March 10, 2025 • 17 mins
Fear of retirement often arises from the head trash that clouds decision-making and prevents individuals from taking action. Understanding the valid concerns behind this fear is essential to dispel myths that delay retirement readiness.
- Explaining the concept of head trash and its impact on retirement decisions
- Real-life case study illustrating financial planning for early retirement
- Practical strategies to overcome retirement anxiety and promote sound decision-making
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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.
Ari (00:00):
The one reason that everyone delays their retirement
is because of head trash.
It's not a real phrase, I justmade it up, but head trash is
the concept that I talk about,where people are like: I'm going
to retire, I think I'm in agood spot, but what if markets
go down or you know what?
Maybe I just wait one more year, one more bonus, then I'm going
to retire.
I know I should retire, but Idon't have long-term care yet.
(00:23):
And what are we going to do?
I mean, how am I going to spendmy time?
Am I going to have purpose?
And I could retire, but my kidsare still in college.
" So, all of these thoughts,I'll call them head trash.
It's not a perfect phrase.
I'll use head trash primarilywhen I'm talking about things
that my clients don't need toworry about, and so part of my
job as an advisor is to advise.
"hey, here's an investmentstrategy, here's a tax plan,
(00:46):
here's a withdrawal report,whatever it is.
But also part of my job is togo hey, here's a bunch of things
you're worrying about right nowthat you just don't need to
worry about.
" For example, I have clientsthat reach out, "hey, oh my gosh
, I can't retire yet, I don'thave long-term care, I go.
Maybe you shouldn't worry aboutthat because you have enough
income from your portfolio.
As long as that keeps growing,and you have a sustainable plan,
(01:06):
it's better that you actuallydon't go pay a separate company,
an insurance company, pay thepremiums to yourself instead,
unless financially somethingshifts and legislation shifts
and there's a new requirement ortax that occurs.
" So it's not me just saying"hey, don't worry about it.
" It's me saying hey, don'tworry about it for now, but,
like anything, you have to keeptabs on it and be dynamic.
(01:28):
" So what I'm going to gothrough today, today is more of
a story.
I have lots of different podcastepisodes that are deep case
studies.
Hey, if I have 2 million, howmuch can I spend?
If I have 500,000, when can Iretire?
If I have 20 million, am I in aspot to never have to worry
truly, and can I leave thelegacy I want?
But then I also have specificepisodes, like you're going to
hear today, which is just astory, and so I'm going to talk
(01:50):
about the story that I had witha client of mine.
So this is a client that is avery nice person, and so if they
are watching, please know.
I asked you if I had permissionto post this and you said yes,
so don't forget that.
If I had permission to postthis and you said yes, so don't
forget that, just messing around, that actually did occur.
But they told me that I couldshare the story.
Just can't share names,obviously.
(02:13):
So this couple they were notworried about their retirement
in terms of like 60 to 90, 60 to100.
That was not their concern.
Their concern was hey, we'reworried from 55 to 60.
It's these first few years ofretirement.
I think that's where most ofour concern is.
I said totally get it, you're ahuman, that's why You're not a
robot.
Let's dive into the finances.
And so we did.
(02:33):
And when we dove into thefinances, we found that they
were going to be okay if theyretired at 55, but they didn't
have a brokerage account.
And a brokerage account is whatI call a superhero account.
A superhero account is abrokerage account, a taxable
account, a joint account,individual account.
All four of those accounts arethe exact same thing.
The financial industry justmakes it really annoying for
(02:55):
these basic phrases that comewith all these different names.
It's like those acronym peoplein your life that are always
trying to sound smart.
It's like just tell me what itis.
So superhero.
I call it a superhero becauseit allows for flexibility.
And so this couple is going okay.
So like, why do we?
Why do we not feel at ease?
I said I don't know, like,what's your healthcare costs?
(03:16):
Now I knew what they were, butI wanted them to say them.
And they said, yeah, that's,you're right, I think that's it.
And so sometimes I need myclients to say it out loud.
If I just say what I thinkthey're thinking, number one I
could be wrong.
