June 23, 2025 • 18 mins
Retirement doesn’t come down to a magic number, it comes down to your number. In this episode, we walk through a simple, personalized framework to help you understand when you can truly retire, based on what you want life to look like, not generic benchmarks.
We cover the core question: How much do you want to spend each month? From there, we reverse-engineer your retirement target, factoring in taxes, withdrawal strategies, estate planning, and those big one-time expenses that often get missed.
And it’s not just about the math. We dive into the emotional side of retirement. It's about how to find purpose, identity, and meaning in this next chapter. Whether retirement feels decades away or just around the corner, this episode will help you stop guessing and start planning with clarity.
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Advisory services are offered through Root Financial Partners, LLC, an SEC registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult your CPA or attorney regarding your specific situation.
The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.
Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements.
Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.
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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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
There are a lot of assumptions that you must
consider when you're talkingabout retiring early.
The issue is, many peopleconsider these assumptions and
then they go even further andget the analysis paralysis and
go wow, there's so many factorshere.
I really just can't play onretiring early.
I don't know how much is enoughand I'm just going to keep
working because it's easier.
I don't want to run out ofmoney and I don't hate my job.
(00:22):
Maybe I would love to do otherthings, but I feel like I'm only
going to be able to make thisamount of money my high earning
years for so long.
I'd rather just keep workingand be extra safe.
I hear that a lot.
There's a big risk to that andwhat I'm going to do today is
show you a framework so that youcan hopefully think really
clearly about how to retireearly, and I'm going to do it
for you in the next 10 minutes.
(00:43):
Now, if you're new to the show,sometimes I will have a large
case study where I'll literallygo through an example and show
them exactly how much theyshould convert for optimal tax
purposes, do a Roth conversion.
I'll talk about healthcare.
I'll talk about estate planning.
I'll talk about insurance.
Today is not that Today is avery simple framework.
(01:03):
It's a very simple episode thathopefully removes a lot of head
trash.
Head trash is the phrase that Italk about when people reach
out and say, yeah, there's noway I can retire early because I
don't have $3 million, so I'mjust going to keep working and
I'll say that is complete headtrash.
You have no idea if yourneighbor, who has $3 million,
wants a second home, if theyspend three times as much as you
(01:24):
, if they're not optimizingtheir situation, you might not
need $3 million, you might need$1 million and you might be able
to retire early.
It totally depends on you andyour goals.
So don't have the cookie cutterapproach, don't have head trash
.
Now here's the framework andI'm going to keep it really
simple for you guys.
So too many people go.
I don't know my number exactly.
(01:45):
Just tell me how much do I needto spend?
The reason it doesn't exist isbecause it would be like going
to the doctor and saying, hey,so I filled out this
questionnaire for you on myhealth.
Just tell me what surgery isgoing to fix all of that.
They'd be like well, it's notthat simple.
You're going to need surgery onyour ankle because that's
broken, but I'm going to needyou to lower your cholesterol by
taking this pill and doing yadayada.
(02:05):
It's not one size fits all.
Now, what I also don'tsubscribe to, because I see this
a lot and, more importantly,this happened to my parents.
My parents used to always go totheir advisor and their advisor
would always take the easy wayout and I could tell the reason
I do this for a living now isbecause my parents were burned
by four advisors out, and Icould tell the reason I do this
for a living now is because myparents were burned by four
(02:26):
advisors, so they used to go totheir advisor, ask some simple
questions.
My parents were great at makingmoney, not great at saving or
investing their money whichthere's a big difference there
and they would bring a situationand the advisor would always
say it depends.
And I would say that's great,it depends, but I need more than
that.
Imagine once again you go to thedoctor.
You go, hey doc, so my ankle isreally bothering me and for all
(02:50):
of you to know the reason I'mbringing up ankle, I'm a soccer
player.
My ankle is legitimatelybothering me, so didn't just
pick ankle randomly.
So my ankle, which is on themend.
No need to worry, not that youguys are anyways, let's get to
the point here the ankle.
Cause I watch YouTube and Ihate when people go on tangents
too much.
Okay, here we go.
So back to the ankle.
You go to the doctor Doc, myankle is really bothering me.
And they literally tell you hey, it depends, there's different
(03:13):
protocols.
You could do physical therapy,you could get surgery, you could
see if it gets better.
It depends, and you're thinkingto yourself that's great, that
it depends.
I need more than that.
Tell me, what do I do?
That's what I'm going to try todo for you guys right now.
Obviously no black and whiteanswers here.
It all depends.
Consult with your financialprofessional before executing
anything today.
But this should be a frameworkthat helps.
