October 11, 2025 • 16 mins
What if the real financial risk isn’t running out of money, but running out of time to use it well? In this episode, listen as James and Ari unpack a $14 million case study with concentrated inherited stock, sizable retirement accounts, and big questions about spending, portfolio risk, taxes, and legacy.
See how a single allocation decision can swing outcomes from an eight-figure estate to running out of money by age 75. Learn why $25,000 a month versus $50,000 a month can change the end balance by tens of millions, and how to fund first-class experiences without sacrificing long-term security.
Get practical about investment mix and sequence risk, including why a preservation-tilted portfolio can quietly erode optionality over decades. Then map a smarter spending design: a steady baseline plus time-boxed “experience funds” for travel and family, so you can say yes when health and energy are highest.
What you’ll learn (high-net-worth planning focus):
- Investment strategy and portfolio allocation: balancing growth and preservation, managing sequence risk, and diversifying concentrated stock.
- Tax strategy: timing Roth conversions, harvesting gains in low-rate windows, using QCDs to blunt RMDs, and giving appreciated stock through donor-advised funds.
- Estate planning: moving from revocable trusts to SLATs and grantor trusts, plus the deeper work of intent, values, and right-sized inheritances.
- Spending plan design: building a lifestyle-first plan that funds experiences today and keeps long-term flexibility.
You’ll also hear updated context on how many Americans actually cross eight figures, why common “ultra-high-net-worth” stats surprise most people, and how to turn a windfall — inheritance, business sale, or concentrated equity — into a resilient, purpose-driven plan.
If the goal is money that reflects your purpose, not your fears, this conversation gives you a clear path to act with confidence.
-
The statements provided are from individuals who are not clients of Root Financial Partners, LLC. These individuals were not compensated for their comments, and their views do not necessarily reflect those of Root Financial Partners, LLC. The information shared is for informational purposes only and should not be considered a recommendation or testimonial regarding advisory services.
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 an investment, tax or legal professional 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
Create Your Custom Strategy ⬇️
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:00):
How much conservative money should I
have?
Should I have a 60-40 portfolio?
SPEAKER_00 (00:05):
Should I invest in all dividend paying stocks so I
can live just on the dividendincome going forward?
SPEAKER_01 (00:09):
Should I worry about Roth conversions?
Because I see a lot of wealthypeople.
I'm in these friend groups andthey're always talking about
them, but I know I also have alot of money I inherited because
I'm part of that sperm and eggclub.
So does that apply?
SPEAKER_00 (00:21):
How do I use this money to help support my family,
my children, my grandchildren?
How do I pass this on mosteffectively?
SPEAKER_01 (00:27):
Do I need a basic trust or are there more complex
things that I need to look outfor because of how much money I
have and might really have?
SPEAKER_00 (00:35):
What tax strategies are most important when I have
more than$10 million in myportfolio versus when I have
less?
SPEAKER_01 (00:42):
How many people do you think have a net worth north
of$10 million in the UnitedStates?
SPEAKER_00 (00:48):
10 million is a lot, and I think it's a low
percentage, but there's a lot ofpeople in America.
I'm gonna say$25,000.
SPEAKER_01 (00:54):
$25,000 is a good guess, but according to
Fidelity, you're off by about$100,000 because you can see
Fidelity says here in 2023,there were$147,000 individuals
that were considered ultra highnet worth.
Now, what is ultra high networth?
Well, Fidelity says it's someonewho has 30 million or more in
(01:16):
investable assets.
SPEAKER_00 (01:18):
That is a lot more than I would have thought.
And today's show this is acollaboration between myself,
James Cannol, Ari Taubleb.
Ari's the chief growth officerat Root Financial.
I'm the chief executive officerat Root Financial.
And today we're gonna go througha case study that's not too
dissimilar from maybe whatFidelity is referencing there,
from what we see in a lot of ourwork at Root, working with
clients.
Ari, what's the plan for today?
(01:39):
What's the case study that we'regonna look at today?
SPEAKER_01 (01:41):
We're looking at a sample case study of a couple
that has north of$10 million asa net worth.
And it's gonna be a fun one.
I do want to say, James, Iimagine a lot of people who have
just heard this intro arethinking something like this
comment here from Ben Virgil,1573, who says, and this is from
a previous video, thank you,Ari.
(02:02):
I don't have anything remotelyclose to 20 million, but I still
got benefit from this video.
Congratulations to those whohave achieved this, although it
is not my goal.
So, this video is a sample casestudy of many clients who reach
out to Root seeking guidance onwhat the heck do I do.
Now, it's not necessarily, oh mygosh, I'm worried I'm gonna run
out of money.