But number two, if they don'tactually speak it, they're not
going to really ever have theability to overcome it.
From my experience and fromwhat mentors have shared and
(03:36):
from what I've seen, so I'veasked them to share hey, what
did healthcare?
And it was for them about$8,000 a year each for
healthcare until Medicare kickedin.
That's significant.
And so the reason that I saidthat they had anxiety is for
healthcare, college planning andremodels.
That was their head trash.
I think I said healthcare asecond ago.
(03:57):
Healthcare is one of them, butthis head trash.
Basically I say, hey, the reason, guys, you're hesitant to
retire is not because you won'tbe okay long term.
I think you also recognize thatit's because these first few
years of retirement, that'swhere you're nervous.
And I get why you're nervous.
I'm not confused.
The reason you're nervous isbecause if you get unlucky and
(04:17):
retire and markets don't do well, because you don't have a
superhero account, you can'tshift your income that easily.
Now why can they even retire atall?
Well, there's something called arule of 55.
Many of you know this already,but what this is is this is
something that allows you, aslong as you retire in the year
you turn 55 or later, as long asyou're working at that company
(04:40):
in that year, once again, youturn 55 or later, you can start
pulling from your 401k.
Now, that just avoids a 10%penalty.
You still have to pay taxes.
So basically, you just have theability to turn this on at 55
instead of 59 and a half.
So this is great for peoplethat have a lot of money in a
401k and want to retire early.
It's an option to withdrawincome, but it's not optimal.
(05:02):
And the reason it's not optimalis because if you start pulling
income from your 401k when youactually live off that income,
it's as if you're makingordinary income.
It's like W-2 wages.
It's not pulled that way, butthat's how it's taxed through
what are called IRAdistributions.
And so for this couple, theypull from their 401k.
That creates income and thatincome is taxed at ordinary
(05:25):
income levels, and so they'renot receiving any health care
subsidies.
They also, once again, theyneed to pay for college expenses
.
How are they going to pay forthose college expenses?
Well, they need to pull fromcash flow, because they don't
have 529s.
Well, cash flow, they don'thave cash flow.
They're retired, in thishypothetical, at 55.
So they're now pulling more,which once again gets taxed at a
(05:48):
higher bracket, because nowthey're taking 40,000 out to pay
for college expenses, inaddition to the 100,000 that
they wanna live off.
So, 140,000, they need 140, butnot really, because they need
like 160, 170 so that they canpay taxes and end up with
140,000.
And that's me being nice there,by the way.
(06:08):
So the point here is they alsowant to do a home remodel
because they don't want toretire and not have their
bathroom done.
Well, that's another 20,000.
But in addition to that, guys,do you think they're going to
spend more time traveling orless?
When they retire early, they'regoing to spend more.
So now they have more time.
When you have more time, youspend more money.
So now maybe they need $200,000.
(06:31):
Maybe they need $240,000 thatthey need to go sell so they can
live off of $200,000.
Now the reality is they havesome expenses that will go away
their mortgage that will go away, college expenses that will go
away but they generally getreplaced not evenly.
But if you're not doing collegeexpenses, you're helping out a
child with a down payment.
(06:51):
Some of you are like I'm not,but I have clients that often do
this.
They're helping out someonewith a wedding.
They are oftentimes going.
We're gonna travel more andwe're gonna spend money as a
family to do that, because oncethey're out I'm trying to make.
Here is this person that washesitant to retire with head
(07:12):
trash.
It's a valid head trash.
They are hesitant to retireearly because they're worried
about oh my gosh, what if all ofthese things?
I need so much income so earlyon?
What if it turns out we want tospend more or life changes?
I don't want to have to go backto work in my sixties and I go.
That's super reasonable, by theway.
(07:32):
So there are people that are ontrack for retirement, but in the
first few years of retirement.
That's what I'm worried about.
For my clients.
It's generally not the 60 toeven 70 to 90, 70 to 100.
It's, I see, that income Atthat point there's social
security helping out At thatpoint, maybe there's inheritance
(07:57):
at that point, but it's kind ofthis in between.
What do we do then?
