I Work in a Toxic Office. Can I Retire Early? - 513

Summary

Podcast Summary: Your Money, Your Wealth - Episode 513: "I Work in a Toxic Office. Can I Retire Early?"

Release Date: January 21, 2025
Hosts: Joe Anderson, CFP® & Alan "Big Al" Clopine, CPA of Pure Financial Advisors

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Introduction

In Episode 513 of Your Money, Your Wealth (YMYW), hosts Joe Anderson and Big Al Clopine delve into the intricate topic of early retirement, particularly focusing on individuals grappling with burnout in toxic work environments. The episode features detailed analyses of listener-submitted scenarios, offering listeners practical insights into whether early retirement is financially feasible under various circumstances.

Listener Case Studies

1. Peter and Joanna from New Jersey (00:48 - 09:23)

Background:
Peter, age 45, and his wife Joanna, age 44, are contemplating retiring in the next two years. Peter earns $350,000 annually with contributions of 8% from his company and maxes out his Roth 401(k). Joanna, who transitioned to a second career, earns $75,000 per year, contributes $500 monthly to her 403(b), and anticipates receiving approximately 60% of her pension with an inflated base Cost of Living Adjustment (COLA).

Financial Snapshot:

• Assets:
  Peter:
  • $1.4M in a brokerage account
  • $900,000 in a Roth IRA
  • $400,000 in a traditional 401(k)
    Joanna:
  • $100,000 in a brokerage account
  • $100,000 in an IRA
  • $15,000 in a Roth IRA
  • $500,000 in a 529 plan
• Joint Assets:
  • Fully paid $700,000 house
  • $100,000 in cash
• Future Income:
  • Peter: $3,600/month Social Security at age 70
  • Joanna: $5,000/month pension at 62 and $3,000/month Social Security at 70

Discussion:
Big Al initiates the analysis by highlighting the couple's substantial net worth of approximately $3 million, stating, "It's about $3 million." (02:54). The primary concern revolves around their annual spending of $120,000 against Joanna's net income of approximately $60,000 after contributions and taxes, resulting in a $60,000 shortfall.

Big Al suggests, "You divide that into the $3 million they have, you get a 2% distribution, which for a 44 and 45 year old, I'm okay with that if that's what he wants to do." (03:30). However, Joe expresses skepticism about the sustainability of a 2% withdrawal rate at age 45, emphasizing the potential longevity of the portfolio over 40 years and the risks associated with market volatility.

Notable Quote:
Joe questions the practicality by stating, "At 45, I would not want to be pulling 2% out of my portfolio." (04:16).

Ultimately, while Big Al acknowledges the numerical feasibility, he also cautions about the uncertainties over such a long retirement horizon, suggesting that the couple could attempt early retirement but remain prepared to return to work if necessary.

2. Suzanne from Massachusetts (22:32 - 25:18)

Background:
Suzanne, age 69, works in healthcare on a per diem basis, earning $40,000 annually. She plans to draw Social Security at age 70, expecting a benefit of $48,000 per year. Her financial assets include $1 million in retirement savings, predominantly in annuities, and a modest emergency fund of $10,000. She requires $55,000 to $60,000 annually for the next 30 years.

Financial Snapshot:

• Assets:
  • $1M in retirement accounts (annuities and 401(k))
  • $10,000 emergency fund
• Income:
  • $40,000/year from work
  • $48,000/year Social Security at 70

Discussion:
Big Al calculates Suzanne's withdrawal rate, noting, "She needs $15,000 from $1,000,000. $1,500,000 at $69,000." (24:16). He assesses a 1.5% distribution rate as sustainable, to which Joe concurs, adding, "Yeah, 1.5% distribution rate at 69. Yeah, it looks good." (25:08). Both agree that Suzanne's financial plan appears secure, assuming average market performance and consistent expenses.

Maryland Chicken Man: Early Retirement Analysis (11:31 - 33:23)

Background:
A listener, humorously dubbed "Maryland Chicken Man," is a 45-year-old chicken farmer from Maryland with a net worth of approximately $2.25 million. He anticipates ceasing work in three years due to the rising costs of maintaining his farm and seeks advice on sustainable withdrawal strategies post-retirement.

Financial Snapshot:

• Assets:
  • $1.7M in a brokerage account
  • $100,000 in a Solo 401(k)
  • $8,000 in a newly opened Roth IRA
  • Two rental properties valued at $450,000 generating $15,000/year
  • Land assets worth $500,000
• Income:
  • $100,000/year from farming
  • Additional $40,000 via Solo 401(k) contributions
• Expenses:
  • $40,000/year personal expenses
  • Plans to withdraw $80,000/year plus $15,000 from rentals

Discussion:
Big Al performs a thorough analysis, recognizing the complexities of retiring from a self-employed venture with fluctuating income streams. He points out the precarious balance between withdrawal rates and market performance, stating, "If the market does well and cooperates, I think he's going to feel good. If it doesn't do well, and we have some pretty big corrections, he'll probably want to go back to work." (09:57).

