Fires - Are You Properly Covered?

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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, one of the nation's largest registered

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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 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, it's a real high

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percentage of people who have that thought process,

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you know, like what if I, what do

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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, in my fifties and, um, he's been

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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.

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And is, is at a point where he

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could, if he wants to, he just happens

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to like his work at this point in

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time and isn't, isn't desirous, but yeah, he's

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ready.

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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, you know, the

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picture you've reached that point where you can

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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 presents, 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, the thing

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about it is you, we, people tend to

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be living longer, so we need to be

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planning 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, I

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normally 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.

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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'm adding to the account instead of subtracting

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and the money that's already there would be

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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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We talk in generalities of, oh, what's a

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good amount to set 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, that's one thing.

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Well, there's like vacations and new set of

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tires and 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 well

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ready for any kind of financial challenges they

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may face over their lifetime or opportunities like

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this that they might say, oh, I have

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the opportunity for financial freedom earlier.

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I want to add a couple more things.

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If you're thinking about retiring early, you mentioned

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the big ones, but a couple other maybe

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secondary things that people don't consider if you're

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retiring early is you said you're not contributing

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to your retirement plan.

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It's certainly true, but you're also not contributing

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to 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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35 years.

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Yeah.

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How many of those are going to be

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without number?

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So that's a missed opportunity.

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And they all also, I know it's implied

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in your comments, but I just want to

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highlight it because some people who do their

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own kind of spreadsheets and don't kind of

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DIY this, you have that 15 more years

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in this example of 50 to 65 of

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inflation.

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And we certainly add in inflation for the,

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you know, the work that we do, the

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modeling that we do, but I see that

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as one of the mistakes of people who

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are doing DIY and they're saying, all right,

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how much money do I need?

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All right.

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I need $50,000 of income 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 lowball that estimate of what future

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expenses are going to be.

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Yeah.

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Remember an advisor who, I used to do

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these seminars when I first started 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 are you talking 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, you know, they also

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have lifelines to the community was the way

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he put 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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Yeah.

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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, in,

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in repairs, et cetera, et cetera.

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Like I buy food.

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Yeah.

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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, there's a stereotype, right?

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I mean, you ever been to your homeowner's

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association?

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If you're like me, uh, it's all the

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older retirees complaining about the dues increase because

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they're not working anymore and it's, you know,

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these are examples of inflation.

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Uh, 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, think about over 40, 40

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years of life.

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If you own a home, if you had

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a brand new home today and you're retiring

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at 50, everything in that house is being

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replaced over, over that 40 years.

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At some point, there's going to be a

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lot of maintenance repairs that are going to

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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.

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Really good point.

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Uh, and, and, you know, as much as

272
00:11:25,500 --> 00:11:27,620
we might say, oh, inflation's two and a

273
00:11:27,620 --> 00:11:30,440
half percent or 3% or whatever it

274
00:11:30,440 --> 00:11:34,960
is, you know, um, rule of 72s.

275
00:11:35,040 --> 00:11:35,260
Right.

276
00:11:35,680 --> 00:11:39,280
If we divide that by three, 24 years,

277
00:11:39,400 --> 00:11:40,660
that's double everything.

278
00:11:41,400 --> 00:11:43,840
And, you know, if you're living 40 years,

279
00:11:44,040 --> 00:11:45,840
you know, you're close to probably going to

280
00:11:45,840 --> 00:11:46,660
get a double, double.

281
00:11:46,780 --> 00:11:46,940
Yeah.

282
00:11:47,200 --> 00:11:48,840
And if you don't, if you don't believe

283
00:11:48,840 --> 00:11:50,300
that, if you just like, yeah, kind of,

284
00:11:50,340 --> 00:11:51,100
that's not going to happen.

285
00:11:51,320 --> 00:11:53,940
Go back 20 or 40 years and say,

286
00:11:54,000 --> 00:11:54,860
how much was a car?

287
00:11:55,380 --> 00:11:57,600
How much, you know, you pick, pick your

288
00:11:57,600 --> 00:11:59,380
item that you want to compare it to

289
00:11:59,380 --> 00:12:02,020
a basket of items and you'll see bread

290
00:12:02,020 --> 00:12:04,900
and milk and, uh, eggs these days.

291
00:12:04,900 --> 00:12:05,300
Right.

292
00:12:05,460 --> 00:12:09,300
Uh, you know, tax, all of them just

293
00:12:09,300 --> 00:12:10,940
say, oh, it's changed.

294
00:12:11,060 --> 00:12:13,060
Uh, in a chain, it will continue to

295
00:12:13,060 --> 00:12:13,320
change.

296
00:12:13,340 --> 00:12:15,420
That's just the, the reality.

297
00:12:15,480 --> 00:12:15,740
It was hard.

298
00:12:15,900 --> 00:12:17,860
So inflation is one of those things you

299
00:12:17,860 --> 00:12:21,880
have to, uh, be more mindful of.