And so what I would encouragethis couple to do and I work
with this couple obviously today, and we've had a lot of
conversations about this, theyare still working.
The reason that they have this,I call it head trash.
It's valid.
So that's why I don't reallylove the phrase, but the reason
I do want to bring it up.
It's never I don't think it'sperfect, but the head trash that
they are worried about in largepart they don't need to be
worrying about and some of thosethings that, in fact, a lot of
(08:20):
those have nothing to do withwhat I just said.
So let me connect the dots, orelse it feels like I'm going in
circles here, because what Ihope you just connected is yes,
they have valid concerns that ifthey retire and get unlucky and
they start pulling from their401k, if they need to pull out
250,000, but markets aren'tdoing well, maybe they need to
pull out 300,000.
If they have 2 million, pullingout 300,000 in one year is a
(08:42):
big deal and that's way less.
That grows long term.
That's their concern.
That's valid.
What's not valid is them going.
You know what?
What we're going to do insteadis we just we're not even going
to look at projections.
We don't know.
There's no way we can retireAbsolutely not.
Our friends.
We know they have less moneythan us and they're going to
(09:03):
have to work so much more.
In fact, we also have friendsthat have more money than us and
they are not even close toretiring.
So that just confirms it.
I cannot retire early.
Why don't we just work till 65?
I mean, it's just, it's safer.
We can't go wrong.
I guess.
If politics or things at workshift, maybe I'll look for some
other job, but I really don'twant to.
That is head trash.
(09:24):
That is them cheating theirself.
That's like if any of you guyshave run drills in sports or
have children that have rundrills, that's like running to
the line.
If they go run to the line andrun back, that's like running to
the line and then stopping 80%of the way there and running
back.
It's like you're just cheatingyourself.
Go get a plan that really sayswhen you can retire.
So for this couple, what Iencourage them to do because
(09:44):
they have a really healthyincome is don't add more money
to your 401k beyond the match,because that's free money.
Take the remainder and put thatto this brokerage account.
That's for flexibility.
And before you retire, let's dothat bathroom remodel.
That's one less thing we'regonna have to worry about.
So when we retire, we'redecreasing our chance of getting
(10:04):
unlucky.
Now, college okay, maybe we'reputting money away for grad
school, but maybe you're alsohaving a conversation with
children and say, hey, I'mpaying for your undergrad, but
beyond that, that's just not inthe cards.
Not because I'm trying to bemean, but because you know we
only have our health for so long.
We want to spend time with youguys, we want to travel, we want
to do different things, and socan you eliminate some of these
(10:27):
things, these things that causehead trash of I can't retire a
home remodel, I'm not going toretire, I don't get paid my
bonus for another year.
Don't do that.
That is you cheating yourselfout.
So, yeah, it's some tough loveyou're probably getting from me
right now, but I don't know whoelse is giving it to you, so I
hope it is really love.
That's what I hope.
I'm trying to do.
I want everyone to know theearliest time work is optional.
(10:49):
I don't want someone to retiretoo early and run the risk of
running out of money, and therisk I'll see is it's a common
example, but many people knowthe S&P 500.
It's an amazing asset class andit's really something that when
we talk about investing S&P 500, equities equities would be
known as the asset class.
The subdivision of that wouldbe the S&P 500.
(11:11):
Those are called large caps,large companies, the 500 largest
technically, 505 to be exact.
But the point here is these arecompanies that generally grow at
10% per year over time andthere was a period where, from
2000 to 2010, it was literallylike the second best literal
performer versus like the entireworld, like real estate and
(11:35):
small caps and all thesedifferent types of assets.
But 10 years prior, from 2000to 2010, the S&P 500 lost an
average of 3% per year becausethere were a few years 2000,
specifically, in 2008, that didnot do very well, and so if you
had $100,000, and you startedwith that and you didn't
(11:55):
withdraw any money in 2000, andthen you checked your account 10
years later you would have lostmoney.
So now imagine that's a milliondollars, and not only did you
lose money, but you had travel,remodeling, college expenses and
now all of a sudden, you'respending.
The rest of your life is verydifferent.
So this was a big risk.
