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

7 Steps To Check Off Before Retiring Early

• Ari Taublieb, CFP®, MBA • Episode 223

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Exploring seven essential steps to prepare for early retirement empowers listeners to approach their golden years with confidence and clarity. From understanding financial needs to defining personal success, this episode guides you through crucial retirement planning considerations.

• Evaluating how much money you truly need for retirement
• Contemplating your work status during retirement
• Identifying alternative income sources for financial stability
• Adjusting your savings strategy to ensure flexibility
• Determining how much you want to leave behind for heirs
• Exploring different investment approaches and risk levels
• Defining personal success and fulfillment in retirement

If you have a question that you want answered in a future episode, you can always go to my website, earlyretirementpodcast.com.

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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:

Welcome back to the Early Retirement Podcast. We're gonna have some fun today. These are the seven steps so that you can retire early with confidence. Some of you are watching this video and you're already retired. This might give you some new thoughts. Some of you are 10 years out, five years out, one year out from retirement going. Did I miss anything? And I wanna make sure. Healthcare and tax strategy and where do I pull income from? That's what today's going to be all about. What are the steps to make sure you didn't miss anything, so you don't retire and go shoot. I should have looked at this. Why didn't I think about that? And really it's. So you have the confidence, when you do retire, to go. I am not missing anything and I'm fully confident. I'm in a great spot. So, with that being said, what I'm gonna start with today? If you are new to the podcast, welcome. I do these episodes on the podcast app as well as on YouTube, so if you're watching on YouTube, you can, of course, see me Now.

Speaker 1:

I'm a checklist guy. I like checklists, it's fun. You're gonna see on my screen and I'm gonna explain it as well for those listening. This is a fun checklist and you can see it's titled what issues should I consider before I retire? And there are a lot. This is the full checklist that I go through with clients. So, everything from well. Your cash flow needs change. Will you receive a pension? How does social security get impacted? Are you married? What if there's inheritance? There's so many different things. This is the full checklist. What if there's inheritance? There's so many different things. This is the full checklist. Now you can get access to that inside of the Academy.

Speaker 1:

Now, today, I'm going to give you my seven key steps. And these are the key steps because some of these on this checklist here they're good. But if you see one of these here, are you disabled? If so, you might be eligible for certain benefits. Well, many of you are not disabled, so that just doesn't apply to you. I want to give you the most hard-hitting steps and we're going to hop right in. So, number one, and a lot of what I'm going to go through by the way, I know I hate these little disclaimers before this, but a lot of what I'm going to go through. I'm going to use real examples from my clients, but please know it's all for fun, informational, educational purposes only. Okay, guys. So number one how much money do you need? Well, it's easy, right?

Speaker 1:

Some of you are like I just need enough to spend $10,000 a month in retirement. Is that after taxes? Is that adjusted for inflation? Well, yeah, but what if it turns out I want to spend more? Well, that's what I call head trash, which I hear a lot.

Speaker 1:

And the way I'll do it with a client. They'll say how much do you want to spend? And I won't add any more color. Some of you are like you always add color after you ask a question, but sometimes with clients I don't. So I will say how much do you want to spend? And I pause because sometimes they'll say oh, I mean maybe 10,000 a month, but I have a mortgage right now, so that's another 2,000. And I'm going to have health care, but that's not forever, just the first few years. And so I'm seeing them really kind of explain their thoughts.

Speaker 1:

Versus someone else might say 10,000 a month with no more color. I'll say great, is that 10,000 a month forever? Is that a short period of time? What does that mean? And so the point here is how much do you need? Well, this is going to be a dynamic thing, and don't get into the paralysis, analysis or analysis, paralysis I forget whichever one it is. But don't get so into it that you go.