(03:35):
So, the first place to start,how much would you love to spend
?
Let's just pretend if I were togive you a blank check and I'm
going to say you have $8,000 amonth, net after taxes, adjusted
for inflation.
Would that allow you to doeverything you want for the rest
of your life?
Here I'm asking you right now,directly.
You can comment below and say,yes, $8,000 a month is great.
(03:55):
You could say no, I would need$12,000.
But how much?
If I said I'm going to startwith $8,000, you have $96,000 a
year.
That's every single year forthe rest of your life Would you
be able to enjoy retirement?
Pretend you say yes, I'd saygreat, $2 million is your
starting spot.
$2 million if we're taking a 5%withdrawal rate on that.
(04:15):
That's about $100,000 a year,not a million a year.
$100,000 a year what's the bigassumption?
The big assumption here is thatyou're willing to understand.
When markets do well, you canspend more.
When markets are doing poorly,you spend less.
You're willing to understandthat $2 million.
I'm assuming in thishypothetical that you don't have
(04:35):
to go pay taxes on that, thatyou just have $100,000.
The reality is you don't have$2 million, most likely all in a
Roth IRA.
Maybe you have 2 million oryou're on track for 2 million at
age 55 and it will be in your401k.
Okay, so if you have 2 millionand it's in your 401k and you
want to net 100,000 a year, youneed to really probably sell
(04:58):
$120,000 worth using a 20% taxassumption here to end up with
$100,000.
So what that's telling me islet's use $2.5 million.
If you have $2.5 million rightnow and you want to spend
$100,000 a year throughoutretirement, I might say I have
no idea why you're working.
What do you need to add on tothat?
Well, what you need to add onto that is how much is too much
(05:20):
to pass away with?
So I start with the estatepiece.
I'll ask someone you'respending $100,000 every single
year, you have $2 million andit's all in a Roth IRA.
Hypothetically, you're going topass away with $8 million.
How would you feel?
Some of you will go I don'tneed $8 million.
I would rather spend more.
Great, you don't want tooverspend the early years of
(05:41):
retirement.
You also don't want to be 80with 6 million going.
Hey, I didn't need this amountof money, I should have spent
more.
There's a balance there.
But ask yourself is there a veryspecific estate goal?
Because that drives a lot ofthe conversation.
If you're thinking, yeah, Iwant to leave 2 million to three
different children, great, youshould save and invest more.
If right now you're 40 and youhave a million dollars, if right
(06:03):
now you're 40 and you have amillion dollars, and if you save
and invest well and invest wellbeing the key here and in 10
years you're going to plan onhaving $2 million.
You should feel pretty goodright now, understanding that in
10 years you could legitimatelyretire and spend $100,000 a
year.
That is a reality.
I'm using a 5% withdrawal rate,assuming you're doing all the
(06:24):
right things, investing reallywell, not just in the s?
P 500.
Lots of different asset classes, diversifying.
Check out my other videos onwithdrawal strategy to fully
understand why it's reallyimportant to diversify across
many asset classes.
Because in retirement, if oneasset class is not doing well,
you need the others to pick upthe slack.
There.
That's different when you'resaving and investing along the
(06:46):
way.
Along the way, if you put yourmoney into the S&P 500 and it
grows and grows awesome, there'snot a big risk.
If markets are down, you'rejust putting more money into it.
But in retirement, if all yourmoney is in the S&P 500, which I
see more often than you wouldthink and you want to go on a
new trip and markets are down,you don't have to go sell at a
(07:07):
loss.
You want to have some otherasset class, some other spot.
That's actually an uncorrelatedasset class.
So, with that being said, we'llstart on the estate side Now.
Level two is go add on otherlayers.
For example, let's pretendyou're 60 and we have a
conversation and you feelconfident that you could live
off 100,000 a year and you'vegot 2 million bucks and I say,
(07:30):
hey, you're in a comfortableposition.
That doesn't mean you should goretire.
It means you're in acomfortable position to create
100,000 a year for the rest ofyour life, to create $100,000 a
year for the rest of your life.
The reality is you might wantto do a home remodel, you might
have big healthcare expenses,you might want to travel
extensively, but just the first10 years.
Is the plan accounting for that?
Because many people are ontrack for retirement and when I
(07:53):
say retirement, I'm sayingthey're 65 to 95, looks crystal
clear, but it's the 60 to 65 orthe 50 to 60.
That's where the lack ofclarity is and that's where most
people keep working becausethey're wondering I don't want
to spend too much too early onand not have enough later.
So the reason I bring this upis the value of working is
(08:15):
significant.