That someone thought they werediversified with the S&P 500.
(12:16):
They had to go back to work.
And so I'll talk to people thatwill come and they'll say, hey,
ari, I'm retiring.
I said, okay, cool, they go.
No, I'm retiring again.
I said what happened?
They said, well, I retired, Ihad all my money in one
investment like the S&P 500.
I had healthcare, I had travelexpenses, I had a home remodel,
I had other investments thatdidn't do well, and so now I
(12:38):
have to go back to work and youdon't want to be that person On
the flip side.
I don't want any of you mad atme when you're 80 years old with
way too much money going.
Hey, we told you like we wantedto retire early.
Why didn't you kind of give usmore confidence to do that?
And I have had feedback frompeople that are very transparent
and have said that I haveclients with me in their 70s who
are like hey, you should havepushed harder, like I was like
(13:00):
in the moment I thought I did.
They're like oh no, you thinkyou did, but you didn't.
I said why they go?
Because I didn't retire and youwere so confident you were
showing me all these numbers andgraphs but you didn't find a
way to connect it and I'm likegreat point.
Like then, what good is it?
So the point here is I wanteveryone to know the earliest
time, work is truly optional forthis particular couple.
(13:21):
I encourage them to pay off atleast one of their children's
college, which is going to betwo years, save more money to a
brokerage account and do abathroom remodel.
Then I'm asking them toreevaluate.
So the following year I'm goingto be checking in and we're
going to be having aconversation about hey, is this
happening?
Like, did we actually do thesaving we talked about?
(13:42):
And they might be like we didmore than you projected because
I got another bonus.
Great, then maybe they couldretire, then they might go.
You know what I know?
I said I was going to save thatamount of money, but there's
this really cool new Maseratithat I didn't tell you and I
kind of got a new obsession.
So that's what I bought.
I bought four of them.
I said, okay, that's cool, Iwant you to buy the cars maybe
not four of them, but you'regoing to work till you're 62 now
(14:04):
and they might be like that'scool Cause I just love cars so
much.
Great, it's not my goals, it'stheir goals and it's my job to
make sure what's happeningproperly.
Is them accomplishing theirgoals?
So that is the quick littlestory for this couple of what is
head trash?
Well, head trash is whereyou're thinking.
Hey, I saw an article onlinethat says I need 2 million to
(14:25):
retire.
I don't have 2 million, so,like I can't retire.
That's head trash.
That does not mean you cannotretire.
There are people that retirewith $500,000.
There's also people that go Ican't retire Like the people I'm
around.
They've got 5 million bucks andI want to live like them.
Okay, maybe you can't retire.
Maybe you do need more becauseyou want to spend more.
But do you really want to spendmore?
Like, what is it you reallywant?
(14:46):
Is it we're keeping up with theJoneses, or is it?
No, those are my specific goals.
So I encourage you map out howoften are you buying new cars?
Okay, are there new cars?
How many vacations do you wantto take?
What is your health like?
Do you have a specific legacygoal?
Build a custom plan, either withroot or another advisor, or, as
I've shared with many of you,start with the software, go,
(15:08):
project out, see what you're ontrack for and then, after you
kind of run some analyses, youcan see okay, I kind of loosely
know what I'm on track for.
I now I'm going to work with anadvisor to help me execute this
.
But for a lot of you I don'tthink you need an advisor.
If you're in your 30s and 40ssaving money to your 401k or
brokerage account, but as youget closer to retirement you're
(15:29):
in your 50s, 60s going hey, Ithink, like an early retirement
is probably possible.
I would then seriouslyencourage you to go okay, either
take the time yourself to learntax strategy and go deep on
that front, because that's thebiggest value an advisor can add
.
Or you hire an advisor forquality of life to go, hey, my
life's way better having anadvisor.
(15:50):
I want someone in my corner tohelp out with all of this and I
don't want a new job as anadvisor.
So I hope that this was helpfuland insightful, quick story on
this kind of head trash concepttalk about.
I have a lot of differentphrases I like and I try to make
these fun.
So hopefully you guys likedthis video and if so, please
like it and I'll see you guysnext time.
