Can I Retire At 55 With $1M+? | Early Retirement Hotline

Having over a million saved does not automatically mean you can retire early. Where your money sits matters just as much as how much you have.

In this episode, Ari walks through a real case of a 47 year old aiming to retire at 55. On paper, the numbers look strong. But most of the assets are tied up in retirement accounts, which creates a gap in the years before those funds are easily accessible.

Ari explains why this is often called being “qualified rich” and how it can delay retirement even when you have done everything right. The conversation shifts to what actually creates flexibility. Brokerage accounts, cash strategy, and how to position assets so income can be generated when you need it most.

The deeper question is not just whether retirement is possible. It is how early it can happen and what tradeoffs are worth making to get there.

Because retirement is not about having enough on paper. It is about having access to your money when it matters.

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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

New Voicemail Series And How To Submit

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 O T Financial.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.

SPEAKER_00 2:32

I'm looking

A Listener’s Numbers And The Cash Pile

SPEAKER_00 2:33

for a 355, and we've got the 413. We've got a 41K with 121 million, 41K with 53,000, 300 with 456,000, 129 with 51,000, 853 with 43,000. Uh just looking for your insight and love the show, appreciate it.

SPEAKER_01 2:57

The first thing I have to address is that is a lot of cash. If that cash is what you're holding, because that's something that you're like, oh my gosh, I have a big purchase coming up, makes total sense. But if that's just their losing out to inflation, I would want to have a deeper conversation about that. Now I know that's not the main reason for your call, and I promise we're gonna address what's top of mind, which is hey, are we in a position to retire at 55? Now, before we get started, we're only hearing a small snapshot of this person's entire financial situation. So I'm a CFP, a certified financial planner, and I'll walk you through what typical CFPs would consider in a situation like this.

The Real Question Behind “Can I Retire”

SPEAKER_01 3:30

But as always, this is not personalized financial advice. I'm Ari, a CFP and host of the Early Retirement Podcast and CGO here at Root. If you want to retire early, aka Know Win Work can truly become optional. So if you love what you do, keep doing it. But if you don't, you don't have to, make sure to click subscribe so you can find out how you can retire early. First thing is I want f ⁇ to know the earliest time work is truly optional. So having a child in high school, that can oftentimes create what I call head trash, which is, well, there's no way I can retire because I have a child in high school, and what if things come up? Well, things will come up and we're gonna plan for it just like we would plan for anything. Does it change the situation? Yes, it does. But does it mean we should write it off? No. It's similar to when people say, I just can't retire early because of healthcare, it's so expensive. It can be, and we can plan for it intentionally. And if we understand what we should do to put ourselves in the best position, we might find we still should work longer. We might find, no, actually, if we were to do X strategy, we're in a better spot than we think. So that's what I want to explore. Now, this is someone who is qualified rich. I brought this up on a recent voicemail I responded to, where they've done a good job saving and investing, arguably too good of a job because assets aren't in the exact spot and it's never going to be exact. That's perfect. There's no such thing as exact, but it's not in the most optimal, let's say, in relation to their goals. If you told me I could retire earlier, I wouldn't because I love my job. I'm never leaving. Now, maybe that's the case here, in which case there's really not a big harm because this person could turn on the rule of 55, assuming their plan allows for it. They have 1.1 million in the 401k, assume that doubles in growth by the time they're 55, just taking an assumption here. Now we have north of $2 million, and what I'm missing, one big variable here, is how much do they want to spend in retirement? If they said we want to spend $5,000 a month or $4,000 a month, that's very different than $10,000 a

Withdrawal Rates And Guardrails Strategy

SPEAKER_01 5:13

month. So assuming a 4% withdrawal rate, which if you know and you watch my videos, I'm not a big fan of Bill Bang's 4% withdrawal rate, which he has since revised. But what that says is if you take 4% out of a million dollar portfolio, that's $40,000 a year, and you could take that out for 30 years and not run out of money. I believe in John Guyton's guardrails approach, which allows you to take 5.2 to 5.6%, assuming you follow a strict set of guidelines, which to me is a very reasonable set of guidelines. It's where you're being dynamic in relation to what markets are doing. And if you do that, the study shows that you can take out that income for 40 plus years. So if this person retires at 55, pass away at 85, that's a 30-year retirement with the 4% rule, versus the guardrails approach says, well, for 40 years, so to 95, which to me is a whole lot more reassuring. So my concern really isn't, okay, are we going to be able to retire? It's how early can we retire and how much can we spend, which I imagine is where most of you are

