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

How to Know If You’re Ready to Retire (Hint: It’s Not Just About Money)

• Ari Taublieb, CFP®, MBA • Episode 267

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The hardest part of retirement isn’t always financial, it’s psychological. For many, stepping away from work isn’t a light switch, but a dimmer that adjusts over time. This episode of Root Talks unpacks what makes the retirement decision so complex, especially for high-achieving professionals whose identity is tied to their careers.

Through a real-life case study, the conversation explores how severance offers can become powerful “test drives” for retirement, offering space to reimagine life beyond work. Ari and James examine the impact of golden handcuffs— when financial incentives cloud what really matters: time, health, and meaningful connection.

If retirement feels more like a mental block than a math problem, this episode offers a new lens. Learn how tools like Tim Ferriss’s fear-setting exercise can help unpack the real risk of not of leaving work, but of staying too long. 

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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements

Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

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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.


Speaker 1:

James, I've never had someone wake up and say today is the day I've decided I'm going to retire. I've had people, however, say I'm over commuting, I'm over deadlines, my boss is just at the brim. I just don't know how long I could do this. And then all of a sudden that starts to increase. And then there's the hey, maybe I do have enough. But it's very rare that someone wakes up and says today is the day I have 2.2 million in assets and I have my withdrawal strategy ready and plan for healthcare. That doesn't happen.

Speaker 1:

So some of you are thinking it's a light switch, there's a retirement light switch. That's really not how it works. It's more of a dimmer where it's over time you're starting to feel maybe I do have the pieces to make it happen. Maybe it's been on your mind since you were in your 20s or 30s of. I've always wanted to retire early. I just didn't know when that day would come. And now, all of a sudden, it might be closer than you think and it's hard to make that decision why You've just worked the last 30, 40 years.

Speaker 1:

It would be weird if it was not hard, if you were to come to me and I was your advisor and you said, ari, I'm just not worried, yeah, I'm going to retire and, like, markets will do what they'll do and I just have no concerns. That would make me very nervous because I'd want to make sure you're aware that you're in a good spot. But here's how to make sure we're thinking through everything. Today, what we're talking about is retirement and the choices around it. I believe, james, if everyone was told here's exactly when you have to retire, it would actually be easier on their brain. They wouldn't have to make the decision themselves, and it's easier to not have to do that. So what we're going to talk about today is exactly that.

Speaker 2:

Agreed. I've told the story before of getting let go from my last firm. So incredibly grateful that happened. If it was up to me to leave, probably wouldn't have happened. Being let go best thing in the world. I think you have an example, ari, and we can actually work through kind of specifics of this with some context. Do you want to share that example?

Speaker 1:

I do, and let me say I'm so grateful that you were fired. So this was from someone in the Root Collective. That's our free community with over 3,100 members, where you can go and not just hear from James or myself but other people who might be in a more similar position to you in life, in age and assets. And this person says my position has been eliminated and I have the choice to retire with 26 weeks severance or try to find another position in the company. I'm 60 and a quarter of my assets will come from stock and dividends that will be converted once the company goes public. If they go public, Take the 26 weeks and test out retirement, or should I work a couple more years with reduced pay? He goes on to say he worked a career for 25 plus years, so there's a lot to unpack there.

Speaker 2:

Yeah, and let's start with what do we not know? I have no idea how much he has saved. I have no idea what's in his portfolio. I have no idea what it would cost to retire. I have no idea where he lives, so we have no actual idea of a lot of things. But what we do know is kind of what framework should you think about this through or how should you approach this decision? And to me, the first question is obviously could you retire? You know this. If this guy's asking this and he has nothing saved and never did anything before, okay, put that severance into savings and keep working. There's just, it's an easy answer, kind of like think of it as a flow chart. Are you undersaved? If yes, go back to work. No, you know, if you're good, if you have enough that you could retire, this could be an incredible opportunity to be one of the best things that ever happened to you. Because that severance 26 weeks of pay that's six months of pay. What a perfect opportunity to try retirement before actually committing to retirement.

Speaker 2:

The hardest part for most people about retirement isn't actually the financials. You think it's the financials which is why you save and you invest and you contribute X percent to your 401k and you think that that's the thing that's going to enable retirement. Until you've actually done those things and you realize, in addition to there being a financial barrier, there's a psychological barrier, and the psychological barrier is holy cow. I've spent my whole life committing 40, 50 plus hours of each week to this work thing. I don't actually know who I am without this work thing, and I think for some people don't struggle with this. They've got a great idea of exactly what they would do, where they would travel, what types of things they would. That's awesome. What they would do where they would travel, what types of things they would, that's awesome. But most people don't have that. And the scary thing is okay, I'm going from to use your analogy lights on to lights off overnight. That's a very scary thing. I know this thing, even if I don't love work. I know it and I know what I'm getting If I flip the switch, if I turn off the lights. I have no idea what's on the other side here.

Speaker 2:

And what this individual has a great opportunity to do is how can you potentially test those waters, knowing you got six months of runway? You've got six months of runway to support you while testing out what retirement could look like, because the thing about retirement is, I don't think it should actually be a binary thing. Traditionally, it's this thing okay, you graduate, you get out of high school, you get out of college, you start working. You do that for 40 years. One day you're just done because you saved up enough. That's one way to think about it.

