May 5, 2025 • 17 mins
In this episode, Ari explores six common oversights in early retirement planning that can create unnecessary stress and limit flexibility in the long run.
• Not establishing a taxable brokerage account to access funds before traditional retirement age
• Overlooking healthcare planning, including available subsidies, which may impact retirement timing
• Missing opportunities for tax efficiency through strategies like Roth conversions or coordinated withdrawals
• Underestimating the importance of physical health when planning for an active retirement lifestyle
• Limiting retirement vision to essential expenses, rather than factoring in meaningful goals and experiences
• Focusing only on finances without considering purpose, routine, or fulfillment during retirement
Submit your questions at earlyretirementpodcast.com for future episodes. Are you sabotaging your early retirement with what I call "head trash"? These are the unnecessary worries that keep you working years longer than you need to - like comparing your finances to neighbors without knowing their full picture.
Advisory services are offered through Root Financial, an SEC-registered investment adviser. This content is intended for general informational purposes only and should not be construed as personalized investment, tax, or legal advice. Advisory relationships are established only through a signed agreement. Any examples discussed are hypothetical and for illustrative purposes. If client experiences are referenced, no compensation was provided and their experience may not be representative of others. Comments shared publicly are unsolicited and do not reflect the views or experience of all clients. They are not verified and should not be construed as testimonials or endorsements. Root Financial does not provide tax or legal advice. Tax planning topics are discussed in the context of comprehensive financial planning and should not be relied upon as a substitute for professional advice. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Watching or listening to this content does not create an advisory relationship. To learn more about Root or to explore working together, please visit www.rootfinancialpartners.com.
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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.
“Early Retirement – Financial Freedom” is a podcast produced by Root Financial Partners, an SEC-registered investment adviser. The content provided is for informational and educational purposes only. It should not be interpreted as investment, legal, or tax advice. I may reference planning situations based on real client experiences, but they’ve been simplified for clarity. Always consult your own financial advisor before making decisions.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I know I'm not your personal financial advisor, but
sometimes I feel like thatbecause you guys will leave me
comments going hey, this reallyhelped me retire early.
This is something I justwouldn't have considered
otherwise, because I'm not doingit all day, and so I do believe
that I have this job, so tospeak, to make sure I'm
educating you all properly.
Now, the fun part is I lovedoing it, so it's not a burden
(00:22):
in any way, it's the opposite.
But there's something I want toshare with you, and this is how
I want to start this episode.
So what I love about my job isgetting to advise people about
hey, here's something that youjust didn't know that might
really shift your retirement howyou can save on health care
costs, how you can create income, how you can you name it.
But my partner, james, and thefounder of Root his dad once
(00:42):
told him something that I wantto tell you all right now, and
so James is the founder of Root.
I'm the chief growth officer atRoot.
We are growing Root assustainably as we can, so the
service never suffers, and whatwe really care about is that
clients go wow, my life is waybetter working with Root.
And when James was speaking tohis dad.
His dad told James his job isnot to be an advisor.
(01:05):
And James said that'sinteresting because I'm a
financial advisor.
And his dad said your job isnot to advise.
Your job is to organizepeople's thinking, which is
sometimes telling people whatnot to worry about.
And that's what today is goingto be about, because I think a
lot of you are worryingunnecessarily.
I have a phrase for this that Imade up.
I call it head trash, whereyou're literally thinking about
(01:30):
things that you worry about,that you do not need to worry,
but you're worrying.
It's a real worry, but it'sfake, and the reason it's fake
is through this example.
So there's a funny one, butit's important.
So I had someone reach out andgo all right, I really don't
think I should retire earlybecause I have $2 million.
I'm kind of a big spender and Ijust don't think I have enough,
but I don't love my job.
And I said why do you feel likeyou can't retire early?
They said well, I have aneighbor, and my neighbor and I
(01:51):
are very transparent withfinances.
They have more money and theywant to spend less than me.
So, like I know, I'm not in agood spot.
I said you don't know thatbecause you don't know their
planning and their legacy goals.
They're like, yeah, I get that,but I really just think that,
honestly, there's no way I'm ina good spot.
And the reality is they were ina great spot.
Yes, they wanted to spend agood amount of money, but it
(02:11):
wasn't forever and it was totackle travel and different
things.
That, to them, was reallyimportant, and I was never going
to tell them to go retire earlyfor the sake of it, because
that's the last thing in theworld I would ever do.
But I also don't want someonemad at me when they're 85 with
plenty of money, wishing theyretired earlier when they
actually had their energy andhealth.
