not, we strive to not be anxious about things like it. And it just, I mean, part of that is being blessed. I mean, to be honest, it's a little bit easy to not, not be anxious, you know, when, when the van needs a, you know, because it's a Mercedes Sprinter. Right. So anytime you go to get work done, it's always $2000. It doesn just like, I'll just give you 1800 just to start. You know, it doesn't.

[Bo Hanson]

So.

[Robert]

But you try not to be anxious about that. And you know, part of that is the blessing of, of having some resources.

[Bo Hanson]

Right. We'll get into it in greater details. But we did notice, even when we were looking at your investments, for somebody who's now living off of your resources and assets, you're still equity heavy. Is that something that. How did you come to. Because have you always. I mean, it's fine. You know, there's this whole life change. When you're younger, you want to be aggressive, but usually as you start living off of the ass assets, you dial it down a little bit. But when we looked at your stuff, y'all were pretty lean on cash. Now there's some lifestyle things that happened recently that's more of a timing thing. But I did notice on the asset allocation, very, very heavy on, on equity.

[Brian Preston]

How would you describe your portfolio? Is it an aggressive portfolio? Is it a conservative portfolio?

[Robert]

I would say it's aggressive. Here's, I think a few things about it. One is we have, we, we. It's always a struggle about how much you're going to spend in a year. It's one of those things I remember asking people and it's hard to get people. People don't want to be, they don't want to be perceived as prideful and it's always personal. Personal finance is personal. But, but we were just trying to figure that out because it's hard to really just budget from like working to retirement and what is your lifestyle going to be? What, you know, what choices are you going to make? So we've basically figured out that so far we've been spending about $80,000 a year in retirement. And that's just total. That's everything. That's, that's healthcare, you know, giving, you know, everything that we travel, all that kind of stuff. And that really helped us a lot to have that idea. Now we have had some lifestyle changes recently. I'll go ahead and share that. We've had our second grandchild.

[Brian Preston]

Oh, congratulations.

[Robert]

And I think the second grandchild is sort of. I say it's a gravitational pull that says maybe we're not, maybe we're not just going to live in the van full time and be away too much to miss too many of those opportunities. So, so we did make the, the choice to, to buy a house. So we've, we had, we had no car. All we had was the van. We had no. Just to be clear, we had no house. We sold our house in 2022.

[Bo Hanson]

Literally.

[Brian Preston]

Living out of a van.

[Robert]

Yeah.

[Bo Hanson]

Yeah.

[Robert]

I mean, when, I mean, the day that we handed our keys to the new Owner of our house and it was a Fairly large, like 10 acre house in Gwinnett county and you're near Georgia.

[Bo Hanson]

It was a seven figure transaction, right? Yeah.

[Robert]

And we owned it outright. So. So we, so we handed those keys over and that day we got on the. We went to the Appalachian Trail to get on. So I mean it was like the storage building was awful.

[Bo Hanson]

It's so awesome.

[Carrie]

We were crazy.

[Robert]

And at that point we had already ordered our van. It was in the height of like when RVing was really crazy. So we paid top dollar pretty much for the van and, but. And there was a back backlog on it. So the van was delivered in June. So we left in March and went out on the trail in June and then got off the trail in June when the RV was ready and then just hit the trail in the rv. So we've been doing that ever since, living in the van. And then In October of 2024 we, we bought a house and another car just so we have another car. And so it's been a, it's been a journey. So. So now we're trying to figure out what our, what our expense model is.

[Brian Preston]

Really going to look like because now you have a mortgage again and there's some stuff and carry costs that maybe weren't existing previously, at least in the early stages of retirement.

[Robert]

So we're trying to reset that. Obviously we, we could just pay cash for the house, but we. Sure. We just decided not to because I mean, we're doing okay with the investments. They're. They're doing okay. This, the interest rate's not great. We'll probably refinance.

[Bo Hanson]

Right.

[Robert]

If we decide to keep it.

[Bo Hanson]

It's right under 6, like 5. 5.8 somewhere.

[Robert]

Yeah. And we put 25% down. So we were carrying a good amount of cash. Especially when interest rates when, when cash is paying really nice. It wasn't too bad. So, so we had that, we had, we had basically three years of expenses in cash.

[Bo Hanson]

Right.

[Robert]

So you know, when you say it's an aggressive portfolio, it's like, yeah, but I'm carrying three years of expenses in cash.

[Brian Preston]

Were.

[Robert]

Were. Right.

[Bo Hanson]

But the. Were.

[Robert]

Yeah.

[Bo Hanson]

Yeah.

[Robert]

So now. Well, that's why we're, we're, we're currently drawing down. I mean, I share some details. We're drawing down $9,000 from our post tax investments. Great. And we're trying to reset that to see if that'll replenish some a little bit. We're honestly not sure because we had nothing like, I mean we were Shocked when we emptied our storage unit, which was a 10 by 20 storage unit, not very large. And it was mostly just furniture and like a piano and stuff like that. And it's like, oh, we don't even, I don't even have a rake. I mean, like, you know, it's like all of a sudden you're resetting, going, oh, we don't have. So we're, we're having to restock some of that to live in a house.

[Brian Preston]

I love that what you said is okay. The way that we got to where we are is by making just small decisions. But obviously for folks out there listening, they're hearing, hey, these people were able to sell their house and live out of a van. And they must have, they must have a pretty healthy financial situation. I thought it'd be nice because you guys are kind enough to share a net worth statement. Let's kind of look at sort of where you guys are presently. So when we look at your current net worth, you've already alluded this. You beat us to the punch. You've only got about $54,000 in cash, but it sounds like there's a strategy to get that number to a targeted goal. And you said that your burn rate is about $80,000 a year. So if our goal is to have somewhere between 18 to 24 months of expenses, I imagine your cash goal is going to be somewhere around 120 to $160,000. Is that what you're thinking?

[Robert]

My guess is it'll be a little higher than that. Okay, well, we're also not, we think our burn rate's going to be a little higher with the house.

[Brian Preston]

And what do you think the burn rate will be?

[Robert]

I don't know. I think it's going to be a hundred.

[Brian Preston]

Okay.

[Robert]

I mean, I think it'll be 100 if I had to guess.

[Bo Hanson]

But by the way, that's still not really going to stress your level of assets. I mean, so you didn't hear us like give any anxiety ourselves. It was actually, that's very within reasonable.

[Brian Preston]

And then we walk through the investment portfolio you have really. You already mentioned you don't have a ton of Roth assets because you didn't do the Roth. We'll talk about that in a moment. But in terms of the other two buckets, in the three buckets, it's pretty, it's pretty interesting. You have a lot of after tax assets split between two joint accounts, about $1,050,000 there. Why the two joint accounts? Is there a reason that you have Two separate after tax accounts.