Speaker 2:

But how do we have a more balanced life where we're not waiting and deferring everything until retirement, but we're doing the things that we want to do along the way while also saving for the future? This could be a perfect opportunity to say spend four weeks, spend eight weeks, hopefully, spend a little bit more. Spend 12 weeks, spend half of what you're getting in severance. Just testing out what would you want retirement to look like. I've got some other thoughts on that. Before I go into that, ari, what other thoughts do you have?

Speaker 1:

Just one big one. And then don't forget your thoughts, because I want to hear them. The biggest one I see is the golden handcuffs. When people reach out and they're making 300,000 a year and they know that they've run the projections to understand they're in a good spot to retire. And then they've, they've told their spouse they're ready, it's probably. They've probably done that for a few years and now it's finally time.

Speaker 1:

And then all of a sudden, james walks in and goes you know, we'll give you $500,000 more to stay because you're just so important to the company and we're going to miss having you around and we just really value you. And so now here he was ready to retire, but he's thinking to him younger self now. Do you know what I would have done to make $500,000? I mean, that would have been like 10 years of me working from 20 to 30. And, oh my gosh, I just couldn't see myself turning it down Also. And they start convincing themselves what could I do to get to this position again? What if I didn't look at my expenses properly? What if inflation is this? And starts telling his spouse you know, maybe we should just do this to be safe.

Speaker 1:

Now, how many years have we seen that go on. How many missed opportunities did they legitimately miss, with family or otherwise, because of this golden handcuff? So it's something that we need to make sure we do good planning around, because first you must know you're in a good spot. But if you know you're in a good spot and now you're presented this, we don't fault clients who take it. We just want to make sure they take it for a clear reason. If they are taking it to go, oh it's so, we can have five more trips. That's very different from them saying, well, we already know we can take five trips, five more trips, we don't even have the time to do that. So there becomes a point where these golden handcuffs actually make the decision more difficult. We a couple of episodes.

Speaker 2:

We these golden handcuffs actually make the decision more difficult. A couple of episodes. We talked about the concept of different scorecards. We think about financial planning with just one scorecard. What is my financial wealth? And this is just. Don't think about it just from that. This concept comes from a book called the Five Types of Wealth, where there's financial wealth, but there's also physical wealth, there's mental wealth, there's time wealth. There's, I think. What have I not said yet?

Speaker 2:

If you're that individual where you get those golden handcuffs and you're making $300,000, you're ready to retire and they offer you $500,000 to stay, well, this is why it's good to have a financial planner if you can't do this on your own. This is why we exist. Reach out to Root Financial if you're looking for someone to do that with. But how impactful is that? What's the marginal benefit of that? Now, if someone is 25 years old and gets offered half a million dollars per year, that's insanely beneficial. The impact of that is probably going to fast forward your financial goals tremendously. But if you're at the latter stage of your working career and it's cool $300,000 to $500,000, that's a big jump. But realistically, is that going to increase your probability of being able to do what you want to do in retirement? Yes, it's going to add to your portfolio, but do you need more portfolio to do what you need to do? So what's the actual marginal impact on your finances? Way less in your 60s than that same bump would have been in your 20s or 30s even.

Speaker 2:

But don't stop there. Sure, it's helped your financial wealth, but you continue to work. How many more years of life do you have left? We really don't know. But if you keep doing this one fewer, two fewer, three fewer that you're fully free to do what you want to do. What about relationships? How many years left do you still have with your parents? How many times are you going to see them before they pass, and what's this going to do to that? How many more times are you going to be able to go on those trips with your whole family before everyone gets married and has kids and it's harder to get everyone together? What about your health? How much longer can you put off taking care of your health, putting off eating better? How much longer? So these are the types of things that, if we're just looking at the financial side, we're missing out on the other filters, the other things that we should be looking at to make the best decision.

Speaker 2:

One of the things I think prevents most people in this situation if I had to guess from actually retiring isn't the finances. I think we justify it. Oh, let's run one more projection. Can I get my Monte Carlo score from 95% to 96%? Can we do? That's just our logical brain trying to justify the fears that we're facing, which it's totally fine to face those fears. This is something you've never done before, that's fine. I would be afraid if tomorrow I had to retire. So what do you do?

Speaker 2:

There's a great exercise Tim Ferriss writes about this called fear setting. I've done this a number of times, where I'm going to try to summarize I'm not going to do the best job, but if you're saying it's essentially this what are your actual fears? Your fear is not that you're not going to make $500,000. That's not a true fear. The fear is what am I actually going to do when I retire? Will I still have friendships when I don't get to see the people that I see in the office every day? Will I still have purpose when I don't have the VP title or the director title that I currently have?

Speaker 2:

So truly define your fears, and that takes deep introspective work to say what is it that's actually scaring me about this? The fear could be financial, whatever it is. Just make a list on the left-hand column of a piece of paper, define all your fears and so, really, this piece of paper, divide it into three sections the left column, middle column and the right column. And the middle column next to each of those fears is the prevent. What could you do to prevent some of those worst case outcomes? What could you do to prevent that feeling of loneliness? What could you do to prevent that feeling of I no longer have purpose? What could you do to prevent that feeling of maybe I haven't saved enough?