And so this person reached outa few months later and said, hey
(02:33):
, my neighbor has a big homeremodel that they're going to do
and they're actually planningon moving, but not moving and
downsizing, meaning moving toget a second home.
And so, yeah, they're not maybegoing out to eat as much, maybe
they're not spending on theirkids as much, but they really
did have some big financialgoals.
And so the point here is thisperson was thinking there's no
way I can retire early becauselook at my neighbor, when that's
(02:55):
just not the case, it's justhead trash.
So what I'm going to tell youtoday is a lot of head trash.
That, hopefully, should stopmake you worrying, and sometimes
my job, by the way, is to tellmy clients this is something to
worry about.
Markets are shifting.
Let's talk about your portfolio.
Can it still create the incomeyou need?
So I'm not Mr Nice Guy.
(03:15):
In fact, I will joke on myYouTube videos that I am the
meanest financial advisor.
I promise I'm not mean.
I'm very transparent and I tryto do it in a fun, enlightening
way, because my parents had anadvisor at one point.
They had a few, and that's thereason I do this today, because
they weren't all optimal.
Let's say and that's me beingnice here, and it was always
(03:35):
here we go financial advisormore numbers, more graphs.
I'm going to pretend not to fallasleep, or you know, I really
like this stuff, but my spouseis never interested in finances
because they keep it as dry ascan be, and I was trying to
think of a dry food, but I justhad dried mango a little bit,
and that's a bad example becauseI really liked that.
But anyways, you get my point.
So I'm going to hop into thesesix things that maybe you just
(03:58):
don't need to worry about, butthey're also mistakes that
hopefully you don't make.
So if you're new to the show,welcome.
I love getting to do this.
If you have not left a review oniTunes if that's where you
listen please do, or just sendme a note.
It's fun for me to get to hearhow I do help all of you, and
once again, this does feel likemy job in a way, in the best way
possible.
So send me a note via email.
(04:18):
Leave a comment on myearlyretirementpodcastcom.
Send us a note at RootFinancial.
Hello atrootfinancialpartnerscom.
Leave a review on Google Likethis helps more people find the
show and I really appreciate it.
So thank you in advance fordoing that.
And then, finally, I ask thatyou, if you wanna retire early,
that's awesome, but retire earlywith friends it's more fun.
If you retire early and you'relike I crushed it and you have
(04:40):
no one to hang out with, wellthen it's not going to be nearly
as enjoyable.
Still be probably way betterthan you working.
But you get my point.
So I am Ari Taublieb.
I'm the chief growth officerhere at Root and I love what I
get to do, which is makepodcasts like this on different
topics whether it be taxstrategy, healthcare, withdrawal
, estate, you name it.
Let's hop in.
So six common mistakes whenretiring early.
(05:01):
Common mistakes when retiringearly.
I'm going to go through each ofthese and I'm going to give an
example.
So the first common mistake andthis is something that if all
of you guys were on the amountof calls I'm on, you would see
oh my gosh, this is really thatcommon.
I just think it's hard tobelieve, but I'm going to tell
it to you right now.
So these are people that are 53.
They reach out and they go look, I've done well, I have 3
(05:22):
million bucks in my 401k, or twoand a half, and I feel like I'm
a savvy investor, but I justit's time to call it quits and I
don't want to work part-time.
I'm over it, but I don't reallywant to take this huge penalty,
this huge 10% penalty, to justto take money out of my 401k and
pay taxes.
So I'm just going to keepworking.
And what they didn't do is theydidn't think about having a
(05:42):
superhero account, which is whatI call a brokerage account, or
a taxable account, or a joint orindividual.
They're all named the samething.
They're all a taxable account,which is not a tax advantaged
account.
So you don't get to put moneyinto that like a 401k and get a
deduction, but there's norestrictions in terms of when
you can access the money.
So not enough people have ataxable, a superhero account to
(06:04):
help them bridge the gap.
And then, when they get it, themistakes they'll make is they'll
make it super aggressivebecause they're like this is a
superhero account.
Right, it should be like thebest account.
No, that's the first accountyou're going to touch.
You want that to be way safer.
You want your other accounts,like your 401k, to be a little
less safe because you want it togrow for you.
You might not touch it for afew years, but you still need it
(06:24):
pretty safe.
And then your Roth IRA.
Yeah, you want that superaggressive because you're not
going to be touching that for along time.
So the number one mistake ispeople don't have this account
at all and if you don't get onit and you're going to thank me
later, this is called abrokerage account.
I had someone call it Vanguardand say I want a superhero
account.
That's what this guy on thiscrazy podcast told me no, they
didn't say crazy, but that'swhat they said and I laughed
(06:46):
because it's not a real name ofan account.