Thank you all, as always, forlistening to the early
(16:11):
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
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.
(16:33):
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
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
(16:54):
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
people.
I will absolutely make anepisode on it.
At the very least give you someinsight, that's.
The one reason that everyone delays their retirement
is because of head trash.
It's not a real phrase, I justmade it up, but head trash is
the concept that I talk about,where people are like: I'm going
to retire, I think I'm in agood spot, but what if markets
go down or you know what?
Maybe I just wait one more year, one more bonus, then I'm going
to retire.
I know I should retire, but Idon't have long-term care yet.
(00:23):
And what are we going to do?
I mean, how am I going to spendmy time?
Am I going to have purpose?
And I could retire, but my kidsare still in college.
" So, all of these thoughts,I'll call them head trash.
It's not a perfect phrase.
I'll use head trash primarilywhen I'm talking about things
that my clients don't need toworry about, and so part of my
job as an advisor is to advise.
"hey, here's an investmentstrategy, here's a tax plan,
(00:46):
here's a withdrawal report,whatever it is.
But also part of my job is togo hey, here's a bunch of things
you're worrying about right nowthat you just don't need to
worry about.
" For example, I have clientsthat reach out, "hey, oh my gosh
, I can't retire yet, I don'thave long-term care, I go.
Maybe you shouldn't worry aboutthat because you have enough
income from your portfolio.
As long as that keeps growing,and you have a sustainable plan,
(01:06):
it's better that you actuallydon't go pay a separate company,
an insurance company, pay thepremiums to yourself instead,
unless financially somethingshifts and legislation shifts
and there's a new requirement ortax that occurs.
" So it's not me just saying"hey, don't worry about it.
" It's me saying hey, don'tworry about it for now, but,
like anything, you have to keeptabs on it and be dynamic.
(01:28):
" So what I'm going to gothrough today, today is more of
a story.
I have lots of different podcastepisodes that are deep case
studies.
Hey, if I have 2 million, howmuch can I spend?
If I have 500,000, when can Iretire?
If I have 20 million, am I in aspot to never have to worry
truly, and can I leave thelegacy I want?
But then I also have specificepisodes, like you're going to
hear today, which is just astory, and so I'm going to talk
(01:50):
about the story that I had witha client of mine.
So this is a client that is avery nice person, and so if they
are watching, please know.
I asked you if I had permissionto post this and you said yes,
so don't forget that.
If I had permission to postthis and you said yes, so don't
forget that, just messing around, that actually did occur.
But they told me that I couldshare the story.
Just can't share names,obviously.
(02:13):
So this couple they were notworried about their retirement
in terms of like 60 to 90, 60 to100.
That was not their concern.
Their concern was hey, we'reworried from 55 to 60.
It's these first few years ofretirement.
I think that's where most ofour concern is.
I said totally get it, you're ahuman, that's why You're not a
robot.
Let's dive into the finances.
And so we did.
(02:33):
And when we dove into thefinances, we found that they
were going to be okay if theyretired at 55, but they didn't
have a brokerage account.
And a brokerage account is whatI call a superhero account.
A superhero account is abrokerage account, a taxable
account, a joint account,individual account.
All four of those accounts arethe exact same thing.
The financial industry justmakes it really annoying for
(02:55):
these basic phrases that comewith all these different names.
It's like those acronym peoplein your life that are always
trying to sound smart.
It's like just tell me what itis.
So superhero.
I call it a superhero becauseit allows for flexibility.
And so this couple is going okay.
So like, why do we?
Why do we not feel at ease?
I said I don't know, like,what's your healthcare costs?
(03:16):
Now I knew what they were, butI wanted them to say them.
And they said, yeah, that's,you're right, I think that's it.
And so sometimes I need myclients to say it out loud.
If I just say what I thinkthey're thinking, number one I
could be wrong.
But number two, if they don'tactually speak it, they're not
going to really ever have theability to overcome it.
From my experience and fromwhat mentors have shared and
(03:36):
from what I've seen, so I'veasked them to share hey, what
did healthcare?