Joe is more cautious, emphasizing the unpredictability of long-term sustainability: "At 45, this money has to last this family for probably another 40 years." (08:46). He raises concerns about the sequence of returns risk and the psychological impact of depleting retirement funds prematurely.

Notable Quote:
Joe articulates his reservations, saying, "I just think 45 is too young and 2% burn rate, I think it's rich. I think the math is flat." (06:37).

Despite acknowledging the numerical feasibility, both hosts underscore the high risk associated with assuming consistent market growth and the potential necessity of returning to work if unforeseen financial strains arise.

Key Insights and Conclusions

• Withdrawal Rates:
  The hosts discuss sustainable withdrawal rates, with Big Al suggesting a 2% rate for early retirees and 1.5% for those closer to traditional retirement age. However, Joe emphasizes the importance of adaptability and the dangers of rigid withdrawal strategies, especially over extended periods.

• Market Volatility and Sequence of Returns Risk:
  Both Joe and Al highlight the critical impact of market performance on retirement sustainability. They caution against optimistic assumptions of steady returns, pointing out that significant market downturns can drastically affect retirement funds, potentially forcing early retirees to reintegrate into the workforce.

• Psychological Factors:
  Joe touches on the emotional and psychological challenges of managing retirement funds, particularly the stress of watching portfolio values fluctuate and the difficulty in adhering to withdrawal plans during market volatility.

• Personal Fulfillment vs. Financial Stability:
  The episode underscores the balance between personal well-being and financial security. While early retirement may offer relief from toxic work environments, it also necessitates a robust financial plan to ensure long-term stability and the ability to pursue fulfilling activities without financial strain.

Final Thoughts

Joe and Big Al conclude the episode by reiterating the importance of comprehensive financial planning tailored to individual circumstances. They encourage listeners to utilize resources like the Retirement Plan Spitball Analysis and the 2025 Key Financial Data Guide, available in the episode description, to better assess their retirement readiness.

Notable Quotes with Timestamps

• Big Al Clopine: "You divide that into the $3 million they have, you get a 2% distribution, which for a 44 and 45 year old, I'm okay with that if that's what he wants to do." (03:30)

• Joe Anderson: "At 45, I would not want to be pulling 2% out of my portfolio." (04:16)

• Joe Anderson: "I just think 45 is too young and 2% burn rate, I think it's rich. I think the math is flat." (06:37)

• Big Al Clopine: "I think the numbers are close enough that he can try it." (08:12)

• Joe Anderson: "The money's got to probably last for 45 more years." (04:05)

• Big Al Clopine: "If the market does well and cooperates, I think he's going to feel good. If it doesn't do well, and we have some pretty big corrections, he'll probably want to go back to work." (09:57)

• Joe Anderson: "There's no way. I don't think this is even close to reasonable." (17:06)

• Big Al Clopine: "You have to react to what cards you're dealt based upon the market, based upon what you're really spending." (21:22)

Resources Mentioned

• Retirement Plan Spitball Analysis: Access free personal retirement plan analyses by clicking the link in the episode description.

• 2025 Key Financial Data Guide: Available for free download, providing up-to-date tax brackets, contribution limits, and other critical financial data for retirement planning.

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Connect with YMYW:

• Website: YourMoneyYourWealth.com
• Free Financial Assessment: Schedule your complimentary assessment with Pure Financial Advisors at 888-994-6257.

Disclaimer: The information provided in this summary is for informational purposes only and does not constitute personalized financial advice. Consult with a financial professional before making any investment or retirement planning decisions.

Transcript

[Andi Last]

Today on youn Money, you, wealth podcast number 513, YMYW listeners in their 40s are ready to call it quits at work, become financially independent and retire early. Can they afford to do it? Peter and Joanna want to retire in the next two years. Burned out and ready to retire once out of his toxic office. If Maryland Chicken man never earns another dollar, how much can he afford to withdraw from his retirement accounts each year? And Suzanne In Massachusetts is 69 and needs 60k a for the next 30 years. Is she all right? Click Ask Joe and Big Al in the episode description to get a retirement spitball analysis of your own. I'm executive producer Andi Last, and here are the hosts of youf Money, you, Wealth, Joe Anderson, cfp, and Big Al Clopine, cpa.

[Joe Anderson]

Hey, what's up, Big Al?

[Big Al Clopine]

Hey. Aloha.

[Joe Anderson]

Yeah, in Hawaii. You're looking good, man.

[Big Al Clopine]

Well, I'm more relaxed than typical, which should make for a better show. We'll see. Or maybe a worse show. I don't know. I have not had the Mai Tai yet. That's coming after.

[Andi Last]

Well, that, that definitely puts us in a better position.

