← Your Next Dollar: Money Management for High Earners
Your Next Dollar: Money Management for High Earners
Here’s What You Should Consider Before Retiring at Age 50
00:29:53
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- [00:00]
A
Today on your next Dollar, we are talking about one of my favorite topics, which is early retirement. And early retirement is the dream for a lot of high earners. You hit your number, you walk away, and you have the flexibility to do what you want with your time, your energy, and everything in between. And so today we're going to be talking through some of the top myths and misconceptions around early retirement. We're going to dive deeper into some of those areas that you haven't thought about. Also, we're going to talk about the healthcare bridge. What are you going to do about health care if you do retire early? Let's say you retire at 50. What are you going to do for the 15 years before Medicare kicks in? And why some people retire early and regret it? We want you to avoid that at all costs. And we want you to think through some of the ways that you can maybe test the waters when it comes to early retirement. Plus so much more. Welcome to your next dollar, the show where we help you make smarter decisions with the money you already have so you can live the life you actually want. I'm Andrew Giancola, and I am joined by my co host, Ryan Sterling. Ryan, I am so excited for this episode.
- [01:06]
B
So am I. It's one of my favorite topics.
- [01:07]
A
So I want to dive in first to some of the common misconceptions that you see surrounding early retirement. There's a lot of information out there where we see people talking about early retirement, and for a lot of high earners, most of that information is overly simplistic. So what are some of the misconceptions that you see when you talk to clients surrounding early retirement?
- [01:26]
B
It's actually more attainable than I think a lot of people think. I talk to people who are in their mid-30s, for example, and they're like, gosh, I'm just getting started today. There's no way I'm ever going to be able to reach financial independence in my early 50s. And actually depending on their income and their ability to save like they actually can, it just takes intention and it takes just showing up each and every day. I always tell people like, you know, there's a saying that we overestimate what we can do in a year and underestimate what we can do in a decade. That statement could not be any truer as it relates to building wealth. So number one is like, it actually is, for a lot of people, more achievable so long as you have a plan and you're willing to stick with the plan. But, but I also think it's, it's more complex than just having a kind of retirement date target in the future. There's so much that goes into early retirement that I think a lot of people don't think about. And that is, look, when you're 35, 50 seems like a long way away. I can tell you when you're 50, you're probably not ready to just retire on a beach and do nothing. With time, you will get bored very, very quickly. There's a side of it that's focusing on the financial component of reaching early retirement, but you also have to think about the emotional side of early retirements. I think that's where a lot of people misunderstand kind of the toll that takes on somebody.
- [02:49]
A
And when it comes down to the emotions, I truly believe that the emotional side comes down to like 80% of your finances is the emotions. And understanding that your psychology is a huge portion of this entire equation. And only about 20% is the know how in my opinion. Because when we start to think through early ret, you really need to understand what the implications are here. So some of the things that I think through is a lot of folks will say, okay, well I want to retire early, but what is your why? What are some of the reasons why you want to do this? How are you going to spend your time? How are you going to spend your days? What are you actually retiring to? What are you going to spend your time doing? Is it volunteering more for causes you believe in? Is it taking a part time job for something that you're truly interested in?
- [03:29]
B
Because it's so different when you're retiring to something versus running from, from something. So it really comes down to intention. And I think like one of my big predictions in the future is that I think we're going to have multiple careers. I don't think it's going to be uncommon for someone to have a career from 25 to 40 and then a completely new career from 40 to 60. So you know, I think when I talk to people about financial independence today, it is less about reaching that number and not doing anything and it's more about having the flexibility to make some sort of career shift, to make a pivot, to maybe do something, something that's a little bit less stressful but still is making money and providing purpose.