And it was for them about$8,000 a year each for
healthcare until Medicare kickedin.
That's significant.
And so the reason that I saidthat they had anxiety is for
healthcare, college planning andremodels.
That was their head trash.
I think I said healthcare asecond ago.
(03:57):
Healthcare is one of them, butthis head trash.
Basically I say, hey, the reason, guys, you're hesitant to
retire is not because you won'tbe okay long term.
I think you also recognize thatit's because these first few
years of retirement, that'swhere you're nervous.
And I get why you're nervous.
I'm not confused.
The reason you're nervous isbecause if you get unlucky and
(04:17):
retire and markets don't do well, because you don't have a
superhero account, you can'tshift your income that easily.
Now why can they even retire atall?
Well, there's something called arule of 55.
Many of you know this already,but what this is is this is
something that allows you, aslong as you retire in the year
you turn 55 or later, as long asyou're working at that company
(04:40):
in that year, once again, youturn 55 or later, you can start
pulling from your 401k.
Now, that just avoids a 10%penalty.
You still have to pay taxes.
So basically, you just have theability to turn this on at 55
instead of 59 and a half.
So this is great for peoplethat have a lot of money in a
401k and want to retire early.
It's an option to withdrawincome, but it's not optimal.
(05:02):
And the reason it's not optimalis because if you start pulling
income from your 401k when youactually live off that income,
it's as if you're makingordinary income.
It's like W-2 wages.
It's not pulled that way, butthat's how it's taxed through
what are called IRAdistributions.
And so for this couple, theypull from their 401k.
That creates income and thatincome is taxed at ordinary
(05:25):
income levels, and so they'renot receiving any health care
subsidies.
They also, once again, theyneed to pay for college expenses
.
How are they going to pay forthose college expenses?
Well, they need to pull fromcash flow, because they don't
have 529s.
Well, cash flow, they don'thave cash flow.
They're retired, in thishypothetical, at 55.
So they're now pulling more,which once again gets taxed at a
(05:48):
higher bracket, because nowthey're taking 40,000 out to pay
for college expenses, inaddition to the 100,000 that
they wanna live off.
So, 140,000, they need 140, butnot really, because they need
like 160, 170 so that they canpay taxes and end up with
140,000.
And that's me being nice there,by the way.
(06:08):
So the point here is they alsowant to do a home remodel
because they don't want toretire and not have their
bathroom done.
Well, that's another 20,000.
But in addition to that, guys,do you think they're going to
spend more time traveling orless?
When they retire early, they'regoing to spend more.
So now they have more time.
When you have more time, youspend more money.
So now maybe they need $200,000.
(06:31):
Maybe they need $240,000 thatthey need to go sell so they can
live off of $200,000.
Now the reality is they havesome expenses that will go away
their mortgage that will go away, college expenses that will go
away but they generally getreplaced not evenly.
But if you're not doing collegeexpenses, you're helping out a
child with a down payment.
(06:51):
Some of you are like I'm not,but I have clients that often do
this.
They're helping out someonewith a wedding.
They are oftentimes going.
We're gonna travel more andwe're gonna spend money as a
family to do that, because oncethey're out I'm trying to make.
Here is this person that washesitant to retire with head
(07:12):
trash.
It's a valid head trash.
They are hesitant to retireearly because they're worried
about oh my gosh, what if all ofthese things?
I need so much income so earlyon?
What if it turns out we want tospend more or life changes?
I don't want to have to go backto work in my sixties and I go.
That's super reasonable, by theway.
(07:32):
So there are people that are ontrack for retirement, but in the
first few years of retirement.
That's what I'm worried about.
For my clients.
It's generally not the 60 toeven 70 to 90, 70 to 100.
It's, I see, that income Atthat point there's social
security helping out At thatpoint, maybe there's inheritance
(07:57):
at that point, but it's kind ofthis in between.
What do we do then?
And so what I would encouragethis couple to do and I work
with this couple obviously today, and we've had a lot of
conversations about this, theyare still working.
The reason that they have this,I call it head trash.
It's valid.
So that's why I don't reallylove the phrase, but the reason
I do want to bring it up.
