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

Why The Biggest Risk To Retiring Early Is Not What You Think

• Ari Taublieb, CFP®, MBA • Episode 251

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Even when the financial plan indicates you're on track, many people experience anxiety—especially between ages 50 and 65, before traditional retirement benefits begin. This episode explores ways to prepare for that critical transition with clarity and confidence.

• One of the most impactful retirement risks is withdrawing too much from your portfolio in the early years
• Many individuals are “qualified rich, cash limited” with the majority of assets in tax-advantaged retirement accounts
• Building a taxable brokerage account can provide additional flexibility before age-based access to retirement funds
• For some, temporarily adjusting retirement account contributions may help support short-term liquidity needs (consider your specific situation and consult a financial professional)
• Planning ahead for early retirement expenses—such as travel, healthcare, or home projects—can reduce surprises
• Avoiding large discretionary expenses early in retirement may help reduce stress on your portfolio
• Focus on what you can control: spending, timing of retirement, asset allocation, and strategic withdrawals



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. 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. The Early Retirement Academy is an educational resource offered by Root Financial. Participation may involve a fee. Use of the tool does not establish a client relationship or constitute personalized advice. 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. 


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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:

You can be on track for retirement and still feel worried. And here's why I bet that you are right now on track for retirement from, let's call it, 65 to 95. But you're wondering, hey, what if something goes wrong? Markets go down, I want to spend more than I think, healthcare costs go up, my kids don't get a scholarship to go play football in college, whatever. Well, now all of a sudden, yeah, I think my retirement's okay, but it's this 50 to 65. That's kind of given me the anxiety, because what if it turns out I retire one year too early? Or what if it turns out once again, markets go down, healthcare goes up, I live longer than I think.

Speaker 1:

So the point here is, most people are worrying about this gap from 50 to 65 because that's when, all of a sudden, they go. Well, after 65, if I really needed to, I mean I could turn on social security. I'm probably going to spend less when I'm in my 70s and 80s on travel versus my early years of retirement. And I'll say that's correct. And they'll say, well, then help me out. Like, what do I do in this situation? And what we do is we do a lot of what if? Scenarios that I'm going to explain today. But the biggest thing and I'm going to this is the number one takeaway which you're going to have right now is don't put everything on your portfolio in the first year. And so here's what I mean. I will see people who reach out and they go look, I have 2 million bucks. I feel that I want to spend about 60, $70,000 a year in retirement. I've done some basic math. I think I can do that. But my concern is right now I have extra healthcare costs because I don't have Medicare yet. I want to travel more when I have my health. My kids are not in college yet, so I'm going to need to cash flow that we really do need a new car and we need to remodel the bathroom. So the risk here is markets go down and they get unlucky In the one year when they retire. Now, all of a sudden, they need let's call it $200,000, but their $2 million is not at $2 million anymore. Now it's at $1.8. Well, they still need that 200,000. So now, all of a sudden, they're at 1.6 and they need income for the next 40, 50 years.

Speaker 1:

So the point here is you can be legitimately on track for retirement and still have anxiety about hey, can I really retire early? So that's number one is validating the way you feel right now, because some people don't know why they feel this way. They're like I feel like I have enough. I mean, I've got a million and a half, I've got two million, I've got three, five, 10 million bucks. Why is it? I still have this feeling that something is missing.

Speaker 1:

And the way you protect against that is by running enough what if? Scenarios to understand your probability of success. Now, if you were to ever go have a surgery and they say there's 100% chance that you'll be okay, they're lying to you. Something could always go wrong. Now maybe it's 99.99% chance, but the reality is you'll probably be fine. I've had multiple surgeries. I'm grateful they exist because my life is better.

Speaker 1:

But the point here is I can't guarantee anything and retirement is about confidence. And if you knew right now, if I said hey, ari, hypothetically, right now, I know you want to retire early at 55. I know I look 55. So that's why I'm saying this I want to retire early at 55. And if markets were to go down 30% and I live till I'm 100 and my legacy goal is to leave 2 million to each of my future children. I can still do that, but you're going to have to live with this amount of volatility. I would be able to say, well, I could live with that. I could today.

