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

This Is When I Recommend You STOP Saving For Retirement

• Ari Taublieb, CFP®, MBA • Episode 297

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Most people think the safest path to retirement is to keep saving more, no matter how close they are to the finish line. But what if there comes a point where saving actually matters less, and investing well, living well, and spending with intention matter more?

In this end-of-year episode, Ari shares why many near-retirees may need to rethink their instinct to “just keep saving.” He breaks down the surprising point where portfolio growth outweighs new contributions, why being “qualified-rich and cash-poor” can limit your freedom, and how over-saving can quietly eat into the healthiest, most meaningful years of your life. Through honest stories, real math, and a clear look at how 401(k)s, Roth IRAs, and brokerage accounts support early retirement, this episode challenges the belief that more saving is always better.

If you’re wondering when to stop maxing every account, when to shift dollars into a taxable “superhero” account, or how to balance retirement planning with actually enjoying your life right now, this conversation offers a different way forward — one rooted in confidence, not guilt.

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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.

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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:

It's insane that this is my last episode of the year because I feel like there's so much going on all the time. There's just no way time moves this fast. But I know that's cliche. It's just how I feel. So I had to mention it to start the episode. But I have a question for you. And I thought of what do I want my final episode of the year to look like? I want it to be something that really makes you think differently going into the new year. So I hope this is the episode that does exactly that. But of course, happy holidays to all of you who are celebrating whatever it is you choose to celebrate during this period. Now, let's get into it. So, regarding saving for retirement, which I know is what all of you are thinking during the holiday period, you're just thinking about finances. You wake up in the morning, you're smelling not bacon, but you're smelling Roth conversions. Oh yeah. You're not smelling those new cookies or any of that. You're just thinking about when should I collect Social Security and healthcare subsidies. Now, jokes aside, here's actually something I'm gonna urge you to think strongly about, which is should you stop saving for retirement? How weird is that? That's coming from an advisor. Most people think advisor is just gonna tell me to save more. And so I don't really want to go to my advisor today because they're gonna think I'm behind or they're gonna tell me to save more, but they don't really know me and how hard I've already saved to get to this point. So I kind of feel bad. I'm explaining the situation of many clients who had shared this with me, their previous advisor before they work with either Root Financial or another firm was, you know, I didn't feel that close to my advisor. I felt scared sometimes to bring things up because I didn't want to disappoint them. Many of you don't feel that way with your advisor, which is awesome. You want that to be a true partnership. But if they have not pressed you in the sense of, hey, why don't you stop saving for retirement? I would ask you to ask yourself, why do you think that is? And most of the time, advisors want you to save more and work longer. Why? It's safer on their end. It's easier. I could just say, hey, why don't you just work till you're 80? It's gonna be way easier. And you're like, well, I don't want to work till I'm 80. But from an advisor perspective, our goal is to make sure you don't run out of money most of the time. That's not my goal. Let me be clear. That's one of my goals. But most advisors, their goal is to make sure you don't run out. So it's easier to say, why don't you work one more year and one more year, one more bonus? It makes a big difference. You can see what you actually want to do in retirement first, spend more time learning. But there becomes a point where, just like with saving, it doesn't make sense to keep working. And you might just be working because it's what you know, it's what you're familiar with. And I joke that I'm the meanest advisor on YouTube and on the podcast app, but I'm not. I'm just transparent. And I don't want you to run out of money, and I don't want you to be mad at me when you're 80 with 5 million bucks going, that wasn't my goal. Why didn't I retire earlier when I had more of my energy and health? And so here's the example I'm gonna illustrate today that connects on many different fronts, in my opinion, but specifically saving. If you have a million dollars in your 401k, what's the most you can contribute today? I believe today, you know, let's assume you're over 50, you're at 30,500. I'm not talking about mega backdoors or any fancy stuff. You're 401k. You could put 30,500 in there, you could put another seven in your Roth IRA. So, yeah, you could put 37,000, 38,000 bucks