You Have Enough to Retire Before 60. Why Are You Still Working? - 580

Summary

Your Money, Your Wealth – Episode 580

You Have Enough to Retire Before 60. Why Are You Still Working?
Release Date: May 5, 2026
Hosts: Joe Anderson, CFP® & Big Al Clopine, CPA

Episode Overview

In this episode, Joe and Big Al tackle listener questions from high-achieving savers wrestling with the idea of retiring in their 40s or 50s—some with eight-figure portfolios—yet unsure if, how, or when to walk away from high-pressure, lucrative careers. Along the way, they break down safe withdrawal strategies, discuss early retirement withdrawal rules, poke fun at job titles and cartoon references, and help listeners deal with the emotional side of walking away from success.

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Key Segments & Spitball Analyses

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1. Martha from DC: "Is My Soul Worth $2 Million a Year, or Can I Foster Puppies Now?"

[00:56–16:07]

Background:

• Martha (44): Earns ~$2M/year; husband George is a stay-at-home dad.
• Family plans: Sell primary home (equity: $1.6M), downsize, keep/use/rent $2.5M lake house.
• Savings:
  • $2.8M in cash (treasuries),
  • $665K brokerage,
  • $670K Roths,
  • $2.4M 401(k)s,
  • Large cash balance plan, mega backdoor Roths.
• Social Security estimates: Hers $5K/mo at 70, his $1.2K/mo at 62.
• Wants: $350K–$400K/yr spending to at least age 95.
• Considering: Quit full-time ASAP vs. working part-time. Fears the “withdrawal strategy.”

Discussion Highlights:

• Humor and relatability: Banter on wine, blue cheese olives, and George Washington references set the comedic, accessible tone that makes the show a "best of" pick (e.g. "That sucking sound you hear is my soul being pulled out of my body by my employer." – Martha, [03:48]).
• Core question: “What’s the earliest age you think I can retire, or what’s the strategy if I pare back hours?” ([05:51])
• Withdrawal rate math:
  • At 44 with $6.5M: Safe withdrawal $200K–$220K/yr (3–3.5%), shy of $350K target.
  • “You want to spend $350K? Then you need to part-time work another $150K–$200K to cover it.” – Big Al, [08:48]
  • Work 6 more years ("til 50"), save $650K/year → Projected nest egg: $13.8M. 3% withdrawal = ~$414K/yr, matching current target. ([09:03–09:49])
• Psychological trade-off: “Giving up a couple million at 44 years old—that’s a lot. Can you ever replace that?” – Joe, [10:07]
• Flexibility: If miserable, could cut lifestyle sooner; working part-time could bridge the gap and guard lifestyle goals.
• Withdrawal sequencing: Spend cash & brokerage first, do Roth conversions from 401(k)s while in lower tax brackets, let Roths grow for late retirement ([15:13]).

Notable Quotes:

• “Saving money is one thing. Taking money out is totally different.” – Joe, [11:03]
• “There’s all kinds of paths—whatever you decide, looks really good, congratulations.” – Joe, [15:00]

Key Takeaways & Timestamps

• Retiring now: $6.5M supports ≈$200K/yr, less than $350K–$400K desired ([08:04]).
• Ideal path: Work full/part-time up to 50 for $13M+, ensures chosen lifestyle ([09:03–09:49]).
• Withdrawal order: Cash/brokerage → Roth conversions → Roth for late years ([15:13]).

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2. Bandit & Chilli: Burnout vs. Bullishness; Early Retirement Math

[16:07–35:24]

Background:

• Bandit (51) and Chilli (48) with two kids (Bluey & Bingo).
• Portfolio: $5.1M ($2.4M brokerage, $1.8M 401k, $260K his Roth, combined IRAs ~$680K), 40% company stock ("archaeology instruments"), low cost index funds, $200K cash, $1M home, $200K mortgage @1.75%.
• Income: Bandit $200K, Chilli $70K.
• Annual spending: $110K (plus $30K for health care if Bandit retires).
• Plans: $1.2M allocated to moving up in house & kids’ future college.

Discussion Highlights:

• Pop culture fun: Name references from the cartoon "Bluey" and TLC’s "Chilli"; segues into generational jokes ([17:02–18:09]).
• Math on retirement feasibility: If retire at 51 (Bandit):
  • Remove $1.2M for college/house -- leaves $4.1M.
  • 2.7% withdrawal rate for $110K spending (solid); with $30K healthcare, 3.4% (still generally safe for mid-50s) ([22:24–23:08]).
  • “I think it could work. It’s a little tight...” – Big Al, [23:09]
• Gap-bridging strategies: Discuss options:
  • Live off brokerage before 59.5.
  • 72(t) SEPP from 401(k): Could work if managed right ([24:08–26:32]).
  • “I’d probably live off the brokerage and do Roth conversions, try to get that tax-deferred account down.” – Big Al, [25:43]
• Rule of 55 confusion clarified: Must separate from service the year you turn 55 to do penalty-free withdrawals from your 401k ([31:23–33:41]).
• Realities of job burnout: Despite being “bullish” on the company, the drain of the job is real. Discuss possibility of working part-time, using spousal insurance if Chilli keeps working ([35:07]).

Notable Quotes:

• “Bandit is asking for his personnel file. Curious about the rule of 55. HR says, ‘It can’t happen soon enough.’” – Joe, [32:16]
• “If you’re planning on retiring, I would not want an all-stock portfolio.” – Joe, [29:00]

Key Takeaways & Timestamps

• Retire at 51? Feasible if spending is contained, wife works a few years ([22:24–23:08]).
• Distributions >59.5: SEPP (72t) or live from brokerage + Roth conversions ([24:08–26:32]).
• Rule of 55: Only works if you retire in the calendar year you turn 55, and only from workplace plan ([31:23–33:41]).
• Portfolio: Add bonds for volatility, not just high-yield cash ([28:05–29:38]).

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3. Kevin & Winnie: Deferring Comp, Big Conversions, and the “Wonder Years”

[36:30–43:41]

Background:

• Ages: Kevin (58), Winnie (57), Chicago area; 4 kids (1 in HS, $200K college savings).
• Assets: $4M qualified (only $85K Roth), $60K HSA, $650K brokerage, $1M mortgage-free home.
• Future cash: $325K deferred comp in 2027, then $310K/yr x 10 years starting 2028.
• Spending Goal: $225K/yr after-tax.
• Social Security: $5K/mo (Kevin), $2K/mo (Winnie) at 70.