The Superhero Account For Early Retirement

SPEAKER_01 6:06

at. So in this individual situation, why I say they're qualified rich is they have 150,000 in their brokerage account, or what I call a superhero account. And if you want to know the true importance of the superhero account, make sure to comment the word superhero below. So I'll send you a link to a video where you can really see that in great detail. Now, the superhero account, that's what oftentimes people call is the bridge the gap account. Because what that allows you to do is retire earlier and pull income most efficiently. You don't need it to retire early, but it's really helpful. So this person's 47 and they're planning on retiring at 55. Now, maybe they want to make sure that, you know, they're optimizing their tax situation. And I say optimizing in quotes, because if you make a healthy amount of income and you're in a high tax bracket, your initial gut is more than likely to say, wow, I've got to max out my 401k. I mean, it's just, it's been in my brain. My people told me growing up, put as much as you can in your 401k. But the reality is if this person keeps adding to their 401k at a substantial level, they're just adding to a future tax burden, a larger issue of funds that they cannot touch. So pretend I had, you know, 10 minutes with this person to ask questions. My number one question is assuming you have all the money in the world, when would you retire? And if they were to say yesterday, that's very different than if they were to go, look, I'm not ready to leave my team yet. I don't know how I'd spend my time. 55 is the earliest. Well, I'd have two very different recommendations, which is why this is not personalized financial advice because I don't know what they want. But assuming that they go, no, I really would love to be able to spend, you know, let's say $10,000 a month. $10,000 a month, let's say, plus, what if my child wants to go to grad school? I want to be able to support that. Or what if healthcare expenses come up? And they assume, you know, I want more child, I want more time with my child before they go off to college. Okay, they're 47. What if I were to show this person, hey, at 50, you are in a position to retire, which is not what I'm saying here. But assuming we look at their finances and go, okay, 50 years old, do they have the pieces to make it happen? It would be very difficult. And the reason it would be so difficult is not because of how much they have, because of where is it, where it is, should I say. So you know what I was going for. So we can see here 150,000 their superhero account, assuming that gets some minimal growth. Maybe in three years there's what, 180,000, 175,000 in there. That's not gonna be able to generate $10,000 a month for the rest of their life, that one account. And then we'd have to go to a 401k, pay huge penalties, which I imagine they don't want to do. So this is an example of if this person were to say, okay, what am I on track for? How much can I spend? Well, we can look at their assets today and go, okay, you have 1.1 million, you're 401k between different Roth accounts, you have $500,000 plus, we have $1.6 million. Let's assume that's getting to 2 million in a couple of years from now with some good growth. Big assumption there. But if we do that, that that's assuming the 4% withdrawal rate, that's $80,000 a year that they could be bringing in. So let's just call it $7,000 a month, just to be close here. Okay, so $84,000 a year. Would that allow them to live the life they want to live? Pretend they say yes. I'd say, great. I'm not saying you could do that because where would we pull income from? Your 401k and Roth, if they wanted to spend $7,000 a month, they might have to generate $9,000 a month to pay taxes to end up with $7,000 a month. So this is why they have a good amount in cash. Are

