Build a Confident Early Retirement Plan (Without Overthinking It) SB1746

Summary

The Stacking Benjamins Show

Episode SB1746: Build a Confident Early Retirement Plan (Without Overthinking It)

Release Date: October 10, 2025

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Episode Theme & Purpose

This episode of The Stacking Benjamins Show focuses on demystifying early retirement planning. Hosts Joe Saul-Sehy and OG, along with panelists Paula Pant (Afford Anything podcast) and special guest Sean Mullaney (co-author of Tax Planning To and Through Early Retirement), offer a comprehensive, approachable discussion on crafting an early retirement plan without getting stuck in overanalysis. The panel explores definitions, common misconceptions, financial levers, tax considerations, asset allocation, lifestyle choices, and actionable strategies—mixing practical expertise with the show’s trademark humor and relatability.

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Key Discussion Points & Insights

1. Defining "Early Retirement"

[10:30–15:20]

• Avoiding Semantics: The panel sidesteps tired debates about what “retirement” truly means, instead aiming for clarity and common ground.
• Paula Pant’s Take: "Retirement is not the complete and permanent cessation of all income producing activity. ... A 65-year-old retiree often volunteers or works part time—they have options. Early retirement just brings those options forward." ([11:04])
• OG’s View: Early retirement mainly means stopping your primary job before age 62/65, regardless of supplementing with part-time gigs.
• Sean Mullaney’s Perspective: "If you retire prior to Medicare enrollment ... you've got a health insurance issue to manage. ... Anyone before 65 is early by at least some planning metric." ([12:42])
  Sean suggests that everyone needs to consider early retirement possibilities, even if they don’t plan on it, due to career unpredictability and forces like AI.

2. The Three Levers: Saving, Spending, Earning

[15:20–21:59]

• Sean’s Priority: Both saving/investing (building wealth) and spending (managing expenses) are critical; spending exerts substantial influence over retirement viability.
• Paula's Framework: Savings rate is #1 (“increasing the delta between what you earn and what you spend is the backbone of everything”), investing is #2, asset allocation is #3. ([16:50])
• OG’s Reality Check: Many people either save too little or, conversely, save too much and don't enjoy life (two sides of the same psychological coin).
  "You can only cut so much spending ... there’s no theoretical limit to your income." ([20:23])

3. Lifestyle Design and Opportunity Cost

[21:59–24:01]

• Intentionality: Each panelist agrees that early retirement success hinges on being deliberate about what you prioritize spending on.
• Paula’s Signature Insight:
  "You can afford anything, just not everything ... the goal is to be intentional about what you say yes and no to." ([21:59])
• Sean on Tax & Lifestyle: Spending more on "stuff" in retirement not only increases consumption but can raise taxes when withdrawing from retirement accounts. "Stuff ends up in the landfill, while experiences don’t create a burden for loved ones." ([24:01])

4. Tax Planning for Early Retirement

[26:11–28:20]

• Asset Location: It’s vital to be thoughtful about where different types of investments sit (traditional/Roth/taxable accounts) for maximizing tax efficiency.
• On "Ideal Ratios": Sean pushes back on the search for a perfect mix, focusing instead on flexibility and intentional drawdown. "With any decent mix of accounts, you can probably have a very tax-efficient retirement with some planning."

5. The Roth vs. Traditional Retirement Account Debate

[28:20–38:05]

• Sean’s Traditional Lean: "Let's pay tax when we pay less tax. For most Americans, working years are highest tax years, so deferring with traditional accounts saves more." ([28:52])
• Paula’s Roth Bias: She champions Roth, especially for younger savers, for:
  1. Maximizing tax-free growth ("...that money is going to double... the amount you are eventually pulling out grows to 300%, 400%, 500% more than what you have put in"),
  2. Tax rate uncertainty ("...there's at least a probability tax rates might be much higher in the future"),
  3. Simplicity ("What you see is what you get in your portfolio balance.") ([34:13])
• OG’s Flexibility Stance: "Yes to everything. Build all account types; the real benefit is flexibility to optimize withdrawal strategies year by year."

6. Asset Allocation for Multi-Decade Retirement

[51:37–55:13]

• Key Insight (OG): "I don’t think your portfolio changes much whether you retire at 50, 55, or 65. If you’ve got sufficient assets, why would you suddenly go ultra-conservative?"
• Paula’s Support: Early retirees face a bigger risk being too conservative than too aggressive. She endorses a bucket strategy—segment assets by time horizon and purpose.
• Sean on Drawdown: The drawdown phase requires more attention for early retirees; order of withdrawals is crucial but manageable with intention.

7. Tax Strategies & Utilizing Non-Retirement Accounts

[55:13–61:29]

• Sean: If you retire long before 65, having taxable brokerage accounts is hugely helpful for both tax flexibility and managing healthcare (ACA premium subsidies).
• Managing Withdrawals: For early retirees, using “basis recovery” from taxable accounts keeps AGI low, increasing ACA credits and potentially hitting 0% capital gains rates.
• On IRS §72(t): Recent changes make this a more viable option for early withdrawals, especially after exhausting taxable accounts.

8. Future-Proofing Your Early Retirement Plan

[62:49–65:18]

• OG: "Spend 95% of your energy on figuring out your savings goal; 5% on optimization. You won't regret having too much, but you might regret falling short." ([62:49])
• Paula: Prepare for black swan events: major health crises, lawsuits, cognitive decline, etc. ("Protection and playing defense is key.") ([63:56])
• Sean: Max out retirement accounts for wealth-building and creditor protection ("Creditor protection is an underappreciated benefit of IRAs and 401(k)s.") ([64:37])

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Notable Quotes & Memorable Moments

• Paula Pant ([21:59]):

  "You can afford anything, just not everything."

• Sean Mullaney ([14:15]):

  "...in today's world, everyone needs the early retirement playset in their playbook. Not everyone needs to plan on early retirement, but you need flexibility."

• OG ([38:05]):

  "If you’re trying to tweak that last 5% of the calculation, you’ve already won the game."

• Joe Saul-Sehy ([65:18]):

  "It truly is, if you look at Benjamin’s life, about stacking more life, not just more dollars."

Humorous Banter:

• The lively "caddy corner vs. kitty corner" debate. ([03:23–04:15])
• Paula’s attempt to calculate distances during her move—"It's almost a mile. It's 0.8 miles." ([05:43])
• Multiple pop culture references—from The Art of War and Princess Bride to Van Halen and SNL’s Church Lady.

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Timestamps for Important Segments

• Opening and Introduction: [01:33–10:30]
• Defining Early Retirement: [10:30–15:20]
• The Three Financial Levers: [15:20–21:59]
• Lifestyle Design & Opportunity Cost: [21:59–24:01]
• Tax Location and Drawdown Strategy: [26:11–28:20]
• Roth vs. Traditional Debate: [28:20–38:05]
• Trivia Interlude: [39:47–49:19]
• Key Differences for Long Early Retirement: [50:36–55:13]
• Asset Allocation for Multi-Decade Retirement: [51:37–55:13]
• Tax Planning & Withdrawal Tactics (incl. 72t): [55:13–61:29]
• Strategies for Future-Proofing Your Plan: [62:49–65:18]
• Wrap Up, Panel Updates, and Book Details: [65:18–69:32]
• Doug’s Three Takeaways: [69:32–70:20]
• Show Credits and Outtakes: [70:20–74:49]

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Actionable Takeaways

• Define Retirement Flexibly: Don’t get bogged down—focus on creating financial options for yourself, not a hard stop on work.
• Dial in Savings Rate: The savings 'gap' is paramount; savings and spending choices have long-term ripple effects.
• Leverage Tax Flexibility: Build balances across traditional, Roth, and taxable accounts to maximize drawdown options and manage taxes.
• Don’t Over-Optimize: Nail the big 'how much' goals—minor allocation tweaks matter less once you’re saving enough.
• Plan for Healthcare Before 65: ACA strategies and taxable accounts are powerful for bridging the pre-Medicare gap.
• Invest for the Long Haul: Early retirees can’t afford to be too conservative—bucketing and maintaining growth assets is critical.
• Prepare for Life’s Unknowns: Protect against lawsuits, health disasters, and cognitive decline with insurance and account protections.

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Resources Mentioned

• Sean Mullaney & Cody Garrett’s book: Tax Planning To and Through Early Retirement (available via major booksellers, and linked in show notes).
• Paula Pant’s Afford Anything Podcast: For deeper dives into lifestyle design, personal finance, and investing.

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Final Thoughts

This episode provides both practical frameworks and nuanced debate, equipping listeners to build confident early retirement plans that are flexible, intentional, and robust—without falling into the trap of overthinking. The expert panel offers reassurance that, while the financial landscape may shift, the timeless principles of saving, intentional spending, and strategic investing will always provide a solid foundation.

