Rich Habits Podcast – Episode Summary
Episode: Q&A: Taking Social Security Early, Building Two ADUs, & Whole Life Insurance For Children?
Date: September 11, 2025
Hosts: Austin Hankwitz & Robert Croak
Episode Overview
In this Q&A edition of the Rich Habits Podcast, hosts Austin and Robert tackle a range of listener-submitted personal finance questions. Topics include:
- The feasibility of early retirement with significant student loans
- Leveraging home equity and the risks of building ADUs
- Whole life insurance vs. custodial investing for children
- Diversifying retirement funds into private real estate deals
- Balancing saving for college and investing as a student
- Prioritizing emergency funds versus retirement contributions
The hosts bring their characteristic blend of practical advice, optimism, and real-talk about the financial habits that lead to wealth.
Key Discussion Points and Insights
1. Early Retirement and Student Loan Management
Listener: Natasha B., age 53, single, no children
Summary of Situation: Wants to retire at 62 and transition to part-time. $330k invested, $71k student loans (half at 6–7%), moderate expenses, single income.
Key Insights
- Austin: Affirms Natasha is “trending in the right direction” and illustrates the path to feasible early retirement if she continues contributions and incorporates anticipated Social Security and part-time income. (04:50)
- Quote:
"You have about $330,000 invested right now at 52, which I think is a really good place to be... There's absolute hope for you as it relates to wanting to retire at 62." – Austin (05:26)
- Quote:
- Emphasizes defining retirement as a mix of part-time work and leisure rather than total cessation of work.
- Calculated projection: Portfolio could grow to $650–850k by 62 with continued investing.
On Student Loans:
- Austin: Don’t stop investing, but consider side hustling to pay off loans.
- Robert: Ramp up efforts to pay loans off quickly—suggests a $1,000/month side hustle to attack principal and interest aggressively.
- Quote:
"That 10-year window is tough. Thinking about only paying off $7,000 of the student loan debt a year... I would try to find a side hustle to get $1,000 a month that goes strictly to the student loan debt." – Robert (09:21)
- Quote:
- Urges realistic expense projections (including inflation: $3,500/mo in 10 years) and cautions the “4% rule” means aiming for a ~$1 million nest egg for true security.
2. Rental Property Equity vs. Building ADUs
Listener: Angel, age 42
Situation: Owns rental with $443k equity ($700k value, $257k loan), $1k/mo cash flow, dreams of building 1-2 ADUs, but a financial advisor advised against it.
Key Insights
- Robert: Recommends selling the property to realize equity gains, invest in diversified markets, and “guarantee millionaire status.”
- Quote:
"If I can get my hands on $400,000, 500,000, a million dollars right now and invest it properly, what does that do for the rest of my life?... I would sell the property in a heartbeat." – Robert (13:24)
- Quote:
- Warns against leveraging equity via a HELOC to build ADUs (at ~8% interest), which adds debt and risk, with uncertain cash flows.
- Austin: Illustrates that investing equity in the market at 8.5% could yield $3K/mo, vs. the current $1K/mo cash flow. Long-term, the market investment offers superior upside and liquidity.
3. Whole Life Insurance for Kids vs. Custodial Investment Accounts
Listener: Taylor K., age 36
Situation: $2,000/year per child (3 kids) in whole life policies; asks about custodial accounts instead.
Key Insights
- Austin: Advises strongly against whole life; endorses opening custodial brokerage accounts (esp. through Fidelity) and investing in broad market index funds for better growth and flexibility.
- Quote:
"What do your kids need life insurance for? They’re 7, 5 and 2. ...Open up the account on Fidelity, ...put it in the S&P 500... it’s going to grow much more, much better than the fees and everything else that... sucks about a whole life insurance policy." – Austin (18:29)
- Quote:
4. Using 401k Funds for Private Real Estate Investment
Listener: Taylor K. (continued)
Situation: Considering taking $50,000 from 401k for a real estate deal with projected 8% preferred return and 22% annual gain.
Key Insights
- Robert: Advises against taking 25% of a retirement nest egg for a single, illiquid real estate deal—especially when pulling from retirement funds interrupts compound growth and poses unnecessary risk.
