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

You Want To Retire By 55. Here's 5 Things You Need To Know.

• Ari Taublieb, CFP®, MBA • Episode 290

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Retiring by 55 sounds incredible, but it takes more than hitting a savings target. You need to understand how to bridge the gap between your last paycheck and the life you want to live.

In this episode, Ari Taublieb, CFP®, shares the five things every early retiree should know before calling it quits. From the overlooked “Rule of 55” to navigating healthcare costs and tax traps, this guide helps you move forward with confidence in your plan instead of crossing your fingers.

Here’s what we cover:
The Rule of 55 — how it lets you access 401(k) funds early (and the key mistake that disqualifies you).
Healthcare before Medicare — how to budget smartly, use tax strategies, and avoid sticker shock.
Taxes & Withdrawal Strategy — why a $2M 401(k) isn’t really $2M, and how to create real after-tax income.
Legacy Goals — whether you want to leave a million or spend it all, your intentions should drive your plan.
Lifestyle & Purpose — how to avoid the “I’m bored already” phase and build fulfillment into your retirement.

Retiring early isn’t about escaping work, it’s about creating a life you don’t want to escape from.


If you’re serious about retiring at 55 (or sooner), this episode helps you think beyond the math so you can design your freedom with purpose.

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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_00:

If you want to retire at 55, there's a few things you need to know. The first is the rule of 55. The second is healthcare. The third is lifestyle, which I'm going to get into and purpose and identity. The fourth is legacy goals. And the fifth one is what I call all the extras. I'm going to explain all of these in today's specific episode so that hopefully you have a total sense of wow, am I in a spot to like make this happen now? Or wow, this is really helpful. I'm going to work a few more years so I can really spend what I want. I could see it being risky if I do quit. I don't want to have to go back to work or retire again, which trust me, from working with hundreds of clients, you do not want to have to do that. Now, my name is Ari Taubleb. I'm a certified financial planner, host of this podcast, the Early Retirement Podcast, and chief growth officer here at Root. We love what we get to do, which is help clients retire early with confidence. If you're watching this on YouTube and enjoy the content around tax planning, healthcare, withdrawal, I invite you to subscribe and like this video. If you are someone who is just listening on the podcast app, that's great. Please rate and review the show as it helps more people find the episodes. Now, my goal is to help as many people as possible retire early with confidence, such as yourself. So let's get into it. Number one is the rule of 55. This is something that so many people just don't even know is an option, and so I have to talk about it first. So in the year you turn 55, not your specific birth date, but in the year you turn 55 or later, that's when you have the option, not every employer, but a majority will allow for this. You can pull from your 401k. You still have to pay taxes, but you don't have to pay the 10% penalty. So if you go ask a friend or a neighbor who's in their 30s, hey, when can I start pulling from my 401k in retirement? Which is something that I would do, but you probably wouldn't want to do, right? Just off a whim, because they would think that's very odd. But if you were to just go up to them, if they do have any financial knowledge, they will probably say 59 and a half. That's the first time you can pull, which is correct, meaning that's the first time you can pull without paying additional penalties, but it would be wrong because you can actually start pulling at 55, assuming your employer allows for this rule of 55. So if, for example, you are let's say 54 years old today and you retire this year and you're gonna turn 55 next year in 2026, you cannot use the rule of 55. So if you do retire, you're not going to be able to use this rule. Now, let's pretend your birthday is January 2nd, okay? January 2nd, 2026, and you choose to retire January 1st, 2026. Can you use this rule? Yes, you can, because in that year you are going to turn 55. Now you can't start pulling from your actual 401k at your employer until after you've retired. So that's a common question of hey, can I still work and pull and just maybe work part-time? No, you have to be separated. So that's the first thing to know, just as an option. Now, some people will go, oh my gosh, well, that's so cool. Why don't I retire early? I didn't know about that rule. Don't go retire, please, just because you heard about this rule. It's an option, it's a lever that we can manipulate. But too often I'll see people go, oh my gosh, I'm really over my job. I just thought I had to wait until 59 and a half. And I've been worrying about how I'm going to bridge this gap from 50 to 59 and a half, anyways. And now I just found out I can do this. I'm going to go retire. First, make sure that you're going to have enough money to live and do everything you want to do because I don't want you doing what I call appetizer planning. When you retire and you're like, yep, I did it, but I'm hesitant to buy appetizers or go out to eat or do things I really care about. And you will, I promise, wish that you worked one more or two more years so you could really spend what you want in retirement. So with that being said, that's number one. Number two, I have to talk about healthcare. Now, too many people freak out unnecessarily. I will tell you when it's necessary to freak out. And there are times where I'll have people come and say, Yep, Ari, so I'm retired and look how great it's going. And I'll say, I would go get back the letter. They go, What do you mean? I'm just telling you about my travel. I go, yeah, I don't know why you retired, because this is a sure way to run out of money unless there's something I'm missing. And they'll explain all the math and I'll go, yeah, I just I don't know why you're retired. And that's when it's time to freak out. And even then, don't freak out. Create a plan. You don't need to freak out. But healthcare is something to plan for, not to freak out over. There are clients that I have that are paying$2,000 a month and they planned well and that's how they're living in retirement. Is it fun to pay$2,000 a month until Medicare? No. But I have other clients that are spending$200 a month and they have millions of dollars, but they're being really wise with how they withdraw income in retirement, and legislation is changing constantly around healthcare. We do need to make sure that you are staying up to date so that you don't retire and go, wow, I didn't know things could change. I was planning on a hundred bucks every month, and now all of a sudden it looks like I'm quoted twelve hundred dollars a month. And so now am I not going to be able to travel? You don't want your retirement ruined by healthcare, which I've also seen. So it's something to plan around. I see a lot of people spending anywhere from 500 to 1500 bucks a month. It totally depends. I have episodes where I go into great detail about bronze, silver