[Robert]

I had a Vanguard account for a really long time. Like, one of my bad decisions was I used a. A very large financial management company. I think this was actually pride when I was in my 30s, and I thought I was becoming, like, big money, big deal. So I went to a large brokerage house and I said, why don't you manage some of my money? And they really did a poor job. It didn't last long, but. But the funny thing is, I know my personality. My personality is I'm pretty good at buying stocks. I'm horrible at selling stocks.

[Brian Preston]

Like individual stocks.

[Robert]

Like individual stocks.

[Brian Preston]

Well, it's a hard part. You got to get it right twice. I got to do it twice.

[Robert]

And I. Because I just question it and I doubt, and I. I second guess after the fact. So. So the funny thing is that when they. When we. When we dump those guys, we just transferred all of their assets into Merrill Lynch. I'm sorry, not Merrill Lynch. Into Vanguard.

[Brian Preston]

Okay.

[Robert]

And one of those accounts is of my Vanguard account.

[Brian Preston]

Got it.

[Robert]

And so we just. And honestly, I've. The only time I've ever sold those holdings that I've held for 20 years is when I'm donating, like a cash. Cash transaction.

[Brian Preston]

Yeah.

[Robert]

So I take the things with the biggest capital gains, and I do do that for a donation or the one time we bought a. We bought the car.

[Bo Hanson]

So you're donating it directly to the share.

[Robert]

So that's.

[Bo Hanson]

That's great.

[Robert]

So that's what we've been using that account for. It's been. So the holdings in that one are really not great sometimes, but I've never done anything with it. But.

[Brian Preston]

So this is a big chunk of your assets we're talking about. If your total investable portfolio is about 3.8 million. We're talking about a million bucks that's in these accounts that are.

[Robert]

No, brokerage number two.

[Brian Preston]

Oh, they're small. Okay.

[Robert]

Brokerage number two is. Is. Is managed. Oh, okay. Okay. Sorry. It's the broker number one. The fact you got that.

[Brian Preston]

I was like, oh, my goodness, you have a million dollars.

[Robert]

Brokerage number two is pretty well managed and actively managed.

[Brian Preston]

Wonderful. Okay. Is that something you're doing or do you have.

[Robert]

We have. We have somebody else doing it.

[Brian Preston]

Okay.

[Robert]

And primarily it's because we want to enjoy life. Yeah. And I know how. I am. Sure. No, I would sit around watching Fox Business or cnbc, and I would just get consumed with analyzing what to do, and I just. We just don't want to do it.

[Brian Preston]

Sure.

[Robert]

It's. It is. We're. I mean, as you know, it's not that complex, but it just allows us.

[Brian Preston]

You're paying more for peace of mind than for the strategy of it, probably.

[Robert]

And it's. Yeah. And it just helps us to enjoy life.

[Bo Hanson]

I know the curse. I want our audience to hear it because you've. You just said I'm good at picking stocks. And I want to echo that, because I think people who actually have record of picking stocks, it still can be a curse. There's two reasons it really turns into a curse is because even if you choose the perfect stock, you typically, people will sell it after it makes three to four times what you initially invested, because you're like, man, I've made 300%, 400%. You've owned it for three or four years, five years. You sell it. Well, then it becomes the next Nvidia or something like that. And you watch it go up tenfold. And then you're like, I should have never sold it at 3 or 4. Well, the other side of it is that if you don't sell it, because even when you're making money, when that Stock goes down 5, 6%, even though it might only be less than 1% of your total net worth, you find that 100% of your happiness for the day has been wrapped up into the emotional side of that. And that's one of the things.

[Brian Preston]

Is that true? Is that an accurate sentence?

[Bo Hanson]

That's why it is a curse. And I tell people there's nothing wrong with vacation money to do individual stocks. It can be very fun. It's a great hobby. But we love index funds. You know, we love. Because I think it takes the emotional side out of things. And you're just buying. You're counting on this ever expanding economy, the law of accelerating returns and kind of benefiting.

[Robert]

Can I tell you why we aren't doing index funds? And then you can tell us why we're wrong? It's fine. I got a thick skin. Part of it. It's that healthcare marketplace thing. So. Because if I do s and P500 index funds and I. Okay, let me just say I'm not gonna pull my money out right before they do distributions. Right. I'm not gonna consume my life with reading when they're doing it and pulling all of my money out so that I don't get capital gains distributions, then all of a sudden I get a big capital gains hit. Because these are big numbers. And my income, my quote unquote adjusted gross income has drastically changed and now my healthcare, I gotta pay another 15 grand besides taxes, I gotta pay another 15 or 20 grand in healthcare just because the mutual fund cut a distribution. Right. So that's the reason that worries me. And I don't know if that's right.

[Bo Hanson]

You could counter that several ways. Maybe you look at ETFs which would allow you then just to get the dividend because you're still getting dividend, dividend income. We looked at your projected, these statements have the projected incomes on there. That's one way to be more tax efficient. So you can afford index funds. Even if it's the mutual fund variety, they're still more tax efficient than managed mutual funds because it's the turnover, that manager coming in there and picking the winners and losers that typically is causing those big distributions, those capital gain year end distributions. The mutual funds will have them because they change and even the ETFs to some degree because they change the portfolio. The Kodaks of the world disappear off of the S and P and then they add the Teslas and whatever else is the hot stock that joins the s and P500. I don't know that I think that that necessarily is as inefficient because that's one of the reasons we love index funds is they're very tax efficient.

[Brian Preston]

And then the other thing that you have the ability to do and it looks like judging from your tax records you probably were doing this is when there are significant downturns like 2022 or like fourth quarter of 2018 or the middle of, you can do a bunch of loss harvesting where you can go out and harvest those losses and then those losses can be used to offset future capital distributions or capital transactions. So there are ways that you can tax manage it without having that. Oh, from the, you know, from the portfolio distribution it is one of the.

[Robert]

Things Kerry has mentioned and we tried to look at this. It seems like the tax man's pretty good about making sure that they get.

[Bo Hanson]

Oh yeah, no, the system is set.

[Robert]

Up to get taxes, you know, and we, we, we really try not to completely get wagged around. I think sometimes people get so consumed with saving, you know, not a penny but a quarter, you know, in taxes that they're spending an awful lot of effort to try to do that. So we, we try not to do that too much.

[Bo Hanson]

Sure.

[Robert]

But maybe there's just sneak in.

[Brian Preston]

You don't want to get into a situation where you lose control of your tax circumstance. Right. Like you'd love to have an idea in there where you could control what you're paying in taxes.

[Bo Hanson]

Taxes.

[Brian Preston]

And not just be, surprise, surprise, oh, so interesting. Brian.

[Bo Hanson]

I definitely want to get into taxes, but I do want to. There's one other behavioral thing that you've said, though, that I want before we get into the. Because I love taxes, by the way, so I'm not going to delay us too much.

[Brian Preston]

You love tax planning.

[Bo Hanson]

I do.

[Brian Preston]

I love tax planning.

