Feb. 17, 2025
Challenges to an early retirement
Challenges to an early retirement – Chris Boyd and Jeff Perry explore the risks and challenges to retiring early. Chris and Jeff start the episode with how some clients have an undefined desire to retire early, and frequently fail to consider the...
Challenges to an early retirement – Chris Boyd and Jeff Perry explore the risks and
challenges to retiring early. Chris and Jeff start the episode with how some clients have
an undefined desire to retire early, and frequently fail to consider the various details.
Chris outlines why savings must be abundant as an earlier retirement means not only
spending sooner, but also fewer years of savings and less compounding as you spend
assets. Chris and Jeff discuss the need for greater tax diversification, especially if retiring
before age 59 ½. Chris explains the option of using Equal Periodic Payments. Chris and
Jeff explore the need to plan for how you will manage health care insurance and costs, as
well as the long-term impacts of inflation.
For more information or to reach Chris Boyd, Russ Ball or Jeff Perry, click the following
link: https://www.wealthenhancement.com/s/advisor-teams/amr
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Welcome to something more with Chris Boyd.
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Chris Boyd is a certified financial planner, practitioner,
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and senior vice president, financial advisor at wealth
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enhancement group.
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One of the nation's largest registered investment advisors.
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We call it something more because we'd like
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to talk not only about those important dollar
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and cents issues, but also the quality of
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life issues that make the money matters matter.
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Here he is your fulfillment facilitator, your partner
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in prosperity, advising clients on Cape Cod and
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across the country.
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Here's your host, Jay.
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Christopher Boyd.
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Welcome to something more with Chris Boyd.
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I'm Chris Boyd here with Jeff Perry.
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We are both of the AMR team at
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wealth enhancement group and glad to have you
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with us listening for another segment of something
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more, um, today we're talking about early retirement.
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You know, Jeff, every once in a while,
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I get these, um, Notifications of topics and
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articles that, um, reporters might be looking for
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comment from, um, an advisor to weigh in
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on, and, um, this one caught my eye.
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I don't know if we'll get, um, quoted
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or not, but I thought it was an
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interesting, uh, thought exercise that we might want
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to share with our listeners about some of
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the challenges.
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If you are going to think about retiring
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early, I know you, uh, probably as much
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as I do hear from people who say,
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yeah, one of my big goals is I
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want to be done.
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I want to retire, um, early and, you
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know, there may, some people are focused on
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it and really dedicated to that.
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Right.
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And some people just have this sort of
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vague, yeah, I'm tired of working and I
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want to be done.
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You know, so, uh, I think it's a
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real high percentage of people who have that
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thought process, you know, like what if I,
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what do I need to do?
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Right.
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How can, could I pull it off?
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And they kind of go through the checklist
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in their head and, you know, it's the
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checklist might not include all the things they
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should, but I think a lot of people
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think about it, right?
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Yeah, absolutely.
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Um, now just as an aside, I mean,
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I, I have one client, excuse me.
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He's become one of our biggest clients.
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Uh, he came in, uh, I don't know
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if he was even in his forties, uh,
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when he started and said, you know, I
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want to be able to retire young, you
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know, um, in my fifties and, um, he's
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been just dedicated, vigilant.
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Um, he has a good paying job and
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is able to save regularly, but puts a
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lot of money toward that goal and is,
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is at a point where he could, if
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he wants to, he just happens to like
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his work at this point in time and
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isn't, isn't desirous.
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But yeah, he's right.
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You know, uh, I guess that's the, the,
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the financial freedom, right?
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That notion of having the resources that work
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becomes optional.
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That's what we're trying to think about here.
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I always think about this in the context
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of the older radio show host.
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He's not on the radio anymore, but Bob
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Brinker.
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Yes.
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Um, and he had the term critical mass.
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So it's when you reach that point that
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you have critical mass of assets, I guess,
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or income or not debt, or, you know,
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the picture you've reached that point where you
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can retire, doesn't mean you're retiring.
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It doesn't mean you're not working.
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You could be retiring from your full-time
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high stress, fast pace life to a still
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working, but not that right.
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Something that's less than that.
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That's more conducive to some travel or some
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leisure, but not, not going from a hundred
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miles an hour to zero.
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Right.
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Yeah.
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So the definition of, I want to retire
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early is not a single thing.
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It could mean I just don't want to
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do this anymore.
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I'd like to do something else, but something
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that is more flexible and maybe more positive
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depending on one's given occupation.
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Right.
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Yeah.
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Yeah, exactly.
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Well, I think one of the challenges that
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this really present, there's a number of things
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that do come up as reasonable challenges to
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consider, but the first one that comes to
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my mind is that, you know, you really
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must be saving with abundance because if you
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do retire early and start drawing from your
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investments, you know, I mean, the thing about
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it is you, we, people tend to be
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living longer, so we need to be planning
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for the prospects of long life longevity.
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Right.
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So if I retire, just say, for example,
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in my fifties, 55 instead of, or, you
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know, 50, you know, as an example, I
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want to, I want to retire well in
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advance of the traditional, you know, ages people
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retire, you know, that not only does that
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add 10 years, let's say, or 15 years
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of withdrawals.
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That could be a 40 year run rate,
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right?
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Yeah, we might have.
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So in that case, you could have it
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easily, right?
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40, even more, right?
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Right.
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Let's say it was 50 and you said
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for age 50 and you said, okay, normally
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I'd plan to retire at 65 or somewhere
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thereabouts.
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I think it's later from a lot of
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people, but so that's 15 or 20 years
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of additional withdrawals, right?
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Yep.
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But it's also now 15 or 20 years
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where I'm not getting the compounding impact that
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I would have from all the savings I'd
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be doing in that time, right?
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I'd be adding to the account instead of
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subtracting, and the money that's already there would
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be compounding for me.
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So it'd be growing, whereas now I'm probably
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drawing from it to some extent.
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So it's a big difference.
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So just that notion of the lack of
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compounding, earlier withdrawal, and the lack of addition
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over that period of time is impactful.
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So if that's something you think, I really
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want this, you really have to be extremely
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aggressive about your savings.
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The amount of your, we talk in generalities
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of, oh, what's a good amount to set
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aside?
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People have this question often, and it's a
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really kind of an arbitrary thing.
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What percentage should I set aside for savings
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and investment?
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And I think oftentimes we kind of answer
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that in different ways.
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Well, there's your emergency money.
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That's one thing.
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There's, well, there's vacations and new set of
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tires, delayed spending intentions.
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That's another thing.
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But if we're really talking about savings and
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investment to accumulate resources, we try to encourage
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people to, if they can, from the very
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beginning, save 10%, they're going to be really
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well ready for any kind of financial challenges
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they may face over their lifetime or opportunities
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like this that they might say, oh, I
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have the opportunity for financial freedom earlier.
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So I want to add a couple more
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things.
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If you're thinking about retiring early, all the,
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you mentioned the big ones, but a couple
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other maybe secondary things that people don't consider
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if you're retiring early is you said you're
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not contributing to your retirement plan.
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Certainly true, but you're also not contributing to
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social security.
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So if you're relying on, or if you're
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thinking about future social security benefits and you
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stop working, although you're probably vested certainly by
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age 50, you're going to have 15 years
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or 17 years of zeros on your highest
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35.
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Yeah, how many of those are going to
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be without number?
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So that's a missed opportunity.
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And they also, I know it's implied in
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your comments, but I just want to highlight
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it because some people who do their own
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kind of spreadsheets and don't kind of DIY
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this, you have that 15 more years in
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this example of 50 to 65 of inflation.
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And we certainly add in inflation for the
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work that we do, the modeling that we
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do.
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But I see that as one of the
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mistakes of people who are doing DIY.
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And they're saying, all right, how much money
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do I need?
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All right, I need $50,000 of income
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a year.
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And they kind of think that number is
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going to be stagnant, right?
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Because maybe they have their mortgage paid off.
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But as we've seen in the last few
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years, the impact of inflation, sometimes in a
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short period of time, but certainly over 40
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years, you really have to account for that
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and not lower all that estimate of what
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future expenses are going to be.
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Yeah, I remember an advisor who, I used
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to do these seminars when I first started
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out.
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And when I did, there was an advisor
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who had a video series to kind of
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show you what you talk about.
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And he talked about inflation and tried to
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explain that as much as people maybe do
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have some fixed costs, they also have lifelines
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to the community was the way he put
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it.
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And I think that's a good way to
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think about it.
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What are those lifelines?
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Well, I have real estate taxes.
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I have insurance.
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I'm going to buy a car.
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The car has gasoline, you know, in repairs,
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etc, etc.
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I buy food.
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I like to go out to dinner once
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in a while too.
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You know, all of these things that we
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take for granted, all are subject to the
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risks of inflation over time.
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And, you know, there's a stereotype, right?
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I mean, have you ever been to your
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homeowner's association?
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If you're like me, it's all the older
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retirees complaining about the dues increase because they're
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not working anymore.
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And it's, you know, these are examples of
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inflation, you know, they're on a fixed income.
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You know what they're voting against is maintenance.
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So over 40 years of life, if you
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own a home, if you own a brand
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new home today and you're retiring at 50,
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everything in that house is being replaced.
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Yeah, over that 40 years, at some point,
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there's going to be a lot of maintenance
263
00:11:12,060 --> 00:11:14,120
repairs that are going to be needed.
264
00:11:15,240 --> 00:11:17,620
So, you know, those are just things that
265
00:11:17,620 --> 00:11:20,560
will work into your inflation concern.
266
00:11:20,700 --> 00:11:21,720
Yeah, really good point.
267
00:11:22,840 --> 00:11:25,040
And, you know, as much as we might
268
00:11:25,040 --> 00:11:27,200
say, oh, inflation's two and a half percent
269
00:11:27,200 --> 00:11:30,460
or three percent or whatever it is, you
270
00:11:30,460 --> 00:11:34,280
know, rule of 72s, right?
271
00:11:34,660 --> 00:11:38,300
If we divide that by three, 24 years,
272
00:11:38,400 --> 00:11:38,980
that's double.
273
00:11:39,400 --> 00:11:40,100
Everything doubles.
274
00:11:40,300 --> 00:11:40,420
Yeah.
275
00:11:40,500 --> 00:11:42,860
And, you know, if you're living 40 years,
276
00:11:43,060 --> 00:11:44,500
you know, you're close to double.
277
00:11:44,500 --> 00:11:45,660
You're probably going to get a double double,
278
00:11:45,780 --> 00:11:45,960
yeah.
279
00:11:46,400 --> 00:11:48,420
And if you don't believe that, if you're
280
00:11:48,420 --> 00:11:49,720
just like, yeah, kind of, that's not going
281
00:11:49,720 --> 00:11:50,100
to happen.
282
00:11:50,100 --> 00:11:52,960
Go back 20 or 40 years and say,
283
00:11:53,060 --> 00:11:53,860
how much was a car?
284
00:11:54,700 --> 00:11:57,060
How much, you know, you pick your item
285
00:11:57,060 --> 00:11:58,540
that you want to compare it to a
286
00:11:58,540 --> 00:12:00,180
basket of items and you'll see.
287
00:12:00,640 --> 00:12:04,340
Bread and milk and eggs these days, right?
288
00:12:04,780 --> 00:12:05,880
Taxes, insurances.
289
00:12:06,280 --> 00:12:06,600
You know, tax.
290
00:12:06,680 --> 00:12:07,700
Yeah, all of them.
291
00:12:07,800 --> 00:12:10,020
You can just say, oh, it's changed.
292
00:12:10,260 --> 00:12:12,340
It will continue to change.
293
00:12:12,380 --> 00:12:14,420
That's just the reality.
294
00:12:14,420 --> 00:12:16,880
So inflation is one of those things you
295
00:12:16,880 --> 00:12:20,900
have to be more mindful of.