If you are planning for theseother one-off expenses, if
you're cash flowing, your kid'scollege, if you're wondering
about how am I going to pay fortaxes in retirement, which may
be one of your largest expenses.
You need to make more money toaccount for that now, so that we
can pay those taxes and pay foryou to do everything you want
(08:35):
in more.
But let's pretend it takes youtwo years to save, let's just
say $50,000.
And that is allowing you totake three big trips in the
first year of retirement.
And then you go.
You know what?
We don't really have that manyother large expenses.
Hypothetically we don't havekids or we're gonna downsize in
the future.
Awesome, you might wanna reallyconsider looking into retiring
(08:57):
way earlier than what you wereprobably thinking.
You may have thought we'll workfive more years, six more years
.
No, you might be in a positionto do it way sooner than you
think.
And it's just because of thishead trash concept where people
think, well, my neighbors havelike two, 3 million, 4 million,
probably way more than that.
They're not even talking aboutan early retirement, so it feels
weird that I'm even bringingthat up.
(09:17):
And then there's a sense ofidentity issues and what are you
going to spend your time on?
And so the third framework tothink through here.
So first one is withdrawal rate.
Take literally 5%, and that ishow much you can spend, assuming
you're doing all the rightthings.
Big assumption there If we'retaking 5% of a $2 million
(09:38):
portfolio, that's $100,000.
You want to take 5% of a 3million portfolio, that's
$150,000.
So ask yourself first, how muchwould you love to spend as your
base rate throughout retirement, meaning?
Here's a check every month tomeet your expenses.
Some of you would say it's 4,000a month.
Great.
Then $2 million might becompletely unrealistic and
(10:00):
unnecessary for you.
And stop beating yourself upthinking that you didn't save
well enough or invest wellenough.
I see way too many people whodo that, who go.
Ah, I feel like I'm so behind.
In your videos you give so manyexamples of people that have 5
million or 6 million.
Yeah, there's people who needto optimize, who have those
amount of assets, and there'sother people that don't have
anywhere near those assets, whodon't need to keep working
(10:23):
because, for you, you'd ratherretire earlier than spend more.
That's the big trade-off here.
Would you rather work longer soyou can spend more, or would
you rather retire earlier, evenif it means spending less?
Everyone's quality of lifediffers here.
With this being said, the firstone withdrawal rate.
The second one is to get really, really clear and to say well,
(10:43):
estate planning.
Don't forget, of course, legacygoals.
But then we're thinking aboutwithdrawal rates, then we're
going deeper here and we'regoing okay, how much could we
realistically spend that wouldallow us to enjoy our lives?
Don't do my pet peeve.
My pet peeve is how much couldwe get by on?
Maybe we could get by on $3,000a month.
Retirement is not about gettingby, it's how much would you
love to spend.
(11:04):
Then we need to add in whatabout those other what-ifs?
What if it turns out my healthisn't in a comfortable position
and I want to be able to affordlong-term care at this facility
that cost $120,000 a year forthe last five years, versus
$70,000 a year the last fiveyears, for 70,000 a year the
last five years Great.
Add that to the plan.
What if you downsize?
What if there's inheritance?
What if you still need to payfor kids' college?
(11:25):
Add in these what ifs.
Everything I'm talking abouttoday is easiest with a software
tool the one in the description, I think, is the best one,
which is why I talk about it,but you can get access to this
If you want to build your ownplan.
Many of you already have wholisten or watch this content.
And then, finally, that finalframework here is what are you
(11:46):
going to spend your time on forpurpose and fulfillment?
Because if you knew tomorrowyou did not need to go back to
work.
What would you do?
Well, the reality is, most ofyou go I'm going to spend time
traveling, I'm going to spendtime with family and friends and
it's going to be awesome.
And then three, six monthslater, now, there's some boredom
that sets in.
Now some of you are like I amnot worried about being bored,
(12:07):
awesome, you can ignoreeverything I'm saying right now.
But others of you go.
No, I think I really am goingto struggle.
I don't know exactly how I'mgoing to spend my time.
I just worked the last 40 yearsreally hard at this one career.
The idea of not having to dothat, I mean it sounds good, but
I don't really know how I'mgoing to spend my time
legitimately.
Well, yes, you could volunteer.
(12:27):
Yes, you could look intocertain hobbies, lots of
different options that weliterally help our clients with
here at Root.
But for you, this idea ofhaving this magic number once I
hit $3 million, everything'sgoing to go to bliss it doesn't
work that way.
But if you had $3 million andyou want to spend $150,000 a
year.
I would strongly considerlooking into retiring if that's
(12:49):
something that's of interest.
