The Stacking Benjamins Show: Retirement 101 — Planning, Risks, and Smooth Sailing (SB1696)
Release Date: June 16, 2025
Hosts: Joe Saul-Sehy, OG, and Doug
Guests: N/A
Introduction
In episode SB1696 of The Stacking Benjamins Show, hosts Joe Saul-Sehy, OG, and Doug delve into the fundamentals of retirement planning. Titled "Retirement 101: Planning, Risks, and Smooth Sailing," the episode is part of a dedicated Retirement Week series aimed at helping listeners navigate the complexities of preparing for a financially secure and fulfilling retirement.
Understanding Retirement
Healthy Lifespan and Retirement Expectations
The discussion kicks off with eye-opening statistics from the Wealthy Accountant blog shared in September of the previous year. According to research, the average healthy lifespan in America is 66.1 years. This figure highlights a critical consideration: many individuals may not enjoy as lengthy or as healthy a retirement as they anticipate.
Joe Saul-Sehy emphasizes, "[...] the average healthy lifespan in America, 66.1 years. Meaning that for a lot of people, if they're going to retire on time, OG we're not even healthy enough to do the things that we think that we're going to do." (06:46)
The Emotional Rollercoaster of Retirement
The hosts reference research by Ken Dykewald, which reveals that the first 18 months of retirement are often filled with immense happiness. However, without proper planning, retirees may encounter an identity crisis and profound dissatisfaction later on. This underscores the importance of more than just financial readiness.
OG adds, "[...] it's not just playing golf every day. It's not just about waking up whenever I want to, like, what am I actually doing with... the rest of my life?" (06:50)
Lifestyle Planning: Structuring Your Retirement
Creating a Routine
Joe and OG discuss the necessity of establishing a structured daily routine in retirement, akin to a fulfilling job. This structure helps prevent boredom and maintains a sense of purpose.
OG asserts, "If you treat retirement like a predictable job, but one that you love, what you do, one when you can raise that flag, that little middle finger flag, whatever you choose, right. But you get out of bed at a certain time, you structure your day a certain way..." (12:01)
Experimenting During Pre-Retirement Years
Joe highlights the importance of pre-retirement experimentation with potential retirement activities. By testing interests ahead of time, individuals can better predict what will sustain them post-retirement.
Joe Saul-Sehy: "Whether you're in your 20s, 30s, 40s, 50s, think about what the things are that you might want to do when you're financially independent." (13:13)
Financial Planning: The Tax Triangle and Withdrawal Strategies
Understanding the Tax Triangle
A significant portion of the episode is dedicated to navigating the tax implications of retirement fund withdrawals. The hosts break down the tax triangle comprising pre-tax accounts, Roth accounts, and taxable brokerage accounts, emphasizing that withdrawal strategies must be flexible and adaptable to annual changes.
OG notes, "It's largely going to depend on your year to year spending and consumption plans." (19:21)
Risks of Withdrawing Pre-Tax Funds
The conversation turns to the risks associated with drawing heavily from pre-tax accounts, particularly the Income-Related Monthly Adjustment Amount (IRMAA). Over-withdrawal can lead to significantly increased Medicare premiums, creating unexpected financial burdens.
Doug: "If you pull too much money from pre-tax IRAs during retirement, you may pay a tax on your Medicare Part B and Part D." (21:07)
Strategies to Mitigate Tax Impacts
Joe suggests a balanced approach: "I like them both together because if I'm trying to live a certain lifestyle and I'm trying to have only so much money come out of the pre-tax bucket, I can supplement that with Roth money and have it make a better tax situation than I did if I went in." (24:25)
Listener Letters: Analyzing Fintech Risks
Shane’s Letter on Basic Capital
Listener Shane raises concerns about a new fintech company, Basic Capital, which proposes leveraging 401(k) contributions by offering $4 of non-recourse financing for every dollar contributed. The hosts critically analyze this approach, highlighting the inherent risks of using leverage within retirement accounts.
Doug: "Don’t Beat around the bush, Shane. Funded by Bill Ackman and ran by some former Goldman Sachs guy. Basically they're advocating for using 5x leverage on your 401k." (28:19)
Risks of Leveraged Retirement Accounts
OG elaborates on the dangers: "Leverage works fantastically... except for when it's not a great idea because it goes down five times faster." He illustrates this with a scenario where a leveraged investment could lead to significant losses, potentially wiping out retirement savings.