- [04:09]
A
Here's a great example of this is I just had a conversation with a guy who was an executive for the course of 30, 30 years or so and he was so burnt out that he wanted to Retire. And so he pushed to retire at the age of 52. And when he retired at the age of 52, all of a sudden he realized after three months when he decompressed that he really just kind of wanted to take three months off or four months off and have the ability to be able to just reset his life. And so he got to those three or four months and actually went back to work at the job that he was working at previously because he was so bored. And so this is one of those areas I think a lot of people just really don't think through and you got to figure out how you're going to spend your time. I have talked to other people who have gone through the same process where they felt bored, but then they start a side business or maybe they start working on a hobby they love. So for example, if you love yoga, maybe you spend some time as a part time yoga instructor. It helps A, supplement your income, B, you're doing something that you love and C, it is one of those areas that I think keeps you busy throughout, throughout the day. And we have seen studies after study where people who stay busy throughout retirement, they live longer, they have more longevity, they have the brain functionality for long term. And I think this is a really powerful point where most people need to consider how they're going to spend their days. Have you ever had any clients, Ryan, that have come across that maybe they, they retire or they get to a point in time where they're done with work and they kind of struggle with their, you know, identity and what they're going to do with their day?
- [05:30]
B
Big time. I see it all the time. Let's go with the yoga example. I've come across so many people where they say, oh my gosh, I love yoga. Like I want to reach financial independence and be a yoga instructor. And they do it. And guess what? They realize they love doing yoga, they don't like teaching yoga. So I've seen that happen so many times where it's like, you know what, I actually didn't dislike being an attorney. I just needed a break. And that's another thing about financial independence and, and I'm another bold prediction that, that I, that I have. And I'm already seeing this in that I do think it's going to be less about people reaching financial independence and maybe retiring early and more about people being intentional about mini sabbaticals. So taking anywhere between like three months to, you know, in some cases maybe two years as like a mini break and then getting back into some sort of full time job and doing that multiple times throughout a career. I'm already seeing this and I suspect that's going to happen with frequency.
- [06:30]
A
So let's say somebody is listening to us right now and they said, you know what, I think I still want to retire early. I kind of know how I want to spend my time. I know some of the things that I love. And this is something that I have been wanting to pursue for a long time. Maybe they're in their 30s or their 40s and they're like, I don't really know if I can actually do this though. Is this something that is obtainable when you're thinking about your retirement number and how to kind of calculate that? Ryan, what do you tell clients if they want to figure out how to calculate the retirement number? How do you tell them to do that?
- [06:58]
B
Okay, so I'm going to get a bit technical here. So if it is making your head spin, don't worry. There's easy calculators that can help you here. So, so number one, basically what you need to do is think about, okay, how much money are you making today and how much money do you need to spend today? And let's just for simplicity purposes, let's say after taxes, you make $120,000 just making that up. And you're saying, you know what, I want to be able to spend $120,000 in retirement. And let's say your retirement date or your, your target financial independence date is 20 years into the future. Okay, so first off, you can't just assume $120,000 20 years in the future because we have inflation. So you have to grow it by an inflation rate. So let's call it 2.5%. So take that 120,000 and grow that by 2.5% over 20 years. Okay? So that's going to be the amount of money that you are going to spend in your first year of retirement. Okay, so what asset base do you need to be able to sustain that spending? General rule of thumb is roughly around 4%. There's new research that says you could maybe bump it up to 5%, but let's just say 4% or so. So you have to take that inflation adjusted spending number, you divide it by 4%, and then that is your financial independence number. So it sounds like there's a lot that goes into that calculation. And there is. The good news is we did develop a calculator for people that you can access for free. Andrew, where can people find that?
