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

Avoid These 6 Common Mistakes When Retiring Early

• Ari Taublieb, CFP®, MBA • Episode 249

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In this episode, Ari explores six common oversights in early retirement planning that can create unnecessary stress and limit flexibility in the long run.

• Not establishing a taxable brokerage account to access funds before traditional retirement age
• Overlooking healthcare planning, including available subsidies, which may impact retirement timing
• Missing opportunities for tax efficiency through strategies like Roth conversions or coordinated withdrawals
• Underestimating the importance of physical health when planning for an active retirement lifestyle
• Limiting retirement vision to essential expenses, rather than factoring in meaningful goals and experiences
• Focusing only on finances without considering purpose, routine, or fulfillment during retirement



Submit your questions at earlyretirementpodcast.com for future episodes. Are you sabotaging your early retirement with what I call "head trash"? These are the unnecessary worries that keep you working years longer than you need to - like comparing your finances to neighbors without knowing their full picture.

Advisory services are offered through Root Financial, an SEC-registered investment adviser. This content is intended for general informational purposes only and should not be construed as personalized investment, tax, or legal advice. Advisory relationships are established only through a signed agreement. Any examples discussed are hypothetical and for illustrative purposes. If client experiences are referenced, no compensation was provided and their experience may not be representative of others. Comments shared publicly are unsolicited and do not reflect the views or experience of all clients. They are not verified and should not be construed as testimonials or endorsements. Root Financial does not provide tax or legal advice. Tax planning topics are discussed in the context of comprehensive financial planning and should not be relied upon as a substitute for professional advice. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Watching or listening to this content does not create an advisory relationship. To learn more about Root or to explore working together, please visit www.rootfinancialpartners.com.

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

“Early Retirement – Financial Freedom” is a podcast produced by Root Financial Partners, an SEC-registered investment adviser. The content provided is for informational and educational purposes only. It should not be interpreted as investment, legal, or tax advice. I may reference planning situations based on real client experiences, but they’ve been simplified for clarity. Always consult your own financial advisor before making decisions.

Listening to this podcast does not create or imply an advisory relationship with Root Financial. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. Testimonials and endorsements do not reflect all client experiences and are not compensated. Learn more at our website or by reviewing our Form ADV at https://adviserinfo.sec.gov.

Speaker 1:

I know I'm not your personal financial advisor, but sometimes I feel like that because you guys will leave me comments going hey, this really helped me retire early. This is something I just wouldn't have considered otherwise, because I'm not doing it all day, and so I do believe that I have this job, so to speak, to make sure I'm educating you all properly. Now, the fun part is I love doing it, so it's not a burden in any way, it's the opposite. But there's something I want to share with you, and this is how I want to start this episode. So what I love about my job is getting to advise people about hey, here's something that you just didn't know that might really shift your retirement how you can save on health care costs, how you can create income, how you can you name it.

Speaker 1:

But my partner, james, and the founder of Root his dad once told him something that I want to tell you all right now, and so James is the founder of Root. I'm the chief growth officer at Root. We are growing Root as sustainably as we can, so the service never suffers, and what we really care about is that clients go wow, my life is way better working with Root. And when James was speaking to his dad. His dad told James his job is not to be an advisor. And James said that's interesting because I'm a financial advisor. And his dad said your job is not to advise. Your job is to organize people's thinking, which is sometimes telling people what not to worry about. And that's what today is going to be about, because I think a lot of you are worrying unnecessarily. I have a phrase for this that I made up. I call it head trash, where you're literally thinking about things that you worry about, that you do not need to worry, but you're worrying. It's a real worry, but it's fake, and the reason it's fake is through this example. So there's a funny one, but it's important.

Speaker 1:

So I had someone reach out and go all right, I really don't think I should retire early because I have $2 million. I'm kind of a big spender and I just don't think I have enough, but I don't love my job. And I said why do you feel like you can't retire early? They said well, I have a neighbor, and my neighbor and I are very transparent with finances. They have more money and they want to spend less than me. So, like I know, I'm not in a good spot. I said you don't know that because you don't know their planning and their legacy goals. They're like, yeah, I get that, but I really just think that, honestly, there's no way I'm in a good spot.