296
00:12:21,100 --> 00:12:23,420
I think another one we should include in
297
00:12:23,420 --> 00:12:25,920
there is, you know, you got to think
298
00:12:25,920 --> 00:12:30,000
about health care, health insurance as one of
299
00:12:30,000 --> 00:12:31,380
those practical things.
300
00:12:31,500 --> 00:12:34,680
If you're retiring, you know, in your 50s
301
00:12:34,680 --> 00:12:37,440
and Medicare starts at 65.
302
00:12:38,000 --> 00:12:38,280
Right.
303
00:12:39,420 --> 00:12:42,980
Um, let's face it, health insurance costs are
304
00:12:42,980 --> 00:12:44,340
exorbitant today.
305
00:12:44,980 --> 00:12:48,400
So, you know, is that something you've planned
306
00:12:48,400 --> 00:12:48,860
for?
307
00:12:48,940 --> 00:12:51,740
If you're not employed, you're not getting any
308
00:12:51,740 --> 00:12:55,500
subsidy from the employer to help defray those
309
00:12:55,500 --> 00:12:55,840
costs.
310
00:12:55,900 --> 00:12:57,980
And usually an employer picks up some of
311
00:12:57,980 --> 00:13:00,580
that cost if you're working through an employer
312
00:13:00,580 --> 00:13:01,100
plan.
313
00:13:01,660 --> 00:13:03,360
I mean, sometimes a lot of it.
314
00:13:03,440 --> 00:13:06,220
Even if it's 50 percent, it's big money
315
00:13:06,220 --> 00:13:08,060
over a year and decades.
316
00:13:09,960 --> 00:13:12,040
So, you know, that could add.
317
00:13:12,860 --> 00:13:13,020
Yeah.
318
00:13:13,120 --> 00:13:17,320
I mean, 20 years of 10, 10 years
319
00:13:17,320 --> 00:13:20,260
of those costs rather, you know, you could
320
00:13:20,260 --> 00:13:25,140
be looking at, I don't know, $250, $300,
321
00:13:25,640 --> 00:13:27,280
you know, more because of inflation.
322
00:13:27,480 --> 00:13:27,660
Right.
323
00:13:27,720 --> 00:13:29,260
The health care inflation is higher.
324
00:13:29,820 --> 00:13:29,920
Right.
325
00:13:30,000 --> 00:13:33,060
So, you know, another chunk of money that
326
00:13:33,060 --> 00:13:35,340
you got to have set aside with that
327
00:13:35,340 --> 00:13:35,840
in mind.
328
00:13:35,960 --> 00:13:37,360
And that's assuming you don't have any health
329
00:13:37,360 --> 00:13:37,860
problems.
330
00:13:38,280 --> 00:13:39,900
That's just for premiums, right?
331
00:13:39,960 --> 00:13:41,580
Not deductibles and all that kind of stuff.
332
00:13:41,580 --> 00:13:46,940
And uncovered dental and other vision and whatever
333
00:13:46,940 --> 00:13:48,300
it is, things that are not covered.
334
00:13:48,360 --> 00:13:50,000
As you get older, you run into more
335
00:13:50,000 --> 00:13:55,200
of these non-covered optional things like teeth,
336
00:13:55,480 --> 00:13:56,000
for example.
337
00:13:56,040 --> 00:13:56,300
Yeah.
338
00:13:57,340 --> 00:13:58,340
We want to keep them.
339
00:13:58,460 --> 00:14:00,000
But, you know, generally, if you don't have
340
00:14:00,000 --> 00:14:03,040
an employer plan, you don't have dental insurance.
341
00:14:03,580 --> 00:14:04,940
You can buy it, but it costs money.
342
00:14:04,940 --> 00:14:06,840
I keep hearing this from people who are
343
00:14:06,840 --> 00:14:10,740
in retirement about the cost of implants and,
344
00:14:10,740 --> 00:14:12,600
you know, some of the dental expense.
345
00:14:13,300 --> 00:14:14,820
Just rough.
346
00:14:15,160 --> 00:14:16,760
It's a common conversation.
347
00:14:16,840 --> 00:14:18,440
In fact, we had people over last night
348
00:14:18,440 --> 00:14:22,260
and one of the ladies in the couple
349
00:14:22,260 --> 00:14:26,820
was sharing how much money she has spent
350
00:14:26,820 --> 00:14:29,820
in the last two months as her need
351
00:14:29,820 --> 00:14:32,340
for dental insurance has come up and she
352
00:14:32,340 --> 00:14:33,200
doesn't have any coverage.
353
00:14:33,200 --> 00:14:36,420
So, you know, it's not inexpensive.
354
00:14:37,020 --> 00:14:39,440
I mean, even if you do, some things
355
00:14:39,440 --> 00:14:40,880
aren't covered enough, right?
356
00:14:40,900 --> 00:14:41,300
That's right.
357
00:14:41,480 --> 00:14:42,400
50%, maybe.
358
00:14:42,720 --> 00:14:43,000
But, yeah.
359
00:14:43,120 --> 00:14:43,360
Yeah.
360
00:14:45,080 --> 00:14:46,300
Well, so, okay.
361
00:14:46,980 --> 00:14:49,140
That's on some of the expenses side of
362
00:14:49,140 --> 00:14:49,380
things.
363
00:14:49,520 --> 00:14:50,480
There's probably others too.
364
00:14:50,580 --> 00:14:50,840
I don't know.
365
00:14:51,020 --> 00:14:53,300
Before we move on from expenses, anything else
366
00:14:53,300 --> 00:14:55,700
that you wanted to think in terms of
367
00:14:55,700 --> 00:14:56,720
that I didn't think of?
368
00:14:57,530 --> 00:15:02,020
No, I would just add when you're projecting
369
00:15:02,020 --> 00:15:05,220
out long-term spending thing, you know, in
370
00:15:05,220 --> 00:15:07,680
addition to the cars and the vacations and
371
00:15:07,680 --> 00:15:10,460
the home maintenance that we mentioned, you have
372
00:15:10,460 --> 00:15:13,780
to really consider is in the next 30
373
00:15:13,780 --> 00:15:18,880
years, am I likely to need to or
374
00:15:18,880 --> 00:15:20,460
want to help a family member?
375
00:15:20,580 --> 00:15:22,620
Because this is something that sneaks into our
376
00:15:22,620 --> 00:15:24,360
financial planning discussions.
377
00:15:24,360 --> 00:15:27,260
Do you have a daughter who's getting married?
378
00:15:27,440 --> 00:15:30,000
Or do you have someone you want to
379
00:15:30,000 --> 00:15:31,680
help buy their first house or maybe a
380
00:15:31,680 --> 00:15:32,860
grandchild with college?
381
00:15:33,740 --> 00:15:35,540
Well, if you're at 50, you might be
382
00:15:35,540 --> 00:15:36,800
talking about your kids in college.
383
00:15:36,820 --> 00:15:37,520
That's what I mean.
384
00:15:37,640 --> 00:15:38,120
That's true.
385
00:15:38,760 --> 00:15:39,640
Yeah, that's a good point.
386
00:15:39,920 --> 00:15:42,600
So, consider not just your household expenses and
387
00:15:42,600 --> 00:15:43,940
even if you're doing a good job with
388
00:15:43,940 --> 00:15:46,100
all the things that we're talking about, kind
389
00:15:46,100 --> 00:15:48,540
of open up that field of vision and
390
00:15:48,540 --> 00:15:50,960
say, what am I going to do with
391
00:15:50,960 --> 00:15:52,280
my time if I retire?
392
00:15:52,460 --> 00:15:53,360
Oh, I'm going to buy a boat.
393
00:15:53,360 --> 00:15:55,780
OK, well, let's make sure that that's there
394
00:15:55,780 --> 00:15:57,980
or I'm going to travel more or I'd
395
00:15:57,980 --> 00:16:00,880
like to be more generous, family charities, or
396
00:16:00,880 --> 00:16:02,260
I'd like to do X, Y or Z
397
00:16:02,260 --> 00:16:06,000
hobbies or all these things have potential costs.
398
00:16:06,340 --> 00:16:08,940
So, enlarge your vision and say, what is
399
00:16:08,940 --> 00:16:09,960
my life look like?
400
00:16:10,120 --> 00:16:10,840
What am I going to do?
401
00:16:10,920 --> 00:16:12,000
What might I do?
402
00:16:12,520 --> 00:16:15,120
And what is the cost associated with that
403
00:16:15,120 --> 00:16:16,400
item?
404
00:16:18,610 --> 00:16:19,610
Good points.
405
00:16:20,110 --> 00:16:23,310
Yeah, I think those are good examples of
406
00:16:23,310 --> 00:16:26,710
sometimes underestimated expenses.
407
00:16:27,970 --> 00:16:31,710
The money we spend on family needs, you
408
00:16:31,710 --> 00:16:32,850
know, come up.
409
00:16:33,730 --> 00:16:34,250
All right.
410
00:16:34,270 --> 00:16:35,970
Well, the next thing I want to talk
411
00:16:35,970 --> 00:16:39,110
about as it relates to this notion of
412
00:16:39,110 --> 00:16:41,690
if you're going to retire early, things you
413
00:16:41,690 --> 00:16:45,270
need to think about and this probably applies
414
00:16:45,270 --> 00:16:47,690
to everyone, but it comes to my mind,
415
00:16:47,750 --> 00:16:50,630
especially for people retiring early, and that's the
416
00:16:50,630 --> 00:16:52,350
notion of tax diversification.
417
00:16:53,550 --> 00:16:56,910
You know, if you're retiring again at 50,
418
00:16:56,990 --> 00:17:01,170
55, you don't have access to your IRAs,
419
00:17:01,470 --> 00:17:02,410
your 401ks.
420
00:17:02,750 --> 00:17:06,109
They're usually now there's some workaround to that,
421
00:17:06,170 --> 00:17:09,190
but by design, they're structured to be available
422
00:17:09,190 --> 00:17:11,170
to you at 59 and a half and
423
00:17:11,170 --> 00:17:11,609
thereafter.
424
00:17:12,190 --> 00:17:15,310
So, you know, you may want to make
425
00:17:15,310 --> 00:17:18,510
sure that you do have, one, other buckets
426
00:17:18,510 --> 00:17:21,210
of money, non-IRA, just, you know, joint
427
00:17:21,210 --> 00:17:23,710
account, individual trust, whatever it might be that
428
00:17:23,710 --> 00:17:27,329
non-qualified taxable, we'll call it kind of
429
00:17:27,329 --> 00:17:27,569
money.
430
00:17:29,490 --> 00:17:31,870
Meaning it, you know, pays income tax each
431
00:17:31,870 --> 00:17:34,350
year as opposed to something that's tax deferred
432
00:17:34,350 --> 00:17:36,570
like your IRA or your 401k and so
433
00:17:36,570 --> 00:17:36,770
forth.
434
00:17:36,770 --> 00:17:40,070
And of course, Roth IRA money, you know,
435
00:17:40,130 --> 00:17:43,190
it's important to have some different buckets of
436
00:17:43,190 --> 00:17:45,050
money with different tax treatment.
437
00:17:46,710 --> 00:17:50,290
So the challenge is if you don't have
438
00:17:50,290 --> 00:17:55,070
sufficient resources in your non-IRA money, we
439
00:17:55,070 --> 00:17:59,470
see this throughout retirement anyway, that if people
440
00:17:59,470 --> 00:18:04,710
draw down on some of their investments outside
441
00:18:04,710 --> 00:18:08,390
of retirement plans, it becomes challenging when they
442
00:18:08,390 --> 00:18:10,630
have a big expense, like a purchase of
443
00:18:10,630 --> 00:18:12,850
a car, it's a common example.
