Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

7 Surprising Regrets From My Clients Who Retired Early

• Ari Taublieb, CFP®, MBA • Episode 192

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I want to ensure you all learn from my clients who have successfully retired early and I'll be launching a new format where I invite more of you on the show so you can hear from those who have done it!

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Ari Taublieb, CFP ®, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.

Speaker 1:

I don't think it's realistic in life to have no regrets. I think that's almost too perfect. But I do think it's nice when you all get to hear from my clients who have retired and say, yep, I wish I would have done these things differently. So in the future, I'm going to be asking a lot of you to come onto the show. I'll be discussing how we protect privacy and how you can come on the show but use a different alias and so you do not have to worry about is it actually you? Now, that's going to be for my podcast, for my YouTube channel. I'm actually going to ask a lot of you to come on the show, show your face that people can learn you and what you're looking for in terms of how you approach retirement planning, and have me actually give you guidance on the show. So a few new exciting things that are going to be occurring. Some of you are like look, I don't want to show my face, I'm uncomfortable, you do not need to do this. This is not something any of you have to do. You can continue to keep listening and engaging in this content, but I want to make this the best show possible for an early retirement. So always thinking of new and engaging ways to keep it fun. So the past few episodes have been heavy on purpose and fulfillment and what you want to think about in retirement. Actually, I think two weeks prior was heavy Roth conversions. But I want to make sure that you are all continuing to get the best guidance possible based on what you're looking for, and I know some of you. Some of you are like look, I just need to know how much should I be saving to that brokerage account to help me bridge the gap? How much do I need to worry about when it comes to health insurance? Is it $12 million a year or is it a hundred bucks a month? Tell me, how much should I be planning for. So I do all of that on this show.

Speaker 1:

If you are new, I want to give you a brief introduction. Some of you are longtime listeners, but it might've been a while where the whole goal of this podcast is to give you actionable advice. It is not, so you go. Okay, that's interesting, good. No, I'm going to think about this after this episode. What do I want to spend my time doing? Huh, should I do a Roth conversion or is that something I should not worry about because it does not apply to me. Huh, I've been worrying about that.

Speaker 1:

My neighbor asked me about long-term care. Should I have long-term care or is that something I don't need to worry about because I have enough assets that I can self-insure? These are the types of things that I want to discuss so that you have the perfect early retirement as perfect as it can be and I will joke that I'm the meanest financial advisor I'm not, actually, but I refuse to let you go. Why didn't I work six more months or another year so I actually could have spent what I wanted to the rest of my life? And I also do not want you to be mad at me when you've plenty of money going. Why didn't you tell me I could have retired early, when I was in a fine spot to do so? Both of those things are things I care about deeply, and that's why I do this podcast.

Speaker 1:

So what I'm going to go through today are seven. They're common regrets for early retirees are seven they're common regrets for early retirees, but they're not common regrets in terms of you know, I wish I would have spent more time with family. Yes, everyone wishes they'd spend more time with family, and it's like going to the doctor and like you know you should really work out more and eat healthy. It's like, yeah, I know I should do those things, but at the same time, I really like cookies and so, like I'm going to eat these cookies. I don't want only cookies, I want other things as well. But I want to know, like, what else should I be thinking about when it comes to an early retirement? And that's what I view my job is is to inform you guys on the experiences my clients have, who have actually already retired early, and hear from me of someone who's actually giving guidance to them consistently. So, with that being said, I'm going to start with the comment of the week.

Speaker 1:

My name is Ari Taublieb. I am the host of this podcast, the Early Retirement Show. I'm a certified financial planner and I'm the host of the Early Retirement Podcast. So if you are looking for more guidance on any of these types of strategies healthcare, tax strategies, withdrawal rates, estate planning, insurance you're in the right spot. If you're on YouTube, I invite you to subscribe. If you are on the Apple podcast app or Spotify or Google podcasts or iHeartRadio I know a lot of you like to listen where you're accustomed to listening. I invite you to share this with a friend so you can retire early with them. It's a whole lot more fun and it helps more people find the show, which is what I'm very grateful for on my mission to help a million plus people retire early with confidence, which, as most of you know, does not actually mean stop working. It means wow, good to know I don't need to keep working. Which really leads me to the comment. So this comment that I'm highlighting today, this comes from MrButtons2065.

Speaker 1:

Now, this comes from a question I asked on my YouTube community and I said why do some people love the word retirement? Some people hate it. And I got some good answers. Some people said I love the word retirement because it feels like I finally get to relax after years of hard work. Others say I also don't love the word retirement. It kind of feels like I'm dying and I feel like kind of life is over, and so I don't mean this to be a depressing podcast, but I like this comment because they allude to what I'm consistently bringing up. When I said why is it some people like the word or don't like the word, they said good point, retirement sounds like the end of the road.