It's never I don't think it'sperfect, but the head trash that
they are worried about in largepart they don't need to be
worrying about and some of thosethings that, in fact, a lot of
(08:20):
those have nothing to do withwhat I just said.
So let me connect the dots, orelse it feels like I'm going in
circles here, because what Ihope you just connected is yes,
they have valid concerns that ifthey retire and get unlucky and
they start pulling from their401k, if they need to pull out
250,000, but markets aren'tdoing well, maybe they need to
pull out 300,000.
If they have 2 million, pullingout 300,000 in one year is a
(08:42):
big deal and that's way less.
That grows long term.
That's their concern.
That's valid.
What's not valid is them going.
You know what?
What we're going to do insteadis we just we're not even going
to look at projections.
We don't know.
There's no way we can retireAbsolutely not.
Our friends.
We know they have less moneythan us and they're going to
(09:03):
have to work so much more.
In fact, we also have friendsthat have more money than us and
they are not even close toretiring.
So that just confirms it.
I cannot retire early.
Why don't we just work till 65?
I mean, it's just, it's safer.
We can't go wrong.
I guess.
If politics or things at workshift, maybe I'll look for some
other job, but I really don'twant to.
That is head trash.
(09:24):
That is them cheating theirself.
That's like if any of you guyshave run drills in sports or
have children that have rundrills, that's like running to
the line.
If they go run to the line andrun back, that's like running to
the line and then stopping 80%of the way there and running
back.
It's like you're just cheatingyourself.
Go get a plan that really sayswhen you can retire.
So for this couple, what Iencourage them to do because
(09:44):
they have a really healthyincome is don't add more money
to your 401k beyond the match,because that's free money.
Take the remainder and put thatto this brokerage account.
That's for flexibility.
And before you retire, let's dothat bathroom remodel.
That's one less thing we'regonna have to worry about.
So when we retire, we'redecreasing our chance of getting
(10:04):
unlucky.
Now, college okay, maybe we'reputting money away for grad
school, but maybe you're alsohaving a conversation with
children and say, hey, I'mpaying for your undergrad, but
beyond that, that's just not inthe cards.
Not because I'm trying to bemean, but because you know we
only have our health for so long.
We want to spend time with youguys, we want to travel, we want
to do different things, and socan you eliminate some of these
(10:27):
things, these things that causehead trash of I can't retire a
home remodel, I'm not going toretire, I don't get paid my
bonus for another year.
Don't do that.
That is you cheating yourselfout.
So, yeah, it's some tough loveyou're probably getting from me
right now, but I don't know whoelse is giving it to you, so I
hope it is really love.
That's what I hope.
I'm trying to do.
I want everyone to know theearliest time work is optional.
(10:49):
I don't want someone to retiretoo early and run the risk of
running out of money, and therisk I'll see is it's a common
example, but many people knowthe S&P 500.
It's an amazing asset class andit's really something that when
we talk about investing S&P 500, equities equities would be
known as the asset class.
The subdivision of that wouldbe the S&P 500.
(11:11):
Those are called large caps,large companies, the 500 largest
technically, 505 to be exact.
But the point here is these arecompanies that generally grow at
10% per year over time andthere was a period where, from
2000 to 2010, it was literallylike the second best literal
performer versus like the entireworld, like real estate and
(11:35):
small caps and all thesedifferent types of assets.
But 10 years prior, from 2000to 2010, the S&P 500 lost an
average of 3% per year becausethere were a few years 2000,
specifically, in 2008, that didnot do very well, and so if you
had $100,000, and you startedwith that and you didn't
(11:55):
withdraw any money in 2000, andthen you checked your account 10
years later you would have lostmoney.
So now imagine that's a milliondollars, and not only did you
lose money, but you had travel,remodeling, college expenses and
now all of a sudden, you'respending.
The rest of your life is verydifferent.
So this was a big risk.
That someone thought they werediversified with the S&P 500.
(12:16):
They had to go back to work.
And so I'll talk to people thatwill come and they'll say, hey,
ari, I'm retiring.
I said, okay, cool, they go.
No, I'm retiring again.