300
00:12:21,880 --> 00:12:24,400
I think another one we should include in

301
00:12:24,400 --> 00:12:26,700
there is, um, you know, you've got to

302
00:12:26,700 --> 00:12:30,860
think about healthcare, health insurance, um, as one

303
00:12:30,860 --> 00:12:34,200
of those practical things, if you're retiring, you

304
00:12:34,200 --> 00:12:37,680
know, in your fifties and Medicare starts at

305
00:12:37,680 --> 00:12:38,380
65.

306
00:12:39,900 --> 00:12:41,940
Um, let's face it.

307
00:12:41,980 --> 00:12:45,340
Health insurance costs are exorbitant today.

308
00:12:46,500 --> 00:12:49,380
So, you know, is that something you've planned

309
00:12:49,380 --> 00:12:52,220
for, uh, if you're not employed, you're not

310
00:12:52,220 --> 00:12:55,000
getting any subsidy from the employer to help

311
00:12:55,000 --> 00:12:58,440
defray those costs and usually an employer picks

312
00:12:58,440 --> 00:13:00,940
up some of that cost if you're working

313
00:13:00,940 --> 00:13:04,060
through their plan, I mean, sometimes a lot

314
00:13:04,060 --> 00:13:05,880
of it, even if it's 50%, it's a,

315
00:13:05,960 --> 00:13:09,080
it's big money over a year and decades.

316
00:13:10,840 --> 00:13:13,980
So, you know, that could add, um, yeah,

317
00:13:14,060 --> 00:13:17,960
I mean, 20 years of, uh, 10, 10

318
00:13:17,960 --> 00:13:20,780
years of, uh, those costs rather, you know,

319
00:13:20,840 --> 00:13:23,500
you could be looking at, I don't know,

320
00:13:25,340 --> 00:13:28,260
150, 300, you know, more because of inflation,

321
00:13:28,260 --> 00:13:28,620
right.

322
00:13:28,660 --> 00:13:30,240
The healthcare inflation is higher.

323
00:13:30,460 --> 00:13:30,880
Right.

324
00:13:30,940 --> 00:13:33,880
So, uh, you know, another chunk of money

325
00:13:33,880 --> 00:13:35,900
that you got to have, uh, set aside

326
00:13:35,900 --> 00:13:37,580
with that in mind for, and that's assuming

327
00:13:37,580 --> 00:13:39,740
you don't have any health problems, that's just

328
00:13:39,740 --> 00:13:40,840
for premiums, right.

329
00:13:40,840 --> 00:13:42,320
Not deductibles and all that.

330
00:13:43,740 --> 00:13:48,120
Uncovered dental and other vision and whatever it

331
00:13:48,120 --> 00:13:49,640
is, things that are not covered as you

332
00:13:49,640 --> 00:13:51,500
get older, you run into more of these

333
00:13:51,500 --> 00:13:54,500
non-covered optional things.

334
00:13:55,300 --> 00:13:59,200
Like teeth, for example, we want to keep

335
00:13:59,200 --> 00:14:00,780
them, but you know, generally if you don't

336
00:14:00,780 --> 00:14:03,180
have an employer plan, you, you don't have

337
00:14:03,180 --> 00:14:05,360
dental insurance and you can buy it, but

338
00:14:05,360 --> 00:14:05,900
it costs money.

339
00:14:05,920 --> 00:14:07,660
I keep hearing this from, from people who

340
00:14:07,660 --> 00:14:10,600
are in retirement about, um, the cost of

341
00:14:10,600 --> 00:14:13,020
implants and, you know, some of the dental

342
00:14:13,020 --> 00:14:15,740
expense, just rough.

343
00:14:16,160 --> 00:14:17,740
It's a common conversation.

344
00:14:17,760 --> 00:14:19,400
In fact, we had people over last night

345
00:14:19,400 --> 00:14:22,240
and, uh, one of the, one of the

346
00:14:22,240 --> 00:14:26,720
ladies in the couple was sharing how much

347
00:14:26,720 --> 00:14:28,420
money she has spent in the last two

348
00:14:28,420 --> 00:14:31,380
months as her, you know, need for dental

349
00:14:31,380 --> 00:14:33,700
insurance has come up and she doesn't have

350
00:14:33,700 --> 00:14:36,780
any coverage, so, you know, it's, it's not

351
00:14:36,780 --> 00:14:37,240
inexpensive.

352
00:14:37,240 --> 00:14:40,120
So just even if you do some, some

353
00:14:40,120 --> 00:14:41,940
things aren't covered enough, right?

354
00:14:42,020 --> 00:14:42,340
That's right.

355
00:14:42,360 --> 00:14:43,980
50% maybe, but yeah.

356
00:14:44,220 --> 00:14:44,700
Yeah.

357
00:14:44,720 --> 00:14:45,020
Yeah.

358
00:14:45,520 --> 00:14:47,280
Well, um, so, okay.

359
00:14:47,580 --> 00:14:49,960
Some that's on some of the expenses side

360
00:14:49,960 --> 00:14:50,360
of things.

361
00:14:50,360 --> 00:14:51,440
And there's probably others too.

362
00:14:51,520 --> 00:14:51,800
I don't know.

363
00:14:51,800 --> 00:14:53,620
Does any, before we move on from expenses,

364
00:14:53,620 --> 00:14:56,240
anything else that you wanted to think in

365
00:14:56,240 --> 00:14:58,160
terms of that I didn't think of?