Speaker 1:

I love recreational employment or graduating to independently wealthy. So recreational employment is the phrase that I like to discuss when it comes to an early retirement, because most people don't actually stop working. They go. Good to know I don't need to keep working, I mean they're still going to because I want to spend and travel to this degree which it can be very helpful to make more money to be able to do that. Or you know what? No, I'm going to stop working, but I'm going to do something else that pays way less, that I actually enjoy more and that pays way less, that I actually enjoy more. And that's what I want to do.

Speaker 1:

And some clients come and go Ari, you're not going to be that happy because I'm only going to bring in 40,000 a year versus 200,000. I go, I'm really happy, and they're like why I go? It's not 40,000 I care about, that's 40,000 less. That needs to come from your portfolio of 2 million plus dollars, which, if that keeps compounding, you get 10% growth on 2 million. Well, that's $200,000. So you're at a spot now when you've saved and invested.

Speaker 1:

Well, I want you to actually consider is there a job that I would enjoy that pays less, that if I really enjoyed it. I would do for longer, because sometimes I'll recommend someone to work longer at something they enjoy versus working a very short period of time making a really healthy income, because at the same time, you are really taking away your health and what you care about most, and then you can't actually end up hiking and doing everything you want to do in retirement, and so it's not just about financially getting set up, it's all the other stuff. So what I'm going to start with and these come from my clients who, once again, in the future, you're going to get to hear from personally even more. So the first one, the first thing that they shared, is they said I wish I would have saved more to a bridge account. Now, this bridge account I nickname as the superhero. The superhero is the account that helps you bridge the gap from, let's assume, 50. To 59 and a half, when you can tap into your retirement accounts, because a lot of people come to me and they go.

Speaker 1:

I want to retire early, but my funds are locked up. Now some of you are smart and you've heard me discuss the rule of 70, not the rule of 72T distributions. You've heard me discuss rule of 55, lots of rules out there, okay, so even I get them mixed up sometimes. Lots of different rules and legislation. There's lots of ways to tap into funds early, so it's not like you cannot retire if you have a 401k and you're 57. You can and there's options.

Speaker 1:

But by and large, more often than not which I know is a repetitive statement I just sometimes laugh. I'll do that to my clients. I try to keep it silly. What is happening is you want to retire early but you can't because most of your funds are locked up. Or if you do pull from a 401k, well, that's increasing your income. So now you can't implement the tax strategy and other things that I talk about, because you don't have a way to keep your income low. And that's the magic of what they're alluding to. They are saying I wish I would have saved more, meaning my 401k is really healthy. It's got two, two and a half million bucks, one and a half million bucks. I've saved and invested really well there, but I put so much there. I don't have enough that if I wanted to retire early and spend more on travel and do these things, that I actually could do them while optimizing everything else.

Speaker 1:

Because let's take a hypothetical. Let's assume you are 60 and want to retire early and you've only saved to a 401k. Well, now, when you pull from your 401k, if you don't have any of these other accounts, you're going to pull that income and you're going to have to pay taxes. Now, that's okay, you've got a deduction up front. But let's assume you want to live off $80,000. Maybe you need to take $95,000 so you can actually pay taxes and end up with $80,000 to live off of. Remember, you have to pay taxes so that you can can't live off the 95, you have to pay taxes. And now you're living off the 80 you're after tax amount. It's like gross income versus net income. That might click for a few of you. Now you've got 80 000 to live off of. Okay, great, but the 95 000, that's all income. So let's assume you're 60 and you're like well, I've got to pay for health care, medicare at 65.

Speaker 1:

Well, during those five years you cannot optimize your income to qualify for a subsidy or keep your income under certain thresholds, which could have given you legitimately hundreds of dollars every single month and ended up saving you a lot of money. So the point here is whether you want to implement Roth conversions or keep your income low for subsidies or do any of these other strategies. More often than not, this superhero brokerage account, which is what they're alluding to, allows you to be flexible, because if you've saved $300,000 on the side to help you get through the first five to 10 years, well, that allows you to keep your income really low. You get to pay capital gains instead of ordinary income, which is higher, and it keeps your income low so you can qualify for a subsidy. You can do a Roth conversion. You can do all these cool strategies before Social Security gets turned on, before maybe a punch-in comes in, before maybe rental income increases. So you want to be really strategic because it can really actually add to the amount you can spend in retirement.