Speaker 1:

Well, I don't know what if it turns out. I retire and because I have more time, I want to travel even more than I'm projecting. Because I'm projecting $20,000 a year. But what if it turns out I want to spend 40? Well, maybe I'm just going to work two more years just in case I want to travel more than I thought. I'll see people do that all the time. I'm going to do one more bonus, because what if markets go down? And then one more, one more, one more. And then your spouse is like you've been saying one more for 10 years. Now, are you ever going to retire? I want to spend time with you. So how much do you need? Get a piece of paper, use a software I don't care if it's mine or any of them and really think about what would you love.

Speaker 1:

So step one is truly dreaming big. Really go and say would I want to go to the World Cup final? Now, be realistic here. Don't like me, put buy Arsenal Football Club okay, because that's an unrealistic goal, but please do go dream big to the point where you go yep, 30,000 a year on travel. What if my kids get no scholarships? What if it turns out that my spouse doesn't want to travel but I still do, and so when they're home, they're going to want to go on more spa days with their girlfriends. Okay, great, like, put that in there. Maybe it's the opposite You're the big traveler and you're like but I need to budget more because my husband might play golf all the time. Okay, put that in there. But anything buying new cars, vacations, weddings are we going to downsize Almost like write out your dream life? I know I want you to do this before you look at your assets and what it could create, but this is how I prefer to do it. That's step one.

Speaker 1:

Step two is are you going to truly stop working? And for some of you, this is an easy one. You go, yes, financially, if I don't need to keep working, I am done. Others of you go no, no, no, I'm not going to do nothing. I'm just going to work way less. I'm going to enjoy it way more. I'm going to ask for Fridays off or my schedule is flexible, and so I'm going to do something else, because 55 is too early to just do nothing. I don't want to sit on the couch. Maybe I do a side business, but what if it doesn't end up doing well? I don't want to rely on that. So these are things to think about.

Speaker 1:

I'll give a client example. One of my clients wants to go sell jewelry on Etsy. That sounds fun. Now, if they do not get any sales, their plan is totally okay. So the reality is that's just extra bonus and they're not going to do nothing. So I can already tell you for this client we're going to call her Jane. If Jane stopped selling jewelry, she's going to do something else, because I know Jane. So any extra buffer there.

Speaker 1:

If it turns out she wants to travel more or gets worried about healthcare costs, even if it's unnecessary, she's a human and when markets go down, even if her portfolio goes from two and a half to 2.3 million and she might not feel great, she goes look, I know I'm going to be okay. She's just working because she wants to work in the same way. I don't think I will ever stop. Now, that's what I say today. Life changes. You just never know.

Speaker 1:

So because of this, I'm Think about who you are. Are you the person that's going to be like I'm done. When I'm done, that's it. Or are you going to be the person that's like I'm probably gonna do something? I just don't know what it is, because if you're probably going to do something, it's a big deal. Why is it such a big deal?

Speaker 1:

Well, I had a client that came to me and said you're really not going to be happy with me. I said why? They told me that they are only going to bring in 40,000 a year and the year before they told me they were bringing in 250,000. And I said I'm pretty happy. And they said that's weird. Are you just like trying to be a nice guy here, because normally you're super transparent? I said look, you bringing in 40,000, that helps way more than you think because it allows your portfolio to keep growing, which means it can keep compounding. So you making $40,000 and using that for your travel budget means that's 40 less thousand dollars I have to send you from your portfolio, so your 2 million doesn't become 1.96. Now, all of a sudden, that 2 million grows at 10 percent, that's a $200,000. That's a significant difference because we didn't have to pull from that. So any day, any day, any week, any month, any year that you keep working, it really helps the plan, which is what causes a lot of people to go. I'm just going to keep working a little bit more because I see how helpful it is.

Speaker 1:

But then there's a point where you go. How much is really enough? Which leads me to step three. What other income sources are going to help you? Social security, pension, inheritance, rental income. Factor those in. If you want to spend 10,000 a month the first year of retirement, but 4,000 a month is coming in from a rental property, you only need six to come from your portfolio.