366
00:14:58,440 --> 00:15:01,280
No, I would just say, I would just

367
00:15:01,280 --> 00:15:05,180
add when you're projecting out long-term spending

368
00:15:05,180 --> 00:15:07,460
thing, you know, in addition to the cars

369
00:15:07,460 --> 00:15:09,660
and the vacations and the home maintenance that

370
00:15:09,660 --> 00:15:12,700
we mentioned, you have to really consider is

371
00:15:12,700 --> 00:15:16,840
in the next 30 years, am I likely

372
00:15:16,840 --> 00:15:20,740
to need to, or want to help a

373
00:15:20,740 --> 00:15:21,440
family member?

374
00:15:21,560 --> 00:15:23,620
Cause this is something that sneaks into our

375
00:15:23,620 --> 00:15:25,340
financial planning discussions.

376
00:15:25,540 --> 00:15:27,520
You know, do you have a daughter who's

377
00:15:27,520 --> 00:15:28,240
getting married?

378
00:15:28,380 --> 00:15:30,780
Did you have a, you know, someone you

379
00:15:30,780 --> 00:15:32,180
want to help buy their first house or

380
00:15:32,180 --> 00:15:34,740
maybe a grandchild with college or, you know,

381
00:15:34,780 --> 00:15:36,480
well, if you're at 50, you might be

382
00:15:36,480 --> 00:15:37,940
talking about your kids in college.

383
00:15:38,000 --> 00:15:38,500
That's what I mean.

384
00:15:38,600 --> 00:15:39,100
That's true.

385
00:15:39,340 --> 00:15:43,280
So consider not just your household expenses.

386
00:15:43,280 --> 00:15:44,740
And even if you're doing a good job

387
00:15:44,740 --> 00:15:46,400
with all the things that we're talking about,

388
00:15:46,740 --> 00:15:49,240
kind of open up that field of vision

389
00:15:49,240 --> 00:15:51,860
and say, what am I going to do

390
00:15:51,860 --> 00:15:53,280
with my time if I retire?

391
00:15:53,420 --> 00:15:54,360
Oh, I'm going to buy a boat.

392
00:15:54,460 --> 00:15:54,780
Okay.

393
00:15:54,800 --> 00:15:56,760
Well, let's make sure that that's there.

394
00:15:56,780 --> 00:15:58,960
Oh, I'm going to travel more or I'd

395
00:15:58,960 --> 00:16:01,840
like to be more generous family charities, or

396
00:16:01,840 --> 00:16:03,240
I'd like to do X, Y, or Z

397
00:16:03,240 --> 00:16:06,980
hobbies or all these things have potential costs.

398
00:16:07,120 --> 00:16:09,920
So enlarge your vision and say, what is

399
00:16:09,920 --> 00:16:10,940
my life look like?

400
00:16:10,960 --> 00:16:11,820
What am I going to do?

401
00:16:11,880 --> 00:16:12,960
What might I do?

402
00:16:13,520 --> 00:16:16,100
And what is the cost associated with that

403
00:16:16,100 --> 00:16:17,380
item?

404
00:16:19,420 --> 00:16:20,700
Good, good points.

405
00:16:20,980 --> 00:16:23,620
Um, yeah, I think those are good examples

406
00:16:23,620 --> 00:16:29,580
of, uh, sometimes underestimated expenses, the, uh, the

407
00:16:29,580 --> 00:16:32,880
money we spend on family needs right now

408
00:16:32,880 --> 00:16:33,840
that come up.

409
00:16:34,640 --> 00:16:35,200
All right.

410
00:16:35,220 --> 00:16:36,920
Well, the next thing I want to talk

411
00:16:36,920 --> 00:16:39,880
about as it relates to, uh, this notion

412
00:16:39,880 --> 00:16:42,080
of if, if you're going to retire early

413
00:16:42,080 --> 00:16:45,260
things you need to think about, and, um,

414
00:16:45,300 --> 00:16:47,860
this probably applies to everyone, but it comes

415
00:16:47,860 --> 00:16:51,060
to my mind, especially for people retiring early,

416
00:16:51,060 --> 00:16:53,280
and that's the notion of tax diversification.

417
00:16:53,280 --> 00:16:57,420
You know, if you're retiring, uh, again, at

418
00:16:57,420 --> 00:17:01,340
50, 55, you don't have access to your

419
00:17:01,340 --> 00:17:06,020
IRAs, your 401ks, they're usually, no, there's, there's

420
00:17:06,020 --> 00:17:08,599
some workaround to that, but by design they're

421
00:17:08,599 --> 00:17:11,020
structured to be available to you at 59

422
00:17:11,020 --> 00:17:11,579
and a half.

