Spitballing Early Retirement for the One Percenters - 502
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Can bowl in illini retired age fifty seven, and when should he collect social security? More importantly, can he afford three hundred thousand dollar motor home? Can brad in michigan coasts for the next ten years and still reach the promised land of retirement somewhere around age fifty three, join big output about early retirement today on your money, your wel podcast number five o two plus IT seems weird to ElizabEthan edit that all her money is in taxi ble account.

Is that a good thing or a bad thing? And and and and in separate co, barry have ten million dollars liquid. Should they make groth contributions and conversions now, or wait until they retire?

You can listen in your favorite podcast, APP, or watch us right now on youtube or spotify. I'm executive producer andy last with a host of your money, you're wealth, john Anderson c. Fp and biga coplin cpa. To get a retirement football analysis of your own, click ask john biga on air in the episode description and send us an email or a priority voice message like this one hello.

andy, joe and big l twenty in from monday line ilona y and bowers, fifty four you, my wife? Lane, fifty nine. My drink is an old fashion, and I drive a twenty eighteen gmc era when I drive a twenty sixteen infinity.

I work for the federal government with a gross pave about one hundred and ninety two k when needs a sam and collect city government pension of sixteen thousand per year, no cola tsp baLances one point three, seven, five million, all traditional four, five, seven roth ira of two hundred ten k traditional ira eight k kids colleges paid for our spend is about nine k per month. I have a Mandatory retirement in june of twenty twenty seven. I'll be fifty seven lane, sixty one.

My spitball request is, will I be good to retire at fifty seven and not have to work? What will be my tsp draw down in retirement? I'll get a pension of about sixty nine thousand a year adJusting for cola, and we'll collect the social security supplement of sixteen eight per year until the age is sixty two.

What age should we collect? Those security might not be thirty k at sixty two, forty five k at sixty seven and fifty six k at seventy lines. Social security would be fourteen k at sixty two, twenty k at sixty seven and twenty four k at seventy. And most importantly, can I afford a three hundred thousand dollar a class a motor home? Looking forward .

to the spits power .

kind of call .

me take great name how to ninety two dollars federal? It's like secret .

secret yes, I think I want that job.

What he does so bad that .

yeah get me something really cold .

yeah being rich his life every every day .

probably but the name like .

power IT sounds like you should. Well, I think, yes, I look across the board. Yes, I think too.

So let's put some numbers to IT. So even before social security, joe, fixed income is eighty six .

thousand eight thousand lus and .

the then the spend is probably one hundred moll, say hundred ten thousand sure, somewhere around there OK. So short fall this is just rounded to twenty five thousand is got one point six million. So that's a low distribution rate under two percent. So um even before social security, this looks great as far as when they take social security. Um I I generally like to have the uh spells that has higher um benefit go as long as they can maybe age seven um and then as first the this file that has a lesser level, it's kind of when you want to I think that that's kind of how I think about IT .

yeah you're looking to look in a guaranteed income. But order has really an income that's guaranteed by the pension of the federal government of seventy thousand .

box yeah so what we don't know is what the the survivor benefit is on the pension.

The the issue that I see that he three hundred thousand a dollar motor home is would you're going to have to finance IT? There's no liquidity besides the wife in the T S P. I don't know what is going on.

cash? Yeah right. So then his expenses go from ten .

thousand.

So now you you're not looking at a two percent per right. You're probably looking .

closer to a four plus or if you just pull IT all out. So it's you got to pull three hundred thousand. I pull a little much more .

if you pull three hundred thousand knowsh on pay cash I pay cash for that .

going up for four hundred more more uh .

just to pay attacks on the three hundred so it's not a three hundred thousand dollars or many more. Its four hundred and fifty thousand .

yeah I suspect three hundred thousand more takes a little bit of keep and gasoline things .

yeah yeah depends on where power once ago yeah right um but I think all in all IT IT works out. You just have to run the numbers and run the number a little bit from a retirement perspective. I think IT looks great um from taking out three hundred thousand dollars or how do you finance that or what the additive expenses are, it's gona be a little bit tRicky. But I still think that he can potentially do IT, of course, depending on how you you invest everything to if he super aggressive, you know he loses twenty thirty percent and that bridge because it's a bridge from forty seven to sixty seven, uh, is ten years where they're pulling now quite a bit potentially til the security comes them, right? So depending .

how they find the motor home but but I don't but I would say um bara packin y right now but if if that's your dream, the three hundred thousand home, yeah you could pull this off. We're just giving you a couple questions. If you take all the money out of your for this, they ve got to take quite a bit more out to pay the tax. So you can you want to find out at least part of IT, if not all of IT, and then you got to figure out what the interest payments are and and kind of factor that into budget.