Speaker 1:

So what a lot of people do is they go. Maybe I don't spend too much in the first few years of retirement, because what if I run out? I don't want to run out of money ever, so I'm going to underspend. And then what happens is they have $4,000 coming from rental income, they have $3,000 coming from social security and then another $3,000 that's coming from inheritance. So like there becomes a point in the future where, theoretically, if their portfolio went to zero, they would meet all of their goals. Now the reason for the example here is I don't want this person to go. I don't want to spend my money because it's all up to my portfolio before Social Security starts helping out when they're in a fine spot to do it. So, yes, understand what other income sources are going to help you, because it might mean you need to save way less than you think, which means step four how are you saving new dollars?

Speaker 1:

Today I just spoke with a lovely couple and they have about $3 million in their 401ks. They actually live very close to our San Diego headquarters and they're super nice people, but they've saved and invested too well. They've been the on-paper good financial students who sometimes it's cringe when people do this. By the way, I felt a little cringe If you can't see me because you're listening on the podcast app. I'm doing the quotation marks here but they were really good people. The thing is they were good students and what I mean by that is they were like I've been told from the time I started a job to put money into my 401K, because that's what I do, that's what we do as a family. So they put money in and they put money in, and now here they are and they're in their 50s going.

Speaker 1:

Maybe we should stop working. I feel like we have a good amount of money and the job has changed, so I kind of want to stop, but most of their money is all locked up, so they can't really get it without paying penalties and taxes. So I told them guys, you did a great job and if you had a million fewer dollars, what I'm about to tell you you should not do. But you don't. You have 3 million plus in assets in your 401k. You should really consider strongly stopping adding new money to your 401k beyond the employer match, because that's free money Hard to say no to that and any additional dollars should go to that superhero account, the brokerage account, because that's going to actually help you retire earlier. It's almost like I don't need you getting more tax benefits with a deduction from your 401k. I don't need you adding more tax deferred dollars. I need you to get flexibility. So if you want to stop in two years when you're 53, you can do that.

Speaker 1:

So for your situation, look at this sample. So I made up a phrase it's called QRCP qualified rich, cash poor. It's not a real thing, I just made it up. But house rich, cash poor. Many of you have heard of that before where you have a lot of equity in your home but not a lot of liquidity. That's my parents. They have a $6 million home in Malibu. They never want to sell. They want to stay there forever, so they are going to keep that home and it's never going to help bring an income. The difference is they love it and they're willing to work longer, and many of you know this. But they were burned by four financial advisors not burned by all of them, but many of them. Some of them just, let's just say, less than optimal me being nice here and so they're working in their 70s. They'd rather not be working at the pace they are in their 70s, but they're doing it because they like Malibu. They could sell and go somewhere else, but they don't want to. That's house rich cash poor. These clients I just told you about are qualified rich cash poor. Most of their money is in their 401k. They need some other assets to help out.

Speaker 1:

The next one, which is number five how much do you want to leave behind? If you have not read Die With Zero by Bill Perkins, go check it out. It's an amazing book. But some of you are like I want to leave five million to each kid. Some of you go none. I want to die with zero Great. You guys should have very different retirement plans and retire at very different times. So make sure that's where I really do like my software, because it does a good job of being able to show you hey, here's exactly how much you can spend and here's exactly when you're going to pass away. If you want to plan on 100 or 95, based off your investments growing, this is what it would show.

Speaker 1:

Next one is how are you going to invest? Meaning, what is the experience you're looking for? Some of you do not get bothered. When markets go up and down, you go look, yeah, I get that equities grow stocks more than bonds over the long term, and so I've been doing that for 30 years anyway, it doesn't bother me. I'm happy to keep investing this way, knowing there's going to be volatility if it means I'll have more at the end. Others of you are like no, I was doing that while I was working, so I was comfortable, but now I don't want to see my portfolio go down 40% because I don't have as long for that to recover. So I'm going to sleep better if I never go down more than 15%. Great, you guys should have two very different retirement plans. That first person, who's more willing to accept volatility, they might be able to spend more money because markets might be doing really well, but they have to be willing to accept a time where they might have to spend less money when markets are down by a lot Versus another couple might go look, as long as I kind of have my basics and I kind of deviate from that slightly, I'm fine. So it's just up to your experience. Are you going to lose sleep if your portfolio is down 30%? Some of you are like I don't even know when it is because I'm not going to check that. So there's also a study, by the way, that's proven, that people who forget their passwords end up having a better portfolio over the long term. Interesting Last step here, number seven.