423
00:17:11,680 --> 00:17:15,240
And thereafter, so you, you know, you, you

424
00:17:15,240 --> 00:17:16,940
may want to make sure that you do

425
00:17:16,940 --> 00:17:20,839
have one, uh, other buckets of money, non

426
00:17:20,839 --> 00:17:23,480
IRA to, you know, joint account individual trust,

427
00:17:23,700 --> 00:17:26,780
whatever it might be that non-qualified taxable,

428
00:17:27,000 --> 00:17:30,940
we'll call it kind of money, um, meaning

429
00:17:30,940 --> 00:17:33,060
it, you know, pays income tax each year

430
00:17:33,060 --> 00:17:35,520
as opposed to something that's tax deferred, like

431
00:17:35,520 --> 00:17:37,740
your IRA or your 401k and so forth.

432
00:17:38,180 --> 00:17:40,480
And then of course, Roth IRA money, you

433
00:17:40,480 --> 00:17:43,880
know, it's important to have some different buckets

434
00:17:43,880 --> 00:17:46,000
of money with different tax treatment.

435
00:17:46,480 --> 00:17:51,020
Um, so the challenge is if you don't

436
00:17:51,020 --> 00:17:54,020
have sufficient resources in your non IRA money,

437
00:17:54,160 --> 00:17:59,600
um, we see this throughout retirement anyway, that

438
00:17:59,600 --> 00:18:02,380
if people draw down on some of their,

439
00:18:02,540 --> 00:18:08,440
their investments outside of retirement plans, it becomes

440
00:18:08,440 --> 00:18:10,800
challenging when they have a big expense, like

441
00:18:10,800 --> 00:18:13,280
a purchase of a car as it's common

442
00:18:13,280 --> 00:18:13,700
example.

443
00:18:14,480 --> 00:18:14,580
Yep.

444
00:18:14,960 --> 00:18:17,700
Uh, if I want to pay for that

445
00:18:17,700 --> 00:18:19,740
car and I don't have a non IRA

446
00:18:19,740 --> 00:18:21,740
account to, you know, draw that from a

447
00:18:21,740 --> 00:18:25,120
taxable account, um, I have to take that

448
00:18:25,120 --> 00:18:25,860
out of an IRA.

449
00:18:26,080 --> 00:18:27,220
I have to, you know, I want to

450
00:18:27,220 --> 00:18:31,940
spend $30,000 on a car, $40,000

451
00:18:31,940 --> 00:18:33,060
on a car, whatever it is.

452
00:18:33,060 --> 00:18:33,280
Right.

453
00:18:33,900 --> 00:18:37,160
Uh, I have to end up spending $50

454
00:18:37,160 --> 00:18:39,300
,000 to get that money or, you know,

455
00:18:39,340 --> 00:18:41,600
fill in the blank, whatever the tax.

456
00:18:41,600 --> 00:18:43,840
And that's if you're after 59 and a

457
00:18:43,840 --> 00:18:45,120
half generally.

458
00:18:45,300 --> 00:18:46,440
And that's if you're 59 and a half.

459
00:18:46,600 --> 00:18:49,840
Now there is actually a workaround for people

460
00:18:49,840 --> 00:18:54,600
who are, um, pre 59 and a half,

461
00:18:55,300 --> 00:18:59,080
but, um, are definitely like going to be

462
00:18:59,080 --> 00:19:01,400
in a position where they need to draw

463
00:19:01,400 --> 00:19:04,320
from their retirement money in retire, like in

464
00:19:04,320 --> 00:19:08,600
a retired status, but prior to being eligible

465
00:19:08,600 --> 00:19:09,860
to access that money.

466
00:19:09,980 --> 00:19:10,440
Right.

467
00:19:10,440 --> 00:19:14,920
There's a rule 72 T that, um, it

468
00:19:14,920 --> 00:19:17,460
relates to the internal revenue code and it

469
00:19:17,460 --> 00:19:22,540
does allow for some substantially equal periodic payments.

470
00:19:22,640 --> 00:19:25,540
Now the rules around this are very precise

471
00:19:25,540 --> 00:19:28,400
and there, you need to know them before

472
00:19:28,400 --> 00:19:30,500
you undertake this process.

473
00:19:30,900 --> 00:19:33,580
Uh, so this is why you're better served

474
00:19:33,580 --> 00:19:36,140
if you can avoid it altogether, you know,

475
00:19:36,140 --> 00:19:39,600
have other resources available to you to draw

476
00:19:39,600 --> 00:19:39,960
from.

477
00:19:39,960 --> 00:19:42,640
And if you're going to be retired early,

478
00:19:42,920 --> 00:19:45,080
you probably should make sure you do have

479
00:19:45,080 --> 00:19:46,580
those additional resources.

480
00:19:46,740 --> 00:19:50,600
But if you find circumstances change and you

481
00:19:50,600 --> 00:19:52,740
must, you know, be in a new circumstance,

482
00:19:53,980 --> 00:19:57,740
um, this separate equal, uh, periodic payments is,

483
00:19:57,800 --> 00:20:01,400
um, uh, approach that can allow you to

484
00:20:01,400 --> 00:20:06,020
get access to your retirement plan and, um,

485
00:20:06,280 --> 00:20:10,620
not be penalized the 10% penalty, you'll

486
00:20:10,620 --> 00:20:12,360
still have income taxes the way you would

487
00:20:12,360 --> 00:20:15,040
from your retirement account, but not have the

488
00:20:15,040 --> 00:20:18,160
10% penalty for withdrawals prior to 59

489
00:20:18,160 --> 00:20:18,420
and a half.

