Understanding 2026 Housing Pressure Points and Finding Your “Enough” Number for Retirement

Summary

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Podcast Summary: NerdWallet's Smart Money Podcast

Episode: Understanding 2026 Housing Pressure Points and Finding Your “Enough” Number for Retirement

Date: December 4, 2025
Hosts: Sean Pyles, CFP® & Elizabeth Ayola
Guests: Ana Helhoski, Holden Lewis, Kate Wood, Paul (Listener)

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Overview

This episode tackles two distinct but timely themes in personal finance:

1. Housing Market Pressures for 2026 — A roundtable of NerdWallet’s mortgage and housing experts reviews key developments in U.S. homeownership, affordability crises past and future, and what buyers and owners can expect approaching 2026.
2. Finding Your “Enough” Number for Retirement — Listener Paul joins live to ask: When can you safely coast on your retirement savings instead of aggressively saving? The hosts help unpack both the financial logic and the emotional side of “CoastFI.”

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Key Discussion Points & Insights

I. 2026 Housing Pressure Points

A. The Evolution of Housing Affordability

• Every Generation Faces a Crisis:
  Holden Lewis reflects that “every generation has an affordability crisis… In 1981 the 30-year mortgage rates exceeded 18%. So houses did cost less back then, but that's because they had to be with those interest rates.” (05:50)
• The Legacy of Low Rates:
  The ultra-low mortgage rates of 2020-2021 created a surge of buyers and rapid price escalation. Now, even as rates rise, prices remain high as homeowners are reluctant to sell at a loss. (07:40)
• “We are kind of in this unaffordability era that is just going to take time for us to get out of.” — Holden Lewis (08:22)

B. The Next Affordability Crisis: Climate

• Climate-Driven Insurance Costs:
  “Home insurance premiums… are making it difficult for people to afford their homes, even homes they bought several years ago. That's already happening.” — Holden Lewis (08:53)
• Areas like California (wildfires), the Gulf Coast (hurricanes), and much of the Midwest (hail, storms) are seeing dramatic increases in insurance costs.

C. Changing Demographics of Homebuying

• Older First-Time Buyers:
  Kate Wood highlights: “In 1981, median age of first-time homebuyers was 29. In 2025, the median age hit 40… And for repeat buyers, from 36 in 1981 to 62 in 2025.” (11:17)
• Childless Households:
  “Last year, among all home buyers, only 24% had children under 18... in 1985, 58% did.” This shift challenges the tradition of “spring homebuying” tied to school calendars. (12:21)

D. Predictions for 2026

• Preferred Scenario:
  “I'm really, really crossing my fingers that mortgage rates hang out around 6% all year in 2026. If that happens, we will see more homeowners… put their houses on the market.” — Holden Lewis (13:03)
• Ongoing Pressure from Taxes & Insurance:
  “Average escrow costs [taxes + insurance] were up 45% from 2020 to 2025 across the U.S... In Florida, 70% increase.” — Kate Wood (14:28)
• Advice for Buyers:
  “You’re really going to want to look beyond the list price and the interest rate. You’re going to want to look into property taxes, insurance, weather data...” — Kate Wood (15:02)

E. Personal Retirement Reflections from Holden

• Modest living (older cars, smaller home since 1999) is cited as a key enabler for early retirement at 62. (16:05)

Memorable Moment:
“Instead of living large, living small... it just, it really, really did help, I think to be able to retire at age 62.” — Holden Lewis (16:05)

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II. Listener Feature — “When Is It Really Enough to Coast Into Retirement?” (CoastFI)

A. Introducing Paul: CoastFI Aspirant

• Paul’s Background:
  Lifelong diligent saver, lived and worked in Dubai (low living costs, high savings), now age 48, almost $3 million saved, primarily in taxable brokerage accounts. (21:09)
• The Dilemma:
  “I'd like to stop saving now... at least reduce the amount... by the time I get to 65, I should be doing okay. But there's a lot of things that make me nervous with it.” — Paul (21:42)

B. The Emotional Side of “Enough”

• Anxiety About Stopping:
  “I'm scared that… if I do [reduce saving], then I’ll find myself at an older age where I still need to work... you never know if I'll need that money.” — Paul (22:33)
• Elizabeth Ayola encourages reflection on underlying fears: “Sometimes we have money stories or money fears… that are creating those anxieties.”
• Acknowledgment: Paul hasn’t personally experienced scarcity but remains concerned about the unknowns of the future. (24:01)

C. Expert Responses

• Financial Planning Tools:
  Sean Pyles recommends a financial advisor and Monte Carlo simulations: “It spits you out a percentage of how likely you are to succeed in your retirement planning.” (24:16)
• Balance Enjoyment and Security:
  “Maybe just taking a little bit at a time out and setting yourself some short and medium term goals...” — Elizabeth Ayola (25:59)
• Paul's Aspirations: Own a home, upgrade car, travel more, enjoy life without “nitpicking” budgets.