I made it up superhero.
That's what I call this taxableaccount, because it is the
superhero, it's the best accountthat actually lets you retire
early.
It lets you keep your incomelow because you can use this
account to pay for living whenyou retire early.
If you pull from your 401k oran IRA, that's withdrawing
(07:07):
income as if you just made moremoney.
It's called ordinary incometaxes.
Brokerage accounts are subjectto capital gains taxes, which is
lower and sometimes 0%.
So not having a way to bridgethe gap, that's the first issue
I see.
And people that do have theaccount, they don't have it set
up properly.
So if you're listening going, Ihave a superhero account.
Oh my gosh, that brokerageaccount.
(07:28):
I'm so glad I started that whenI was younger.
Good job, because not enoughpeople actually have this
account.
For those that do, they findout late and then they put some
money into it.
So they limit their 401kcontributions because they see
the value of this and then theygo yeah, but now I have 75,000
or 200,000 bucks in there.
It's going to help myretirement, but why didn't I
have way more?
(07:48):
And so that's.
I never see people say I hadtoo much in my superhero account
and I don't have enough in my401k.
It's always the opposite muchin my superhero account and I
don't have enough in my 401k.
It's always the opposite.
Number two overlookinghealthcare costs.
Now let me clarify here.
I'm not saying overlooking asin oh my gosh, it's going to
cost me so much, there's no wayI can retire early.
I'm talking about not planning,meaning overlooking the
(08:11):
planning for healthcare, and thereason I say that is I have
clients that spend a hundredbucks a month on healthcare and
they're in a great spot and theyhave a really healthy subsidy
and they have $4 million.
And what that means is, if youkeep your income low because you
have a superhero account,you're basically telling the
government hey look, we areeligible for a subsidy.
We don't have enough income.
(08:31):
Even if you have $4 million inan IRA, that doesn't mean that
you don't get this subsidy.
So you can be really strategicand keep your income really low
but have a really healthyportfolio.
So the point here is don'toverlook healthcare costs and
simply go.
I can't retire early because ofhealthcare.
That is you cheating yourself.
It is a cost, sometimes it's asignificant cost, but not doing
(08:55):
the full analysis is youcheating yourself.
So, even if you're five yearsout or 10 years out from
retirement, I would encourageyou to start playing with a
calculator that is telling youexactly what healthcare costs
would look like.
I think we have the best oneand we partner with move health,
who is the best healthcarecompany in the world when it
comes to early retirementplanning.
I personally use them for myparents, my clients.
(09:18):
They're the best move healthioand I don't get paid more by
telling you guys about them ornot.
I just think they're great.
Move health is awesome.
They have a calculator.
It's in my early retirementacademy, so if you want to use
that, you can learn more in thedescription to join that academy
.
Number three is not having a taxstrategy.
So I talked about paying 0% intaxes.
Yeah, that is a reality whenyou retire early.
(09:40):
If you have a superhero account, not considering Roth
conversions, that might yieldhundreds of thousands of more
dollars for you tax-free inretirement.
So I have a ton of videos ontax strategy, which is my
favorite thing to talk about,because it's the number one,
most overlooked aspect ofplanning, in my opinion, and
that's my background.
I was working at a company thatspecialized in creating
(10:00):
tax-free income in retirementand I brought it to the early
retirement world Number four notspending on health before early
retirement.
I'll see people who are like,hey, I'm going to retire early,
then I'm going to focus onprioritizing my health, then I'm
going to hike, then I'm goingto travel which I understand
(10:21):
because you don't have unlimitedtime but I would think about it
like training.
I'm currently training forupcoming soccer tournament.
I'm going to the gym more.
I'm doing yoga more.
I have more motivation becauseI have a tournament and I'm a
calendar guy.
I need to see something on thecalendar.
I need to be excited for it.
That's how my brain works.
I think you should do the samefor your early retirement.
It's time to train.
So you can't get there and belike now I'll figure it out.
No, start training today.
(10:43):
Easier said than done, because Iknow a lot of you are like hey,
I have a family, I'm working,but it's about priority, and so
sometimes my tough love forclients is hey, you tell me you
want to travel and you want todo all this fun stuff.
Great.
I don't know if your body is ina position to do that, because
you told me you haven't workedout for a few years.
So start prioritizing health.
And sometimes it's as simple asme saying, look, I don't know
(11:04):
if it's possible, but could youcut down to four days a week?
Maybe it's less income, itprobably would be, but look,
your finances are going to beokay If you're still adding X
amount to your 401k, are goingto be okay if you're still
adding X amount to your 401k.