490
00:20:18,680 --> 00:20:20,500
And it's worth mentioning there are other instances

491
00:20:20,500 --> 00:20:23,200
where you can access, uh, if there's a

492
00:20:23,200 --> 00:20:26,660
disability or, you know, certain kinds of circumstances

493
00:20:26,660 --> 00:20:30,620
that might allow for, um, uh, earlier withdrawal.

494
00:20:30,800 --> 00:20:34,060
But in this case, uh, the rules are

495
00:20:34,060 --> 00:20:36,600
somewhat involved in, you know, I wasn't planning

496
00:20:36,600 --> 00:20:38,260
to spend the whole show on this, but

497
00:20:38,260 --> 00:20:40,560
just the notion that it is available.

498
00:20:41,340 --> 00:20:45,100
The challenge becomes if your circumstances change, let's

499
00:20:45,100 --> 00:20:47,240
say as an example, you start down this

500
00:20:47,240 --> 00:20:49,520
path of a 72 T 50, you know,

501
00:20:49,840 --> 00:20:52,840
you're going to withdraw some money, uh, and

502
00:20:52,840 --> 00:20:54,940
not be penalized by doing it, you know,

503
00:20:54,960 --> 00:20:56,780
do it in this appropriate fashion.

504
00:20:57,720 --> 00:21:00,420
Uh, but then you decide, maybe I, I'm

505
00:21:00,420 --> 00:21:01,560
going to get a part-time job and

506
00:21:01,560 --> 00:21:04,520
I don't need to draw from this.

507
00:21:04,600 --> 00:21:05,780
I'm going to stop doing it.

508
00:21:06,340 --> 00:21:10,760
You violated the rules of the separate equal

509
00:21:10,760 --> 00:21:11,340
period.

510
00:21:12,460 --> 00:21:15,040
Violated the periodic component, right?

511
00:21:15,100 --> 00:21:18,980
So essentially there's different methods of whether how

512
00:21:18,980 --> 00:21:19,720
it's calculated.

513
00:21:20,020 --> 00:21:22,440
Uh, one that I think of as a

514
00:21:22,440 --> 00:21:24,380
common one is, you know, related to that

515
00:21:24,380 --> 00:21:26,700
R and D kind of, uh, notion.

516
00:21:26,860 --> 00:21:28,860
You know, you look at a table to

517
00:21:28,860 --> 00:21:30,720
come up with an amount and that it's

518
00:21:30,720 --> 00:21:32,280
permissible to withdraw from.

519
00:21:32,820 --> 00:21:35,580
And, uh, that allows you an amount.

520
00:21:35,580 --> 00:21:37,440
Now, is that the right amount to meet

521
00:21:37,440 --> 00:21:38,300
your needs or not?

522
00:21:38,420 --> 00:21:39,460
You know, this is why you look at

523
00:21:39,460 --> 00:21:42,680
these, there's a few different ways to calculate

524
00:21:43,340 --> 00:21:46,380
what the amount of these periodic payments can

525
00:21:46,380 --> 00:21:46,820
be.

526
00:21:47,580 --> 00:21:49,680
And, but you are required to do it.

527
00:21:50,140 --> 00:21:52,120
Let's say you're 55, you have to do

528
00:21:52,120 --> 00:21:55,060
it, uh, at least until you're 59 and

529
00:21:55,060 --> 00:21:57,060
a half and not less than for five

530
00:21:57,060 --> 00:21:57,420
years.

531
00:21:58,760 --> 00:22:00,920
So in that case, you'd have to do

532
00:22:00,920 --> 00:22:02,220
it for five years.

533
00:22:02,720 --> 00:22:05,580
Um, even if you said, oh, circumstances change,

534
00:22:05,640 --> 00:22:06,800
I don't need this anymore.

535
00:22:07,700 --> 00:22:10,300
Uh, so it's, it's an oddity and it's

536
00:22:10,300 --> 00:22:11,180
complex.

537
00:22:11,340 --> 00:22:15,440
And I would consult an advisor, uh, probably

538
00:22:15,440 --> 00:22:18,680
both a financial advisor and a tax advisor,

539
00:22:18,900 --> 00:22:21,780
um, in, in reviewing this to make sure

540
00:22:21,780 --> 00:22:24,820
you follow through on doing it properly, uh,

541
00:22:24,820 --> 00:22:27,020
should you feel that this is a necessity

542
00:22:27,020 --> 00:22:28,400
that you might have to deal with?

543
00:22:28,520 --> 00:22:31,780
On the opposite of the technical comments that

544
00:22:31,780 --> 00:22:33,020
you shared.

545
00:22:33,240 --> 00:22:35,980
I have to say that this, not the

546
00:22:35,980 --> 00:22:40,780
72 T, but this frequency of people who

547
00:22:40,780 --> 00:22:44,820
retire it before 50, after 50, after 60

548
00:22:44,820 --> 00:22:46,960
or 70 with the intention of not working

549
00:22:46,960 --> 00:22:49,240
and then wanting to go back to work

550
00:22:49,240 --> 00:22:51,020
or finding something that they want to do

551
00:22:51,020 --> 00:22:53,660
or being bored is super common.