Speaker 2:

There's things you could do, work with a financial planner to do the financial piece, can you start developing some friendships? Go to the community center, go to go join a pickleball league, whatever it is for the friendship piece? Good, you know. So there it starts to be this sense of okay, I've defined my fears, what can I do to prevent that? And then the third column here is the repair. Okay, assume, worst case scenario happens, you weren't financially prepared.

Speaker 2:

This and I think this person didn't have I think they used a pseudonym, ari, who, yes, the question. Okay, say his name is Tim. Okay, one of Tim's fears is the financial piece. He's going to prevent that by making sure he doesn't spend over X amount and he's going to work with a financial planner to do Okay, cool, he lists that. But then, beyond that, tim, what could you do if that doesn't prevent it? What if your actual worst case scenario comes true? Well, in this case, he's 60 years old and he just goes back to work.

Speaker 2:

Now, easier said than done, but it's, it's what it starts to do, is it starts to properly? It gives fear the proper attention. It's not overly inflating this fear Sometimes, when our fears are just kind of vague and undefined and we don't take the time to express them, they become much bigger, but they're only much bigger in our head. It's the perception that's much bigger. And when you go through that and say, okay, well, worst case scenario, I could do this Worst case scenario, okay, none of those are actually that bad. That's the first piece.

Speaker 2:

The second piece is separately. What are the benefits of taking action, tim? What are the benefits of potentially retiring right now and trying it out and seeing how it goes? Think of what you could do with your sense of adventure, your sense of purpose, your health, your relationships. Look at all those things and then finally look at what's the cost of inaction. The cost of inaction if action is test out retirement the cost of inaction is wow.

Speaker 2:

What if I never actually take the time, while I have my health and my vitality, to find out who I am and what I want to do? What you start to paint is a very realistic picture of what are the actual things. You should be fearful of the fears that you started with. What if I don't have enough money? There's some, you know. If you've got a plan in place and you do it, you should be able to prevent those, hopefully. But worst case scenario, you should be able to repair those if you monitor this and take some steps to repair it.

Speaker 2:

That risk is now put in its proper context the risk of what if I never actually figure out who am I, what do I want to do? What is this life actually all about for me? What do I want to look back and not regret one day that becomes this much greater sense of that's the real thing. I should be terrified of of never actually figuring out what I want to do, because I continue to use work as this excuse to distract myself and to feel a sense of purpose, to feel a sense of productivity, but it's not actually aligned with what I want to do. So look up fear setting, tim Ferriss.

Speaker 2:

Fear setting. It's a very helpful thing to go through Anytime there's a major decision I've done this a few times specific to root financial. I've done it outside, and it just helps to put fear in its proper context and really what it helps to do is it shows you that there is no action that doesn't have any risk associated with it. Action comes with risk, but so does inaction, and oftentimes it's the inaction that is actually far riskier, but we're able to justify that and put that out of sight, out of mind, and keep ourselves doing what we've always been doing because it's more comfortable, we know it. It takes us work to actually go through that.

Speaker 1:

Beautifully said and very wise. If you're willing, let us keep you accountable. Send a photo in and you can do this anonymously. You can send. If you send a note to Ari at rootfinancialcom, you can, I will be the one to see the email of your piece of paper. You do not have to worry, it will not get posted in the community. If you want to share it with others and be very transparent and say hey, everyone, I did the exercise, I'm in the community sharing what worked and what didn't, and how it really helped or didn't, we are one community.

Speaker 1:

We just want to help each other, and it's one thing for James to give great examples or myself to give a story, but it does hit different when you guys get to speak with each other. So certainly, make sure to check out the community. Once again, we want to keep you accountable and so sometimes we'll make these episodes and we'll say guys, there's something that we think you should really take away. Nothing to do with working with Roots. Just we want to make sure that if you are in this position, like hypothetical Jeff here or Tim here, well, tim has been given a great option where now he has the opportunity to test out retirement.

Speaker 1:

We recognize a lot of you will not have that same option. It doesn't mean you still can't prepare well. What we don't want you to do is beat yourself up thinking, oh my gosh, I just feel like I'm so behind my neighbors or my coworkers, my friends or I'm never going to be able to retire. We want you to even shift how you think about that word retirement. So that is why we do everything we do here at Root. Anything else in today's episode, james.

Speaker 2:

That's it, Thanks everyone.

Speaker 1:

Awesome. Thanks everyone. James has his own show, Ready for Retirement. We, of course, both work at Root. James has his video on YouTube under James Canole. I have mine under Ari Taublieb, aka Early Retirement, which you will see on YouTube. I also have the podcast Early Retirement. If you're interested in working with Root, this is, of course, what we love to do. It is holistic financial planning, tackling all aspects. If you head to our website, rootfinancialcom, in the upright you'll see a little button that says see if you're a fit. You can click that, You'll be asked a few questions and we'll see you from there. See you, guys, next time.