[Joe Anderson]

So we got. Let's see, from New Jersey. Greetings from New Jersey. My name is Peter. I'm 45, yo. And my lovely wife Joanna, 44. We will both enjoy a good beer to you, usually a local IPA or seasonal together. We have three kids, ages 6 to 10. I've been listening for about a year while I run to commute to work. It would love to spitball on my situation. Here's our breakdown. My total income is $350,000 per year. I have a company contribution of 8% and contribute the max of my Roth 401. Joanna started a second career a few years ago and now has income of $75,000 per year. She contributes $500 a month to our 403 as a state employee. She says she has paid health care that would contribute through retirement. And we'll receive about 60% pension with inflated base COLA. At 62, we spend about 100 or $10,000 a month. We'll have the following assets. So Peter, he's got $1.4 million in a brokerage account, $900,000. So, okay. And an additional $900,000 in a Roth and additional $400,000 in the traditional 401s. That correct? Okay. Anyway, Joanna's got $100,000 in her brokerage account, 100,000 in her IRA. Roth IRA, 15,000 and a 403. And then they have joint, $100,000 cash. You got $700,000 house that's fully paid for and a 529 plan that has about $500,000 in it for the kids. Wow. This guy's 45 and what does he got? And that's several million.

[Big Al Clopine]

It's about $3 million.

[Joe Anderson]

So future income, Peter's expected Social Security at age 70 is $3,600 a month. Joanna's expected pension at age 62 is $5,000 a month. Joanna's expected Social Security at age 70 IS 3,000. I'd like to explore retiring to take care of the family. Joanna will continue working until 62. Is it feasible to retire in the next couple of years? All right, so they spent $120,000 a year, and Joanna makes how much?

[Big Al Clopine]

Yeah, she makes $75,000, Joe. And if you subtract out her 403 of $6,000 and taxes, I just estimated about $9,000. So maybe she nets about $60,000. Right. So if they're spending $120,000 and she's making a net $60,000, so their shortfall is $60,000. You divide that into the $3 million they have, you get a 2% distribution, which for a 44 and 45 year old, I'm okay with that if that's what he wants to do. Even right now, not even waiting two years.

[Joe Anderson]

Would you take 2% out of your portfolio every year at age 45? And that money's got to probably last for 45 more years.

[Big Al Clopine]

If I had kids and I felt like I wanted to be there for them, sure, why not? I think. I think the math works is what I'm saying. Now, on the other hand, I think at age 45, he may do this for a few years and realize maybe I want to do something else and that's okay too. Basically the question is, can I if I want to. And I think he can.

[Joe Anderson]

I don't know. I don't know if he can or not. I mean, the number makes sense, but I don't know how long that money's going to last. Depending on he's not working. 2% plus tax. He lives in Jersey, they got three kids. He's spending $10,000 a month. Now he's got 500 in a 529 plan. I don't know. Let's say the market tanks. He doesn't manage it correctly. Now he's pulling 3% out. Taxes go up. I think it's rich. At 45, I would not want to be pulling 2% out of my portfolio.

[Big Al Clopine]

But really I disagree with that. I think that doesn't even include Social Security and pension at age 70.

[Joe Anderson]

I know, but 25 years from now, who knows? He's probably not even going to be there.

[Big Al Clopine]

I say try it.

[Joe Anderson]

I think he's got, well, the guy's making $350,000 a year. Can he get a job making 50 grand? Can he get, do something online, Work a couple hours a week.

[Big Al Clopine]

Six to ten.

[Joe Anderson]

They're in school during the day anyway. Is he going to homeschool them?

[Big Al Clopine]

Well, not even considering the financial part. What's he going to be doing? And to me that's the second question that he didn't ask, which is is, I mean he asked. Doesn't make sense financially. But you and I know that a 45 year old and you and I are both past that, right?

[Joe Anderson]

Not by much for me. I'm just putting them in my shoes. So let's say I'm close to 45 years old and it's like, all right, and I have two young kids. I have one that's three and a half and one that's nine. So it's like picturing me retired with the kids, taking 2% out of my portfolio. I think that's a lose lose.

[Andi Last]

So would your thoughts have changed on this before you had the kids?

[Joe Anderson]

No, I just think 45 is too young and 2% burn rate, I think it's rich. I think the math is flat. I think a good distribution rate for someone that is in their 60s is probably 3. The 4% rule. I don't know. Given so many different studies that have come out, I think it's a good gauge to see how much money that you have. They've saved a lot, but I don't know, I think that's, to me, I would never do that. That would be a little bit too rich for me.

[Big Al Clopine]

Well, I wouldn't do it either, but for the secondary reasons that you talked about as far as financially. See, here's what I think will like may happen. I'm not going to predict, but what may happen is he does this for a few years, he starts to see his portfolio start to change. Now 2%. I mean if a portfolio over time, globally diversified portfolio would earn 6%. Now there's no guarantees. What if it loses 10% for five years in a row? How is that going to feel? And I think that's what you're getting at and, and that's a valid concern. And if that happens, then it's like well, heck, maybe I'll just go back to work. But I think it's. I think the numbers are close enough that he can try it.