D. Structured Recommendations

• Track progress with periodic (e.g., annual) checkups — “Baby steps are smart because you don’t want to shock your system.” (31:50)
• Ensure tax diversity:
  Max out tax-advantaged accounts (401(k), Roth), balance with taxable brokerage.
• Joint planning as a couple:
  “Working with a certified financial planner can be really helpful because they can look at your wife’s information too, see what you both have asset-wise...” (27:39)
• Emotional permission to enjoy:
  “As much as we are here for planning, we cannot control the future… you have to give yourself a pat on the back…” — Elizabeth Ayola (32:47)

E. Notable Quotes & Moments

• “I’ve still got almost 20 years left, so I don’t really know what’s going to happen… inflation… cost of living…” — Paul (29:11)
• “I'm trying to find something that you're doing wrong and I'm having a hard time, but it seems like you still have this lingering financial anxiety.” — Sean Pyles (31:04)
• “If I’m going to cut back… I’ll try to enjoy my life more… another, a nicer car… travel more—maybe go away three times a year.” — Paul (32:27)

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Timestamps for Key Segments

| Time | Segment Description | |----------|-------------------------------------------------------------------| | 03:09 | News roundtable begins: Year in housing with Helhoski, Lewis, Wood| | 05:44 | What’s always true about the housing market (Holden’s reflections)| | 08:53 | The next affordability crisis: climate risk and insurance | | 11:17 | Demographics of homebuying shift—first-time/median ages | | 12:48 | 2026 housing outlook & predictions | | 15:36 | Holden on modest living and retirement planning | | 16:47 | Transition to listener Q&A: “CoastFI”—saving enough for retirement| | 19:01 | Listener Paul describes his financial journey | | 22:33 | Paul’s anxiety: the emotional side of CoastFi | | 24:16 | Advice: Financial planning & Monte Carlo simulations | | 25:29 | Using saved money to support lifestyle goals | | 27:39 | Joint retirement planning as a couple | | 29:41 | Portfolio diversification & tax strategy discussion | | 31:50 | Gradual adjustment vs abrupt change to savings habits | | 32:47 | Giving yourself permission to enjoy your money | | 34:15 | The challenge of retiring abroad with currency changes | | 34:41 | Paul’s next steps—taking “baby steps” toward less aggressive saving|

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Tone and Original Moments

The show maintains its friendly, “nerdy” tone—relatable, accessible, and candid.
Example:
“I'm trying to find something that you're doing wrong and I'm having a hard time…” (Sean Pyles, 31:04).

Listener Paul’s vulnerability around money anxiety, despite “doing everything right,” drives a sincere and supportive conversation.

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Closing Guidance

• On Housing:
  Don’t expect a “return to normal” in 2026—watch for climate impacts, demographic shifts, and always look beyond the sticker price.
• On Retirement ‘Enough’:
  If you’ve done the math (and/or work with a CFP) and still feel anxious, make gradual changes, reflect on your goals, and allow yourself enjoyment.
• Featured Advice:
  “As much as we are here for planning, we cannot control the future… you have to give yourself a pat on the back…” (Elizabeth Ayola, 32:47)

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For more detailed financial planning or to share your questions, reach out to NerdWallet at [e-mail] or 901-730-6373.

Transcript

[Elizabeth Ayola]

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[Sean Pyles]

Quince.com smartmoney don't wait to buy real estate. Buy real estate and wait. It's an adage for the ages, but did it ring true? This year, we've got a look at the year in housing and what it means for 2026.

Welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles.

[Elizabeth Ayola]

And I'm Elizabeth Ayola. Now, later on this episode, we'll be asking when enough is enough and you can stop saving for retirement. Yes, you heard that right.

[Sean Pyles]

But first, our weekly MONEY News roundup, where we break down the latest in the world of finance to help you be smarter with your money. Our news colleague Ana Hilhosky is here to talk about the year in housing. Hey, Ana.

[Ana Helhoski]

Hey, Sean. Hey, Elizabeth. Yeah. Today we're joined by mortgage writers Holden Lewis and Kate Wood to reflect on the home market this past year and look into their crystal balls for 2026. But first, I'd like to point out that it's the end of an era here at Nerd Wallet.

[Kate Wood]

It is truly the end of an era because our very own Holden actually can probably tell us about having enough to pay for retirement because he's retiring at the end of this year.

[Holden Lewis]

Ooh, man, I feel really lucky. I made my living as a writer for 43 years when I started writing about high school football games when I was in college. I have never been laid off. And like, no one in the journalism world has gone more than 40 years without being laid off except for me. So, wow, what a lucky ride.

[Sean Pyles]

Extraordinarily lucky.

