The Clark Howard Podcast Episode: Ask An Advisor With Wes Moss (03.11.25)

Release Date: March 11, 2025

Introduction

In this episode of The Clark Howard Podcast, Clark Howard welcomes Wes Moss, a fiduciary fee-only advisor, seasoned broadcaster, and author, to the show. Together with Krista Dibiaz, Wes delves into the intricacies of early retirement, sharing valuable insights and addressing listener questions related to personal finance and investment strategies.

Guest Introduction: Wes Moss

Krista Dibiaz introduces Wes Moss, highlighting his extensive background as a fiduciary advisor, broadcaster, and author of several books such as "You Can Retire Sooner Than You Think" and "What the Happiest Retirees Know". Wes emphasizes his commitment to providing real-life financial guidance based on over 25 years of experience.

Notable Quote:

"These financial questions could be right, could not be right. This is financial guidance, so there's such a unique DNA that this is just my best guidance." – Wes Moss [02:04]

Early Retirement Trends and Strategies

Wes Moss discusses the growing trend of early retirement, influenced by factors such as corporate workforce reductions and the desire for financial independence. He contrasts the traditional view of retirement, epitomized by his grandfather's seamless transition to retirement, with the current reality where individuals must proactively plan for phased retirement.

Phased Retirement

Wes advocates for a phased retirement approach, where individuals gradually reduce their working hours instead of stopping abruptly. This strategy provides financial flexibility and reduces the need to tap into retirement savings prematurely.

Case Study: Wes shares the story of Barb, a 55-year-old corporate project manager who successfully transitioned to part-time work, allowing her to preserve her retirement funds while still earning an income.

Notable Quote:

"Instead of stopping completely, she phased back. She went to halftime part-time and took her salary from 100 down to 50." – Wes Moss [06:30]

Proximity to Adult Children

Another critical factor for a happy retirement is living close to adult children. Wes emphasizes the importance of geographic proximity to maintain strong family ties and ensure mutual support as both parents and children age.

Notable Quote:

"I've got four kids, so I'm always thinking, who are the two we need to live near eventually when they're grown up increases the likelihood you end up in the happy retiree camp versus unhappy by 4 times." – Wes Moss [09:26]

Multiple Streams of Income

Wes underscores the necessity of establishing multiple income streams in retirement. Relying solely on Social Security or retirement accounts can be risky. Diversifying income sources through investments, rental properties, or part-time work ensures financial stability.

Notable Quote:

"If we're not thinking about that, that's a mistake." – Wes Moss [10:19]

Common Mistakes to Avoid in Early Retirement

Wes outlines six common mistakes individuals should avoid when planning for early retirement, sharing three in this segment and the remaining three in the next.

1. Not Considering Phased Retirement
   Abruptly stopping work without a transition plan can strain finances. Phased retirement offers a gradual reduction in work hours, preserving retirement savings.

2. Failing to Plan for Proximity to Adult Children
   Living far from family can lead to isolation and logistical challenges in providing mutual support as both parents and children age.

3. Failing to Establish Multiple Income Streams
   Dependence on a single income source increases financial vulnerability. Diversification through various investments and income-generating assets is crucial.

4. Waiting Too Long to Collect Social Security
   While delaying Social Security can maximize benefits, it’s essential to balance this with the need for immediate income, especially if relying heavily on retirement accounts.

5. Underestimating Healthcare Costs
   Healthcare can become the largest expense in retirement. Securing adequate Medicare coverage and supplement plans is vital to avoid exorbitant medical bills.

6. Over-Supporting Adult Children
   Financially assisting adult children beyond their capacity can deplete retirement funds and diminish personal financial security.

Notable Quote:

"Supporting our adult children too much at the expense of our own retirement... can take a big bite out of your retirement plan, your retirement happiness." – Wes Moss [28:36]

Listener Questions

Question 1: Early Retirement Readiness (John from Minnesota)

John's Scenario:

• Age: 55
• Spouse: 54
• Savings: $1.1 million (Traditional IRA and 401k)
• Mortgage: $180,000 on a $500,000 home at 3%
• Retirement Budget: $3,400 - $3,600/month
• Social Security: Planned at age 67

Wes's Advice: John appears financially prepared for early retirement. With a safe withdrawal rate of 4%, his retirement accounts can provide approximately $44,000 annually, supplemented by Social Security benefits. Wes advises against pulling funds to pay off the mortgage early due to the low-interest rate and recommends considering phased retirement to maintain income flow.

Notable Quote:

"You're in good shape. I would just think back to what we talked about first. Always consider phasing out as opposed to stopping completely." – Wes Moss [16:17]

Question 2: Investment Choices (Michael from Georgia)

Michael's Scenario:

• Considering selling I Bonds (3.11%) to buy Vanguard VTEB Municipal Tax Free Bond ETF (3.52%)
• Queries about optimal withdrawal strategies and income ETFs for stable annual income.

Wes's Advice: Wes explains the importance of evaluating tax equivalent yields when choosing between municipal bonds and treasury bonds. He recommends a strategic order of withdrawals: first from taxable accounts, then traditional IRAs, and finally Roth IRAs. For dealing with large proceeds from home sales, he suggests using government-specific money market funds for safety and liquidity.

Notable Quote:

"Anytime you have an ETF that has the word max in it, yield max, and it has to do with options... these are financial instruments of mass destruction." – Wes Moss [32:26]

Final Thoughts on Early Retirement Mistakes

Wes continues to elaborate on the remaining three mistakes to avoid:

4. Waiting to Collect Social Security Too Long: While delaying Social Security can maximize benefits, it's crucial to balance this with the need for immediate income to prevent excessive withdrawals from retirement accounts.

5. Underestimating Healthcare Costs: Healthcare has become the largest expense in retirement. Wes recommends securing comprehensive Medicare supplemental plans to cover the 20% not covered by Medicare.

6. Over-Supporting Adult Children: Financial assistance to adult children should not compromise one's retirement security. Wes advises setting boundaries to ensure that retirement funds are not depleted by over-supporting dependents.

Notable Quote:

"If you are having to over supplement the kids, it can take a big bite out of your retirement plan, your retirement happiness." – Wes Moss [28:36]

Conclusion

The episode provides a comprehensive guide to early retirement planning, emphasizing the importance of phased retirement, proximity to family, diversified income streams, strategic Social Security planning, diligent healthcare budgeting, and prudent financial support to adult children. Wes Moss's expertise offers listeners actionable strategies to avoid common pitfalls and achieve a financially secure and satisfying retirement.

Call to Action: Listeners are encouraged to submit their financial questions to www.clark.com/askclark and tune into upcoming episodes for more insights.

Notable Moments and Quotes

• Phased Retirement Benefits:

  "Instead of stopping completely, she phased back." – Wes Moss [06:30]

• Importance of Family Proximity:

  "Living near your kids increases the likelihood you end up in the happy retiree camp versus unhappy by 4 times." – Wes Moss [09:26]

• Multiple Income Streams Necessity:

  "We want to have diversification of how we're getting paid." – Wes Moss [10:19]

• Investment Caution with Yield Max ETFs:

  "These are financial instruments of mass destruction." – Wes Moss [32:26]

This detailed summary captures the essence of the podcast episode, highlighting key discussions, insights, and expert advice provided by Wes Moss on early retirement planning. It serves as a comprehensive guide for listeners seeking to navigate the complexities of personal finance and retirement.