552
00:22:54,220 --> 00:22:57,300
So you can think that you're retiring at

553
00:22:57,300 --> 00:23:02,880
55 and you're done working, but I suspect

554
00:23:02,880 --> 00:23:05,540
that most people are going to want to

555
00:23:05,540 --> 00:23:06,840
do something productive.

556
00:23:07,180 --> 00:23:08,920
Something, you may just be done with what

557
00:23:08,920 --> 00:23:11,320
you used to do and not want to

558
00:23:11,320 --> 00:23:14,140
do that anymore, but that doesn't mean you

559
00:23:14,140 --> 00:23:16,860
may not want to do something for compensation

560
00:23:16,860 --> 00:23:17,920
along the way.

561
00:23:18,240 --> 00:23:20,140
I just had a conversation the other night.

562
00:23:20,140 --> 00:23:22,580
I was at home Depot picking up something,

563
00:23:22,600 --> 00:23:26,280
uh, at the tool rental thing and the

564
00:23:26,280 --> 00:23:28,120
general, I had a police shirt on.

565
00:23:28,540 --> 00:23:30,780
So the gentleman who had long hair and

566
00:23:30,780 --> 00:23:32,760
a beard, by the way, he said, Oh,

567
00:23:33,020 --> 00:23:34,120
you're retired.

568
00:23:34,300 --> 00:23:35,700
I said, yeah, it was me too.

569
00:23:35,960 --> 00:23:36,360
LAPD.

570
00:23:36,860 --> 00:23:38,640
And, uh, so he was talking, he goes,

571
00:23:38,760 --> 00:23:40,420
I retired for like five years and then

572
00:23:40,420 --> 00:23:41,220
I had to do something.

573
00:23:41,280 --> 00:23:43,720
I started part-time now I'm working 60

574
00:23:43,720 --> 00:23:47,500
hours a week, you know, but that's not

575
00:23:47,500 --> 00:23:48,100
the exception.

576
00:23:48,100 --> 00:23:50,320
That's kind of what develops into the norm.

577
00:23:50,380 --> 00:23:55,440
Like people like, you can only play pickleball

578
00:23:55,440 --> 00:23:57,000
so many days or go to the beach

579
00:23:57,000 --> 00:24:00,400
so many days or whatever you're retiring for.

580
00:24:01,380 --> 00:24:03,420
And then you can say, well, I'd like

581
00:24:03,420 --> 00:24:03,920
a few bucks.

582
00:24:04,000 --> 00:24:05,200
I need to do something productive.

583
00:24:05,340 --> 00:24:06,600
I want to meet some new people.

584
00:24:07,360 --> 00:24:07,940
And a part-time.

585
00:24:07,940 --> 00:24:10,140
Sometimes it's, yeah, there's a whole range of

586
00:24:10,140 --> 00:24:12,540
reasons, but sometimes it could be just to

587
00:24:12,540 --> 00:24:14,080
help you afford some of the things you

588
00:24:14,080 --> 00:24:14,560
want to do.

589
00:24:14,740 --> 00:24:15,160
That's right.

590
00:24:15,260 --> 00:24:17,860
And that's what this retired LAPD officer.

591
00:24:17,860 --> 00:24:19,640
That was just getting a part-time job

592
00:24:19,640 --> 00:24:20,620
to get out of the house and have

593
00:24:20,620 --> 00:24:21,500
some pocket money.

594
00:24:22,160 --> 00:24:24,180
And then they creeped, you know, like they

595
00:24:24,180 --> 00:24:26,220
offered him a position to manage the tool

596
00:24:26,220 --> 00:24:26,600
rental.

597
00:24:26,600 --> 00:24:28,500
And he likes dealing with all the customers

598
00:24:28,500 --> 00:24:31,500
and contractors and so he's enjoying it.

599
00:24:31,600 --> 00:24:32,460
So he's enjoying it.

600
00:24:32,680 --> 00:24:36,320
And let's, let's turn our, sorry, let's turn

601
00:24:36,320 --> 00:24:38,520
our attention to a social security part of

602
00:24:38,520 --> 00:24:40,660
this for a minute or two though, because

603
00:24:40,660 --> 00:24:42,300
I think that's something we should also talk

604
00:24:42,300 --> 00:24:43,580
about before we wrap up.

605
00:24:44,140 --> 00:24:47,500
Um, and the whole notion of working, even

606
00:24:47,500 --> 00:24:50,020
if you've turned on social security, uh, early,

607
00:24:50,140 --> 00:24:52,600
it has its own complexities.

608
00:24:52,720 --> 00:24:53,120
Right.

609
00:24:53,720 --> 00:24:53,820
Right.

610
00:24:53,860 --> 00:24:57,260
Um, so you want to, let me set

611
00:24:57,260 --> 00:24:58,220
the stage on this.

612
00:24:58,520 --> 00:24:58,920
Yeah.

613
00:24:58,940 --> 00:25:01,560
Really related to my comments of people who

614
00:25:01,560 --> 00:25:04,000
retire, say they retire at 62 and they

615
00:25:04,000 --> 00:25:05,320
say, my social security money's there.

