Can You Retire at Age 57 and Spend Big? - 543

Summary

Podcast Summary: Your Money, Your Wealth

Episode 543: Can You Retire at Age 57 and Spend Big?
Release Date: August 19, 2025
Hosts: Joe Anderson, CFP® & guest co-host Mark Horner, CFP®
Produced by: Pure Financial Advisors

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Overview

This episode tackles the perennial question: Can you retire in your late 50s and spend lavishly, especially during your early retirement years, without running out of money? Joe Anderson and guest co-host Mark Horner provide candid, humorous, and insightful "spitball" analyses for several listeners contemplating early retirement, large withdrawal rates, Roth conversion strategies, and overall financial readiness. The episode features real listener scenarios—each with their own set of numbers—and plenty of memorable quips and practical wisdom.

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Key Discussion Points & Insights

1. Is it Common (or Wise) to Spend Big Early in Retirement?

(Beavis & Daria, Texas Scenario – 00:36 to 12:29)

• Listener Case:

  • 37 years old, married with young kids, high earners ($370k/year), significant current savings (~$2M), plans for “go-go” years spending ~$300k annually in early retirement (at 57), then tapering off.
  • Asks about optimal withdrawal strategies and the feasibility of spending big early, while considering Roth conversions.

• Key Points:

  • Many people actually spend more than their pre-retirement income in the first years—Joe: “My experience has always been clients spend 100-plus percent of their working income in those first handful of years of retirement as they're checking off the boxes of things that they never got around to doing.” (08:13)
  • The belief that high early spending automatically means high taxes may be a misconception. Withdrawals from brokerage and Roth accounts can be made more tax-efficiently than from pre-tax retirement accounts.
  • Mark: “High spending does not necessarily equate to high income… Where he's thinking that high spending is going to be high income, which means I'm boxed out of Roth conversions, which is not necessarily true.” (09:48)
  • With their savings rate and timeframe, they're on track for a solid retirement—but spending 300k/year (future dollars) at 57 is aggressive; disciplined saving will be key.

• Quote – Joe (reflecting on risk of overspending):

  • “I've had one client run out of money... It was entirely about spending. I just could not talk them off the ledge on winding down, winding down spending. So it's just—it’s really, really important to be thoughtful about the spending number. I think that’s the biggest risk in retirement.” (10:23)

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2. How to Structure Early Withdrawals, Roth Conversions, and Manage Portfolio Risks

(Clark Kent, Pennsylvania Scenario – 13:36 to 28:23)

• Listener Case:

  • 55-year-old, single, two college-aged kids, late start on savings due to military service, now with ~$2M net worth (majority in pre-tax accounts), no pension, wants to retire at 57 and spend $100k/year, using ‘Rule of 55’ for early withdrawals.

• Key Points:

  • Main concern is having sufficient liquid (accessible) assets to bridge from 57 to Social Security at 62. Only $30k in cash, $15k in brokerage; the rest is in retirement accounts.
  • A 5% initial withdrawal rate (at 57, pre-SS) is “aggressive” and risky, especially if the market sours early. Joe: “He’s going to have to pull out $400,000 from his portfolio over the next four years… He’s pulling out 20% before he even hits 62.” (22:25)
  • The math looks much better if he works additional years, secures some part-time income, or delays Social Security.
  • Annuity? Both hosts are not fans, emphasizing annuities may mean locking in lower, less flexible income.

• Quotes:

  • Joe: “At age 57, that's a 5% distribution rate... which I don't really care for because he's got to take $100,000 out per year plus tax, plus the cost of living.” (21:17)
  • Mark: “If he pulls the trigger on this and we run into some market unpleasantness, he's probably going back to work anyway.” (23:53)
  • Joe, on annuities: “No, do not. No, no, no. Only go with an annuity if it's fully invested in Bitcoin.” (26:22)

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3. Spitball: The Case of “Tony Soprano” in New Jersey

(Tony Soprano, New Jersey Scenario – 29:09 to 36:06)

• Listener Case:

  • 56 years old, $121k salary, $900k in retirement/other assets, 70/30 stock/bond allocation, no mortgage, plans for $40k/yr pension at 60, $25k/yr Social Security at 62, targeting $65–75k/year in retirement expenses.

• Key Points:

  • Tony is in ‘great shape’; assets-to-income ratio is high for age.
  • The anticipated “gap” between pension and Social Security until both are active is narrow, and even with a modest drawdown, he stays well within safe withdrawal territory.
  • Advice: Consider moderating risk (reduce equities) as retirement nears. Push Social Security as late as possible unless portfolio drawdown dictates taking it earlier. Consider asset location/tax efficiency improvements (e.g., more bonds in IRAs, equities in brokerage).
  • Suggests small Roth conversions if regularly in 22% tax bracket, especially if single.