444
00:18:14,650 --> 00:18:17,070
If I want to pay for that car
445
00:18:17,070 --> 00:18:19,290
and I don't have a non-IRA account
446
00:18:19,290 --> 00:18:21,270
to, you know, draw that from a taxable
447
00:18:21,270 --> 00:18:24,370
account, I have to take that out of
448
00:18:24,370 --> 00:18:24,830
an IRA.
449
00:18:25,170 --> 00:18:26,270
I have to, you know, I want to
450
00:18:26,270 --> 00:18:30,910
spend $30,000 on a car, $40,000
451
00:18:30,910 --> 00:18:32,330
on a car, whatever it is, right?
452
00:18:32,890 --> 00:18:36,630
I have to end up spending $50,000
453
00:18:36,630 --> 00:18:38,710
to get that money or, you know, fill
454
00:18:38,710 --> 00:18:40,630
in the blank, whatever the tax.
455
00:18:40,850 --> 00:18:42,870
And that's if you're after 59 and a
456
00:18:42,870 --> 00:18:44,130
half, generally.
457
00:18:44,310 --> 00:18:45,470
And that's if you're 59 and a half.
458
00:18:45,630 --> 00:18:48,890
Now, there is actually a workaround for people
459
00:18:48,890 --> 00:18:54,890
who are pre-59 and a half, but
460
00:18:54,890 --> 00:18:58,570
are definitely going to be in a position
461
00:18:58,570 --> 00:19:01,470
where they need to draw from their retirement
462
00:19:01,470 --> 00:19:04,410
money in a retired status.
463
00:19:04,790 --> 00:19:08,530
But prior to being eligible to access that
464
00:19:08,530 --> 00:19:14,550
money, there's a Rule 72T that relates to
465
00:19:14,550 --> 00:19:16,110
the Internal Revenue Code.
466
00:19:16,310 --> 00:19:20,210
And it does allow for some substantially equal
467
00:19:20,210 --> 00:19:21,550
periodic payments.
468
00:19:21,550 --> 00:19:24,570
Now, the rules around this are very precise,
469
00:19:24,910 --> 00:19:27,910
and you need to know them before you
470
00:19:27,910 --> 00:19:29,490
undertake this process.
471
00:19:30,370 --> 00:19:32,870
So this is why you're better served if
472
00:19:32,870 --> 00:19:35,390
you can avoid it altogether, you know, have
473
00:19:35,390 --> 00:19:38,990
other resources available to you to draw from.
474
00:19:39,070 --> 00:19:41,650
And if you're going to be retired early,
475
00:19:41,930 --> 00:19:44,070
you probably should make sure you do have
476
00:19:44,070 --> 00:19:45,610
those additional resources.
477
00:19:45,610 --> 00:19:49,630
But if you find circumstances change and you
478
00:19:49,630 --> 00:19:51,670
must, you know, be in a new circumstance,
479
00:19:53,090 --> 00:19:58,610
this separate equal periodic payments is an approach
480
00:19:58,610 --> 00:20:01,230
that can allow you to get access to
481
00:20:01,230 --> 00:20:07,210
your retirement plan and not be penalized the
482
00:20:07,210 --> 00:20:08,510
10 percent penalty.
483
00:20:09,250 --> 00:20:11,210
You'll still have income taxes the way you
484
00:20:11,210 --> 00:20:13,930
would from your retirement account, but not have
485
00:20:13,930 --> 00:20:16,830
the 10 percent penalty for withdrawals prior to
486
00:20:16,830 --> 00:20:17,450
59 and a half.
487
00:20:17,710 --> 00:20:19,550
And it's worth mentioning there are other instances
488
00:20:19,550 --> 00:20:22,850
where you can access if there's a disability
489
00:20:22,850 --> 00:20:26,050
or, you know, certain kinds of circumstances that
490
00:20:26,050 --> 00:20:29,630
might allow for earlier withdrawal.
491
00:20:29,830 --> 00:20:33,430
But in this case, the rules are somewhat
492
00:20:33,430 --> 00:20:35,830
involved in, you know, I wasn't planning to
493
00:20:35,830 --> 00:20:37,530
spend the whole show on this, but just
494
00:20:37,530 --> 00:20:39,590
the notion that it is available.
495
00:20:40,150 --> 00:20:44,130
The challenge becomes if your circumstances change, let's
496
00:20:44,130 --> 00:20:46,270
say, as an example, you start down this
497
00:20:46,270 --> 00:20:48,590
path of a 70 to 50, you know,
498
00:20:48,650 --> 00:20:52,070
you're going to withdraw some money and not
499
00:20:52,070 --> 00:20:54,150
be penalized by doing it, you know, do
500
00:20:54,150 --> 00:20:55,870
it in this appropriate fashion.
501
00:20:56,990 --> 00:20:59,630
But then you decide maybe I'm going to
502
00:20:59,630 --> 00:21:01,350
get a part time job and I don't
503
00:21:01,350 --> 00:21:03,570
need to draw from this.
504
00:21:03,650 --> 00:21:04,810
I'm going to stop doing it.
505
00:21:05,370 --> 00:21:09,750
You violated the rules of the separate equal
506
00:21:09,750 --> 00:21:10,410
period.
507
00:21:10,590 --> 00:21:13,410
Periodic and violated the periodic component.
508
00:21:13,890 --> 00:21:14,030
Right.
509
00:21:14,350 --> 00:21:18,010
So essentially there's different methods of whether how
510
00:21:18,010 --> 00:21:18,750
it's calculated.
511
00:21:19,210 --> 00:21:21,770
One that I think of as a common
512
00:21:21,770 --> 00:21:23,590
one is, you know, related to that R
513
00:21:23,590 --> 00:21:25,670
&D kind of notion.
514
00:21:25,910 --> 00:21:27,890
You know, you look at a table to
515
00:21:27,890 --> 00:21:29,750
come up with an amount and that it's
516
00:21:29,750 --> 00:21:34,030
permissible to withdraw from and that allows you
517
00:21:34,030 --> 00:21:34,610
an amount.
518
00:21:34,850 --> 00:21:36,470
Now, is that the right amount to meet
519
00:21:36,470 --> 00:21:37,330
your needs or not?
520
00:21:37,470 --> 00:21:38,490
You know, this is why you look at
521
00:21:38,490 --> 00:21:38,710
these.
522
00:21:39,130 --> 00:21:42,870
There's a few different ways to calculate what
523
00:21:42,870 --> 00:21:45,870
the amount of these periodic payments can be.
524
00:21:46,570 --> 00:21:48,710
But you are required to do it.
525
00:21:49,150 --> 00:21:50,030
Let's say you're 55.
526
00:21:50,410 --> 00:21:53,250
You have to do it at least until
527
00:21:53,250 --> 00:21:55,270
you're 59 and a half and not less
528
00:21:55,270 --> 00:21:56,450
than for five years.
529
00:21:57,490 --> 00:21:59,950
So in that case, you'd have to do
530
00:21:59,950 --> 00:22:03,230
it for five years, even if you said,
531
00:22:03,310 --> 00:22:04,610
oh, circumstances change.
532
00:22:04,710 --> 00:22:05,830
I don't need this anymore.
533
00:22:06,790 --> 00:22:09,960
So it's an oddity and it's complex.
534
00:22:10,810 --> 00:22:14,870
And I would consult an advisor, probably both
535
00:22:14,870 --> 00:22:19,170
a financial advisor and a tax advisor in
536
00:22:19,170 --> 00:22:21,650
reviewing this to make sure you follow through
537
00:22:21,650 --> 00:22:22,910
on doing it properly.
538
00:22:23,550 --> 00:22:26,090
Should you feel that this is a necessity
539
00:22:26,090 --> 00:22:27,530
that you might have to deal with.
540
00:22:27,690 --> 00:22:27,850
Yeah.
541
00:22:27,870 --> 00:22:30,810
On the opposite of the technical comments that
542
00:22:30,810 --> 00:22:33,810
you shared, I have to say that this,
543
00:22:34,130 --> 00:22:39,610
not the 72T, but this frequency of people
544
00:22:39,610 --> 00:22:43,490
who retire at before 50, after 50, after
545
00:22:43,490 --> 00:22:45,570
60 or 70 with the intention of not
546
00:22:45,570 --> 00:22:48,050
working and then wanting to go back to
547
00:22:48,050 --> 00:22:49,870
work or finding something that they want to
548
00:22:49,870 --> 00:22:52,710
do or being bored is super common.
549
00:22:53,430 --> 00:22:56,370
So you can think that you're retiring at
550
00:22:56,370 --> 00:22:58,970
55 and you're done working.
551
00:22:59,930 --> 00:23:04,030
But I suspect that most people are going
552
00:23:04,030 --> 00:23:06,330
to want to do something productive, something.
553
00:23:06,470 --> 00:23:06,590
Yeah.
554
00:23:06,650 --> 00:23:08,110
You may just be done with what you
555
00:23:08,110 --> 00:23:10,510
used to do and not want to do
556
00:23:10,510 --> 00:23:11,290
that anymore.
557
00:23:11,790 --> 00:23:13,850
But that doesn't mean you may not want
558
00:23:13,850 --> 00:23:16,930
to do something for compensation along the way.
559
00:23:16,930 --> 00:23:19,170
I just had a conversation the other night.
560
00:23:19,250 --> 00:23:21,590
I was at Home Depot picking up something
561
00:23:21,590 --> 00:23:25,850
at the tool rental thing and I had
562
00:23:25,850 --> 00:23:27,090
a police shirt on.
563
00:23:27,530 --> 00:23:29,830
So the gentleman who had long hair and
564
00:23:29,830 --> 00:23:31,810
a beard, by the way, he said, oh,
565
00:23:32,030 --> 00:23:33,150
you're retired.
566
00:23:33,410 --> 00:23:35,410
I said, yeah, because me too, LAPD.
567
00:23:36,110 --> 00:23:37,990
And so he was talking, he goes, I
568
00:23:37,990 --> 00:23:39,550
retired for like five years and then I
569
00:23:39,550 --> 00:23:40,230
had to do something.
570
00:23:40,370 --> 00:23:41,390
I started part time.
571
00:23:41,870 --> 00:23:43,490
Now I'm working 60 hours a week.
572
00:23:44,790 --> 00:23:45,470
Yeah.
573
00:23:45,730 --> 00:23:47,130
But that's not the exception.
574
00:23:47,310 --> 00:23:49,350
That's kind of what develops into the norm.
575
00:23:49,630 --> 00:23:55,350
You can only play pickleball so many days
576
00:23:55,350 --> 00:23:56,950
or go to the beach so many days
577
00:23:56,950 --> 00:24:01,430
or whatever you're retiring for and then you
578
00:24:01,430 --> 00:24:02,950
can say, well, I'd like a few bucks.
579
00:24:03,050 --> 00:24:04,230
I need to do something productive.
580
00:24:04,390 --> 00:24:06,410
I want to meet some new people and
581
00:24:06,410 --> 00:24:06,930
a part time.
582
00:24:06,950 --> 00:24:09,030
Well, sometimes it's, yeah, there's a whole range
583
00:24:09,030 --> 00:24:09,430
of reasons.
584
00:24:10,010 --> 00:24:11,770
But sometimes it could be just to help
585
00:24:11,770 --> 00:24:13,270
you afford some of the things you want
586
00:24:13,270 --> 00:24:13,570
to do.
587
00:24:13,770 --> 00:24:14,190
That's right.
588
00:24:14,190 --> 00:24:17,070
And that's what this retired LAPD officer is.
589
00:24:17,070 --> 00:24:18,670
That was just getting a part time job
590
00:24:18,670 --> 00:24:19,650
to get out of the house and have
591
00:24:19,650 --> 00:24:20,550
some pocket money.