[Ana Helhoski]

Yeah. We should all be so lucky. I know I wasn't when I was about 22, but anyhow, Holden, you've got more than 20 years experience writing about mortgages and homeownership, and that's pretty wild. Where did you start your career as.

[Holden Lewis]

Far as, like, writing about mortgages? That was with Bankrate. And I started the mortgage beat there on September 10, 2001. So it was quite a week to be writing about mortgages because, you know, the market basically Shut down and then. Yeah, did that for years and years, and then moved over to NerdWallet in 2017, writing about the same subject. And then before that, I mean, I worked for the Associated Press, the Toledo Blade, worked in Dallas, Baltimore, El Paso, Lubbock, Toledo.

So I've been everywhere writing about everything.

[Ana Helhoski]

Yeah.

[Holden Lewis]

And I think the biggest story I ever wrote, like the biggest event, was Baby Jessica. And I don't know how many people know about Baby Jessica. Yeah, a little toddler who fell down a well in Midland, Texas in 1987. And I was there. I was on the scene writing about that, freezing my ass off. Because it was October in Midland in the desert and it was cold and we couldn't see much. But that was quite an experience.

[Ana Helhoski]

That's quite the career, Holden. And in all that time, is there anything that you feel like is always true about the housing market?

[Holden Lewis]

You know, every generation has an affordability crisis. I just find that interesting because, you know, I see a lot of criticism of boomers for having had it easy because houses were really cheap back when the boomers were just starting to buy houses. And that's not exactly the case. I mean, I think about, like in 1981, when I was a college freshman, the rates on the 30 year mortgage, they exceeded 18%. And this was happening just as the first boomers were buying houses. And for the entire 1980s, the 30 year mortgage averaged 12.7%. And in the 90s, it was 8.1%. I mean, my first house, I think we paid eight and a quarter percent. So houses did cost less back then, but that's because they had to be with those interest rates. The only way you could afford a house at those high interest rates was houses had to be cheap. And the houses back then, they just weren't as good as the ones now as far as energy efficiency and all that, I think about, you know, the financial crisis of 2007 through 2012. It was the result of an affordability crisis that was concealed by mortgages that were destined to go bust. For a lot of people, the only way they could afford a home was to get a risky mortgage, something that like had a super low interest rate and they would turn into an adjustable rate mortgage six months later with rates that were sky high. So eventually millions of homeowners discovered that they couldn't make those mortgage payments. And that's the very definition of an affordability crisis.

[Ana Helhoski]

Well, we certainly hear a lot about being in an affordability crisis today. So where this one come from?

[Holden Lewis]

All right, so this One comes from those incredibly low mortgage rates in 2020 and 2021. You know, when I was talking about in the 80s with those high mortgage rates were forcing home prices to be low. Well, the exact mirror image of that happened in the 2000s where you had these super low mortgage rates in 2020 and 2021, and tons and tons of people rushed into the market and they bought houses and they were competing against each other and that drove house prices up. And they have been stuck there at those high levels even as mortgage rates went up. Because that's just the way things are, you know, I mean, if your house is worth $500,000, you don't want to sell it for $450,000 a year later just because mortgage rates went up. So we are kind of end in this unaffordability era that is just going to take time for us to get out of. We're going to have to build out of it. And people's incomes are just going to have to continue to rise until houses are more affordable and that it really is going to take several years.

[Ana Helhoski]

All right, so that's where we're at right now. But what do you see as maybe the next affordability crisis?

[Holden Lewis]

I think the next affordability crisis is going to be climate driven. We've already seen the beginning of this with home insurance premiums just really rising a whole lot. From California to Florida, home insurance is just really, really expensive. You know, you have wildfires in places like California, Oregon, Washington, Arizona and Colorado. You have hailstorms and tornadoes and heavy thunderstorms from Texas to Nebraska. And then along the Gulf coast you have hurricanes. And so I think that those rising premiums are going to really make it difficult for people to afford their homes, even homes that they bought several years ago. I mean, that's already happening.

[Ana Helhoski]

Okay. I don't want you to feel ignored here. So when you look at the housing market this year, what themes are jumping out at you?

[Kate Wood]

Well, every year when we're coming around to the new year and you're in the mortgage space, you're in the homeownership space, you always get these headlines that are like, whatever year it's about to be colon the year the housing market normalizes. And like we got those in 2022, 2023, 4, 5, 2026 is not going to be the year the housing market normalizes. And really we need to get rid of the idea that we're going to go back to some real or imagined norm because things are really changing. So since Holden was Bringing up the early 80s, I grabbed some early 80s numbers for comparison. So this is another 80s to now analogy. And I'm pulling these from the national association of Realtors. They do an annual home buyers and sellers report. It gives a lot of information on home sales, sellers, buyers in the U.S. so in 1981, the median age of first time homebuyers was 29. So almost 30. Get in your first place. Feels like it makes sense. In 2025, the median age hit 40. So your median first time home buyer is now 40. And if that didn't break your brain, this might. Back to 1981 again, rewind. In 1981, the median age for repeat home buyers. So it's not your first time, that median age was 36. So you've someone who's bought your first home at 29, you're upgrading at 36. Again, feels like a narrative that we're comfortable with. Right. In 2025, the median age for repeat buyers was 62.