I said what happened?
They said, well, I retired, Ihad all my money in one
investment like the S&P 500.
I had healthcare, I had travelexpenses, I had a home remodel,
I had other investments thatdidn't do well, and so now I
(12:38):
have to go back to work and youdon't want to be that person On
the flip side.
I don't want any of you mad atme when you're 80 years old with
way too much money going.
Hey, we told you like we wantedto retire early.
Why didn't you kind of give usmore confidence to do that?
And I have had feedback frompeople that are very transparent
and have said that I haveclients with me in their 70s who
are like hey, you should havepushed harder, like I was like
(13:00):
in the moment I thought I did.
They're like oh no, you thinkyou did, but you didn't.
I said why they go?
Because I didn't retire and youwere so confident you were
showing me all these numbers andgraphs but you didn't find a
way to connect it and I'm likegreat point.
Like then, what good is it?
So the point here is I wanteveryone to know the earliest
time, work is truly optional forthis particular couple.
(13:21):
I encourage them to pay off atleast one of their children's
college, which is going to betwo years, save more money to a
brokerage account and do abathroom remodel.
Then I'm asking them toreevaluate.
So the following year I'm goingto be checking in and we're
going to be having aconversation about hey, is this
happening?
Like, did we actually do thesaving we talked about?
(13:42):
And they might be like we didmore than you projected because
I got another bonus.
Great, then maybe they couldretire, then they might go.
You know what I know?
I said I was going to save thatamount of money, but there's
this really cool new Maseratithat I didn't tell you and I
kind of got a new obsession.
So that's what I bought.
I bought four of them.
I said, okay, that's cool, Iwant you to buy the cars maybe
not four of them, but you'regoing to work till you're 62 now
(14:04):
and they might be like that'scool Cause I just love cars so
much.
Great, it's not my goals, it'stheir goals and it's my job to
make sure what's happeningproperly.
Is them accomplishing theirgoals?
So that is the quick littlestory for this couple of what is
head trash?
Well, head trash is whereyou're thinking.
Hey, I saw an article onlinethat says I need 2 million to
(14:25):
retire.
I don't have 2 million, so,like I can't retire.
That's head trash.
That does not mean you cannotretire.
There are people that retirewith $500,000.
There's also people that go Ican't retire Like the people I'm
around.
They've got 5 million bucks andI want to live like them.
Okay, maybe you can't retire.
Maybe you do need more becauseyou want to spend more.
But do you really want to spendmore?
Like, what is it you reallywant?
(14:46):
Is it we're keeping up with theJoneses, or is it?
No, those are my specific goals.
So I encourage you map out howoften are you buying new cars?
Okay, are there new cars?
How many vacations do you wantto take?
What is your health like?
Do you have a specific legacygoal?
Build a custom plan, either withroot or another advisor, or, as
I've shared with many of you,start with the software, go,
(15:08):
project out, see what you're ontrack for and then, after you
kind of run some analyses, youcan see okay, I kind of loosely
know what I'm on track for.
I now I'm going to work with anadvisor to help me execute this
.
But for a lot of you I don'tthink you need an advisor.
If you're in your 30s and 40ssaving money to your 401k or
brokerage account, but as youget closer to retirement you're
(15:29):
in your 50s, 60s going hey, Ithink, like an early retirement
is probably possible.
I would then seriouslyencourage you to go okay, either
take the time yourself to learntax strategy and go deep on
that front, because that's thebiggest value an advisor can add
.
Or you hire an advisor forquality of life to go, hey, my
life's way better having anadvisor.
(15:50):
I want someone in my corner tohelp out with all of this and I
don't want a new job as anadvisor.
So I hope that this was helpfuland insightful, quick story on
this kind of head trash concepttalk about.
I have a lot of differentphrases I like and I try to make
these fun.
So hopefully you guys likedthis video and if so, please
like it and I'll see you guysnext time.
Thank you all, as always, forlistening to the early
(16:11):
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
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.
(16:33):
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
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
(16:54):
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
people.
I will absolutely make anepisode on it.
At the very least give you someinsight, that's.
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