- [08:23]
A
So you can find that Are you on track Calculator by going to nerdwall@wealthpartners.com on track. And you can also find that down below in the show notes. So, Ryan, one thing I think a lot of people who are listening right now, we have a lot of folks who listen to this podcast who are in their 30s or their 40s and they're saying to themselves, okay, but I got this long term time horizon. I don't really know how to track my retirement number. I think you should be tracking this retirement number on a yearly basis no matter how old you are. So for a lot of folks out there who are younger, continuing to think about this stuff and making sure that you're tracking your retirement number is very important. Now, one big pushback I get is a lot of people say, I just don't really know where that number is going to be. Just use the amount that you're spending right now. Some people will say, oh, you only spend 80% of what you're spending right now in retirement. For me, I like to use the entire amount only because I'd rather have more in retirement than less. And so for me specifically, I like to track this on a yearly basis based on what I am currently spending now. You could take out things like your mortgage if you have to plan to have that paid off. And there's a lot of other factors that you could throw into play. But in reality, just getting started and thinking about tracking this number is really important. Now the next thing is thinking through your portfolio, because if you want to retire early, we want to make sure that we have a portfolio in place that makes sense for someone considering retiring early. So when you're looking at portfolios for some of your clients, Ryan, how do you kind of think about this when it comes to building a portfolio based on early retirement?
- [09:45]
B
Yeah, so I oftentimes see the extremes in that extreme. Number one is people that have all of their money in cash and they are like, I am so nervous, nervous about putting my money in the market. Like, I'm risk averse. Like, I don't want to take on any risk. I don't want to experience any volatility. And for those clients, we have to remind them that the riskiest thing you can do is actually be too conservative because you're not going to have the growth engine needed to, to have the wind at your back to be able to reach that retirement number. We, we know that if you have your money in cash, that cash is going to be eroded away with inflation. So you need a rate of return to again give you that wind at your back. So that's number one extreme that people in cash that we have to inch in to a more aggressive portfolio. But we see the opposite as well. Where people have one stock that might be a high flyer, they have cryptocurrencies, or they're so concentrated in one investment and they're saying, look, this is the fuel that I need to get to me where I want to go. And look how it's done for the last year or so. That is equally detrimental to wealth. Because look, when you're putting on all of your eggs in one basket, it doesn't take a lot for that to be eroded. So what we say is like, look, we want to be invested for growth, so we need to withstand some volatility, we need to take on some risk. But the way that we mitigate that risk is that if you're in a diversified stock portfolio, I always say the way that you lose in a diversified stock portfolio is there's two ways. Number one is you are a forced seller and number two is you are a panicked seller. So the way to avoid being a panic seller is by having regular conversations with your advisor, being connected to your portfolio, knowing that you have a long term orientation. The way that you avoid being a for seller is to make sure any known liability that you have, you know, a down payment on, a house tuition payment, whatever it may be, that needs to be in something that's cash conservative, super liquid. But if you have a 20 year time horizon and you're in a diversified stock portfolio, sure there's going to be ups and downs, there's going to be volatility, but the odds are strongly in your favor for a positive outcome. And it's really needed again in order to reach that financial independence number. You know, going back to the calculation that we were talking about earlier, a big component of that calculation is an assumed rate of return. So again, we don't need a 30 or 40 or 50% compound rate of return, but we also can't tolerate a 2% or 3% rate of return. We really want to target that 6 to 8% over a 20 year period.
- [12:22]
A
And that's one of those things that, you know, I think about it this way, where a lot of folks out there will kind of focus their time and energy and feel as though, oh, if I want to be good at my personal finances, I need to cut back on coffees or I need to cut back on all these other areas. No, what you really need to focus on is things like your asset allocation, especially when you're thinking through building wealth over time. If you want to retire early, that is a multimillion dollar decision in comparison to some of these piddly little things that high earners should not be worrying about whatsoever. So when you're trying to focus on some of the things to focus on when it comes to early retirement, that asset allocation is so incredibly important. And the reality is for early retirees, many of them have to make this money last a lot longer than someone who goes and retires at tradition retirement age. And we have seen studies where we are looking at retirees and how they spend their money. And usually early on in retirement, they will spend a little bit more than they do later on in retirement. And we talk about like the retirement smile, for example, where people will spend early on in their 50s and their 60s, they will spend a lot more because maybe they're traveling more or they are doing more things, keeping them active, those types of things. Then towards the middle of life, maybe they, they, you know, spend a little bit less. And then as time goes on, healthcare causes them to spend a lot more again. Which leads me into the healthcare bridge and kind of thinking through how we want to look at health care when it comes to early retirement. Because obviously if you retire at the age of 50 or maybe even retire in your 40s, you have a really long time horizon before you can reach traditional Medicare age. And so we have, you know, from age 50 to 65, that's 15 years that you have to plan out for healthcare. So this either needs to be factored in when you are planning out that retirement number on how much you're going to be spending in health care. But in addition, we also need to look at this in a way that makes sense for the individual and their family and the amount of coverage that they need. So what are some of the things that, that you think through for early retirees when it comes to healthcare and how they need to approach this?