• Quotes:

  • Joe: “He's doing phenomenal... With all that guaranteed income coming in, that shortfall between the guaranteed income and his spending goal—it’s tiny.” (32:53)
  • Mark: “Tony’s looking. He’s looking pretty good.” (34:16)
  • Joe, about asset allocation: “I would probably tone that down maybe a little bit… You don't want to switch your portfolio the day before you retire.” (34:38)
  • Mark, on Social Security: “I would try to push out Social Security as long as he can, because he's only taking 4% out at age 62.” (33:51)

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Notable Quotes & Memorable Moments

• Joe’s joke about corporate lingo:

  • “Let’s really hydrate this retirement plan with a well thought out whiteboarded plan. Where's the closest open window?” (03:19)

• Mark, on spending risks:

  • “Spending does not necessarily equate to income. So high spending does not necessarily equate to high income.” (09:48)

• Hilarity on pop-culture references:

  • “There's no way Tony Soprano is driving a Subaru Crosstrek drinking cold water.” (30:32, Joe)

• Mark, about “retirement anxiety”:

  • [On early withdrawals] “He won’t be able to sleep... Pounding the espresso, sweat pouring down his face.” (25:43)

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Timestamps for Key Segments

• Beavis & Daria’s High-Spending Early Retirement Plan: 00:36 – 12:29
• Clark Kent’s Early Retirement Bridge and Withdrawal Risks: 13:36 – 28:23
• Tony Soprano’s Readiness for Retirement & Portfolio Review: 29:09 – 36:06

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Conclusion

This episode blends financial guidance with comic banter and pop culture. The takeaways:

• Early, high-spend retirement is possible, but discipline and realistic projections are crucial.
• Efficient retirement withdrawals and Roth conversion strategies can improve flexibility and tax outcomes.
• Having a large asset pool isn’t fail-proof—spending is the ultimate variable risk.
• Delaying Social Security and moderating portfolio risk near retirement is smart.
• Every plan needs ongoing re-evaluation; circumstances and markets change.

As Joe and Mark emphasize, these “spitballs” are meant as broad planning insights—personalized advice requires a deeper dive.

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Transcript

[Andi Last]

Is it possible common even to spend a lot early in retirement to celebrate your financial freedom? How do Roth conversions and withdrawals work if you do plan to call it quits around age 57 and spend big early on, should you convert retirement funds to tax free Roth after you stop working? Joe Anderson, CFP and our special guest co host, Mark Horner, cfp spitball on these topics for Beavis and Daria in Texas and Clark Kent in Pennsylvania. Today on youn Money, you, Wealth Podcast543 plus, the sooner 56 year old ton Soprano in New Jersey can retire, the better. What tips do Joe and Mark have for him? By the way, Mark is one of the newest principals here at Pure Financial Advisors. He's the founder of Fairhaven Wealth Management, which has just become the newest Pure Financial Advisor, Chicagoland office in Wheaton, Illinois. So help us welcome him for his YMYW debut. I'm executive producer Andi Last. And here are the hosts of youf Money, you, Wealth, Joe Anderson, CFP and sitting in for Big Al Clopine, CPA for the next two episodes, Mark Horner, cfp.

[Joe Anderson]

Mark, first time. So there's a couple, couple rules. No advice given.

[Mark Horner]

Right.

[Joe Anderson]

And we'll just kind of spitball of what direction that our listeners wanted, where they should go with some of the answers that we're going to give.

[Mark Horner]

I'm with you. Can I throw out one suggested rule?

[Joe Anderson]

Sure.

[Mark Horner]

Keep the hate mail about Where's Big Al? Down to an absolute minimum. I mean, I got some. I'm trying to step into some big shoes here today, so bear with me.

[Joe Anderson]

Yeah, well, Big Al is halfway into retirement, so we got to figure something out. So. All right, let's get to this. It's Howdy, y'. All. It's Beavis and Daria. No, Beavis.

[Andi Last]

I was going to say. You get both of those references, right? You got Beavis from Beavis and Butthead and you got Daria, both of which were animated TV shows from the 90s, I guess. So this is totally Gen X.

[Joe Anderson]

Well, did you know that Beavis is actually a financial planner?

[Andi Last]

What?

[Mark Horner]

What?

[Joe Anderson]

The voice of Beavis is a financial advisor. Or it could be Butthead. It's either Beavis or the Butthead. I'm telling you the truth. Our good buddy Benny Lippman, he was on a trip up in LA and he was at a conference and he met Beavis. Or if it, I forget which one it was, but he's actually in the financial planning profession.

[Andi Last]

I'm going to totally check this out. After the fact I'll add it to the show notes.

[Joe Anderson]

All right. They're from the great state of Texas. I may be one of your younger listeners. 37. I've tried a diff. I tried a few different financial planning podcasts, which I listened to on a commute from home. And I like yours the best. Kill mes.

[Mark Horner]

Absolutely.

[Joe Anderson]

I hear a lot of folks ask questions as they are approaching retirement. And you often recommend Roth conversions in the early years of retirement. I understand how this works, but I seem to be missing something. I would expect my spending to be higher in my early retirement years. My go go years. Mark. I hate the go go years. I hate to say go go. No, no, slow go fomo.

[Mark Horner]

But it's like bandwidth and all these made up words from the management consulting world. Let's really hydrate this retirement plan with a well thought out whiteboarded plan. Yeah, right. Where's the closest open window?