And then I would ask you, Iwould beg you, if you're my
client, I go, please.
I need to know what other whatifs need to happen.
Do you want to redo your pool?
Do you want to downsize in thefuture?
Is inheritance coming?
Do we want to even plan on it?
Do you want to help your kidswith the first down payment and
pretend hypothetically they go?
We'd love to help both of ourkids with a down payment and
(13:10):
help with a wedding and we wantto do a home remodel and they
say that that will cost about Idon't know, let's say 150,000.
And if they make 250,000 as acouple, I'd say, guys, what I
want you to do, you've alreadysaved, invested really well.
I consider stop adding new moneyto your 401k, except the
employer match, because we lovefree money Outside of that.
(13:30):
It's going to feel weirdbecause you've maxed out your
401k for the last 30 years.
I want you to consider stoppingthat.
Save more money just strictlyto a high yield savings account.
That's for those next threeyears, of all those things you
just mentioned kids, college andbuying new cars and weddings
and remodels, and what you'regoing to do is you're going to
work three more years, becausethat's when we're going to have
(13:53):
enough money to be able totackle all of those one-off
expenses.
At the same time, when youretire, you're going to have
your base of, you know, 150,000a year.
You know, monthly, you're goingto have your 12 a month.
You're going to be more thanfine and some of you are
thinking about it, but you'regoing into unbelievable depths,
which I'm not blaming you for.
(14:14):
But I don't want any of you overthinkers out there to be mad at
me later when you're like hey,you talk about all these topics,
but you never really simplifiedit for me.
I want to know when can Iretire and I'm trying to get
clarity around that.
Hopefully this is the episodethat clicks.
I know I watch a lot ofdifferent YouTube videos and
podcasts on a lot of topicsmainly history at the moment but
(14:35):
when I'm watching, I wantwhat's the takeaway?
Okay, great.
So this is what happened duringthe Spanish Inquisition.
Here's exactly why it occurredat this timeframe and what led
to this and how.
Hopefully this never can happenagain because of X, y, z.
I want a takeaway, so I hopeyour guys' takeaway is hey, I'm
gonna ask myself how much wouldI need every month so I could
(14:58):
really enjoy my retirement 8,000a month as an example.
I'm gonna write down what areall these one-off things that
I'm probably gonna wanna helppeople with.
I'm gonna write down how muchwould I leave to my children.
Maybe it's just they inheritthe home, maybe it's no.
I want them to have skin in thegame and I want them to have to
go through what I went through.
Maybe it's no.
I want to be able to supportthem, because I never had that
support.
You write down all those goalsand then, finally, you actually
(15:21):
see how long would it take youto get to that number of, let's
say, 2 million or 3 million soyou can spend everything you
want and more.
Some of you are going to wantextra buffer and you might be
happy to work another year sothat you have buffer in case it
turns off.
Turns out your assumptions wereslightly off.
Others of you go buffer theidea of working one more year.
I'm good, awesome, but go getreal clarity.
(15:43):
This should be a really simpleframework to think through it.
It's mainly on the expenseswhat's your base, what's your
core expenses that you wantevery month.
What are some one-off things?
How much money do you need sothat you can take care of all of
those things?
Now are there a million thingsin between, of course.
What's the insurance coverage?
How about estate planning?
Do you have trust wills,medical directives, power of
(16:05):
attorneys?
Do you have the righthealthcare coverage so that
you're optimizing?
And how much is in yourbrokerage account?
And what's your stock to bondcomparison?
There's so much more.
This is the simple framework Ifyou want to get real granular
about this and really get intothe optimization, because you
believe that would add moreconfidence, not take away.
(16:28):
A lot of people I see is they'reworried about retiring early
because of the what if I misssomething?
What if I get unlucky?
What if inflation goes up?
What if, right when I retire,markets go down and I'm just an
unlucky guy?
You can run more what if?
Scenarios.
You can work with an advisor toget guidance on that.
If you want to work with root.
This is what we love to do.
We help clients so they don'thave a new job having to do all
(16:51):
of this.
If you're wondering, you know Ithink I might want to hire an
advisor, but I just don't knowif it's the right time.
Maybe I should just wait alittle bit not crazy, but maybe
I should wait a few more years.
Then I'll reach out to anadvisor.
Awesome, you can use the earlyretirement academy in the
meantime so that you can startplanning for your retirement and
seeing what you're on track forrunning these what-if scenarios
(17:12):
.
And then, once again, guys, Ido all of this for you guys.
I love what I get to do.
Thank you for letting me recordthese.
Please like this video, pleasecomment if there's something you
learned, and then please shareit with someone you wanna retire
early with.