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For more resources, links, and panelist info, see the show notes at stackingbenjamins.com.

Transcript

[Joe Salce]

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[OG]

Hello, my name is Inigo Montoya. You killed my father.

[Joe Salce]

Prepare to die.

[Doug]

Live from the basement of the YouTube headquarters, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor, Doug, and in the last few weeks we've talked five steps to retirement. We've talked about about working less and getting more done. We've even talked about how to use your retirement plans better. But you know what we really haven't talked about yet? Building an early retirement plan. So let's do that. Today our all star panel of contributors will dive into all the questions you're asking about early retirement so you can punch out earlier and more importantly, happier. But you think that's all? Of course not. We'll also bring home the bacon halfway through today's show with my amazing money themed trivia. And now a guy who's to good money habits what bacon and eggs are to breakfast. Which means often burned and usually runny. It's Joe Sal. Si. Hi.

[Joe Salce]

Welcome to the only show that can ruin a great open. Hey everybody, it is Joe Salce. Hi. Happy that you're here with us. We're gonna have a great time today. So sit back and relax and get your money nerdery on. I'm here right now with my Buddy. Doug. How are you, my friend?

[Doug]

Hey, buddy. So glad when you called me we were.

[Sean Mullaney]

Buddy.

[Joe Salce]

We got a great show. Because I'm gonna hold it right here. We got this author who's gonna be part of our roundtable today. Duh nuh, duh nuh. Yep. Not gonna show you. Gonna show you. Just a second. But first, let's meet the guy who is always across the card table from me and kitty Corner. Kitty is a kitty corner or caddy corner? I hear both.

[Doug]

Kitty.

[Joe Salce]

Kitty Corner from Doug. Mr. OG is here. How are you, brother?

[OG]

I believe it is caddy corner, actually.

[Doug]

Nope.

[OG]

Just get my papers ready.

[Joe Salce]

So always be an argument.

[OG]

Show Doug what's what.

[Doug]

Only if you're the kind of person who says cats up instead of ketchup.

[OG]

I think there's plenty of people. I would argue a solid two thirds of the population would say caddy corner.

[Joe Salce]

I don't know. Don't. Please don't write to me and tell me.

[Doug]

Wake up.

[Joe Salce]

I was about to say write to me about. Do this later, but don't write to me about that. Write to me about the important stuff like early retirement and a woman who likes to talk about how to think about early retirement. The Paula Pant is here. How are you?

[Paula Pant]

It's definitely caddy corner. For sure.

[Joe Salce]

Definitely wrong.

[Paula Pant]

Caddy corner and ketchup.

[Joe Salce]

Wow. So she's splitting the difference.

[Paula Pant]

She is spl.

[Joe Salce]

I want to get along with OG but I also want to get along with Joe and Doug. How are you, Paula?

[Paula Pant]

I'm great. How are you doing?

[Joe Salce]

You have been moving. I saw you have a little red wagon and you.

[Paula Pant]

I do, yes. So I've been moving out of that. We work office and I've been putting everything into a storage unit and it's about an eighth of a mile in between the two. And rather than take an Uber or Lyft or taxi, and obviously I don't have a car, I've decided to just hand pull every item. So I've got a little red wagon and I have been loading boxes and loading equipment and just loading stuff onto the wagon, pulling it an eighth of a mile to the storage unit, uphill both ways and unloading and then walking back and so just back and forth, back and forth. I've done probably around 10 trips. I'm training for the half marathon. Joe.

[Joe Salce]

I just love the fact, Paula, that you. You get to say the word mile in there like it's a long way because. Because when I start doing that math backwards is a guy that ran track in cross country mile is 800 yards. A quarter mile is 400 yards. Paula, are you telling me you go a whopping 200 yards or 2? 200. Well, that's 1600 meters.

[Paula Pant]

It's an eighth of a mile. So it's 800 yards, right?

[Joe Salce]

No, 800 yards is a half mile, boy.

[Paula Pant]

Oh, oh, okay, wait. So it's one. It's.

[OG]

Please make this a trivia question. Please make this a trivia question. Please make this a trivia question. I got this one. I know it.

[Paula Pant]

Eight miles. It's 0.8 miles.

[OG]

Those are way different things.

[Joe Salce]

Well, there you go.

[Paula Pant]

It's almost a mile. It's 0.8 miles.

[OG]

If Paula was ready for retirement, she would have just hired 10 people to do this once and then all with red wagons and put it on her socials. It's a red wagon.

[Joe Salce]

I can't believe, by the way, all the math that Paula does on her show and she gets tripped up by an 8th and 0.8.

[Paula Pant]

Yes.

[OG]

No wonder the cookies always taste funny. Add 1/2 cup sugar. It's like there's too big scoops of this, right? That's two cups.

[Joe Salce]

No, that's the entire bag. Hoi. That's the entire bag.

[Paula Pant]

Oh, wow. That was some botched math right there. It is eight miles.

[Joe Salce]

Well, you guys excited? Because look at this. I got this new book just just below the screen for those not with us on YouTube. And the author of this book, actually one half of the author team of this book is with us today from Southern California. There he is, my brother by another mother, my younger brother by far. Mr. Sean Mullaney's here. How are you, man?

[Sean Mullaney]

Joe, I am doing well. We're talking early retirement today. We got the jets on Monday night tonight. Awesome day.

[Joe Salce]

Oh, boy. That is Doug. Is. Is Sean Mulaney the one person in Stackerville who's worried about the jets tonight and excited the jets are up.

[Doug]

I don't know about that, Joe, because a whole bunch of Detroit fans now are semi jets fans because we gave you our coach.

[Joe Salce]

That's right. That's right, Sean. So is it the time for the big turnaround you've been looking for the past like 30 years in jets world?

[Sean Mullaney]

Lots of hope over here. It's going to take a while. Let's put it that way. Tonight could be the start of it. Dolphins are not very good. They've got some talent, but they're not very good. So I'm very hopeful for a W.

[Joe Salce]

Tonight and everybody's like dolphins. That was a couple of weeks ago. Well, now you know, when we recorded this. There you go. But Sean is the co author of this beautiful book that I have in my hand, tax planning to and through early retirement. You and your friend Cody Garrett wrote this thing. Sean, how was it writing this beast? Look at how big that book is.

[Sean Mullaney]

It's over 300 pages. So we go through all sorts of stuff in that book, accumulation through the end of the retirement. I really enjoyed it. I became a better professional by doing it. I learned a lot by doing it. And our hope is that readers will learn a whole lot by reading it.

[Joe Salce]

Sean starts on this project, goes tax planning. That's a thing. Is that really a thing? I've known Sean a while. I'm sure that wasn't exactly how that went down. Well, we're going to talk early retirement, everybody. And that will include, partially because Sean's here, a lot of work on your tax planning for early retirement, but also the other planning you need to do, the psychological piece, the investment piece. We're going to do a 360 look at this for about the next 45, 50 minutes. So grab your iPad, the paper, wherever you take notes and we're gonna dive in. But before that, we got a couple sponsors to make sure we can keep on keeping on. So we're going to hear from them so you don't have to pay anything for any of this pre and early retirement goodness. We're going to hear from them. And then Sean, Paula, og, Doug and I, we're going to talk about planning your way into early retirement. This episode is sponsored by Navy Federal Credit Union. Buying a car could be like a long road trip. There's negotiating prices, lots of fees and a difficult process. But with the auto loan from Navy Federal, you're on the highway to higher savings. We want our members to save more on their next auto purchase. That's why we offer great rates, military discounts and pre approvals that are good for 90 days. Plus, we offer most decisions in seconds. You could even get 200 when you refinance your auto loans from another lender with us. So if you want to save more on your next auto purchase, learn more and apply for an auto loan@navy federal.org Autoloans Navy Federal Credit Union. Our members are the mission. Navy Federal is insured by NCUA Credit and collateral subject to approval. Terms and conditions apply for military discounts. Refinance loan must be at least $5,000 to be eligible for the $200 terms. Conditions apply. Visit navyfederal.org autoloans for details.

[Paula Pant]

When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans, send event invites and pin messages so no one forgets mom's 60th and never miss a meme or milestone. All protected with end to end encryption. It's time for WhatsApp message privately with everyone. Learn [e-mail].

[Joe Salce]

All right guys, Sun Tzu from one of my favorite all time books, the Art of War said the best battle is the one that's never fought. And I can hear the battle already, Paula pant which is going to be early retirement. And then, and then the debate over what early retirement actually means, which is the eye roll discussion I don't want to have. So let's make sure we don't fight that battle. Define it for us, Paula.

[Paula Pant]

Sure.

[Joe Salce]

What are you playing for during this next hour? What is early retirement going to be defined by Paula as?