Speaker 1:

And the reality is they were in a great spot. Yes, they wanted to spend a good amount of money, but it wasn't forever and it was to tackle travel and different things. That, to them, was really important, and I was never going to tell them to go retire early for the sake of it, because that's the last thing in the world I would ever do. But I also don't want someone mad at me when they're 85 with plenty of money, wishing they retired earlier when they actually had their energy and health. And so this person reached out a few months later and said, hey, my neighbor has a big home remodel that they're going to do and they're actually planning on moving, but not moving and downsizing, meaning moving to get a second home. And so, yeah, they're not maybe going out to eat as much, maybe they're not spending on their kids as much, but they really did have some big financial goals. And so the point here is this person was thinking there's no way I can retire early because look at my neighbor, when that's just not the case, it's just head trash. So what I'm going to tell you today is a lot of head trash. That, hopefully, should stop make you worrying, and sometimes my job, by the way, is to tell my clients this is something to worry about.

Speaker 1:

Markets are shifting. Let's talk about your portfolio. Can it still create the income you need? So I'm not Mr Nice Guy. In fact, I will joke on my YouTube videos that I am the meanest financial advisor. I promise I'm not mean. I'm very transparent and I try to do it in a fun, enlightening way, because my parents had an advisor at one point. They had a few, and that's the reason I do this today, because they weren't all optimal. Let's say and that's me being nice here, and it was always here we go financial advisor more numbers, more graphs.

Speaker 1:

I'm going to pretend not to fall asleep, or you know, I really like this stuff, but my spouse is never interested in finances because they keep it as dry as can be, and I was trying to think of a dry food, but I just had dried mango a little bit, and that's a bad example because I really liked that. But anyways, you get my point. So I'm going to hop into these six things that maybe you just don't need to worry about, but they're also mistakes that hopefully you don't make. So if you're new to the show, welcome. I love getting to do this.

Speaker 1:

If you have not left a review on iTunes if that's where you listen please do, or just send me a note. It's fun for me to get to hear how I do help all of you, and once again, this does feel like my job in a way, in the best way possible. So send me a note via email. Leave a comment on my earlyretirementpodcastcom. Send us a note at Root Financial. Hello at rootfinancialpartnerscom. Leave a review on Google Like this helps more people find the show and I really appreciate it. So thank you in advance for doing that.

Speaker 1:

And then, finally, I ask that you, if you wanna retire early, that's awesome, but retire early with friends it's more fun. If you retire early and you're like I crushed it and you have no one to hang out with, well then it's not going to be nearly as enjoyable. Still be probably way better than you working. But you get my point. So I am Ari Taublieb. I'm the chief growth officer here at Root and I love what I get to do, which is make podcasts like this on different topics whether it be tax strategy, healthcare, withdrawal, estate, you name it. Let's hop in.

Speaker 1:

So six common mistakes when retiring early. Common mistakes when retiring early. I'm going to go through each of these and I'm going to give an example. So the first common mistake and this is something that if all of you guys were on the amount of calls I'm on, you would see oh my gosh, this is really that common. I just think it's hard to believe, but I'm going to tell it to you right now. So these are people that are 53. They reach out and they go look, I've done well, I have 3 million bucks in my 401k, or two and a half, and I feel like I'm a savvy investor, but I just it's time to call it quits and I don't want to work part-time. I'm over it, but I don't really want to take this huge penalty, this huge 10% penalty, to just to take money out of my 401k and pay taxes. So I'm just going to keep working.

Speaker 1:

And what they didn't do is they didn't think about having a superhero account, which is what I call a brokerage account, or a taxable account, or a joint or individual. They're all named the same thing. They're all a taxable account, which is not a tax advantaged account. So you don't get to put money into that like a 401k and get a deduction, but there's no restrictions in terms of when you can access the money. So not enough people have a taxable, a superhero account to help them bridge the gap.

Speaker 1:

And then, when they get it, the mistakes they'll make is they'll make it super aggressive because they're like this is a superhero account. Right, it should be like the best account. No, that's the first account you're going to touch. You want that to be way safer. You want your other accounts, like your 401k, to be a little less safe because you want it to grow for you. You might not touch it for a few years, but you still need it pretty safe. And then your Roth IRA. Yeah, you want that super aggressive because you're not going to be touching that for a long time.

Speaker 1:

So the number one mistake is people don't have this account at all and if you don't get on it and you're going to thank me later, this is called a brokerage account. I had someone call it Vanguard and say I want a superhero account. That's what this guy on this crazy podcast told me no, they didn't say crazy, but that's what they said and I laughed because it's not a real name of an account. I made it up superhero. That's what I call this taxable account, because it is the superhero, it's the best account that actually lets you retire early. It lets you keep your income low because you can use this account to pay for living when you retire early. If you pull from your 401k or an IRA, that's withdrawing income as if you just made more money. It's called ordinary income taxes. Brokerage accounts are subject to capital gains taxes, which is lower and sometimes 0%. So not having a way to bridge the gap, that's the first issue I see.