[Joe Anderson]

He's looking at a statement and he sees $3 million and he feels pretty good.

[Big Al Clopine]

Yeah.

[Joe Anderson]

How about if that goes to 2.2 million?

[Big Al Clopine]

Well, then he goes back to work, Right.

[Joe Anderson]

It's like, oh, he's got a good job making, you know, 350 grand a year. Yeah, you're right, Al. I mean, if we looked at just kind of this in a bubble of, hey, take 2% out of the 3 million, that's going to cover the shortfall, pay a little tax, it's close. But at 45, this money's got to last. $3 million is a ton of money, but it has to last this family for probably another 40 years.

[Big Al Clopine]

Yeah, a long time for sure. At least 40.

[Joe Anderson]

But she's going to continue to work, but she's not going to save. They're going to be so. I don't know. I mean, go for it, I guess. Yeah. If you want to take care of the kids, you want to homeschool the kids, you're burnt out. You've done $3 million. At 45, you're in the top.01% of people. So you've given yourself the luxury to do something like this. So what the hell, right? And I'm sure if he's making 350 and he's got $3 million, he's marketable in a couple of years, he could probably get a job pretty quickly.

[Big Al Clopine]

I would expect he's got some skills that people might want. It's kind of Joe, it's kind of like the fire movement. Those people retire sometimes in their 30s and then they end up doing blogs and YouTube videos and they make a lot of money that way. You're probably right. You'll probably want to make some kind of money, but I don't think he necessarily has to. Certainly at the beginning. I think he has to see how it feels and see what happens to the portfolio. It somewhat depends upon what the market like. If the market corrects over the next two or three years, it's not going to feel very good. And I think that's what you're getting at.

[Joe Anderson]

What? I haven't heard much of the old fire movement lately.

[Big Al Clopine]

No, not me neither. It's still out there, I'm sure.

[Joe Anderson]

Financial independence. Retire early, right?

[Big Al Clopine]

Early, Yep. That's it.

[Joe Anderson]

Yeah. People would live in their mother's closet.

[Big Al Clopine]

Yeah. They saved 80% of their income.

[Joe Anderson]

85% of their take home. They eat Spam every day.

[Big Al Clopine]

That's right.

[Andi Last]

Have you ever heard the term no regrets? It's a good way to live your life, but unfortunately, plenty of retirees have plenty of regrets. This week on a brand new episode of youf Money, you, Wealth tv, learn from their mistakes. Joe and Big Al show you how to avoid the 10 biggest retirement regrets and to set yourself up to retire happy and secure. They'll also share retirees recollections on everything from lending money to boredom to give you the wisdom of the ages without having to learn it the hard way. Then calculate whether you're on track for retirement for free. Input your current cash flow, assets and projected spending for retirement into our financial Blueprint tool and it'll calculate a detailed report with three scenarios to help you determine your probability of retirement success with actionable steps you can take now to achieve your financial goals. Watch 10 Big Retirement Regrets to avoid and calculate your free financial blueprint. You'll find the links to both in the episode description.

[Joe Anderson]

All right, here we go. Let's go to the next one. This sounds very similar. This guy's burned out too. Alright.

[Big Al Clopine]

Okay, we got a theme going.

[Joe Anderson]

I think I'm burnout. This is actually me.

[Big Al Clopine]

This probably was you. You changed the name, didn't you?

[Joe Anderson]

I love the show, Joe. Big Al stumbled across. Yeah, I love your show, Joe. So he stumbled across our podcast this year, hoping for a little spitball. Looking to retire next year. I'm 42, single, live in New Jersey. Is this double New Jersey?

[Andi Last]

It is.

[Joe Anderson]

I think people are just getting burnt. It's winter, you know, it's cold in Jersey.

[Big Al Clopine]

Yeah, they don't go to work.

[Joe Anderson]

I'm done. He drinks little Stella in the summer and apple cider in the Winter. Net worth 2.25 million. Good for you. Geez. He's got a 401k of a million, Roth IRA of 150, brokerage account of 400 cash, $700,000 earnings. Makes $100,000 in interest and dividends is $40,000. He's got $40,000 of expenses. He's working in a toxic office and trying to see if I can afford to retire. See, I'm with you.

[Andi Last]

Is your office toxic? Really? It's that bad?

[Joe Anderson]

I feel that. That's why Big L's in Hawaii. So let's see, here's his plan. All right, this is good. I like people that he's formulating a plan, a strategy. He's like, all right. Age 43 and 51. He's gonna have $50,000 expenses. He's gonna have another $10,000 for insurance. He's got a drawdown from 700,000, cash, CDs and bonds. All right, age 52 to 62, he's going to have $80,000 in expenses. He's going to draw down his brokerage account, assuming the 4% return now worth 600,000, all right? And then at age 62, he's going to have $100,000 in expenses, drawdown. He's going to have a $15,000 pension, $14,000 from Social Security. Then he's thinking his 401 and Roth IRA will be worth $2.2 million by the time he's 62. Does this work? All right, you plan to regroup and spend some time volunteering. All right, so the other guy wants to take care of his kids. He wants to volunteer, take care of other people's kids.