[Paula Pant]

I'll start with what it's not. Retirement is not the complete and permanent cessation of all income producing activity. Retirement, I think is the option. Well, okay, think about what a 65 year old who retires does. If that 65 year old is in good health, then just move it forward several years. So that 65 year old might decide to stop income producing activity for a while, maybe forever. Or that 65 year old might decide to volunteer maybe to start a part time job, maybe to do you know that 65 year old has options. So just imagine that framework and then just move it forward.

[Joe Salce]

Oh gee, what are you going to define early retirement as today?

[OG]

I didn't know that this was going to be one of the questions. What do I want to define it.

[Joe Salce]

As or do Apollo did what Define it as not? What are we talking about? What are we not talking about?

[OG]

I think it's largely accepted that retirement is 62 plus. And when you stop working, like Paula said, you just are done doing anything that's productive from a work standpoint. So early retirement would be anything that causes you to stop that major source of income, your primary job before that. So you know anybody who's done in their 50s, I don't even know early retirement's early retirement. It's retiring early. Why do we have to define a word that's like two words that make a lot of sense together by themselves?

[Joe Salce]

Well, Sean, and you know why? I think you know why I'm starting there here because people like, well, but they're still working but they're still doing stuff. They're over 50 years old and they're doing. They're not really actually early retired. So define it for us in Sean Mulaney terms.

[Sean Mullaney]

Paula makes a great point that retirement does not need to mean zero out earned income. Here's how I look at it. I say something like 70% of Americans report retiring prior to Medicare enrollment. Medicare enrollment is the first of the month you turn 65. So if you retire prior to Medicare enrollment, that means at a minimum, you've got a health insurance issue to manage. And it's very manageable. But you need to have a lot of intention around that. So I start with 65. Anything prior to 65 is going to have at least some sort of thought that's going to be needed behind the health insurance. And so I would argue Anyone before 65 is early by at least some metric, by at least some planning consideration. The other thing I'm going to say about early retirement is there are going to be some folks in the audience who say, oh, I'm going to work to 65, 70, maybe even 75. And I think in today's world, everyone needs the early retirement play or playset in their playbook. Not that everybody needs to plan on an early retirement, but do we really think the jobs we're doing today are going to exist as they exist today, 10 years from now, 15 years from now, heck, even 5 years from now? It could be that your company changes, the economy changes, or your own preferences change. You may love going to the office today. Maybe in five years something's going to change. You're not going to love it so much anymore. So I think this early retirement, I almost think it's more of a planning concept. And it's a planning concept that applies to almost everybody with a job.

[Joe Salce]

Man, I love that, Sean, because at lunch today, I was reading the CEO of Walmart at a recent employment conference talking about how, and this is his quote, AI is going to affect every job. And it's not about people not having jobs. It's about how do we help retrain our workforce and how do we think about where people are going to fit? Because the way we fit is going to be different. Well, he predicts that we will all have jobs. We'll just be doing much, much, much different things. So to your point, we may be an earlier retiree, maybe an early retiree that we think as we're getting retrained for the next thing.

[Sean Mullaney]

Absolutely, Joe. And, and I'm not here to say I'm for or against AI, but it's certainly part of the conversation and things change and, and that we've seen that over the last 10 years, things in the world, things on our own personal lives, careers. And so I just like this idea of, look, I may not be 100% planning on retiring prior to 65 or prior to 55, but. But I @ least have some flexibility in my playbook to consider it if it does happen.

[Joe Salce]

Yeah. And I think it doesn't matter whether you're for it or against it.

[Sean Mullaney]

Right.

[Joe Salce]

I mean, I'd love that Jack Welch quote from the 90s. Accept reality the way it is, not the way you wish it were, or hope it will be. Like reality is, AI is coming in some way to every job in one form or another. Sean, let's stick with you. In retirement, you've got these three levers saving money. Right. How are you going to save money? You've got the spending. How are we going to control our spending and look at our spending patterns? And third is earning money. Are we going to keep putting money away? Partly. Which of those three levers, if I'm planning on early retirement, do you think is the most important to drive?

[Sean Mullaney]

That's a fantastic question, Joe. I sort of look at two of them being building up the wealth, so saving and investing, and then the spending, because the spending is a very powerful driver of when someone can potentially retire. You know, it's one thing to say, oh, you know, I've got, you know, a $2 million balance in my retirement accounts, in my taxable account, whatever it might be, in investable assets. Well, how much do you spend every year? And if it's, oh, Well, I spend 50,000, 60,000 a year. Well, that's one situation. Well, you know what if you spend 300,000 a year, that's a very different situation. So I don't necessarily put a priority between saving and our expenses. But, boy, that expense stuff does matter and can give you some flexibility.

[Joe Salce]

Paula, when you think about those three drivers, saving, spending and investing, how do you put them in order?

[Paula Pant]

I would put savings as number one because the. Well, okay, it depends on how you're defining savings. But if savings is the delta between what you earn and what you spend, then I would say increasing the size of that delta. Did I say that correctly? What you earn and what you spend. Yes. Then I would say increasing the size of that delta is number one, since that is the backbone of everything. And then number two would be shoveling as much of that into investments as possible.

[Joe Salce]

And Then asset allocation, then how you do it is three.

[Paula Pant]

Yeah, yeah. And, you know, refining all of that, that becomes more important after you have made some significant contributions to your portfolio. But as. As you and I have talked about on my show, especially when you're building that first hundred thousand, it's the contributions that really move the needle, not the tweaking around the margins.

[Joe Salce]

Oh, gee. You see people on a daily basis who are struggling with all three of these. Right. What's the one you end up having to help people with the most because they're getting it the most wrong?

[OG]

So just for clarification purposes, you said savings, spending, and investing, but isn't saving and investing the same thing? And you said asset allocation. Is that what you mean by investing? Like, that's what I mean.

[Joe Salce]

Yeah, yeah. Shoveling money in spending plan in retirement, or how you have it invested so that you can withdraw it in a simple manner, in an efficient manner.

[OG]

I think that there's two types of people from a financial planning standpoint that we talk to very broadly speaking. And one is the person that's not saving enough money, you know, for their future goals. And most of us can kind of picture that, right. It's like lifestyle and just it is what it is. I'm where I am in my life, and I need to, like, stretch or like Paula said, try to figure out a way to increase that gap between my earnings and my saving potential. That's probably the large majority of people, maybe 60 or 70% kind of fall into that category. But I think the other side is. And I don't know that this is a direction we want to talk about with this, but I think the other side is also the person that saves too much money and doesn't do enough living in terms of experiences early, that's kind of a different thing altogether. And it seems like to the person who is not saving enough money, hearing somebody go like, there's people out there that have too much savings and like, boy, that would be tough, you know, woe is them, you know, must suck. It's the same disease. It's just the other side of the coin. And that person has the same sort of anxiety and stress. And, you know, I'm not there and I need to work harder as the person who doesn't have those things. It's the same psychosis as just the other side. And that's fewer people, maybe 1 in 3 versus 2 and 3. The other side, in terms of not saving. On the whole, it's focusing on how do we, like Paula Said increase that gap between the savings or our spending and what we're earning. And however you get to that delta or increasing that is okay. Sometimes you can do it from reducing your spending. That's harder, I think, to do than it is to increase your income.

[Joe Salce]

What I like and actually the next topic I wanted to kind of morph this into because I feel like these topics meld together so well is this idea of lifestyle design, right? And so, oh gee, when you talk about people who save too much money, I mean, now we're into this whole different idea, I think, of determining how we're actually spending our money, not, not whether we're spending money, but. But how we're spending our money, right?

[OG]

I mean, from a spending standpoint, and we've talked about this on the show for 15 years, it's so much harder to cut your lifestyle down to something than it is to just make more money. And again, I get it. There's people that are listening going, oh, you don't understand. It's way harder than you think it is. I didn't say it was easy. But you can only cut to so much, right? You can only have so little food or so little housing costs or so little transportation costs. And once you're at that base amount, you're there versus working a little overtime or getting a second job or getting a third job or whatever the case may be to increase your income to infinity. There's no theoretic limit to your income. It's a combination of both of them for sure. And if you're stuck kind of lips just above water type of scenario, you make some money and you spend just kind of where you are. I think it's fair to evaluate everything and realize there are no sacred spending or income earning activities. And you should be able to say everything counts, including selling the house and moving. You know, you think about like the Dave Ramsey concept where he's like, you got to get rid of this, you.

[Sean Mullaney]

Got to get rid of this.

[OG]

You got, you know, sometimes you got to do those things to get kind of your life back in, in where it should be so you can grow from there.