Sleep Number Cash Versus Inflation Loss

SPEAKER_01 9:12

they comfortable with that amount in cash because it lets them sleep better at night? I talk about a sleep number and emergency fund and how they should be very different. There should be a number in your account right now, in my opinion, and this is just an emotional feeling, it's not a scientific answer, that allows you to sleep at night. Pretend you go, you know what, I sleep better at night with 50,000 in my checking account at all times. Well, if you were to go to some advisor, they'd say, hey, that's not optimal because you see you're losing out to inflation. And you'd say, Yeah, well, shut up, because that's not why I'm doing it. Now you wouldn't say that because you're probably nicer than I am, but I'd say, hey, that doesn't make sense because the truth is 50,000, that's just that's my gut. That's what lets me and my wife or husband or partner just sleep better at night. But anything beyond that, I want to make sure I'm outpacing inflation. So pretend I had a chat with this person. I'd say, how much needs to be there all the time so you can sleep? And they go, 100,000. Even though that might be higher than my comfort level, it's their money. So if 100,000 lets them sleep at night, great. The point is to give education and let them make the informed decision, like all of you. What a good advisor should do most of the time is shut the heck up and listen. So in this example, it'd be weird if I just listened because this would be a silent video. But $100,000, if that's there and they have $235 in cash, then extra $135, I'd say, what's most important to you in the next five years? And if they go, well, I want to make sure my kid can go to the perfect college, or even if it's already funded, I want to make sure if they want to start a business, I can help them with that, or a down payment in the future, or I want to show them the importance of investing. I'm gonna match their Roth contributions, whatever it might be, you can see that it's not me saying, do this differently. It's let's understand that. And where should that money go? Maybe it should go towards that superhero account. And if so, of their 235 in cash, maybe 130 of that should go towards their superhero account. So now we're looking at 280,000 in their superhero account. Okay, well, if we're looking at what they're currently saving today, which once again I don't know, I'm making an assumption. Most of the time, people that make a healthy income, they're maxing out their 401k and putting a portion of their superhero account. When generally

Flexibility Versus Maxing The 401(k)

SPEAKER_01 11:05

I see people with balances like this who have saved and invested well, it can make a ton of sense, can being the key word there, to actually not max out your 401k, get the full match because that's free money, and then the rest of that goes towards your superhero account just to provide flexibility. Now imagine what you might be thinking: oh my gosh, what about my tax deduction? Do you not like care about me as a human? Do you want me to like pay more in taxes than I need? No, that's not my goal. But you're at a point where flexibility might be more valuable than a higher dollar amount on paper. Because if you want the highest dollar amount on paper, just work forever, which obviously isn't your goal. Most people want to retire one day. So in this case, 1.1 million in a 401k, 500K in a Roth. When this person's 59 and a half, if they want to pull from those accounts, those accounts are gonna be a very healthy position. So what I really need to know is how much this person wants to spend. That's what we're missing here. And if they say my goal is to spend $20,000 a month, well, that changes the recommendation. Once again, none of this is a recommendation, it's not financial advice. If they want to spend $20,000 a month, which once again we don't know, well, we might want to prioritize getting that tax deduction to put as much as we could into a 401k so that that can grow because we need to make sure that's growing as efficiently as possible. And having that 401k grow at a higher balance really helps. And maybe it would mean they work until 55. But I would ask this person, what trade-offs matter to you? If I told you right now, and I'm gonna ask you this question, and please let me know your answer in the comments. Would you rather retire today? It's just a blanket assumption here. Would you rather retire today and spend $6,000 a month for the rest of your life? Or would you rather work five more years to spend $10,000 a month for the rest of your life? Are you option one or option two? Option one, six thousand a month, retire today. Option two, ten thousand a month, retire in five years. What would you do? And let me know why. Because this is what's really fascinating is it's all about trade-offs. That's all planning is. So they have a good amount of moving pieces. It's how do we put this puzzle together? And that's what we love to do here at Root.

Trade-Offs, Next Steps, And Where To Get Help

SPEAKER_01 12:56

So if you want to put a puzzle together to know, can I retire early? When can I retire? How much can I spend? This is what we love to do. So as always, you can scan this on the TV, you can click the link in the description, or you can just go to rootfinancial.com and on our website, you're gonna see a see if you're a fit in the upper right. Answer a few questions, and we might be talking very soon. That's a free conversation where we can just explore, there's no obligations. Let's find out, hey, are we in a position to potentially help? We might find that we're not, and we're very honest about that, and say, hey, we really can't add value yet. I wouldn't recommend hiring an advisor. That's right, I'm the weird advisor that says it oftentimes doesn't make sense to. It's all about timing. So that's what I want for you is to know what if this person knew, wow, I could retire at 50 and I could do everything I wanted to do and more. Wow, I'm gonna keep working. I bet they're gonna like work a whole lot more because they're choosing to be there, not forced to be there. Finally, call the number on my screen wherever my editor puts this number, and you can see once again the number. And I'm gonna read it out 213-316-8397 to submit your situation for the chance of having me respond to your voicemail in the future. Thanks. Love you guys. Thank

Disclaimers And Closing Thoughts

SPEAKER_01 14:02

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.