Speaker 1:

So that is their first regret. Now their second regret. Now they're all from the same client, but this one is they said I wish I had the courage to live a true life of myself, not of what those expected. So for some of you right now you're like that's not a big deal because I'm able to do that and kudos to you. But others of you are like you know what? Why do I live in the house I live in? Is it because it turns out I've had a lot of children and I've always wanted a big home and now I have a lot of children but I don't really need this home. Should I downsize? But I like living in this community, I like having this big home.

Speaker 1:

Are you going you know what to the office every day? And when I drove to the office, I felt right to drive this type of car and I just liked the way it sounds. If you like the way it sounds and you enjoy it, that's very different from parking, because I have someone who's very transparent, who you're going to get to hear from, hopefully, in the coming months, who, if they're open to sharing their story, they were driving a car because they felt if they didn't have a certain car at work, the people would not take them seriously. They did not enjoy the car and they look back saying, why didn't I retire earlier? Because I did not need to make payments for this fancy car, because I think no one really cared and I was in my head.

Speaker 1:

Now I'm not saying that to you guys, but I want to make sure you're asking yourself at a minimum why do you do the things you do? Is it to fulfill you. Is it to fulfill your family? Is it for both? What do you really want to do? Because I see people that hate their jobs, that continue working in it because they either think financially they need to, they think there's no other option and they really don't know how they'll spend their time if they're not at that job.

Speaker 1:

Now, once again, easier said than done, and living intentionally takes a lot of courage. So the most common thing I hear is yeah, I just can't prioritize my health right now. That's number one. Number hear is yeah, I just can't prioritize my health right now. That's number one. Number two is you know, it's really hard to find time to think about how I'll spend time in retirement because I'm so busy working. And so if you're not really intentionally putting time together to do those things and think through them and build a plan, it's never just going to magically align. So let me be the main advisor that says that and let me be the advisor at the same time that encourages you to actually take the steps to think about that.

Speaker 1:

This third regret comes from a different client who says I wish I didn't work so hard. Now some of you are like what do you mean? Work so hard. It's good to work hard yes, it is good to work hard but it's not good to work so hard that other things begin to get sacrificed. So to me, one of the things I really care about is optimizing. My nickname is Optimize here at the firm. I love optimizing because you've worked so hard, you deserve to get the most out of that.

Speaker 1:

But there's a danger when people over-optimize and I've had someone come to me once they do not work with me now, but they came to me once going Ari, I want you to help me optimize my conversions. I go great. But to do that first I need to understand how much you'd like to spend and what you want to do, and they're like you're not really listening to me. I want you to tell me how to minimize my tax burden. I go, I also want to minimize your tax burden, but I need to only do that. I can only do it well if I understand what we're planning for and they're looking for, because I did not want them to let the tax tail wag the life dog, which I see consistently when people come not super consistently, but I do see it where people want to pay so little in taxes they are willing to sacrifice lifestyle in terms of travel and goals, and I don't think anyone wants to do that.

Speaker 1:

I actually think they're so lost in the weeds of trying to over optimize they don't end up doing what they want to do and I think later in life they might be like why did I try to do that conversion or tax strategy to save $3,000 when I could have spent $20,000, really enjoyed it, had an amazing vacation and it looks like I'm still okay either way? Was it worth that $3,000 haircut cost? For some people it is, for others it's not. And if you have more thoughts, as you're hearing any of this guys, this is what makes my job fun, so you can always shoot me a note, my website earlyretirementpodcastcom slash, submit a question, so you can always check that out.

Speaker 1:

Now I don't know the truth is if you guys are like me at all, but I personally love working and I work very hard. I never feel like I have to work because I really love my job. And sometimes I still feel like I'm sacrificing relationships and time with family and friends and I ask myself what am I really doing this for? Because I want to make sure I'm building an amazing community for all of you and telling you to do awesome, want to make sure I'm building an amazing community for all of you and telling you to do awesome things, but if I'm not doing it, then why on earth should you listen to me? I would say you shouldn't, and I'm listening to my parents and I'm listening to my clients and I'm listening to all these people that are saying, hey, you know, right now you're working like crazy. You're putting out a lot of videos and podcasts.

Speaker 1:

I want to make sure you're taking time for you and I need to be more intentional about that, even if sometimes I think I'm doing a good job when I go back to my journaling and go okay, why am I really doing all of this? It's so I can spend amazing time doing what I want to do most, which is with family, it's with friends, it's playing soccer, it's being active. That's what I like to do, but I don't want to only do those things I want to do, but I don't want to only do those things. I want to do those things and spend time with all of you guys. Come out with new content, new ideas, connect with you in more ways. So to me, I've got a lot of moving pieces going on and if I'm not intentional, one piece will grab all the other pieces, which more often than not is work, and I imagine that's similar for a lot of you. So I want you to ask yourself is the goal financial independence? Is the goal? Buying a certain home Is the goal, like? For some people, legitimately, it's just hey, how do I think about my identity in this new stage of life? And I'm continuing to work because I don't know what I would be like without work. So thoughts to have.