[Joe Salce]

Well, and that I think, Paula, is really the cool thing. What OG's talking about is, you know, while Dave Ramsey might say, you got to cut this, you got to cut that, you don't have to cut anything. Like I feel like this powerful thing of lifestyle design, it might have a little bit to do with this phrase I just came up with. Listen to this. You can afford anything, just not everything. I Just thought of that like, it's pretty kick ass, isn't it?

[Paula Pant]

Brilliant. Brilliant. What that speaks to is opportunity cost. That saying yes to something necessarily means that you are saying no to other things. And the goal is to be intentional about what you say yes and no to. Right. To be very intentional about both of those. Because I think what often happens is that people will make decisions because that is what is generally prescribed by society. Right. So society says that you should have this type of house or this type of car, or wear these types of clothes or wear these brands or whatever, or have a giant tv.

[OG]

That is required. Paula.

[Joe Salce]

Yeah, you went too far.

[Paula Pant]

You can see my. I don't own a tv. Hence why I never know anything when it comes to podcasts.

[Doug]

Enough virtue signaling.

[Paula Pant]

I mean, I do. I have an iPad. I do watch things on there. But, you know, I think that's a perfect example of what might be a big priority to you is not a priority to me, you know, versus I'll spend my money. I went to Panama in April. Right. That's something that I.

[OG]

Can you guys ever think of that without saying that?

[Paula Pant]

Anyways, I don't know the song.

[OG]

Oh, my God.

[Joe Salce]

Case in point right there.

[Doug]

OG and she doesn't own a television usa.

[Sean Mullaney]

All right?

[Paula Pant]

But that trip to Panama, that's an example of something that I value, but not everybody would necessarily value that.

[Joe Salce]

And apparently OG values Van Halen way more than you do.

[Paula Pant]

Yes.

[Joe Salce]

And Sean, on this topic of lifestyle design, I think lifestyle design has a lot to do with early retirement because you're like, you know what? I'm rejecting the premise that I have to work till 65. But you did a cool thing the first time you and I met at a campfire in Southern California where you tied this idea of lifestyle design also to tax planning. Do you mind for, you know, most of our stackers weren't there unless our total audience was the 40 people that were in that room. Do you mind tying those two together again? Because I think this idea of lifestyle design and tax planning are pretty cool things that go hand in hand.

[Sean Mullaney]

Yeah. So it turns out, particularly in retirement, we claim we have a quote, unquote income tax. But when you boil it down, in retirement, oftentimes it's a consumption tax. I was making a point about stuff, and now I'm going to make a point also about stuff versus experiences. One of the points I made in that presentation was, well, wait a minute. In retirement, if you want to go buy more stuff, you're increasing your taxes because you're essentially taking money out of taxable accounts, traditional accounts, increasing your taxable income to go buy that stuff. So you're paying more taxes for this stuff, which, oh, by the way, is ultimately going into the landfill. Anyway, the other thing about that in terms of retirement is stuff versus experiences. So what I mean by that is we buy the sports car, we buy the vacation home, we buy these other big ticket items. They have carrying costs versus in retirement, you go to the big island of Hawaii and you upgrade to the ocean view room and you go to a nice steak dinner a couple of nights. Well, maybe those were expensive and maybe even blew the budget a little bit. But there's no carrying cost when you pass. Your kids don't have to sort that out, right? Oh, mom and dad happened to go to the big island and they had a few steak dinners and they went snorkeling and okay, maybe they spent a little too much, but there's no carrying cost and there's no decision for your loved ones when you pass on, oh, what are we doing with this knickknack or that knickknack? So I think in the early retirement paradigm, one, the stuff tends to increase our taxes, and two, if we're going to be a little more spendy, why don't we do it a little bit more on the experiences side than on the stuff side?

[Joe Salce]

It's funny, ever since you talked about that no matter how good you take care of this stuff, it's gonna end up in a landfill. Yesterday in Houston, I was in the Galleria Mall, this monster mall, and all I can think of is Sean Mulaney in my ear going, no matter how good people take care of this stuff, it's all going to be a landfill. And it's just so, it was so gross. It's just such a.

[Sean Mullaney]

Sorry to ruined your Sunday at the mall, Joe.

[OG]

Oh, no, it's good. What did, what did you buy?

[Joe Salce]

My, my Sunday at the mall is already ruined. You know why? Because I was at the mall. That's, that's a, that's a hundred percent. I want to talk about this idea of tax location, Sean. How important is it while I'm planning for this early retirement to know whether I have my money in pre tax and in tax free or in tax flexible locations.

[Sean Mullaney]

So it is very important. And there's sort of two aspects to this. One is something called asset location. You know, most investors, we're not giving investment advice in today's podcast episode, but most investors want some combination of bonds and equities and so wait, wait a minute. I want to have some bonds. Where should I hold that? Should that be in my traditional retirement account, my taxable account, my Roth account? That tends to do much better in my traditional retirement account. It has interest income. We like to leave that off a tax return. It's also lower growth, generally speaking. So we like to leave those at a Roth accounts. We like the higher growth in the Roth. So that's one piece of it. Okay, then there's the second piece. And I get this question, and I bet everyone here has probably gotten this question. Well, what's my ideal ratio of traditional retirement accounts, Roth retirement accounts and taxable accounts. And the real nerds will even throw in an HSA to that equation. But let's just do traditional tax.

[OG]

Roth, it's the triple tax.

[Sean Mullaney]

Yeah. I like to argue there's no ideal ratio between those three. But I think what we can do is in our drawdown, we can be intentional around how we access those three. And all three of those have pros and cons. And by the way, it's mostly pros because you want to get to retirement with sufficient assets. So if it's, even if it's all in one or another, as long as we got sufficient assets, all three of them are, generally speaking, better than worse. That's sort of the way I look at it is not that we have any sort of golden ratio of traditional to raw to taxable, but more how can we control our drawdown to make the most. Most of whatever it is we have? And my general thesis too is, you know, everyone with any sort of sufficient mix of those three can probably have a very tax efficient retirement with some planning.

[Joe Salce]

All right, one more question for you, Sean, which is that we had a stacker in mom's basement, our Facebook chat group, and having a lively discussion where they said that they wanted to have you or your co author Cody on to talk about the fact that Paula and I really are. Or we, we kind of default first to the Roth and then talk us out of it. You agree with that strategy? Because it sounds like you don't based on the fact that somebody wanted you on to fight with us.

[Sean Mullaney]

So it's about an intellectual discussion. Right. And reasonable minds can differ a little bit here. But the overriding premise I go with is let's pay tax when we pay less tax. Generally speaking, for most Americans, and this includes most affluent Americans, we tend to pay the most tax during our working years and we tend to pay less tax in our retirement years. Is that a 100% universally true statement. Of course not. But let's just think about it conceptually. First, in our working years, we're getting up at 9am or before, then to go to the office to earn an income. Over the years, we've had this sort of inchoate fear. Enter the personal finance space. Oh, no, in retirement I'm going to pay all these taxes. But that's counter to the lived experience that literally in your working years, you're going to work every day trying to earn a buck or two. In your retirement years, you're sleeping in or you're going to the national park, you're not going into the office to earn a buck or two. Now, yes, financial assets can absolutely earn you money in your retirement. But there's another thing that's going on in retirement is you have access to all the different tax brackets, the 0% and the standard deduction, which keeps going up and up and up. The 10%, the 12%, the 22%, on and on. When we're at work, we're making a decision, hey, do I do a traditional 401k or Roth 401k? That decision is not based on, well, some of this is in the 0%, some of this is 10, some of this is 12. It's all in our marginal bracket, 24%, 22%, 32%. So in order for the traditional to fail in retirement, it's going to have to be taxed at a higher rate than the rate we deducted at during our working years. I think for most Americans, you're going to wind up, even if you're relatively affluent, you're going to wind up paying back the IRS at a lower bracket. And this going through the brackets in retirement is a very beneficial concept. The other thing too is the RMD landscape has just changed. They start at 75 now. So one other point I'll make, and then I'll come down off my soapbox is eight years ago, folks were like RMDs, they're terrible. They're terrible. Well, yeah, but they started at age 70 and a half. You know when they start. Now, if you're born in 1960 or later and thus could potentially be an early retiree, they start at age 75. And so I think it's based on a lot of these changes that have occurred. It's time for all of us to step back and reexamine some of these things. And one of them is, well, all right, RMDs are compelling planning objective, fair enough, but they only last for a narrow slice of our lives. And why is this one concern? Sort of had this overriding concern in the personal finance space when now, you know, for those of us born in 1960 and later, which is essentially every prospective early retiree out there in the future, they only start at age 75. How many of these things are you actually going to have? If you look at the Social Security mortality table, you may not be too thrilled about how many RMDs you're scheduled to have. So, Joe, it's great that you're, you know, having this conversation. I think it's time for all of us, considering all the changes that have occurred, to at least reassess this issue.