into, let's call it some retirement accounts. But what would happen if you got 10% growth on your million bucks? It would grow by 100,000. So you're at a spot now in life where it's more important to invest well than save more. Does that mean you should stop saving? No, that's not what I'm saying. What I'm saying is let's understand what holds the most weight today. Right now, you're in a position, if you're this person, where investing the right way, the difference between 10% growth and 5% growth is a big deal. That's$50,000. Versus the difference of you going to work and adding mood new dollars, that takes energy on your front. That takes saving. That takes you choosing to use those dollars to go to your retirement accounts versus potentially enjoying it today. And that opportunity cost is something we have to consider. Now, why am I bringing this why am I bringing up this example? You can see I'm flustering over my words because I'm so I want to say this carefully because I think this holds a lot of weight. What if you had$2 million in your portfolio and you're thinking, I gotta save more? Well, if you get 10% growth on$2 million, that's$200,000. Once again, if you put$40,000, let's say, into your retirement accounts, I know it's not exactly that amount, but the example is the same. It doesn't hold nearly as much weight. You've got to a point where investing is more powerful than saving. That is not how it starts. At the beginning of your career, so if you want to give an example to a friend or a coworker or a child, they might come to you, and I've had clients come to me who say, Hey, can you explain this to my children? Because then they're gonna finally get it. Where if they're like focusing on returns and you know they have 10,000 bucks in their 401k and they get a 10% return, great, that's a thousand dollars. That does not compare to adding$5,000. Adding more money in your earlier career is way more valuable. So why am I bringing this up? Many of you are what's called qualified rich cash poor. It's a term I made up where most of your money is in a 401k. Now I know that's not all of you. Many of you are like, yes, I have my 401k, but a lot of it's Roth, and I have a lot in a brokerage account or a superhero account, as you call it. And so it's not all, but for the majority of you, you have a decent amount of money in your 401k, which makes sense. You got a deduction, so you put money in, it grows tax-deferred, and now you don't have to worry about the taxes until you pull the money out. And so what we need to think about is if you're qualified rich, meaning the majority of your money is in a pre-tax account, if you keep adding to that, you're just adding to a future tax burden. Now, can we do Roth conversions in the future? Of course. But to keep it simple for today's episode, if you've already saved and invested very well into your 401k and it's going to stay invested very well because you're a diligent investor, maybe we start to take dollars that you otherwise would have used to max out your 401k into a superhero account, into a brokerage account. And the reason I say this is that's an account that allows more flexibility. I've had many different episodes where I talk about it primarily on YouTube, and I one of them is the seven benefits of a superhero account that you didn't know and why the superhero account is crucial to retiring early. And these are episodes where I go into detail about what most people don't know. They don't know that if they want to retire early, meaning let's assume at 52, you're like, I'm over my job. I want a new career, I want to switch gears. Well, if all your money's in a 401k or IRA, you're gonna pay crazy taxes to actually access that money and penalties that you don't want to pay. If you have your money and you're retiring so early in a superhero account, you can use tax gain harvesting to pay 0% taxes in many cases on so many gains that have done really well for you. So this is something that most people just don't even know about, which is insane to me. Not insane in like, how don't you know this? How could you? This is what I do all day. If you ask me anything about your field, I would not know it. But in terms of optimizing here, there becomes a point where you're gonna hopefully not save so much that you sacrifice quality of life. And this is a tough balance. How do I know when to save more? How do I know when I have enough? And Rockefeller said it very well. I'm saying that as if he's my friend. He is not. I do not know Rockefeller. And if any of you knew him, I'd be very impressed. But most people will use his quote often, which is when you ask someone, how much do you need to retire? the answer that was always quoted is just a little bit more. Once I have two million, I'm retiring. Five million, that's it. 10 million, that's it. And people just want to keep saving more, which is a very rational thought because you want to make sure you never run out. But there becomes a point where if your money just keeps growing even at a conservative rate, you're gonna be more than fine. And if you could use these dollars now to take family on more trips or do more giving, or maybe just contribute less to one specific account. So maybe don't stop saving because if you're a