Speaker 1:

It's kind of like number one, which is like how much money do you need? But really it's what is your definition of success? Because some of my clients definition is hanging out with family and that's it and that's sufficient for them. Now, I love my family, but that's not enough for me. I need to play soccer. I need to play soccer. I need to be healthy. I need to work out often. I need to be able to cook. There's a lot of fun things I need for stimulation. Now, call me high maintenance or call me whatever you'd like, but I have high standards for the life I want to live.

Speaker 1:

If you told me I could no longer work at Root anymore, I'd be really sad, because this gives me a lot of stimulation and I feel like I'm really doing a big purpose for the world. Doing a big purpose I don't think that's real English there the way I said that, but you get my point. So for you, you might go I really want to volunteer and then do it and you might go. This feels like a job. You might actually go do it in like a different job that you thought was going to be super kind of laid back. You're still with coworkers, but it's once again feeling more like a job. You might be doing a job that once again feels like a real job, versus what you were hoping it to be, which was more of a kind of laid-back, part-time, you know, hang out with coworkers kind of a thing. Now, not a lot of people do that, but I do have some clients that work a stressful job and then go work at Starbucks because they're like I just wanted something less stressful. And I only say Starbucks because my first thought was like that is not stressful. I mean, that is extremely stressful, trying to get the exact drink right and people complaining and the names and the this and like. It seems stressful to me. It seems harder than what I do, to be honest. So just think about, like, what is your definition? Now, I've got all these tools and academies and things to try to help you figure all this stuff out. You can check that out in the description of this if you're watching on YouTube, as well as the podcast app. I hope this was helpful.

Speaker 1:

These are seven steps for you to retire early with confidence, with success. But, guys, I make all of this for you, so tell me which one resonated the most. My goal is, after every episode there's something that you take away, where you take action, where you go yep, that I'm going to stop saving to my 401k. This clicked what you just said there. Or you know what, for the first time, maybe I sit down and I'm going to write it out. Dream it. I mean everything. Am I taking cruises? How much are those going to cost? And then kind of using a software, or you could use Excel, but I prefer a software because it's your life is easier and then you can see what you're on track for. So that's what I would encourage for everyone If you're five years out, one year out, 30 years out from retirement. And that's all I got for you guys. See you next week.

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. 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.

Speaker 1:

For informational purposes only. 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 in this podcast. For informational purposes only. 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. 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 will 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. Thank you, hey guys, it's me again. Pleasebesmartaboutthiscom, and you can go ahead and submit a question that I'll look to answer in a future episode. Consult with your tax preparer or financial advisor before taking any action.

Speaker 1:

This podcast is for informational purposes only. Hey guys, it's me again. Please be smart about this, and I will see you all in a tweet. Thank you for listening to another episode of the Early Retirement Show. Consult with 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. Hey guys, it's me again. Please be smart about this. I certainly appreciate it and I will see you all each week. 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. Hey guys, it's me again. Please be smart about this, if there's anyone out there that you know as financial, tax or legal advice each week. 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 any 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. 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. 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, that's early retirement podcastcom, and you can go ahead and submit a question that I'll look to in a future episode. Thank you all for listening. Please do rate it, review it and share it with someone you think will benefit from this information. If there's anyone out there that you know, consult with your tax preparer or financial advisor before taking any action. 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. 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. 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 finance advisor before taking any action, 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 as you enjoy it with someone you think will 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. 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. This podcast is for informational purposes only. 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. 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. I certainly appreciate it and I will see you all each week. 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, 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. Nothing in this podcast should be as true as you all each week. 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. Early Retirement Podcast is for informational purposes only. 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.