Discussion Highlights:

• Retirement date question: Can Kevin retire 12/31/2026? “Easy—based on assets and deferred comp, absolutely doable.” – Big Al ([39:48])
  • Deferred comp covers most expenses for 11 years (2028+), letting other money grow (~$9M–$10M projected at 6% annualized by age 70).
• Social Security strategy: Winnie likely should file for spousal around FRA instead of waiting to 70 (“You might want to look at a different claiming strategy for both of you…” – Joe, [41:20])
• Roth conversion plan:
  • Large required distributions incoming; convert up to or above the 24% bracket, especially with market volatility.
  • “You would want to convert all day to the top of the 24[%].… Might even go to 32 when the market’s down.” – Joe, [42:01], Big Al, [43:41]

Notable Quotes:

• “The deferred comp kills you from a tax bracket…it makes it tricky.” – Big Al, [41:47]
• “You have to run the scenarios, but on a back-of-the-envelope: 24%, maybe even 32% if there’s a down market and the recovery comes in the Roth.” – Big Al, [43:41]

Key Takeaways & Timestamps

• Retiring at 59: Green light due to comp structure ([39:48–40:10]).
• Roth conversion: Yes; up to 24% bracket at minimum, more if high account growth ([41:49–43:41]).
• Social Security: Consider optimized spousal strategy ([40:54–41:20]).

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Practical Retirement & Tax Strategies (Throughout)

• Safe withdrawal rates: 3–4% generally safe, but consider personal market risk, longevity, goals.
• Roth conversions: When income drops (after retirement, part-time work), fill lower brackets before RMDs force high-tax withdrawals.
• Order of withdrawals: Spend taxable/brokerage first, then tax-deferred (with conversions as feasible), let Roths grow.
• Rule of 55: Penalty-free 401(k) withdrawals only if you separate from service after turning 55, and only from employer plan.
• 72(t)/SEPP: Early IRA/401(k) withdrawals via fixed distributions, but can be complex and inflexible.
• Portfolio allocation: Don’t skip bonds if retired or near so—preserve capital for volatility, not just returns ([29:00–29:38]).
• Customized plans: One-size-fits-all rules (like 4% rule) are guides, not gospel. Actual drawdown pattern should be adaptive.

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Memorable Moments & Quotes

• “That sucking sound you hear is my soul being pulled out of my body by my employer.” – Martha, [03:48]
• “You want to spend $350K? Then you need part-time work for another $150K–$200K.” – Big Al, [08:48]
• “Saving money is one thing. Taking money out is totally different.” – Joe, [11:03]
• "Bandit is asking for his personnel file. HR says, 'It can't happen soon enough.'" – Joe, [32:16]
• “If you’re planning on retiring, I would not want to have an all-stock portfolio.” – Joe, [29:00]
• "You have to run some different numbers with different assumptions...are you trying to maximize ultimate wealth...or just negate taxes as much as you can?" – Joe, [43:00–43:41]

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Conclusion / Takeaways

• Even high earners with “enough” still struggle with letting go, withdrawal strategy, and lifestyle transitions.
• Technical tax and withdrawal rules (Rule of 55, 72(t), sequence of conversions) are important but need to fit the whole life picture.
• Flexibility—either emotionally or financially—makes early retirement far more achievable.
• If you’re feeling “soul sucked,” these spitball analyses show you probably have more choices (and time) than you think.
• Personalized planning, not rules of thumb or pundit headlines, is the key to successful, sustainable, happy retirement.

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For more spitball analyses or to get your own numbers crunched, visit YourMoneyYourWealth.com.

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End of episode summary.

Transcript

[A]

Today on youn Money, you, Wealth Podcast 580, Joe and Big Al are spitballing for some folks who've done the work, hit the numbers, but aren't sure if they can really walk away yet. Martha in D.C. is 44 and says her soul is being sucked out of her body by her employer. When can she stop working full time and foster puppies instead? Bandit is bullish on his company's stock in archaeology instruments, but not so much on his work itself. Kevin is staring down a wall of deferred comp and needs a spitball on how aggressive his and Winnie's Roth conversion strategy should be before RMD's hit. Can both Bandit and Chilli and Kevin and Winnie call it quits this year? Do us a favor and leave your honest rating and review in Apple Podcasts. It's a big part of how new listeners find a finance show that doesn't sound like a tax seminar. I'm executive producer Andi Last, and here are the hosts of youf Money, you, wealth, Joe Anderson, CFP and Big Al Clopine, CPA.

[B]

We got Mar, Martha from Washington D.C. joe, Big Al, Martha here from Washington D.C. your show is cooking because Andy has y' all rockin'.

[A]

Oh, thank you Martha.

[B]

I found you guys eight months ago and eagerly await new spitballs every Tuesday. Enjoy listening to the show after pouring a red glass of wine, drawing a warm bubble bath in reclining, listening to Big Al's smooth baritone buzz.

[C]

Is that what you do when you take a bath?

[B]

While Joe's hilarious commentary keeps me laughing. Well, thank you Martha. You do remember we can do tax chat.

[C]

I know I still could. I got lots of energy still.

[A]

Should be in that bathtub for a long time.

[B]

Yeah, yeah, Martha in the bathtub with

[C]

little wine listening to you and me.

[B]

Let's set the stage and 44 drive a Toyota Sienna minivan. George is also 44 and drives a Ford F150 Raptor. I believe those are quite fast if I know my Ford F150s well, they usually are.

[C]

And they're strong. They can pull a lot of weight.

[B]

Probably sounds like a beast.

[C]

Probably.

[B]

When I'm not drinking my red wine, I enjoy vodka martini with a little blue cheese olives. The dirtier the better. He likes multiple smoked old fashions or a neat pour of Pappy.

[A]

Yeah, what is a smoked Old Fashioned?

[B]

A little smoky whiskey or rye.

[A]

Got it.

[B]

And then a little Pappy. Pappy Van Winkle.

[C]

Oh well, you would know.

[B]

Love some happy over the holidays. Do you like blue cheese olives Big Al.

[C]

Yes, I do.

[B]

I got banned from drinking vodka because of blue cheese olives.