That's it for this episode.
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
(17:34):
for you guys every single week.
I've not missed a single weekin years, and that is because I
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.
(17:56):
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways.
You can, of course, submit aquestion on my website,
earlyretirementpodcastcom, ifyou of course want me to address
a specific case study or topic.
I will not promise I can get toit, but I respond to every
(18:19):
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it, at the very
least give you some insight.
That's it, thanks, guys.
There are a lot of assumptions that you must
consider when you're talkingabout retiring early.
The issue is, many peopleconsider these assumptions and
then they go even further andget the analysis paralysis and
go wow, there's so many factorshere.
I really just can't play onretiring early.
I don't know how much is enoughand I'm just going to keep
working because it's easier.
I don't want to run out ofmoney and I don't hate my job.
(00:22):
Maybe I would love to do otherthings, but I feel like I'm only
going to be able to make thisamount of money my high earning
years for so long.
I'd rather just keep workingand be extra safe.
I hear that a lot.
There's a big risk to that andwhat I'm going to do today is
show you a framework so that youcan hopefully think really
clearly about how to retireearly, and I'm going to do it
for you in the next 10 minutes.
(00:43):
Now, if you're new to the show,sometimes I will have a large
case study where I'll literallygo through an example and show
them exactly how much theyshould convert for optimal tax
purposes, do a Roth conversion.
I'll talk about healthcare.
I'll talk about estate planning.
I'll talk about insurance.
Today is not that Today is avery simple framework.
(01:03):
It's a very simple episode thathopefully removes a lot of head
trash.
Head trash is the phrase that Italk about when people reach
out and say, yeah, there's noway I can retire early because I
don't have $3 million, so I'mjust going to keep working and
I'll say that is complete headtrash.
You have no idea if yourneighbor, who has $3 million,
wants a second home, if theyspend three times as much as you
(01:24):
, if they're not optimizingtheir situation, you might not
need $3 million, you might need$1 million and you might be able
to retire early.
It totally depends on you andyour goals.
So don't have the cookie cutterapproach, don't have head trash
.
Now here's the framework andI'm going to keep it really
simple for you guys.
So too many people go.
I don't know my number exactly.
(01:45):
Just tell me how much do I needto spend?
The reason it doesn't exist isbecause it would be like going
to the doctor and saying, hey,so I filled out this
questionnaire for you on myhealth.
Just tell me what surgery isgoing to fix all of that.
They'd be like well, it's notthat simple.
You're going to need surgery onyour ankle because that's
broken, but I'm going to needyou to lower your cholesterol by
taking this pill and doing yadayada.
(02:05):
It's not one size fits all.
Now, what I also don'tsubscribe to, because I see this
a lot and, more importantly,this happened to my parents.
My parents used to always go totheir advisor and their advisor
would always take the easy wayout and I could tell the reason
I do this for a living now isbecause my parents were burned
by four advisors out, and Icould tell the reason I do this
for a living now is because myparents were burned by four
(02:26):
advisors, so they used to go totheir advisor, ask some simple
questions.
My parents were great at makingmoney, not great at saving or
investing their money whichthere's a big difference there
and they would bring a situationand the advisor would always
say it depends.
And I would say that's great,it depends, but I need more than
that.
Imagine once again you go to thedoctor.
You go, hey doc, so my ankle isreally bothering me and for all
(02:50):
of you to know the reason I'mbringing up ankle, I'm a soccer
player.
My ankle is legitimatelybothering me, so didn't just
pick ankle randomly.
So my ankle, which is on themend.
No need to worry, not that youguys are anyways, let's get to
the point here the ankle.
Cause I watch YouTube and Ihate when people go on tangents
too much.
Okay, here we go.
So back to the ankle.
You go to the doctor Doc, myankle is really bothering me.
And they literally tell you hey, it depends, there's different
(03:13):
protocols.
You could do physical therapy,you could get surgery, you could
see if it gets better.
It depends, and you're thinkingto yourself that's great, that
it depends.
I need more than that.
Tell me, what do I do?
That's what I'm going to try todo for you guys right now.
Obviously no black and whiteanswers here.
It all depends.
Consult with your financialprofessional before executing
anything today.
But this should be a frameworkthat helps.
(03:35):
So, the first place to start,how much would you love to spend
?
Let's just pretend if I were togive you a blank check and I'm
going to say you have $8,000 amonth, net after taxes, adjusted
for inflation.
Would that allow you to doeverything you want for the rest
of your life?
Here I'm asking you right now,directly.
You can comment below and say,yes, $8,000 a month is great.
(03:55):
You could say no, I would need$12,000.
But how much?