- Quote:
"You're taking 25% of what you've built up to risk on one real estate deal that you don't own. ...There's a lot that can go wrong." – Robert (19:27)
- Quote:
- Austin: Breaks down the math—401k withdrawals incur 10% penalty + ~15% in taxes, meaning a 25% effective fee before the investment even starts.
- Quote:
"Your 401k money, first and foremost, you pay a 10% penalty... you're essentially paying a 25% fee on this $50,000 to obtain it." – Austin (21:12)
- Quote:
- Final verdict: Build wealth consistently, and once you have $500k+ invested, diversify with new (not retirement) money.
5. Saving vs. Investing: The College Student Dilemma
Listener: Liam Yu, age 19
Situation: College student working part-time; debating between using extra income to pay college bills (less student debt) or investing in a Roth IRA.
Key Insights
- Austin: Advocates investing 10–20% into a Roth IRA for the power of compounding:
- Quote:
"Every dollar that you invest in your 20s... will turn into $70 in retirement." – Austin (24:11)
- He points to their earlier episode, "How to 70x Your Money," for deeper context.
- Quote:
- Robert: Reinforces message—start investing young for “mind-blowing” compounding.
6. Emergency Fund vs. Roth IRA Contributions
Listener: Paul C., age 35
Situation: $32,000 in each spouse’s Roth IRA, $210K in 401k, $5K in crypto, $55K in employer stock, leans emergency fund, debating whether to use $10K from employer stock to fund emergency savings or Roth.
Key Insights
- Robert: Always max out the Roth IRA first—tax-free growth is crucial for long-term wealth.
- Quote:
"From Austin and I standpoint, it’s always going to be max out the Roth if you can. So for me, that's number one." – Robert (27:52)
- Quote:
- Both hosts note the importance of an emergency fund (three to six months of expenses) to avoid credit card debt.
- Austin cautions: Don't treat the Roth as a checking account; keep retirement and emergency savings separate.
Notable Quotes & Memorable Moments
| Timestamp | Speaker | Quote | |-----------|--------------|----------------------------------------------------------------------------------------------------------------| | 05:26 | Austin | “You have about $330,000 invested right now at 52, which I think is a really good place to be...” | | 09:21 | Robert | “That 10-year window is tough... I would try to find a side hustle to get $1,000 a month that goes strictly to the student loan debt.” | | 13:24 | Robert | “If I can get my hands on $400,000, 500,000, a million dollars right now and invest it properly... I would sell the property in a heartbeat.” | | 18:29 | Austin | “What do your kids need life insurance for? They’re 7, 5 and 2. ...Open up the account on Fidelity, ...put it in the S&P 500...” | | 19:27 | Robert | "You're taking 25% of what you've built up to risk on one real estate deal that you don't own. ...There's a lot that can go wrong." | | 21:12 | Austin | “Your 401k money, first and foremost, you pay a 10% penalty... you're essentially paying a 25% fee on this $50,000 to obtain it.” | | 24:11 | Austin | “Every dollar that you invest in your 20s... will turn into $70 in retirement.” | | 27:52 | Robert | “It’s always going to be max out the Roth if you can. So for me, that's number one.” | | 28:44 | Austin | “Don’t treat your Roth IRA as a savings account… your retirement contributions are for your retirement. Full stop.” |
Quick Reference – Timestamps for Major Q&As
- Early Retirement & Social Security: 04:50–12:00
- Using Rental Equity/ADUs: 12:55–16:45
- Whole Life Insurance vs. Custodial: 17:11–18:55
- 401k Withdrawals for Real Estate: 19:23–22:49
- College Student: Save vs. Invest: 23:35–25:40
- Emergency Fund vs. Roth IRA: 26:16–28:49
The Hosts’ Core Messages
- Consistent investing and compounding are key, no matter your age.
- Avoid unnecessary fees, penalties, and high-cost products (whole life insurance, early 401k withdrawals).
- Aggressively attack debt but not at the expense of missing out on compounding growth.
- Real estate can be great, but weigh risk/return and don’t over-leverage.
- Emergency funds prevent financial backsliding—don’t skip this step.
- Personal finance is personal: tailor decisions to your life, goals, and risk tolerance.
For Listeners
The episode is full of actionable, no-nonsense advice drawn from both hosts’ real experiences and the mistakes they’ve seen. It’s especially valuable for those navigating the tricky middle ground of saving, investing, and debt payoff.