[Joe Anderson]

As my wife and I start traveling around the globe in drinking neipas ne IPAs, I had to look, is that like any IPAs? And he's trying to be cute with words.

[Mark Horner]

I think that might be New England ipa.

[Andi Last]

Yeah.

[Joe Anderson]

Oh, yeah, and a little red zinfandel. You're in New England right now, aren't you, Mark?

[Mark Horner]

Yes, I am. I'm in a bunker in Maine if you can't tell from my background. Yeah, I got spam and bottled water all around me.

[Andi Last]

So romantic.

[Joe Anderson]

I anticipate spending around $300,000 a year in early retirement and then taper that back later in life. Is it not common to spend a lot in your early years of retirement to celebrate financial freedom? How could Roth conversions work if you plan to spend a lot in the early retirements? Where do I make my withdrawals from? We hope to retire at 57 once our two youngest kids graduate from college. I assume this is feasible as our current Savings rate is 20%. But I'd like to hear a spitball on our retirement and how we should be saving to set up our great withdrawal plan. Here are the specifics. Current income, $370,000 a year. He's got a traditional 401 of $600,000. Roth 401 of $164,000. Rollover IRA, $50,000. Roth IRA of $250,000. He's got a brokerage account of a million bucks. Social Security. Ha ha ha. Doesn't really think that. All right, dude, how old is this guy? 37.

[Mark Horner]

They're both 37. Wow.

[Joe Anderson]

Yeah, Beavis, wow.

[Mark Horner]

But yeah, way to Go, Beavis.

[Andi Last]

Apparently he is a financial planner.

[Joe Anderson]

Yeah. House is worth 600,000 with about $400,000 left on a low interest mortgage. We will probably utilize some of our brokerage money to upsize the house in a few years. The Camry and the Jeep are about half paid off with low interest rates. All right, so let's see, how much is this guy saving?

[Mark Horner]

Saving 20% of his current.

[Joe Anderson]

Saving 20% of his 3, 7. Oh, there you go, Mark.

[Mark Horner]

Yes.

[Joe Anderson]

Value. Look at that, right off the gate.

[Mark Horner]

So public math. That equates to I think $12,000 a year.

[Joe Anderson]

Mark can read. So 303, 70, 20%. That's 74,000. He's got a total of $2 million. How many years do we got to go here?

[Andi Last]

He wants to retire at 57. So 20 years. Make it happen, Joe.

[Mark Horner]

Yeah, so he might get a, I mean by my back of the envelope math, just that rule of 72. If he's got 20 years, maybe he gets two doubles and he go, and with that savings rate maybe goes to 8 million by 57.

[Joe Anderson]

I like that math. All right, and then let's say he takes 3% out of that, that's 250. He wants to spend 300 given inflation. So it's tight.

[Mark Horner]

It is.

[Joe Anderson]

Depending maybe if he gets a little bit higher rate. But if you want to spend $300,000 in 20 years. So $300,000, 20 years. God, this calculator. I'm going to throw away $300,000, 20 years, let's say at 3% inflation.

[Andi Last]

Mark, do you have an HP12C just for future reference calculator?

[Mark Horner]

I do. It's a piece of paper and a pen. That's my sophisticated financial advice. Right.

[Joe Anderson]

But if you look at $200,000, he wants to spend three hundy. Right. $300,000 in 20 years from now. So I don't know if that 300 is today's dollars or future dollars. If it's Future dollars, that's 300 and change.

[Mark Horner]

Yeah.

[Joe Anderson]

And if you want to retire at age 57, you know, I don't know, you probably want a 3% distribution rate.

[Mark Horner]

Yeah, that's a big number. It is a big number.

[Joe Anderson]

It's 10 million. He's at 2, so we're going to get to 8. So we need a couple more million dollars here. So that savings rate needs to increase. You know, we're assuming a flat savings rate. So he could be pretty close. But still, $8 million is nothing to sneeze at.

[Mark Horner]

It is not. It is not. But, but yeah, no, I totally agree. The spending, the spending, it makes it a little tight. I love, I love that first question, though, about, is it common to spend a lot in your early years of retirement? Because I think what gets floated around a lot for people is, you know, you need 70 to 80% of your, your working year income in retirement. And in my 25 years, I know I don't look that old, but in my 25 years of doing this, my experience has always been clients spend 100 plus percent of their working income in those first handful of years of retirement as they're checking off the boxes of things that they never got around to doing. So that he's appreciating that there might be some lumpiness to spending in retirement. I love that thinking.

[Joe Anderson]

But what I think is the misunderstanding, conception, misnomer, or where he's confused. Let's say he's saying, hey, I want to spend a lot of money my first few years. Let's say I'm spending $300,000. Well, if you have a tax plan or tax strategy on the distribution, all of that income is not going to be taxed at ordinary income rates.

[Mark Horner]

Right, right, right.

[Joe Anderson]

So you're creating your own income on the assets that you have that could keep you in a pretty low tax rate even though you have high income. I mean, that's a whole part. I mean, this is the whole reason why you want to be thinking about tax strategy, Roth conversions, blah, blah, blah, blah, blah, is that you're going to have control, a lot more control over the distribution and the tax that you pay on the distribution. And so if he's creating the income from other sources.