plans, cobra, so many different ways to create health care planning for income. I focus on the tax side of things, meaning how do I adjust your income to ensure that you don't pay more than you need to? We have teams that we partner with. Move Health is a team that I talk about a lot. You don't have to be working with Root Financial. You can reach out to Move Health on your own. We do it with you if you, of course, are a client here. But Move Health, they will get you connected and ensure that you are getting a great policy. And they talk about how they're compensated, which is not as a traditional broker, meaning there's no commission to them. They are paid on the back end. So they don't care what policy you pick. They just want to make sure you get the best one. And I don't get paid by them. So I don't care. I don't make money promoting them. I just want you to get the right healthcare. So move health is a resource for you there. Now, healthcare as a whole is something that people will have a base for. And then you want to put some buffer there. You want to put buffer for out-of-pocket expenses. Not saying this is you, but I have clients that go, I want to go to physical therapy, or I want to be able to make sure I can plan for going to out-of-network, you know, whatever it is. I have one client that for some reason has come into my mind, they get those cryotherapy sessions. That's not coverage. So that's something that you want to make sure you're planning for. And I want you to not do it in the sense of, oh, I feel like it's like another bill, but like, well, no, I'm excited because prioritizing my health is important to me. So hopefully you look at healthcare and understand how that works. I have other episodes, I go into great detail there. It can be one of your biggest expenses. Number three is taxes and withdrawal strategy. I have to talk about this. This is the real financial side of things. Yes, you can retire at 55, but does that mean you're living your dream life? I've seen people who do it and I've seen people who don't do it. So understand what amount of the assets you have are going to be taxed. If you come to me and say you have$2 million and I look at your account and it's all in a 401k, I'll tell you you don't have$2 million. I'll say you have$1.7 million because we need to know what you have after taxes. How much income can this really create for you? So just an example there. Obviously, I do it nicer than that. But I need you to understand that whatever you see in your account is not your actual value. It depends. Is it in a brokerage account? Are there huge gains on Apple stock that you bought? Is it all in NVIDIA and you've got 10 million bucks that you need to diversify? Are you looking at it completely different, going, I have inheritance and I'm planning on that, but I'm going to work part-time? Make sure that the numbers that you're looking at, you have a way of understanding what's the after-tax value because that's going to tell you how much income you can really create in retirement. From there, Social Security timing is key. The reason it's so key is because when you retire at 55, you don't have Social Security for many years. Maybe there's a deceased spouse at that point. You could put on survivor benefits at 60, but 62 is as early as you can collect. So at that point, we're five, seven years away from even having the option of turning it on. And even when you can turn it on, it doesn't mean you should. Now, you want to make sure there's not as much pressure on your portfolio, which is why people turn on Social Security, but there's a risk to that. The risk is you turn on Social Security and now you're losing healthcare benefits because you have more income coming in. By showing more income, you receive less of a subsidy. Maybe you want to do Roth conversions. If you turn on Social Security, that's interrupting the quality of your conversions because you're manufacturing more income. So you've got to be really careful with how you withdraw income in retirement. From there, we're going to talk about the extras. Now, before we get to that, I have to talk about legacy planning real quick. So some of you are like, I'll tell you where most of you lie. And you can tell me if I'm wrong. Just put it in the comments below or like this video if it's resonating. I forget to say that, but my marketing team tells me I should say that. So I'm going to clip this and then I'm going to send it to them and say, hey, look, guys, I did it. So with that being said, I'm going to give you a legacy thought here. Most people are like, look, I've saved and invested well. If my house goes to my kids, I'm happy with it. That's most people. Some people go, I want to leave a million bucks. I received a million bucks, or I want to help them while I'm alive for a down payment or a wedding. And then there's other people that go, look, I worked hard to get here. I want my kids to work hard. I'm going to leave with whatever I've got. And I want to assume that I spend it all and that maybe there's some left over for my healthcare. I don't want to be a burden to them. But my plan is to die as close to zero as possible because I worked hard for it without cutting it close. So if that's you, that changes the plan as well. You might not want to work till 60 if you retire at 55 without a goal of dying with two, three million bucks. So that plays a big change here. And then all the extras. So the extras is the psychological, the lifestyle of you retire at 55. Your friends might be nowhere near the ability to retire. You might be completely on your own. Are you okay with that? Are you worried about how you're going to find purpose and fulfillment? So make sure that you have a plan and don't just do what, and my client lets me use the following example. They told me they wanted to retire, they'd have no issue with purpose. They told me they were going to volunteer and play golf. Well, they went golfing and they hurt their back and they couldn't golf for six months. And the volunteering they wanted to do included them walking around. So now they're at home bored, and their spouse was like, You told me you were going to be out of the house. Now they are still together and they love each other, but it has not been the retirement that they dreamed of to start, let's just say. So not saying you need to think of every little nook and cranny here, but you do need to think intentionally about what you want your retirement to look like and how you're going to spend your time because most people just overlook that and go straight to the numbers because it's easier. It's actually way easier to look at numbers than actually ask yourself, okay, what am I really going to do? What time am I going to wake up? Who am I going to hang out with? What time am I going to, you know, go volunteer? If I am going to volunteer, do my kids let me chase them around, whatever it may be. So that's it for this episode. If you want to retire at 55, I have other videos where I go into great detail on the rule of 55, other podcasts. I make all this content for you guys, and I hope that you resonate with it. If you want to work with Root, this is what we do. I encourage you to reach out to us, rootfinancial.com. We do all the tax, the healthcare, the withdrawal, the estate planning, and we love it if you cannot tell. So that's it. See you guys next time.