[Elizabeth Ayola]

Wow.

[Ana Helhoski]

So a lot of people are staying in their first home a lot longer these days.

[Kate Wood]

Homeownership tenure has really been lengthening. You know, it varies depending on where in the country you are, because property taxes are a piece of it. But people are staying put a lot longer and people are simply getting started a lot later. And this should really be changing the way that we're thinking about home buying and home ownership right now. If you're listening to this and you're in your 20s or even your 30s thinking like, oh my gosh, I haven't bought a home yet. I need to hurry up. You are in good company. You are not lagging behind you. You are good. Okay? We are good on that goal. Another 2025 stat that really jumps out. And I need to actually give a shout out to my editor, Jeanette, because she was the one who pointed this out. So last year, among all home buyers, only 24% had children under 18 in their households. So fewer than a quarter. In 1985, 58% of buyer households had children. So the conventional wisdom has been that spring is home buying season. Right. And one reason why spring is time to list is because people have time to house, shop, schools letting out, it's summer, they'll have time to move and then get settled into a new place before school starts again. But if most homebuyers don't have kids, that timing is probably not that relevant to them. And, you know, you can say, oh, you know, well, spring home buying season is about the weather warming up and that kind of thing. But again, back to climate change. Weather patterns are very off track all over the country, so that argument might not hold up either.

[Ana Helhoski]

All right, and now for the $415,200 question. That's the most recent median home price from the national association of Realtors. By the way, what are we thinking about the housing market for next year? Holden, let me first start with you.

[Holden Lewis]

I'm really, really crossing my fingers that mortgage rates hang out around 6% all year in 2026. Because if that happens, we will see more homeowners just take the plunge, list their homes for sale, wave bye bye to their 3 1/2% mortgage rates and say, well, okay, my next house at 6%. Okay, I can handle that. With luck, a lot of people will put their houses on the market. So we'll have a lot of houses on the market that will help prices remain flat as sellers compete on price and it'll help us slowly emerge from this affordability crisis. And I am really interested in what you think, Kate.

[Kate Wood]

So I would definitely agree with what you said about rates in inventory and also what you said earlier about the coming affordability crisis. It's something that I've been watching. We have this idea that home affordability is something that's essentially solved once you've bought a home, especially if you have a 30 year fixed rate mortgage, which is the standard in the US this is the vast majority of home loans. You've essentially stabilized your housing costs and that is true in terms of your principal, how much you borrowed and your interest rate. Right. But we can't forget about the ti half of our piti. Right. So principal interest, taxes and insurance. Taxes and insurance are absolutely walloping homeowners in many parts of the country, like Holden mentioned.

[Elizabeth Ayola]

Right.

[Kate Wood]

You know, your hurricanes, tornadoes, sort of more one off disasters and then just regular stuff like hail getting bigger, hail getting stronger. Totality, which is a firm that does real estate data, among other things, found that from 2020 to 2025, average escrow costs. So this is what homeowners are paying into their taxes and insurance were up 45% on average across the U.S. holden mentioned Florida. Florida, often a bellwether for this kind of stuff. In Florida, it was a 70% increase. So people who are buying homes in 2026, like looking ahead, you're really going to want to look beyond the list price and the interest rate. You're going to want to look into property taxes, you're going to want to look into insurance, weather data, stuff like that. Really try to figure that into your home buying budget so that you know that it's a home that you can afford now and that you're going to be able to afford later.

[Ana Helhoski]

All right, thank you both for wrapping that all up for the year and looking ahead. Before I let you go, Holden, do you have any big retirement plans yet? And how about some advice for those who feel like retirement is oh so very far away, but maybe not as far away as it seems.

[Holden Lewis]

As far as plans, I want to walk as much as possible in the woods. I do plan to thru hike the Appalachian Trail in 2027. And then in the meantime in February I want to start out by hiking something called the Ocean to Lake Trail, which is from Lake Okeechobee to the beach on Jupiter island. And that's about 62 miles. As far as advice, I'm where I am partly because I don't exactly live frugally, but I never minded having a 15 or 20 year old car. And you know, I mean we bought this house at the end of 1999. It's a starter house and we were in our mid to late 30s when we bought it and we're still here. It's really small, it's very modest, but instead of living large, living small, it just, it really, really did help, I think to be able to retire at age 62.

[Ana Helhoski]

All right, thanks Holden and congratulations. You will be missed.

[Holden Lewis]

No, thank you.