[Andi Last]

Yeah.

[Joe Anderson]

Then you might have room to do Roth conversions, even though you're spending a lot of money in your first go, go years of retirement.

[Mark Horner]

Amen. Yeah. Yeah. Spent spending. Spending does not necessarily equate to income. So high spending does not necessarily equate to high income. Where he's thinking that high spending is going to be high income, which means I'm boxed out of Roth of Roth conversions, which is not necessarily true.

[Joe Anderson]

Yeah, I love it. I think. Yeah, he's at 37 years old. Did you have a couple million bucks, Mark at 37?

[Mark Horner]

No, I did not. Absolutely.

[Andi Last]

Hey, hang on. Are you saying that Mark's not 37 now? Come on.

[Joe Anderson]

He's pretty close.

[Mark Horner]

Yeah, no, I remember what I had last week, and it wasn't. And it wasn't when I was 37 years old. And. Yeah, no, no, it was not. They're off To a fabulous. They are off to an absolutely fabulous start. But we are. That's also reminding me though I've had, in my career, unfortunately I've had one client run out of money. So I know that gets talked about a lot and sometimes you can just, you can just brush that aside. That never happens. I did witness it happen and it didn't have anything to do with this. It didn't have anything to do with the pile of money that they, that they had accumulated. It didn't have anything to do with the investments. It was entirely about spending. And I just could not talk them off the ledge on winding down, winding down spending. So it's just, it's really, it's really, really important, really important to be thoughtful about the spending number. I think that's the biggest risk in retirement.

[Joe Anderson]

I don't think they're going to spend anywhere near 300,000. Well, they could if they do crazy travel. But let's say at $370,000 a year, he's saving 70,000, that's 300. He probably has another $70,000 in taxes. I guess he's spending maybe $150,000 today. He's got two little kids. I mean, in 20 years they're gonna graduate from college. So when the kids are out of college, I don't know, 300 is probably a stretch goal for him anyway. For someone to save that much, 20% of your income, you get pretty disciplined. Unless you just go off the deep end and then you marry someone with the name Rosemary. And that just absolutely has no conf concept of what budget actually means. And I can see that too. He doesn't listen to the show. He doesn't listen to the show. So it's all right. It's all good. All right.

[Mark Horner]

Everybody needs a 40 person bar in their backyard.

[Joe Anderson]

Oh, man.

[Andi Last]

Turns out the creator of Beavis and Butthead, Mike Judge, voiced both characters and he doesn't work in finance. So if you know where those wires may have gotten crossed, email podcastsurefinancial.com and let me know, will ya? Anyway, when you're ready to start spending your retirement savings, you gotta watch out for the common trap doors that can upend your entire plan. Like that backyard bar Mark mentioned. Master the art of retirement withdrawals and learn how to spot and avoid those trapdoors you may find along the way. Click or tap the links in the episode description to watch Withdrawal Trapdoors on YMYW TV and to download the free companion withdrawal strategy guide. It'll tell you more about sustainability Sustainable distribution rates optimizing from which accounts you make your withdrawals and when. The impact of market volatility and inflation on your retirement spend down plan and tax saving strategies to make your money last longer in retirement. Watch Withdrawal Trapdoors with Joe Anderson CFP and Big Al Clopine CPA on YMYW tv and grab the withdrawal strategy guide for free courtesy of your money, your wealth and pure financial advisor.

[Joe Anderson]

Let's go. Let's go to. Where are we going to go this time? Little Pennsylvania. Hello, ymywtm. I've been listening to the podcast for about six months. Here we go. All right. This is his last episode during my daily walks and really enjoy the education, entertainment content. I'm nearing retirement. It could really use your input. This is Clark Kent from Pennsylvania.

[Andi Last]

Weren't they in Iowa or something?

[Joe Anderson]

Yeah, Smallville.

[Andi Last]

Yeah.

[Mark Horner]

Before he went to the big city, right?

[Joe Anderson]

Well, yeah, Metropolis.

[Mark Horner]

Yeah, Metropolis, right.

[Joe Anderson]

Come on. Know your movies there, Horner.

[Mark Horner]

I'm sorry, I'm sorry, I'm sorry. I'm a little groggy.

[Joe Anderson]

Have you seen that, the new Superman that came out, right?

[Mark Horner]

No, Something like that? No, I have not. But both of my sons, we've got four kids, both of my boys have said, I gotta go see the new Superman movie.

[Joe Anderson]

Oh, really? They saw it?

[Mark Horner]

They have, they have.

[Joe Anderson]

You know, Marvel was going to go bankrupt in the 90s.

[Andi Last]

What happened?

[Joe Anderson]

Even though that's. I don't think Superman's Marvel, I think Superman is dc.

[Mark Horner]

Yeah.

[Joe Anderson]

So I was definitely on the Instagram or something because I got a lot of worthless knowledge in my brain right now. Never usually on social media, but.

[Andi Last]

So have you seen the new Superman yet?

[Joe Anderson]

No, I have not. I have not.

[Andi Last]

Okay.

[Joe Anderson]

You know, the last movie I've been to in a movie theater, telling me, I think the movie was called Hitch.