(02:22):
It's oh my gosh, what if I don'tdo as good as I possibly can and
I work so hard for this?
I want this to actually reflectwhat I care most about.
So this is the case study thatwe are looking at today.
You can see a total net worth of$14 million, and we're gonna
have some fun.
SPEAKER_00 (02:41):
And all right, while you're doing this, the reality
is there's so many differentthings.
There's investment strategies,tax strategies, insurance
strategies, estate strategies.
But today we're gonna talk aboutwhat's that first thing that you
should be looking at.
If this is you, what are thefirst things that you should be
looking at so that you know whatto look at when it comes to
investment, tax, other types ofstrategies?
But let's dive into the detailsand we'll start looking through
(03:01):
that.
SPEAKER_01 (03:01):
We want to get to the details as badly as you guys
do.
So we're gonna look at taxstuff, investment stuff.
It's gonna be a blast, but weare all about being transparent
here at Root.
And here is a comment from BumHip who says, You're doing the
Lord's work here.
I mean, who is more underservedor vulnerable than the top 0.05%
of asset holders?
James, thoughts there?
SPEAKER_00 (03:23):
My thoughts are uh yes, very much tongue-in-cheek.
And we have tons of content frompeople in many different phases
of life.
So if this does not apply toyou, you don't have to watch.
I think there's gonna be a lotof curiosity here.
I think there's gonna be a lotof just fun things to look at
here.
But most importantly, there arecore strategies that do apply to
everyone, regardless of if theyhave 20 million saved, 20,000
(03:43):
saved.
So hopefully there's some themesthat you can pull out regardless
of where you stand there.
SPEAKER_01 (03:48):
Well said.
So let's learn about this couplebecause this is what we're
talking about today.
So you can see this couple, youcan see we're just putting some
names here.
Retiree, spouse, and child.
We got real creative there.
And you can see retiree has a401k with$2.4 million.
Spouse also invested well:$2.2million,$250,000 in a Roth IRA,
(04:10):
$50,000 in an HSA.
And then, guys, you guys know myjokes, many of them are bad, and
I apologize in advance.
But this inherited stock wesometimes also call the Lucky
Sperm and Egg Club.
I know, I know.
Get mad at me later.
You can tell me in the comments.
But you can see they'veinherited$8.5 million, and those
are actually just two positions.
(04:32):
They inherited Apple and Amazon.
So they are now wondering howmuch can we spend?
SPEAKER_00 (04:39):
And Ari, real quick, I'm gonna step in here.
If you're looking at that andsay, I don't have any inherited
accounts, this could beanything.
Maybe you just sold a businessand you have some proceeds from
that.
Maybe you just sold a propertyor a few properties and you have
some proceeds from that.
Maybe the numbers you have arethe same as that, maybe they're
quite different.
The reality is it's the it's theway that we want to talk through
this that's most important, notthe actual numbers themselves.
SPEAKER_01 (05:00):
Beautifully said.
You sell a business and youhave, let's call it, eight and a
half million dollars, you'rereally in the same spot as if
you inherited stock.
The difference is the emotionalcomponent.
For example, my dad, he tells mealmost every day monster stock
has done so well.
If I were to just sell monsterstock, I might feel maybe I've
(05:20):
lost a little bit of my dad.
Now we have financialconversations, but many of you
will share with ustransparently, I just can't sell
that stock.
That that reminds me of my momor my father, or other people
go, I have no concerns.
They want me to do what makesmost sense for my situation.
So let's take a look and see howmuch this couple can
realistically spend.
(05:41):
And where we would start withthis, if you were a client at
root, is how much money is toomuch to pass away with?
Because right now they're ontrack for$70 million.
Now, many of you might be going,that's not enough for me.
But I'd imagine most of youwould go, no, that$70 million
looks like a lot of regret.
It looks like a lot of whydidn't I spend more on my
(06:03):
children?
Why didn't I take bigger tripswhen I had my energy and my
health?
Why didn't I retire earlier?
So, James, let's explore alittle bit about how much they
can spend.
SPEAKER_00 (06:13):
Let's do that.
And Ari, this number, that 70million, a lot of people
probably watching are saying,that's just absurd.
That's not me.
I'm gonna have nowhere close tothat.
You would be surprised how manypeople are completely surprised
by their own situation, wheretypically, if you're that
individual that maybe sold abusiness and maybe you have this
money, you probably weren'tliving with loads and loads and
loads of free cash flow all theway up until the point of that
(06:36):
sale.
You may have been living withinyour means, reinvesting back
into the business, not having ahuge abundance of cash flow
while working in the business.