[Joe Salce]

These are my favorite discussions, though, to your point, Sean, because what, and what I love about having them is people often think that we're, we're all in agreement about this stuff and smart people always disagree. I remember we had Frank and Carsten and Dana on, and it was just a huge, it felt like a fist fight sometimes. People were like, I left more confused. And the point wasn't to confuse our stackers. The point was really to show people, look at how many different ways there are to slice this.

[OG]

Oh, don't lie, Joe. You wanted to confuse everybody. Come back on Monday for the confusing part.

[Joe Salce]

If I keep them confused and nobody.

[OG]

Knows, they'll come back for the next.

[Joe Salce]

Like some timeshare presentation. See how this actually makes everybody more money. Like, we're, like we're great.

[OG]

You'll be rich. Timeshares never go down.

[Joe Salce]

Well, the stacker that mentioned this, Paula, put you and I on the other side of this. So you just heard Sean's argument. So let's hear the Paula Pant argument.

[Paula Pant]

Okay, The Paula Pant argument in favor of my bias is towards Roth. Unless you have a compelling reason otherwise is for a few reasons. Number one, when you contribute money to a Roth, you are contributing a smaller amount versus if that money grows. We'll take the rule of 72, which is a rule of thumb that the amount of money doubles if you take the rate of return. That rate of return multiplied by number of years equals 72. So 72 divided by the rate of return is the amount of time it takes for the money to double. Let's just say that you've got an 8% long term annualized return. That means every nine years that money is going to double. So I think the Roth argument is even more compelling if you're in your 20s or 30s or 40s, but really at any age. I mean, if you consider the fact that you will be pulling money out of your retirement portfolio throughout retirement, you know, and not just on the day that you retire. That money is going to be in there for a series of doublings, which means that the amount that you are eventually pulling out, it grows to 300%, 400%, 500% more than what you have put in, depending on when you put it in. So to be able to have all of that as tax free growth is I think, an incredible opportunity. That's one of my two reasons. The other reason is that we do not know. I'm going to give three reasons actually. So that's reason number one. Reason number two.

[Joe Salce]

But wait, there's more.

[Paula Pant]

Yeah, I'll go through the next two very quickly. Reason number two is that we don't know what tax rates are going to be in the future. And there is at least a probability that tax rates in the future might be much higher than they are today. If you want to argue that I'm paying a premium for certainty, sure, I'll take that argument. I would pay a certainty premium to lock in today's tax rate as opposed to a much higher tax rate that might exist in the future. So that's reason number two. And then reason number three, by the.

[Joe Salce]

Way, Paula, just to stop there, that is the Ed Slott argument right there. Ed Slott's argument is if you just look at tax rates versus where we're at in the debt, there's no way tax rates are going to remain as low as they are today. But continue.

[Paula Pant]

Yeah, and I don't want to make any like certainty prognostications about the future, but I'll just say there's at least a reasonable probability that tax rates in the future will be higher than they are today. So that's reason number two. Reason number three is the simplicity. Somebody in the comments said this too. The simplicity of it. What you see is what you get. You look at the amount that's in your portfolio and you're like, that's it. That's, that's the amount that I've got.

[Joe Salce]

Oh, gee, you know, unstacking Benjamin's, I've tried to lure you into this argument. You're like, I'm not taking it because it's different all the time.

[OG]

So we try again. It'll be fun.

[Joe Salce]

You just heard Sean, you just heard Paula. Where do you come down on this idea of pre tax versus Roth?

[OG]

Yes, I come down as yes, yes to everything. You should have everything because we don't have any idea what the future is going to hold. And yes, tax rates could be higher, they could be lower. We could have some tax bracket changes that give some flexibility. I think the main goal in distribution planning and retirement is to have have a system that allows you to take advantage of whatever is going on in the circumstances in that calendar year. So maybe you have a high expense year or you have high expenses in a year and you say, well if I do that, if I take that all out of my ira, then I'm going to pay higher Medicare taxes or higher Social Security taxes. And you know, so it's nice to have the flexibility of saying, oh, I can have some Roth money to take that out this year to still keep my lifestyle the way that I need it, but then pay a tax rate that is more favorable and in subsequent years maybe I don't need as much. Or you have the flexibility for charitable contributions to kind of double dip by taking it out of your IRA perhaps, or something. So I can't make a logical argument on one side or the other because there's too many unknowns. And so I like to take it year by year. And I've said this in our circumstances, I think that I would much rather have Roth money in my 401. But I also know that right now because of the way the college funding FAFSA BS is Roth 401 contributions don't count against my income, whereas pre tax 401 contributions do. So if I do pre tax 401k contributions for me and the Mrs. That ends up being $47,000 that comes off of our income for FAFSA purposes and grant and aid and that sort of stuff, that we might qualify for scholarships or that my son might qualify for my kids versus not being able to do that. And so the problem is that I got to decide that on January and I find out the next year whether or not I got any payoff with any sort of scholarship to grants or aid or whatever the case may be. So it's a gamble, like Paula said, it's paying for some certainty versus uncertainty type of stuff. And I would much rather just have the flexibility make a decision year to year, live with it. If you can't decide, do 50, 50 totally fine.

[Joe Salce]

You know what I love? I love first that if you're debating which one of these to do, it already means you're saving money. It already means, you know, this is important and now you're trying to tweak, tweak, tweak. And so I love what all Three of you said, and I think it's amazing to see the differences in your thinking and how we get to where we are. I think it's so helpful for all of our stackers. And by the way, Paula. Yeah.

[OG]

Oh, gee, no, I was just going to say that's the message I think is if you are trying to tweak that last 5% of the calculation, then you've already won the game. It's the saving of the 20,000 in your 401k that matters. It's the icing on the cake of whether or not you exactly get it right in terms of what that future tax rate is going to be in 30 years from now. So save the 20 grand and if, you know, if you want to mess around with that last little bit, then so be it.

[Joe Salce]

Paula and I got to open this year's fincon conference and we did a funny little skit at the start saying you might be a money nerd if you. And let me see if I can find it in the comments. We got some great stackers from the family hanging out with us today, chatting. We've been putting as many of them on screen as possible. In fact, Ben says I'm being diplomatic. I'm not being diplomatic as much as I do enjoy all these as much as I think it's Wills Lou, who said you might be a personal finance nerd. If you're really enjoying this conversation. Hold, hold on, like somebody's trying to talk to you. Like, whoa, whoa, they're about to talk about the Roth. Hold on a second, hold on, I want to hear more. Well, you're gonna have to wait a couple minutes because at the halfway point of every Stacking Benjamin show, we pause for Doug's trivia question. But on Fridays it's super spectacular because our three frequent contributors, OG Paula and Jesse Kramer, they do battle in this year long competition that's been getting tighter and tighter as year goes on. Started off as a blowout with OG Way ahead, but now. Well, Doug, tell Sean what place he's in and tell our stackers hanging out with us the score.

[Doug]

Well, Sean, here's the setup. Today you are playing for Jesse who is in the lead but only by a half point. He's got 11 and a half points. OG has 11 points, but Paul has got her vehicle in fifth gear and she is coming on strong with eight and a half points.

[Joe Salce]

And that means that unfortunately, and I hate this for you, Sean, you have to guess first. Whoever the leader is, guess first. So that is the only painful Part of this. Hey, thanks for coming on our show. You have to guess first. But for you to guess first, we have to have a question. And, Doug, what's on tap for today's trivia question?

[Doug]

Well, hey there, Stackers. I'm Joe's mom's neighbor. Today, we're shining a light on almost President Spiro T. Agnew. That threw you off, didn't it? But in the early 1970s, Spiro Agnew resigned as vice president after pleading no contest to tax evasion, opening the door for Gerald R. Ford to become vice president and then our nation's 38th president after Richard Miller Nixon resigned as well. Had he just used TurboTax, I bet we'd still be talking about President Spiro Agnew today, right?

[OG]

Maybe.

[Doug]

Am I right?

[Joe Salce]

Maybe not.

[Doug]

That's not how it works. Could be.

[Paula Pant]

I don't know.

[Doug]

Here's today's question, though. Back then, Agnew was fined a bunch of Benjamins for his crime. But exactly how many Benjamins were in that bench? I'll be back right after I see how many Benjamins it'll take to get Joe's mom to let me try her latest batch of chocolate chip cookies. They're the ones with the M M's and everything.

[Sean Mullaney]

Those things are amazing.

[Doug]

Should be worth at least three Benjamins.

[Joe Salce]

Oh, they are amazing. And this is the difference. It could have been President Spiro Agnew and Eddie hanging out with us online says Spiro who. And yet, had he not committed tax evasion, he could have been the next president.

[OG]

Allegedly.