[C]

Oh, really?

[B]

Yes.

[A]

Because of the olives themselves.

[B]

I don't know. I was drinking very dirty martinis with the blue olives.

[C]

I'm guessing it was the vodka that was the problem.

[B]

I don't know. They were pretty good. They're going down.

[A]

Were you pitching the olives across the restaurant or something?

[B]

No, I don't. I wish I could remember what I said to my lovely bride.

[C]

Okay. She probably knows.

[B]

Yeah. Was several years ago. So I haven't touched it since. I don't know. I just kind of stick to the old easy basics, you know?

[C]

It works, right? Yeah.

[B]

Of course. Light. You don't get in trouble.

[C]

Yeah, it's. It's. It's easy.

[B]

You have. You're trying to be fancy. Next thing you know the wheels come off. The question. I love my job, but I find myself thinking about retirement daily.

[C]

Wow.

[B]

She's 44.

[C]

She doesn't like it that much. Then.

[B]

That sucking sound you hear is my soul being pulled out of my body by my employer.

[A]

Wow.

[B]

I stress about having many mouths to feed at my office. I'm always hustling for new work. I barely see my kids. And I'm looking for a reset. In true Big Al fashion, that might look like working part time. Once I pull the rip cord on full time work. I'd like to know your thoughts on what age I can stop working full time and do one of 1. Retire, work part time or foster puppies. I like Martha's sense of humor here.

[C]

Yeah. Did you catch that? It's George and Martha in Washington D.C.

[B]

is that George Washington?

[C]

I think so.

[B]

Look at you.

[C]

History, Bob. That's because I haven't had them.

[A]

Just to set the scene. That's what they look like.

[B]

Yeah. Very beautiful couple.

[C]

Yeah. Lovely.

[B]

Handsome. Martha is a very handsome woman.

[C]

Yeah.

[B]

All right, the numbers. I make approximately $2 million a year. My husband makes nothing. Oh, Martha, sugar mama. He manages the kids in the house and drinks old fashions. I started contributing $70,000 per year to the mega backdoor Roth. And we also put $14,000 combined in the backdoor Roths. I also have a cash balance plan and I contribute $200,000 a year. I'm planning to save $350,000 per year starting 2026 to add to my brokerage account. Assuming a 3% housing value growth rate, we have $1.6 million in equity in our primary home. When my last child goes to college, we will sell this place and downsize to a smaller town in the countryside. We also have a link front rental home that we rent and use ourselves. It's paid off and worth about $2,500,000. If we ever had to borrow money in a pinch, I'd borrow against a leg home. We have the following in our accounts. $2,800,000 in cash.

[C]

Really?

[B]

It's in treasuries. $665,000 in a brokerage account, $670,000 in Roth accounts, $2,400,000 in 401s. He's barely worked, so his Social Security will be $1,200 a month at 62. Mine will be $5,000 a month starting at 70. The goal? I like to start retirement with the ability to spend 350 to $400,000 per year. I'm sure that will change as we age. My family lives. My family lives to be old, so I'm planning to at least 95. My thoughts. I'm thinking of starting retirement by spending down the cash and brokerage account first while doing Roth conversions out of the 401ks. RMD. RMDs could be large given our current savings. What's the earliest age that you think I can retire? What if I work part time at the same job? My pay gets reduced pro rata based on how many hours I work. I have no desire to work full time until I'm. Let's see. I have no desire to work full time until I'm 55. I'd rather go part time and take the pay hit to try and stretch to 55. If you think I need to use the rule of 55 to assess my retirement accounts early. At what age would I need to start dipping into the retirement accounts? The withdrawal strategy is intimidating, but I need to find a way out of this rat race to get more time for myself, my kids and for doing good in this world. My husband can't be the only one sipping drinks down the dock or taking up golf.

[C]

She wants to have a little fun.

[B]

All right, cool. Well, I wonder what she does. Attorney.

[A]

Well, and she gets paid by the hour and she makes 2 million.

[B]

What is that gig, an attorney? Could be.

[C]

Could be. Yep.

[B]

Hourly rate?

[C]

Could be. Yep. Or maybe she gets paid for the clients she brings in and other people work on them. You know, who knows? Anyway, I've got a couple thoughts here, Joe.

[B]

Okay. She's 44. She wants to retire ASAP.

[C]

Okay.

[B]

Because her soul is getting sucked.

[A]

Is being sucked out.

[B]

Sucked out of her life by her employer.

[C]

Well, first of all, when I hear something like that, what does it look like if you retire tomorrow? And they got six and a half million, so that's amazing. Right. And if you look at six and a half million, although it's a young age, 44. Right. I just ran at a 3% distribution rate, that's 200,000. You could say that's even too high of a distribution rate. But the spending you could do right now, if you retire right now, right today, without part time work is maybe a couple hundred thousand or thereabouts. So if you want to spend 350, then you need part time work for another 150 or maybe 200,000 to cover it. So that's one way to think about it.

[B]

Mm.

[C]

Another way is, gosh, you're making a lot of money, you're saving a lot of money. You're saving 650,000 a year. You work a few more years to get yourself set up for life. You have longevity as long as you can stand it. And so I ran a Joe for six years at age 50.

[B]

Okay.

[C]

Seems like a reasonable goal.

[B]

Right.

[C]

Six percent, six years, add 650,000, you're starting with 6.5 million. You get. You'll end up with 13.8 million. And then you can pretty much do anything you want to right now at that point. If you just look at spending at that point, 3% of 13.8 million is 414,000, which in today's dollars is 350, which is right on target with what she wants to do. So I would be pretty tempted to do that. But that may not be the answer you want to hear. I mean, it's perfectly fine when you're making this much money and you have the ability to ration it down, have more free time and still make a good amount of. I would certainly be tempted to think about it.

[B]

Yeah. I think our number's 12 to 13 million.

[C]

Yeah. Based upon the spending.

[B]

So that's the target. And as long as you can until you get the target. Because giving up a couple million dollars at 44 years old, that's a lot.

[C]

Yeah. Can you just, can you ever replace that?

[B]

It's going to be top. Can you put your mind somewhere else?

[C]

Well, just knowing you could retire at 50 and know you could have be set up for life, I mean, maybe that helps you get through it.