592
00:24:21,170 --> 00:24:23,230
And then they creeped, you know, like they
593
00:24:23,230 --> 00:24:25,250
offered him a position to manage the tool
594
00:24:25,250 --> 00:24:27,190
rental and he likes dealing with all the
595
00:24:27,190 --> 00:24:28,370
customers and contractors.
596
00:24:28,790 --> 00:24:30,510
And so he's enjoying it.
597
00:24:30,650 --> 00:24:31,510
So he's enjoying it.
598
00:24:31,730 --> 00:24:35,210
And let's, let's turn our attention, sorry, let's
599
00:24:35,210 --> 00:24:37,550
turn our attention to social security part of
600
00:24:37,550 --> 00:24:39,710
this for a minute or two, though, because
601
00:24:39,710 --> 00:24:41,330
I think that's something we should also talk
602
00:24:41,330 --> 00:24:42,690
about before we wrap up.
603
00:24:43,630 --> 00:24:46,750
And the whole notion of working, even if
604
00:24:46,750 --> 00:24:50,150
you turn on social security early, it has
605
00:24:50,150 --> 00:24:51,650
its own complexities.
606
00:24:52,110 --> 00:24:52,790
Right, right.
607
00:24:54,350 --> 00:24:56,450
So you want to let me set the
608
00:24:56,450 --> 00:24:57,250
stage on this.
609
00:24:57,870 --> 00:25:00,230
Yeah, really related to my comments of people
610
00:25:00,230 --> 00:25:02,910
who retire, say they retire at 62 and
611
00:25:02,910 --> 00:25:04,370
they say my social security money is there.
612
00:25:04,390 --> 00:25:05,390
I'm going to take it right there.
613
00:25:05,450 --> 00:25:05,790
It is.
614
00:25:06,190 --> 00:25:07,510
I know I'd get more later, but I'm
615
00:25:07,510 --> 00:25:08,250
going to take it.
616
00:25:08,590 --> 00:25:10,770
And then I want to start now.
617
00:25:10,850 --> 00:25:11,870
I got who knows how long I'm going
618
00:25:11,870 --> 00:25:12,230
to live.
619
00:25:12,230 --> 00:25:13,630
I'd rather get started.
620
00:25:14,370 --> 00:25:16,030
And then you fall into that scenario I
621
00:25:16,030 --> 00:25:18,010
described or something like it, and you decide
622
00:25:18,010 --> 00:25:18,570
to work.
623
00:25:19,090 --> 00:25:21,730
And so since you're not of full retirement
624
00:25:21,730 --> 00:25:25,110
age, which would be 66 or 67, where
625
00:25:25,110 --> 00:25:26,550
you'd have a higher number, right?
626
00:25:27,170 --> 00:25:27,650
Yeah.
627
00:25:28,490 --> 00:25:30,990
I think it's 20 some odd thousand dollars
628
00:25:30,990 --> 00:25:32,370
is your limited amount.
629
00:25:32,370 --> 00:25:34,730
That I'm planning to find.
630
00:25:35,230 --> 00:25:35,630
But yeah.
631
00:25:35,850 --> 00:25:37,430
So if you make more than.
632
00:25:37,630 --> 00:25:40,790
Twenty three thousand four hundred dollars in 2025.
633
00:25:41,370 --> 00:25:44,650
I'm pretty sure that retired LAPD officer working
634
00:25:44,650 --> 00:25:47,730
full time managing the tool rental center is
635
00:25:47,730 --> 00:25:49,010
making more than that.
636
00:25:49,450 --> 00:25:50,390
So yeah.
637
00:25:50,810 --> 00:25:53,770
So you wouldn't want to keep receiving social
638
00:25:53,770 --> 00:25:56,310
security if you turned it on at 62,
639
00:25:56,510 --> 00:25:59,510
as an example, retiring early if you're going
640
00:25:59,510 --> 00:26:00,750
to be working part time.
641
00:26:00,910 --> 00:26:03,230
So an important consideration.
642
00:26:03,230 --> 00:26:07,950
And it is good that you can suspend
643
00:26:07,950 --> 00:26:10,830
your payments if it turns out that you
644
00:26:10,830 --> 00:26:11,910
have this circumstance.
645
00:26:11,910 --> 00:26:14,430
You thought you wanted it early and then
646
00:26:14,430 --> 00:26:17,130
you change your mind, even though you filed
647
00:26:17,130 --> 00:26:19,850
for it, you could suspend and that would
648
00:26:19,850 --> 00:26:23,350
still help that new wages would count toward
649
00:26:23,350 --> 00:26:25,030
your recalculation.
650
00:26:25,170 --> 00:26:27,570
So if they, you know, add some money
651
00:26:27,570 --> 00:26:30,010
in and took off the zero somewhere, you
652
00:26:30,010 --> 00:26:31,770
know, for your 35 years that you were
653
00:26:31,770 --> 00:26:35,910
talking about earlier, you know, I think that's
654
00:26:35,910 --> 00:26:36,930
worth keeping in mind.
655
00:26:37,390 --> 00:26:40,090
But twenty three thousand four hundred dollars, if
656
00:26:40,090 --> 00:26:42,570
you if you make more than that and
657
00:26:42,570 --> 00:26:46,410
you're receiving social security, you're penalized.
658
00:26:47,370 --> 00:26:49,510
It's it's very unattractive.
659
00:26:49,550 --> 00:26:52,130
So you don't want to do that.
660
00:26:52,510 --> 00:26:53,890
No, I don't want to do that.
661
00:26:53,930 --> 00:26:55,550
So think about it.
662
00:26:55,550 --> 00:26:57,470
And we don't have time for this segment
663
00:26:57,470 --> 00:27:00,430
to add commentary on it.
664
00:27:00,470 --> 00:27:03,190
But I'll just say it may even be
665
00:27:03,190 --> 00:27:06,670
financially prudent to wait and draw from other
666
00:27:06,670 --> 00:27:09,130
assets that you have because of the, you
667
00:27:09,130 --> 00:27:10,830
know, the ultimate benefit that you would get
668
00:27:10,830 --> 00:27:12,710
if you retire at a later date or
669
00:27:12,710 --> 00:27:14,610
maybe even 70 because of the.
670
00:27:14,830 --> 00:27:17,390
Yeah, the increases in social security have a
671
00:27:17,390 --> 00:27:19,130
long lifetime projected and all that.
672
00:27:19,210 --> 00:27:20,270
We talk about it once in a while.
673
00:27:20,350 --> 00:27:21,090
We'll go back to it.
674
00:27:21,150 --> 00:27:22,710
But there's a lot of things to talk
675
00:27:22,710 --> 00:27:24,270
to your advisor about on these.
676
00:27:24,270 --> 00:27:27,350
It depends on like the spouse is who's
677
00:27:27,350 --> 00:27:30,250
the higher earning if their spouses, you know,
678
00:27:30,310 --> 00:27:31,790
all that kind of stuff to help you
679
00:27:31,790 --> 00:27:34,130
think about how to strategize around that.
680
00:27:34,630 --> 00:27:35,710
But, yeah, it's a good point.
681
00:27:36,010 --> 00:27:38,970
If you're trying to retire early, not that
682
00:27:38,970 --> 00:27:41,070
we're we sound kind of negative on this,
683
00:27:41,230 --> 00:27:43,750
Jeff, I think we just want to be
684
00:27:43,750 --> 00:27:44,330
careful.
685
00:27:44,630 --> 00:27:46,210
Yeah, I'm not negative about it.
686
00:27:46,210 --> 00:27:48,070
I just want people if they can do
687
00:27:48,070 --> 00:27:49,150
it and if they want to do it,
688
00:27:49,170 --> 00:27:51,090
just go into it with your eyes wide
689
00:27:51,090 --> 00:27:55,350
open and talk to a fiduciary financial advisor
690
00:27:55,350 --> 00:27:57,170
who has not trying to sell anything, just
691
00:27:57,170 --> 00:28:00,750
has your best interest at heart and go
692
00:28:00,750 --> 00:28:04,150
through all these oddities or scenarios or what
693
00:28:04,150 --> 00:28:07,110
ifs to make sure that you're fully aware
694
00:28:07,110 --> 00:28:09,530
of what an early retirement might look for
695
00:28:09,530 --> 00:28:09,770
you.
696
00:28:11,130 --> 00:28:13,010
And if we can be a resource to
697
00:28:13,010 --> 00:28:14,990
you in the process, we're happy to help.
698
00:28:14,990 --> 00:28:17,810
We talk with people with initially with a
699
00:28:17,810 --> 00:28:19,590
consultation that's complimentary.
700
00:28:20,390 --> 00:28:22,630
We go through a little bit, learn about
701
00:28:22,630 --> 00:28:22,930
you.
702
00:28:23,070 --> 00:28:25,510
We then do some analysis and then have
703
00:28:25,510 --> 00:28:28,610
a follow up meeting where we can explain
704
00:28:28,610 --> 00:28:31,910
to you our observations and make some recommendations
705
00:28:31,910 --> 00:28:34,690
and elaborate on if we were to work
706
00:28:34,690 --> 00:28:37,470
together over time, how we work together.
707
00:28:37,650 --> 00:28:39,950
So if that could be a resource to
708
00:28:39,950 --> 00:28:41,750
you'd like to take advantage of, don't hesitate
709
00:28:41,750 --> 00:28:42,830
to reach out to us.
710
00:28:42,830 --> 00:28:45,810
Until next time, everybody keeps driving for something.
711
00:28:46,190 --> 00:28:48,550
Thank you for listening to something more with
712
00:28:48,550 --> 00:28:49,270
Chris Boyd.
713
00:28:49,550 --> 00:28:51,710
Call us for help, whether it's for financial
714
00:28:51,710 --> 00:28:55,630
planning or portfolio management, insurance concerns, or those
715
00:28:55,630 --> 00:28:57,690
quality of life issues that make the money
716
00:28:57,690 --> 00:28:58,790
matters matter.
717
00:28:59,190 --> 00:29:02,430
Whatever's on your mind, visit us at somethingmorewithchrisboyd
718
00:29:02,430 --> 00:29:05,590
.com or call us toll free at 866
719
00:29:05,590 --> 00:29:11,130
-771-8901 or send us your questions to
720
00:29:11,130 --> 00:29:15,090
amr-info at wealthenhancement.com.
721
00:29:15,510 --> 00:29:17,210
You're listening to something more with Chris Boyd
722
00:29:17,210 --> 00:29:18,050
Financial Talk Show.
723
00:29:18,210 --> 00:29:20,650
Wealth Enhancement Advisory Services and Jay Christopher Boyd
724
00:29:20,650 --> 00:29:22,990
provide investment advice on an individual basis to
725
00:29:22,990 --> 00:29:23,530
clients only.
726
00:29:23,690 --> 00:29:25,670
Proper advice depends on a complete analysis of
727
00:29:25,670 --> 00:29:26,850
all facts and circumstances.
728
00:29:27,110 --> 00:29:28,950
The information given on this program is general
729
00:29:28,950 --> 00:29:30,990
financial comments and cannot be relied upon as
730
00:29:30,990 --> 00:29:32,570
pertaining to your specific situation.
731
00:29:32,770 --> 00:29:34,750
Wealth Enhancement Group cannot guarantee that using the
732
00:29:34,750 --> 00:29:36,750
information from this show will generate profits or
733
00:29:36,750 --> 00:29:37,870
ensure freedom from loss.
734
00:29:37,870 --> 00:29:40,230
Listeners should consult their own financial advisors or
735
00:29:40,230 --> 00:29:42,330
conduct their own due diligence before making any
736
00:29:42,330 --> 00:29:43,110
financial decisions.
00:00:00,400 --> 00:00:03,059
Welcome to something more with Chris Boyd.