- [14:07]
B
Yeah, I mean, it really depends. It's a case by case basis. And you know, so a couple of things. For example, I was actually just talking to a client today who is looking to retire abroad and they're going through the process right now of understanding what they need to do to qualify for healthcare in the country that they're moving to. That also seems to be a growing trend of people retiring outside the US So it's important then to understand if that's something that you want to do, understand, you know, what do you need to do to qualify, qualify for healthcare in that country. I will say, you know, for our clients who are pre Medicare age, who retire early, the Affordable Care act has played a big role. Now the Affordable Care act, it's different state by state. So I'm based in New York. New York has a pretty good Affordable Care act network. California, it's the same for other states. It could be a completely different set of circumstances, but I'll say on a state by state basis, really kind of understand what the Affordable Care act exchange looks like for you for your particular situation, because that can play a big role. And I've seen people have a lot of success with it. Another one being, you know, we're talking about maybe not fully retiring, but maybe doing some part time work is getting a job where you have to, you know, just work maybe 20 hours a week or so to qualify for healthcare. I've seen a lot of people reach financial independence, but get a job just to be able to help that, you know, have some semblance of routine, have people to work with, there's a socialization element, but then also have healthcare as part of that benefits package. So that's also something that's very common in early retirements.
- [15:40]
A
That's one of my favorite strategies. And a lot of people call it barista fire. And it was originally called that because people would go and they would work at Starbucks, for example, and Starbucks was infamous for providing healthcare no matter how many hours a week you worked. And typically it was like right around 20 is what you needed to have in place. And so they would go and work for 20 hours a week at Starbucks and be able to to retire early and have that health care in place. So this is something to definitely factor in. I have a couple of friends who ended up retiring early. They did not factor in the healthcare costs because they were in the state of Florida. And the healthcare cost for them rose so rapidly that they actually ended up having to go back to work. So I really think a lot of people out there need to shop healthcare. They need to consider this when it comes to making sure that you have the right plan in place for them. Specifically, the cost went up to another 1500-2000 dollars for just them and their spouse to have healthcare based on their current situation. And so you really need shop this around and make sure you have this in place. The other thing that can help you bridge here is something called the hsa. Now the HSA is an account that stands for Health Savings Account for anybody that doesn't know what that is. But the cool thing about the HSA is it can be one of two things. One is it can help you, if you do retire early, bridge the gap and allow you to draw down some funds completely tax free. But secondly, the HSA can also pay for some of your health care expenses if you retire early. So it really does have double benefits, fits in an account that I think is really powerful.
- [17:01]
B
Yeah. There's no question. We have a number of clients who are using the HSA right now with the intention that it's going to be there when they reach early retirements.
- [17:09]
A
And in reality, for most people out there, if you haven't looked into an HSA before, you have to have a high deductible health plan in order to qualify for an hsa. But it is an awesome option if you do have that high deductible health plan and you qualify for it. So the next thing I want to think through, Ryan, because speaking of the HSA and how it can help you bridge your spending and in addition to some of your health care, is accessing your money before the age of 59 and a half. So a lot of high earners out there, maybe they're maxing out their 401k, maybe they're maxing out their Roths. But there are some common misconceptions about those accounts and some things we want to talk through when it comes to which accounts to actually focus on or the way to think about this, especially if you want to retire early, when you talk to early retirees, what are some of the things that you want them to focus on when it comes to the account type so they can actually access their money if they want to retire early?