[Andi Last]

With Will Chevy Chase.

[Joe Anderson]

Oh, I don't know. It's been probably 20 years.

[Andi Last]

Wow.

[Joe Anderson]

Stadium.

[Mark Horner]

Stadium seating in movie theaters was a godsend for me to get me back into the movie game because before those arrived, when I would sit down, you can't tell from looking at me, but I'm 6 foot 7. So when I would sit down in a movie theater, there would be audible groans behind me that this giant just, just sat down to block the. To block the screen. One time. One time I heard a. I heard a husband or a boyfriend lean over to. Lean over to his date and say, you want to. You want to move? And she huffed, huffed and puffed and no, I'll look around. This guy's Melon head. So thank you for stadium seating.

[Joe Anderson]

Yes. No, I take that back, man. I can't remember the last movie, but it's been a while.

[Andi Last]

Yeah, hitch was actually 2005, so. Yeah, you would have been. Right about 20 minutes, 20 years if that was your last movie.

[Joe Anderson]

Kevin James, Will Smith, he was like.

[Mark Horner]

I haven't seen Hitch.

[Joe Anderson]

Oh, Kevin James is trying to hook up with Princess. And then Hitch is like. He's the guy. He's the one that puts them together.

[Andi Last]

Isn't he supposed to be, like, a relationship expert or he's telling guys how to get girls or something like that.

[Joe Anderson]

Right. And then he. I forget her name off the top of my head. Very gorgeous actress was in it as well.

[Andi Last]

Eva Mendez.

[Joe Anderson]

Yes, Eva Mendez.

[Mark Horner]

And he's looking at notes.

[Andi Last]

Yeah, of course. That's what I do. I'm the librarian on this show.

[Joe Anderson]

All right, back to Superman. I'm 55 years old, divorced, father of two children. In college, jointly supported. I got a late start to investing because there was no 401 equivalent while I was serving in the military after college. I'll thank you for your service, sir.

[Mark Horner]

Yes, thank you, Superman.

[Joe Anderson]

Nonetheless, I maxed out 401 and target date funds over the last 25 years. My financial summary includes this. We got income of 160,000, home value 550, remaining mortgage 330 traditional pre tax, $1,700,000, Roth $300,000, HSA 10 cash, $30,000, taxable brokerage account of $15,000 and added $1,000 per month into retirement. Got no pension but Social Security of $31,000 at $62,000 or $54,000 at $70,000. I'm hoping to retire in two years at $57,000, so I'll need to bridge that gap until 62, but I can use the rule of 55. Okay, well, sure. I anticipate needing $100,000 a year, pre tax to today's dollars, assuming no ACA premium credits. Based on my personal and family health history, life expectancy is 85 years old. Now, this guy is just. He's got a dial. Spreadsheet for sure. He's a spreadsheet mania. My vehicle is low mileage. 2014 Toyota Camry. My drink of choice is a good French press coffee or espresso. Here's his questions. I don't think Clark Kent drinks espresso.

[Mark Horner]

No, he does not. He's not drinking a drink with the pinky up in the.

[Joe Anderson]

With the pinky up in the air.

[Mark Horner]

No, no, no. No. No.

[Joe Anderson]

Okay, let's go. Despite a high early drawdown rate, is it feasible to retire at 57 or should I work another year or two? I love my job, but if I no longer need to work, I'd rather focus on travel and my hobbies. Number two, once I retire, does it make sense to do Roth conversions? And if so, what is the best option to pay the tax? Dare I ask if I should consider an annuity for more fixed income? Sorry, Joe. I would really appreciate your spitball on my situation. Still looking for my Lois Lane. Keep looking. She's out there. All right, let's see. So he is 55. He wants to retire in a couple years. 57 wants to travel, find the lowest lane, drink espressos across the world. He's got a total of $2 million, and he wants to spend 100 grand. He's got to bridge the gap. He's close.

[Mark Horner]

Thinking about retirement soon, I'd like to see him have a bit more liquid assets. The 30,000 in cash and everything else is in what, I guess what, it's 15 in brokerage and a million seven in the deferred. I'd love to see him build up a little bit more cushion that was more efficiently accessed if he needed it.

[Joe Anderson]

I agree there, 57. And then let's say he's going to claim Social Security at 62. So if he wants to spend 100 and he doesn't have his fixed income, is what, just the Social Security at 31, 38 or 70?

[Mark Horner]

Yep.

[Joe Anderson]

He's saving a. All right, but he is saving $1,000 a month. So if he works another, what, three years or two years?

[Mark Horner]

Yeah, another $24,000.

[Joe Anderson]

Another $50,000. So call it $2,100,000. He's got it $57,000. And then he wants to spend $100,000.

[Andi Last]

And he's talking about using the rule of 55, which is where he would be able to start withdrawing from his 401 in the year that he turns 55 if he quits his job. Is that correct? Have I got that straight?

[Joe Anderson]

That is correct. Yeah. As long as you separate from service at 55, you could take money from your 401 plan and avoid the 10% penalty as long as you separate from service at 55 with the employer and keep it in the 401 plan.