He's got three years, so he's got pretty good income now. I don't know depending on what he has or he doesn't have IT he dad IT sounds like on his home, maybe you refinance the house, takes out a couple of box there. Imagine going to be a little bit cheaper than deal ship, right? He wants to work for another three years and he's got good income. So i'm sure he qualify. So ways that you can kind of move some money around a little bit um and maybe can aggressively pay IT up with the retirement accounts, just you don't have to ourself up really high tax brackets.

Yeah that's so you not pulling .

three hundred thousand dollars now you might pull in additional fifty thousand dollars out depending on where tax rates goes so we can keep in those rates to pay up .

the dead and we might say, don't use rather you for the motor IT could be tempting jail but don't .

manator one whose got mind retirement at fifty seven deal government 你是 yeah the .

enforcement or the eye maybe field age and I you ve done you ve .

done your service right uh .

all right .

power thinks uh for everything thank you ah for the the question and good and retirement and they have fun and all right we grad from michigan iao the l andy your podger is completely addicting and now look for the historically the worst day of the week， tuesday, tuesday that the worst .

day of the week I guess .

I know what's your worst day yeah I don't .

have a worst now .

every day and the sunshine you're like that's a stupid move when it's like, okay. I love mondays just outside of beds and singing show tunes.

I can't say I had a Better. I don't. I can't think, how about you?

I can't think the one. What's your words say? I don't know.

I don't really care for monday all that much.

Yeah, i've noticed your expression sometimes .

on monday's. I just got IT a long we can have a me too but I mean, I don't hate them. It's sound like, no, I have a case of .

the monday no, you know hey.

for an hour now when I got to listen to your sermons .

trying to get shared .

your you got that works but tuesday, I like tuesday. Tuesday are one of my favorite .

days yes.

I like tuesday, wednesday.

thursday, of course.

by this monday well.

I have like fifty appointments of weekend and .

you have this that is great.

That wasn't .

always the case because that's how is very now.

Okay, let's see let's see if we can speak up for for big bread again um as my White anna want to retire in early fifties right and forty two sales and like a cold to heart tail and I drive at twenty eleven xx in my body one or White business ers will enjoy a peno and drives twenty twenty link and navigator cars in home seven hundred thousand paid for note that left seven hundred fifty and cash broker eight fifty and four one case four hundred rods by turning nine funded one hundred gram for the two middle school kids any expenses are about eighty thousand H H I.

Household income on guessing averages about three hundred and fifty thousand dollars and we ve been saving fifty percent of after tax income for seven years. That's very, very impressive. Yes.

we like you to get to twenty. So fifty.

fifty is good. Not a lot of people can see fifty percent of their APP. Well, yeah, that's crazy amount after tax IT.

Three pity or isn't a very high tax bracket, right? So only sixteen community time that would be security proxy thirty five hundred dollars a month for me and eighteen hundred dollars for my wife. We think we spend about eight thousand dollars monthly and retirement, mostly on travel and property taxes.

We plan to bridge retirement free security with distribution dividends from my growing taxi broke account. Can we coast for the next decade, maybe saving twenty five to fifty thousand per year and still reached the promise land and twenty thirty five by taking new job that pays less? Should we start to enroll conversions next year? thanks. You all are a joy for me and many others.

Oh, bad. That's very nice.

Very nice to be. Thank you. You're joy for me too. Now it's .

mutual on monday, just .

every day, like friday, they're all good. Everyone just can be as Lucy as you. They're planters.

Well， I did little math for you.

Okay, look, bread coast, so he's got a rep, fifty thousand dollars come, he's saving half of that. He's like, band, this is too much. That's coast. I don't want to say that much. Yeah.

yeah, yeah. So I here's what so he's been about two hundred dollars to start. So that's creat to start .

with years .

old o and they want return the early fifties so um anyway, so here's what I did. I said, okay, you get you get two million I just said. Now what if you say forty thousand years for ten years as six percent, what does that look like? And then they get to four point one million.