2
00:00:03,120 --> 00:00:06,160
Chris Boyd is a certified financial planner, practitioner,
3
00:00:06,360 --> 00:00:09,120
and senior vice president, financial advisor at wealth
4
00:00:09,120 --> 00:00:09,880
enhancement group.
5
00:00:10,080 --> 00:00:12,820
One of the nation's largest registered investment advisors.
6
00:00:13,180 --> 00:00:15,239
We call it something more because we'd like
7
00:00:15,239 --> 00:00:17,380
to talk not only about those important dollar
8
00:00:17,380 --> 00:00:19,540
and cents issues, but also the quality of
9
00:00:19,540 --> 00:00:22,040
life issues that make the money matters matter.
10
00:00:22,380 --> 00:00:25,760
Here he is your fulfillment facilitator, your partner
11
00:00:25,760 --> 00:00:28,900
in prosperity, advising clients on Cape Cod and
12
00:00:28,900 --> 00:00:29,940
across the country.
13
00:00:30,320 --> 00:00:31,720
Here's your host, Jay.
14
00:00:31,780 --> 00:00:32,760
Christopher Boyd.
15
00:00:32,920 --> 00:00:35,060
Welcome to something more with Chris Boyd.
16
00:00:35,160 --> 00:00:36,660
I'm Chris Boyd here with Jeff Perry.
17
00:00:36,740 --> 00:00:38,760
We are both of the AMR team at
18
00:00:38,760 --> 00:00:40,360
wealth enhancement group and glad to have you
19
00:00:40,360 --> 00:00:43,620
with us listening for another segment of something
20
00:00:43,620 --> 00:00:46,560
more, um, today we're talking about early retirement.
21
00:00:46,800 --> 00:00:48,180
You know, Jeff, every once in a while,
22
00:00:48,180 --> 00:00:53,680
I get these, um, Notifications of topics and
23
00:00:53,680 --> 00:00:58,000
articles that, um, reporters might be looking for
24
00:00:58,000 --> 00:01:01,480
comment from, um, an advisor to weigh in
25
00:01:01,480 --> 00:01:04,140
on, and, um, this one caught my eye.
26
00:01:04,300 --> 00:01:07,300
I don't know if we'll get, um, quoted
27
00:01:07,300 --> 00:01:09,700
or not, but I thought it was an
28
00:01:09,700 --> 00:01:12,440
interesting, uh, thought exercise that we might want
29
00:01:12,440 --> 00:01:14,780
to share with our listeners about some of
30
00:01:14,780 --> 00:01:15,340
the challenges.
31
00:01:15,740 --> 00:01:18,500
If you are going to think about retiring
32
00:01:18,500 --> 00:01:21,620
early, I know you, uh, probably as much
33
00:01:21,620 --> 00:01:23,220
as I do hear from people who say,
34
00:01:23,380 --> 00:01:25,180
yeah, one of my big goals is I
35
00:01:25,180 --> 00:01:25,960
want to be done.
36
00:01:26,060 --> 00:01:29,980
I want to retire, um, early and, you
37
00:01:29,980 --> 00:01:32,160
know, there may, some people are focused on
38
00:01:32,160 --> 00:01:33,780
it and really dedicated to that.
39
00:01:33,960 --> 00:01:34,060
Right.
40
00:01:34,180 --> 00:01:36,180
And some people just have this sort of
41
00:01:36,180 --> 00:01:38,840
vague, yeah, I'm tired of working and I
42
00:01:38,840 --> 00:01:39,340
want to be done.
43
00:01:39,760 --> 00:01:42,040
You know, so, uh, I think it's a
44
00:01:42,040 --> 00:01:44,500
real high percentage of people who have that
45
00:01:44,500 --> 00:01:47,740
thought process, you know, like what if I,
46
00:01:47,800 --> 00:01:48,960
what do I need to do?
47
00:01:48,960 --> 00:01:49,200
Right.
48
00:01:49,940 --> 00:01:51,720
How can, could I pull it off?
49
00:01:51,760 --> 00:01:53,260
And they kind of go through the checklist
50
00:01:53,260 --> 00:01:56,400
in their head and, you know, it's the
51
00:01:56,400 --> 00:01:58,240
checklist might not include all the things they
52
00:01:58,240 --> 00:01:59,980
should, but I think a lot of people
53
00:01:59,980 --> 00:02:01,300
think about it, right?
54
00:02:01,960 --> 00:02:03,020
Yeah, absolutely.
55
00:02:04,040 --> 00:02:06,320
Um, now just as an aside, I mean,
56
00:02:06,340 --> 00:02:09,860
I, I have one client, excuse me.
57
00:02:09,919 --> 00:02:12,000
He's become one of our biggest clients.
58
00:02:12,480 --> 00:02:15,080
Uh, he came in, uh, I don't know
59
00:02:15,080 --> 00:02:17,140
if he was even in his forties, uh,
60
00:02:17,140 --> 00:02:19,300
when he started and said, you know, I
61
00:02:19,300 --> 00:02:21,340
want to be able to retire young, you
62
00:02:21,340 --> 00:02:28,000
know, um, in my fifties and, um, he's
63
00:02:28,000 --> 00:02:31,080
been just dedicated, vigilant.
64
00:02:32,120 --> 00:02:34,460
Um, he has a good paying job and
65
00:02:34,460 --> 00:02:37,640
is able to save regularly, but puts a
66
00:02:37,640 --> 00:02:39,880
lot of money toward that goal and is,
67
00:02:40,140 --> 00:02:41,660
is at a point where he could, if
68
00:02:41,660 --> 00:02:43,720
he wants to, he just happens to like
69
00:02:43,720 --> 00:02:45,280
his work at this point in time and
70
00:02:45,280 --> 00:02:46,720
isn't, isn't desirous.
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But yeah, he's right.
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00:02:49,740 --> 00:02:52,460
You know, uh, I guess that's the, the,
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the financial freedom, right?
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That notion of having the resources that work
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becomes optional.
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That's what we're trying to think about here.
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I always think about this in the context
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of the older radio show host.
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He's not on the radio anymore, but Bob
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Brinker.
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Yes.
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Um, and he had the term critical mass.
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So it's when you reach that point that
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you have critical mass of assets, I guess,
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or income or not debt, or, you know,
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the picture you've reached that point where you
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can retire, doesn't mean you're retiring.
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It doesn't mean you're not working.
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You could be retiring from your full-time
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high stress, fast pace life to a still
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working, but not that right.
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Something that's less than that.
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That's more conducive to some travel or some
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leisure, but not, not going from a hundred
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miles an hour to zero.
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Right.
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Yeah.
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So the definition of, I want to retire
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early is not a single thing.
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It could mean I just don't want to
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do this anymore.
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I'd like to do something else, but something
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that is more flexible and maybe more positive
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depending on one's given occupation.
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Right.
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Yeah.
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Yeah, exactly.
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Well, I think one of the challenges that
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this really present, there's a number of things
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that do come up as reasonable challenges to
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consider, but the first one that comes to
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my mind is that, you know, you really
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must be saving with abundance because if you
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do retire early and start drawing from your
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investments, you know, I mean, the thing about
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it is you, we, people tend to be
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living longer, so we need to be planning
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for the prospects of long life longevity.
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Right.
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So if I retire, just say, for example,
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in my fifties, 55 instead of, or, you
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know, 50, you know, as an example, I
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want to, I want to retire well in
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advance of the traditional, you know, ages people
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retire, you know, that not only does that
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add 10 years, let's say, or 15 years
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of withdrawals.
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That could be a 40 year run rate,
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right?
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Yeah, we might have.
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So in that case, you could have it
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easily, right?
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40, even more, right?
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Right.
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Let's say it was 50 and you said
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for age 50 and you said, okay, normally
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I'd plan to retire at 65 or somewhere
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thereabouts.
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I think it's later from a lot of
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people, but so that's 15 or 20 years
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of additional withdrawals, right?
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Yep.
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But it's also now 15 or 20 years
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where I'm not getting the compounding impact that
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I would have from all the savings I'd
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be doing in that time, right?
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I'd be adding to the account instead of
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subtracting, and the money that's already there would
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be compounding for me.
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So it'd be growing, whereas now I'm probably
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drawing from it to some extent.
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So it's a big difference.
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So just that notion of the lack of
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compounding, earlier withdrawal, and the lack of addition
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over that period of time is impactful.
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So if that's something you think, I really
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want this, you really have to be extremely
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aggressive about your savings.
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The amount of your, we talk in generalities
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of, oh, what's a good amount to set
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aside?
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People have this question often, and it's a
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really kind of an arbitrary thing.
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What percentage should I set aside for savings
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and investment?
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And I think oftentimes we kind of answer
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that in different ways.
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Well, there's your emergency money.
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That's one thing.
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There's, well, there's vacations and new set of
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tires, delayed spending intentions.
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That's another thing.
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But if we're really talking about savings and
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investment to accumulate resources, we try to encourage
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people to, if they can, from the very
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beginning, save 10%, they're going to be really
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well ready for any kind of financial challenges
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they may face over their lifetime or opportunities
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like this that they might say, oh, I
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have the opportunity for financial freedom earlier.
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So I want to add a couple more
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things.
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If you're thinking about retiring early, all the,
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you mentioned the big ones, but a couple
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other maybe secondary things that people don't consider
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if you're retiring early is you said you're
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not contributing to your retirement plan.
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Certainly true, but you're also not contributing to
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social security.
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So if you're relying on, or if you're
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thinking about future social security benefits and you
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stop working, although you're probably vested certainly by
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age 50, you're going to have 15 years
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or 17 years of zeros on your highest
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35.
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Yeah, how many of those are going to
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be without number?
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So that's a missed opportunity.
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And they also, I know it's implied in
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your comments, but I just want to highlight
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it because some people who do their own
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kind of spreadsheets and don't kind of DIY
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this, you have that 15 more years in
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this example of 50 to 65 of inflation.
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And we certainly add in inflation for the
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work that we do, the modeling that we
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do.
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But I see that as one of the
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mistakes of people who are doing DIY.
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And they're saying, all right, how much money
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do I need?
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All right, I need $50,000 of income
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a year.
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And they kind of think that number is
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going to be stagnant, right?
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Because maybe they have their mortgage paid off.
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But as we've seen in the last few
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years, the impact of inflation, sometimes in a
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short period of time, but certainly over 40
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years, you really have to account for that
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and not lower all that estimate of what
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future expenses are going to be.
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Yeah, I remember an advisor who, I used
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to do these seminars when I first started
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out.
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And when I did, there was an advisor
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who had a video series to kind of
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show you what you talk about.
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And he talked about inflation and tried to
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explain that as much as people maybe do
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have some fixed costs, they also have lifelines
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to the community was the way he put
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it.
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And I think that's a good way to
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think about it.
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What are those lifelines?
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Well, I have real estate taxes.
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I have insurance.
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I'm going to buy a car.
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The car has gasoline, you know, in repairs,
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etc, etc.
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I buy food.
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I like to go out to dinner once
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in a while too.
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You know, all of these things that we
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take for granted, all are subject to the
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risks of inflation over time.
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And, you know, there's a stereotype, right?
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I mean, have you ever been to your
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homeowner's association?
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If you're like me, it's all the older
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retirees complaining about the dues increase because they're
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not working anymore.
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And it's, you know, these are examples of
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inflation, you know, they're on a fixed income.
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You know what they're voting against is maintenance.
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So over 40 years of life, if you
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own a home, if you own a brand
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new home today and you're retiring at 50,
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everything in that house is being replaced.
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Yeah, over that 40 years, at some point,
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there's going to be a lot of maintenance
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repairs that are going to be needed.
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So, you know, those are just things that
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will work into your inflation concern.
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Yeah, really good point.