If I said I'm going to startwith $8,000, you have $96,000 a
year.
That's every single year forthe rest of your life Would you
be able to enjoy retirement?
Pretend you say yes, I'd saygreat, $2 million is your
starting spot.
$2 million if we're taking a 5%withdrawal rate on that.
(04:15):
That's about $100,000 a year,not a million a year.
$100,000 a year what's the bigassumption?
The big assumption here is thatyou're willing to understand.
When markets do well, you canspend more.
When markets are doing poorly,you spend less.
You're willing to understandthat $2 million.
I'm assuming in thishypothetical that you don't have
(04:35):
to go pay taxes on that, thatyou just have $100,000.
The reality is you don't have$2 million, most likely all in a
Roth IRA.
Maybe you have 2 million oryou're on track for 2 million at
age 55 and it will be in your401k.
Okay, so if you have 2 millionand it's in your 401k and you
want to net 100,000 a year, youneed to really probably sell
(04:58):
$120,000 worth using a 20% taxassumption here to end up with
$100,000.
So what that's telling me islet's use $2.5 million.
If you have $2.5 million rightnow and you want to spend
$100,000 a year throughoutretirement, I might say I have
no idea why you're working.
What do you need to add on tothat?
Well, what you need to add onto that is how much is too much
(05:20):
to pass away with?
So I start with the estatepiece.
I'll ask someone you'respending $100,000 every single
year, you have $2 million andit's all in a Roth IRA.
Hypothetically, you're going topass away with $8 million.
How would you feel?
Some of you will go I don'tneed $8 million.
I would rather spend more.
Great, you don't want tooverspend the early years of
(05:41):
retirement.
You also don't want to be 80with 6 million going.
Hey, I didn't need this amountof money, I should have spent
more.
There's a balance there.
But ask yourself is there a veryspecific estate goal?
Because that drives a lot ofthe conversation.
If you're thinking, yeah, Iwant to leave 2 million to three
different children, great, youshould save and invest more.
If right now you're 40 and youhave a million dollars, if right
(06:03):
now you're 40 and you have amillion dollars, and if you save
and invest well and invest wellbeing the key here and in 10
years you're going to plan onhaving $2 million.
You should feel pretty goodright now, understanding that in
10 years you could legitimatelyretire and spend $100,000 a
year.
That is a reality.
I'm using a 5% withdrawal rate,assuming you're doing all the
(06:24):
right things, investing reallywell, not just in the s?
P 500.
Lots of different asset classes, diversifying.
Check out my other videos onwithdrawal strategy to fully
understand why it's reallyimportant to diversify across
many asset classes.
Because in retirement, if oneasset class is not doing well,
you need the others to pick upthe slack.
There.
That's different when you'resaving and investing along the
(06:46):
way.
Along the way, if you put yourmoney into the S&P 500 and it
grows and grows awesome, there'snot a big risk.
If markets are down, you'rejust putting more money into it.
But in retirement, if all yourmoney is in the S&P 500, which I
see more often than you wouldthink and you want to go on a
new trip and markets are down,you don't have to go sell at a
(07:07):
loss.
You want to have some otherasset class, some other spot.
That's actually an uncorrelatedasset class.
So, with that being said, we'llstart on the estate side Now.
Level two is go add on otherlayers.
For example, let's pretendyou're 60 and we have a
conversation and you feelconfident that you could live
off 100,000 a year and you'vegot 2 million bucks and I say,
(07:30):
hey, you're in a comfortableposition.
That doesn't mean you should goretire.
It means you're in acomfortable position to create
100,000 a year for the rest ofyour life, to create $100,000 a
year for the rest of your life.
The reality is you might wantto do a home remodel, you might
have big healthcare expenses,you might want to travel
extensively, but just the first10 years.
Is the plan accounting for that?
Because many people are ontrack for retirement and when I
(07:53):
say retirement, I'm sayingthey're 65 to 95, looks crystal
clear, but it's the 60 to 65 orthe 50 to 60.
That's where the lack ofclarity is and that's where most
people keep working becausethey're wondering I don't want
to spend too much too early onand not have enough later.
So the reason I bring this upis the value of working is
(08:15):
significant.
If you are planning for theseother one-off expenses, if
you're cash flowing, your kid'scollege, if you're wondering
about how am I going to pay fortaxes in retirement, which may
be one of your largest expenses.
You need to make more money toaccount for that now, so that we
can pay those taxes and pay foryou to do everything you want
(08:35):
in more.
But let's pretend it takes youtwo years to save, let's just
say $50,000.
And that is allowing you totake three big trips in the
first year of retirement.