Speaker 1:

And people that do have the account, they don't have it set up properly. So if you're listening going, I have a superhero account. Oh my gosh, that brokerage account. I'm so glad I started that when I was younger. Good job, because not enough people actually have this account. For those that do, they find out late and then they put some money into it. So they limit their 401k contributions because they see the value of this and then they go yeah, but now I have 75,000 or 200,000 bucks in there. It's going to help my retirement, but why didn't I have way more? And so that's. I never see people say I had too much in my superhero account and I don't have enough in my 401k. It's always the opposite much in my superhero account and I don't have enough in my 401k. It's always the opposite.

Speaker 1:

Number two overlooking healthcare costs. Now let me clarify here. I'm not saying overlooking as in oh my gosh, it's going to cost me so much, there's no way I can retire early. I'm talking about not planning, meaning overlooking the planning for healthcare, and the reason I say that is I have clients that spend a hundred bucks a month on healthcare and they're in a great spot and they have a really healthy subsidy and they have $4 million. And what that means is, if you keep your income low because you have a superhero account, you're basically telling the government hey look, we are eligible for a subsidy. We don't have enough income. Even if you have $4 million in an IRA, that doesn't mean that you don't get this subsidy. So you can be really strategic and keep your income really low but have a really healthy portfolio.

Speaker 1:

So the point here is don't overlook healthcare costs and simply go. I can't retire early because of healthcare. That is you cheating yourself. It is a cost, sometimes it's a significant cost, but not doing the full analysis is you cheating yourself. So, even if you're five years out or 10 years out from retirement, I would encourage you to start playing with a calculator that is telling you exactly what healthcare costs would look like. I think we have the best one and we partner with move health, who is the best healthcare company in the world when it comes to early retirement planning. I personally use them for my parents, my clients. They're the best move healthio and I don't get paid more by telling you guys about them or not. I just think they're great. Move health is awesome. They have a calculator. It's in my early retirement academy, so if you want to use that, you can learn more in the description to join that academy.

Speaker 1:

Number three is not having a tax strategy. So I talked about paying 0% in taxes. Yeah, that is a reality when you retire early. If you have a superhero account, not considering Roth conversions, that might yield hundreds of thousands of more dollars for you tax-free in retirement. So I have a ton of videos on tax strategy, which is my favorite thing to talk about, because it's the number one, most overlooked aspect of planning, in my opinion, and that's my background. I was working at a company that specialized in creating tax-free income in retirement and I brought it to the early retirement world Number four not spending on health before early retirement.

Speaker 1:

I'll see people who are like, hey, I'm going to retire early, then I'm going to focus on prioritizing my health, then I'm going to hike, then I'm going to travel which I understand because you don't have unlimited time but I would think about it like training. I'm currently training for upcoming soccer tournament. I'm going to the gym more. I'm doing yoga more. I have more motivation because I have a tournament and I'm a calendar guy. I need to see something on the calendar. I need to be excited for it. That's how my brain works. I think you should do the same for your early retirement. It's time to train. So you can't get there and be like now I'll figure it out. No, start training today.

Speaker 1:

Easier said than done, because I know a lot of you are like hey, I have a family, I'm working, but it's about priority, and so sometimes my tough love for clients is hey, you tell me you want to travel and you want to do all this fun stuff. Great. I don't know if your body is in a position to do that, because you told me you haven't worked out for a few years. So start prioritizing health. And sometimes it's as simple as me saying, look, I don't know if it's possible, but could you cut down to four days a week? Maybe it's less income, it probably would be, but look, your finances are going to be okay If you're still adding X amount to your 401k, are going to be okay if you're still adding X amount to your 401k. And that's one day a week where it's like you're prioritizing health a ton. I don't love the recommendation. I'd rather you do 30 minutes a day than two hours on a Friday. But I had one client that told me it was really helpful for them and they're like. Then, all of a sudden, I kind of got addicted to it and I made it work and so it was what they needed to get them over that hump.