And that's one day a week whereit's like you're prioritizing
health a ton.
I don't love the recommendation.
I'd rather you do 30 minutes aday than two hours on a Friday.
But I had one client that toldme it was really helpful for
(11:26):
them and they're like.
Then, all of a sudden, I kindof got addicted to it and I made
it work and so it was what theyneeded to get them over that
hump.
Number four was health.
I just did that.
Number five not thinking aboutyour dream retirement.
Oh, I see this all the time.
I'm going to retire, I'm goingto spend $7,000 a month.
It's going to be awesome.
Yeah, maybe there's a new carI'm going to buy or a home
(11:46):
remodel I need to do, but no,I'm pretty much just.
You know, I think $7,000 amonth is good.
Then they retire and go.
I have way more time, I haveway more of my health than I
thought I was going to havebecause I only worked out on
Fridays before.
No, I'm just messing aroundwith you guys there.
But not thinking about a dreamretirement is the biggest issue,
because here's someone thatcould get by on $7,000 a month,
(12:07):
but that $84,000 a year plus aremodel and travel, look, that's
a lot of money.
But to be honest, this couplethat I'm thinking of, they would
love to spend way more and theydon't hate their job.
So for them it probably makessense to work another two years,
even if right now they're 58.
And if they're listening,they're like you're explaining
my situation, I am, but I'm notsaying your name but they're 58.
(12:29):
They don't hate their job.
So it's like hey, would yourather retire and spend 10,000 a
month and never worry about?
Hey, would you rather retireand spend $10,000 a month and
never worry about?
Hey, what if I want to take anextra trip and never worry about
?
Hey, if I want to potentiallyget a second home, like that's
now a possibility for you,having to work two more years.
For them it was like oh, thisis interesting.
For others they're like $10,000a month.
(12:49):
What would I do with $10,000 amonth?
If I had $6,000 a month, I'd bemore than happy, and so that
person should stop workingbecause they don't need as much
money.
That doesn't add to theirquality of life.
So my ask of you please dreambig.
Dream big.
You don't have to do all of it,but at least think about it.
(13:10):
Would you love to take fourtrips a year at 25,000 a year?
Is that forever?
Do you like new cars?
Do you want to do a homeremodel?
Are you going to travelsignificantly?
Do you want to take friends andfamily?
So, maybe dream before youactually kind of write out your
expenses.
But I do encourage you to writeit out, because most people are
like yeah, I've got my billsand groceries and mortgage, but
that's going to go away inretirement and I think we spend
(13:31):
about $6,000 a month as ahousehold.
So if we could just have that,that'd be great.
They're assuming it's going tobe the same and it's not.
When you have more time, youspend more money.
You probably recognize that,because on the weekends, that's
when your bills go up, becauseyou're doing more fun stuff.
And if you're doing more funstuff more often, great, that's
why you're retiring early.
So I'm proud of you.
But I now need you to reallyspend knowing that you're in a
(13:54):
plan.
You're in a plan, you're in aposition excuse me, to do that.
And then number six, the lastone here, the mistake is people
don't really think about purposeand fulfillment.
They're like, yeah, yeah, Ineed to think about it and I
will, but right now I'm just sobusy working.
And so I'll play that role forclients and we'll say, okay,
let's pretend you're retired,what do you want to spend your
time doing?
And they or I'm gonna play golf.
(14:22):
And I'll say, great, let'sassume the volunteer place shuts
down and you hurt your back Nowwhat?
And they're like I don't know,like that was the plan, it was
volunteer at this one spot andgolf.
And now my wife or husband orpartner, they're sick of me
because I've never been home forthis amount of time, and so
they're kind of wishing I didn'tretire this early, or not.
Really, I don't hear that a ton, but sometimes you'd be shocked
(14:44):
.
So the point here is really dothink about purpose and
fulfillment.
And if there's one thing I cantell you when it comes to like
identity a little bit which Iknow it could be a little
woo-woo here, but just do me afavor and watch one documentary.
I don't get any commission fromthis.
It's called In and Of Itself.
In and Of Itself.
It's on Hulu.
(15:05):
It's a great documentary.
I think it's on Disney Plus aswell.
This is what I ask my clients tolisten to when they're six
months out from retirement,because it helps them think more
about okay, who am I, what do Iwant to do?
And it's a kind of fun magicshow a little bit.
I'm not selling it well, butthe point here is it's really
interesting and most of myclients go look, if I didn't
(15:26):
listen to this, it really wouldhave been a different retirement
.
So you know, hour of yourevening, if you don't mind,
check that out and let me knowwhat you think.