- [17:57]
B
Poorly. I think one of the most underrated accounts is a taxable brokerage account. I don't know why people don't focus more on it. And I understand, look, there are tax advantages for having money in a retirement account. There's also almost this anxiety of, hey, these accounts are available for me. I should be taking advantage of all of them. The trap I see people falling into is maxing out every single retirement account you have at your disposal, and then you have zero leftover liquidity. And the issue with that is you could find yourself in your early 50s and say, hey, like, gosh, like, I'm a multimillionaire right now and like, I'm ready for financial independence. But there's a big problem. All the money's in retirement accounts and you can't access it for another 10 years or so. So, you know, having a taxable brokerage account and really being intentional about, you know, still using the retirement accounts and, you know, getting the tax deductions and getting the matches and all of that good stuff. I'm a huge fan of it, but not at the expense of building up a taxable brokerage account. And also for those who aren't necessarily looking to reach financial independence in your early 50s, it's still important to have a taxable brokerage account because look like life is changing at such a fast rate right now. So you could find yourself in a position in your mid-40s where you have to do a career shift that you weren't necessarily intending to. And having a brokerage account can provide that bridge to your next opportunity. So to me, oftentimes I see a big mistake people are making is that they are overly aggressive with all of their retirement accounts at the expense of building up a taxable brokerage account.
- [19:34]
A
And the cool thing about the taxable brokerage account for a lot of people out there who are like, well, I'm going to be taxed all this money on the taxable brokerage account. Well, in reality, if you stop working and then you start drawing on that taxable brokerage account, then all of a sudden what's going to happen is if you have long term capital gains inside of that account and you are making, you know, less than $44,000 per year if you are single, or it's like $80,000 per year if you're married, filing jointly, then you have this situation where you're not paying taxes on those dollars, those long term capital gains. But then in addition, we also have the standard deduction to factor in. And when you factor in that standard deduction, it's like $120,000 plus for a couple where they don't have to pay taxes on that money. So really it is a much more tax efficient account, especially than your income than most people realize. And so when they look at this, I think this is one of those areas where if you are someone who is really interested in financial independence, but you're trying to optimize for taxes and make sure that you have all these boxes checked, this is one of those areas where in reality it is a much better account than maybe a lot of people assume.
- [20:30]
B
There's also tax loss harvesting as well in the taxable brokerage account that people don't pay attention to. So when those bear markets present themselves, you're able to sell some of these positions at a loss, capture that loss, and then going forward, those losses $3,000 can be carried over on an annual basis. That's a deduction. But then number two though is you can carry over all of those losses indefinitely and use them to offset gains in the future. So know, just looking back the last couple of years, like 2022 was a bear market. We use that time to capture losses. We did the same thing in April of 2025. So again, these, these pockets of opportunities present themselves where we're able to capture these losses, which then we use to offset gains.
- [21:13]
A
And that's a huge thing for high earners. And most of you out there are like, well, I don't know how to tax loss harvest. That's why we have advisors in place. They help you through that process so that you know exactly when to do that. There's a ton of other strategies out there that we could talk through and we'll probably do full episodes on there. So make sure you're subscribed to this podcast as we this, because there are so many cool ways that you can figure out how to get some of those money out of retirement accounts. But again, what we're saying here is the taxable brokerage account is the easiest, the most flexible, and the way that you can really retire early and have a plan in place that makes the most sense. Well, those are just some of the things that we want you to consider when it comes to retiring early. If you guys have any questions, make sure you leave a comment down below. Now we're going to jump into a segment. We're going to be ranking some of the our favorite places to retire and some of our favorite retirement money moves. So first let's dive into the best places to retire. So Ryan, we're going to rank these from S, A, B, C, D and F. So the first one is the state that I'm in right now, which is the state of Florida.
- [22:10]
B
All right, this is going to be somewhat controversial here, but I would rank it more of a C or D. Right. And this might be the contrarian me, I don't know. Property prices have gone up a lot. Too many people have flocked there in the last couple of years. But I would, I would put it kind of middle of the package back.
