This 59-Year-Old Might Retire..Or Make a Huge Mistake | Early Retirement Hotline

Six million dollars sounds like enough to retire. But that number alone does not answer the question.

In this episode, Ari responds to a real listener wondering if they can retire at 59 with significant savings. The surprising truth is that the portfolio is not the starting point. Spending is.

Ari walks through a simple way to reverse engineer retirement. Define what your lifestyle actually costs, layer in healthcare, travel, and one time expenses, then work backward to see what your portfolio needs to support. Without that clarity, it is easy to keep chasing a bigger number and delay retirement longer than necessary.

The numbers matter. But so does the life you are trying to fund. What you are retiring from and what you are retiring to can change the answer just as much as any spreadsheet.

Because retirement is not about hitting a number. It is about knowing what that number needs to do for you.

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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.

Transcript

Voicemails And How To Submit Yours

SPEAKER_01 0:00

Over the last few months, you have heard me speak with real retirees as well as people who want to retire early, and I hope that that has been helpful perspective. I love everything early retirement related, but I hope it's hit different hearing it from real people. So what you're actually going to hear now is a new series for the next few months where I'm actually responding to real voicemails for people who are asking me a wide range of questions, such as, how do I know I have enough money? When should I actually look at a Roth conversion? Should I be worrying about healthcare? And a million other things like that. And so these are people who are calling me to leave a voicemail, hoping I respond in a future episode. If it's up to me, I'd respond to every single one of you. But fortunately, many of you have similar questions. So what I try to do is put them into one episode that I feel would be most helpful. So if 10 people ask, hey, what should I do about XYZ regarding healthcare? I try to do my best to address those, whether it's me addressing your specific point. But if you would like, you can of course call my number, 213-316-8397. I do read through every single one as well as my team. And if you say in there, hey, the truth is I just don't even know. When does it make sense work with an advisor? I have no idea. Should I even be looking at retirement? Should I have retired 10 years ago? Am I in a good spot? What you will hear from us is at a minimum, hey, here's absolutely what I would recommend considering in your situation. So not a formal yes, go retire or no, why did you retire? We would never say it like that. But what we would do is say, hey, even though we're not gonna maybe respond to your specific voicemail, here's a guide that I think is gonna be really helpful for you. Or here's a video that we've recorded in the past that went out a year ago that applies to your situation. Make sure to check that out. So I'm always gonna make sure that you feel the effort that you put in to make the voicemail to leave for me will be equally responded to with effort to make sure you're getting the help that you're looking for. So once again, if you would like, you can call and literally tell me anything. But the the phone number is 213-316-8397. The next few months you're going to hear voicemails and me specifically responding to those voicemails. I hope you enjoy this next series. I'm always trying to come up with new creative ways that are helpful for you. As always, if you're wondering, okay, am I in a good spot to retire? Email me and put in the subject line the word retire. Very simple, just the word retire. And that my email is ari at rootfinancial.com. That's R O O Tfinancial.com, and I will respond with that free guide just for you. And thank you in advance for always listening to the podcast episodes and hope you enjoy these.

She Has Millions So Why Wait

SPEAKER_00 2:27

Oh hi. I just wondering I have um $2.5 million. So I think we have enough. I just want to make sure that this is enough for us. Thank you.