If you go, hey, this was superhelpful.
I see why you recommend it,awesome.
If you go, no, that actuallymade me not want to retire early
.
Well, you'd be the first personto say, but I appreciate all
feedback.
So that is it for this podcastepisode six mistakes.
I see a lot when people wannaretire early.
(15:47):
If, once again, you guys wannawork with Root, this is what we
love to do, so please do reachout.
You'll see the link in thedescription if you wanna work
with us and we'll go from there.
That's it.
See you guys next time.
Thank you all, as always, forlistening to the Early
Retirement Podcast.
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
(16:11):
love getting to do this.
Now, please be smart about this.
Before you actually execute anystrategy that you see me talk
about or hear me talk about,should I say Please talk to your
financial advisor, your taxpreparer, your estate attorney.
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
(16:32):
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom, if
you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
(16:54):
people, I will absolutely makean episode on it.
At the very least give you someinsight.
That's it.
Thanks, guys.
I know I'm not your personal financial advisor, but
sometimes I feel like thatbecause you guys will leave me
comments going hey, this reallyhelped me retire early.
This is something I justwouldn't have considered
otherwise, because I'm not doingit all day, and so I do believe
that I have this job, so tospeak, to make sure I'm
educating you all properly.
Now, the fun part is I lovedoing it, so it's not a burden
(00:22):
in any way, it's the opposite.
But there's something I want toshare with you, and this is how
I want to start this episode.
So what I love about my job isgetting to advise people about
hey, here's something that youjust didn't know that might
really shift your retirement howyou can save on health care
costs, how you can create income, how you can you name it.
But my partner, james, and thefounder of Root his dad once
(00:42):
told him something that I wantto tell you all right now, and
so James is the founder of Root.
I'm the chief growth officer atRoot.
We are growing Root assustainably as we can, so the
service never suffers, and whatwe really care about is that
clients go wow, my life is waybetter working with Root.
And when James was speaking tohis dad.
His dad told James his job isnot to be an advisor.
(01:05):
And James said that'sinteresting because I'm a
financial advisor.
And his dad said your job isnot to advise.
Your job is to organizepeople's thinking, which is
sometimes telling people whatnot to worry about.
And that's what today is goingto be about, because I think a
lot of you are worryingunnecessarily.
I have a phrase for this that Imade up.
I call it head trash, whereyou're literally thinking about
(01:30):
things that you worry about,that you do not need to worry,
but you're worrying.
It's a real worry, but it'sfake, and the reason it's fake
is through this example.
So there's a funny one, butit's important.
So I had someone reach out andgo all right, I really don't
think I should retire earlybecause I have $2 million.
I'm kind of a big spender and Ijust don't think I have enough,
but I don't love my job.
And I said why do you feel likeyou can't retire early?
They said well, I have aneighbor, and my neighbor and I
(01:51):
are very transparent withfinances.
They have more money and theywant to spend less than me.
So, like I know, I'm not in agood spot.
I said you don't know thatbecause you don't know their
planning and their legacy goals.
They're like, yeah, I get that,but I really just think that,
honestly, there's no way I'm ina good spot.
And the reality is they were ina great spot.
Yes, they wanted to spend agood amount of money, but it
(02:11):
wasn't forever and it was totackle travel and different
things.
That, to them, was reallyimportant, and I was never going
to tell them to go retire earlyfor the sake of it, because
that's the last thing in theworld I would ever do.
But I also don't want someonemad at me when they're 85 with
plenty of money, wishing theyretired earlier when they
actually had their energy andhealth.
And so this person reached outa few months later and said, hey
(02:33):
, my neighbor has a big homeremodel that they're going to do
and they're actually planningon moving, but not moving and
downsizing, meaning moving toget a second home.
And so, yeah, they're not maybegoing out to eat as much, maybe
they're not spending on theirkids as much, but they really
did have some big financialgoals.
And so the point here is thisperson was thinking there's no
way I can retire early becauselook at my neighbor, when that's
(02:55):
just not the case, it's justhead trash.
So what I'm going to tell youtoday is a lot of head trash.
That, hopefully, should stopmake you worrying, and sometimes
my job, by the way, is to tellmy clients this is something to
worry about.
Markets are shifting.
Let's talk about your portfolio.
Can it still create the incomeyou need?
So I'm not Mr Nice Guy.
(03:15):
In fact, I will joke on myYouTube videos that I am the
meanest financial advisor.
I promise I'm not mean.
I'm very transparent and I tryto do it in a fun, enlightening
way, because my parents had anadvisor at one point.