- [22:24]
A
Florida is right now at the point in time that we're recording this, this episode, you know, from June, July, August is absolutely miserable and most retirees actually leave and go back to the north when, during these, these couple of years. So that's one factor to factor. But there's a lot of other things there as well. The second one is Tennessee.
- [22:39]
B
Tennessee. I like it. I would put it as an A or B. There's zero state income taxes. It does get hot in the summertime, however. It's really nice falls, really nice springs. A lot of good outdoor activity, and I feel like it's a growing community of people who are reaching financial independence at an earlier age.
- [22:57]
A
What about California? That's a big one that a lot
- [22:59]
B
of people talk about.
- [23:00]
A
A hot topic.
- [23:01]
B
Ooh, that's tough. I would rank that in the middle of the pack. On the positives. You have amazing weather. You have so much to do. It's just. It's so expensive.
- [23:10]
A
Where would you rank New York, your
- [23:12]
B
state, so I'm biased. I actually think New York City is a very underrated place to retire. Yes, it is expensive. Yes, we do have winter, but it's so easy to get around. There's so much to do. There's so much activity. I think the energy of the city keeps you young. I would put it as an S. Arizona. Ooh, Arizona. I would rank it maybe a B or so. It gets really hot is kind of the downside, but favorable tax rates. There's a lot of outdoor activity, and it seems like there's a fair amount to do. It just gets really hot.
- [23:47]
A
The next one is a hot topic I've seen as of late on a lot of retirement articles, which is North Carolina.
- [23:51]
B
Ooh, North Carolina. I like it. I would put that as a S or an A once. It. So you have the beaches. You have reasonably good weather. You have a lot of outdoor activity. There's a lot going on. There's a lot of good energy. In North Carolina, I would rank it pretty high.
- [24:08]
A
The next one is Michigan.
- [24:10]
B
Michigan. I kind of like that one, too. Right. I think it's like thinking outside the box a little bit. You have all the lakes, lots of activity. You have a bunch of big universities that provide a lot of either interesting educational content or sports or whatever it may be. I like Michigan. I would rank it pretty high, actually.
- [24:27]
A
Where would you put Nevada? Viva Las Vegas.
- [24:29]
B
Ooh. Some of my favorite people in the world live in Nevada, so I just want to put that out there. However, I would rank it pretty low for me. I just think it's too hot. And I'm not the biggest fan of Las Vegas. Too much of a party atmosphere.
- [24:44]
A
What about Texas?
- [24:46]
B
Ooh, I think you're getting a trend here. Like, I don't like. I don't like heat, so I would rank that one pretty low. I'm also, again, the contrarian in me. I feel like when everyone's going someplace, I like to kind of like rebel a little bit. So I would actually rank that on the lower side. So I'd rank that in like the C or the D range.
- [25:01]
A
I like that one. And then what? The last one that we'll do is Oregon.
- [25:04]
B
Ooh, Oregon. I rank it pretty high. Same thing for North Carolina. You have the beaches, you have the mountains, you have a lot of activity, you have young environments. I like it. I would, I would put it high.
- [25:18]
A
I just went to fincon in Oregon and it was, it was so beautiful. Some of the areas that you can go out there and just kind of see in the redwood trees and all that kind of stuff too. So absolutely a fantastic spot for sure. And I'm the same way. I don't like the heat at all. So like the, the cooler weather is much better overall. All right. The second thing we're going to be ranking is retirement money move. So this is kind of considering, okay, some of these money moves. Where do you rank these when it comes to a retiree and how they need to think about this or if they're trying to achieve retirement, how they want to think about this. So we'll do the same thing. We're going to rank these from S, ABCD and F. So ranking retirement money moves. The first one is maxing out your 401k match.
- [25:55]
B
Oh, absolutely.
- [25:57]
A
Rank that as an S. What about Roth conversions?