[Big Al Clopine]

I like it.

[Joe Anderson]

Cool. 42 guys got 2 1/2 million bucks single. What do you think? You like this plan, Al?

[Big Al Clopine]

Well, I'll break it down. So if he's spending 40,000, which is pretty hard, to only spend 40,000 in New Jersey, I would think, but let's just go with that number. For the time being, he'll have an extra 10,000 or so, he thinks, for insurance. So that's 50 grand. You divide that into about 2.3 million liquid, that's 2.2%. Our last one was two, just a little bit higher. But it's in the ballpark. If you let's then go forward eight years, because that's what he's saying eight years from now. So he starts with 2 million. Eight years from now, he's drawing 2.2%. I don't know what it's going to grow. I just said, what if he only gets a net 2% growth just to throw in a number, and then. And then he's pulling out, you know, 50 grand per year. He actually ends up with about, I think, 2.7 million, if I did that math. Right. And. And then he's got about a 3% distribution rate. If he's wanting to spend 80 into 2.7 again, that's kind of on the margin in the early 50s, but it's not that far out of whack. And then by the time he gets to 62, he's spending a little bit more, but he's $20,000 more. But he's got $30,000 more of income. Based upon his assumptions, I think it's potentially doable to me, it's a little bit tighter than the last case, but it's possible, Tom, and we'll say some of the same things again, which is if the market does well and cooperates, I think he's going to feel good. If it doesn't do well, and we have some pretty big corrections, he'll probably want to go back to work.

[Joe Anderson]

Yeah, I'm doing. He's going to pull roughly $1.2 million out of his $2.2 million before he turns 62.

[Big Al Clopine]

Right.

[Joe Anderson]

So over half of his liquid portfolio is going to be gone before he's even full retirement age.

[Big Al Clopine]

No, no, no. That's considering no growth, and that's not reasonable.

[Joe Anderson]

I think you're way too optimistic. Have you ever heard of the last decade? Have you heard of the lost decade? How about if he's in the s and P500? What did the S&P500 do for that 10 years?

[Big Al Clopine]

You didn't listen to what I said. I said if you go with a 6% average return of a globally diversified portfolio, I don't know how about it.

[Joe Anderson]

But I think you can't assume that at 42, can you? If you're pulling that much money out.

[Big Al Clopine]

Of course not. But if you go with just basic mathematics, it's pretty close. The problem is the sequence of returns. Right. If you have. Let's say. Let's say there's a lost decade. Right. And there's no rate of return for the 10, which is. Which is what you came up with. I think in five years you're going back to work because you're just seeing your portfolio just get decimated. So, yeah, 100%. In fact, that 2.3 million, you're pulling half of it, plus it goes down 20, 30, 40%. Yeah. Any reasonable person watching this would then go back to work. Right. So I'm not saying it's guaranteed, but I'm saying it's close.

[Joe Anderson]

Yeah. I think on paper it's a lot easier just to kind of run some of this stuff, but in actuality, there's no way. I don't think this is even close to reasonable. Just because if he's fully. If he has to be at least 60% in stocks, would you say to get a 6% return?

[Big Al Clopine]

Yeah, I would.

[Joe Anderson]

Right. So at least 60% in stocks and let's say. And then the other 40 is in cash and bonds. If cash and bonds do 2 to 3%, right. Then you have inflation running at 2 to 3%, and then the stocks go down. Now Your distribution rate is not two and a half, it's probably four. I mean, I just think there's so many different moving parts here for such a long period of time. And I think that's the problem with, like, financial planning calculators. I think that's. I knew I probably shouldn't have done the show today. I told you, I'm hot, tired, spicy.

[Andi Last]

That makes for a good show. Come on now.

[Joe Anderson]

But no, I think it, it just gives people false confidence a lot of times. All right, well, here I'm going to plug it into. Who was the guy that was like, hey, well, I plugged this thing into the financial, you know, the Fidelity Financial planning calculator or whatever. And it said I was going to be great. And then you and I looked at it, we're like, yeah, I don't know. It just depends on what assumptions that you put into this. So we're assuming, okay, a 6% growth rate. That is a straight line growth rate. Well, you're not going to get a straight line 6% growth rate. You're going to get 20% and you're going to lose 10, and then you might get 4, then you're going to lose 20, then you might get 25. And then as you're pulling dollars from these accounts, plus, he has most of his money in a retirement account, and so he's going to drain 100% of his brokerage account to zero. That's going to be hard to do. You're going to see that pool of money just go from X amount to zero. Psychologically, I think it's going to be challenging for him to pull it off. But if we look at it again, if I plug this into a financial planning software, it will probably say yes. Or like a Monte Carlo, it might say, yeah, you could probably do this.