They had a few, and that's thereason I do this today, because
they weren't all optimal.
Let's say and that's me beingnice here, and it was always
(03:35):
here we go financial advisormore numbers, more graphs.
I'm going to pretend not to fallasleep, or you know, I really
like this stuff, but my spouseis never interested in finances
because they keep it as dry ascan be, and I was trying to
think of a dry food, but I justhad dried mango a little bit,
and that's a bad example becauseI really liked that.
But anyways, you get my point.
So I'm going to hop into thesesix things that maybe you just
(03:58):
don't need to worry about, butthey're also mistakes that
hopefully you don't make.
So if you're new to the show,welcome.
I love getting to do this.
If you have not left a review oniTunes if that's where you
listen please do, or just sendme a note.
It's fun for me to get to hearhow I do help all of you, and
once again, this does feel likemy job in a way, in the best way
possible.
So send me a note via email.
(04:18):
Leave a comment on myearlyretirementpodcastcom.
Send us a note at RootFinancial.
Hello atrootfinancialpartnerscom.
Leave a review on Google Likethis helps more people find the
show and I really appreciate it.
So thank you in advance fordoing that.
And then, finally, I ask thatyou, if you wanna retire early,
that's awesome, but retire earlywith friends it's more fun.
If you retire early and you'relike I crushed it and you have
(04:40):
no one to hang out with, wellthen it's not going to be nearly
as enjoyable.
Still be probably way betterthan you working.
But you get my point.
So I am Ari Taublieb.
I'm the chief growth officerhere at Root and I love what I
get to do, which is makepodcasts like this on different
topics whether it be taxstrategy, healthcare, withdrawal
, estate, you name it.
Let's hop in.
So six common mistakes whenretiring early.
(05:01):
Common mistakes when retiringearly.
I'm going to go through each ofthese and I'm going to give an
example.
So the first common mistake andthis is something that if all
of you guys were on the amountof calls I'm on, you would see
oh my gosh, this is really thatcommon.
I just think it's hard tobelieve, but I'm going to tell
it to you right now.
So these are people that are 53.
They reach out and they go look, I've done well, I have 3
(05:22):
million bucks in my 401k, or twoand a half, and I feel like I'm
a savvy investor, but I justit's time to call it quits and I
don't want to work part-time.
I'm over it, but I don't reallywant to take this huge penalty,
this huge 10% penalty, to justto take money out of my 401k and
pay taxes.
So I'm just going to keepworking.
And what they didn't do is theydidn't think about having a
(05:42):
superhero account, which is whatI call a brokerage account, or
a taxable account, or a joint orindividual.
They're all named the samething.
They're all a taxable account,which is not a tax advantaged
account.
So you don't get to put moneyinto that like a 401k and get a
deduction, but there's norestrictions in terms of when
you can access the money.
So not enough people have ataxable, a superhero account to
(06:04):
help them bridge the gap.
And then, when they get it, themistakes they'll make is they'll
make it super aggressivebecause they're like this is a
superhero account.
Right, it should be like thebest account.
No, that's the first accountyou're going to touch.
You want that to be way safer.
You want your other accounts,like your 401k, to be a little
less safe because you want it togrow for you.
You might not touch it for afew years, but you still need it
(06:24):
pretty safe.
And then your Roth IRA.
Yeah, you want that superaggressive because you're not
going to be touching that for along time.
So the number one mistake ispeople don't have this account
at all and if you don't get onit and you're going to thank me
later, this is called abrokerage account.
I had someone call it Vanguardand say I want a superhero
account.
That's what this guy on thiscrazy podcast told me no, they
didn't say crazy, but that'swhat they said and I laughed
(06:46):
because it's not a real name ofan account.
I made it up superhero.
That's what I call this taxableaccount, because it is the
superhero, it's the best accountthat actually lets you retire
early.
It lets you keep your incomelow because you can use this
account to pay for living whenyou retire early.
If you pull from your 401k oran IRA, that's withdrawing
(07:07):
income as if you just made moremoney.
It's called ordinary incometaxes.
Brokerage accounts are subjectto capital gains taxes, which is
lower and sometimes 0%.
So not having a way to bridgethe gap, that's the first issue
I see.
And people that do have theaccount, they don't have it set
up properly.
So if you're listening going, Ihave a superhero account.
Oh my gosh, that brokerageaccount.
(07:28):
I'm so glad I started that whenI was younger.
Good job, because not enoughpeople actually have this
account.
For those that do, they findout late and then they put some
money into it.
So they limit their 401kcontributions because they see
the value of this and then theygo yeah, but now I have 75,000
or 200,000 bucks in there.