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And, you know, as much as we might
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say, oh, inflation's two and a half percent
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or three percent or whatever it is, you
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know, rule of 72s, right?
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If we divide that by three, 24 years,
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that's double.
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Everything doubles.
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Yeah.
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And, you know, if you're living 40 years,
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you know, you're close to double.
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You're probably going to get a double double,
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yeah.
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And if you don't believe that, if you're
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just like, yeah, kind of, that's not going
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to happen.
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Go back 20 or 40 years and say,
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how much was a car?
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How much, you know, you pick your item
285
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that you want to compare it to a
286
00:11:58,540 --> 00:12:00,180
basket of items and you'll see.
287
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Bread and milk and eggs these days, right?
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Taxes, insurances.
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You know, tax.
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Yeah, all of them.
291
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You can just say, oh, it's changed.
292
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It will continue to change.
293
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That's just the reality.
294
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So inflation is one of those things you
295
00:12:16,880 --> 00:12:20,900
have to be more mindful of.
296
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I think another one we should include in
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there is, you know, you got to think
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about health care, health insurance as one of
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those practical things.
300
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If you're retiring, you know, in your 50s
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and Medicare starts at 65.
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Right.
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00:12:39,420 --> 00:12:42,980
Um, let's face it, health insurance costs are
304
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exorbitant today.
305
00:12:44,980 --> 00:12:48,400
So, you know, is that something you've planned
306
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for?
307
00:12:48,940 --> 00:12:51,740
If you're not employed, you're not getting any
308
00:12:51,740 --> 00:12:55,500
subsidy from the employer to help defray those
309
00:12:55,500 --> 00:12:55,840
costs.
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And usually an employer picks up some of
311
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that cost if you're working through an employer
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00:13:00,580 --> 00:13:01,100
plan.
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I mean, sometimes a lot of it.
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Even if it's 50 percent, it's big money
315
00:13:06,220 --> 00:13:08,060
over a year and decades.
316
00:13:09,960 --> 00:13:12,040
So, you know, that could add.
317
00:13:12,860 --> 00:13:13,020
Yeah.
318
00:13:13,120 --> 00:13:17,320
I mean, 20 years of 10, 10 years
319
00:13:17,320 --> 00:13:20,260
of those costs rather, you know, you could
320
00:13:20,260 --> 00:13:25,140
be looking at, I don't know, $250, $300,
321
00:13:25,640 --> 00:13:27,280
you know, more because of inflation.
322
00:13:27,480 --> 00:13:27,660
Right.
323
00:13:27,720 --> 00:13:29,260
The health care inflation is higher.
324
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Right.
325
00:13:30,000 --> 00:13:33,060
So, you know, another chunk of money that
326
00:13:33,060 --> 00:13:35,340
you got to have set aside with that
327
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in mind.
328
00:13:35,960 --> 00:13:37,360
And that's assuming you don't have any health
329
00:13:37,360 --> 00:13:37,860
problems.
330
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That's just for premiums, right?
331
00:13:39,960 --> 00:13:41,580
Not deductibles and all that kind of stuff.
332
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And uncovered dental and other vision and whatever
333
00:13:46,940 --> 00:13:48,300
it is, things that are not covered.
334
00:13:48,360 --> 00:13:50,000
As you get older, you run into more
335
00:13:50,000 --> 00:13:55,200
of these non-covered optional things like teeth,
336
00:13:55,480 --> 00:13:56,000
for example.
337
00:13:56,040 --> 00:13:56,300
Yeah.
338
00:13:57,340 --> 00:13:58,340
We want to keep them.
339
00:13:58,460 --> 00:14:00,000
But, you know, generally, if you don't have
340
00:14:00,000 --> 00:14:03,040
an employer plan, you don't have dental insurance.
341
00:14:03,580 --> 00:14:04,940
You can buy it, but it costs money.
342
00:14:04,940 --> 00:14:06,840
I keep hearing this from people who are
343
00:14:06,840 --> 00:14:10,740
in retirement about the cost of implants and,
344
00:14:10,740 --> 00:14:12,600
you know, some of the dental expense.
345
00:14:13,300 --> 00:14:14,820
Just rough.
346
00:14:15,160 --> 00:14:16,760
It's a common conversation.
347
00:14:16,840 --> 00:14:18,440
In fact, we had people over last night
348
00:14:18,440 --> 00:14:22,260
and one of the ladies in the couple
349
00:14:22,260 --> 00:14:26,820
was sharing how much money she has spent
350
00:14:26,820 --> 00:14:29,820
in the last two months as her need
351
00:14:29,820 --> 00:14:32,340
for dental insurance has come up and she
352
00:14:32,340 --> 00:14:33,200
doesn't have any coverage.
353
00:14:33,200 --> 00:14:36,420
So, you know, it's not inexpensive.
354
00:14:37,020 --> 00:14:39,440
I mean, even if you do, some things
355
00:14:39,440 --> 00:14:40,880
aren't covered enough, right?
356
00:14:40,900 --> 00:14:41,300
That's right.
357
00:14:41,480 --> 00:14:42,400
50%, maybe.
358
00:14:42,720 --> 00:14:43,000
But, yeah.
359
00:14:43,120 --> 00:14:43,360
Yeah.
360
00:14:45,080 --> 00:14:46,300
Well, so, okay.
361
00:14:46,980 --> 00:14:49,140
That's on some of the expenses side of
362
00:14:49,140 --> 00:14:49,380
things.
363
00:14:49,520 --> 00:14:50,480
There's probably others too.
364
00:14:50,580 --> 00:14:50,840
I don't know.
365
00:14:51,020 --> 00:14:53,300
Before we move on from expenses, anything else
366
00:14:53,300 --> 00:14:55,700
that you wanted to think in terms of
367
00:14:55,700 --> 00:14:56,720
that I didn't think of?
368
00:14:57,530 --> 00:15:02,020
No, I would just add when you're projecting
369
00:15:02,020 --> 00:15:05,220
out long-term spending thing, you know, in
370
00:15:05,220 --> 00:15:07,680
addition to the cars and the vacations and
371
00:15:07,680 --> 00:15:10,460
the home maintenance that we mentioned, you have
372
00:15:10,460 --> 00:15:13,780
to really consider is in the next 30
373
00:15:13,780 --> 00:15:18,880
years, am I likely to need to or
374
00:15:18,880 --> 00:15:20,460
want to help a family member?
375
00:15:20,580 --> 00:15:22,620
Because this is something that sneaks into our
376
00:15:22,620 --> 00:15:24,360
financial planning discussions.
377
00:15:24,360 --> 00:15:27,260
Do you have a daughter who's getting married?
378
00:15:27,440 --> 00:15:30,000
Or do you have someone you want to
379
00:15:30,000 --> 00:15:31,680
help buy their first house or maybe a
380
00:15:31,680 --> 00:15:32,860
grandchild with college?
381
00:15:33,740 --> 00:15:35,540
Well, if you're at 50, you might be
382
00:15:35,540 --> 00:15:36,800
talking about your kids in college.
383
00:15:36,820 --> 00:15:37,520
That's what I mean.
384
00:15:37,640 --> 00:15:38,120
That's true.
385
00:15:38,760 --> 00:15:39,640
Yeah, that's a good point.
386
00:15:39,920 --> 00:15:42,600
So, consider not just your household expenses and
387
00:15:42,600 --> 00:15:43,940
even if you're doing a good job with
388
00:15:43,940 --> 00:15:46,100
all the things that we're talking about, kind
389
00:15:46,100 --> 00:15:48,540
of open up that field of vision and
390
00:15:48,540 --> 00:15:50,960
say, what am I going to do with
391
00:15:50,960 --> 00:15:52,280
my time if I retire?
392
00:15:52,460 --> 00:15:53,360
Oh, I'm going to buy a boat.
393
00:15:53,360 --> 00:15:55,780
OK, well, let's make sure that that's there
394
00:15:55,780 --> 00:15:57,980
or I'm going to travel more or I'd
395
00:15:57,980 --> 00:16:00,880
like to be more generous, family charities, or
396
00:16:00,880 --> 00:16:02,260
I'd like to do X, Y or Z
397
00:16:02,260 --> 00:16:06,000
hobbies or all these things have potential costs.
398
00:16:06,340 --> 00:16:08,940
So, enlarge your vision and say, what is
399
00:16:08,940 --> 00:16:09,960
my life look like?
400
00:16:10,120 --> 00:16:10,840
What am I going to do?
401
00:16:10,920 --> 00:16:12,000
What might I do?
402
00:16:12,520 --> 00:16:15,120
And what is the cost associated with that
403
00:16:15,120 --> 00:16:16,400
item?
404
00:16:18,610 --> 00:16:19,610
Good points.
405
00:16:20,110 --> 00:16:23,310
Yeah, I think those are good examples of
406
00:16:23,310 --> 00:16:26,710
sometimes underestimated expenses.
407
00:16:27,970 --> 00:16:31,710
The money we spend on family needs, you
408
00:16:31,710 --> 00:16:32,850
know, come up.
409
00:16:33,730 --> 00:16:34,250
All right.
410
00:16:34,270 --> 00:16:35,970
Well, the next thing I want to talk
411
00:16:35,970 --> 00:16:39,110
about as it relates to this notion of
412
00:16:39,110 --> 00:16:41,690
if you're going to retire early, things you
413
00:16:41,690 --> 00:16:45,270
need to think about and this probably applies
414
00:16:45,270 --> 00:16:47,690
to everyone, but it comes to my mind,
415
00:16:47,750 --> 00:16:50,630
especially for people retiring early, and that's the
416
00:16:50,630 --> 00:16:52,350
notion of tax diversification.
417
00:16:53,550 --> 00:16:56,910
You know, if you're retiring again at 50,
418
00:16:56,990 --> 00:17:01,170
55, you don't have access to your IRAs,
419
00:17:01,470 --> 00:17:02,410
your 401ks.
420
00:17:02,750 --> 00:17:06,109
They're usually now there's some workaround to that,
421
00:17:06,170 --> 00:17:09,190
but by design, they're structured to be available
422
00:17:09,190 --> 00:17:11,170
to you at 59 and a half and
423
00:17:11,170 --> 00:17:11,609
thereafter.
424
00:17:12,190 --> 00:17:15,310
So, you know, you may want to make
425
00:17:15,310 --> 00:17:18,510
sure that you do have, one, other buckets
426
00:17:18,510 --> 00:17:21,210
of money, non-IRA, just, you know, joint
427
00:17:21,210 --> 00:17:23,710
account, individual trust, whatever it might be that
428
00:17:23,710 --> 00:17:27,329
non-qualified taxable, we'll call it kind of
429
00:17:27,329 --> 00:17:27,569
money.
430
00:17:29,490 --> 00:17:31,870
Meaning it, you know, pays income tax each
431
00:17:31,870 --> 00:17:34,350
year as opposed to something that's tax deferred
432
00:17:34,350 --> 00:17:36,570
like your IRA or your 401k and so
433
00:17:36,570 --> 00:17:36,770
forth.
434
00:17:36,770 --> 00:17:40,070
And of course, Roth IRA money, you know,
435
00:17:40,130 --> 00:17:43,190
it's important to have some different buckets of
436
00:17:43,190 --> 00:17:45,050
money with different tax treatment.
437
00:17:46,710 --> 00:17:50,290
So the challenge is if you don't have
438
00:17:50,290 --> 00:17:55,070
sufficient resources in your non-IRA money, we
439
00:17:55,070 --> 00:17:59,470
see this throughout retirement anyway, that if people
440
00:17:59,470 --> 00:18:04,710
draw down on some of their investments outside
441
00:18:04,710 --> 00:18:08,390
of retirement plans, it becomes challenging when they
442
00:18:08,390 --> 00:18:10,630
have a big expense, like a purchase of
443
00:18:10,630 --> 00:18:12,850
a car, it's a common example.