[Big Al Clopine]

Well, if you look at his brokerage account and cash and CDs, it's currently 1.1 million. So if we use your math. Right, so basically he's going to spend that, assuming zero growth.

[Joe Anderson]

Sure.

[Big Al Clopine]

Yeah. So he can do it. He gets to 59 and a half before then. So then he could pull from retirement accounts. I, I get to your point though, Joe, and the, your point is there's. So the longer the time period, there's, there's more chance for uncertainties and things that could happen that are not in your favor. And, and although it could go the opposite, we could have totally, totally, really good markets. And then you're thinking, why didn't I retire at 38?

[Joe Anderson]

Right, exactly right. It's going to show, you know, he plays this thing out and then he's got $5 million and he's like, all right. Or he's going to play this thing out and he's broke by 55.

[Big Al Clopine]

Yeah. So I think when we. When we're talking about such a long time frame. So in both examples, I was kind of doing the straight mathematics. The reality, though, behind it is you have to react to what. What cards you're dealt based upon the market, based upon what you're really spending. Right. And you may have to go back to work when you're retiring this young. It's just the reality of it. Or you may need to work part time if you start seeing your money slip away, particularly in a bad market.

[Joe Anderson]

He's done such a great job. He's 42 years old. You got $2.2 million. You could work another eight years.

[Big Al Clopine]

Yeah, but it's toxic.

[Joe Anderson]

Find another toxic environment.

[Big Al Clopine]

He needs to come live in Hawaii with me. He'll be much more relaxed and then he can keep working.

[Andi Last]

So that's going to really cause his expenses to go up.

[Big Al Clopine]

Well, that's true. Good point.

[Andi Last]

As promised back in episode 511, the 2025 key financial data Guide is now here and ready for you to download for free from the episode description. Joe and Big Al use it daily themselves. It lets them see at a glance the 2025 tax brackets, capital gains tax rates, retirement plan contribution limits, tax on Social Security, Medicare premiums and current credits, deductions, exemptions, distributions, and exclusions. All the numbers that affect your financial strategies as you plan for retirement. Just click or tap the link in the description of today's episode to download the 2025 key financial data Guide for free. Courtesy of youf Money, you, Wealth and Pure Financial Advisors.

[Joe Anderson]

All right, let's. Let's keep going here. We got Suzanne from Massachusetts. I drive a 2016 Lexus 350GS. All right. Dry wine. Dry red wine is my tipple of choice.

[Big Al Clopine]

Ever used that word before?

[Joe Anderson]

Tipple?

[Big Al Clopine]

Tipple.

[Joe Anderson]

No, that's the first time. I didn't even know how to read it.

[Big Al Clopine]

I never used that either.

[Joe Anderson]

Andy. Is that what you use?

[Andi Last]

It officially means drink alcohol, especially habitually.

[Big Al Clopine]

Oh, maybe you should know that word, Joe.

[Joe Anderson]

Oh, wow. Shots fired. What's your temple, Joe? Yeah, little tipple. My tipple of choice. Who's the lady that wrote in and was like, man, I'll drink everything, even gasoline or something?

[Andi Last]

I don't remember that one.

[Joe Anderson]

I'm 69 and work in Health Care. On a per diem basis, I make $40,000 a year. I plan to draw Social Security at age 70. Estimated benefit is $48,000 a year. I have $1 million in retirement savings with a mixture of annuities. I rent and have a small emergency fund of $100,000. I need $55,000 to $60,000 a year for the next 30 years. Am I all right?

[Andi Last]

Her emergency fund is $10,000 and her retirement savings is in annuities and 401. You said $100,000 emergency fund.

[Joe Anderson]

Okay. She's got $10,000. She needs six grand.

[Big Al Clopine]

She's got a million in retirement.

[Joe Anderson]

Yeah. She's going to have $50,000 in Social Security benefits. She needs $15,000 from $1,000,000. $1,500,000 at $69,000.

[Big Al Clopine]

1.5%.

[Joe Anderson]

I'm good with that.

[Big Al Clopine]

Oh, you're good with something. I'm good with that too. But what if she lives to 110,000?

[Joe Anderson]

She's still fine.

[Big Al Clopine]

That's no different than a 42 year old. I mean to 80.

[Joe Anderson]

Yeah, 42 year old. Well, by the time the 42 year old turns 80, the life expectancy, there's going to be a magic pill that you're going to live until like 150.

[Big Al Clopine]

Good point.

[Joe Anderson]

According to your boy.

[Big Al Clopine]

Yeah, my boy.

[Joe Anderson]

You know who I'm talking about.

[Big Al Clopine]

I know you're talking about.