[B]

Yeah. I mean, let's call it close to $7 million. They're going to sell, they're going to downsize. I don't know. Is there College costs in here they have the two and a half million dollar lake house. Could they downsize down by a different lake house? I don't know. I mean there's a lot of different ways that you can slice this. So if she really wants to hunt tomorrow, I think there's ways that she could.

[C]

There is absolutely ways to do that.

[B]

If you're used to the lifestyle and you want to spend 4000-003504-00000 after tax in retirement. Yeah. Then you're going to have to work probably another five years.

[C]

Yeah. And I wasn't counting Joe, Social Security, because they're 44. So it's a ways up. Sure.

[B]

Let's see. Yeah, I don't know. I mean, yeah, the withdrawal strategy is intimidating because saving money is one thing. Taking money out of your accounts is something totally different. And I think we plan to be a little bit conservative on the show of just using 3,4% distribution rate. We get a lot of emails from you of saying, oh, that's too conservative. This and that. Yeah, I get it. Because it's more of a dynamic withdrawal rate is really what you want to do. The 4% rule is kind of a joke in my opinion, but we use it as a spitball just to give people an idea of where they should be thinking about as a number as they approach retirement. I think you would want to plan more conservatively that then aggressive and potentially run out of money. So once you start retirement or you leave your job, how you take money out is going to be a little bit different each year of what assets that you sell, what accounts that you take the money from, what is the market going to do, how do you manage the risk, how do you manage your taxes, how do you continue to get tax diversified from a Roth conversion standpoint, or do you take advantage of the 0% capital gains rate? So there's a lot of different things that you want to consider as you start taking distributions or start creating that retirement income. But I think for a spitball, we're just kind of looking at back of the envelope. Are you on track? Are you close? Are you not close? And what are some of the things that you should be thinking about in regards to what's your number? Most people want to, you know, what's your number? That commercial when people would walk around and they had that big number above their heads?

[C]

Or do you.

[B]

I mean that was like almost 20 years ago.

[C]

Yeah, it was.

[B]

But I think still people have that in mind. I don't care if their number is 50 million. Martha's. Here's almost 15 million. Some people's number is going to be a million. Some people's number is going to be 200,000.

[C]

Yeah, if that. Some people don't have a number because they have a pension.

[B]

Yeah, they have a pension. So it's really figuring out what you need to be doing with your money to figure out what strategy and plan moving forward. So if she wants to work the next five years, okay, keep, continue to save what you're saving. But I mean that's only kind of half the story, right? There's a lot of other techniques and strategies that she should be thinking about that is probably too technical and too in the weeds for this program.

[C]

Well, there's a lot here. I mean a lot of times when people get used to spending this much, there are ways to cut. If you really don't want to work anymore or if you want to work a lot less and make a lot less, there are ways to cut. There are part time income. You know, I would be tempted in this case. I'm just taking her word for this that she can work less and make less. Why not Think about that. If you want more free time, maybe that would allow you to work another six years and sort of get set up for life. Just a thought.

[B]

Al, you're making $2 million a year. You leave and then you get a job making 150.

[C]

No, no, you wouldn't do that. You would just reduce your hours where you're currently at.

[B]

How hard would that be?

[C]

I don't know.

[B]

She's making like 150 a paycheck.

[C]

That's why they're spending 350 to 400.

[B]

Then it's like, okay, well I'm going to go part time and make 200,000. Yeah, you would think 200,000 is. Yeah. Even though it's a ton of money. But if you're making 2 million, $2.2 million a year.

[C]

Yeah.

[A]

I mean she could just go to working halftime and still be making a million a year.

[C]

Well, if, if, if she's right, if, if this is scalable and we don't, we don't know for sure. But anyway, if it were me, her paycheck's 85,000.

[B]

If it were, she gets paid 26 times a year.

[C]

If it were me, I would, I would work another few years to get set up for life. And I, and I get it. You want to be with your kids while they're younger. I 100% get that. But you know, sometimes I think to get the lifestyle that you want in retirement. And this is. And we're talking about age 50, not. Not retiring at 70. Right. So.

[B]

Yeah, well, yeah, they don't have to buy Pappy.

[A]

Yeah.

[C]

Do without Pappy. Yeah.

[B]

I mean, that's expensive stuff.

[C]

Got it. Okay. Anyway, it looks really good, and whatever you decide, there's all kinds of paths to do it, but that's what we got.

[B]

Congratulations.

[C]

It's a great story.

[A]

Spend down the cash and the brokerage first. Do Roth conversions out of the 401k while you're in a low tax bracket and let the Roth keep growing tax free for later. Tax deferred, taxable tax free. The order you pull from each one in retirement can be the difference between paying the IRS a fortune and paying them almost nothing. We've got a free guide that walks through exactly how this works with an example showing how a couple can pull 100 grand of retirement income and owe almost zero in federal tax. This guide is called the Tax Free Retirement Guide, and it covers the three bucket framework. The tax brackets you need to know how Roth conversions fit in, plus tools most people overlook, like HSA is, qualified, charitable distributions, and the home sale exclusion. Click or tap the link in the episode description to download the Tax Free Retirement Guide for free. When you request it, you see that dropdown that says, how did you hear about us? Choose podcast.

[B]

All right, let's. We got a long email here. It's going to be a doozy. Hi, Joe, Al, Andy, Bandit here from California. Bandit.

[A]

Like, do you know that reference? That's. That's Bandit and. No, that's Bandit and Chili from the cartoon Bluey, which is an Australian cartoon which I haven't ever seen because I'm not of kid age, but apparently it's hugely popular here and in the U.S.

[C]

oh, you've seen that?

[B]

Yeah, My son watches Bluey.

[C]

Yeah. So you know.

[B]

Yeah, he's got a little Bluey.

[C]

Little sweatshirt.

[B]

Yeah.

[A]

And you don't know the Bluey theme song?

[B]

Nope, I do not. I do not know the Bluey theme song.

[C]

Probably better not to.

[A]

Yeah, well, that's Bandit and Chili there, so.

[B]

So if it's Bandit, my generation is smoky in the. Right.

[C]

Yeah, exactly. That's what I thought, but I was wrong. All right.

[B]

Love your show. Superbly entertaining and educational. I'm an avid listener. Since finding you earlier this year and enjoying your hilarity during my commute, I've been bringing all your episodes up with the help from your fantastic search function. Thank you.