SPEAKER_01 2:55

I want to guess what most of you are thinking. How on earth does this woman not think she can retire? Like she has six million dollars, she saved and invested well. Sounds lovely. She's 5960, but I'm not so sure she should retire. The first thing is obviously I don't know her whole situation, and there's one huge variable. Do you guys want to guess what that is? I assume you could probably do that. Her expenses. I have no clue. What if she wants to spend $20,000 a month? If she does want to spend $20,000 a month, that changes everything. Maybe she wants to spend $5,000 a month. I don't know. But that's the first thing that is making me think, oh, that's why you're not ready to retire, is you don't really know how much you want to spend. And there's this concept of I just need a little bit more. Be honest with me in the comments if you feel that way. Because if you do, you're not alone. Yeah, once I have three million, I'm gonna retire. Well, I know I said that last year, but everything's so expensive now. I really need four million to retire. And my neighbor, well, they told me that they're spending more than they ever thought because they have more time in retirement. So maybe I should just save a little bit more. And by the way, I make great money right now. So the concept of turning that off, oh my gosh, am I never gonna add money to my 401k again? That's scary. You could come up with a hundred new reasons to not retire. So for those of you thinking, why on earth does this person not think they can retire? I'm gonna walk you through a framework so that you're gonna be able to understand for yourself, okay, when am I in a position to retire? What do I need to think through? So I use a super fancy calculator called an iPhone, nothing special. I use the same calculator everyone does. And I put a 5% withdrawal rate, which is my preferred starting spot. I'm not a huge fan of the 4% rule for many reasons. The primary one being it's designed for a 30-year retirement. And most people who are watching the channel want to retire early before 65. Well, if you live longer, that rule doesn't apply. So, well, it applies, but it's not optimal because you don't want to run out, obviously. So a 5% withdrawal rate on a $6 million portfolio, that's $300,000 a year or $25,000 a month. So if they said, I want to spend $20,000 a month, I'd say, okay, well, you have a $6 million portfolio, we take a 5% withdrawal rate. Are you gonna have any other income sources? And they might go, actually, yes, I'm gonna have Social Security and I'm gonna have rental income or inheritance or whatever it may be. So you need, if you have any of those things watching this video right now, you need to detract that because the reality is her portfolio could generate $25,000 a month. So what if hypothetically you want to spend $30,000 a month? Well, if you have $25,000 coming from a portfolio and $5,000 coming from Social Security, even though I just said sub is Social Security, I can't even say social security, even though I say it in almost every video. So might need to go back to my speech pathologist. I don't know if anyone else mispronounced a certain word, but those S's, I still struggle with those S's. Okay, regardless. My point here being $30,000 a month is a lot of money, but if you have the means to be able to support it, meaning your portfolio or income sources allow for it, don't feel bad about it. I don't care if this person said they're $39 and 40. Well, you need the money to last longer. You need to adjust the withdrawal rate rules. But just because you think um 59.60 and I think we've saved and invested well, quite honestly, it doesn't tell you you can retire. It's based on your expenses. So let me tell you what I would do if I was this person. And by the way, our kind reminder if you want me to potentially respond to a voicemail in the future, call this number below and I might just respond to your voicemail. So I think everyone has it backwards. I think it's easier to chase a number because they see it in their account every day. Two million, three million, five million, we just talked about that. And please be honest with me in the comments. This is a safe space where we can all share. What's the number one thing preventing you from retirement? Just I love hearing your responses. So if you're like, yep, it's healthcare. Yep, it's withdrawal strategy, yes, it's taxes, yes, it's what the heck am I gonna do? You're not alone. It's fun to hear other responses. And I have a bunch of guides and resources. So please comment those words below. That's withdrawal or healthcare, and I will send you some stuff that hopefully helps and it's totally free.