[Joe Salce]

Alleged. That's right. He did. It was no contest. Sean. It's not how many dollars, it's how many Benjamin was he fined? That's the. That's what we got to know.

[Sean Mullaney]

Nobody picked up significant notation or whatever. The.

[Doug]

Yes. I don't know how many more times I could have said Benjamin.

[Joe Salce]

Just wanted to clarify that before you. Before you guys.

[Sean Mullaney]

That. All right, so. And you got to remember, too, back then, dollar amounts are smaller than they are today.

[Joe Salce]

Yeah. Dollars are this big, and they used to be this big.

[Sean Mullaney]

All right, So I am going to say, oh, boy. I'm going to say 5,000, because I think that gets me to a half million if I did the math correctly. And I may not have five Benjamins.

[Joe Salce]

We'll just add 10,000. You're good. Sure. Oh, gee. He says 5,000 Benjamins. Mr. Agnew was fined for tax evasion. What say you?

[OG]

I think that's light. That doesn't seem like a lot of Benjamins. In the grand scheme of things, nothing. I mean, I think the common person in 1970 would be like, that's ridiculous. But let's say lots. He said lots of Benjamins for a fine. So I'm going to say 23,694. Four and a half Benjamins.

[Joe Salce]

23,694 and a half. Just so. If you're new here, this is just so Doug can do the math.

[OG]

Well, if he would stop doing dumb things, then he would get good answers.

[Joe Salce]

All right, Paula, you've. You've got a big number from OG that I already can't remember, but it's significantly bigger than Sean's 5000 Benjamins.

[Paula Pant]

It's a wide field goal.

[Joe Salce]

See?

[Paula Pant]

Well, I am the person who conflated 1/8 of a mile with 0.8 miles.

[OG]

So 1/8 of a Benjamin.

[Joe Salce]

Well, Brett's helping you. We said, no help stackers. And Brett said, check this out. He says, more than one. It's more than one.

[Paula Pant]

More than one. I would agree. It's a number that is more than one and less than infinity. I think Sean was closer. So I'm gonna take the upside of his answer and go with 5,001.

[Joe Salce]

5,001. 1 Benjamin. Half a million $1. Which. Doug, what was OG's guess? 23,000 Benjamins.

[Doug]

23,694.5 Benjamins, which should be $2.3 million.

[Joe Salce]

Roughly. We're going to find out if it's 2.3 million 500,000 or 500,001 in just a minute. We'll be right back.

[Paula Pant]

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[Joe Salce]

Who'S with you throughout your entire program.

[Paula Pant]

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[Joe Salce]

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[Joe Salce]

All right, we're talking about Spiro Agnew today. The guy that Eddie hanging out with us on YouTube says, I got to learn about this guy, this Spiro guy. But regardless, Sean, you started off with half a million dollars or 5,000 Benjamins. How you feeling now that Paula took your upside away?

[Sean Mullaney]

Look, that's not a great outcome for Jesse and myself, but I will say I got the downside, so I'm feeling good about that.

[Joe Salce]

It's funny because Firelighter, our friend Phylator, says that we got to let the guest go last, which I agree with, but you're playing for team Jesse and he's winning, so we'll see. Paula, you feeling good about taking the upside? Taking the middle, I guess.

[Paula Pant]

Taking the middle side, you know, I don't know, because when 2.3 million OG's, guess it doesn't sound like a lot, but it doesn't sound like a lot in today's dollars. But if you think about it in terms of the early 70s, it was more. And also he was vice president. Vice presidents don't actually get paid a whole lot of. I don't know what his other business interests were, but I would imagine that the scandal of it was less about just the sheer heft of the amount and more about the evasion itself. So, yeah, I think I'm feeling good.

[Joe Salce]

That's a long way to yes, I feel great. Jessica, by the way, wants to go back to when we were talking about Bavaria and talking about Oktoberfest. It's 80 swimming pools. 80 swimming pools. Oh, gee, you had a lot of swimming pools full of Benjamins. How you feeling about the big 2.3 number?

[OG]

Yeah, I mean, Doug was pretty adamant that it was a lot of Benjamins, so, you know, I hope it's not something silly like 10.

[Joe Salce]

We'll find out.

[OG]

Doug's a liar.

[Joe Salce]

Doug, who's. Wow, who's taken away the prize today?

[Doug]

OG is not Playing the game. He's just playing it to hose me. Like, he's just angry at me and he wants everybody to know it. Hey there, Stackers. I'm chocolate chip lover and guy who just got caught with the bait and switch, Joe's mom's neighbor, Doug. Good news and bad news. The good news is that Joe's mom agreed to three Benjamins for her chocolate chips. Sadly, she wasn't buying it when I brought in three of the neighborhood kids who happened to be named Benjamin. See what I did there? Gonna need to borrow a few bucks there, Stackers. Hey, write me on that one because I gotta get to the trivia question here. It was, how many Benjamins was Vice president Spiro Agnew fine for tax evasion? Well, what I can tell you is it was 23.594.5 less than what OG guessed. It was 4901 less than what Paula guessed and just 4900 less than what Jesse slash Sion guessed because the correct answer was $10,000 for the fine, translating to just 100 Benjamins. And yes. That's a lot of Benjamins. Making Sean our winner, Sean Mulaney. Wow.

[Joe Salce]

Guess is first wins the prize. Congratulations, brother.

[Sean Mullaney]

Thanks so much. If I'm going to be honest, I thought it was how much money was he caught with? And I was like, ah, probably about like a half mil. And then it was like, oh, it was the fine. Well, I went north. But no one else. No one, no one else picked up that fumble.

[Joe Salce]

And you were still the closest. And by the way, we didn't get this done on time, but every time you talked today, we were going to play this clip now.

[Sean Mullaney]

Sin.

[Joe Salce]

Excuse me, Sean, I'm sorry. The old church lady. You ever getting that, Sean?

[Sean Mullaney]

Oh, people mispronounce it all the time, but I've not. I didn't put that together, actually, that it was Church lady. I certainly remember 80s SNL and Dana Carvey. So I just. I swung and missed on that one too.

[Joe Salce]

Oh, seeing. I mean, Sean, I'm sorry. Every single time I called on you, I was going to play that clip OCN o C. And anyway, it was funny for me at the time. Apparently not as funny here live. Let's move into our second half of this discussion. Sean, I'll stick with you. What are the biggest points when building a retirement plan that's built to last for 40 or 50 years? Verse that are different than if you're building one to last for 25 or 30? What are the different inflection points.

[Sean Mullaney]

So I think the different inflection points include sufficiency is more challenging. Right. If we're going to retire at age 70 and we're walking right into a high Social Security check to begin with, that's a much different retirement than if we're retiring at 55. So that's the first inflection point is just sufficiency and we're probably going to have to build up some more assets. The second one is health care is more of a challenge. And now I think in today's environment, it should not be a gating issue if you have sufficient assets to otherwise retire. But that is absolutely going to be a challenge. And then the third one is drawdown strategy. There's just more pressure on it. And it's amazing how many times folks just ask, well, what do you do at first in early retirement? What assets do you access first? And you know, we believe that this requires some intention, but it's very navigable. Those three would be areas of differentiation. Just sufficiency is more challenging. Health insurance is more challenging. And we just need to be a little more intentional, most likely with our drawdown strategy.

[Joe Salce]

You know, oh gee, we haven't yet today talked much about asset allocation, but it seems to me that when you're looking at 45, 50 years of retirement, that puts a lot more pressure on the portfolio. Is there something different that you do if you're planning on a 45 year retirement than a 30 year retirement with your asset allocation?

[OG]

45 versus 30? No. I'm known for saying this, but I don't think that your portfolio would ever change, honestly, whether you retire at 50, 55, 60, 65, 70, 75, 80, 85, 90. I mean, why would you, if you've got sufficient assets, when you get to that point of I'm going to retire, why then would you now say, now I finally got this big corpus of money, I'm going to let off the gas in its entirety and just let this slowly get eaten away by inflation sitting in the bank or sitting in a CD at 4% or something awful like that. I think you have to be particular around how you're going to take the money out and how do you protect yourself in case the market does go down 25, 30%? Because it's going to probably five times during your retirement, just like it did five or seven times during your accumulation stage. But short of that little two, three years of extra cash maybe, that maybe draws your asset allocation to 90% stock and 10% cash or short term stuff. Or maybe 85% stock. I don't know why you would ever choose an asset allocation that takes the opportunity for generational wealth and throws it completely in the trash. If you accumulated all this money, you're 70 years old with 2 million in the bank. And using Paula's example, it's probably going to double three or four more times if I just leave it, if I just live my life and you say, well, but you're going to spend some of that, consume some of it. Okay, so maybe it only doubles once, or hell, maybe it doesn't double at all, it just stays the same. And I don't like glide path it all the way into the ground at zero at 100 years old. It doesn't make any sense to me. So if you're retiring at 55 or 65 or 75, I don't think that there's any marked difference in your investment allocation.

