← Ready For Retirement
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- [00:00]
A
Fifth question is for Ari. When can I retire? I am 52. My wife is 50. We want to retire August of 2029. My salary is $100,000. My wife's salary is $139,000. She works for a school district. My simple IRA. I contribute $21,000 a year. My wife contributes to our 403 Roth $32,500 a year. Her TRS3 plan is at 5% a month, which is $500 per month. Our superhero account, we contribute $1,000 a month. And we both were maxed out our Roth IRAs, which is a total of $17,200 per month. My HFA has 15,000 in it. These are the balances. My wife's veeba account has 35,000 in it. My wife's 403B has 96,000 in it. Her 403B Roth has 26,000 in it. Her TRS3 plan has 161,000. My 401K has 147,000. My IRA account has 152,000. My Roth IRA account has 170,000. My wife's Roth IRA has 133,000. We have about 227,000. My Superhero account has 865,000. My checking account has 25,000. My wife will receive a pension of about $3,000 a month at 65. We don't know when we're going to pick our Social Security yet. And we own two homes. They are both completely paid off. Washington House is worth about 650, and our vacation home in Arizona is worth about $500. We would love to retire at 10,000 per month. And I would love to get any advice from you, and I appreciate you doing this. Hopefully, I gave you everything you needed. Thank you very much.
- [01:35]
B
There's just one word I have for this person. Trade offs. How bad do you want to retire early? This person said they want to retire at 52 and 50 in 2029. They have August. They have their month picked out. So they are ready to go. That's something. They do want to retire early. Now, I honestly don't care how much someone makes. I do care how much they're saving. But when this person's explaining all their different accounts, one, it's very difficult understand, okay, is everything talking to each other? And I see this a lot when people are wondering, okay, do I have the right investment mix? Not necessarily. Okay, stocks and bonds, but what do I put in every account? We've got the 403B. We've got the VBO, we have Roth IRAs, we have Superhero account, we have stocks. Now I'm going to walk through how I would think through this before we get started. This is a small snapshot of this person's situation. I don't know how much they want to leave behind. I don't know if they have kids. I don't know if they rather work longer so that they can keep their vacation home or if they'd rather retire earlier and sell that. There's so many different options and alternatives alternatives here. It's going to be fun, which is why I love doing this. So I'll walk through what a typical certified financial planner CFP may consider in a situation like this. But once again, this is not personalized financial advice. That's important. I'm Ari, host of the Early Retirement Podcast and if you want to retire early one day, AKA not work forever, make sure to hit subscribe so you learn all the strategies and hopefully you have fun watching. Call the number on your screen if you want to submit your situation so I might respond in a future episode. That number is 213-316-8397. You can also see it on my screen wherever my brilliant editors put it. So I'd have a few questions before I would give any insights here. And obviously this is never financial advice, but the first thing I would say, honestly, and I'm laughing, is, hey, are you like enjoying life today? You're saving a lot of money. Now if you're like, hey, we're naturally people. We don't. We're not big spenders. We're not worried about, hey, are we missing out on travel opportunities? We just want to retire early. That's our goal, then I wouldn't have concerns. But if you were like, yeah, we don't go out to eat, but we'd love to because we're saving every last dollar to our accounts. That's where I'd caution them on doing so, because it becomes a question of what's the highest lever opportunity this person saved. They have 2 million plus dollars they've saved. Well, they have a pension coming at 65, 3,000amonth, their Social Security. I'm not really worried about their later retirements. In fact, I'm not even really worried about their earlier retirement. I'm worried about are they going to be able to retire and enjoy it? Because you don't want to retire too early and go, why didn't I work a few more years to spend what I actually wanted to? But you also don't want to work unnecessarily when you're like, look, I could be retired right now and still be okay, so they wanna retire in three years. That's awesome. 