It's going to help myretirement, but why didn't I
have way more?
(07:48):
And so that's.
I never see people say I hadtoo much in my superhero account
and I don't have enough in my401k.
It's always the opposite muchin my superhero account and I
don't have enough in my 401k.
It's always the opposite.
Number two overlookinghealthcare costs.
Now let me clarify here.
I'm not saying overlooking asin oh my gosh, it's going to
cost me so much, there's no wayI can retire early.
I'm talking about not planning,meaning overlooking the
(08:11):
planning for healthcare, and thereason I say that is I have
clients that spend a hundredbucks a month on healthcare and
they're in a great spot and theyhave a really healthy subsidy
and they have $4 million.
And what that means is, if youkeep your income low because you
have a superhero account,you're basically telling the
government hey look, we areeligible for a subsidy.
We don't have enough income.
(08:31):
Even if you have $4 million inan IRA, that doesn't mean that
you don't get this subsidy.
So you can be really strategicand keep your income really low
but have a really healthyportfolio.
So the point here is don'toverlook healthcare costs and
simply go.
I can't retire early because ofhealthcare.
That is you cheating yourself.
It is a cost, sometimes it's asignificant cost, but not doing
(08:55):
the full analysis is youcheating yourself.
So, even if you're five yearsout or 10 years out from
retirement, I would encourageyou to start playing with a
calculator that is telling youexactly what healthcare costs
would look like.
I think we have the best oneand we partner with move health,
who is the best healthcarecompany in the world when it
comes to early retirementplanning.
I personally use them for myparents, my clients.
(09:18):
They're the best move healthioand I don't get paid more by
telling you guys about them ornot.
I just think they're great.
Move health is awesome.
They have a calculator.
It's in my early retirementacademy, so if you want to use
that, you can learn more in thedescription to join that academy
.
Number three is not having a taxstrategy.
So I talked about paying 0% intaxes.
Yeah, that is a reality whenyou retire early.
(09:40):
If you have a superhero account, not considering Roth
conversions, that might yieldhundreds of thousands of more
dollars for you tax-free inretirement.
So I have a ton of videos ontax strategy, which is my
favorite thing to talk about,because it's the number one,
most overlooked aspect ofplanning, in my opinion, and
that's my background.
I was working at a company thatspecialized in creating
(10:00):
tax-free income in retirementand I brought it to the early
retirement world Number four notspending on health before early
retirement.
I'll see people who are like,hey, I'm going to retire early,
then I'm going to focus onprioritizing my health, then I'm
going to hike, then I'm goingto travel which I understand
(10:21):
because you don't have unlimitedtime but I would think about it
like training.
I'm currently training forupcoming soccer tournament.
I'm going to the gym more.
I'm doing yoga more.
I have more motivation becauseI have a tournament and I'm a
calendar guy.
I need to see something on thecalendar.
I need to be excited for it.
That's how my brain works.
I think you should do the samefor your early retirement.
It's time to train.
So you can't get there and belike now I'll figure it out.
No, start training today.
(10:43):
Easier said than done, because Iknow a lot of you are like hey,
I have a family, I'm working,but it's about priority, and so
sometimes my tough love forclients is hey, you tell me you
want to travel and you want todo all this fun stuff.
Great.
I don't know if your body is ina position to do that, because
you told me you haven't workedout for a few years.
So start prioritizing health.
And sometimes it's as simple asme saying, look, I don't know
(11:04):
if it's possible, but could youcut down to four days a week?
Maybe it's less income, itprobably would be, but look,
your finances are going to beokay If you're still adding X
amount to your 401k, are goingto be okay if you're still
adding X amount to your 401k.
And that's one day a week whereit's like you're prioritizing
health a ton.
I don't love the recommendation.
I'd rather you do 30 minutes aday than two hours on a Friday.
But I had one client that toldme it was really helpful for
(11:26):
them and they're like.
Then, all of a sudden, I kindof got addicted to it and I made
it work and so it was what theyneeded to get them over that
hump.
Number four was health.
I just did that.
Number five not thinking aboutyour dream retirement.
Oh, I see this all the time.
I'm going to retire, I'm goingto spend $7,000 a month.
It's going to be awesome.
Yeah, maybe there's a new carI'm going to buy or a home
(11:46):
remodel I need to do, but no,I'm pretty much just.
You know, I think $7,000 amonth is good.
Then they retire and go.
I have way more time, I haveway more of my health than I
thought I was going to havebecause I only worked out on
Fridays before.
No, I'm just messing aroundwith you guys there.