Speaker 1:

But me at 55 might say I don't want that level of volatility. So I have an option I can spend less, I can work longer, I can change my allocation. But the big ones is how much I want to spend and how long I want to work. Those are the two things really in your control. Yes, it's in your control. Your allocation, how much equities or fixed income you have yes, it's in your control to the degree of course you travel. That goes back to spending. But the big things that are out of your control, look, you can't control how markets are going to perform. I don't believe in market timing. I do like companies like Vanguard and Dimensional and Fidelity that they're not trying to pick and beat the stock market. It's. You've done a good job saving and investing. You now need income for the rest of your life. So it's really 50 to 65 that will dictate the quality of your retirement.

Speaker 1:

So what do I encourage you to do? If you're still working today and you've got a few years until you actually retire. I encourage you, can you? Maybe it makes sense to temporarily halt some of your 401k contributions. If you find that your 401k is in a comfortable position, maybe it makes sense for you to start tackling some of these things, like a new car or a remodel or college savings or a travel fund, before you retire. So if you retire and markets do go down because you get unlucky, it's not like your portfolio has this gigantic pressure of oh my gosh, we have to be able to afford all of these things all at once, because if it's time to pay for college, you're not going to tell your kid no college for you. Sorry, markets are down. No, they're going to go to college and if we don't have enough cash on the side, that's a problem. You're probably not going to want to push back travel in retirement. I see people willing to travel less meaning hey, we're going to take 60,000 worth of big trips and now it's 40,000 worth. I'll see that, but I don't want you to have to do that. I want you to be able to.

Speaker 1:

You worked really hard 30, 40 years, I imagine to save and invest so you could retire early one day. Maybe you sold a company, maybe something else happened that's allowing you to be in this position of even talking about an early retirement, which which, by the way, is success in its own Just even the fact that you are right now listening, trying to put yourself in a position to legitimately not have to work ever again doesn't mean you have to stop working. But if you knew you didn't have to keep working, you would feel different. You'd have less stress. You'd maybe take on less projects, knowing, hey, if they were to say you're out of here, okay, well, financially I'm fine, you will put less pressure on yourself, and so kudos to you for listening to this, trying to get yourself in a good spot. So this is the number one thing. Once again, it's can we avoid putting everything into one year? So this is why I harp on something called the superhero account, the taxable account, the brokerage account, the joint account, the individual account, the after-tax account it's all called the same exact thing superhero account. Now, if you call Vanguard and say I want to open a superhero account, they're going to be very confused. Okay, it's not a real name, but that's what I like to call it. So this brokerage account this is where a lot of people will find wait a second.

Speaker 1:

I have a million bucks in my 401k and I'm going to retire in three years. Maybe it makes sense for me to drop my contribution from doing the max to just getting the employer match and then putting the rest of that money into my future travel fund or my home remodel fund or my new car fund and it's getting really intentional. Now maybe it doesn't make sense for you because you're in such a high tax bracket. Getting that 401k deduction really is helping your tax situation and money's really tight, so it doesn't mean it's for you. But if you're like, hey, I have extra every month, I'm in my highest earnings years right now I'm bringing in 200, 300, 500,000 a year. I've got extra money. What's the most optimal thing? Well, it's not always maxing out your 401k. That's a common mistake If you already have a lot of money in there.

Speaker 1:

I call it qualified rich, cash poor. My parents they are house rich, cash poor, beautiful home in Malibu, california. They it's house rich, cash poor. That's not throwing off income. They don't want to leave. If they were renting it out, different story. So they're working in their 70s because they like their job and they are big spenders now. Luckily, they like what they do. So they're still working. But if it was up to them, they would not work to the extent that they're currently working, and this is in large part because they receive poor financial advice. Thus why I became a financial advisor. So that's's house rich, cash poor. I just said qualified rich, cash poor. That's where you have so much money in qualified assets like a 401k and you want to retire at 54. Good luck. You have to pay the penalty.