And then you go.
You know what?
We don't really have that manyother large expenses.
Hypothetically we don't havekids or we're gonna downsize in
the future.
Awesome, you might wanna reallyconsider looking into retiring
(08:57):
way earlier than what you wereprobably thinking.
You may have thought we'll workfive more years, six more years
.
No, you might be in a positionto do it way sooner than you
think.
And it's just because of thishead trash concept where people
think, well, my neighbors havelike two, 3 million, 4 million,
probably way more than that.
They're not even talking aboutan early retirement, so it feels
weird that I'm even bringingthat up.
(09:17):
And then there's a sense ofidentity issues and what are you
going to spend your time on?
And so the third framework tothink through here.
So first one is withdrawal rate.
Take literally 5%, and that ishow much you can spend, assuming
you're doing all the rightthings.
Big assumption there If we'retaking 5% of a $2 million
(09:38):
portfolio, that's $100,000.
You want to take 5% of a 3million portfolio, that's
$150,000.
So ask yourself first, how muchwould you love to spend as your
base rate throughout retirement, meaning?
Here's a check every month tomeet your expenses.
Some of you would say it's 4,000a month.
Great.
Then $2 million might becompletely unrealistic and
(10:00):
unnecessary for you.
And stop beating yourself upthinking that you didn't save
well enough or invest wellenough.
I see way too many people whodo that, who go.
Ah, I feel like I'm so behind.
In your videos you give so manyexamples of people that have 5
million or 6 million.
Yeah, there's people who needto optimize, who have those
amount of assets, and there'sother people that don't have
anywhere near those assets, whodon't need to keep working
(10:23):
because, for you, you'd ratherretire earlier than spend more.
That's the big trade-off here.
Would you rather work longer soyou can spend more, or would
you rather retire earlier, evenif it means spending less?
Everyone's quality of lifediffers here.
With this being said, the firstone withdrawal rate.
The second one is to get really, really clear and to say well,
(10:43):
estate planning.
Don't forget, of course, legacygoals.
But then we're thinking aboutwithdrawal rates, then we're
going deeper here and we'regoing okay, how much could we
realistically spend that wouldallow us to enjoy our lives?
Don't do my pet peeve.
My pet peeve is how much couldwe get by on?
Maybe we could get by on $3,000a month.
Retirement is not about gettingby, it's how much would you
love to spend.
(11:04):
Then we need to add in whatabout those other what-ifs?
What if it turns out my healthisn't in a comfortable position
and I want to be able to affordlong-term care at this facility
that cost $120,000 a year forthe last five years, versus
$70,000 a year the last fiveyears, for 70,000 a year the
last five years Great.
Add that to the plan.
What if you downsize?
What if there's inheritance?
What if you still need to payfor kids' college?
(11:25):
Add in these what ifs.
Everything I'm talking abouttoday is easiest with a software
tool the one in the description, I think, is the best one,
which is why I talk about it,but you can get access to this
If you want to build your ownplan.
Many of you already have wholisten or watch this content.
And then, finally, that finalframework here is what are you
(11:46):
going to spend your time on forpurpose and fulfillment?
Because if you knew tomorrowyou did not need to go back to
work.
What would you do?
Well, the reality is, most ofyou go I'm going to spend time
traveling, I'm going to spendtime with family and friends and
it's going to be awesome.
And then three, six monthslater, now, there's some boredom
that sets in.
Now some of you are like I amnot worried about being bored,
(12:07):
awesome, you can ignoreeverything I'm saying right now.
But others of you go.
No, I think I really am goingto struggle.
I don't know exactly how I'mgoing to spend my time.
I just worked the last 40 yearsreally hard at this one career.
The idea of not having to dothat, I mean it sounds good, but
I don't really know how I'mgoing to spend my time
legitimately.
Well, yes, you could volunteer.
(12:27):
Yes, you could look intocertain hobbies, lots of
different options that weliterally help our clients with
here at Root.
But for you, this idea ofhaving this magic number once I
hit $3 million, everything'sgoing to go to bliss it doesn't
work that way.
But if you had $3 million andyou want to spend $150,000 a
year.
I would strongly considerlooking into retiring if that's
(12:49):
something that's of interest.
And then I would ask you, Iwould beg you, if you're my
client, I go, please.
I need to know what other whatifs need to happen.
Do you want to redo your pool?
Do you want to downsize in thefuture?
Is inheritance coming?
Do we want to even plan on it?
Do you want to help your kidswith the first down payment and
pretend hypothetically they go?
We'd love to help both of ourkids with a down payment and
(13:10):
help with a wedding and we wantto do a home remodel and they
say that that will cost about Idon't know, let's say 150,000.