[Andi Last]

So is that a good strategy? Should he use that?

[Joe Anderson]

Yeah, I think so, but I don't know. He's short. He doesn't have enough. I hate to say it, Superman. So at Age. So he's got $2 million today. He's saving 1,000 bucks a month, $24,000 a year. So $50,000 over the next two years. I'm just assuming, you know, a flat rate. So he's going to have $2.1 million at 57. So if he's spending $100,000 at age 57, that's a 5% distribution rate at 57, which I don't really care for because he's got to take $100,000 out per year plus tax, plus the cost of living. He has very little tax diversification. Most of it is in a retirement account. He's got some brokerage, some cash, but most of it is going to come from a retirement account. So this $100,000 is all taxed at ordinary income rates. So he's got five years of distribution or even, let's call it five or four years. I'll be generous with him. Four years. So he needs to pull out $400,000 from his portfolio over the next four years from 57 to 62. So if I look at.

[Mark Horner]

Off of 2.14.

[Joe Anderson]

Yeah, 400,000. Two one. So he's pulling out 20% of his portfolio before he even hits 62.

[Mark Horner]

Yeah, it's aggressive.

[Joe Anderson]

The market goes down. I don't know.

[Mark Horner]

We're in big trouble. Yeah. With no cushion. Right. If the market goes down, he's got nowhere else to go. Nowhere else to go, nowhere else to go.

[Joe Anderson]

At age 62, if I look at $100,000 living expense, given a 3% inflation rate at 62, that's 115,000. He claims his Social Security, he's going to have an $84,000 shortfall at 62. If he takes 4% out of the portfolio. He needs 2.1 million. And I don't like 4% at 62. I think it should be a little bit less, maybe 3 and a half.

[Mark Horner]

I agree. Too aggressive.

[Joe Anderson]

So he needs to work a couple of more years or he can work part time. I don't like the 5% burn rate at that young of age because that's so much money coming out of the portfolio in the. I mean, if the market's down even one of those years, taking that much money out, that could really blow him up. If the market performs, then, then he's fine. Right. But I would not bet my life savings on. All right, well, here, let's just hope that the market does okay.

[Mark Horner]

Yeah, I like the half, the sort of the half step idea of getting, of getting Some sort of, some sort of part time job that's helping ease, close that, close that shortfall. But because he, if he pulls the trigger on this to me and we run into it, we run into a market, some market unpleasantness, he's going, he's probably going back to work anyway.

[Andi Last]

Now he says he loves his job. So if he continues working at his full rate and holds off on taking Social Security, doesn't take it at 62, I mean, that could put him in a significantly better position, couldn't it?

[Mark Horner]

Oh, for sure, absolutely.

[Joe Anderson]

Yeah. If he continues to work, if he loves his job, he makes great income and he's saving 20 some odd percent of his income into the retirement accounts. So if he continues to do that instead of to age 57, if he can hold on to age 60, I think this situation looks completely different. If he wants to retire at 57 and let's say works part time and makes 50 grand. So now his distribution is not 100 grand, it's not 5%. It's only 2.5% at 50,000 plus tax.

[Mark Horner]

Way better.

[Joe Anderson]

Yeah, I like that math too. So he can withstand some market corrections. He can withstand volatility. But if you're taking 5% at 57, you get some volatility there, you're gonna freak out. You're gonna be like, oh my God, I gotta pull another 100,000 out. I'm gonna go all in cash.

[Mark Horner]

Yeah, yeah. Probably at the exact wrong time.

[Joe Anderson]

Exactly. And then it's like, okay, well when do you get back in? Yeah, and then you're already pulling way too much money out. You're gonna be stressed. There's no way he's gonna find Lois Lane. Just, he's gonna be too stressed. Drinking espressos, just freaking out.

[Mark Horner]

Right.

[Joe Anderson]

He won't be able to sleep. Oh, my God. Poor guy.

[Mark Horner]

Pounding the espresso, sweat pouring down. Sweat pouring down his face.

[Joe Anderson]

He's wearing a Superman outfit, you know, just walking around his living room.

[Mark Horner]

They'll be lucky to find Mimi from the Drew Carey show. I'm sorry, I'm sorry, Andy.

[Joe Anderson]

He's going to Comic Con. Oh, all right.

[Mark Horner]

You want to, you want to hit his annuity question, Joe?

[Joe Anderson]

Oh, no, do not. No, no, no.

[Mark Horner]

Only go with an annuity if it's fully invested in Bitcoin.

[Joe Anderson]

I could see. I guarantee he's done the math, right. Yeah, because he, like, you could tell by his questions, you know, the aca. Yeah. Then you're like, hey, is it okay if I take a large distribution? If it goes down to somewhat normal. I don't know what he's running for a rate of return on his investments because it does go to a 4% at 62. So he's like, all right, well, I think I could be okay if I bridge this gap. So anyone's seen ACA Bridge?

[Mark Horner]

Yep.

[Joe Anderson]

They're doing spreadsheets or they listen to this show or. Unless he's a financial advisor and he just wants our opinion because he knows he's close.

[Andi Last]

He's learned a lot in the six months he's been listening.