[Bo Hanson]

I've been in the weeds a little bit with it. But you also said that you got this house proceeds seven figures and then it just got washed into the market all of a sudden. And then we all know 20 in hindsight, 2022, you know, was not a great year to just throw seven figures into the market. And but to their defense, Your, your advisor, 8 out of 10 years markets make money. So I mean, if you're going off the statistical norm, it's okay. But we typically, I worry always worry about my retirees is that you have. Because it does hit different when the market goes down 15, 20% when you retired versus when you're working. Because when you're working, you're just like, well, I'll make a little bit more money. It'll recover, it'll be okay. You, you said something that I thought was very powerful. You said, I didn't even tell Carrie what was going on because I just knew it would, it would cause. These are the behavioral components. So you probably did have some stress, even though it's not even part of your personality to a degree.

[Robert]

Not, not very much, to be honest. Not really very much. I mean, because, I mean, we pulled like $300,000 of the proceeds out and I had that sitting in a Vanguard cash account. So I'm sitting there going, I mean, if I hadn't done that, I would have gone, oh man, this is not a.

[Bo Hanson]

Then your advisor probably did it exactly right. Knowing your personality profile on that. It's just that for a lot of clients that I see that maybe don't handle that emotional stuff as well. We typically just like right now you're going through and your dollar cost averaging out to replenish your cash. That's an aggressive stance which does tie into just go and lump sum in. Whereas maybe somebody who's a little more anxiety prone, we would a dollar cost average those housing proceeds probably over 10 months.

[Brian Preston]

Sure.

[Bo Hanson]

Into into the market just to cut the corner or edge off of any type of volatility that might be happening in the show.

[Robert]

I assumed my advisor was actually going to do that, but because I didn't Tell him he said no surprise. I think somebody says that time in the market or whatever. Yeah, it's like, it's a good thing. It's like, well, let's just get in the market. So they pretty much over three years, which ultimately it's all okay now.

[Brian Preston]

Sure.

[Robert]

Right.

[Bo Hanson]

I mean, 2023 turned out to be great. 2024 is great. It's amazing what a little bit of time can do to save things.

[Brian Preston]

So and so right now, as part of your strategy, you're obviously living off of these assets. You're pulling money out on a monthly basis to be able to satisfy that 80 to $100,000 burn rate. But in addition to that, you're selling to raise cash. Is. Am I, Am I. Because you're also doing the $9,000 a month to build up your cash. Am I understanding that correctly?

[Robert]

I mean, that's all that we're. That's all that. That those investment monies are doing. So, yeah, the rest of it is just sitting in. I mean, we're using that brokerage one account.

[Brian Preston]

The goal is to get that 50,000 up to some higher number, 150, 200. You're just doing that through a monthly distribution strategy.

[Bo Hanson]

Right?

[Robert]

Right. And we're not in that big of a hurry to do that. Maybe we should be in a little bit more of a hurry.

[Brian Preston]

Well, it just seems like having a nice. I mean, right now market has done incredibly well. And it seems like having an emergency fund in place would be valuable because generally when bad things happen, they kind of happen in, in all at once. Right. Market goes down and the, the, the sprinter van breaks down or you have to replace the H Vac or whatever.

[Bo Hanson]

The thing, real estate is bad, you know, unemployment, inflation, all these things happen at the same time.

[Brian Preston]

And so having that emergency fund there is just one of those things. Again, if you're looking for peace of mind, things that don't keep you up. I would begin to think if my goal is to go from 50,000 to 150, 200,000, and is that something I should do more quickly than I'm doing right now.

[Bo Hanson]

I also want to. One thing we couldn't tell from planning prep is because you sent us a tax transcript, but it doesn't really show carry forwards or other things. Last year you took a capital loss carry forward, you took the $3,000 loss. So I know sitting in the background somewhere you have some capital loss carry forwards it might allow you to take and fill up your cash reserves. Today, while the stock market's at all Time highs with zero tax impact. It's something to consider. Just because we don't want. I think you're wired in an incredibly healthy way where you don't stress out. But I'd like to make sure that that stays that way. Because if the market went down 15, 20% and you had to apple car turnover, figure out how we're gonna find the $8,000 a month or whatever you need, 7 to 8,000. I don't want you making those desperate decisions for nothing because now we're getting into immaterial choices that could have material impacts in the long term if you're not careful.

[Brian Preston]

And so as we're looking at your net worth statement, obviously we have the after tax accounts. And then, Robert, you have two different pre tax accounts. You have your rollover IRA and then you have your 401k. Any, any reason you haven't consolidated those.

[Robert]

Two is a reason we actually have now.

[Brian Preston]

Okay, wonderful.

[Robert]

We did it just recently all in one.

[Brian Preston]

So you have a big. Were there any Roth dollars in that 401k? Okay, so it's all pre tax money now and then. And Carrie, you have a traditional ira, all pre tax. Then you have an inherited ira. What's going on with that inherited ira? Is that something you're having to take required distributions from presently? Okay. So it's money that's drawing out. And did you inherit that at the time in which you're going to have 10 years to where you have to.

[Carrie]

No, it was before that.

[Brian Preston]

It was before that. So you're not going to have to, you're not going to have to distribute that all inside of the ten year window.

[Carrie]

Right.

[Brian Preston]

Okay, wonderful.

[Robert]

And so far all we've been doing is whatever. I mean, I think it's fidelity. Whenever whatever Fidelity tells us is the required R, we just take that currently. But there's a. We always have that in our hip pocket that we could also go faster. Sure.

[Brian Preston]

Money in there that could be tapped into. And then on the liability side, you obviously said you borrowed money for the RV, so you still owe about 100, a little under $130,000 on that. And now you have a mortgage. Right. So you, while you are financially independent, it is unique that you do have some debt on the books. But I say this all the time and Brian hates it when I say this. Being debt free is amazing, but also having the ability to be debt free is amazing. And I would argue that with a total net worth of $4 million and an investable net worth of like 3.8 you guys have the ability to be debt free. You've just not chosen to go that route just yet. So you guys are in a really, really healthy financial situation. Right? Even living off of the 80 to $100,000 a year.

[Robert]

What?

[Brian Preston]

I'm not. I don't. To me, that doesn't scream a withdrawal rate. That's, like, super concerning. It certainly seems like the assets, you.

[Bo Hanson]

Guys are less than 3%. Not that we use safe withdrawal rates to drive, but it is a great indicator of how conservative somebody's retirement is. So y'all are in a solid position. That's why when I find out you're so aggressive, like, you know, Robert gets a little grace because, I mean, he's done such a disciplined job of building up assets that it's okay that he wants to be a cowboy on this part.

[Robert]

Well, I mean, I think one of the things that made so much of this possible was when our kids were in college. Like, we. We homeschooled all the way through. And then Carrie started tutoring at the time when tuition started to be due, and she was a private tutor all through their. Their college, and she made enough money to basically just pay for all of college. Oh, that's great for both of our kids. Med school, I mean, like, a lot of things. So. So it not only allowed them to be set up really well, it allowed us to continue and that. So. So then I. We took all of our stuff about the same time. The house is getting paid off, and then so we're just taking all of my money, and it's just going into HSA and. And maxing out everything that we can max out.