Speaker 1:

Number four was health. I just did that. Number five not thinking about your dream retirement. Oh, I see this all the time. I'm going to retire, I'm going to spend $7,000 a month. It's going to be awesome. Yeah, maybe there's a new car I'm going to buy or a home remodel I need to do, but no, I'm pretty much just. You know, I think $7,000 a month is good. Then they retire and go. I have way more time, I have way more of my health than I thought I was going to have because I only worked out on Fridays before. No, I'm just messing around with you guys there.

Speaker 1:

But not thinking about a dream retirement is the biggest issue, because here's someone that could get by on $7,000 a month, but that $84,000 a year plus a remodel and travel, look, that's a lot of money. But to be honest, this couple that I'm thinking of, they would love to spend way more and they don't hate their job. So for them it probably makes sense to work another two years, even if right now they're 58. And if they're listening, they're like you're explaining my situation, I am, but I'm not saying your name but they're 58. They don't hate their job.

Speaker 1:

So it's like hey, would you rather retire and spend 10,000 a month and never worry about? Hey, would you rather retire and spend $10,000 a month and never worry about? Hey, what if I want to take an extra trip and never worry about? Hey, if I want to potentially get a second home, like that's now a possibility for you, having to work two more years. For them it was like oh, this is interesting. For others they're like $10,000 a month. What would I do with $10,000 a month? If I had $6,000 a month, I'd be more than happy, and so that person should stop working because they don't need as much money. That doesn't add to their quality of life.

Speaker 1:

So my ask of you please dream big. Dream big. You don't have to do all of it, but at least think about it. Would you love to take four trips a year at 25,000 a year? Is that forever? Do you like new cars? Do you want to do a home remodel? Are you going to travel significantly? Do you want to take friends and family?

Speaker 1:

So, maybe dream before you actually kind of write out your expenses. But I do encourage you to write it out, because most people are like yeah, I've got my bills and groceries and mortgage, but that's going to go away in retirement and I think we spend about $6,000 a month as a household. So if we could just have that, that'd be great. They're assuming it's going to be the same and it's not. When you have more time, you spend more money. You probably recognize that, because on the weekends, that's when your bills go up, because you're doing more fun stuff. And if you're doing more fun stuff more often, great, that's why you're retiring early. So I'm proud of you. But I now need you to really spend knowing that you're in a plan. You're in a plan, you're in a position excuse me, to do that.

Speaker 1:

And then number six, the last one here, the mistake is people don't really think about purpose and fulfillment. They're like, yeah, yeah, I need to think about it and I will, but right now I'm just so busy working. And so I'll play that role for clients and we'll say, okay, let's pretend you're retired, what do you want to spend your time doing? And they or I'm gonna play golf. And I'll say, great, let's assume the volunteer place shuts down and you hurt your back Now what? And they're like I don't know, like that was the plan, it was volunteer at this one spot and golf. And now my wife or husband or partner, they're sick of me because I've never been home for this amount of time, and so they're kind of wishing I didn't retire this early, or not. Really, I don't hear that a ton, but sometimes you'd be shocked. So the point here is really do think about purpose and fulfillment.

Speaker 1:

And if there's one thing I can tell you when it comes to like identity a little bit which I know it could be a little woo-woo here, but just do me a favor and watch one documentary. I don't get any commission from this. It's called In and Of Itself. In and Of Itself. It's on Hulu. It's a great documentary. I think it's on Disney Plus as well.

Speaker 1:

This is what I ask my clients to listen to when they're six months out from retirement, because it helps them think more about okay, who am I, what do I want to do? And it's a kind of fun magic show a little bit. I'm not selling it well, but the point here is it's really interesting and most of my clients go look, if I didn't listen to this, it really would have been a different retirement. So you know, hour of your evening, if you don't mind, check that out and let me know what you think. If you go, hey, this was super helpful. I see why you recommend it, awesome. If you go, no, that actually made me not want to retire early. Well, you'd be the first person to say, but I appreciate all feedback. So that is it for this podcast episode six mistakes. I see a lot when people wanna retire early. If, once again, you guys wanna work with Root, this is what we love to do, so please do reach out. You'll see the link in the description if you wanna work with us and we'll go from there. That's it. See you guys next time.

Speaker 1:

Thank you all, as always, for listening to the Early Retirement Podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years and that is because I love getting to do this. Now, please be smart about this. Before you actually execute any strategy that you see me talk about or hear me talk about, should I say Please talk to your financial advisor, your tax preparer, your estate attorney. Please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always, and you can, of course, submit a question on my website, earlyretirementpodcastcom, if you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it. At the very least give you some insight. That's it. Thanks, guys.