[A]

For somebody that actually uses the website. And it works. That's amazing.

[B]

Unbelievable.

[C]

That's great.

[B]

Thank you for sharing your wisdom and putting a smile on my face. Well, thank you very much for that compliment. I drive a 2008 Toyota Prius. Chili. My wife. See, when I hear Chili, you think.

[A]

Yes, I do. You think. What's their name? Tlc. Thank you. Yes. T boss. Chili and can't remember the third woman's name. And I think Left eye Lopez. That's right.

[B]

Left side Lopez that died and burnt down Andre Reed's house.

[A]

Yes, yes.

[B]

Yeah, yeah.

[A]

But Chili from tlc.

[B]

Yeah, yeah.

[C]

I think of a potluck at a church on Sunday.

[B]

All right, okay. So chili drives a 2008. What is that? Sakon Sion, I think.

[A]

I think it's a Scion. Yeah.

[B]

Scion xp. Neither I nor my wife drink alcohol. Never enjoyed the taste, to be honest. But we love a good smoothie. Or Johannes shared with Bluey in Bingo.

[A]

I think it's Yo Nanas.

[B]

Yo Nanas. Oh, okay. Yo Nanas. What the hell is yo?

[A]

Okay, it's a thing that makes a smoothie, frozen dessert thing.

[B]

This is. This is gonna be a tough one. Yeah, keep going, Bandit and Chili. Yes, you can, Yanas. Yo Nana, Yo Nana With Bluey and Bingo. Especially on a hot summer day.

[C]

That first paragraph already.

[B]

I know. This is killing me.

[C]

And here we go.

[B]

All right, I'm 51. Chile 48. We have $2.4 million in a brokerage majority of my company stock. Do an ESPP plan in the Archaeology.

[A]

Archaeology Instruments.

[C]

Yeah, yeah, yeah.

[B]

I'm very bullish on Archaeology Instruments in my company stock. Long term, even if there may be volatility in the media future. FYI, please don't mention the stock.

[C]

Yeah, okay, they got that. All right.

[B]

One point.

[A]

Just so you know, this is what archeology instruments look like.

[B]

Yeah, sure. He's digging up what, dinosaur?

[A]

Yeah, apparently so. Yeah.

[C]

All right. Yeah, okay.

[B]

He's bullish.

[C]

Yeah, bullish on that.

[B]

All right, $1.8 million sits in a 401, but I only have $260,000 in a Roth. Chile has $400,000 in her traditional IRA and 280 grand in her Roth. That total is approximately $5.1 million with 40% company stock, 60% low cost index funds. We also have $200,000 in savings, money market accounts and CDs. No debts other than the $200,000 mortgage, which will end in 2035. We won't be paying it off early since the interest rate is 1.75 home is worth $1 million. So they got 5 million bucks, couple hundred thousand in cash, and a home worth 1 million. My current salary is $200,000. Chili's is $70,000. Expecting to take Social Security at age 70 for me, 67 for Chili. Social Security calculator estimates $60,000 annual for me, $24,000 for her annual expenditures, $110,000 for the full heeler family. We'll assume the same at retirement. Additional expenditures include plans for moving from our townhome to a single family home, plus bluey and B, in college when I'm 55 and 57. We'd also allocate $1,200,000 for that. Appreciate your spitfall in the following questions. They're going to allocate $1,200,000 to college. Is that what he's.

[C]

Well. And buying a home. A better home.

[B]

And the home. Okay.

[C]

Yep.

[B]

All right, question one. My original plan was to retire at 55, mainly so I can access my 401 and leverage the rule of 55. But job satisfaction has plummeted. I thought you're bullish on the dinosaur bones.

[C]

Bullish for the investment, but not the job, apparently.

[B]

Yeah. I wonder, does he sell them at the trade shows? Maybe dinosaur archeology instruments.

[C]

Have you ever thought of buying one of those?

[B]

I was thinking about going to the San Diego Convention Center.

[C]

You know, I think they're having a convention this week.

[B]

Assortment.

[C]

Yeah, right.

[B]

Instruments.

[C]

Yep.

[B]

My job satisfaction has plummeted, so I'm wondering if I can retire early. 2026, if feasible. Shelly would continue to work under her until 52. She enjoys her work, unlike me. If I retire 2026, there will be an additional $30,000 annual cost for medical insurance from age 51 to 65. This would mean drawing down the brokerage until 59 and a half for expenditures, medical, Roth conversions, and adding up our savings for safe money, maybe three years worth. All right, so how much are they spending? I didn't catch that.

[C]

Yeah, they're spending $110,000. And let me put a little math behind this for you.

[B]

$10,000. They got $5 million. They want to spend $110,000 plus $30,000. Call it 140,000. 150 plus tax, plus the cost of living.

[C]

Yep. All right, so if you take their $5.3 million that they have right now, they want to back out 1.2 million, because that's for college and a better home. Leaves them 4.1 million. Okay. And so without the insurance, health Insurance, that's about a 2.7% distribution rate. That's great. Even at that young age of 51. With insurance, though, $30,000, it's about a 3.4% distribution rate. But Bandit said that Chile's going to keep working for three or four more years.

[B]

She makes 70.

[C]

She makes 70. So that at least covers that. I think it could work. It's a little tight. I think there's a lot more cushion if they work till age. He worked till age 55, but I think it's possible.

[B]

Yeah, I like the numbers. Five and a half million dollars. Hell of a job saving.

[C]

Yeah. And 51 and not spending too much.

[B]

$110,000 is what they want to spend. She makes 70. The math works pretty good.

[C]

Yeah, but that's only for three or four more years. And so they're going to have a long time before Social Security. That's my only concern.

[B]

Yeah, I suppose it's all dependent on if they really spend 110. I don't know. That's.

[C]

And every time we do this, it's dependent upon the market and the spending and the type of investments. I mean, there's a lot of variables here.

[B]

What can you do part time in the archaeology instrument?

[C]

I think you can be a trainer for the other salesman.

[B]

Got it.

[A]

Part time digger.

[C]

Part time digger.