[Bo Hanson]

Hearing you give Carrie that compliment, I will tell you, one of the things I enjoyed when I was preparing for our meeting today is you provided us. We had this spreadsheet of net worth over time, and it was basically from 2018 to now. And I loved on the far right column. Y'all had made personal notes. And I felt like I was going on this journey with you guys because there was. The tuition payments were in there. So also, you have your hard work. I loved when you obviously were helping out. Like, there was a car purchase to help out the kids. There were charitable contributions to the church, and it was fun. And I loved that. I got to see that, because I imagine as you guys, when you get to give compliments to each other and you get to look at your journey and see where your success is, doing a net worth statement every year was. Was pretty valuable for you guys because you were doing Obviously, you've been doing this since at least from what I could see, 2018. Is this just an annual tradition for you guys?

[Robert]

Yeah, we've been doing it actually for a longer time. I did something wrong and lost the file somewhere. I set a password on it or something because I was really worried about it. I did something and it just got lost. So it's been actually for a long time. You know, we basically, since maybe about age 30 or 35, we targeted a $3 million number. You know, when you talk about knowing.

[Brian Preston]

Yeah.

[Robert]

It wasn't with incredible, like, detail. I think the stuff that you do is more. More detailed.

[Brian Preston]

Sure.

[Robert]

But it was sort of like I was thinking of it as a. What a withdrawal rate might be and, you know, kind of get what is the escape velocity or some phrase like that. So you get to a point where it's. It's making more money than you are.

[Brian Preston]

Yeah.

[Robert]

Then, then, then your salary, even when you're. Because it gets to that point where it's like, okay, my. Even a decent salary, I think, you know, at a point I'm making. I'm making in the high hundreds, was probably about the top end of my salary, you know. And then you're like, oh, I'm making a lot more money out of investments at a point. Right. So. But, but when we started getting close to that 3 million, you could see that trajectory. That's when you get really serious about, okay, we're. We're getting close. Yeah. And then by the time we saw that we were getting close to that number. By the time we. I think I gave a year's notice to retire, then we were already at like 3.5 at that point, you know, and then the market corrected a little bit. We were back to three. But, but it was.

[Bo Hanson]

But as you can see, it's. It's continued to grow.

[Robert]

Right.

[Brian Preston]

And build as you, as you guys have been retired now, have you seen the accounts continue to grow? Have you seen the portfolio get larger? Which is, which is a wonderful place to be. Right. Like, if the assets keep growing, what that suggests to us is that you guys are no more at, like, to pass or fail. Like, are we going to be okay? Are we going to be able to retire? It's more about optimizing. Are we making decisions now that are optimal from a financial planning standpoint. That's where. That's where we get really, really excited. Because when, you know, we love talking about. In financial independence, if you have three distinct tax buckets, you get to pick and choose how you Pay taxes and where you pay taxes from and what you trigger. And you can do things like manipulate your income for ACA marketplace resources or for Medicare surcharge things. What's really, really interesting about you guys is you have so much in pre tax assets and you're not actually pulling off of those pre tax assets yet. So what's going to happen is as you continue to spend down the after tax brokerage account, those pre tax assets are going to grow and grow and grow and grow, which is a wonderful problem to have. But you know what happens at some point with pre tax assets? The government says, hey, okay, now you gotta start pulling it out.

[Bo Hanson]

Now you gotta. It's back to Yell's point that you said, hey, the government seems to be pretty good at figuring out how they can get the taxes from you. They've designed the system to essentially create a tax bomb for those required minimum distributions.

[Robert]

But they keep extending the age, right?

[Brian Preston]

They do, they do.

[Robert]

So it's a little bit lower risk.

[Brian Preston]

One of the things that we wanted to model out for you guys to look is that, okay, if we think about every year that remains for the rest of your life, and we think about every year and we just assumed age 95, what does each year look like? We have an illustration showing a little bit of a tax projection of your income. Now, we did not know about your inherited IRA, so right there at age 60, that's when we had assumed that your RIA, your IRA would balloon, right? But what you can see is that every single year, if you're living on about $80,000 and this is all in present value dollars, you're going to be pretty consistent in terms of the taxable income you show every single year. But then once you get to age 75 and you have to start pulling those requirement distributions, instead of getting to live in the 12% tax bracket that you guys are living in now, all of a sudden, now you have to jump into the 24% bracket, which eventually turns into 32% bracket, which eventually turns into 35% bracket.

[Bo Hanson]

I have a question, Robert. Do you think 12% is a low tax rate?

[Robert]

Oh, absolutely.

[Bo Hanson]

Yeah, it's a dream. It's what I mean, when you pay 12%, like, man, how is the government letting us get away with paying 12%? But do you think it's interesting that even though we've agreed that 12% is a low tax rate, that you're not maximizing that? Now we're gonna get back to. You're gonna say, it's my medic My insurance premiums.

[Brian Preston]

I got insurance premiums. Think about.

[Robert]

No, it's just because we have, we have enjoyed living life.

[Bo Hanson]

Yeah.

[Robert]

Like we're not, we're not spending a lot of time thinking about it. And maybe we should spend a little bit more time. I mean, that's fair. But to be honest, that's really what it's been. I mean, we've seen all 50 states. We've, you know, been. We've done a bunch of travel. You know, we do about three months of international travel every year. I mean, we do a lot. Right. So it's.

[Bo Hanson]

And this is what we want you to do.

[Robert]

So we're enjoying that. But so, so it's not like we. Because I actually thought about, I actually did some of that calculation about a month ago and I said, what if things went well and we stayed the way we were? What is my RMD going to be at? 75? And I was like. And I think it was 300,000 was the number. I kind of did a quick calculation.

[Brian Preston]

So you can see that. I mean, obviously at the end of this plan, age 95, in today's dollars, you guys would have about a little under $6 million. Right. So that's a fantastic inheritance or you know, assets that you would be able to pass on. But over the life cycle of you guys being retired, you would have paid about $3 million in taxes and present value dollars. When we look at this, what we see is an optimization opportunity that we think has a material impact. So there are some assumptions we made. We said, hey, if we were going to implement some planning, we're going to give you guys an idea of a strategy to think through. Here are some assumptions that we walked through. We said, okay, let's assume that your living expenses stay right around 80,000. You could use 100,000. It's not going to change the numbers. Let's assume that tax laws stay the same because obviously, you know, there's a sunset that's supposed to happen. But let's, just for simplicity, let's assume that they stay flat. Let's assume that your current assets and liabilities stay roughly the same. You pay down the debt on the schedule. You're going to pay on the debt. Your assets grow, you don't get an inheritance or anything like that. We're going to assume that you true up your emergency funds. We know that's going to happen in the following year. Let's assume inflation average is about 3%. Let's say your portfolio on average could make about 7.5% per year. We think that's pretty conservative, certainly for someone who is equity heavy as you are, but pretty conservative. We said, okay, what does that look like? And this is what we said. What if, just in the years that you could maximize the 12% bracket, what if you began a Roth conversion strategy where you began converting some of those pre tax dollars to Roth in those early years before you get to RMDs. And when we look at how that plays out, it's pretty wild. So again, all you can see is we're maxing out up to the top of the 12% bracket. Just by doing that, we're able to. At the end of your plan, instead of having the almost $6 million you ended up with because of that tax savings of the lifetime, you actually end up with an ending portfolio of about seven and a half million dollars, which is a million and a half dollars more than what you're currently on track for. And your cumulative taxes that you pay over your lifetime drop by about $600,000. So let me pause for a second and ask the question. Is that meaningful? Is that valuable? Is that something that, oh man, I'd like to have a million and a half more dollars and pay 600,000 less.