Reverse Engineer Retirement From Spending

SPEAKER_01 6:29

So here's the framework. Everyone should reverse engineer it. Don't start with the portfolio. Start with how much you want to spend. So pretend this person goes, Ari, I would love to spend $8,000 a month. I'm like, beautiful, that's awesome. Does that include healthcare? And they go, no, that's another $1,000 a month. I go, okay, so now $9,000 a month. They go, is that and then I would ask them, is that forever? They go, no, not forever, just till Medicare kicks in. I go, okay, so let's pretend you want to spend $8,000 a month and another $1,000 a month for healthcare, but it's her and her spouse. So I'm gonna be conservative and say $2,000 a month, but that's not forever. That's just till Medicare at age 65. So it looks like for five, six years we have that additional expense. But wait, we want to travel more the first 10 years of retirement. We just work so hard, can we enjoy it, please? So let's throw another $20,000 a year. Uh let's just say $24,000 a year for easy math. So let's do another $2,000 a month for the first, I don't know, five, 10 years. Let's say 10 years. So now it's $8,000 a month or $96,000 a year. Let's call it $100,000 to keep it simple. Plus another $25,000 a year or so for healthcare for about five, six years. Then we're gonna add another, let's call it $2,000 a month or $24,000 a year for some fun vacations every year, but just the first 10 years. So those are things you need to layer in. So let's keep it real simple here. Let's assume $8,000 a month is your base. Okay, so that means we need to all the time $96,000, let's call it $100,000. $100,000 here is what we need. What you're gonna do is you're gonna take out your calculator, or you could just do it in your head. It's not fancy. I'm just gonna do it with you because I, even though I'm a CFP, I like using the calculator. We're gonna take $100,000. So put that in your calculator, and you're gonna divide that for me by 0.05, okay? And it's gonna spit on a number. So this spits out the number $2 million. Now, that's deceiving. You might think, so you're telling me two million is enough? No, I don't know what account that's in. Is it a Roth? Is it a superhero account? She said brokerage, but I prefer superhero. Is it a 401k? I don't know. Do we have to pay taxes? Because too often people make the mistake of, okay, so I want to spend 100 a year. I go, great, that's 100 after taxes. That's adjusted for inflation, right? They're like, I don't know. I just want to spend 100,000 a year. I go, well, you might need to take 115,000 from your 401k. So you actually end up with $100,000. They're like, I didn't consider that. And I'm like, I don't blame you. I'm doing this all day. How could you know? So people sometimes feel bad. They're like, oh, I should have known that. I'm like, I also didn't know it until I knew it. And now that you know it, you now know it. So don't feel bad about it. So in this case, $2 million allows them to spend that $8,000 a month. If we're using the 5% withdrawal rate, following all the rules that go along with it. As always, this is not financial advice. It's just, these are basic rules. Now, we need to layer on healthcare. Okay, healthcare, that's another $2,000 a month, but not forever, just for a certain period of years. Same thing. Okay, well, travel. Okay, well, some of you go, well, maybe it's travel today, but that gets replaced by a home remodel. Or what if I want to buy one big new car? Okay, add in these one-time expenses. But those one-time expenses or those expenses that might be five years of healthcare or a child in college, that shouldn't be factored into your main portfolio. Yes, you might use that to actually live off of it, but if you just hyperanalyze it, you get the analysis, paralysis, and then you never retire. So don't make that mistake. Calculate what's your base. Okay, so for this person, it's the base. $8,000 a month. Okay, nine, $100,000 a year. That's what we're just using for simple math. $2 million would allow them to do that. Do they have enough? Yes, they have six million. Let's go on here. Another $2,000 a month each for healthcare for five years. Okay, that's a lot of money. That's $25,000 a year, which can sound like a big bullet to bite. That's why you need the superhero account to optimize and massage your income. Separate topic there. But let's pretend that's five years. That's $125,000. Okay, so let's put that separate. We need $125,000 for five years to pay for that. And then let's assume we want another $25,000 for 10 years for travel. So that's another $250K. So that's a separate $375,000 that we're going to be spending over the next 10 years. Okay, could our portfolio support that? Well, we can see based off their assets. Obviously, it could. So you can use napkin math, like I just did right here. You can use the fancy software tool that I talk about all the time in my videos. And if you want access to that, just make sure to comment the word optimize below and you can put everything in. And if you're a visual person like I am, yes, I can sometimes do quick math, but I just like to see it. And you might want to play around with different scenarios. What if it's 10 years? What if it's five years and you don't want to do the math? Okay, well, just put everything into the tool and you'll see what it shares with you. So

Retiring From Work And Toward What

SPEAKER_01 10:46

this person, the framework I would invite them to consider strongly is okay, how much do you really want to spend? What about healthcare? And then the big thing, and I just picked up on this in terms of tone, they said 5960, I feel like maybe we should retire now. I don't know if that was the exact quote, but that was the feeling I took from it. I feel like we're in a good spot. Look, you can feel a certain way, but honestly, I would ask them, what are you retiring from and what are you retiring to? And I would sit back and I would shut up if I was their advisor. And oftentimes people want to break the silence. So I've seen it where I've where I'm shadowing or training advisors, and they'll say this, they'll go, okay, what are you retiring from and what are you retiring to? Here's a few ideas. What about volunteering? What about don't do that? Just let them talk. Let them, meaning you, actually figure it out for yourself. So I can present ideas, but an advisor's job, in my opinion, like myself when I work with clients, is to shut the heck up and hear what the client wants. That's my goal, is to understand. Maybe their goal is to spend 30,000 a month. Maybe it's to pass 5 million to kids, but I don't know if I don't shut the heck up. So I talk a lot in these videos or else these would be silent. But my point here is I want you to feel fully heard and understood. And you can't do that unless I shut up. So I would shut up and say, what are you tiring from? What are you tiring to? And if they were to say, I don't really know, I don't know how I'm gonna spend my time. I'm worried. Okay, well, it's a deeper conversation. If they go, oh my gosh, I have a list of things, I just can't wait to start doing them. Well, that's very different. Let's talk about what those are. Let's talk about them in great detail. So once again, hopefully this was helpful, just kind of framework of reversing the spending versus chasing a number because that number keeps getting pushed back versus your expenses are your expenses. They might change, but you have a better grasp of them and it will increase your confidence to retire.

Resources Disclaimers And Next Steps

SPEAKER_01 12:24

And if it has already, let me know in the comments below. And then finally, once again, call this number somewhere on the screen, wherever my editors put this. So if you want, you can leave a voicemail and I may respond to that in a future video. Thanks, guys. Thank you all. 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.