saver at heart, you like saving, it's fun for you. You're thinking, well, I've only got a few more years left until I actually stop working entirely. I want to use the most of these years to save while I can. I'm not saying don't do that. I'm saying being very intentional about what holds the most weight today. So if you can invest well and save more, great, obviously do that. But make sure it's not coming at the cost of, you know, not saying any of you would do this, but during the holiday season, yeah, I'm not gonna buy Christmas gifts for the family or I'm not gonna celebrate Hanukkah or whatever that may be because you wanted to make sure you got your 401k maxed out by the end of the year. Now, is it important to do these things? Of course. I'm a financial advisor that talks about this all the time. But let's just remember that the point in life is to make sure that you have a good life. The sign of a good financial plan is a life well lived. It's not, did I die with the most money? It's not what was my average return. And so can we think about that just a little bit on the saving front? Can we think about that a little bit on the spending front? One of the questions I love asking clients is, how much are you spending today? And they'll explain to me their budget. I go, no, no, no, how much are you spending? And they go, what do you mean? I go, on you, not rent. Although, yes, you're living somewhere, not on your mortgage, not on gas, not on the water bill, not on the septic. How much are you spending on you, on fun for you, just things that bring pure joy? Because we should be spending at least, in my opinion, 5% of what we work so hard for just on pure joy of what you enjoy doing. So, for example, I love soccer. I pay for my soccer league. I will sponsor a few players that otherwise would not play with us because they can't afford it. And I love their play style. And so they're so grateful. That's something I love spending money on. I will spend money on soccer cleats. I will go out to eat. There are things that I find every month I really want to feel like I worked really hard, I want to enjoy it. And I wasn't always that way. It was very difficult. And I made a huge mistake at the beginning of my career where I heard about maxing out a 401k. And I felt if I didn't max it out, I'd be behind. I used to think there's a reason they put a max on it. It's so good. If I don't max it out, I'm just being an idiot. And so when I had a very small income, very low, should I say, I would max out my 401k and sometimes I would skip lunch and I'd be proud of myself. And the stupid thing about that is my health would get impacted in a severe way. So don't make those dumb mistakes that I made and don't be the one that's embarrassed to ask about, oh, is it too late to get a superhero account? Or what the heck does it mean when it comes to Roth conversions? Or what tax bracket should I be in? And does it make sense for me to diversify? Or because I have significant gains, would the tax impact be even worse? These are things that you should always be asking yourself and without any guilt or feeling of, oh my gosh, am I behind? Or this concept of saving. It's oh my God, it's weird to not save. I'm just naturally a saver. I've recommended this movie so many times, this documentary called In and Of Itself. And if there was something to watch during the holiday season, it might not be the most cheery. That's maybe not the word I would use, but it's enlightening. And yes, I would recommend if there was a movie that you could pick, if I had to pick one for you to watch this holiday season, it would be in and of itself. And it does a beautiful job talking about identity and how to think about wait a second, you're more than your career. And when you do retire, this new stage of life is one that is uplifting and it's one that should be very exciting. So I hope that you guys um take some of these true examples and stories that I share during these episodes and you just resonate with it. Now, if I've helped you in any way build confidence for your early retirement, I love hearing from you. It's what makes my job fun. Please go drop a comment on YouTube. That's where I get to see all the comments of what you guys resonate with. And that can be um just on any video, it can be on this specific video. And if you listen on the podcast app, I'm obviously just so grateful because I put out a video, a podcast, excuse me, every single week. It goes to the podcast app and it goes to YouTube. And for those of you who tune in, I feel like you're with me on the journey where I'm trying to help as many people as I can. My only request is that you leave a review if it's been helpful to help more people find the show. If you share it with someone you want to retire early with, and obviously these are all free that I post, and I hope that, in fact, it will always be the case. But it brings me a lot of joy to be able to do this. So thank you for tuning in. Thank you for this opportunity to be able to share these insights, because if not, I'm just doing a weird TED talk every week. Appreciate you guys. Happy holidays. 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, early retirementpodcast.com. 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.