[Robert]

Yes.

[Brian Preston]

Yes. Okay. All right. I didn't know where you were gonna.

[Bo Hanson]

What I also love about it is that you think about the fact that it's just like you have an inherited ira, and right now, I mean, it's good because it's an asset, but there's some, there's some accounting you have to do where, you know, you have to do these required distributions every year there. You got to pay taxes on it. What about if you pass on Roth assets to the kids? Those, they get 10 years, 10 years to let them keep growing. That, that's an incredible opportunity from an estate standpoint and legacy standpoint as well.

[Robert]

There was definitely a plan to do some Roth. I mean, especially, I think there's. There's always in the back of our minds, like, are we really good? Like, are we good?

[Brian Preston]

Sure.

[Robert]

So before we started making structural changes, like, I mean, we have a tax adviser, I mean, an advisor, and we. It's one of our main questions. It's like, okay, we're going to buy a house. It's going to be this much. We're going to put this much down.

[Brian Preston]

Can we afford it?

[Robert]

Are we good?

[Brian Preston]

Yeah, are we good?

[Robert]

Like, that's one of the benefits of paying really smart people who live and breathe this stuff like you guys to, to just look at you and go, yes.

[Brian Preston]

How are they answering that question? What exercise they walking through to give you some peace of mind around on that?

[Carrie]

He said, if you weren't good, I would tell you, okay, I love it.

[Brian Preston]

I love it.

[Carrie]

So that's just what we repeated to ourselves when we were buying this.

[Robert]

And in fact, he even said, in fact, there are people that I'm currently advising that I've said, you're not good. You can't keep doing that. If you keep doing that, I don't want to be your advisor. And that's good. We fiduciary. We kind of want that. That's, you know. And I know you guys do.

[Bo Hanson]

I do want to point out, though, on our chart, though, is it's great that we got you below where the 35% tax rate starts, but wouldn't it be nice? Because when I look at that, I'm still like when I ask myself, and you even heard us say it on content, we always say, when you get. If I could get your taxes below 25%, that's great. That seems historically from a context of low 25 to 30, it's kind of in that gray zone when people are deciding between Roth or traditional and their tax savings over 30 is a high tax rate. And then you even add, but Georgia tax rates and other things, even though they give some benefits to retirees. But it is interesting, though, that we still have a chunk of that money. And me and this microphone are going to have a fistfight in a minute. But the chunk of that money over 32%, I'd love if we could even push that down a little bit. So we did run another scenario to even optimize a little bit more.

[Brian Preston]

Yeah, we said, what if in these early years, while we could. What if we even considered maxing out the 22% bracket, not just the 12%, but going in the 22% bracket. What does that do? Well, what it does is while it does increase the tax bill that you would pay in these early years, it buys down that future tax rate that you would have. And this is assuming that tax rates stay flat. Obviously, if tax rates were to increase in the future for any reason, this would be more valuable. And you can see in this scenario by doing that, and all we did is we increased it up until what we had targeted for your RMD for your required IRA to have to balloon. You can see that the end value is almost $9.5 million. Now we are almost three and a half million dollars more than the original plan that you had laid out and we cut the total cumulative taxes by about $1.3 million. Now, here's the way, at least in our world, that we do financial planning, we sit down with clients and kind of go through it. We operate under the idea that, hey, this is the strategy, this is what we want to implement. But every single year it becomes a year by year decision because of exactly what you said. So what we would do with a client is say, hey, we're proposing that you're going to convert $180,000 to Roth this year. Let's see if we do that and we carry out this plan and we run this through Monte Carlo simulation, looking at a thousand different iterations of a thousand different, do we still have a high probability of success in the next year? We do the same thing, and the next year we do the same thing. So that even as you are making some of these structural changes, it's not like you begin down a path that you cannot deviate from. You begin down a path and then you test and retest and keep going. And you test and retest, you keep going, you test and retest. And you think about if you, over the next 20 years, really were able to convert all of the orange that you see on screen right there to Roth. Imagine the millions upon millions of dollars you end up having tax free later on in life. But that way, if you do want to do something like go buy another RV or buy the home or pay for the fill in the blank, you have tax free dollars that are unencumbered that you can then do that with. It just gives you guys maximum flexibility to do things on your terms, no matter what tax policy is going on at the time.

[Robert]

So what is it? Why did you drop? What's the reason at 63 that you dropped?

[Brian Preston]

So the reason we did that is we wanted to, it was a little bit of a, of a goal seek to get it below that.

[Bo Hanson]

Trying to keep it below 32% because that's where the bracket starts.

[Brian Preston]

You could have, you could be even more aggressive and you could take this all the way out till 75. This is less prescriptive and more we want you guys to be thinking about, hey, these are strategies. It's just like you said, man, when the Roth came out, I didn't jump on it. And now sitting here, I wish I would have. I love the fact that right now in retirement, you guys are enjoying your go go years. You're doing it, you're loving it, you're doing it. What I don't want you to do is get to age 65 when Medicare starts. And now you have to worry about IRMAA premiums. And you think, man, I wish I would have converted when I was in my early 50s. I wish I would have converted in my mid-50s. If you can begin thinking through some of these things now, your future self will likely thank you. The same way that yourself today would think that younger man, if he would have been funding Roth IRAs back then.

[Bo Hanson]

And it's back to that whole mindset of small decisions today because these wouldn't be heavy lifts. Currently, even just getting to the full 12%, maxing out that 12% is going to get you in a lot better place. And that's not even going to cost you much money.

[Brian Preston]

That's right.

[Bo Hanson]

So it's a small decision to really create big legacy results. And I had this conversation yesterday with a client because we're doing this with actual clients here at the firm. And they said, well what happens like because we just had an election, what happens if tax rates get extended or even maybe get lower? And I said, well look, all the things we convert today, it's still these good historic rates. If you tell me that they extend or even expand into lower taxes, what do you think the stock market's going to do? And I was like it's probably going to go up under the optimism of that more people are going to be able to do this. And I was like, so you're going to have this chunk of money that you just converted that's going to be tax free. It's going to build incredible legacy for your kids to pass down. It's kind of a great benefit. And then I played at the other side. What if taxes, because we all know the federal balance sheet is pretty big, it's heavy with a lot of liabilities. What if they decide they can't extend it? You're going to be very happy that you locked in those tax free dollars when you could before the clock and the buzzer rung that now you have to pay even more taxes.