[Sean Pyles]

Thank you Holden for all of your contributions to the smart money and nerd wallet over the years.

[Holden Lewis]

Aw, thanks.

[Elizabeth Ayola]

And thank you for giving us hope, Holden, and reminding us that we can all retire one day someday. Someday, someday.

Up next, we're going to answer listeners question about when you've saved enough to coast into retirement. Speaking of. But before we get into that, a reminder to send us your money questions. Maybe you're thinking about retiring early or you just want to retire and at the retirement age and don't know how to save. Send us a money question. You can leave a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901-730-Nerd. You can email us about any of your money questions at [e-mail] in a moment.

[Sean Pyles]

This episode's money question. Stay with us.

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[Elizabeth Ayola]

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[Sean Pyles]

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[Elizabeth Ayola]

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[Elizabeth Ayola]

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[Paul]

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[Elizabeth Ayola]

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We're back and we're answering your money questions to help you make smarter financial decisions. This episode's question comes from a listener named Paul who has a question about coastfi, which is a type of the financially independent retire early movement where you frontload retirement contributions so you can pull back later in your working years. Paul is here with us today so we can answer his question in real time. Hey, Paul.

[Paul]

Hello. Thanks for having me.

[Sean Pyles]

Hey, Paul. Welcome to Smart Money. So we like to start these conversations with our listeners with an icebreaker. So here is my icebreaker for you. If you could describe your finances as an animal, which would it be and why?

[Paul]

A cat?

[Sean Pyles]

Okay, tell me why.

[Paul]

I feel like my finances are organized and I feel like I'm kind of in control of where I'm going with it.

[Sean Pyles]

Okay. Is there a mischievous part of your finances because cats are known for causing trouble?

[Paul]

No, I don't have a mischievous part.

[Sean Pyles]

Okay, there you go. A very well behaved cat, especially my.

[Paul]

Cat'S very well behaved. Yeah.

[Elizabeth Ayola]

So, Paul, you wrote to us because you had questions around fire. So now that we know that your finances are catching, it does actually take a lot of planning, Right. To achieve fire. So my first question is, what attracted you to fire?

[Paul]

It kind of happened by accident, really. I've always been saving pretty diligently my whole life, just always living below my means and spending less than what I was making. I found myself all of a sudden, you know, trying to invest my money and finding out, do that. And then I came across that my money was growing compound interest was growing faster than. Than I could save it. And that's when I stumbled across on the Internet, CoastFi. And I started doing some research into that. And then when I came across that, I thought, wow, this is probably something that I'm actually without knowing, doing. And then it became something that interested me, thinking that maybe I can get ahead with my finances and hopefully stop investing or at least reduce the amount of money that I'm investing and then enjoying a little more of my life now and then hopefully still having enough for retirement when the retirement comes.

[Sean Pyles]

So how much have you been putting away each year, and in what kinds of accounts are you saving?

[Paul]

Well, I was living in a foreign country for a long time, so they don't have a 401k there. So my 401k is very young and doesn't have a lot of money in it. I was saving mostly in a brokerage account. I have two. I have one with Charles Schwab and one with Merrill Edge. I don't know what the official term.

[Sean Pyles]

For those is, but like a taxable brokerage account.

[Paul]

Taxable brokerage account. That's where I've been mostly investing my money. I originally was playing around with buying individual stocks, but then I was reading on the Internet that things like ETFs and mutual funds are a little better. So I was slowly converting into those. And now most of my stuff is. Is located in that.

[Sean Pyles]

Yeah, we do like the diversification that you get in ETFs and mutual funds. So how much have you been saving? And if I can ask, how much do you have saved up total? If you have the number off the top of.

[Paul]

Yeah, I was saving quite a lot when I was living in a foreign country because they were paying my rent and there's, you know, your U.S. taxes. You only pay taxes in the U.S. over a certain amount of money when you're living in a foreign country, which. Which was a great advantage. So I was able to save quite a lot of money. Right now I'm up to almost 3 million in cash.

[Elizabeth Ayola]

Big congratulations. Where were you living?

[Paul]

Dubai.

[Elizabeth Ayola]

Oh, nice. Okay, so it sounds like you have a significant amount of money saved. And I know you said you kind of just stumbled on Coast Fire, but did you have in mind when you would like to stop saving for retirement and age?

[Paul]

I'd like to stop saving now. I'm 48. At least reduce the amount of money I'm saving. Slow down, because I did the calculation on my little compound interest investment calculator, which says that even at a very conservative rate, by the time I get to 65, retirement, I should be doing okay. But there's a lot of things that make me nervous with it.

[Sean Pyles]

So you're still planning to retire at 65? You're not planning to retire early unless.

[Paul]

For some reason something changes in the Future? Yeah, I am planning to. I enjoy my job, so I have no problem continuing for now.