But not thinking about a dreamretirement is the biggest issue,
because here's someone thatcould get by on $7,000 a month,
(12:07):
but that $84,000 a year plus aremodel and travel, look, that's
a lot of money.
But to be honest, this couplethat I'm thinking of, they would
love to spend way more and theydon't hate their job.
So for them it probably makessense to work another two years,
even if right now they're 58.
And if they're listening,they're like you're explaining
my situation, I am, but I'm notsaying your name but they're 58.
(12:29):
They don't hate their job.
So it's like hey, would yourather retire and spend 10,000 a
month and never worry about?
Hey, would you rather retireand spend $10,000 a month and
never worry about?
Hey, what if I want to take anextra trip and never worry about
?
Hey, if I want to potentiallyget a second home, like that's
now a possibility for you,having to work two more years.
For them it was like oh, thisis interesting.
For others they're like $10,000a month.
(12:49):
What would I do with $10,000 amonth?
If I had $6,000 a month, I'd bemore than happy, and so that
person should stop workingbecause they don't need as much
money.
That doesn't add to theirquality of life.
So my ask of you please dreambig.
Dream big.
You don't have to do all of it,but at least think about it.
(13:10):
Would you love to take fourtrips a year at 25,000 a year?
Is that forever?
Do you like new cars?
Do you want to do a homeremodel?
Are you going to travelsignificantly?
Do you want to take friends andfamily?
So, maybe dream before youactually kind of write out your
expenses.
But I do encourage you to writeit out, because most people are
like yeah, I've got my billsand groceries and mortgage, but
that's going to go away inretirement and I think we spend
(13:31):
about $6,000 a month as ahousehold.
So if we could just have that,that'd be great.
They're assuming it's going tobe the same and it's not.
When you have more time, youspend more money.
You probably recognize that,because on the weekends, that's
when your bills go up, becauseyou're doing more fun stuff.
And if you're doing more funstuff more often, great, that's
why you're retiring early.
So I'm proud of you.
But I now need you to reallyspend knowing that you're in a
(13:54):
plan.
You're in a plan, you're in aposition excuse me, to do that.
And then number six, the lastone here, the mistake is people
don't really think about purposeand fulfillment.
They're like, yeah, yeah, Ineed to think about it and I
will, but right now I'm just sobusy working.
And so I'll play that role forclients and we'll say, okay,
let's pretend you're retired,what do you want to spend your
time doing?
And they or I'm gonna play golf.
(14:22):
And I'll say, great, let'sassume the volunteer place shuts
down and you hurt your back Nowwhat?
And they're like I don't know,like that was the plan, it was
volunteer at this one spot andgolf.
And now my wife or husband orpartner, they're sick of me
because I've never been home forthis amount of time, and so
they're kind of wishing I didn'tretire this early, or not.
Really, I don't hear that a ton, but sometimes you'd be shocked
(14:44):
.
So the point here is really dothink about purpose and
fulfillment.
And if there's one thing I cantell you when it comes to like
identity a little bit which Iknow it could be a little
woo-woo here, but just do me afavor and watch one documentary.
I don't get any commission fromthis.
It's called In and Of Itself.
In and Of Itself.
It's on Hulu.
(15:05):
It's a great documentary.
I think it's on Disney Plus aswell.
This is what I ask my clients tolisten to when they're six
months out from retirement,because it helps them think more
about okay, who am I, what do Iwant to do?
And it's a kind of fun magicshow a little bit.
I'm not selling it well, butthe point here is it's really
interesting and most of myclients go look, if I didn't
(15:26):
listen to this, it really wouldhave been a different retirement
.
So you know, hour of yourevening, if you don't mind,
check that out and let me knowwhat you think.
If you go, hey, this was superhelpful.
I see why you recommend it,awesome.
If you go, no, that actuallymade me not want to retire early
.
Well, you'd be the first personto say, but I appreciate all
feedback.
So that is it for this podcastepisode six mistakes.
I see a lot when people wannaretire early.
(15:47):
If, once again, you guys wannawork with Root, this is what we
love to do, so please do reachout.
You'll see the link in thedescription if you wanna work
with us and we'll go from there.
That's it.
See you guys next time.
Thank you all, as always, forlistening to the Early
Retirement Podcast.
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
(16:11):
love getting to do this.
Now, please be smart about this.
Before you actually execute anystrategy that you see me talk
about or hear me talk about,should I say Please talk to your
financial advisor, your taxpreparer, your estate attorney.
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
(16:32):
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom, if
you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
(16:54):
people, I will absolutely makean episode on it.
At the very least give you someinsight.
That's it.
Thanks, guys.
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