444
00:18:14,650 --> 00:18:17,070
If I want to pay for that car
445
00:18:17,070 --> 00:18:19,290
and I don't have a non-IRA account
446
00:18:19,290 --> 00:18:21,270
to, you know, draw that from a taxable
447
00:18:21,270 --> 00:18:24,370
account, I have to take that out of
448
00:18:24,370 --> 00:18:24,830
an IRA.
449
00:18:25,170 --> 00:18:26,270
I have to, you know, I want to
450
00:18:26,270 --> 00:18:30,910
spend $30,000 on a car, $40,000
451
00:18:30,910 --> 00:18:32,330
on a car, whatever it is, right?
452
00:18:32,890 --> 00:18:36,630
I have to end up spending $50,000
453
00:18:36,630 --> 00:18:38,710
to get that money or, you know, fill
454
00:18:38,710 --> 00:18:40,630
in the blank, whatever the tax.
455
00:18:40,850 --> 00:18:42,870
And that's if you're after 59 and a
456
00:18:42,870 --> 00:18:44,130
half, generally.
457
00:18:44,310 --> 00:18:45,470
And that's if you're 59 and a half.
458
00:18:45,630 --> 00:18:48,890
Now, there is actually a workaround for people
459
00:18:48,890 --> 00:18:54,890
who are pre-59 and a half, but
460
00:18:54,890 --> 00:18:58,570
are definitely going to be in a position
461
00:18:58,570 --> 00:19:01,470
where they need to draw from their retirement
462
00:19:01,470 --> 00:19:04,410
money in a retired status.
463
00:19:04,790 --> 00:19:08,530
But prior to being eligible to access that
464
00:19:08,530 --> 00:19:14,550
money, there's a Rule 72T that relates to
465
00:19:14,550 --> 00:19:16,110
the Internal Revenue Code.
466
00:19:16,310 --> 00:19:20,210
And it does allow for some substantially equal
467
00:19:20,210 --> 00:19:21,550
periodic payments.
468
00:19:21,550 --> 00:19:24,570
Now, the rules around this are very precise,
469
00:19:24,910 --> 00:19:27,910
and you need to know them before you
470
00:19:27,910 --> 00:19:29,490
undertake this process.
471
00:19:30,370 --> 00:19:32,870
So this is why you're better served if
472
00:19:32,870 --> 00:19:35,390
you can avoid it altogether, you know, have
473
00:19:35,390 --> 00:19:38,990
other resources available to you to draw from.
474
00:19:39,070 --> 00:19:41,650
And if you're going to be retired early,
475
00:19:41,930 --> 00:19:44,070
you probably should make sure you do have
476
00:19:44,070 --> 00:19:45,610
those additional resources.
477
00:19:45,610 --> 00:19:49,630
But if you find circumstances change and you
478
00:19:49,630 --> 00:19:51,670
must, you know, be in a new circumstance,
479
00:19:53,090 --> 00:19:58,610
this separate equal periodic payments is an approach
480
00:19:58,610 --> 00:20:01,230
that can allow you to get access to
481
00:20:01,230 --> 00:20:07,210
your retirement plan and not be penalized the
482
00:20:07,210 --> 00:20:08,510
10 percent penalty.
483
00:20:09,250 --> 00:20:11,210
You'll still have income taxes the way you
484
00:20:11,210 --> 00:20:13,930
would from your retirement account, but not have
485
00:20:13,930 --> 00:20:16,830
the 10 percent penalty for withdrawals prior to
486
00:20:16,830 --> 00:20:17,450
59 and a half.
487
00:20:17,710 --> 00:20:19,550
And it's worth mentioning there are other instances
488
00:20:19,550 --> 00:20:22,850
where you can access if there's a disability
489
00:20:22,850 --> 00:20:26,050
or, you know, certain kinds of circumstances that
490
00:20:26,050 --> 00:20:29,630
might allow for earlier withdrawal.
491
00:20:29,830 --> 00:20:33,430
But in this case, the rules are somewhat
492
00:20:33,430 --> 00:20:35,830
involved in, you know, I wasn't planning to
493
00:20:35,830 --> 00:20:37,530
spend the whole show on this, but just
494
00:20:37,530 --> 00:20:39,590
the notion that it is available.
495
00:20:40,150 --> 00:20:44,130
The challenge becomes if your circumstances change, let's
496
00:20:44,130 --> 00:20:46,270
say, as an example, you start down this
497
00:20:46,270 --> 00:20:48,590
path of a 70 to 50, you know,
498
00:20:48,650 --> 00:20:52,070
you're going to withdraw some money and not
499
00:20:52,070 --> 00:20:54,150
be penalized by doing it, you know, do
500
00:20:54,150 --> 00:20:55,870
it in this appropriate fashion.
501
00:20:56,990 --> 00:20:59,630
But then you decide maybe I'm going to
502
00:20:59,630 --> 00:21:01,350
get a part time job and I don't
503
00:21:01,350 --> 00:21:03,570
need to draw from this.
504
00:21:03,650 --> 00:21:04,810
I'm going to stop doing it.
505
00:21:05,370 --> 00:21:09,750
You violated the rules of the separate equal
506
00:21:09,750 --> 00:21:10,410
period.
507
00:21:10,590 --> 00:21:13,410
Periodic and violated the periodic component.
508
00:21:13,890 --> 00:21:14,030
Right.
509
00:21:14,350 --> 00:21:18,010
So essentially there's different methods of whether how
510
00:21:18,010 --> 00:21:18,750
it's calculated.
511
00:21:19,210 --> 00:21:21,770
One that I think of as a common
512
00:21:21,770 --> 00:21:23,590
one is, you know, related to that R
513
00:21:23,590 --> 00:21:25,670
&D kind of notion.
514
00:21:25,910 --> 00:21:27,890
You know, you look at a table to
515
00:21:27,890 --> 00:21:29,750
come up with an amount and that it's
516
00:21:29,750 --> 00:21:34,030
permissible to withdraw from and that allows you
517
00:21:34,030 --> 00:21:34,610
an amount.
518
00:21:34,850 --> 00:21:36,470
Now, is that the right amount to meet
519
00:21:36,470 --> 00:21:37,330
your needs or not?
520
00:21:37,470 --> 00:21:38,490
You know, this is why you look at
521
00:21:38,490 --> 00:21:38,710
these.
522
00:21:39,130 --> 00:21:42,870
There's a few different ways to calculate what
523
00:21:42,870 --> 00:21:45,870
the amount of these periodic payments can be.
524
00:21:46,570 --> 00:21:48,710
But you are required to do it.
525
00:21:49,150 --> 00:21:50,030
Let's say you're 55.
526
00:21:50,410 --> 00:21:53,250
You have to do it at least until
527
00:21:53,250 --> 00:21:55,270
you're 59 and a half and not less
528
00:21:55,270 --> 00:21:56,450
than for five years.
529
00:21:57,490 --> 00:21:59,950
So in that case, you'd have to do
530
00:21:59,950 --> 00:22:03,230
it for five years, even if you said,
531
00:22:03,310 --> 00:22:04,610
oh, circumstances change.
532
00:22:04,710 --> 00:22:05,830
I don't need this anymore.
533
00:22:06,790 --> 00:22:09,960
So it's an oddity and it's complex.
534
00:22:10,810 --> 00:22:14,870
And I would consult an advisor, probably both
535
00:22:14,870 --> 00:22:19,170
a financial advisor and a tax advisor in
536
00:22:19,170 --> 00:22:21,650
reviewing this to make sure you follow through
537
00:22:21,650 --> 00:22:22,910
on doing it properly.
538
00:22:23,550 --> 00:22:26,090
Should you feel that this is a necessity
539
00:22:26,090 --> 00:22:27,530
that you might have to deal with.
540
00:22:27,690 --> 00:22:27,850
Yeah.
541
00:22:27,870 --> 00:22:30,810
On the opposite of the technical comments that
542
00:22:30,810 --> 00:22:33,810
you shared, I have to say that this,
543
00:22:34,130 --> 00:22:39,610
not the 72T, but this frequency of people
544
00:22:39,610 --> 00:22:43,490
who retire at before 50, after 50, after
545
00:22:43,490 --> 00:22:45,570
60 or 70 with the intention of not
546
00:22:45,570 --> 00:22:48,050
working and then wanting to go back to
547
00:22:48,050 --> 00:22:49,870
work or finding something that they want to
548
00:22:49,870 --> 00:22:52,710
do or being bored is super common.
549
00:22:53,430 --> 00:22:56,370
So you can think that you're retiring at
550
00:22:56,370 --> 00:22:58,970
55 and you're done working.
551
00:22:59,930 --> 00:23:04,030
But I suspect that most people are going
552
00:23:04,030 --> 00:23:06,330
to want to do something productive, something.
553
00:23:06,470 --> 00:23:06,590
Yeah.
554
00:23:06,650 --> 00:23:08,110
You may just be done with what you
555
00:23:08,110 --> 00:23:10,510
used to do and not want to do
556
00:23:10,510 --> 00:23:11,290
that anymore.
557
00:23:11,790 --> 00:23:13,850
But that doesn't mean you may not want
558
00:23:13,850 --> 00:23:16,930
to do something for compensation along the way.
559
00:23:16,930 --> 00:23:19,170
I just had a conversation the other night.
560
00:23:19,250 --> 00:23:21,590
I was at Home Depot picking up something
561
00:23:21,590 --> 00:23:25,850
at the tool rental thing and I had
562
00:23:25,850 --> 00:23:27,090
a police shirt on.
563
00:23:27,530 --> 00:23:29,830
So the gentleman who had long hair and
564
00:23:29,830 --> 00:23:31,810
a beard, by the way, he said, oh,
565
00:23:32,030 --> 00:23:33,150
you're retired.
566
00:23:33,410 --> 00:23:35,410
I said, yeah, because me too, LAPD.
567
00:23:36,110 --> 00:23:37,990
And so he was talking, he goes, I
568
00:23:37,990 --> 00:23:39,550
retired for like five years and then I
569
00:23:39,550 --> 00:23:40,230
had to do something.
570
00:23:40,370 --> 00:23:41,390
I started part time.
571
00:23:41,870 --> 00:23:43,490
Now I'm working 60 hours a week.
572
00:23:44,790 --> 00:23:45,470
Yeah.
573
00:23:45,730 --> 00:23:47,130
But that's not the exception.
574
00:23:47,310 --> 00:23:49,350
That's kind of what develops into the norm.
575
00:23:49,630 --> 00:23:55,350
You can only play pickleball so many days
576
00:23:55,350 --> 00:23:56,950
or go to the beach so many days
577
00:23:56,950 --> 00:24:01,430
or whatever you're retiring for and then you
578
00:24:01,430 --> 00:24:02,950
can say, well, I'd like a few bucks.
579
00:24:03,050 --> 00:24:04,230
I need to do something productive.
580
00:24:04,390 --> 00:24:06,410
I want to meet some new people and
581
00:24:06,410 --> 00:24:06,930
a part time.
582
00:24:06,950 --> 00:24:09,030
Well, sometimes it's, yeah, there's a whole range
583
00:24:09,030 --> 00:24:09,430
of reasons.
584
00:24:10,010 --> 00:24:11,770
But sometimes it could be just to help
585
00:24:11,770 --> 00:24:13,270
you afford some of the things you want
586
00:24:13,270 --> 00:24:13,570
to do.
587
00:24:13,770 --> 00:24:14,190
That's right.
588
00:24:14,190 --> 00:24:17,070
And that's what this retired LAPD officer is.
589
00:24:17,070 --> 00:24:18,670
That was just getting a part time job
590
00:24:18,670 --> 00:24:19,650
to get out of the house and have
591
00:24:19,650 --> 00:24:20,550
some pocket money.