[Elizabeth Ayola]

Just to clarify, with coastfi, it's different from the other types of fire because the main goal is usually not to retire early. It's just to be able to stop saving for retirement and decide what else you want to do with that money, whether it's going on a beach vacation every year or buying investment properties or whatever it may be. So I think the main part of your question was around the anxiousness when it comes to stop saving for retirement. So can you talk to us a bit about that?

[Paul]

Yeah, I'm a little worried. I'd like to reduce my. My savings rate, but I'm scared that if I do, then I'll find myself at an older age where I still need to work or I won't be able to retire and it won't work exactly as planned because although the stock market and everything has been going great now and I'm seeing some great returns, I'm scared that that might not necessarily be the case over the next decade or two. So that's really what's been stressing me out as well as if you have to cut back on your savings and I'm spending all the money now, then it just gives me a little stress.

[Elizabeth Ayola]

But if you've done the calculations and as you said, you may have at this point saved enough, then I guess it's written in bold statements that you kind of have enough money according to your calculations. So have you explored maybe aside from running out of money, where else that anxiousness could come from?

[Paul]

I haven't really looked at that. What do you mean? As in.

[Elizabeth Ayola]

Yeah, so sometimes we have what we call money stories or we have money fears. So for some people, for example, they may have fears around running out of money, maybe because there was a time in their life where they didn't have enough money, or maybe they saw their parents go through situations where they experienced some kind of scarcity. So there can be lots of deeper issues sometimes that are kind of creating those anxiousness and fears.

[Paul]

Yeah, I have heard that. I'll be honest with you. My parents never really seem to talk about or have money issues. I've been fortunate. I came out of school, I had a job. I was never really making a large sum of money at the beginning or anything, but I was always able to pay my bills. So it was never personally for me, an issue or anything. I guess I'm just really concerned. I don't want to find myself at an older age where I'm stuck, you know, needing to find a job.

[Sean Pyles]

It seems like part of this uncertainty comes from just not knowing what could happen. The stock market could underperform for a few years. It could tank, and your value of investments could go down quite a bit. I'm wondering whether you've worked with a financial advisor in the past around retirement planning at all.

[Paul]

Some of my money that's in the 401k is being managed by a financial advisor. Yeah, I did have one in the past, but I kind of don't have one anymore.

[Sean Pyles]

Okay. I think it would be worth exploring working with a certified financial planner who can look at your finances in a really comprehensive way. And when it comes to retirement planning, they can run what's called a Monte Carlo simulation, which basically has a bunch of different ways that things could go. The stock market could perform really well, it could perform poorly. You could lose your job. All these different variables, and it spits you out a percentage of how likely you are to succeed in your retirement planning. Having that run through by a financial planner and talking through your concerns with them could help you just get a little bit more information and hopefully some more confidence in what you're doing with your financial savings. NerdWallet has a whole division of financial planning. NerdWallet Wealth Partners and NerdWallet Advisors match. So you can look into that if you want tailored personal financial planning. Cool.

[Paul]

Yeah, for sure. I will.

[Elizabeth Ayola]

And something I find that can help sometimes when we have this anxiousness and this fear. Let's say you do talk to financial planner. And again, everything looks good. It looks like you're on track, is maybe focusing less on the fear and more on what you're hoping for. The future. Right. So I'm sure there's something that drew you to coastfi, and I'm gonna assume it was the possibility of what you could do with all that extra money that you're putting towards retirement right now. So talk to us a bit about that.

[Paul]

Well, I mean, for example, right now I'm still renting a house. I'd love to own a house. I'd like to put as much money down as I can. And I'm not a big fan of paying mortgages, especially at the rates they have nowadays. Upgrading my car. I'd like to go travel a little more. My wife and I don't have any kids, so we'd love to take the time to explore more places in Asia. And we have some friends in Australia we'd love to go visit, things like that. So I'D like to be able to be free to do that and not have to worry about specifically, you know, nitpick my budgeting and everything and be able to just kind of go with the flow. That's kind of lifestyle that I'm looking forward to having in the future.

[Elizabeth Ayola]

Those sound like really exciting things that you can do. And maybe something to start with once you're sure about your numbers, is instead of blowing all of the extra money that's going towards retirement and putting it towards those goals, maybe just taking a little bit at a time out and setting yourself some short and medium term goals that you can redirect those funds to. Is that something that you've thought about, thought about it?

[Paul]

Yeah, it's definitely something I want to do and it's something I want to talk to a financial planner about for sure. Because I just don't want to find myself making mistakes. That's the problem. It's just, I think the thing that really stresses me out is I guess with my job, it can go tomorrow. Your health isn't there. And then if I'm forced to retire early, then you never know if I'll need that money and I'll need to live off it.

[Sean Pyles]

And what are your savings like in general? Do you have an emergency fund? Do you have different savings accounts for different purposes?