[B]

Question two. Simplest strategy for bridging the gap until 59 and a half is using a brokerage. Would you also consider 72T SCPP out the 401? All right. For those of you that don't know what a 72t tax election is, is that you take a separate equal periodic payment. So you could take money out of a retirement account prior to 59 and a half. You just have to take the same amount of money out of the account every single year till you turn 59 and a half or five years, whichever is longer. So there's always rules around these penalties, but you just have to follow the rules to avoid them. So does it make sense for him to do a 72 tax election from age 51 to 59 and a half?

[C]

Right.

[B]

They got. Yeah, it might. I mean, you could draw that down. The amount of dollars that you're going to pull out is probably going to be taxed at some. At 12 and 22%. So it's not going to kill you in taxes. You would want to get it out in those lower rates anyway. Either get it out and spend it or get it out and convert it. Then that would save some of the brokerage account I don't actually mind that strategy in this scenario.

[C]

In this scenario, because it's not like 20 years.

[B]

Right. Or it's not. There's. But he does have enough brokerage account dollars where I think I would probably live off the brokerage and convert.

[C]

Yeah.

[B]

But the 72t tax election is probably not going to be all that much. How much does he have in retirement accounts?

[C]

He's got 3 million. Yeah. 2 million 200.

[B]

Call it 2.

[C]

Yeah.

[B]

Probably $40,000.

[C]

Yeah. I think. I like the second thing you said. I probably would live off the brokerage account and do Roth conversions, try to get that tax deferred account down. And I mean, you could do 72T and it wouldn't be the end of the world. But I think that's what I'd probably do is you got a brokerage account that's pretty high. Why not live off of that for a few years?

[B]

Which one do you think he's more emotionally tied to?

[C]

The brokerage.

[B]

I know.

[C]

Because he has access to it.

[B]

So they do the 72T. Yeah, well, because you don't care if that's drawn down. You're paying more close attention to the brokerage account, so you want to see that grow.

[C]

That's a good point.

[B]

If you have the 72T, then I think that will make you sleep better at night.

[C]

But you would do the other.

[B]

I think I would take the brokerage and do conversions.

[C]

Yeah, me too.

[B]

But. But I look at my brokerage account a lot more than I do my 401k.

[C]

Do you?

[B]

I do.

[C]

Yeah.

[B]

And I don't know why. And I don't look at them often.

[C]

When you're over 59 and a half, it doesn't even matter.

[B]

I. I look at my 401k, I think once a year.

[C]

Got it.

[B]

And then I look at my brokerage account. I think twice a year.

[C]

Got it. That's. That's probably healthy.

[B]

I. I looked at it actually today because I had to log in to make my IRA contribution. My best Door Roth contribution.

[C]

Good for you. Yep.

[B]

It's. Oh, it's your birthday tomorrow on Friday. All right.

[C]

Yeah, that's right. That's.

[B]

It's tax day, by the way, people. Happy tax day.

[C]

Yes. As we record.

[B]

This is where we're recording this. And you'll hear it in June

[C]

or whatever, whenever it's ready.

[B]

So it's Big Al's birthday, too, so wish him a happy birthday.

[A]

Happy birthday, Big Al.

[C]

Thank you.

[B]

We don't have bonds in our portfolio. Okay. That's great. Long term, they don't seem to perform well. No, they do perform. They're there to help with volatility. So I think don't think of bonds in a way of how you're gauging your stocks. It kind of seems like, well, they're not performing. Should I go high yield? I don't know. I think you still want to have some bonds in your portfolio.

[C]

Well, I think he's saying they didn't perform well compared to high yield savings money market or CD and that.

[B]

Well, what time frame are you looking at?

[C]

Well, right over the last little recency bias over the last three or four years that's been true, but that's not normal. Typically bonds earn more than those. Well, not. Well, your high yield Savings money market CDs typically bonds outperform.

[B]

Yes. It depends on if they're short term, long term, you know, are they corporate bonds, high yield bonds.

[C]

But the reason they haven't performed well in the last few years is if you've noticed interest rates have gone up. Right. When interest rates go up, bond values go down. When interest rates go down, bond values go up. And it's not, it's not dramatic like the stock market, but that is a reality of bonds. And so if you look at the long term, bonds outperform savings, money market, even high yield savings. But hasn't been recently.

[B]

Yeah. If you're planning on retiring and I think that the burn rate on his is close enough and they're pretty young. I don't know. I would not want to have an all stock portfolio.

[C]

Oh for sure.

[B]

You want to make sure that you have some safety. And I would rather have bonds in my portfolio than my fixed income being a high yield savings account. I think I would want both. You want to have a high yield savings account to use as your cash or high yield savings, but you also want to have bonds in the portfolio to. To kind of help weather out the storm when markets get volatile.

[C]

Right. And you do that so that when markets do get volatile and go down, your bonds tend to stay even. Actually, in many cases bonds go up while stocks go down. And that hasn't been the case the last couple years because interest rates have been climbing. But in general you kind of see that relationship. Stocks go down, bonds go up, flight to safety. Right. So that's why you want to have some bonds in your portfolio. When the markets do go down, you're not pulling completely out of your stocks because I hate to pull money out of a low stock market fund. And you know you got the bond fund that didn't go down. Right. And then. So you pull money out of that and let the stock market recover. And you do better than decimating that account.

[B]

Yes, sir. All right. If somehow I'm able to endure that and take advantage of the rule of 55, how bad really can be in the archaeology instrument business be?

[C]

It's got to be really stressful.

[B]

I mean, this guy just wants to take one of these instruments and just.

[C]

Well, maybe there's only so many diggers, I don't know. But he's. But he is bullish on the industry.

[B]

Yeah, he's just. He hates his job. If somehow I'm able to endure and take advantage of the rule of 55. I'm reading that penalty free withdrawals are allowed in the year a person turns 55. You are correct. In other words, I could be 54 in January. Retire, take advantage, man, you're just counting the minutes. Take advantage of my 401 without penalty as long as I turn 55 by December of that year. Is that correct? Have any of your clients done this? Thanks so much. With lots of love from all of us. Bandit, Chili, bluey and Bingo.

[C]

Okay.

[B]

Yes. A lot of our clients use the rule of 55. You have to turn 55 the year you separate from service to take advantage of the rule of 55. Did you look up the exact rule, Al?

[C]

I did. It's true. I did. Yeah. So the. So the rule is, as long as you. It doesn't really matter when you retire within the year as and you pull money out of a 401k as long as you're 55 before the year's over, that comes out from your 401k at a penalty free. But Joe, as I think of that, maybe that's not right because don't have to be 55 when you terminate from service.