Speaker 1:

Now there's certain things you can do. There's something called a substantially equal periodic payment, sep. There's something called a rule of 55, which I have different episodes explaining. So if truly all your money is in a 401k and you're thinking, is there any way I can use this money, tap into it to start retiring early? Yes, but those are not the optimal options. It's better if you have a brokerage account. So this is the number one thing Can you have a brokerage account and get that to a really healthy position? At the same time, can you start thinking about yeah, we're probably going to want to buy a new car and do a remodel. So can you limit the number of big expenses in the early years of retirement? Because what happens is if you spend too much too quickly and markets go down. Now, yeah, you'll be okay from 60, 65 to 100, but you won't be spending to the same degree and now you don't have income that's coming from any other source other than you, which is stressful.

Speaker 1:

So my biggest tip this is a shorter episode, but once again biggest tip superhero account. Try to at least think about adding money to and it can be a high yield savings account. It can be a balanced portfolio. It doesn't need to go super aggressive, but have something that you can start socking away into travel fund, college fund, car fund. I wouldn't do a legacy fund because and even long term care I would say that's going to do a deeper analysis on things like that but health care before Medicare, make sure that you're optimizing that, which a lot of people don't do as well. But just quick tips, real quick. Well, but just quick tips, real quick.

Speaker 1:

Those are the things that, when it comes to why most people are worried about a retirement, most people are always thinking the biggest risk is the stock market or the biggest risk is what if it turns out I live longer? Those are two big risks. That's not the biggest. The biggest risk to an early retirement is you get unlucky, which is out of your control, and so we're trying to limit what is once again in our control so that we can go wow, I have taken care of what I really need, whether it be, let's assume, home remodel, travel, wedding, whatever. And now you retire and all you, because once again you have these other things saved for. Now you're like I just need portfolio to give me my 7,000 a month or my 8,000 a month this month, because that's my traditional living and that's it, because you already understood that you have money saved, because you were aware of that and saved ahead of time.

Speaker 1:

The other thing to think about is think about are there things that aren't necessary that year? Now, sometimes, if your car breaks down, you need a new car and don't drive around in an unsafe vehicle. But certain things can be pushed back, like a home remodel or downsizing, a wedding not always easy to really push back, college not really easy to push back. So there are certain things that truly are out of your control. So my only ask from this is you get really intentional Now. You don't need to do this.

Speaker 1:

If you're like 10 years out from retirement, you don't other than the superhero account? Yes, I would do that. But the other things like, hey, thinking about kids' weddings, look, you're not going to be able to plan out to the nth degree, what year is that going to be? And if you know, that's probably five years plus away we want that money growing. So I'd put it in a superhero account and I would make sure it's growing. But don't hyperanalyze to the point of well, I didn't look at every single degree, so I can't retire early. Don't do that. That's you cheating yourself. What I would encourage you to do if you are more than five years out from retirement, enroll in the Early Retirement Academy, which you can see in the description.

Speaker 1:

That is an actual software tool that you can use to see when you are on track to retire. I mean, you will know instantly and you'll be like, okay, here's the different variables. What if I spend more? What if I get unlucky? What if, yada, yada? And that should give you confidence. You might go, wow, I'm further out than I thought and this is good for me to see. I need to increase my savings or I need to decrease my spending. You might find, hey, I'm in a better spot than I thought. Maybe I can retire earlier. What am I worrying about? So I use that as a tool. It's not a recommendation in terms of it's not going to be like, hey, here's how much exactly you should be um saving to exactly meet your goals. It's not, it's not thinking, it's just software that you can put your numbers into. Now you do have me as your guide and there are custom videos to help along the way. So I find a lot of people find, hey, this is really helpful.

Speaker 1:

And then, once I'm actually retired early, now I want root, the company I work at, to help actually make sure all these goals accomplish, get accomplished in the correct manner, because I don't want a new job as an advisor in retirement. That's what I hear a lot of. So that's it. If you want to work with Root, of course please look in the description of this episode. If you want access to the Early Retirement Academy, you can check that out as well. And then I encourage you if you're like, hey, this is interesting stuff.

Speaker 1:

I like hearing about tax strategy and healthcare and withdrawal and these different topics, I invite you to subscribe. I love getting to do this. So please do. If you enjoy it, like it and share it with someone you want to retire early with. That's it, thanks guys.

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.

Speaker 1:

None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just a 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.