[Joe Salce]

It seems to me, Paula, that for a lot of people the risk might be that you're too aggressive, but for the early retiree, it's that you're too conservative. I think for early retirees especially, you can't go that target day fund route because you're going to end up screwing yourself by not having that last double.

[Paula Pant]

Right. Well, because I think generally a lot of people have internalized the notion that the closer your timeline is, the more conservatively you want to invest. But the problem is when that gets applied to an entire portfolio as a whole, you can sometimes end up being overly conservative with that portfolio. And so, Joe, I like an approach that I've heard you talk about, which is the bucket strategy, where you know, you've got for your first year or two of retirement a bucket of money that just gets you through that first year or two. It helps you pass through the sequence of returns risk window. And so you've got a bucket for that. Then maybe you've got a separate bucket purely for you have a, a goal of doing a lot of travel in your first 10 years of retirement because you know that those first 10 years of retirement you're going to be a lot healthier and more energetic than you will be in later decades. And so maybe you have a bucket of money that's set aside purely as travel during the first 10 years with a goal of actually whittling down that specific bucket to zero at the ten year mark. Right. And so you just have these little buckets of money for different specific purposes and you manage each one according to its purpose.

[Joe Salce]

You know, Sean, you brought up RMDs later and about how the world of RMDs is, is changing and that's a reason for us to go back and look. But also just the world of tax planning. When it comes to an early retiree versus somebody who's going to retire at 60, 62 or 65, what's one key difference when it comes to that tax planning portion of our planning that is really different for that person that wants to go at 50 versus 65?

[Sean Mullaney]

I would argue a big one is the taxable accounts. Not that you can't retire at 50 or 55 if the lion's share is in the traditional retire accounts that exists in the world and is absolutely worth, you know, considering. And you can actually have very good results living almost entirely on traditional retirement accounts in your 50s. But you know, when we're retiring at 50 versus 65, we now have 15 years of medical insurance to manage for. And the most common solution is the ACA medical insurance. And that comes along with it, the so called premium tax credit. So essentially you have these very high medical insurance premiums. But if you can control your income, what happens is you get a big credit against those insurance premiums. This premium tax credit behaves like a tax. And so one of the best ways to manage for that is as a first spend asset in the beginning of our retirement is those taxable accounts. Because those taxable accounts have quote unquote basis recovery, right? So if you're 52 years old and you're a retiree and you're living off $100,000 this year, so you sell 100,000 of ABC Mutual fund, well, what's your taxable income? Well, it's not 100,000, it's 100,000 less your basis, your historic cost, what you bought it for. So maybe you bought it for 30,000 or 40,000 or 50,000 or 60,000. Well, your taxable income is the 100,000 less that basis. And that's a way of keeping our income lower in the first part of retirement, which is a way of keeping the premium tax credit higher in the first part of early retirement.

[Joe Salce]

More money in the taxable account.

[Sean Mullaney]

That's exactly right, Joe. And this has also very good ancillary knock on effects. There's a 0% long term capital gains rate if you can keep your income low enough. And oh, by the way, even if you don't, you still get the benefit of it. So it can be that the first part of retirement can be a very good time from a tax perspective, you might be paying very little or no income income tax. And you might be able to keep your income position such that your premium tax credit is very high, significantly reducing the expense on the medical insurance premiums, which is definitely an important consideration if we're thinking about retiring in our early to mid-50s.

[Joe Salce]

I want to ask you one more question, which is when do we. Well, before actually I got two more, but I feel like. Paul. No, I got three more. No, I got four more.

[OG]

Can you come back on Monday?

[Sean Mullaney]

This will be great.

[Joe Salce]

How much do you like using this obscure irs? Obscure to some of our stackers who are just beginning called IRS 72T. Using this ability, if I've got the money all in a pre tax plan or if I don't, even if I have tax flexibility, the way OG talks about in. When we get into more complex tax planning, do you end up using 72T so that we can take money out early from our retirement plans or do we save that money for later? For people that don't know what I'm even talking about, this IRS ID of 72 T stackers is that you can take money out of your pre tax plan before your traditional retirement years, right? So let's say you decide to retire at age 50 and you're like, what am I going to do? Or 45. Well, you can take money out if you file some specific rules out of these plans ahead of time. Do those figure into early retirement planning?

[Sean Mullaney]

The answer is they absolutely can. But I'm going to give you a few guardrails and considerations. First thing is my preference is to spend down the other available resources first. So the taxable account first, generally speaking, and only later in the early part of retirement, start the 72T payment plan now. Financial planners have been allergic to 72T payment plans for a long time. And until 2022, that was mostly justified. So 72Ts rely on an interest rate calculation, generally speaking. And it used to be based on the previous two months interest rates back in 2020 in the year 2020, that got the. The rate got down well below 0%. So you didn't want to plan into it because oh no, if the interest rate environment is too low, I may not be able to take enough out of that under the 72t payment plan to live my life. That's a really bad outcome. 2022. Early in the year the IRS issues a notice. It's called 2022 6. Got almost no attention in the personal finance space, but it should have. And they said, well, from now on with these 72T payment plans, you can always use 5% or less as the rate, regardless of what the market rates are at the time.

[Joe Salce]

Wow.

[Sean Mullaney]

When you're in your 50s, general rule of thumb, that means if you use 5%, you can generally take 6% out of that retirement account. And so that means, especially if we're thinking 4% rule. And that's a whole other conversation, but essentially you can actually slice and dice the IRA into two IRAs. One, you take the 72T out of one. You don't. This gives it a lot more flexibility. So it's a much more valid technique than it was say, four years ago. This is. Again, these tax rules change and sometimes the commentators are a little late to the game in terms of these changes. But Joe, it's absolutely a viable path. And now you got to manage it with the premium tax credit and keeping expenses low. But one thing that can happen is say you start a 72T payment plan in your mid-50s, your effective rate on those distributions might be tiny until you collect Social Security because some of that's being recovered against the standard deduction in the 10%. It could be that you're setting yourself up actually for a very low tax late 50s and early 60s by doing a 72T payment plan.

[Joe Salce]

It's interesting just how deep you can go. I mean, as if you might have written a 300 page book on this.

[Doug]

Topic that you can go 300 pages deep on it. Yeah, three quarters of an inch deep is how you forget if you can go.

[Joe Salce]

Is that about three quarters of an inch? I think it's almost an inch.

[Sean Mullaney]

I think it's. I'm not sure.

[Joe Salce]

8Th of an inch might be 0.89 if I'm remembering. Ah, man. Well, we could have 15 discussions on this to G's point of. Sean, could you go back Monday and Wednesday and next Friday and then the following week and we'll have you and Cody on 15 times. But I think we did a great survey. We've been talking kind of around early retirement the last several episodes. Doug, as you began this conversation, I'd like you guys to each take one more swing though, before we go, which is this. I realized it's called planning and not just a plan. It's not a one time thing. And clearly what we brought up with the Roth discussion versus pre tax today and tax flexibility, we don't know where things are going. Sean's talked a lot already today about how much the rules have changed. Certainly on this Show over the 15 years we've been doing this Things have changed so much so you don't just set it and forget it. However, we want to kind of future proof our thinking, right? So that we're able to not have to re rail the train 10 years from now and go, oh, man, I got to redo this whole thing. So, oh, gee, let's start with you. What is a move we should make today after hearing this episode that will help us future proof our early retirement or normal retirement planning?

[OG]

I think that the biggest thing is trying to figure out what is the exact number that you're going to need and spend 95% of your energy on figuring out how you're going to save enough money to get to the goal that you want. And 5% of your energy on what sort of asset allocation is best for which asset class, for which tax location, for, you know, for which IRAs or Roths or pre tax or HSAs or all that sort of stuff. Because you can be exactly right with the allocation of your pre and post and whatever and be wildly off by like a million dollars of your savings and it doesn't matter versus having too much money in your ira. I've never met anybody that's like, man, I'm really, really peed off. I got 40 million in my IRA. That's gonna be a big giant tax bill someday. But it's like, yeah, all right, but you got 40 million bucks, so that doesn't suck. You know, like, you at least show up to the problem in the limo, right? Like what they say. So I want to spend 90% of my time on how much money do I really need to reach my goal?

[Joe Salce]

Paula?

[Paula Pant]

I would say to future proof it, I'd ask the question, what are the black swan events? What are the things that could completely pull me off course? Am I prepared for some type of a major long term disability, either of myself or of a loved one? Am I prepared for a gigantic lawsuit and the ramifications that could emerge from that? Am I prepared if I lose some cognitive faculties and end up getting scammed out of part of my money as a result, like Doug? So the protection and the playing defense is what I would focus on if I wanted to future proof it.