[Joe Anderson]

Okay. So do you agree with me, bud?

[Big Al Clopine]

Yeah, yeah, of course. I'm good with this 1.5% distribution rate at 69. Yeah, it looks good.

[Joe Anderson]

Okay, good job.

[Big Al Clopine]

Yeah.

[Joe Anderson]

All right, we're just going to keep plowing through here. We got Maryland chicken. Man, We're a little late on this one. Happy Turkey Day, Joe. Al, Andy. Oopsies.

[Big Al Clopine]

Whoops. Yep.

[Andi Last]

Well, it just goes to show how many people have been emailing us.

[Joe Anderson]

I've been listening to your podcast since the beginning of 2020. I work alone on my chicken farm every day, so I listen to online books and your podcast keeps the boredom at bay. I knew that my career wouldn't make it until 59, so I started investing into a brokerage and traditional IRA early in life. I'm 45 now and as good as married, but not legally. We have no kids and we are not going to in the future. Just a spoiled 10 year old lab and we have expanded puppy family. I estimate in three years my contractual job will end as I would have to upgrade my infrastructure to continue and the return on investment wouldn't be worth it. Never did like it.

[Andi Last]

Anyway, another toxic workplace.

[Joe Anderson]

Toxic. So here's the breakdown. He's got, let's see, a couple million bucks. It sounds like $1.7 million in a brokerage account. He's got an IRA of 100 grand. Solo 401 of 100 grand. Roth IRA, 8K just opened. He's got two rental properties worth about $450,000. Not going to sell as they're next door to me. They profit $15,000 a year. Business assets are land worth $500,000, which I'll be happy to sell, but not right away. Zero debt and not going to get any. My income is $100,000 a year. I max out my solo 401 of about $40,000 a year. Roth IRA is $7,000. HSA $4,000. After my job ends, I'd like to withdraw an amount to get to the top of the 12% tax bracket or to get to the top of 12%. FIFO on the brokerage is 170% earned. FIFO on the brokerage, 170% earned.

[Big Al Clopine]

I think what he's saying is first in, first out. Yeah, well, yeah, first in, first out. But I think what he's implying is that most of the brokerage was. Was growth and earnings. That's all I get from that.

[Joe Anderson]

He's got 170% rate of return over the years. Cumulative return.

[Big Al Clopine]

Well, I suppose you could look at it that way. Yeah. So if his account was whatever, 300,000, 170% is earnings and the rip. I don't know, who knows?

[Joe Anderson]

All right. He's not a fire guy, but I love FI Financial independence.

[Big Al Clopine]

Yeah.

[Joe Anderson]

I would like to use up the assets potentially because I have no heirs. $80,000 withdrawal per year is what I'm looking. Plus $80,000 withdrawal per year Is what I'm hoping for. Plus to 15,000 for the Randalls. Question. If I never earn another dollar, how much can I withdraw every year? What would be the best strategy to do so, just as Spitball, please. I drive a Silverado and a top off Jeep Wrangler. I like cruise lights, Sam Adams, and occasionally a little vodka and pineapple over crushed ice. Make up a funny name for me, please. Don't worry. I'm going to stop listening if you don't answer my spitball.

[Andi Last]

That's why he got called Maryland Chicken Man.

[Joe Anderson]

The Chicken Man. Maryland Chicken Man.

[Andi Last]

Tells you everything you need to know.

[Joe Anderson]

Marilyn Chicken.

[Big Al Clopine]

So we got another person that wants to retire young.

[Joe Anderson]

Joe, if I knew this was a fire show, I wouldn't have shown up. Who is that guy? Qpert?

[Andi Last]

Yes.

[Joe Anderson]

Do you think he's broke?

[Andi Last]

I don't know. Let's see if Cupert is out there still.

[Big Al Clopine]

Was he the real estate guy?

[Joe Anderson]

Yeah. That just leveraged everything?

[Big Al Clopine]

Yeah.

[Andi Last]

He did Airbnb and all that, didn't he?

[Big Al Clopine]

Something like that, yeah. Okay, so Joe, to recap, he's 45, he wants to retire in three years. 48. Got 1,900,000. I'm just doing the math. Before I answer. I'm just doing the math. So three years, 6% return. He's adding about $50,000 a year in his savings. 401k and Roth, he'd have about $2,400,000. And let's say, like what? You know what, what would be a distribution rate, mathematically, sorry. For a 48 year old? I'm going to say two and a half percent.

[Joe Anderson]

Yep. I agree.

[Big Al Clopine]

So I guess I get 60 grand and he's got $15,000 from a rental. I think he can spend 75. That's what the math says. But then trying to think of how you're going to respond to that. Yes. It depends. It depends on what really happens with the market retiring this young. There's a lot of variables that may cause you to have to go back to work if the market doesn't cooperate or if you spend more than you think, or any number of things.

[Joe Anderson]

Well, this guy is. I think he's a little bit different than the other two.