[B]

Yes.

[C]

So I think I stand corrected.

[B]

You have to be 55 when you turn. But he's got another question here because he's like, he written to his HR.

[C]

Okay.

[B]

I wonder what HR's thinking about Bandit here.

[C]

HR saying it can't happen soon enough.

[B]

I mean, HR is probably talking to Bandit's manager like, hey, I think we got some red flags.

[C]

We got a problem.

[B]

Bandit is asking for his personnel file. Is curious about the rule of 55.

[C]

Yeah, right.

[B]

So we might find a. Have to find a replacement. My company's 401k allows a rule of 55, but at a lump sum withdrawal. Okay. I've written HR to offer partial Withdrawals, assuming it doesn't change is my only strategy to roll over a portion of the 401k to a traditional IRA and take the remainder as a partial withdrawal. I will only be able to do this once in rolling over to the IRA, then remove excess to these funds until I'm 59 and a half again. Is it worth working another three plus years or can I just retire now? Thanks, Bandit. Move it into an IRA. Do the 72T. Take your $40,000, live off of Chili's $70,000 of income. That's going to cover most of your living expenses for the next three years. Then from there live off the brokerage account, do roth conversions until 59 and a half and then you're good to go.

[C]

Yeah, so I'm going to go back because now I even doubted myself. That is true. And I did look that up. As long as you turn 55 in the year that you retire, that rule of 55 works.

[B]

But he can't do partial withdrawals at his 401, so he's got to do one partial withdrawal and then roll the rest into an IRA. So he doesn't have access to the, to the IRA because he moved it to the IRA. There is no rule 55 in IRA. It's only 401ks.

[C]

No. So. Well, I guess if you could leave some in the 401k, he could do that. That's what he's. I think that's what he's asking.

[B]

My company allows the rule of 55, but at a lump sum withdrawal.

[C]

So you take a lump sum out to IRA but you leave or that means the whole thing.

[B]

Yeah. He can only do one partial for that year, then everything goes in the ira.

[C]

Got it?

[B]

Is what I'm reading.

[C]

Well, maybe what he's thinking is he pulls out enough for X number of years from the 401 and gets the rule of 55 and just stores it.

[B]

Yeah, but he has to pay ordinary income tax on it. It probably doesn't make sense. I'll just do the 2T tax.

[C]

I know, because let's say you take

[B]

three years out, what's he going to take? $300,000. He nets $200,000, pays $100,000 in tax.

[C]

Yeah, I know. And he's got plenty of non. He's got plenty of brokerage accounts. I'd still go back to that.

[B]

Probably. I would do the 72T tax election, which this is the first time I think ever in my 25 year.

[C]

Hey, let me hold me. Let me get that Joe's right.

[B]

Yeah.

[C]

I was saying 72 T is okay.

[B]

No, because. Yeah, I think it's okay in this situation because he's got plenty of money. He's got $5 million. I know, a ton of cash here.

[C]

And he's not overspending.

[B]

No. $110,000 plus $30,000. Yeah, yeah. The wife's working. Go on the wife's insurance.

[C]

Yeah, exactly.

[B]

Yeah. Or just sell a couple more tools or whatever the hell you do in the instrument business.

[C]

Yeah.

[B]

All right.

[A]

When you finally walk away from your job, what do you actually do with that 401k? In general, you've got four options. Leave it where it is, Roll it, withdraw it, or convert it. But don't confuse rolling and withdrawing. If you take the money as a check, it's. Instead of rolling it directly into your ira, you're paying tax on every dollar. And that is a tax bill that can run into the tens of thousands depending on how big your 401k actually is. Joe and Big Al break down all four options, the pros and cons of each and more of the costly mistakes that can drain your retirement accounts. This week on YMYW tv, they're giving away the Retirement Readiness Guide. Along with it, it goes way beyond the 401k decision. It'll show you you how long you actually need to plan for, how to build income that lasts, when to claim Social Security, the health care costs most people underestimate. How to think about taxes in retirement, long term care, and protecting your Legacy. To watch 401k after retirement, here are your four options and the costly mistakes on YMYW TV. And to grab the retirement Readiness Guide for free, just click or tap the links in the episode description.

[B]

Let's see. Retirement readiness readiness spitball. Poor Kevin, 58, and Winnie, 57, from Chicago.

[A]

Okay, you know that reference, right?

[B]

Kevin and Winnie. I know Winnie. Isn't that like a natural life or.

[C]

Oh, that was the. Gosh, that was. What was that shit called? Wonderful, Wonderful, Wonderful World.

[A]

It was called the Wonder Years.

[B]

Wonder Years.

[C]

That's it. We were so close.

[A]

Kevin and Winnie.

[B]

Okay, Winnie and Kevin, no pets. Four kids with only a high school senior. Still in, still at home. $200,000 saved for a 529 plan for her. The other three are done with college. I drive a 2013 BMW 5 Series and Winnie has a 2019 Volkswagen Atlas. Both paid for. Drink of choice. Winnie sticks with ice water, while I prefer buffalo trays poured over

[C]

quarry.

[B]

Quarry ice sphere. What the hell is a quarry ice Sphere.

[C]

Is that that. That big block? That's it. I'm guessing.

[B]

I'm not a fan. I'd much rather go if it's a sphere.

[A]

It sounds like it's a. A big round hunk of ice.

[B]

Yes.

[C]

Well, maybe it's a round one. Oh, yeah, it's a round one. It's not a square one. Yeah, you're right.

[B]

Sphere.

[C]

I got ahead of myself. I didn't read that last word.

[B]

I do like Buffalo Trace. I've had that a couple of times. Mike Pash always likes to drink a little Buffalo Trace.

[C]

Okay, so what is that? I don't even know what that.

[B]

Bourbon. Whiskey.

[C]

Bourbon. Okay.

[B]

All right, so I've had it from time to time. I don't know if I like a quarry. I. Sphere. I like rocks.

[C]

You like rocks?

[B]

Yeah, I like the rocks.

[C]

Got it. Okay.

