Create Your Custom Early Retirement Strategy Here
Ari Taublieb, CFP ®, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients navigate the nuances of an early retirement.
PS: Before anyone decides to move forward with our services, I want to ensure we're the best fit to help you reach your goals and I personally have the first conversation with you.
Create Your Custom Early Retirement Strategy Here
Ari Taublieb, CFP ®, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients navigate the nuances of an early retirement.
PS: Before anyone decides to move forward with our services, I want to ensure we're the best fit to help you reach your goals and I personally have the first conversation with you.
What does it really mean to be risky? That question almost sounds like when people say what is the meaning of life in our world. But what I wanna do is give you two definitions and ask you which one resonates most with you. So here's the first.
Speaker 1:One Client came to me. When I asked them what does risk mean to you? They said Ari, risk means that my money doesn't go up and down a whole bunch, because once I retire I don't have as much time for that money to recover, so I just would prefer less fluctuation. I said, hey, that's pretty good. I asked another client. I go hey, what does risk mean to you? They said risk means that I'm not unnecessarily leaving money on the table. I don't wanna see my money go up and down a whole bunch. At the same time, I do recognize that there is value to being invested in a very specific allocation and I don't wanna be in my 80s going. Why don't I have millions of more dollars if they're not investing well? And I said, wow, that's another really good definition. It's not that one's right or one's wrong, but it's the same reason that I tell everyone you cannot have a cookie cutter approach. And if you're watching this on YouTube, you may have seen this ahead of time and if you're just listening on the podcast app, I'll explain. Someone sent me this anti-cookie cutter jar and I'm zooming in on it on my camera right now and it was sent to me and I just think it's awesome because I often say it, but I didn't know. I said it this much where someone sent me a jar and it's because I don't believe in the cookie cutter approach, I don't believe in what's your age and risk tolerance.
Speaker 1:I don't think that's gonna help you retire a whole lot with a whole lot more confidence. Should I say? Let's assume I say, hey, what's your risk tolerance? Like I'm a two to day and a 10 tomorrow, that's not really helping me retire. I don't really do the scale to me. I think you have to be a whole lot more intentional and that creates confidence, because a lot of people come to me and they go all right, I've ran some projections on my own. I'm pretty confident with my planning and it says I have a 99% chance of success. I go. Why don't you go retire then? And they go. Well, what if something's wrong? What if I'm in that 1% and I'm finding a lot of people are going hey, I wanna make sure I'm doing the right things, and if I miss one thing, does that mean I'm gonna have to go back to work? And there are instances where exactly that happens, and I talked about it last week on my sequence of return risk episode, which is the concept that you get unlucky and now, because markets didn't perform well in the same years, you're trying to travel and spend more on health insurance before Medicare kicks in, that your portfolio is being drained too quickly. So what I want you to do today is, if any of you are going hey, I've ran some projects on my own. Looks like I'm in a good spot. I also don't want you to be mad at me when you're in your 80s and 90s going hey, ari, or whoever your advisor is, I've got a ton of money. Why didn't you tell me I could have spent more if I was in a good spot to spend? I don't want to overspend, but I tell everyone in retirement there's a cheat code and you're like what's the cheat code? The cheat code is it says if you're going bowling Now, I'll always start my episodes when I say always, mainly if I have a story that could come to mind that I think would be helpful.
Speaker 1:I like to start with a story, a quick one, and then I want to go through a financial example with you and then I want to go through the logic behind that and I try to keep these 10 to 15 minutes. Sometimes I go 20, 25. I do outline all of these, but sometimes I just think it makes sense to go with my story. So hopefully you've enjoyed the format of the show. I'll go through a few reviews in just a moment. But just too excited so I want to tell you guys this.
Speaker 1:So when someone comes to me I'll say, hey, are you a big bowler? And, by the way, no one's ever said yes to that, so I could pick a new analogy at this point. But I just find this works. And so they're like no. Has anyone ever said yes? I'm like no, but regardless I say well, what if you go into retirement and you're bowling and you hit a few pins over just when you're throwing the bowl down the lane? That's great. I mean, that's the point. The point is to hit pins over. Pretty simple, you could even do really well, you could hit a strike, or you could do unlucky, get unlucky, or maybe you should have really bad form and you could throw that, and all of us have thought of it. One point when you've gone to the bowling alley, maybe you hit a gutter ball. Maybe you even had a gutter ball on the person's lane next to you.