592
00:24:21,170 --> 00:24:23,230
And then they creeped, you know, like they
593
00:24:23,230 --> 00:24:25,250
offered him a position to manage the tool
594
00:24:25,250 --> 00:24:27,190
rental and he likes dealing with all the
595
00:24:27,190 --> 00:24:28,370
customers and contractors.
596
00:24:28,790 --> 00:24:30,510
And so he's enjoying it.
597
00:24:30,650 --> 00:24:31,510
So he's enjoying it.
598
00:24:31,730 --> 00:24:35,210
And let's, let's turn our attention, sorry, let's
599
00:24:35,210 --> 00:24:37,550
turn our attention to social security part of
600
00:24:37,550 --> 00:24:39,710
this for a minute or two, though, because
601
00:24:39,710 --> 00:24:41,330
I think that's something we should also talk
602
00:24:41,330 --> 00:24:42,690
about before we wrap up.
603
00:24:43,630 --> 00:24:46,750
And the whole notion of working, even if
604
00:24:46,750 --> 00:24:50,150
you turn on social security early, it has
605
00:24:50,150 --> 00:24:51,650
its own complexities.
606
00:24:52,110 --> 00:24:52,790
Right, right.
607
00:24:54,350 --> 00:24:56,450
So you want to let me set the
608
00:24:56,450 --> 00:24:57,250
stage on this.
609
00:24:57,870 --> 00:25:00,230
Yeah, really related to my comments of people
610
00:25:00,230 --> 00:25:02,910
who retire, say they retire at 62 and
611
00:25:02,910 --> 00:25:04,370
they say my social security money is there.
612
00:25:04,390 --> 00:25:05,390
I'm going to take it right there.
613
00:25:05,450 --> 00:25:05,790
It is.
614
00:25:06,190 --> 00:25:07,510
I know I'd get more later, but I'm
615
00:25:07,510 --> 00:25:08,250
going to take it.
616
00:25:08,590 --> 00:25:10,770
And then I want to start now.
617
00:25:10,850 --> 00:25:11,870
I got who knows how long I'm going
618
00:25:11,870 --> 00:25:12,230
to live.
619
00:25:12,230 --> 00:25:13,630
I'd rather get started.
620
00:25:14,370 --> 00:25:16,030
And then you fall into that scenario I
621
00:25:16,030 --> 00:25:18,010
described or something like it, and you decide
622
00:25:18,010 --> 00:25:18,570
to work.
623
00:25:19,090 --> 00:25:21,730
And so since you're not of full retirement
624
00:25:21,730 --> 00:25:25,110
age, which would be 66 or 67, where
625
00:25:25,110 --> 00:25:26,550
you'd have a higher number, right?
626
00:25:27,170 --> 00:25:27,650
Yeah.
627
00:25:28,490 --> 00:25:30,990
I think it's 20 some odd thousand dollars
628
00:25:30,990 --> 00:25:32,370
is your limited amount.
629
00:25:32,370 --> 00:25:34,730
That I'm planning to find.
630
00:25:35,230 --> 00:25:35,630
But yeah.
631
00:25:35,850 --> 00:25:37,430
So if you make more than.
632
00:25:37,630 --> 00:25:40,790
Twenty three thousand four hundred dollars in 2025.
633
00:25:41,370 --> 00:25:44,650
I'm pretty sure that retired LAPD officer working
634
00:25:44,650 --> 00:25:47,730
full time managing the tool rental center is
635
00:25:47,730 --> 00:25:49,010
making more than that.
636
00:25:49,450 --> 00:25:50,390
So yeah.
637
00:25:50,810 --> 00:25:53,770
So you wouldn't want to keep receiving social
638
00:25:53,770 --> 00:25:56,310
security if you turned it on at 62,
639
00:25:56,510 --> 00:25:59,510
as an example, retiring early if you're going
640
00:25:59,510 --> 00:26:00,750
to be working part time.
641
00:26:00,910 --> 00:26:03,230
So an important consideration.
642
00:26:03,230 --> 00:26:07,950
And it is good that you can suspend
643
00:26:07,950 --> 00:26:10,830
your payments if it turns out that you
644
00:26:10,830 --> 00:26:11,910
have this circumstance.
645
00:26:11,910 --> 00:26:14,430
You thought you wanted it early and then
646
00:26:14,430 --> 00:26:17,130
you change your mind, even though you filed
647
00:26:17,130 --> 00:26:19,850
for it, you could suspend and that would
648
00:26:19,850 --> 00:26:23,350
still help that new wages would count toward
649
00:26:23,350 --> 00:26:25,030
your recalculation.
650
00:26:25,170 --> 00:26:27,570
So if they, you know, add some money
651
00:26:27,570 --> 00:26:30,010
in and took off the zero somewhere, you
652
00:26:30,010 --> 00:26:31,770
know, for your 35 years that you were
653
00:26:31,770 --> 00:26:35,910
talking about earlier, you know, I think that's
654
00:26:35,910 --> 00:26:36,930
worth keeping in mind.
655
00:26:37,390 --> 00:26:40,090
But twenty three thousand four hundred dollars, if
656
00:26:40,090 --> 00:26:42,570
you if you make more than that and
657
00:26:42,570 --> 00:26:46,410
you're receiving social security, you're penalized.
658
00:26:47,370 --> 00:26:49,510
It's it's very unattractive.
659
00:26:49,550 --> 00:26:52,130
So you don't want to do that.
660
00:26:52,510 --> 00:26:53,890
No, I don't want to do that.
661
00:26:53,930 --> 00:26:55,550
So think about it.
662
00:26:55,550 --> 00:26:57,470
And we don't have time for this segment
663
00:26:57,470 --> 00:27:00,430
to add commentary on it.
664
00:27:00,470 --> 00:27:03,190
But I'll just say it may even be
665
00:27:03,190 --> 00:27:06,670
financially prudent to wait and draw from other
666
00:27:06,670 --> 00:27:09,130
assets that you have because of the, you
667
00:27:09,130 --> 00:27:10,830
know, the ultimate benefit that you would get
668
00:27:10,830 --> 00:27:12,710
if you retire at a later date or
669
00:27:12,710 --> 00:27:14,610
maybe even 70 because of the.
670
00:27:14,830 --> 00:27:17,390
Yeah, the increases in social security have a
671
00:27:17,390 --> 00:27:19,130
long lifetime projected and all that.
672
00:27:19,210 --> 00:27:20,270
We talk about it once in a while.
673
00:27:20,350 --> 00:27:21,090
We'll go back to it.
674
00:27:21,150 --> 00:27:22,710
But there's a lot of things to talk
675
00:27:22,710 --> 00:27:24,270
to your advisor about on these.
676
00:27:24,270 --> 00:27:27,350
It depends on like the spouse is who's
677
00:27:27,350 --> 00:27:30,250
the higher earning if their spouses, you know,
678
00:27:30,310 --> 00:27:31,790
all that kind of stuff to help you
679
00:27:31,790 --> 00:27:34,130
think about how to strategize around that.
680
00:27:34,630 --> 00:27:35,710
But, yeah, it's a good point.
681
00:27:36,010 --> 00:27:38,970
If you're trying to retire early, not that
682
00:27:38,970 --> 00:27:41,070
we're we sound kind of negative on this,
683
00:27:41,230 --> 00:27:43,750
Jeff, I think we just want to be
684
00:27:43,750 --> 00:27:44,330
careful.
685
00:27:44,630 --> 00:27:46,210
Yeah, I'm not negative about it.
686
00:27:46,210 --> 00:27:48,070
I just want people if they can do
687
00:27:48,070 --> 00:27:49,150
it and if they want to do it,
688
00:27:49,170 --> 00:27:51,090
just go into it with your eyes wide
689
00:27:51,090 --> 00:27:55,350
open and talk to a fiduciary financial advisor
690
00:27:55,350 --> 00:27:57,170
who has not trying to sell anything, just
691
00:27:57,170 --> 00:28:00,750
has your best interest at heart and go
692
00:28:00,750 --> 00:28:04,150
through all these oddities or scenarios or what
693
00:28:04,150 --> 00:28:07,110
ifs to make sure that you're fully aware
694
00:28:07,110 --> 00:28:09,530
of what an early retirement might look for
695
00:28:09,530 --> 00:28:09,770
you.
696
00:28:11,130 --> 00:28:13,010
And if we can be a resource to
697
00:28:13,010 --> 00:28:14,990
you in the process, we're happy to help.
698
00:28:14,990 --> 00:28:17,810
We talk with people with initially with a
699
00:28:17,810 --> 00:28:19,590
consultation that's complimentary.
700
00:28:20,390 --> 00:28:22,630
We go through a little bit, learn about
701
00:28:22,630 --> 00:28:22,930
you.
702
00:28:23,070 --> 00:28:25,510
We then do some analysis and then have
703
00:28:25,510 --> 00:28:28,610
a follow up meeting where we can explain
704
00:28:28,610 --> 00:28:31,910
to you our observations and make some recommendations
705
00:28:31,910 --> 00:28:34,690
and elaborate on if we were to work
706
00:28:34,690 --> 00:28:37,470
together over time, how we work together.
707
00:28:37,650 --> 00:28:39,950
So if that could be a resource to
708
00:28:39,950 --> 00:28:41,750
you'd like to take advantage of, don't hesitate
709
00:28:41,750 --> 00:28:42,830
to reach out to us.
710
00:28:42,830 --> 00:28:45,810
Until next time, everybody keeps driving for something.
711
00:28:46,190 --> 00:28:48,550
Thank you for listening to something more with
712
00:28:48,550 --> 00:28:49,270
Chris Boyd.
713
00:28:49,550 --> 00:28:51,710
Call us for help, whether it's for financial
714
00:28:51,710 --> 00:28:55,630
planning or portfolio management, insurance concerns, or those
715
00:28:55,630 --> 00:28:57,690
quality of life issues that make the money
716
00:28:57,690 --> 00:28:58,790
matters matter.
717
00:28:59,190 --> 00:29:02,430
Whatever's on your mind, visit us at somethingmorewithchrisboyd
718
00:29:02,430 --> 00:29:05,590
.com or call us toll free at 866
719
00:29:05,590 --> 00:29:11,130
-771-8901 or send us your questions to
720
00:29:11,130 --> 00:29:15,090
amr-info at wealthenhancement.com.
721
00:29:15,510 --> 00:29:17,210
You're listening to something more with Chris Boyd
722
00:29:17,210 --> 00:29:18,050
Financial Talk Show.
723
00:29:18,210 --> 00:29:20,650
Wealth Enhancement Advisory Services and Jay Christopher Boyd
724
00:29:20,650 --> 00:29:22,990
provide investment advice on an individual basis to
725
00:29:22,990 --> 00:29:23,530
clients only.
726
00:29:23,690 --> 00:29:25,670
Proper advice depends on a complete analysis of
727
00:29:25,670 --> 00:29:26,850
all facts and circumstances.
728
00:29:27,110 --> 00:29:28,950
The information given on this program is general
729
00:29:28,950 --> 00:29:30,990
financial comments and cannot be relied upon as
730
00:29:30,990 --> 00:29:32,570
pertaining to your specific situation.
731
00:29:32,770 --> 00:29:34,750
Wealth Enhancement Group cannot guarantee that using the
732
00:29:34,750 --> 00:29:36,750
information from this show will generate profits or
733
00:29:36,750 --> 00:29:37,870
ensure freedom from loss.
734
00:29:37,870 --> 00:29:40,230
Listeners should consult their own financial advisors or
735
00:29:40,230 --> 00:29:42,330
conduct their own due diligence before making any
736
00:29:42,330 --> 00:29:43,110
financial decisions.