Speaker 1:

A fourth one here is I wish I had the courage to express my feelings. It is similar to the other one, but I wanted to share this one because the client gave me a good example. They said I'm reading their quote that they told me to say for the podcast. They said we all know how important friendships and community are, but if it's not urgent we'll let it slight, and I just like that quote. It's true, we all do know family and friends are important, but if we just are intentional, then all of a sudden time goes by and we go what were we doing this for? Now you will not, I can promise, have a fulfilling retirement unless you're thinking through community and what that looks like. So definitely real thoughts here.

Speaker 1:

Next one is I wish I would have given more. I really like this one, and the reason I like this one is giving for some people is tithing. Giving for some people is to the Red Cross. Giving to some people is to their housekeeper, where they are going to pay them and you know they can tell how hard they're working, so they'll pay them beyond what might be a traditional rate. That's not the type of giving they're discussing. They're giving in terms of how can I give to go have more fun? And so this client said I wish I would have given more to my friends who were working really stressful jobs, that kind of took an oath early on to either help by working at a nonprofit, intentionally making less money. Yes, it was their decision and they recognize that. But they're like look, they're also great people and they also want to take trips. But this is just how they want to spend their time and I have plenty of money because I've saved and invested. Well, I wish I would have actually helped out and encourage them to come on trips by either paying or matching or doing something clever.

Speaker 1:

Now what you don't want to do is embarrass them by saying, hey, I'll pay for the trip because they've told me that that's gone wrong before. But right now, if you're thinking, hey, like I invite you to actually go, is there a friend or family member or someone or a pet, whatever it is there's something, someone that you go. Yeah, you know something would be weird, but it could be your pet, but is there someone that you go? Yeah, you know what I'd love to if they knew this trip was paid for and they did not know I paid for it, and you said and lied and said it's all inclusive, it's all been paid for and I got a deal. Would they come with you and would it make your trip more enjoyable? And when they painted me that hypothetical, I was like, yeah, I do have a friend in mind and I know they work really hard and it's something you trick them on or you don't want anything like that.

Speaker 1:

But when they talked about giving, this was their version of giving is giving to increase their quality of life, which to me, I think is actually a really interesting and cool way of looking at giving. So I invite all of you to think about is there someone that you can pay for? And if so, would you go to them and say, listen, I'm really fortunate, but I've saved and invested. Well, I want to make sure I'm set up for retirement. I am not saying we're going to go take private jet tours together, but I want to make sure that you get to have fun and I'm going to have more fun with you on my trip. I would love you to come May. I pay for that.

Speaker 1:

They might say, no, I'm uncomfortable with that. They might say give me a little bit of time to get a portion of money up. And can we do this trip? Very rare Do they just say, no, it's normally. Yeah, I want to do something, but I don't know exactly what it will look like.

Speaker 1:

So what I would encourage is to have that conversation, because if not, like what is the point of retirement? And if you can take more time with children, or if you can all fly first class, or if you can, some of you don't value those things. Great, don't do them. But what you do value, I encourage you to really think about spending a lot of money on versus simply going yep, looks like I'm good, I'm going to have $50 million when I'm 90. And that's great, because most of you don't want that. Most of you go. I don't want to run out of money and I also don't want to die with too much money. Where's the balance there?

Speaker 1:

So today's these are regrets that are shared from my clients and from things I've seen, and just hopefully this has in a way, opened up the way you're going to think about your own retirement. So less of hey do this conversion and here's the rebalance strategy, and I've got plenty of videos on that. But I wanted to go a little bit deeper and a little bit more emotional today. So that's what today's podcast is all about and I will see you guys next time. If you're looking for one-on-one guidance, that is, of course, what we love to do here at Root, and I invite you to look into the description of the episode on YouTube or in the podcast app and you can see there's a link to schedule a call with me. At the same time, you can see that there's an academy that schedule a call with me. At the same time, you can see that there's an academy. That academy is for those that want to be their own advisor, that don't quite feel the need or don't have $2 million, don't feel the need that they need a whole advisor's dedicated time. So if that's of any interest, I invite you to check that out.

Speaker 1:

Thank you for listening to another episode of the Early Retirement Show. If you have a question that you want answered in a future episode, you can always go to my website, earlyretirementpodcastcom. That's earlyretirementpodcastcom, 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. Thank you.