Joe Saul-Sehy: "If you have an investment account that has a million dollars in it... if the market goes down 20%, you just pushed it into the maintenance bay... you're back to zero." (35:24)
Conclusion on Leveraged 401(k)s
The hosts unanimously advise caution against such high-risk strategies, equating them to unreliable and potentially ruinous financial maneuvers.
Joe Saul-Sehy: "Probably steer clear of this." (40:16)
Trivia Segment: Understanding IRMAA
Trivia Question:
Doug poses a trivia question to the listeners:
"What's the name of the additional Medicare fee you'll pay on your Medicare Part B and Part D premiums if you earn above the annual threshold?"
Answer: IGRMAA (Income-Related Monthly Adjustment Amount).
Doug: "The answer? Payers pulling too much from their Pre tax tax 401k or IRA may find themselves subject to an income related monthly adjustment amount or IRMAA." (29:15)
This segment underscores the importance of understanding how withdrawals can impact overall tax obligations in retirement.
Tick Tock Minute: Smart Car Purchases
Evaluating When to Buy a New Car
In the Tick Tock Minute, the hosts review a TikTok video advising on when to purchase a new car based on past maintenance costs. The crux of the advice is to compare your average monthly maintenance bills over the last two years to the new car payment. If maintenance costs rival or exceed the cost of a new car payment, it might be financially prudent to consider purchasing a new vehicle.
Joe Saul-Sehy: "He's saying that if your monthly expense over the last two years of your monthly maintenance bill has been the same as a new car payment, buy the new car and pay the car payment." (42:05)
Practical Application and Limitations
While the logic is straightforward, Joe and OG acknowledge the limitations of this approach, noting that car maintenance can be unpredictable and highly variable.
OG: "But my point is, so the car's on the fritz and you bring it in and they go, okay, well all the blinker fluid needs to get changed and all the air needs to get rotated. It's going to be five grand." (42:53)
They conclude that while the advice is a good starting point, individual circumstances and additional factors must be considered before making such decisions.
Closing Remarks
As the episode wraps up, the hosts tease upcoming segments, including interviews with the creators of the documentary "Join or Die", which explores factors contributing to a happy and successful retirement. They also hint at a nerdy roundtable on safe withdrawal rates and risk management with personal finance experts.
Doug: "Setting up your retirement distributions works best when you begin with the end in mind." (46:55)
Joe Saul-Sehy: "Setting up your retirement distributions works best when you begin with the end in mind." (46:55)
The episode concludes with light-hearted banter about movies and personal anecdotes, maintaining the show's signature friendly and engaging tone.
Key Takeaways
- Start Planning Early: Regardless of age, begin envisioning and experimenting with your desired retirement lifestyle well before you retire.
- Structured Routine is Crucial: Establishing a predictable and fulfilling daily routine can prevent post-retirement identity crises.
- Understand Tax Implications: Grasp the complexities of the tax triangle and strategize withdrawals to minimize tax burdens like IRMAA.
- Caution with Leverage: Avoid high-risk strategies such as leveraging 401(k) contributions through fintech solutions like Basic Capital.
- Smart Financial Decisions: Use practical tools and advice, such as evaluating car maintenance costs against new car payments, to make informed financial choices.
Notable Quotes:
-
Joe Saul-Sehy (@06:46): "The average healthy lifespan in America, 66.1 years. Meaning that for a lot of people, if they're going to retire on time, OG we're not even healthy enough to do the things that we think that we're going to do."
-
OG (@06:50): "It's not just playing golf every day. It's not just about waking up whenever I want to, like, what am I actually doing with... the rest of my life?"
-
Doug (@21:07): "If you pull too much money from pre-tax IRAs during retirement, you may pay a tax on your Medicare Part B and Part D."
-
Joe Saul-Sehy (@24:25): "I like them both together because if I'm trying to live a certain lifestyle and I'm trying to have only so much money come out of the pre-tax bucket, I can supplement that with Roth money and have it make a better tax situation than I did if I went in."
-
Joe Saul-Sehy (@35:24): "If the market goes down 20%, you just pushed it into the maintenance bay... you're back to zero."
Resources Mentioned:
- Wealthy Accountant Blog
- Ken Dykewald's Research on Retirement
- Christine Benz’s Book on Successful Retirement
- Basic Capital Website: basiccapital.com
- Documentary: Join or Die (Available on Netflix)
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This summary is intended for informational purposes only and does not constitute financial advice. Always consult with a certified financial advisor before making any financial decisions.