[Paul]

I do, yeah. I have about a year of emergency fund saved up right now, so I could go a year without working and then I basically have my investment. So I keep about a year of salary in cash in a high interest savings account and then the rest is invested.

[Sean Pyles]

What about your other goals too? You mentioned travel, you mentioned maybe buying house or a new car. Are you saving for those goals or is everything just going into your taxable brokerage account?

[Paul]

Everything is going to my taxable brokerage account right now. That's, that's my problem.

[Sean Pyles]

And that's because you're so focused on saving because you're afraid that you won't have enough money for retirement, right?

[Paul]

Yeah, exactly. Yeah.

[Sean Pyles]

Okay. And what about your wife? You guys are a financial team here. So what is her approach to saving? How are you talking about your retirement contributions as a unit?

[Paul]

We discuss it every six, seven weeks or so. We, we sit down and we actually try to have a conversation. I'm more the one that pushes for it because I'm more the one that's the budgeter and the organizer in the family. She's happy with what she sees me do and so she kind of lets me do it. I try to get A little more involved, but I find it difficult sometimes. So I try to make it as fun entertaining as possible, but that doesn't always seem to work.

[Sean Pyles]

Yeah, well, that's one area where working with a certified financial planner can be really helpful because they can look at your wife's information too, see what you both have asset wise, and then map out how your retirement could look based on what you've been saving thus far and what you continue to save. So I think that could alleviate some of your anxiety as well. Just seeing what collectively you have and then you might be able to experiment with. Okay, if I pull back from putting X amount into my brokerage account each month, what would it look like if I put that into another high yield savings account for these other financial goals, Goals that you have because it's a balancing act at the end of the day. So you only have a certain amount of money coming in, you have a certain amount of expenses. What can you do with the leftover cash so that you can meet these other goals too? Because while it's important to save for retirement, you never know what's coming down the pipeline. You also want to make sure you're saving for more immediate shorter term goals, like maybe buying a car or a house.

[Paul]

True.

[Kate Wood]

Yeah.

[Paul]

Thank you.

[Sean Pyles]

I was going to ask, what do you do for fun with your money? Because you seem to be really responsible with your finances, Paul. You're really focused on the important things like building financial security through your really robust emergency fund. I want to know, know how you actually enjoy the money that you are earning.

[Paul]

Don't get me wrong, we're not living off rice and beans or anything like that. We still enjoy renting a really nice place and we, you know, we go out for dinner and once a week is enough for us. We just came back from a small little getaway that we did from a two hour drive away from, from here and we spent a night in a really nice hotel and went out for some nice meals, some sightseeing and it was great. That's mostly what we like to do.

[Elizabeth Ayola]

And then how would you like retirement to look for you? So would it look like how you're living now? Would it look a little bit more bougie? Bougie? What do you envision?

[Paul]

Sure, I'd like a little more bougie, but if I can keep what I have now or better, that would be great for me. Yeah, that's kind of what I'm hoping for. But it brings me back to the same thing as you know, I've still got almost 20 years left, so I don't really know what's going to happen in 20 years as far as things like inflation or the stock market or, you know, what cost of living is going to be or things like that.

[Elizabeth Ayola]

And then now that you mention inflation, I'm also curious about how diverse your investments are. So can you talk to us a bit about that? Do you feel that your investments are diversified? And if not, why?

[Paul]

I hope they are. I have a little bit in a target retirement date funds, which I understand are the most diversified ones there. I do have the S P500 like most people have and I have a few other ETFs, and yeah, that's pretty much it. I like to think that having 500 different companies invested is a good diversified investment, but I'm hoping you guys can tell me that.

[Sean Pyles]

Yeah, I mean, investing in ETFs, the SB 500, those are all great tactics here too. But we also want to to think about tax diversification and how you can make it so that you're investing in a really tax efficient way. For a lot of people, prioritizing the 401k is going to be a great idea. So are you maxing out your 401k? What's your approach to that?

[Paul]

Right now the way it works at my company is I feel I'm very fortunate my company puts in money whether I do or not. And right now I am putting in money, but they put in, it ends up being about $2,000 a month into my 401k. So the calculation I did when I came up with my calculations based on them, continue to contribute because even if I stop, they will continue to contribute. Right now I'm maxing it out. I'm putting the full amount that's allowed in a year and I'm doing Roth right now because I feel like I have so many taxable. I'm very heavy on the taxable side. So I'm trying to put a little more weight on the tax free side.

[Sean Pyles]

Again, it seems like you're doing what a lot of financial advisors would recommend you do. You're maxing out the 401k. You're investing in a diverse array of stocks through ETFs in your taxable brokerage account. You're getting some post tax dollars through your Roth. So that way you have tax diversification when you're pulling out money in retirement too. I'm trying to find something that you're doing wrong and I'm having a hard time, but it seems like you still have this lingering financial anxiety. So I'm wondering what you think you might want to change or how you could find some sense of financial ease with your savings and retirement and what you're doing with your money currently.