[B]

We are looking for a spitball analysis as to my ability to retire at the end of 2026. A pre tax income should be $425,000 in 2026. In January 2027, my company would make a one time $325,000 payment under a long term incentive plan. Starting in January 2028, I will receive 10 annual payments of $310,000 each from a non qualified deferred comp plan. Winning plan is to continue work for at least a couple more years to maintain health insurance for the family costing or $400 a month. Her income is fairly limited, but she loves her job. We would like to be able to spend about two and a quarter after taxes. Our qualified accounts total $4 million, of which $85,000 in Roth. We also have $60,000 in an HSA brokerage account is $650,000 and our mortgage free home is worth a million. Our most recent Social Security statements show a monthly benefit of $5,000 at age 70 and 2,000 at age 70 for her. Okay, let's see. So that will be about $85,000 a year combined. No other pensions. We have two questions. Is 1231, 2026 a feasible retirement date for me? Should we plan on doing Roth conversions up to the 24% tax bracket after I retire? We appreciate the levity the team brings to each podcast. Keep up the good luck.

[C]

All right, well, so just give you a couple numbers. They're spending $225,000 for the next 11 years. They're going to have over $300,000. So that looks pretty good. Which means they can let their other money grow for 11 years. And even with no additions Joe, it would be at a 6% rate of return to be 8.8 million. Call it 9 million.

[B]

10 million.

[C]

10. Yeah, whatever. Right. So. Yeah, it looks fine.

[B]

Yeah. Social Security, though. 2000 is less than half of 5000, but that's at age 70. I'm guessing she would want to do the spousal benefit. So prior. So for them to both push to age 70. I don't know if that makes sense.

[C]

Yeah, because it's pretty close. They're pretty close to half and half. I mean, 50% of. Yeah.

[B]

So the spousal benefit is 50% of Kevin's benefit, because Winnie's benefit is 2,000 at age 70. Kevin's is 5,000. So let's just assume that that was at full retirement age.

[C]

Yeah.

[B]

So Winnie's benefit would be actually 2500, right?

[C]

Yeah.

[B]

Versus 2000.

[C]

Yeah. Well, be less than that because it's 67. But still.

[B]

But I'm just saying, let's just assume that the benefit of thousand. Two thousand at 67. So extra 500 bucks a month. So you might want to look at a different claiming strategy for both of you to. To push. So.

[C]

Yeah, I think I might. If I were Kevin, I'd go to 70. And Winnie, I probably do it at full retirement age.

[B]

Yeah. And then she would revert to the spousal when he claims at 70. So there could be. Yeah, I think that's the right move. Winnie would claim earlier.

[C]

How about Roth conversions?

[B]

Okay.

[C]

They got 4 million in a retirement account.

[B]

Yeah. The deferred comp kills them from a tax bracket.

[C]

Makes it tricky. Yep.

[B]

So you go to the top of the 24% tax bracket. Well, they have $300,000 of deferred comp. The top of the 24 is what, 400. So you got about $100,000 thousand dollars that you can convert. Yeah. You would want to convert all day

[C]

to the top of the 24.

[B]

To the top of $24,000. Because let's say his retirement accounts are going to be. If it doubles in 10 years or 11 years, that's a lot. $10 million. Your RMD is $400,000, plus your Social Security of another $100,000. That's $500,000. You're probably in the 32% tax bracket once the RMDs hit.

[C]

Probably. And if you convert to the $24,000, you might stay in it. It's hard to know just on a back envelope.

[B]

Yeah. You have to run some different numbers with different assumptions. What do you think the target rate of return is on the investments that you're in. If you have high growth in your retirement accounts because you don't need them and you want them to continue to grow over the next 10 years and they get a decent rate of return, I mean, that's great. You got a lot more money, but then you're giving a lot more money to the irs. So you would want to be aggressively converting. Maybe you go to the 32 and have that same investment strategy or be a little bit more aggressive in the Roth IRA than you would be in the ira. You don't need to take on any risk because he doesn't have huge needs for those dollars.

[C]

Right.

[B]

So if he takes on less risk, that's going to dampen the growth, of course, of the account, but that's also going to dampen the, the RMD issue as well. So there's a different. It's, it's all really based on what are you trying to accomplish. Are you trying to maximize the ultimate wealth to the, to the family and to the kids? Do you want to spend a lot more money in retirement? Do you want to negate taxes as much as you can? And I don't know, it really depends on the goals is what's going to determine. I think the conversion strategy. But yeah, just up the back of the envelope. 24. I think for sure you would look at that and in some cases you might want to go a little bit higher because of what's ahead of you.

[C]

I agree with that. And I would, I would add, I like the 24% bracket, but I would add, Joe, that maybe do the 32% bracket when there's a down market.

[B]

Sure.

[C]

And then the recovery will be in the Roth. So I think that's, that's the only thing I would amend on what you said.

[B]

All right, Andy, Hope you feel better.

[A]

Oh, thank you. I appreciate that, Aaron.

[B]

I hope you feel worse. Wow, you do have a smile for everyone you meet.

[C]

He does.

[B]

All right, Big Al. And then you're off. Are you back?

[C]

Where are you going? I'll be back. I'm going to Bay Area and Hawaii. I'll do a show in from Hawaii just for fun. Yeah.

[B]

Well, happy birthday.

[C]

Thank you.

[B]

And that's it for us. We'll see you next time. Chill, Scott. Of your money, you're wealth.

[A]

Next week on ymyw. Should June take her pension as a lump sum or. Or a monthly check for life? Pompous assets Financial advisor is fighting him on Roth conversion. Why the fellas also spitball Roth strategies for Homer and Marge and why Johnny Mercer's annuity might not be what he's hoping for. Don't miss it. Your money, your wealth, is your podcast, and this show would not be a show without you. If you've got thoughts about this or any other episode, jump into the comments on our YouTube channel and let us know. Are YouTube videos? Viewers get pretty vocal if they think the fellas missed something. So if you've already gotten a YMYW spitball, why not go see what they've said? Martha and George, Bandit and Chilli and Kevin and Winnie all have real money, real questions, and an intimidating withdrawal strategy. Now, is that you too? That's exactly the kind of situation Pure Financial Advisors built. The free financial assessment for Pure's experienced professionals will sit down with you. Look at where you are now, where you want to be in retirement, and what it actually takes to get there. There's no cost and no obligation. Click or tap the free financial assessment link in the episode description to schedule yours. 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.