[Brian Preston]

And the idea that they can grow tax free for the rest of your lives plus 10 years of your kids.

[Bo Hanson]

Lives, I mean that's, it's a great legacy building thing.

[Robert]

I think we probably are letting the healthcare concern, I mean part of it is we just have to make a decision, you know, because honestly we're both fairly healthy, we don't have significant issues. So. But we just, you know, you have to make those decisions about your healthcare choices. Just, it's just kind of a weird system that we have here because there are other options that we could do like a, like a medical sharing account. Right. So we could do that which is actually more costly, but it wouldn't really be more costly than if we tried to stay with the marketplace if we had a higher income. Right.

[Brian Preston]

Or if you've had a higher income and you paid more, you weigh okay, this is additional cost. But if at the end of the day I end up with three and a half million dollars more, was it a justifiable cost based on what I have going?

[Bo Hanson]

We all have to be careful. I always pick on people when they let that tax tell wag the entire dog. Because as much as I love tax planning, I don't want you trying to save just a little bit here and there and impacting your full decisions. Everybody has their own tails that they're worried about wagging for you. I could tell immediately when you brought up the subsidy you're getting on the exchange. That's something you're really putting a lot of value to. But I do think I would encourage you to really look at the broad picture and see all the other things that it's also impacting because I don't want that to be the decision matrix that's keeping you from these great legacy building opportunities and long term tax minimization strategies too.

[Robert]

The other side of it is also just the fact that I've got to pull funds out of the market in order to pay the tax bill. Right. It's not like I don't have any income really. Right. So, so then just, just thinking through the mechanics of all of that. You know, you're trying to rebuild your cash reserves. But now I also, I'm going to have a bigger cash hit and it's, it's okay. It's just a consideration.

[Brian Preston]

It's another one of those reasons why having. If you did. One of the things that I would think through is if I did have two to three years of living expenses in cash sitting there and I had that 200, $300 in cash and I was going to have a $20,000 pickup on my income taxes because I did $100,000 conversion, well, I know I have the cash there to satisfy that. Another reason why it, we do like our retirees to be super cash heavy so that when it comes time to make decisions like this, where they do get to optimize, they're not having to pull a bunch of different levers. They, you know, they already have cash there that can be used to satisfy that tax Bill. So it's again, it's one of those things, I would think, through the strategy that I have in place to raise that cash. Is that the best strategy? Or if I think the markets are at a super high point right now and I've done really well, might I want to accelerate how quickly I build that cash back up?

[Robert]

So if I have a fairly aggressive desire to give, to donate. Roth's not a good answer. Right. Generally.

[Bo Hanson]

But you do this in multifaceted approach and we even thought about this because you have some appreciated holdings on the taxable account. We'll talk about that. But you also, once you reach age 70, you get that opportunity where even some of these tax deferred accounts, because you have a lot of them, qcd, qualified charitable distributions. So there's going to be lots of opportunities to do really good charity tax planning with the way you have your assets structured if you just have the right person helping you pull the levers on.

[Brian Preston]

But I want to make sure I understand your question about, well, I don't.

[Robert]

Want to be donating Roth money.

[Brian Preston]

Sure.

[Robert]

That's what I'm. I mean that's the.

[Bo Hanson]

You've got enough.

[Brian Preston]

You've got enough.

[Bo Hanson]

I still have plenty to do. Both.

[Robert]

Okay.

[Bo Hanson]

I mean that's the, that's the big thing. It's just what I see. And this is because you said something that I thought was very powerful that a lot of financial mutants are going to resonate with. They're going to hear you say that and they're saying, yeah, that. Why, why are Brian and Bo not addressing that? It does feel counterproductive to sell perfectly good assets that you've got invested today to pay taxes on something that you're not going to pay for. It seems like 15 to 20 years in the future. I'd rather have the money now. And I get that. But you have to always take it. You have to look at this from an opportunity. Decision of the government right now is offering me the ability to get access to this money tax free at 12%. If I wait, not only is it the money I have today, but it's the money, it grows upon it and then anything and all the decisions. When it gets pulled out in my 70s, it's going to be in the high 30s plus probably at that point you're exceeding now the income threshold for even some of the state benefits that they give you. You could see that you're trading 12% for 40%, but you're also getting all the tax free growth that you. Everything that you did you're getting, you see how this now becomes, this is a much more complicated decision matrix. But I've done, we've run the projections. That's why we always do these predictions. And we use very conservative assumptions there so you can actually see the net result and even where the break even analysis is. And that's why I would not ask you if I didn't think it was valuable, because I've seen the other side of it. When people show up here and there's late 60s, early 70s and they show up with tax bombs and there's just no planning, I was like, man, if you'd have come to me 10 years ago, I could have fixed this for you. Because it's really the choice could be how do we want to optimize this? And I'm sure estate attorneys feel the same way. When successful people come to them and go, you realize estate taxes are a choice. If you plan, it's kind of the same way as a tax planner. It's a choice on how you want to take your medicine. And if you wait because you're like, I'm living my best life now and I'll just pay the taxes, that's fine. But I think if you're charitably minded, if you're minded that you want to leave something like a legacy to your children, your adult children, who are you, it sounds like they're making great decisions on their own. So you want to give them the ability to grow upon that as well. Why not maximize this thing with just a little bit? Because like I said, sure. Maximizing the 12%, that's an, that seems like, duh, that's, that's a pretty, that one I would fight you on a little bit. If you remind my client, I would be like, come on, Robert, 12%. You don't want to give the government 12% on this money and then I'm going to let it grow tax free for the rest of your life. I mean, that's, that's, that's a pretty good deal.

[Brian Preston]

So you said giving to charity is another goal that you guys have. Walk us through that. How do you guys approach charitable planning? How do you guys think about that in a year over year basis? And what are some of your goals that you have around generosity?

[Robert]

We try to live generously. I mean, we use. My money is a, it's a tool. It, it is. I mean, honestly, it's, we use it to, for experiences like if, I mean, to be able to spend time with someone. So ultimately we, we, we are trying to do that with our money, mostly. And then the next thing is, we certainly want to be. We. We would love to be able to give generational wealth to our children. Great. We live a great life. We. We don't. We don't need. We don't need much more than what our current life is. I know you've talked about that. We. It would just drive me crazy to spend. To spend a lot of money at a hotel. It really would. I mean, honestly, I'd be like, this shower head's no better than any other shower. Right. So I don't think we're going to really change our. Our lifestyle significantly. We have a great lifestyle, so we've been blessed that way. So then the next thing is. Is the ability to give. We. That is one of our biggest challenges is figuring that out. About. I mean, here's basically what we want to do. We want to at least give 20% of our wealth away, 10% to our local church, and then 10% to other charities. Now, my default answer is posthumously or while you're living? Well, that's about what I was going to say, because our default answer was I said, I'm just. We're just going to put it in the will, and I'm going to say 10% before our kids get 50. 50 split of whatever's left, 10% to the church, and then probably five other charities get 2%. This is not because I want accolades or we want accolades. It's we don't want anything.