Speaker 1:So what I want you to do is understand that a cheat code to all of this, which is going into retirement with the bumpers up. That's what it's like when you have an advisor or someone that's implementing dynamic withdrawal strategy to say, hey, here's the most you can spend, meaning here are the guardrails I want you to be within. Here's the minimum where, if you don't spend this, you're gonna be on track for $5, $10 million and you're gonna be upset with us later. At the same time, what we don't want you to do is overspend. That's not the goal of retirement planning. But I also don't want you to underspend. I want you to become a successful spender.
Speaker 1:So I want you to change your investment perspective in retirement, because too many people say you know what, ari, I've been a great saver and if I stay a good saver, I know I'm not gonna run out of money. I say you're right, I'll even do you one better, what you can do if you wanna have a great investment plan is go work 30 more years. Your plan will look amazing, but your life won't, and no one ever comes to me and goes. I'm so glad my Roth conversion strategy, you know, took me to the point where I now have $600,000 tax-free dollars when I'm 95. They say I'm glad I did Roth conversions so that my children, when they inherit these dollars, aren't in a really healthy tax bracket and decide to not take a job because if that job, if they really enjoy it but it pays them a lot, their second guess in taking the job, because I invested well, I'm now gonna have to get taxed on those dollars.
Speaker 1:Now, this is a real story. A client came to me and, specifically a child of a client said Ari, I'm thinking about no longer being a doctor. I'm like what do you mean? Because I know the last example I just gave you. It's a mouthful, so I'm gonna give you a real story to illustrate this Client came to me and said Ari, I am once again.
Speaker 1:There's the child of the client thinking about no longer being a doctor. I said why? They said well, my dad's invested really well. I go, that's true, and they go well. I heard your podcast and you said at some point that if I inherit these dollars, I get taxed on them. I go. That's true because they're pre-tax dollars and they go well. Here's what I'm thinking. I'm thinking about quitting my job and, as you know, my dad's not in the best health and his their dad is my client. He said my dad's not in the best health and so what I don't want to happen is my dad passes away and now I'm a physician and I'm in really healthy tax bracket and now I'm taxed at 35, 40 plus percent on everything he works so hard for. So I'm now thinking about no longer being a doctor. I said let me make sure I have this straight Are you saying that you're considering altering your future of becoming a physician Just because your father invested really well? They go exactly that, I go well.
Speaker 1:This is the risk of poor planning. The risk of poor planning is that now your child no longer takes a position they otherwise would have loved and helped thousands of people, just because you invested really well. Now that sounds really weird, but these are examples that I'm seeing consistently where, if you invest really well, there are different issues that you face. My parents and a lot of you know this were burned by multiple financial advisors. It's why I became an advisor. There were four specific advisors, and so they're still working in their 70s, but luckily they love what they do. The premise of the story is I saw the risk of bad planning, which can lose millions, and the value of good planning, which can add millions and cause a lot of you to pay 0% in taxes if you're really efficient.
Speaker 1:So how am I changing your investment perspective? I don't want you to be an amazing saver. I don't want you to be an overspender. I want you to be a successful spender and I want you to know if you're still working today when you can stop saving, because what I don't want you to do is go wait a second. I've maxed out my 401k for the last 20 years. I'm just gonna keep doing that because it's what you've done. And you see, you log in and you have $2 million Great. But then there comes a point where, if you have $2 million and you get a 10% rate of return on that, that's $200,000. Good luck beating that by adding $30,500 into your 401k. You can't. So there becomes a point where it's a whole lot more impactful to invest well, as opposed to simply say I'm gonna add new dollars. So why am I bringing this up? I'm bringing this up because I want to change your investment perspective, like I mentioned at the beginning, to something that's gonna let you sleep better at night. And here's my final example here.