But once you sell, now thatreally opens up a completely
different reality for you goingforward.
Or maybe you did inherit moneyand you always lived a lower
middle class, a middle classlifestyle.
Well, now this opens up acompletely different lifestyle
(06:56):
for you.
And it's not all just aboutspending and how much can you
buy and how much can youaccumulate, but what it is about
is what does this actuallyrepresent to you?
What could be possible with thismoney?
Spending, giving, familysupport, experiences.
And I think that's really thequestion people want to know.
And that's why we're goingthrough this right now.
SPEAKER_01 (07:13):
$25,000 a month is a lot of money, especially for
someone who, as you can see,they saved and invested well.
They have about four and a halfmillion dollars until the
inheritance came.
And once again, replaceinheritance with, you know, uh
selling a business or just someother proceeds.
And you can see here, if we wereto double this from$25,000 a
(07:35):
month to$50,000 a month, guys,that's$600,000 a year after
taxes adjusted for inflation,$33million fewer dollars.
That that's some number, James.
That is a big number.
SPEAKER_00 (07:49):
And I think that this is where uh, you know, the
first question always is Ithink, am I gonna be okay?
And so one thing I like to talkto clients about is like, what's
that okay number?
That okay number is probablysomething a whole lot less than
$50,000 per month of spending.
But once you know you're gonnabe okay, and how much do you
need to spend to ensure thatyou're gonna be taken care of
the rest of your life, yourspouse is gonna be taken care of
for the rest of their life.
(08:09):
Now start to think about how canwe be creative with this?
How can we be imaginative withthis?
How can we understand that thisposition that we're in with this
inheritance, with selling abusiness, with being part of a
company whose stock skyrocketedand now you have a significant
concentrated stock positionthere?
Don't just look at the numbers,look at what can those numbers
do for you.
And that's part of the fun hereis imagining.
(08:31):
What good could you do?
What adventure could you create?
What purpose could you createwith this amount of money?
SPEAKER_01 (08:37):
A lot of people will tell us, I'm worried to screw
up.
Once again, I know I'm gonna beokay, but I'm worried I'm gonna
screw something up.
And investing often comes up.
So before we increase the expendthe spending more, because you
can see they're still on trackfor$35 million, what if they
don't invest well or just wouldbe more comfortable with a very
(08:59):
preservation-esque allocation?
How would that impact theirportfolio?
Well, we're gonna see right now.
So all I did was shift theirinvestment mix to something that
we call preservation, which youcan see has them now running out
of money by age 75.
SPEAKER_00 (09:19):
One of the things I think is important here already
to look at is the fact that allthese graphs and projections and
this looks awesome, that allcomes down to assumptions that
we're making.
What growth rate are yougetting?
How much are you spending?
What's inflation gonna be?
And a big part of why I'm gladyou're showing this is none of
this is guaranteed.
There is no guarantee that yourspecific investment mix is gonna
(09:40):
return a specific rate ofreturn.
There's no guarantee thatinflation is gonna stay under a
certain rate of return.
So a big part of this is howmuch could you spend?
What could life look like,assuming things go the way we'd
like them to go, but then alsostress testing this of what if
you're not getting the returnsthat we're planning for, or that
historically you would havereceived, how does that impact
this?
Or how does choosing the rightinvestment mix impact what the
(10:03):
future can look like?
So huge swings here withseemingly not that significant
of changes, but these changesare really significant,
especially at this asset levelthat we're looking at here.
SPEAKER_01 (10:13):
What blows my mind is that you can have millions
and millions of dollars.
Many of you know I grew up inMalibu, California.
James went to Pepperdine inMalibu, California, and I grew
up around a lot of characters.
That's me being nice, okay,guys.
And some of these characters,they want to spend 30,000,
40,000, 50,000 a month.
Now, a lot of these charactersare extremely nice people, and
I'm being coy here, but the factthat you could have tens of
(10:36):
millions of dollars and stillworry about running out of
money, many of you go, there'sno way they think that.
And it's true, they do.
And so you can see here, youclick one button and it looks
like you have 70 million, andyou click one button and you're
running out of money.
So what we really want to makesure you understand is that you
need to plan for yourretirement, nobody else's.
(10:57):
So the assumptions in here arekey.
One thing that we want to makesure you're always thinking
about if you're in a similarsituation, is this$50,000 a
month number.
This is assuming that's everysingle month in retirement.
James, do we find most of ourclients are spending the same
amount?
Does it change?
SPEAKER_00 (11:16):
Not just for our clients, but I think for
retirees and people as a whole,uh, it is not the exact same
every single month throughoutretirement.
SPEAKER_01 (11:24):
Definitely not.