616
00:25:05,320 --> 00:25:06,360
I'm going to take it right there.

617
00:25:06,400 --> 00:25:06,740
It is.

618
00:25:06,840 --> 00:25:08,480
I know I'd get more later, but I'm

619
00:25:08,480 --> 00:25:09,180
going to take it.

620
00:25:09,560 --> 00:25:11,720
And then I want to start now.

621
00:25:11,780 --> 00:25:12,840
I got, who knows how long I'm going

622
00:25:12,840 --> 00:25:13,180
to live.

623
00:25:13,180 --> 00:25:14,580
I'd rather get started.

624
00:25:15,340 --> 00:25:17,000
And then you fall into that scenario I

625
00:25:17,000 --> 00:25:18,980
described or something like it, and you decide

626
00:25:18,980 --> 00:25:19,540
to work.

627
00:25:20,060 --> 00:25:22,700
And so since you're not a full retirement

628
00:25:22,700 --> 00:25:26,080
age, which would be 66 or 67, where

629
00:25:26,080 --> 00:25:27,500
you'd have a higher number, right.

630
00:25:28,120 --> 00:25:31,400
Um, I think it's 20 some odd thousand

631
00:25:31,400 --> 00:25:34,980
dollars is your limited amount that you getting

632
00:25:34,980 --> 00:25:37,640
to find, but yeah, so if you make

633
00:25:37,640 --> 00:25:42,840
more than $23,400 in 2025, I'm pretty

634
00:25:42,840 --> 00:25:46,160
sure that retired LAPD officer working full-time

635
00:25:46,160 --> 00:25:49,260
managing the tool rental center is making more

636
00:25:49,260 --> 00:25:49,960
than that.

637
00:25:50,640 --> 00:25:51,340
So, yeah.

638
00:25:51,780 --> 00:25:54,720
So you wouldn't want to keep receiving social

639
00:25:54,720 --> 00:25:57,280
security if you turned it on at 62

640
00:25:57,280 --> 00:26:00,380
as an example of retiring early, if you're

641
00:26:00,380 --> 00:26:01,700
going to be working part-time.

642
00:26:01,840 --> 00:26:06,040
So an important consideration, and it is good

643
00:26:06,040 --> 00:26:10,200
that you can, uh, suspend your payments.

644
00:26:10,200 --> 00:26:12,340
If it turns out that you have this

645
00:26:12,340 --> 00:26:15,260
circumstance, you thought you wanted it early and

646
00:26:15,260 --> 00:26:17,640
then you change your mind, even though you

647
00:26:17,640 --> 00:26:20,580
filed for it, you could suspend and that

648
00:26:20,580 --> 00:26:23,820
would still help that new wages would count

649
00:26:23,820 --> 00:26:26,020
toward your recalculation.

650
00:26:26,180 --> 00:26:28,520
So if they, you know, add some money

651
00:26:28,520 --> 00:26:30,960
in and took off the zero somewhere, you

652
00:26:30,960 --> 00:26:32,740
know, for your 35 years that you were

653
00:26:32,740 --> 00:26:33,820
talking about earlier.

654
00:26:34,340 --> 00:26:37,180
Um, you know, I think, uh, that's worth

655
00:26:37,180 --> 00:26:37,880
keeping in mind.

656
00:26:37,880 --> 00:26:41,560
Um, but $23,400, if you, if you

657
00:26:41,560 --> 00:26:44,640
make more than that and you're receiving social

658
00:26:44,640 --> 00:26:47,380
security, uh, you're penalized.

659
00:26:47,740 --> 00:26:50,480
Um, it's, it's very unattractive.

660
00:26:50,640 --> 00:26:53,180
So, um, you don't want to do that.

661
00:26:53,560 --> 00:26:54,840
No, I don't want to do that.

662
00:26:54,980 --> 00:26:57,480
So think about it and not, we don't

663
00:26:57,480 --> 00:27:00,940
have time for this segment to add commentary

664
00:27:00,940 --> 00:27:03,760
on it, but I'll just say it may

665
00:27:03,760 --> 00:27:07,180
even be financially prudent to wait and draw

666
00:27:07,180 --> 00:27:09,420
from other assets that you have because of

667
00:27:09,420 --> 00:27:11,420
the, you know, the ultimate benefit that you

668
00:27:11,420 --> 00:27:13,240
would get if you retire at a later

669
00:27:13,240 --> 00:27:15,540
date or maybe even 70 because of the,

670
00:27:16,140 --> 00:27:18,000
uh, the increases in social security.

671
00:27:18,080 --> 00:27:19,840
If you have a long lifetime projected and

672
00:27:19,840 --> 00:27:21,060
all that, we talk about it once in

673
00:27:21,060 --> 00:27:22,040
a while and we'll go back to it,

674
00:27:22,120 --> 00:27:23,680
but there's a lot of things to talk

675
00:27:23,680 --> 00:27:25,240
to your advisor about on these.