Speaker 1:Client came to me. They said, ari, I really want to pay off my mortgage. I said why? They said, well, I'm just gonna sleep a whole lot better and I know also right now I'm spending 8,000 a month. In the future, if I had this mortgage gone, I'd only need 5,000 from my portfolio, not 8,000, I would sleep better. I said great, here's the alternative is we don't pay off the mortgage and instead we just keep paying the minimum down. And in this particular client case, they were gonna yield $400,000 more from doing that, and so we went through it. They said I get it, I'm not paying off the mortgage, but I also understand there's real financial benefits from not doing that, based on my interest rate and my other financial goals. I said, great.
Speaker 1:Another client came to me and it was very similar, but they just said, ari, I just I know, maybe I'm losing money on the table, I don't care, I am going to sleep better with that mortgage gone. That debt is over my head. I want it gone. I said great, and I showed them the trade off and it was about $80,000 of a difference over the long term versus investing it, based on their rate and different factors. And they go wow, it doesn't really make a huge difference over the next 30 years. I go you're right, please go pay off the mortgage and please go throw a party, excuse me. So the reason I'm bringing this up is yes, there's the financial answer to everything, then there's the real life answer and what I want you to do is quantify all of these decisions so that you can go make an awesome decision on your own.
Speaker 1:A good advisor shouldn't say go pay off the mortgage or go invest. A good advisor should say what's gonna help you sleep better at night? Okay, good to know. Am I gonna educate my client on why this is a no-brainer and why they shouldn't pay off the mortgage, and am I gonna illustrate to them why this is something that they think for the next 20 years they could be going? I know maybe I should pay off my mortgage, but I know I should invest when, in reality, maybe they shouldn't invest it. Maybe they have a 7% mortgage interest rate and the point is they're close to paying off their mortgage and it should make sense to go pay it off. So it's about saying how can I really create a custom approach so that you are sleeping well?
Speaker 1:This ties all these little stories and examples I just went over. These tie back to the very first example I gave today, which is the client that said I don't want my money to go up and down a whole bunch. And then the other client that said I wanna make sure that I don't leave anything on the table, yet I still don't want it to go up and down a whole bunch. So what we always need to do is go hey, what's the risk, return that we're comfortable with. And I'll show clients if markets went down 30%, would you be able to sleep at night? And if they go, no, I just couldn't stomach it. That whole concept would cause me to lose sleep. I'd say, great, then we're not doing it.
Speaker 1:Here's the trade-off. The trade-off is, instead of spending 10,000 a month, you're gonna spend 8,000 a month and they might go. I don't wanna spend eight, I wanna spend 10, I say, great. Here's the other trade-off. You can work a little bit longer, they go. I don't wanna work longer, I hate my job. And I say great, you can take this other job and it's gonna pay a whole lot less. But I need to do it for more years and you might go. Well, maybe I'd enjoy that, you know, maybe. Yeah, maybe I didn't bring in 150,000 a year, but if I bring in 70,000 a year and I enjoy it and I'm working three days a week instead of five days a week, that's more of what I'm looking for. I say great. You might say you know what I'm so comfortable with investing. But I don't love my current job and I wanna make sure that I'm doing everything in my power to optimize what I've worked so hard for.
Speaker 1:I have clients, guys, that have 100% equities and you're going well. How on earth could you recommend that? That just doesn't make any sense. Someone's getting older. I go, you're right, it's a horrible recommendation. And they're like oh, what did you just say? I go, it's horrible If they don't also have a spouse that's still working, if they don't also have medical that's being taken care of, if they don't also have rental income or a pension. So you have to layer on all of these different things.
Speaker 1:Because there are clients that it makes total sense to have 100% equities for Now we'll show them here's 100% equities and they go all right, that looks like my money could be down 45% at some point. I go, that's true, that could happen and we're gonna be doing tax planning when that does happen to take advantage of it. But you're right, that could happen and if you're not comfortable with it, we don't have to do it. And they go. Yeah, but you also said before even though this kinda looks scary, that if I was ever down 45%, that I'd still be okay because I have my pension that covers All of my needs and I have potential inheritance, even though we're not relying on that. True, but are you still gonna lose sleep at night? And they go? You know, I thought I would lose sleep but, to be honest, now that I understand that, I'd still be okay either way, I'm not saying to be happy and call you up over the moon when I'm down 30%. As long as we have tax strategy to take advantage of these things, I'll be happy with it. And then I'll take it a step further and show my clients the benefits of doing a roth conversion, which don't make sense for everyone, but for those it does make sense for.