So this$50,000 a month,obviously we're dreaming here.
We want to see, okay, how muchis too much.
But we can also separate some ofthese things.
So for example, assume$25,000 amonth, they go, oh my gosh,
$25,000 a month.
We could do everything we wewanted in more.
That that is a reallycomfortable retirement.
Well, now, once again, they'reon track for potentially$70
(11:49):
million, the beauty of compoundinterest you can see on that
graph there.
But maybe they want to travelmore, or maybe they want to give
more.
And we're gonna do anotherepisode going into more details
on giving and tax strategy andestate planning.
Today is really showing you howmuch can you spend with the
assets that you have?
And let's just, I'm gonna letyou, James, throw out a number
(12:10):
here.
Annual travel luxuriously, firstclass, take in the family,
friends.
How much do you think that mightbe on an annual basis?
Let's say 150,000.
150,000.
You got it.
So 150,000.
So that's 150,000.
Let's see how that impacts theplan.
SPEAKER_00 (12:26):
Ari, how long are they traveling for?
Is this traveling every singleyear for the rest of their life
or is this for the first numberof years in retirement?
SPEAKER_01 (12:33):
Good question.
So they are putting travel herefor the first 30 years.
Now I say first 30 years, James,because they're retiring early.
So if they retire at 55 and theylive till let's say 85, well,
that then they spend 30,000every single year.
But for many people, thisinitial amount of 30 years, that
(12:55):
that's just not realistic.
So we could switch this to 10years or 15 years.
That way it's accuratelyreflected in your plan.
They are just saying, hey, whatif we want to travel every
single year, if we have thehealth to do it?
And you can see here, I mean,that's a large number.
That's 11 million fewer dollars,but obviously they're still in a
comfortable position.
SPEAKER_00 (13:16):
And as we look at this, I think the theme here is
for me at least, people areshocked at what once they've
accumulated wealth, once theyhave it, the amount of compound
growth that will continue totake that number to most people,
the fear, and this is normal,this is how we're hardwired, is
to say, what if I run out ofmoney?
What if this doesn't last to me?
To us, yes, we're concernedabout that, of course, for our
(13:38):
clients.
We want to put plans in place tomake sure that doesn't happen.
But equally, how do we preventthe fear of regret or the risk
of regret of what happens whenthis individual doesn't do all
the things they would havewanted to do?
They say no to the things thatwould have brought amazing
memories and experiences tothem, their family, their
friends.
They say no to all that becausethey don't have the plan to feel
fully confident in their abilityto do so.
(14:00):
And they wake up one day whenthey're 85, or they wake up one
day when they're 87 and theysay, Oh my gosh, I now have 60
million dollars in my portfolio.
There's only so much I can do asan 86-year-old, as an
87-year-old with this money.
Sure, I've got some healthcareexpenses, but man, I wish I
could have spent this money inmy 50s, in my 60s, in my 70s to
(14:21):
do the things I no longer havethe ability to do.
And so when we say dream alittle bit, it's not just kind
of pie in the sky, everything'sgonna be rosy and good.
It's it's truly what can lifelook like?
Let's be imaginative.
Because if we're not, theremight come a day when you really
regret not doing some of thethings that you could have done.
SPEAKER_01 (14:37):
I think we should guess what's in people's heads
right now, James.
So let's go back and forth andwe're gonna do just rapid fire
question style.
I'll start, and I want you guysto let us know in the comments
if this is how you're feeling.
So I'll start.
If I'm this person and I'mhearing everything I've heard so
far, one question in my head ishow much conservative money
(15:00):
should I have?
Should I have a 60-40 portfolio?
SPEAKER_00 (15:03):
Should I invest in all dividend paying stock so I
can live just on the dividendincome going forward?
SPEAKER_01 (15:08):
Should I worry about Roth conversions?
Because I see a lot of wealthypeople.
I'm in these friend groups andthey're always talking about
them, but I know I also have alot of money I inherited because
I'm part of that sperm and eggclub.
So does that apply?
SPEAKER_00 (15:20):
How do I use this money to help support my family,
my children, my grandchildren?
How do I pass this on mosteffectively?
SPEAKER_01 (15:26):
Do I need a basic trust or are there more complex
things that I need to look outfor because of how much money I
have and might really have?
SPEAKER_00 (15:33):
What tax strategies are most important when I have
more than$10 million in myportfolio versus when I have
less?
So in this video, we looked at avery high-level case study of
what you can look to spend, whatyou can do with this level of
wealth.