[Big Al Clopine]

In what way?

[Joe Anderson]

Because he's like a small business guy.

[Big Al Clopine]

Yeah. But he doesn't want to work.

[Joe Anderson]

He works on a chicken farm.

[Big Al Clopine]

He doesn't want to keep working because he's got to reinvest in the farm and he got to be expensive. And he doesn't even like what he's doing.

[Joe Anderson]

Right. But he's working with chickens. He works on a chicken farm. He doesn't have a cushy office job that's making, you know, a couple hundred thousand dollars a year with a very toxic office environment. He's got a toxic environment because the chickens are like.

[Big Al Clopine]

Have you ever worked with chickens?

[Joe Anderson]

Probably don't smell great.

[Big Al Clopine]

That would be hard to work with chickens for 30 years.

[Joe Anderson]

Oh, man. But what I'm saying that he's got rentals, the debt is paid off, he's got cash flow, he's building assets that will give reoccurring revenue. I think if he did this, and I don't think he would do this, I think he's gonna start another business. I think he would do another side. Hustle. I think this guy would do different things, and I think he's capable. A lot of people can't build a business or, you know, do things, I think like the chicken man does. If you work in an office and you have a W2 job that made your skill, which is phenomenal, I think that's a. That's a skill set where you got someone that can kind of. He's making a lot less money, mind you, but I think he got. He might have a little bit more grit where, you know, I don't want to go back to the office, but I'm going to, you know, raise llamas.

[Big Al Clopine]

Right? Yeah. And I'll. I'll feed off of what you just said. And that is people that are self employed. You have good years, you have bad years. You've learned how to live within that as opposed to someone that gets the same salary year in, year out, maybe a 3% raise or whatever. It's a little tougher to make those. Those quick course corrections. So I think I'm agreeing with what you're saying.

[Joe Anderson]

Oh, you think you are. All right.

[Big Al Clopine]

Yeah.

[Andi Last]

Okay. So to address the question of whether or not Qbert retired, he apparently did in June of 2023, and he is.

[Joe Anderson]

His last blog.

[Andi Last]

No, he is still blogging. His most Recent one was December 27, and it says retiring early. Better get familiar with Roth conversions.

[Joe Anderson]

Still a big fan of the show, I bet.

[Big Al Clopine]

So probably. I think we're done, right, sir?

[Joe Anderson]

Yeah. You know what I did? I went ice skating with my kids.

[Big Al Clopine]

Yeah?

[Andi Last]

Were you actually on skates?

[Joe Anderson]

I was on skates, yes, but it wasn't ice. It was plastic.

[Big Al Clopine]

Really.

[Joe Anderson]

I was at the hotel in Del Mar, so we had dinner. It was nice. Kids wanted to go ice skating. I'm like, I'm from Minnesota. I can ice skate. Guess what? Nothing. I cannot ice skate. I took a header. I hit the ground so hard, and I bruised, like, three ribs.

[Andi Last]

Oh, no.

[Joe Anderson]

I've been miserable for, like two and a half weeks. I can't sleep playing golf. I was like, hey, we got some time off of work. I'm gonna play golf every day.

[Big Al Clopine]

No, no, no. Well, that's too bad.

[Joe Anderson]

Yeah. So I got an excuse for being a little ornery today.

[Andi Last]

Ice only. Next time, Joe, maybe you need ice on your side.

[Big Al Clopine]

It makes for a better show, I think. Just keep getting. Keep getting injured.

[Joe Anderson]

Yeah. Sounds good. All right. Very good. Thanks, Al. Thanks, Andy. And have a good trip, Al. Be safe in Australia and New Zealand and everything else.

[Big Al Clopine]

I'll be back in a couple weeks.

[Joe Anderson]

Yeah, we'll see. Well, probably a month.

[Big Al Clopine]

Yep.

[Joe Anderson]

Okay, we'll see you later.

[Andi Last]

Listen next week for more Spicy Joe as the fellows football retirement for Mike and his wife in Tampa and for Kate in California. They'll also answer some Questions from our YouTube viewers on Roth conversions, tax planning and gold. Do us a favor and help other people find ymyw. Leave your honest reviews and ratings for your Money, you, Wealth and Apple Podcasts and all the other podcast apps that accept them. Listen or watch us on Spotify or YouTube and meet me in the YouTube comments to join in the conversation. You'll find all the necessary links in the episode Description if you're worried about outliving your retirement savings and wondering if you're on track, get a free financial assessment from the experienced professionals on Joe and Big Al's team at Pure Financial Advisors. They'll go beyond a simple spitball to give you a comprehensive analysis of your entire financial picture and your risk tolerance to help you create a customized retirement plan that aligns with your needs and goals. Click or tap the free assessment link in the episode description or call 888-994-6257 to schedule your free financial assessment either in person or online. Online, you, Money, you, Wealth is presented by Pure Financial Advisors, 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.