Speaker 1:Think about it like this assume you buy apple stock for $1 and it grows to $5. That's awesome, that's what you want to have happened. But if that's all in your eye array, when you take the money out it's ordinary income. Let's assume you buy apple stock for $1 and it goes up to $5 and you're like okay, I bought it for $1, it's now with $5, but that's in my eye array. So like cost basis and what you purchased it for and all that stuff doesn't really matter, because when you take the money out it's all taxes if it's just ordinary income. So what we want to do is say wait a second. Let's assume we bought apple stock for $1 and now it's worth $5 and it's just crushing it and it's all in your eye array and it keeps going and now apple stocks worth $10.
Speaker 1:Well, what some people do is they go. Apple stocks done really well for me. I'm gonna hold on to that. When I need income, I'm gonna withdraw from it. Nothing wrong with that. But the next level of planning is saying okay, I've got my good investment allocation, I'm comfortable with the ups and downs of the market. Now that apple stock I bought for one went to five. Now it's worth 10. At some point that apple stock is gonna go back down to one. Maybe it's even go to 50 cents. And once it's at that $1 or 50 cents, you can implement what's called a Roth conversion, moving the money from that eye array where your apple stock is owned to a Roth eye array. Now you, for example, you bought it at one. It goes up to five. It goes back up to 10. Now maybe it comes down to five. At five. You do a Roth conversion, move that $5 from your eye array to your Roth eye array. Stick with me here and now, when that $5 that's now your Roth eye array grows back to 10, because it will at some point. That's all tax free growth.
Speaker 1:So too many people say I'm gonna be a good long term investor. They kind of sit on their hands and markets go down and say, yep, I'm gonna just buy and hold. Nothing wrong with that, especially if you're building up in your 20s and 30s and 40s. But then there comes a point where it actually makes a whole lot of sense to say I'm not gonna sit on my hands, I'm gonna implement Roth conversions or these other strategies that people do when they try to retire early, because it can add a whole lot more value over the long term. So hopefully I buy. No means overwhelmed you today a lot of stories, hopefully changing your perspective a little bit when it comes to what the allocation should be retirement planning, roth conversions.
Speaker 1:I wanted to kind of make this a mail bag episode, but really I want you successfully spending, not looking back mad going why didn't I spend more? Because I don't want to have $10 million when I'm 80 and maybe I have children, only a million to each. Maybe you don't have any child and you're like, hey, that changes my whole plan. Can retire earlier and more often, not? The answer is yes, by a number of years if you don't want to leave $3 million to a certain child. So these are the pro strategies that I help my clients with for those that want to retire early. If you listen to this and go to my advisor does exactly this, then great, don't hire us and it's not worth the hassle if you go hey, now this is what I'm looking for. I just didn't know it existed someone that specifically does early retirement holistic planning. That's why we exist. So hopefully this was helpful. Love you guys, as usual.
Speaker 1:I know I said I was going to go over review the week, so I'm gonna go over it right now, just at the end. This comes from Robert 2025 recently started listening to our podcast, find extremely informative, very concise and easy to understand. In addition, I reached out to arie in an email and very helpful with a timely response. Thank you for such an informative, educational podcast. I look forward to listening to it every week. Keep up the good work. Best wishes. So glad that this episode was helpful and, robert, you've enjoyed the show.
Speaker 1:I know I'm not gonna work with all of you, so my only request is, if you're not working with me, if any of this has been helpful, please do drop a comment on youtube or leave review on itunes and let me know how I've helped you. I love hearing all of your stories. It's what makes this job fun. So thank you guys, love you see next week. Thank you for listening to another episode of the early retirement show.
Speaker 1:If you have a question that you want answered in a future episode, you can always go to my website, early retirement podcastcom that's early retirement podcastcom and you can go ahead and submit a question that I'll look to answer in a future episode. Thank you all for listening. Please do rate it, review it and share it with someone who you think would benefit from this information. If there's anyone out there that you know, I certainly appreciate it and I will see you all each week. Hey guys, it's me again. Please be smart about this. Nothing in this podcast should be construed as financial, tax or legal advice. Consult with your tax preparer or financial advisor before taking any action. This podcast is for informational purposes only.