If you enjoyed this, make sureyou subscribe because in the
coming weeks, Ari and I aregoing to do case studies that
dive more into the details, moreinto the tax strategies, more
into the investment strategies,more into the nuts and bolts of
(15:55):
things you can do to enhancethis money, to enhance your
situation once you've gotten tothis point.
If you're in this situation andyou're looking for an advisor to
actually help you implement someof these strategies, reach out
to us here at Root.
We have a private wealth teamthat does this all day, every
day.
Rootfinancial.com is ourwebsite.
There's a link to it in the shownotes.
Reach out to us to see if theremight be a good fit to work
(16:15):
together.
But once again, as we wrap up,make sure that you're subscribed
because in the upcoming weeks,there's gonna be a lot more
videos just like this divinginto the details of what you can
do to optimize your situationgoing forward.
SPEAKER_01 (16:25):
See you guys next time.
How much conservative money should I
have?
Should I have a 60-40 portfolio?
SPEAKER_00 (00:05):
Should I invest in all dividend paying stocks so I
can live just on the dividendincome going forward?
SPEAKER_01 (00:09):
Should I worry about Roth conversions?
Because I see a lot of wealthypeople.
I'm in these friend groups andthey're always talking about
them, but I know I also have alot of money I inherited because
I'm part of that sperm and eggclub.
So does that apply?
SPEAKER_00 (00:21):
How do I use this money to help support my family,
my children, my grandchildren?
How do I pass this on mosteffectively?
SPEAKER_01 (00:27):
Do I need a basic trust or are there more complex
things that I need to look outfor because of how much money I
have and might really have?
SPEAKER_00 (00:35):
What tax strategies are most important when I have
more than$10 million in myportfolio versus when I have
less?
SPEAKER_01 (00:42):
How many people do you think have a net worth north
of$10 million in the UnitedStates?
SPEAKER_00 (00:48):
10 million is a lot, and I think it's a low
percentage, but there's a lot ofpeople in America.
I'm gonna say$25,000.
SPEAKER_01 (00:54):
$25,000 is a good guess, but according to
Fidelity, you're off by about$100,000 because you can see
Fidelity says here in 2023,there were$147,000 individuals
that were considered ultra highnet worth.
Now, what is ultra high networth?
Well, Fidelity says it's someonewho has 30 million or more in
(01:16):
investable assets.
SPEAKER_00 (01:18):
That is a lot more than I would have thought.
And today's show this is acollaboration between myself,
James Cannol, Ari Taubleb.
Ari's the chief growth officerat Root Financial.
I'm the chief executive officerat Root Financial.
And today we're gonna go througha case study that's not too
dissimilar from maybe whatFidelity is referencing there,
from what we see in a lot of ourwork at Root, working with
clients.
Ari, what's the plan for today?
(01:39):
What's the case study that we'regonna look at today?
SPEAKER_01 (01:41):
We're looking at a sample case study of a couple
that has north of$10 million asa net worth.
And it's gonna be a fun one.
I do want to say, James, Iimagine a lot of people who have
just heard this intro arethinking something like this
comment here from Ben Virgil,1573, who says, and this is from
a previous video, thank you,Ari.
(02:02):
I don't have anything remotelyclose to 20 million, but I still
got benefit from this video.
Congratulations to those whohave achieved this, although it
is not my goal.
So, this video is a sample casestudy of many clients who reach
out to Root seeking guidance onwhat the heck do I do.
Now, it's not necessarily, oh mygosh, I'm worried I'm gonna run
out of money.
(02:22):
It's oh my gosh, what if I don'tdo as good as I possibly can and
I work so hard for this?
I want this to actually reflectwhat I care most about.
So this is the case study thatwe are looking at today.
You can see a total net worth of$14 million, and we're gonna
have some fun.
SPEAKER_00 (02:41):
And all right, while you're doing this, the reality
is there's so many differentthings.
There's investment strategies,tax strategies, insurance
strategies, estate strategies.
But today we're gonna talk aboutwhat's that first thing that you
should be looking at.
If this is you, what are thefirst things that you should be
looking at so that you know whatto look at when it comes to
investment, tax, other types ofstrategies?
But let's dive into the detailsand we'll start looking through
(03:01):
that.
SPEAKER_01 (03:01):
We want to get to the details as badly as you guys
do.
So we're gonna look at taxstuff, investment stuff.
It's gonna be a blast, but weare all about being transparent
here at Root.
And here is a comment from BumHip who says, You're doing the
Lord's work here.
I mean, who is more underservedor vulnerable than the top 0.05%
of asset holders?
James, thoughts there?
SPEAKER_00 (03:23):
My thoughts are uh yes, very much tongue-in-cheek.
And we have tons of content frompeople in many different phases
of life.