[Joe Anderson]

Yes. No, I would not purchase an annuity. You're just going to. Unless he wants to live off of something a lot less than that he stated.

[Mark Horner]

Right? Right.

[Joe Anderson]

If he wants to take the market risk out of play and if he wants a guaranteed income, then sure, I would run the numbers, but you're gonna have a guaranteed lower income for life and you're gonna have less flexibility, but you'll have a floor and you'll have guarantees. So I mean, if you want guarantees.

[Mark Horner]

You'Re giving up something, converting it to ordinary income. Although what he's. No, he'd be buying an annuity inside the tax deferred accounts. That's where he'd be doing it.

[Joe Anderson]

Well, I'd rather have them do that than a non qualified account. All you're doing is getting more ordinary.

[Mark Horner]

Income versus turn it all into ordinary income. Right? Right. No, forget the annuity. Even if it's all Bitcoin.

[Andi Last]

You still have 12 days from the release of this episode to tell us what you think about the youe Money, you, Wealth podcast. You might even be the person we randomly choose to receive a $100Amazon. All you have to do is answer the 18 questions in the 8th annual YMYW podcast survey before 5pm Pacific Time on August 31st. YMYW is your podcast. We just make it for you. And we want to make it your favorite podcast. Click or tap the survey link in the episode description and use the secret password YMYW to share your opinions and experiences. Only US residents are eligible to participate in the giveaway no Purchase Necessary survey and giveaway clothes and Amazon E Gift card winner chosen at 5pm Pacific Time on all August 31, 2025.

[Joe Anderson]

Let's move on. Let's go to Tony Soprano in New Jersey. Never saw the whole series of the Sopranos.

[Andi Last]

I've never seen a single episode. I have to admit, I'm not into the violence like you are, Joe.

[Joe Anderson]

What? It's not violence. It's just. No, it's Real life.

[Mark Horner]

Yeah. It's a family show. It's a family show.

[Joe Anderson]

Come on.

[Mark Horner]

There's different ways of making a living. Andy, come on. Let's be a little less judgmental, for crying out loud.

[Joe Anderson]

Yeah, I do like the violent. The more violent shows. You do. I do.

[Andi Last]

At least you admit it.

[Joe Anderson]

I do. Wow. I just saw the ballerina. That's the female version of John Wick.

[Mark Horner]

Ah, Sons of Anarchy. You're a Sons of Anarchy fan, Joe?

[Joe Anderson]

I am a Son of Anarchy fan, yeah. Very much so.

[Mark Horner]

Absolutely love it.

[Joe Anderson]

Yeah, I love all the actors in that. I mean, that's a phenomenal show. Really good produced, great acting. All the above.

[Mark Horner]

That makes for great family dinners at our house when we've got a hail of gunfire going off in the background. That's fantastic.

[Joe Anderson]

All right, let's get back to Tony. Here we go. Hey, guys. Love the energy of the show. A good mix of fun and education. Subaru Crosscheck or Crosstrek?

[Andi Last]

Whatever.

[Joe Anderson]

There's no way Tony Soprano is driving a Subaru Crosstrek drinking cold water. No, no, you gotta pick like Fred Rogers, Right? Not Tony Soprano.

[Mark Horner]

This is Professor Plum. Yeah, yeah, yeah. Not Tony Soprano.

[Joe Anderson]

I enjoy hearing your breakdown. Other callers finances and give helpful tips, but most of those have a much higher net worth than I do. So I'm interested in how my breakdown will look. Hoping you can spitball my situation. I want to know when I can retire. The sooner the better. And any other tips about asset allocation, location, et cetera? I'm $56,000, current salary, $121,000. Here's what Tony's got. He's got $350,000 in a 403, call it $70,000 in a Roth, $250,000 in a brokerage account, $240,000 in an IRA. Total assets are about $900,000. Breaks down 70, 30 allocation. He's 56, makes $100,000 a year and has almost a million bucks.

[Mark Horner]

I love it.

[Joe Anderson]

That's like 9x of your income at 56?

[Mark Horner]

Yes.

[Joe Anderson]

I think he's doing phenomenal.

[Mark Horner]

He's doing just fine. Being too hard on himself.

[Joe Anderson]

Yeah, I know, right? 70, 30 allocation. I will have a pension when I turn 60 of $40,000. No COLA. My Social Security at 62 will be $25,000. I have no mortgage and any other debts. My house is worth $500,000. I estimate my expenses in retirement will be between $65,000 and $75,000 in today's dollars, thanks to making my new Jersey commute more bearable. All right, Tony, I think you're sitting in really good shape here.

[Mark Horner]

You're 56.

[Joe Anderson]

You want to retire at 62. Is that the number? The sooner the better. He said sooner the better.

[Mark Horner]

Yep.

[Joe Anderson]

All right, so at 60, he's got a nice pension of $40,000. He's got four years, and he wants to spend. Let's call. I'm going to split the difference of $70,000.

[Mark Horner]

Yep.

[Joe Anderson]

And we got four years. We're going to go 3%. Future value of that is $78,000, minus $38,000. So $40,000, $1 million, 4%. Bada boom, bada bing. I think he's right.