[Paul]

Yeah, I'd like to ease off on my savings right now and I thought maybe doing it gradually slowing down, maybe start saving a little less and then just slowly going to saving nothing and letting the compound interest in my company, 401k do the rest of that. And I was going, you guys, what you think about, you know, just staying on track with that? Maybe every once every six, every six months or every year, checking up on it, making sure it's moving okay or I mean, is there anything I can do? Just kind of not dive into the pool, but kind of start dipping a toe into the water?

[Sean Pyles]

Baby steps are smart because you don't want to shock your system, especially since you are such a diligent saver and it's a cause of anxiety for you. This is going to be a place where working with a trusted CFP can be really helpful. So you can have a long term relationship with this person and you can check in every six months or every year, depending on the cadence that you want. That way you can just call them up. You have any questions along the way when you're saving. But I think to start slow and steady, that's great. But kind of going back to a question Elizabeth had earlier. What are you going to do with the money if you're not saving it? Is it going to be more vacations? You'll be saving it maybe in a different type of account or what's your life going to look like when you're not saving as diligently as you have been for these many years?

[Paul]

If I'm going to cut back on my saving, then I'll try to enjoy my life more. Like I said earlier, maybe get another, a nicer car or a second car where we're sharing one car right now amongst the two of us. It's been all we needed lately. We'd like to travel more. Maybe instead of once a year, go away three times a year. That'd be great. I try to go back to my home country of Italy once a year, but maybe I can go more than once a year or maybe I can travel business class, try that out.

[Elizabeth Ayola]

I think the possibilities are endless. And that's one thing I like about fire. It gives you or empowers you to dream and to believe and to think about all the different things that you can do if you have a lot more money or if you're able to retire early and just have a lot more flexibility. So I think for you it might be important to just do some daydreaming, to sit down and think about what your life would actually look like if you stopped saving. And also to remember, as much as we are here for planning, we cannot control the future. We don't know what the stock market's going to do in 20 years. We can only plan for it. And you're doing all the right things to plan. So I think you have to give yourself a pat on the back and say, hey, my retirement or my savings seem to be doing okay. As Sean said, speak with a financial planner or a professional just to kind of give you that thumbs up that you're on track and then just enjoy your money because you're doing great. Cool.

[Paul]

Yeah. I'm gonna go check out on your site who Good financial planner. That would be for my situation.

[Sean Pyles]

Great. And I want to hear a little more about what you envision your retirement being. Are you planning to stay in the States? Would you go back to Italy?

[Paul]

We haven't thought that far ahead yet. The one thing we definitely want to do in retirement is just be free to travel and go away for, you know, three weeks, a month, two months if we want to, and not have to worry about coming home. That's definitely one that we both agreed on. So I know traveling is definitely a big thing because we've always done our whole lives and it's just something that we just. We love it. That's how we met and that's how we want to continue going.

[Sean Pyles]

Well, living in Italy would make travel really easy. You can just hop from one country to the next. It might be a little harder state wise. And also I imagine it would be more affordable to retire in Italy than in the US that's part of why I'm asking.

[Elizabeth Ayola]

It is?

[Paul]

Yeah. It's one thing I was looking at, which is another thing that gives me, you know, anxiety, is just look at the value of the dollar right now. It's buying me a lot less in Europe than what it did say maybe a year ago or it was a few years ago and it was almost equal. So I'd have to manage because all my money is in US dollars. So I'd have to go from having money in US dollars to spending money in euros or whatever currency there will be then.

[Elizabeth Ayola]

What do you think that you can do moving forward to help you deal with your feelings of anxiousness? And worry that you're not going to have enough come retirement.

[Paul]

I think the biggest thing I need to start doing, which I'm glad you guys can confirm for me, is taking these baby steps into reducing my savings rate right now and actually enjoying my life a little more. Because you never know what tomorrow brings.

[Sean Pyles]

That's right. Well, Paul, please keep us posted on what you decide, where you land with your financial advisor, and how you plan to set up your CoastFi so you can enjoy today while also so plan for tomorrow.

[Paul]

I definitely will.

[Sean Pyles]

And that's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-N E R D. You can also email us at podcastnerdwallet.com join us.

[Elizabeth Ayola]

Next time to hear about whether it makes sense to divert retirement savings to fund a home down payment. We want you to follow Smart Money on all your favorite podcast apps that include Spotify, Apple Podcasts and iHeartRadio to automatically download new episodes.

[Sean Pyles]

Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

[Elizabeth Ayola]

This episode is produced by Tess Vigelin and Anna Helhoski. Hilary Georgi helped with editing. Nick Karismi mixed our audio and a big thank you to NerdWallet's editors for all of their help.

[Sean Pyles]

And with that said, until next time, turn to the Nerds.