So if this does not apply toyou, you don't have to watch.
I think there's gonna be a lotof curiosity here.
I think there's gonna be a lotof just fun things to look at
here.
But most importantly, there arecore strategies that do apply to
everyone, regardless of if theyhave 20 million saved, 20,000
(03:43):
saved.
So hopefully there's some themesthat you can pull out regardless
of where you stand there.
SPEAKER_01 (03:48):
Well said.
So let's learn about this couplebecause this is what we're
talking about today.
So you can see this couple, youcan see we're just putting some
names here.
Retiree, spouse, and child.
We got real creative there.
And you can see retiree has a401k with$2.4 million.
Spouse also invested well:$2.2million,$250,000 in a Roth IRA,
(04:10):
$50,000 in an HSA.
And then, guys, you guys know myjokes, many of them are bad, and
I apologize in advance.
But this inherited stock wesometimes also call the Lucky
Sperm and Egg Club.
I know, I know.
Get mad at me later.
You can tell me in the comments.
But you can see they'veinherited$8.5 million, and those
are actually just two positions.
(04:32):
They inherited Apple and Amazon.
So they are now wondering howmuch can we spend?
SPEAKER_00 (04:39):
And Ari, real quick, I'm gonna step in here.
If you're looking at that andsay, I don't have any inherited
accounts, this could beanything.
Maybe you just sold a businessand you have some proceeds from
that.
Maybe you just sold a propertyor a few properties and you have
some proceeds from that.
Maybe the numbers you have arethe same as that, maybe they're
quite different.
The reality is it's the it's theway that we want to talk through
this that's most important, notthe actual numbers themselves.
SPEAKER_01 (05:00):
Beautifully said.
You sell a business and youhave, let's call it, eight and a
half million dollars, you'rereally in the same spot as if
you inherited stock.
The difference is the emotionalcomponent.
For example, my dad, he tells mealmost every day monster stock
has done so well.
If I were to just sell monsterstock, I might feel maybe I've
(05:20):
lost a little bit of my dad.
Now we have financialconversations, but many of you
will share with ustransparently, I just can't sell
that stock.
That that reminds me of my momor my father, or other people
go, I have no concerns.
They want me to do what makesmost sense for my situation.
So let's take a look and see howmuch this couple can
realistically spend.
(05:41):
And where we would start withthis, if you were a client at
root, is how much money is toomuch to pass away with?
Because right now they're ontrack for$70 million.
Now, many of you might be going,that's not enough for me.
But I'd imagine most of youwould go, no, that$70 million
looks like a lot of regret.
It looks like a lot of whydidn't I spend more on my
(06:03):
children?
Why didn't I take bigger tripswhen I had my energy and my
health?
Why didn't I retire earlier?
So, James, let's explore alittle bit about how much they
can spend.
SPEAKER_00 (06:13):
Let's do that.
And Ari, this number, that 70million, a lot of people
probably watching are saying,that's just absurd.
That's not me.
I'm gonna have nowhere close tothat.
You would be surprised how manypeople are completely surprised
by their own situation, wheretypically, if you're that
individual that maybe sold abusiness and maybe you have this
money, you probably weren'tliving with loads and loads and
loads of free cash flow all theway up until the point of that
(06:36):
sale.
You may have been living withinyour means, reinvesting back
into the business, not having ahuge abundance of cash flow
while working in the business.
But once you sell, now thatreally opens up a completely
different reality for you goingforward.
Or maybe you did inherit moneyand you always lived a lower
middle class, a middle classlifestyle.
Well, now this opens up acompletely different lifestyle
(06:56):
for you.
And it's not all just aboutspending and how much can you
buy and how much can youaccumulate, but what it is about
is what does this actuallyrepresent to you?
What could be possible with thismoney?
Spending, giving, familysupport, experiences.
And I think that's really thequestion people want to know.
And that's why we're goingthrough this right now.
SPEAKER_01 (07:13):
$25,000 a month is a lot of money, especially for
someone who, as you can see,they saved and invested well.
They have about four and a halfmillion dollars until the
inheritance came.
And once again, replaceinheritance with, you know, uh
selling a business or just someother proceeds.
And you can see here, if we wereto double this from$25,000 a
(07:35):
month to$50,000 a month, guys,that's$600,000 a year after
taxes adjusted for inflation,$33million fewer dollars.
That that's some number, James.
That is a big number.
SPEAKER_00 (07:49):
And I think that this is where uh, you know, the
first question always is Ithink, am I gonna be okay?
And so one thing I like to talkto clients about is like, what's
that okay number?
That okay number is probablysomething a whole lot less than
$50,000 per month of spending.