[Mark Horner]

He's right. He's right there. I'm jealous. With all that guaranteed income coming in, that shortfall between the guaranteed income and his spending goal. It's tiny.

[Joe Anderson]

Yeah, right. I mean, it's 4% for a couple years. I mean, I would push out Social Security as long as you can, because he's only taking 4% out. So if he retires at 60, and if I use 70,000 as the number. He said 65 to 75. So 70,000. Give that inflation, call it 78. 78 minus 38 is 40,000, doll. I would push out Social Security as long as you can. If the market blows up, maybe you take it a little early. That's the only time I would take my Social Security at 62 just to kind of stop the bleeding of the distributions to let my investments recover. But I would try to push out Social Security as long as he can, because he's only taking 4% out at age 62. I think once Social Security hits, there's very little draw.

[Mark Horner]

It might. Might. Might be able to turn it off. Yeah, yeah. And then. Then think about where that money's going down the line to heirs. Could there. There could be. There could be some interesting estate planning and gifting and. And donate. Yeah, whatever. Whatever. Whatever he might want to do from a legacy perspective with that guaranteed income waiting. Once that gap is bridged, Tony's looking. He's looking pretty good.

[Joe Anderson]

Tony doesn't tell us if he's married. So he's single. He's 56. At $121,000 of income, he's in probably the 22% tax bracket. Let me see. Asset location. He's 70, 30. I don't think he needs to take on that much risk if he's looking to retire in four years. I would probably tone that down maybe a little bit.

[Mark Horner]

I agree.

[Joe Anderson]

70% equities in all time. You got to get a glide path sooner than later. You don't want to switch your portfolio the day before you retire.

[Mark Horner]

I agree.

[Joe Anderson]

Because if the market blows up, you lose 10%, 20%. Then he could get a little tight. I would rearrange the portfolio. Now the brokerage account is in mutual funds. I would want to look at that. I would probably want to have something maybe a little bit more tax efficient. ETFs versus mutual funds. Mutual funds, depending on if they're active or passive, sometimes they'll kick out a little bit more dividends, capital gains, interest, because the portfolio managers kind of manage those dollars within. I would probably be more equity heavy in the brokerage account and more bond heavy in the IRAs, just to kind of match the tax there. And then I would look at, depending if he's married or single. If I'm in the 22% tax bracket, I might want to convert a little bit. If he's married, he's definitely in the 22%. If he's single, he's probably on the top end of the 22 because he's got good diversification from a brokerage account and ira. But I would like a little bit more in a Roth. But besides that, I think Tony's doing great.

[Mark Horner]

The really aggressive assets in the Roth, Joe.

[Joe Anderson]

Yep. For sure.

[Mark Horner]

Yeah.

[Andi Last]

I have a question. Mark mentioned something about potentially turning off your Social Security after you have started claiming it. And I assume you're talking about after that guaranteed income comes in. That's not a strategy that we've really talked about.

[Joe Anderson]

No. Turn up the distributions. He said.

[Mark Horner]

Yeah, if I said that. If I said that, I might have missed. I might have misspoke. Maybe I had one too many New England IPAs. But no, I would say, I would think it. I was thinking about turning off the draw on the. On the brokerage. Once that Social Security income comes in, then maybe you look at dialing down or maybe even turning off the draw out of the portfolio.

[Andi Last]

Got it. Okay, cool. Thank you for the clarification.

[Joe Anderson]

He could stop the distributions entirely. Maybe he still takes distribution from the retirement account to the top of maybe the 22% tax bracket. Get more money into Roth, that's going to probably reduce. Well, it will reduce his RMD in the future too, because he's not going to need that money and it's just going to continue to compound and then you're just going to get more growth and you're going to have to pay tax on that growth. I'd rather pay the taxes now. Get that into a tax free environment. So all my growth grows 100% tax free. I just buy my partnership back. So I think there's a lot of different planning that Tony would want to take a look at, but each and every year is different. That's what's funny. They send us questions. It's like, all right, well what we say next year might be completely different and what we say the following year might be completely different. And no, Tony, you can't send me emails every year. This is just a one shot pony here.

[Mark Horner]

Spitballs are one and done, right?

[Joe Anderson]

The one and done.

[Mark Horner]

One and done. One and done.

[Andi Last]

Mark Horner joins us again next week to spitball on Ray and Roy's lopsided tax triangle and Elwood Blues dream to retire in the next two to three years. Watch Mark's bio video in the episode description to learn more about him and click or tap the link to schedule a free financial assessment with one of the experienced professionals here at Pure Financial Advisors. No matter whether you're in Chicago, Denver, Seattle, Nashville, Phoenix, Salt Lake City, Southern California, or just chilling by the bonfire drinking Scotch, the Pure Team can meet with you either in person at one of our offices nationwide or online via Zoom. They'll partner with you to customize a unique and quick comprehensive financial plan to help reduce your taxes in retirement, match your investments to your risk tolerance, and ensure you can meet your needs and goals in retirement. Book your free assessment by clicking or tapping the link in the episode description or by calling 888-994-6257. Pure Financial Advisors is a registered Investment Advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.