[Joe Salce]

Sean, you've got the last word as our guest of honor, my friend. Thanks for hanging out with us, by the way.

[Sean Mullaney]

Oh, thanks for having me, Joe. Bit of a twist on what Paul was saying. I'd be maxing out these retirement accounts for two reasons. One, I think the deduction into the traditional 401k is very valuable. I'm a big fan of the Roth IRA at home. That's based on a known trade off profile. But max out these retirement accounts, one, because they're going to provide sufficiency, and two, creditor protection. The 401 s and the IRAs, to varying degrees, have incredible creditor protection. Now, personal liability umbrella insurance is another component of creditor protection that a lot of folks should be thinking about and considering. But yeah, maxing out these retirement accounts I think is ultimately going to serve most Americans very well.

[Joe Salce]

You know what I'm a big fan of, guys? It's just the lifestyle design portion of this. I mean, it's funny we call this show Stacking Benjamin's, but it truly is. If you look at Benjamin's life, it's about stacking more life, not just more dollars. And man, if you can use this tax planning and this early retirement plan we talked about today to get more life, I think that's great. Talk about what each of you are doing this fine day in mid October. Mr. OG what's happening in the OG household this weekend?

[OG]

Oh, we've got it tonight. Away football game for the varsity kiddo and then, you know, normal, normal Saturday weekend for me and then. Or normal Saturday for me and then softball on Sunday. So it is sports times million here.

[Joe Salce]

In the sporting, sporting weekend for the OGs. Yeah, Paula, what's going on at the Afford Anything podcast besides, you know, running your red wagon up and down Manhattan?

[Paula Pant]

Yeah, yeah, exactly. When I'm not pulling a wagon full of boxes 0.8 miles in each direction. So, you know, 1.6 miles every round trip.

[Joe Salce]

See, this is just becoming a flex.

[Paula Pant]

No, I, I told you, Joe. That's how I'm training for the half marathon, that I'm going to come and walk with you as far as what's on the podcast. So we have our first Friday episode where I cover all of the macroeconomic topics. You know, inflation, interest rates, what, you know, what's going on there. We've got Q and A episodes, Joe, where you and I tackle listener questions. We have an interview with Sarah Williamson. Sarah Williamson and I, we go deep into the solar system of investing. So she creates a framework to understand the world of investing. You know, what is a hedge fund? What is private equity? What is investment banking? And how do all of these things fit with one another? She creates sort of a Linnaean classification system in which she has five different solar systems and a variety of planets orbiting within each solar system. And she uses this framework to explain how the world of finance is laid out.

[Joe Salce]

Oh, come on. Are you gonna say it or am I gonna say it?

[Doug]

You say it.

[Joe Salce]

Which one's Uranus?

[OG]

My stars thought about it for so long.

[Joe Salce]

There's a 12 year old everywhere. Sorry.

[Paula Pant]

I was like, did I mispronounce Linnaean?

[OG]

Sean's just like, we're taking that part out of the show. Right. For the final recording. I can't be affiliated with this talk.

[Doug]

This goes on your permanent record, Sean.

[Joe Salce]

Sean's co author Cody says Pluto is no longer a mutual fund. So it is good. But that's coming up at the Afford Anything.

[Paula Pant]

Yes. That comes out today at the Afford Anything podcast.

[Joe Salce]

Yes. Without Joe's crude remarks. Sean, thanks again for hanging out. You and Cody really did it up. I mean, you've got everything in the book. I mean, even just in the table of contents, from people have pensions to tax loss harvesting. If you have a sudden job loss, if you're inheriting property. I mean, it's all here. Tax planning to and through early retirement. Nice job, you and Cody. Where do people get it, Sean?

[Sean Mullaney]

So Amazon, Barnes and Noble. It's online at various places. I think it may actually be in some bookstores too, which is exciting. Awesome. Yeah. So. And thanks so much for having me on and for mentioning the book. Very much appreciate it, Joe.

[Joe Salce]

Dude. And fantastic job winning the trivia. Well over these people. I'm. I'm not. I'm not really sure. Oh, geez. Hard to beat. Well, Paula, lately. I don't know what's been going on there, Paula, but. Yeah, yeah, but winning our trivia. All right, that's gonna do for today. By the way, thanks to all of you hanging out with us online. If you've got questions for us and you'd like them to appear on the show, ask us your question. It is stacky benjamin.com voicemail and we'll have links to everything, including Sean and Cody's book, tax planning to and through early retirement on our show notes page@stacking benjamins.com. doug, you've got it from here, man. What are our big three takeaways today?

[Doug]

Well, Joe, here's what's stacked up on our to do list for today. First, take some advice from Sean. Ignore your inchoate fear of taxable accounts. It's possible to have a solid retirement on good old traditional retirement retirement accounts. Am I right? Second, learn from what OG said. Don't fall into the trap of saving too much money. Go ahead, buy that automatic cheese straightener you saw on QVC at 3am get out there and enjoy yourself.

[Joe Salce]

Not sure that's where we were going.

[Doug]

But the big lesson, don't ask the real life Benjamins you brought to the house to chip in on the cookie purchase from Joe's mom. Apparently being significantly younger than me has its advantages because these guys got free chocolate chips. And me, I got free shower drain snaking duty. You seen how much hair collects in there?

[Sean Mullaney]

It's nasty.

[Doug]

Oh, seriously, is there anything grosser than just pulling out that?

[Joe Salce]

No.

[Doug]

Oh, no.

[OG]

And scene.

[Joe Salce]

That was grosser than my comment earlier. Duck, do the credits.

[Doug]

Okay, we'll do the credits. I'm sorry. My brain is so distracted because it's so long. You know, you got that big clump right at the top and it's got all the shampoo and stuff stuck in it. But then it's just nasty.

[Joe Salce]

Let's do the credits.

[Doug]

Okay, fine. But then sometimes it. Okay, I'll do the credits. Thanks to Sean Mullaney for joining us today. You'll find Sean's new bestseller, Tax Planning to and Through Early Retirement, wherever books are sold. I don't know, Sean. You and Dan Brown recently released books. I don't know which one I'm going to read first. We'll also include links links in our show notes@stacking benjamins.com thanks to Paula Pant for hanging out with us today. You'll find her fabulous podcast Afford Anything wherever you listen to Finer Podcasts. And thanks finally to OG for joining us. Looking for good financial planning help? Head to Stacking Benjamin's. What are you doing?

[OG]

Blowing kisses to my fans.

[Doug]

Blowing kisses to his fans like he's a prom queen on a float or something.

[Paula Pant]

Thing.

[Doug]

Anyways, head to stackingbenjamins.com OG for his calendar. This show is the property of SP Podcasts, LLC, Copyright 2025 and is created by Joe Saul Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello.

[Joe Salce]

Oh, yeah.

[Doug]

And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug, and we'll see you next time back here at the Stacking Benjamin show.

[Joe Salce]

I realize it's planning and not a plan, but what's a move that we can make in terms of our thinking that will help us kind of future proof our planning. Make it so that in the future we are thinking about this the right way and we're able to get where we want to go without having to re rail the train. OG do you want to take this one first?

[OG]

I was reading the comments and I knew you were going to ask me first.

[Joe Salce]

Let me go to. Let me go to Paul. Let me go to Paul.

[OG]

I was like, oh, don't pick me. Don't pick me. Don't pick me.

[Doug]

When you're scared of the ball, it always finds you on the base.

[OG]

It always just like hit it to someone else. Hit it to someone else. There we go.

[Joe Salce]

Paula, how about if you go first? Let's go. Ladies first.

[Paula Pant]

Okay. I got hung up on Future Proof because then my brain immediately went to the Future proof conference.

[Joe Salce]

Right.

[Paula Pant]

Which just happened.

[Joe Salce]

Just happened.

[OG]

Are you there, Paula?

[Paula Pant]

No, no, I wasn't there, but I.

[Joe Salce]

Know I was at fincon.

[OG]

See you.

[Paula Pant]

Yeah, yeah. A lot of people went straight from Future Proof to fincon anyway, so I was hearing a lot about it and then it got distracted because I was thinking about Future Proof, so I missed the rest of the question.

[OG]

Oh, for three, Joe.

[Joe Salce]

Just shows how, how, how good this is. So let's, let's start with you. Well, I want to go to the guest of honor.

[OG]

Just say it again. Just say it again and I'll. And I got you. I got you, bro.

[Joe Salce]

Let's do it again. Let's talk about. I realize this is, this is a. All right, Steve, just cut all that.

[Sean Mullaney]

Here we go.

[OG]

Material cut.

[Doug]

68 minutes, Steve.

[Joe Salce]

That's right.