They are spending ninety six thousand a year. Uh, three percent inflation rate gets about one hundred thirty thousand. So distribution rate would be three point two percent in the early fifties.

That would be kind of right of the margin of what we might say. But if they if they get a seven percent rate of return, then they get four and half million distribution rates, two point nine percent. I feel feel a little bit Better. I about that .

how they get zero percent.

Well, then they're not retiring. great. They're working. So I think I think bread, I think this does work as far as whether you can actually retire in early fifties and is your close. That's what I would say. Yeah.

I don't know the guys that great. What four year old has couple million dollars? yeah. What percentage of people in their forties .

have two million hours in the one .

percent less than that? I think brad's gonna just fine, you know yeah, he is a grinder. He says half the income um i'm sure .

he's well. And the thing so as I mean like let's say my numbers are right. Any is set with four million.

You can live on four million. Like like what if you you don't spend one thirty? What if you stay one twenty two?

One .

for .

bad? You do on five. Keep doing what you do. And if you want to cost for the next couple of years, I mean, you deserve IT.

I don't know you deserve IT, but I don't know you, but the money is, is little elves really? Again, the money looks right. So yes, you are good to go, my friend. Hopefully this brings a little bit more joy.

even if you've done a great job of saving over your entire working life. There are wealth busters that can destroy your joy and your financial plan for retirement, like funding your adult children, tapping your retirement funds early or not having a retirement withdraw strategy. Learn about these and more wealth busters to avoid as you make your way toward retirement this week on your money, your wealth.

T V. With joe Anderson c fp and big oco point C P A download the companion on wealth busters guide for strategies that i'll help you avoid blowing up your entire financial future. Final links to both the wealth busters to avoid episode of Y N W T V and the wealth busters guide .

in the episode description we got in and and and and and and and and and hi andy. Now just to your months, sixty eos dog, sixty and seven big o is a lot in three months, that is, he loves IT, loves the entertaining. But education discussions, you guys have great on air chemistry. The, my wife and I are pity to live in the same physical by area. And I have two high scholars in a rescue ship villa, shit, wilder.

wilder .

shelter. We drive all cars. I drive twenty old six mercies convertible. Or what could you like?

IT, why sell at right once you get there?

Now every time I think of a two thousand six more series conversion, I think the movie road house.

you do.

I do what they drive, not twenty thirteen. B M W, C, M, both purchases new. We buy and hold our cars and partial to drinking good red wines. And he loves a good old fashion. Wow, it's kind of reverse, right?

Or simply .

little whisky or burbo on the arts. And also both are partial at a well main margin. Gene tonic usually reserve for date nights. We both went to barton in school and we were single, so we also experiment with other drinks from time to time. What is an vanity?

Did you bar Angel?

I did. I did bar ten for several years.

The experiment with the.

I would make up bunch of stuff that would .

I don't like to you have been away and after no.

I said I got I got um I was there my oneyman on and then I had which .

is the first my .

tye place place but .

I hate like .

baby to my time yeah no, they can .

be pretty .

yeah that .

was a long yeah yes.

they were pretty strong. Is that yeah um yeah I think .

I in inner of .

you they get high incomes, but eight hundred to one million dolla year. Good for you guys, max. Out every timing and comes between our contributions and employer match with this is currently about one hundred ten thousand dollars here. All of this among two three tax. Given our high tax break at the thirty seven and eleven point three percent, we currently have ten million dollars in .

liquid assets. Oh, I want to see a fifty two.

fifty good for them, five million and diversified equity in a broker account, five million in a broker game they must probably always use.

So i'm going say, is restricted sacking and its sacked option something like four point .

five and three retirement accounts in one hundred fifty thousand and around three hundred fifteen thousand cash. We have significant more in payments for our primary residence in a couple of a rental properties, two hundred thousand us a year. But most of that should be paid up when the when we retire.

Our rental should generate suspition cash low to cover our housing expenses in retirement taxes, insurance maintainance eeta once some more guys are paid. Our current spin, including housing, excluding housing, one hundred twenty thousand, but I estimate we'll probably be around two hundred thousand once we retire that more time for long trips in other parties. So my question is, should we consider making one four, one five, four, three b contributions or even conversions at this point?