But once you know you're gonnabe okay, and how much do you
need to spend to ensure thatyou're gonna be taken care of
the rest of your life, yourspouse is gonna be taken care of
for the rest of their life.
(08:09):
Now start to think about how canwe be creative with this?
How can we be imaginative withthis?
How can we understand that thisposition that we're in with this
inheritance, with selling abusiness, with being part of a
company whose stock skyrocketedand now you have a significant
concentrated stock positionthere?
Don't just look at the numbers,look at what can those numbers
do for you.
And that's part of the fun hereis imagining.
(08:31):
What good could you do?
What adventure could you create?
What purpose could you createwith this amount of money?
SPEAKER_01 (08:37):
A lot of people will tell us, I'm worried to screw
up.
Once again, I know I'm gonna beokay, but I'm worried I'm gonna
screw something up.
And investing often comes up.
So before we increase the expendthe spending more, because you
can see they're still on trackfor$35 million, what if they
don't invest well or just wouldbe more comfortable with a very
(08:59):
preservation-esque allocation?
How would that impact theirportfolio?
Well, we're gonna see right now.
So all I did was shift theirinvestment mix to something that
we call preservation, which youcan see has them now running out
of money by age 75.
SPEAKER_00 (09:19):
One of the things I think is important here already
to look at is the fact that allthese graphs and projections and
this looks awesome, that allcomes down to assumptions that
we're making.
What growth rate are yougetting?
How much are you spending?
What's inflation gonna be?
And a big part of why I'm gladyou're showing this is none of
this is guaranteed.
There is no guarantee that yourspecific investment mix is gonna
(09:40):
return a specific rate ofreturn.
There's no guarantee thatinflation is gonna stay under a
certain rate of return.
So a big part of this is howmuch could you spend?
What could life look like,assuming things go the way we'd
like them to go, but then alsostress testing this of what if
you're not getting the returnsthat we're planning for, or that
historically you would havereceived, how does that impact
this?
Or how does choosing the rightinvestment mix impact what the
(10:03):
future can look like?
So huge swings here withseemingly not that significant
of changes, but these changesare really significant,
especially at this asset levelthat we're looking at here.
SPEAKER_01 (10:13):
What blows my mind is that you can have millions
and millions of dollars.
Many of you know I grew up inMalibu, California.
James went to Pepperdine inMalibu, California, and I grew
up around a lot of characters.
That's me being nice, okay,guys.
And some of these characters,they want to spend 30,000,
40,000, 50,000 a month.
Now, a lot of these charactersare extremely nice people, and
I'm being coy here, but the factthat you could have tens of
(10:36):
millions of dollars and stillworry about running out of
money, many of you go, there'sno way they think that.
And it's true, they do.
And so you can see here, youclick one button and it looks
like you have 70 million, andyou click one button and you're
running out of money.
So what we really want to makesure you understand is that you
need to plan for yourretirement, nobody else's.
(10:57):
So the assumptions in here arekey.
One thing that we want to makesure you're always thinking
about if you're in a similarsituation, is this$50,000 a
month number.
This is assuming that's everysingle month in retirement.
James, do we find most of ourclients are spending the same
amount?
Does it change?
SPEAKER_00 (11:16):
Not just for our clients, but I think for
retirees and people as a whole,uh, it is not the exact same
every single month throughoutretirement.
SPEAKER_01 (11:24):
Definitely not.
So this$50,000 a month,obviously we're dreaming here.
We want to see, okay, how muchis too much.
But we can also separate some ofthese things.
So for example, assume$25,000 amonth, they go, oh my gosh,
$25,000 a month.
We could do everything we wewanted in more.
That that is a reallycomfortable retirement.
Well, now, once again, they'reon track for potentially$70
(11:49):
million, the beauty of compoundinterest you can see on that
graph there.
But maybe they want to travelmore, or maybe they want to give
more.
And we're gonna do anotherepisode going into more details
on giving and tax strategy andestate planning.
Today is really showing you howmuch can you spend with the
assets that you have?
And let's just, I'm gonna letyou, James, throw out a number
(12:10):
here.
Annual travel luxuriously, firstclass, take in the family,
friends.
How much do you think that mightbe on an annual basis?
Let's say 150,000.
150,000.
You got it.
So 150,000.
So that's 150,000.
Let's see how that impacts theplan.
SPEAKER_00 (12:26):
Ari, how long are they traveling for?
Is this traveling every singleyear for the rest of their life
or is this for the first numberof years in retirement?
SPEAKER_01 (12:33):
Good question.
So they are putting travel herefor the first 30 years.
Now I say first 30 years, James,because they're retiring early.