10,000amonth. That's a good amount of money. Now that's what I like here. If someone wants to spend $120,000 a year, they might hear something like the 4% rule. Take 120,000, divide that by 04. And that tells you you might need $3 million if you wanted once again to use the 4% rule. So if this person wasn't financially savvy, and it sounds like they actually are, they are interested in retiring early, they might hear that and go, oh, we're going to work till we have 3 million. But the reality is there's a pension. The reality is, is there will be Social Security at some point. So it's not as if everything is fully reliant on their portfolio. Plus they have a vacation home. I don't know if they rent that out when they're not there. There's a lot of options here. I was concerned hearing the beginning of the message because I was hearing a lot of qualified rich sentiments. If you don't know what that is, There's a term called house rich cash poor, where the majority of your money is in your home. So although you have this asset, it's not creating income for you. Meaning you might have a 10 million net worth. But if 9 million of it is in a home you never want to sell you, it doesn't create income for you. It just looks good on your balance sheet. The good news is there is a superhero account. And between their stocks and superhero account, really know why they separate those. Unless it's for mental accounting. You know, there's north of a million dollars there. So that could very easily help bridge that gap until they can touch their 401k, 403b viba pension starts and things like that. What I would urge this person to do is get really clear on their actual expenses. They said 10,000amonth. I don't think that's right. And I've shared that with people and they're like, well, how could you not think that's right? Like that's me telling you my thoughts. Your opinion is irrelev relevant here. I said I'm not discounting the 10,000. I'm saying most people spend more when they have their energy and health. So if you wanted to spend more, would that be attractive? And some people go, of course, who would not want more? But Some people would go, no, honestly, I wouldn't know what to do with more than that. So I'm asking the question to gauge how they respond, not necessarily what the response is. So if I asked you, hey, would you like to spend more than 10,000amonth? And you go, of course, who wouldn't? I go, okay, 12,000amonth, could you do everything you want more? They'd go, yeah, that's actually two more big trips. That'd be fun. I go, great, 12,000amonth might be the goal. Do you think you're going to spend more or less compared to your 50s versus 70s? They might go, oh, maybe less in my 70s, don't have the same health and energy. I'm not traveling to the same degree. I'm like, great, okay, well, that's good to know. Because if we're going to spend maybe 9,000amonth, then that changes how you can retire early because you might spend more at the beginning and then later on you have a pension, you have Social Security, and you're spending less, which means there's less requirement on your portfolio. We don't need it to be as large, which allows you to retire earlier and enjoy more. And there's a risk to overspending, but there's also a huge risk of regret, which most people don't focus on. Okay, maybe at this point in your life you want to practice retirement, see how much you want to travel. They said they own two homes. Do they want to sell a home? If they do sell a home and there's a big capital gain, how does that impact health care? Are they planning on doing what's called tax gain harvesting? If not, I'd strongly consider looking into it because you can see here, I put up this episode. This is exactly how you can retire and spend $10,000 a month or 120,000 a year and pay 0% taxes and how to do that. So if I'm this person, that's basically exactly what they told me they wanted to spend. Is that accounting for health care? Is that accounting for extra trips? I don't know. What do you guys think of this person's situation? Let me know in the comments. What advice? What feedback would you actually want to give them if they were hypothetically your client? Whether or not you're a financial advisor, you can give your feedback. It's a free country here. So a few options. Number one, obviously comment optimize below if you want to go build your own plan with the software I use in my videos. Number two, if you just want a free guide that just helps you understand you're not forgetting anything before you retire, comment, retire. And then finally, if you're like, okay, I want to make sure I don't mess something up, I want to speak to you and your team. Okay, well, this is what we love to do. So you can, of course go to root financial.com in the upper right, there's a little button that says see if you're a fit, answer a few questions. We might talk very soon. And then, of course, once again, the number if you want to call to leave your voicemail where I might respond in a future episode, 213-316-8397 to submit your situation of having me potentially respond in the future. Thanks as always. Please like and comment what fascinated you the most about this episode. See you guys next time. Love you.