A deal that there is time to build the tax break is once a salarian and before ARM, these begin to pull dollars from our pretax account. Since we will probably work until the age sixty. But you guys are the rough conversion experts.

So you let me know what you think. Thanks for your football on the question at night. Look for hearing IT on a future podcast yes, he call us and and and or andy make up something more creative.

I thought IT and .

was good and and that it's .

going to be fat well, from safe to school bag.

So want IT okay.

ten million yeah and liquid. And so about half of that is said I is for my case.

for three bees at fifty two year, five million.

So it's kind of roughly double and twice, maybe in the by, by the time already. So could if they don't do anything, you'll probably have close to twenty million dollars with in first time when I can't, maybe that's maybe seventy, eighty million. So that's a pretty big R N D.

yeah. okay. So he's fifty two. There are fifty two years old, four and half million dollars. So um they make a million dollars here. I would, I would go rough all day, every day in even .

comfortable with him. I would they're .

going to be in a giant tax racket forever.

I then I don't know that.

I mean, so it's it's looking at here's the gamble. It's have a giant I mean, yeah kick the can on the road and care. But you look at tax rates today, they're pretty low historically, right? What was the highest tax rate ever?

Um I think I was world war two but even even in my career era, in my era put that way. Um I think the high .

rates for seventy .

percent seventy over thirty .

seven that's right. Yeah I could go to fifty. I don't know. I might be scared and and and and here have not trying to do any fear mugen um but I just .

google that the top individual rate reached a high of ninety four percent and forty four and .

forty five ninety .

four percent in world. Now to be fair, that was for people that made like over ten million dollars, which was a lot of money even now but 就是 in work work 这个 so .

that's a billionaire .

was yeah that was .

a lot yeah um well， so he yeah that's what I would do. He's not kind of miss attacks and I think he would like to have some it's just it's a gamble on tax rates. Yeah, that's all IT is that .

this is a hard one. I here's what I might do. I I like the idea of going all rough and current contribution. No, because why not at least get IT started and they see their fifty two. They want to retire years sixty.

When I wait to draft conversions until then, maybe, probably, probably I would wait just because I don't like paying at the highest right. It's the next, next point. I mean, taxes are lower compared to they have been. And if there, if the I R, is for one case are twenty million, that's a eight hundred thousand dollar R, M, D in year one and IT goes up premier, that's the same what they are making right now. So you could argue that then I can be a lower tax bracket and then they get all the other and income to .

and assuming tax, see the same.

I think you take .

a look um for individuals that have wealth like this, unfortunately, half of IT is in a retirement account. Yeah, I know it's it's going I think it's a lot. It's hard.

Here's one of the thing I might say, fifty, his Young .

enough to get the point to make up potentially take more risk in the rough, right? So when you convert, let's say if you pay in a higher rate and then you just take .

a lot more, yeah no, I that could .

help make up for the higher tax.

Yeah, another factor would be where they want to live when they retire there in california, pretty high tax. Say if they want to move to washington state with no income tax, maybe we are you sixty lunch then yeah .

conversions are still around ten .

years yeah too. I mean, they had that a lot of I know is right.

It's a good you. You're trying to predict the future tax rates and future regulation. If you play the status q and said, you know, I don't think any changes are going to happen, then potentially kick the hand on the road and maybe you change your contributions like you said, may be to get a little bit more diverse .

ation yeah um that I I just kind of way .

and see to see what happens, take a little bit more risk in the room. I think that's a really good start. Do you convert at the thirty seven when he could be at a little bit hier rate? Thirty seven is still not awful.

No.

it's going to go to a thirty nine point six two years alive.

Nia is .

paying half and .

taxi self all right .

now um get like lucky gradual lations. So he's got really hard problem.

amazing. These are the kind of problems that everyone would like to have. Great.

feel bad for.

Calculate whether you'll have problems in retirement with a financial blueprint. You're free courtesy of your money, your wealth and pure financial advisers. Click the financial blueprint link in the episode description to get started, then just input your details, and the financial blueprint tool will analyze your current cash flow, your assets and you're projected spending for retirement, and calculate three scenarios to help you determine your probability of success.