So if they retire at 55 and theylive till let's say 85, well,
that then they spend 30,000every single year.
But for many people, thisinitial amount of 30 years, that
(12:55):
that's just not realistic.
So we could switch this to 10years or 15 years.
That way it's accuratelyreflected in your plan.
They are just saying, hey, whatif we want to travel every
single year, if we have thehealth to do it?
And you can see here, I mean,that's a large number.
That's 11 million fewer dollars,but obviously they're still in a
comfortable position.
SPEAKER_00 (13:16):
And as we look at this, I think the theme here is
for me at least, people areshocked at what once they've
accumulated wealth, once theyhave it, the amount of compound
growth that will continue totake that number to most people,
the fear, and this is normal,this is how we're hardwired, is
to say, what if I run out ofmoney?
What if this doesn't last to me?
To us, yes, we're concernedabout that, of course, for our
(13:38):
clients.
We want to put plans in place tomake sure that doesn't happen.
But equally, how do we preventthe fear of regret or the risk
of regret of what happens whenthis individual doesn't do all
the things they would havewanted to do?
They say no to the things thatwould have brought amazing
memories and experiences tothem, their family, their
friends.
They say no to all that becausethey don't have the plan to feel
fully confident in their abilityto do so.
(14:00):
And they wake up one day whenthey're 85, or they wake up one
day when they're 87 and theysay, Oh my gosh, I now have 60
million dollars in my portfolio.
There's only so much I can do asan 86-year-old, as an
87-year-old with this money.
Sure, I've got some healthcareexpenses, but man, I wish I
could have spent this money inmy 50s, in my 60s, in my 70s to
(14:21):
do the things I no longer havethe ability to do.
And so when we say dream alittle bit, it's not just kind
of pie in the sky, everything'sgonna be rosy and good.
It's it's truly what can lifelook like?
Let's be imaginative.
Because if we're not, theremight come a day when you really
regret not doing some of thethings that you could have done.
SPEAKER_01 (14:37):
I think we should guess what's in people's heads
right now, James.
So let's go back and forth andwe're gonna do just rapid fire
question style.
I'll start, and I want you guysto let us know in the comments
if this is how you're feeling.
So I'll start.
If I'm this person and I'mhearing everything I've heard so
far, one question in my head ishow much conservative money
(15:00):
should I have?
Should I have a 60-40 portfolio?
SPEAKER_00 (15:03):
Should I invest in all dividend paying stock so I
can live just on the dividendincome going forward?
SPEAKER_01 (15:08):
Should I worry about Roth conversions?
Because I see a lot of wealthypeople.
I'm in these friend groups andthey're always talking about
them, but I know I also have alot of money I inherited because
I'm part of that sperm and eggclub.
So does that apply?
SPEAKER_00 (15:20):
How do I use this money to help support my family,
my children, my grandchildren?
How do I pass this on mosteffectively?
SPEAKER_01 (15:26):
Do I need a basic trust or are there more complex
things that I need to look outfor because of how much money I
have and might really have?
SPEAKER_00 (15:33):
What tax strategies are most important when I have
more than$10 million in myportfolio versus when I have
less?
So in this video, we looked at avery high-level case study of
what you can look to spend, whatyou can do with this level of
wealth.
If you enjoyed this, make sureyou subscribe because in the
coming weeks, Ari and I aregoing to do case studies that
dive more into the details, moreinto the tax strategies, more
into the investment strategies,more into the nuts and bolts of
(15:55):
things you can do to enhancethis money, to enhance your
situation once you've gotten tothis point.
If you're in this situation andyou're looking for an advisor to
actually help you implement someof these strategies, reach out
to us here at Root.
We have a private wealth teamthat does this all day, every
day.
Rootfinancial.com is ourwebsite.
There's a link to it in the shownotes.
Reach out to us to see if theremight be a good fit to work
(16:15):
together.
But once again, as we wrap up,make sure that you're subscribed
because in the upcoming weeks,there's gonna be a lot more
videos just like this divinginto the details of what you can
do to optimize your situationgoing forward.
SPEAKER_01 (16:25):
See you guys next time.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
CrimeLess: Hillbilly Heist
It’s 1996 in rural North Carolina, and an oddball crew makes history when they pull off America’s third largest cash heist. But it’s all downhill from there. Join host Johnny Knoxville as he unspools a wild and woolly tale about a group of regular ‘ol folks who risked it all for a chance at a better life. CrimeLess: Hillbilly Heist answers the question: what would you do with 17.3 million dollars? The answer includes diamond rings, mansions, velvet Elvis paintings, plus a run for the border, murder-for-hire-plots, and FBI busts.