676
00:27:25,260 --> 00:27:27,580
And it depends on like the spouse is,

677
00:27:27,740 --> 00:27:30,560
uh, who's the higher earning, if they're spouses,

678
00:27:30,800 --> 00:27:32,400
you know, all that kind of stuff to

679
00:27:32,400 --> 00:27:34,780
help you think about how to strategize around

680
00:27:34,780 --> 00:27:35,080
that.

681
00:27:35,540 --> 00:27:36,660
But yeah, it's a good point.

682
00:27:36,660 --> 00:27:39,940
If you're trying to retire early, not that

683
00:27:39,940 --> 00:27:42,020
we're, we sound kind of negative on this

684
00:27:42,020 --> 00:27:42,320
stuff.

685
00:27:42,460 --> 00:27:44,720
I think, um, we just want to be

686
00:27:44,720 --> 00:27:45,300
careful.

687
00:27:45,600 --> 00:27:47,160
Yeah, I'm not negative about it.

688
00:27:47,180 --> 00:27:49,040
I just want people, if they can do

689
00:27:49,040 --> 00:27:50,100
it and if they want to do it,

690
00:27:50,120 --> 00:27:52,060
just go into it with your eyes wide

691
00:27:52,060 --> 00:27:56,300
open and talk to a fiduciary financial advisor

692
00:27:56,300 --> 00:27:58,120
who has not trying to sell anything, just

693
00:27:58,120 --> 00:28:01,720
has your best interest at heart and go

694
00:28:01,720 --> 00:28:05,120
through all these oddities or scenarios or what

695
00:28:05,120 --> 00:28:08,060
ifs to make sure that you're fully aware

696
00:28:08,060 --> 00:28:10,500
of what an early retirement might look for

697
00:28:10,500 --> 00:28:10,740
you.

698
00:28:12,060 --> 00:28:13,960
And if we can be a resource to

699
00:28:13,960 --> 00:28:15,940
you in the process, we're happy to help.

700
00:28:16,160 --> 00:28:18,220
Uh, we've talked with people with, uh, initially

701
00:28:18,220 --> 00:28:20,540
with a consultation that's complimentary.

702
00:28:21,160 --> 00:28:23,340
Uh, we go through a little bit, learn

703
00:28:23,340 --> 00:28:26,120
about you, we then do some analysis and

704
00:28:26,120 --> 00:28:28,080
then have a followup meeting where we can

705
00:28:28,080 --> 00:28:31,480
explain to you our observations and make some

706
00:28:31,480 --> 00:28:34,460
recommendations and, uh, elaborate on if we were

707
00:28:34,460 --> 00:28:37,040
to work together over time, uh, how we

708
00:28:37,040 --> 00:28:37,700
work together.

709
00:28:37,900 --> 00:28:40,160
So if that could be a resource to

710
00:28:40,160 --> 00:28:41,740
you, you'd like to take advantage of, don't

711
00:28:41,740 --> 00:28:44,160
hesitate to reach out to us until next

712
00:28:44,160 --> 00:28:46,140
time, everybody keeps driving for something.

713
00:28:47,540 --> 00:28:49,840
Thank you for listening to something more with

714
00:28:49,840 --> 00:28:50,580
Chris Boyd.

715
00:28:50,940 --> 00:28:53,000
Call us for help, whether it's for financial

716
00:28:53,000 --> 00:28:56,940
planning or portfolio management, insurance concerns, or those

717
00:28:56,940 --> 00:28:58,980
quality of life issues that make the money

718
00:28:58,980 --> 00:29:01,440
matters batter, whatever's on your mind.

719
00:29:01,580 --> 00:29:03,700
Visit us at something more with Chris Boyd

720
00:29:03,700 --> 00:29:06,580
.com or call us toll free at eight

721
00:29:06,580 --> 00:29:10,120
six six seven seven one eight nine zero

722
00:29:10,120 --> 00:29:13,380
one, or send us your questions to AMR

723
00:29:13,380 --> 00:29:16,360
dash info at wealth enhancement.com.

724
00:29:16,460 --> 00:29:18,540
You're listening to something more with Chris Boyd,

725
00:29:18,600 --> 00:29:21,140
financial talk show, wealth enhancement, advisory services, and

726
00:29:21,140 --> 00:29:23,280
Jay Christopher Boyd provide investment advice on an

727
00:29:23,280 --> 00:29:24,580
individual basis to clients.

728
00:29:24,580 --> 00:29:26,720
Only proper advice depends on a complete analysis

729
00:29:26,720 --> 00:29:28,180
of all facts and circumstances.

730
00:29:28,180 --> 00:29:30,260
The information given on this program is general

731
00:29:30,260 --> 00:29:32,280
financial comments and cannot be relied upon as

732
00:29:32,280 --> 00:29:34,820
pertaining to your specific situation, wealth enhancement group,

733
00:29:34,900 --> 00:29:36,820
cannot guarantee that using the information from this

734
00:29:36,820 --> 00:29:38,820
show will generate profits or ensure freedom from

735
00:29:38,820 --> 00:29:39,180
loss.

736
00:29:39,300 --> 00:29:41,520
Listeners should consult their own financial advisors or

737
00:29:41,520 --> 00:29:43,620
conduct their own due diligence before making any

738
00:29:43,620 --> 00:29:44,400
financial decisions.