And if they make 250,000 as acouple, I'd say, guys, what I
want you to do, you've alreadysaved, invested really well.
I consider stop adding new moneyto your 401k, except the
employer match, because we lovefree money Outside of that.
(13:30):
It's going to feel weirdbecause you've maxed out your
401k for the last 30 years.
I want you to consider stoppingthat.
Save more money just strictlyto a high yield savings account.
That's for those next threeyears, of all those things you
just mentioned kids, college andbuying new cars and weddings
and remodels, and what you'regoing to do is you're going to
work three more years, becausethat's when we're going to have
(13:53):
enough money to be able totackle all of those one-off
expenses.
At the same time, when youretire, you're going to have
your base of, you know, 150,000a year.
You know, monthly, you're goingto have your 12 a month.
You're going to be more thanfine and some of you are
thinking about it, but you'regoing into unbelievable depths,
which I'm not blaming you for.
(14:14):
But I don't want any of you overthinkers out there to be mad at
me later when you're like hey,you talk about all these topics,
but you never really simplifiedit for me.
I want to know when can Iretire and I'm trying to get
clarity around that.
Hopefully this is the episodethat clicks.
I know I watch a lot ofdifferent YouTube videos and
podcasts on a lot of topicsmainly history at the moment but
(14:35):
when I'm watching, I wantwhat's the takeaway?
Okay, great.
So this is what happened duringthe Spanish Inquisition.
Here's exactly why it occurredat this timeframe and what led
to this and how.
Hopefully this never can happenagain because of X, y, z.
I want a takeaway, so I hopeyour guys' takeaway is hey, I'm
gonna ask myself how much wouldI need every month so I could
(14:58):
really enjoy my retirement 8,000a month as an example.
I'm gonna write down what areall these one-off things that
I'm probably gonna wanna helppeople with.
I'm gonna write down how muchwould I leave to my children.
Maybe it's just they inheritthe home, maybe it's no.
I want them to have skin in thegame and I want them to have to
go through what I went through.
Maybe it's no.
I want to be able to supportthem, because I never had that
support.
You write down all those goalsand then, finally, you actually
(15:21):
see how long would it take youto get to that number of, let's
say, 2 million or 3 million soyou can spend everything you
want and more.
Some of you are going to wantextra buffer and you might be
happy to work another year sothat you have buffer in case it
turns off.
Turns out your assumptions wereslightly off.
Others of you go buffer theidea of working one more year.
I'm good, awesome, but go getreal clarity.
(15:43):
This should be a really simpleframework to think through it.
It's mainly on the expenseswhat's your base, what's your
core expenses that you wantevery month.
What are some one-off things?
How much money do you need sothat you can take care of all of
those things?
Now are there a million thingsin between, of course.
What's the insurance coverage?
How about estate planning?
Do you have trust wills,medical directives, power of
(16:05):
attorneys?
Do you have the righthealthcare coverage so that
you're optimizing?
And how much is in yourbrokerage account?
And what's your stock to bondcomparison?
There's so much more.
This is the simple framework Ifyou want to get real granular
about this and really get intothe optimization, because you
believe that would add moreconfidence, not take away.
(16:28):
A lot of people I see is they'reworried about retiring early
because of the what if I misssomething?
What if I get unlucky?
What if inflation goes up?
What if, right when I retire,markets go down and I'm just an
unlucky guy?
You can run more what if?
Scenarios.
You can work with an advisor toget guidance on that.
If you want to work with root.
This is what we love to do.
We help clients so they don'thave a new job having to do all
(16:51):
of this.
If you're wondering, you know Ithink I might want to hire an
advisor, but I just don't knowif it's the right time.
Maybe I should just wait alittle bit not crazy, but maybe
I should wait a few more years.
Then I'll reach out to anadvisor.
Awesome, you can use the earlyretirement academy in the
meantime so that you can startplanning for your retirement and
seeing what you're on track forrunning these what-if scenarios
(17:12):
.
And then, once again, guys, Ido all of this for you guys.
I love what I get to do.
Thank you for letting me recordthese.
Please like this video, pleasecomment if there's something you
learned, and then please shareit with someone you wanna retire
early with.
That's it for this episode.
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
(17:34):
for you guys every single week.
I've not missed a single weekin years, and that is because I
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.
(17:56):
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways.
You can, of course, submit aquestion on my website,
earlyretirementpodcastcom, ifyou of course want me to address
a specific case study or topic.
I will not promise I can get toit, but I respond to every
(18:19):
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it, at the very
least give you some insight.
That's it, thanks, guys.
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