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get this back from connect kit a fifty four year old woman who lives overseas for thirty years my fifty six year old foreign orn born born a .

right he said she's american .

and he's foregone borne born burn born um um and I earn well, lived freely that earth really like in the invested a lot of our income t mostly in U. S. Space index, when the power of compound returns meant that we had a five million dollars day when we accept an early retired last year.

What is going on? Wow, this is so we get one person, then yeah we move the U.

S. To be close. My family, we're happily living in a paint off home with total expenditure about hundred forty thousand thousand eight year. We don't think we'll need to return to work.

Oh, when in bet, I can do agree with the I didn't i'm writing because after listen to your podcast IT seems weird that only fifty thousand dollars of our monies in an R A in one hundred fifty thousand ladies in a if we don't have anything in five twenty nine for two teenagers, this happened because of issues with overseas living and probably ignorant, the vast majority mistake in taxi. taxi. I should note that for decades we favorite paid all necessary U.

S. taxes. Does that situation get bad? But that's that you pay to paid all necessary U. S.

Text is important and it's the .

right thing that I think that's good um IT was probably bad because I was probably a lot um but I think she's asking if it's good at the money and or should SHE be looking in a taxi count, be like little drops in a bucket, right? About twh, twenty twelve hundred to sea, are we? Even my husband and I write bicycles more often than not.

Well, like at learning you .

have a boys school.

Bigger I do. I don't write IT too much much.

I enjoy margry ers on. My wife still drinks. Let's the back. I think .

it's slip .

of IT live IT .

IT that's .

sb sl. Slave l its IT appears .

to be eastern european plum bRandy.

No, if like up would be that that doesn't look very tasty. Fight the core in a very fancy bottle. And k how do you pronounce IT do that? I I think .

it's slive of bits .

slive a bit little .

of its then it's .

a fruit spirit or fruit bRandy made from damson plums often required to a plum spirit, plum .

bRandy swe from .

central, eastern and southern europe. So buzzie a hers to go in a bulgaria creasy chetty agrees, hungry in with mcDonald .

said at .

a it's his home country spirit.

Yes.

thank you. Your fantastic boobs to everyone. You get two faithful fans in our household. awesome. I'm going to start drinking some slip of first.

You get to be old, pronounced.

And if you think a lot of IT and just try to say.

I I want you to go to like a star and say i'd .

like some like sir, be the trick. Not yet you like some sort of bits and .

will say.

what are you take? I'm to that picture that I I just put up here.

Look.

um alright oh no was a bit great job. Five million dollars live IT in hundred fifty thousand and five million is what?

It's a two point eight percent. You don't need to work.

I would do that fifty six years old. You got many years three. And um no, I think it's great.

The only issue that you have with all that money in a in a broken account, you just you just want to make sure that your tax managing IT, that's because interest and dividends, instead of growing tax to further and retirement account is gonna be tax for each and every year. But that's such a benefit because you can control the tax is a lot easier. And then when you sell, the stock is gonna at a capital .

gains reverses ordinary .

income refer.

I personally would prefer to have money in a brokers account as supposed to a time. My account, if if i'm picking, because I can matter that I can do tax for interest, know for baLance, right? I can.

I can have lower dividend paying type stocks, right? I can, I can harvest, I can do all kinds of stuff. So, yeah, no, this is, this is what people would like to do. I mean, people are envious of this.

The bit who pa B, A warm buffet, pays a lower tax.

The secretary, because this is .

his situation is broken action, doesn't pay less tax in his sectary probably pays a lower tax rate .

because of the capital again, he pays a lot more taxes and a secretary .

say that because he gets paid w to ordinary income, but his income is coming from investment like yours, which is going to be tax at a capital gains rate which you can tax manage quite effectively. So yeah, so long after tax money, so probably paid a bunch tax to get five .

million dollars .

in a broken count. But now you're a it's the you've kind of say .

that I know I just .

get way to go to look at .

can do that .

tonight yeah jack and swan in da.

Jane collard, ado skipper in texas. Watch and listen for answers to your money questions next week in episode five o three, click as drone viga on air in the episode description to get your retirements people analysis. Leave your honest reviews, comments and ratings for your money wealth on youtube, apple podcast, spotify and all the other apps that let you do that, and share the show with your friends, family, neighbors and colleagues.

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