[Brian Preston]

Make the world a better place. That's wonderful.

[Robert]

So. So if I decide to do it before, then it's not because I want control or recognition or anything like that, that it is just because it might make more sense to do that. And that's one of the challenges that we have not figured out yet is what is the right approach to be sure that we make it to the end kind of financially. Like, we still keep looking at y'all think going, you know, are we sure?

[Brian Preston]

Yeah.

[Robert]

And also, what's the right. What's the right stewardship of those assets? We're willing to do that at almost any time. But figuring out what the right mechanism for that is, well, that makes sense.

[Brian Preston]

At the end of the day, your money is your money. And so the right choice of what to do and how to do it very much depends on you guys and how you prioritize your goals. So if one of your goals is to be incredibly generous while you're living, then you can absolutely, absolutely use your money to do that the way that we would counsel someone to go through that is okay. In the same vein that we said, hey, this is what it would look like if we did a hundred thousand dollar Roth conversion. Let's now run this through the Monte Carlo simulation and see how that works out. We would do the exact same thing if we said, hey, I want to make a hundred thousand dollar donation to charity every year for the next 10 years and I want to give away a million bucks over 10 years. Okay, well let's now run that through the software and see are we okay? And every decision we make, we answer the question is are we okay? Once you've satisfied the are we okay, then it comes down to strategy. Okay, well now how do we give to charity? Does it make sense for us to just write checks? Do we give appreciated securities? If we're going to give on a smaller scale, we're not going to give $100,000 a year, but we're going to give $15,000 a year. Because the standard deduction is so high right now, you guys likely aren't going to itemize most years unless something really, really unique happens. So you'd be prime candidates if you're going to give $15,000 a year. Rather than giving 15,000 every year, you donate to a donor advised fund, 30,000 every two years. So that way on your taxes, you itemize one year standard one year. Itemize one year standard one year. Or you could decide how to give posthumously. You name the beneficiaries inside your wills or there are even estate planning metrics, you guys. Right now it does not seem have an estate planning issue based on current estate laws. But if the estate laws were to change in the future and Instead of having 24, $25 million lifetime exam or estate exemption, it dropped down to 5 million or 10. You can see you guys are now you could potentially have a $10 million estate at some point. And there are even ways that you can give to charity presently to get assets out of your estate, live off the assets. When you pass away, those assets move on. So there are a myriad of ways that you can give. But in our opinion, before you start doing the strategies, you have to answer the are you okay? And that's running through the, running through the iterations and actually iterating and then taking the steps to move in that direction.

[Bo Hanson]

Yeah, if I'm super excited for you guys because looking at your numbers, we know enough. I think yours is a both. I think you're gonna be able to do some of these goals after your death. If you so choose with that legacy desire. But then I also think that there's nothing wrong. Cause this system's actually gonna reward you from a tax and a financial perspective to make some of these gifts in a proactive way. Now too you could do. We'll talk about annual stacking, you know, to charitable gift funds with some of these appreciated holdings. I also think those qualified charitable distributions, once you get into your 70s is going to be a very powerful thing. And there might even be some family gifting down the road to even not only help with.

[Brian Preston]

Oh, we just hit something. Did you see that?

[Robert]

We've already just hit up.

[Bo Hanson]

I love the fact, because here's. Let me tell you. I mean from a. And this is not to ring the coffers or the tithe barrels. So people are drawing attention to yourself. I think there is something to the fact though. So it's glorious if not only you're leaving this legacy, but also if you do get to experience some of the fruit off of generosity. That doesn't mean you draw attention to yourself, but it just means that part of fulfillment is that you get to experience. Because you guys are all about some experience. Why not also let the generosity. Because you've heard the thing. I mean, when we're all kids, we've already made a bunch of Star wars jokes and stuff. When I was a kid, I never understood that whole saying of it's better to give than to receive. Because when you're a kid, you're like, what's this?

[Brian Preston]

No, it's not.

[Bo Hanson]

I'd rather give. But as you get older and more sentimental, you realize that adage has a lot more power about human nature than we all probably give it credit is that you guys are in the position where you can be better to give than to receive. And we've received a lot. I know it.

[Robert]

I mean, we are blessed people.

[Bo Hanson]

But you love experiences, right? But I think you're being very humble and that's good. You should. You have a heart that feels like I want to make sure this does it. This is not a pride thing. This is so you two as a unit, as a couple that loves each other. Y'all can even use this as something y'all reflect upon, be sentimental about is look at the fruits that you're creating from a prosperous life and a well lived life. And I don't know if this is the perfect. I wrote it down. I was sitting here. Something was said. I deal all the time where most financial mutants or even people out there in the world who haven't Even discovered our content. I think they all are striving for what we call in the four levels of wealth, freedom. The saying you hear everybody in the world say is, I do what I want, when I want and how I want. And that's what the typical American, I think when they're building, saving and being disciplined, they're trying to get that freedom. I want to give you guys a huge compliment. You've gone beyond level four on your wealth. You're actually in the level five, which is abundance, which at the top of the food chain, not many people reach because it's a completely different mindset. And you're there. I can sense it. I'm just talking to you because now instead of doing what I want, when I want, how I want, it's now knowing who you are, what you value and what you wake up for and gives you purpose in the morning. And I can already sense it. You're not moving the goalpost. You're not trying to expand your lifestyle. You guys get it. And that is, I mean, I think not. That is very rarefied error for people to kind of have resources, but also know what gives them purpose and creates incredible things for their family. Y'all are very good, disciplined individuals who have big hearts and you've done really good things.

[Robert]

Thanks. So our friends still say we're cheap.

[Bo Hanson]

I mean, I think you do have some tendency. I would probably, I mean, if you were my client, I would probably. We'd have annual pick on, you know, Robert and Carrie moments where I'd be like, what are you doing? I mean, why? Why? I mean, like, we didn't even pick on you yet. I mean, y'all had in your notes. You donate plasma for money.

[Robert]

We do. I actually do it.

[Bo Hanson]

You need somebody. I'm the option opposite of Susie Orman. Because every, you know, Susie Orman made her entire career telling everybody no. I'd be like, yes, come on. Yes, Robert. Carrie, yes. Let's do some.

[Robert]

I was trying to find a four hour window in on Monday when we're not traveling. I was going to try to find us time because they're going to give me an extra 25 if I donate plasma. So it is absolutely true. I still have the email as a reminder to go. Can we squeeze it in sometime?

[Bo Hanson]

You're a mess.

[Brian Preston]

That's hilarious.

[Robert]

But it's just true. It is true.