- [26:00]
B
I'd rank it high. I'd rank it as an S. Delaying
- [26:02]
A
Social Security until age 70. Ooh,
- [26:07]
B
I want to put that lower. I'm going to put that as like a C. Maybe it might be the right thing for somebody. But I feel like conventional wisdom is that everybody should do that. And I disagree with that. I know actually a lot of people are taking Social Security early and they're able to maximize the amount of stuff they do in their 60s. And look, time value of experiences like you don't get that time back.
- [26:27]
A
What about building a three bucket withdrawal strategy?
- [26:30]
B
I like it. I like it. I think it brings intention. I think it can help during times of volatility. I think anything where you have a plan, a strategy and intention I'm all for.
- [26:40]
A
What about maxing your hsa?
- [26:42]
B
I want to put that high. And I think it's in the category of it depends. I think for some people I would rank that really high. For others, the only issue with the HSA with the high deductible plan is that a couple bad health events could Completely wipe it out. So I think it depends on your health situation.
- [27:00]
A
Would you put it as like a B?
- [27:01]
B
Yeah, maybe. A B. Yeah.
- [27:03]
A
Downsizing your home before retirement, I would
- [27:05]
B
rank that as a B. I think it's something that downsizing provides a lot more liquidity. It's, you know, could provide opportunity for more travel and more activities. However, your home is your home. So, you know, if you like living in your home and you'd rather stay there than traveling more. Again, I think it's a case by case basis. So I'd put that as maybe like a B.
- [27:27]
A
What about keeping two years of cash reserves?
- [27:30]
B
Oh, I'd put that as an S. Absolutely. We don't know what's going to happen in the market. You do not want to find yourself in a situation where you retire. We're in a bear market. And you're selling into a bear market. So I put that top of the list.
- [27:43]
A
Sequence of returns risk is a scary thing. The next one is paying off your mortgage before retiring.
- [27:48]
B
I like it. I'd put it as an A or
- [27:50]
A
an S. What about long term care insurance? That's the thing a lot of people talk about.
- [27:55]
B
I put that far down the list. I think it's way too expensive. You've got to read the fine print. The idea that if a health event puts you in some sort of nursing home, you can use it for 15 to 20 years. Years, that is completely false. A lot of these cap you out after one to two years. So I think you're much better saving, putting that money instead of sending it to an insurance company, put it in an account for you and you can self insure.
- [28:20]
A
And boy, did they make those things complicated too. Claiming Social Security at 62.
- [28:24]
B
It's kind of like what I was saying before. I kind of like it. For some people I'd put it as an S. For some people I'd put it as like maybe a C. But I think that's an underrated strategy.
- [28:33]
A
What about cashing out your 401k when
- [28:35]
B
you switch jobs and just taking a lump sum.
- [28:37]
A
And just taking a lump sum.
- [28:39]
B
Ooh, yeah, I'd put that far down the list. You do not want to pay the taxes and penalties, but that is an F. Or whatever's below an F. What
- [28:46]
A
about putting all your money in annuities?
- [28:48]
B
Oh, yeah, an F. Or below AN
- [28:49]
A
F. Going 100% bonds at retirement.
- [28:52]
B
Ooh, once again, F or below an F. You got to think retirement might be 25, 30, in some cases 40 years. So you got to get your money working for you.
- [29:02]
A
And the last one is co signing loans for adult kids in retirement.
- [29:05]
B
Oh like an effort. Whatever the lowest is, don't do that. Your kids can borrow for school, your kids can borrow for a home. You cannot borrow for retirement.
- [29:14]
A
Well Ryan, you and I hate a lot of the same exact things so I love this. I think this was a great one for sure to see what where you landed on some of these things. Listen thank you so much everyone for listening to this episode of your next dollar. We truly appreciate each and every single one of you being here. If you're getting value out of this episode, make sure you love like subscribe and follow us on your favorite podcast player. And if you're truly getting a lot of value out of here, leave us a five star rating and review. It truly helps us spread this message. Thank you so much again for being here and we will see you on the next episode.