[Brian Preston]

How will you guys navigate thinking about giving and thinking about how you're gonna do? How will you navigate that? What's the conversations you guys will have around? What can we do. And how do we do it?

[Carrie]

I mean, it depends on the need. I mean, when a need comes, like we partner with an organization in Uganda and when, you know, they tell our church they're gonna get shut down because the state has come in, then that's.

[Brian Preston]

You can answer that call.

[Carrie]

Yeah, that's the time to give.

[Brian Preston]

I love it. But it doesn't sound like you guys struggle with that, Right? Like that's something you do right now and you feel comfortable with. That's not a point of tension trying to decide if or can we do that, right?

[Carrie]

I don't think so.

[Robert]

No, it. Yeah, it's. I mean, goes. I made the comment about stewardship mainly because we do want to be. We want to be responsible stewards of the resources so that it's efficient, effective. So we do think about those kind of things, like appreciable assets. We donate some of those, to be honest, we. We have a significant amount of carryover donations, cash donations, on taxes that you didn't see. You probably didn't see that.

[Brian Preston]

Probably because your income's been so low, you haven't been able to capitalize on.

[Bo Hanson]

All 30% rule and so forth. Right?

[Robert]

Yeah. Yeah. So. So we, you know, when we sold our house, we decided we were going to tithe on the. Basically give a 10% to the church on the proceeds of the house. On the capital proceeds of the house. And so we estimated that the house had grown about $600,000. So I mean, you know, that, that helps to have that carryover that's sitting there. So I mean, we've been trying to. We try to do that now, but then we're also thinking from a legacy perspective and then just thinking about when, what the right timing of that. There was some reason, I thought that maybe it made more sense for me to. To give that none of us know when we're going to die.

[Bo Hanson]

Right.

[Robert]

So I can't. I can't say, well, a year before I die, I want to do this, but trying to think through if there is a tax advantage to do that while still alive rather than just being in the estate. But I don't know if there is one. Maybe there's really not.

[Brian Preston]

Well, if you are deducting, if you are able to deduct charitable contributions against your income, that's certainly advantageous. But you guys are already doing that. What I love hearing is if you do have all these carry forward charitable contributions you've not used or can do.

[Robert]

Future, we're still itemized even.

[Brian Preston]

Even if we do Drive up your income through Roth conversions and stuff, you still have tax mitigators there that can offset that. So where you haven't been able to use as much of those charitable contributions, you have higher income. If you go up into the full 12 or full 22% bracket now you even get to mitigate that. So it makes the tax cost even lower, which makes it an even more compelling argument to consider. You really are.

[Bo Hanson]

I mean, that's what I'm sitting here because you all have capital gain carry forwards. Now you're telling me you have charitable gain carry forwards. I mean, charitable contribution carry forwards. I'm like, man, you guys are basically begging to get optimized some of these things because you have all the tools, all the levers I'm looking for to make my masterpiece of a financial plan. You're telling me you have all these things, but yet you're just leaving them sitting over there on the shelf collecting dust. I mean, we got to get to work on these things.

[Brian Preston]

So we always like to send people away with some things to think about. Some stuff that you ought to got the conversation we want you to have first thing that we saw immediately. Item number one of homework is cash reserves. Right. For a retired financial independent group, a couple your cash reserves are probably in a different spot. I love that you have a strategy to get there. I would even think through, should we have a more accelerated strategy?

[Bo Hanson]

Don't get cute. Go ahead and fill up your cash reserves. You have, you have carry forwards, I think. Let's get that, let's get that boosted up.

[Brian Preston]

The other thing I would think through is we looked at your allocation. You guys are an incredibly aggressive allocation. We didn't actually go through it in depth, but we know that it's about 96% equity. So it is almost an all equity portfolio. It's worked out to the moon. It's worked out incredibly well for you. The conversation I have, you guys have is around the why can we take on all this risk? Well, yeah, you have enough money, your withdrawal is low enough. But should we like, can we or should we. I would walk through your allocation. The next thing that I think you guys have in homework item is a conversation around. You have made it. You've asked over and over, are we there? Are we there? Are we there? I think we can say by looking at the numbers that it certainly seems like you are there. We're not your advisor, so we can't say for sure, but your advisor should likely be able to say for sure. Then the question becomes now What. What is it that we really want to do? Do we want to support our family? Do we want to think about the legacy we leave behind? Do we want to optimize what we're paying in lifetime taxes? You guys have to rethink your goals. At one point in your life, your goal was be financially independent. Retire. Now you got to sit down and have another goal conversation. Our goals are in this order. Support ourselves for the rest of our lives. Leave a legacy, Give to charity, support cause we believe in, not pay a ton of tax, whatever that thing is. You guys ought to reprioritize and go through those. And then once you've ordered your goals, then you start thinking about the strategy. Okay, what's the appropriate strategy? If leaving a legacy to our kids is something that's incredibly valuable, perhaps Roth conversions make a lot of sense in order to be able to do that. If giving money to organizations today that we love makes sense, perhaps we should work into our budget. We don't live off $100,000 a year. We live off of $150,000 a year. And we know that $50,000 of that goes to an organization every year that we support. And then you run that through the Monte Carlo, and you test it to see is this viable. You guys are at the place right now where you're in the driver's seat. You just have to decide what you want the rest of your life, what you want the next 30, 40, 50 years to look like. And I would argue you've spent these last few years being Go Go, which is awesome. Now it makes sense to apply some intentionality around just living and experiencing and action. Okay, this is what we're working towards. Does that make sense?

[Bo Hanson]

Y'all are still. Well, in the Go Go years. Our age difference isn't that far, so I'm telling you, you have lots of Go Go years left. So that's why this is so cool, because you're not even, like, you're still young retirees. So, I mean, there's just. That's. That's back to. You have tremendous layers of time. Another one of those levers that, as a planner, I would be trying to pull. This has been a blast, and I'm hoping anybody who watches this can see that. Yeah, those small decisions can create huge results, even with mistakes. I mean, that's why, when I was doing Millionaire Mission, I laid out all my mistakes, too, is because I want. I think there's a lot of benefit and paying it forward doing the experience shares. But I have loved. I mean, I've gotten at least two or three harem arms moments, you know, where just to kind of celebrate all the good decisions you've made. And I can't thank you enough for coming on our show today.

[Robert]

We've enjoyed it. Thank you.

[Brian Preston]

You guys have been awesome. If you would like to be a guest on Making a Millionaire, you can go to moneyguide.com apply or if you want access to all the resources we make available, you can go to moneyguy.com so that you can do money better.

[Bo Hanson]

Guys, thanks for joining us. This has been a blast to meet some financial mutants hearing about their great big beautiful tomorrow. I'm your host, Brian Preston, joined by Mr. Bo Hanson. Money Guy Team Out Making a Millionaire.

[Brian Preston]

Is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance compliance with the security's laws and regulations, a bound Wealth Management does not render or offer to render personalized investment or tax advice through Making a Millionaire. The information provided is for informational purposes only, may not be suitable for all investors and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.