Show Notes

• 00:00 – Intro: This Week on the YMYW Podcast
• 00:36 – We’re 59 and 65 with Less than $1M. Can We Still Accomplish Our Retirement Goals? (Joe and Masako, WA state)
• 08:18 – We’re 33 with $200K. Can We Retire at 65 and Spend $159K/Year? (Reid, IN)
• 15:58 – Calculate your Free Financial Blueprint
• 16:32 – We’re Early 40s With $795K. Can We Retire at 55? (Mr Buckeye, OH)
• 28:38 – Watch Going Solo: Navigating Your Financial Future Single YMYW TV, Download the Going Solo Guide
• 29:25 – I’m 43 With $50K and a Paid Off House. Can I Retire ASAP? (Old MacDonald, Limington, Maine)
• 37:35 – I’m 35 With $1.4M. Can I Retire at 45 and Spend $75K/year? (Conshohocken Curt, PA)
• 49:04 – Next Week on the YMYW Podcast
• 49:23 – YMYW Podcast Outro

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Transcription

(NOTE: Transcriptions are an approximation and may not be entirely correct)

Intro: This Week on the YMYW Podcast

Andi: We heard your feedback, and today on Your Money, Your Wealth® podcast number 546, Joe and Big Al are spitballing retirement for the not-so-fat wallets: Joe and Masako in Washington state and Reid in Indiana have less than a million saved. Can they still accomplish their retirement goals in their 60s? Mr Buckeye in Ohio and Old Macdonald in Maine have less than a million saved, and Kurt in Pennsylvania has less than $1.5 million saved. Can they retire early – in their 40s and 50s? I’m Executive Producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

We’re 59 and 65 with Less than $1M. Can We Still Accomplish Our Retirement Goals? (Joe and Masako, WA state)

Joe: Okay, we got Joe from Washington State. He goes, hello, Andi, Joe and Al. Hope all is well. Been watching all your videos, podcasts, and downloading white papers for the past few months. Totally addicted to learning from you guys. Super great job. Semper Fi, so he must be a Marine. So I occasionally have a Coors Light, but mostly Asian teas. All right. That’s Big. Al, you like Asian teas?

Al: No.

Joe: Oh, you like teas though?

Al: Not really. You don’t like tea?

Joe: No. Oh, I thought that – what are you drinking right now? Isn’t that tea or is that coffee? What is that?

Al: Water. Oh, okay. I mean, I will drink tea, but I, you don’t prefer, I’m a little bit like Ted Lasso. It’s like I don’t really like it. Do you like it? You like tea?

Joe: Tea?

Al: Yeah. You like iced tea?

Joe: Yeah, I like iced tea. With a little vodka.

Al: Yeah.

Andi: I love chai tea. That’s, my drink of choice in the morning, especially when it’s cold.

Al: Now at, look at John Daley. Got it. But John Daley.

Joe: Okay, got it. No, I, I do like, an Arnold Palmer. Yeah. Tea.

Al: And, but do you ever drink a Lipton? No. No. Like a green tea or, yeah, that’s when you say tea, that’s what I’m thinking of.

Joe: Okay. So I, occasionally drink a Coors Light, mostly teas as I’m a diabetic now, and my wife has her daily one beer. Okay. We are not your typical wealthy customer that’s normal on your show, but have done okay and need your opinion if it sounds like we’re on the right track. Okay. I’m almost 59. She is 65 and retired. I currently make 125 to $130,000 a year as an electrician. No work. I have a work 401(k) currently at $333,000 with 60,000 of that in a Roth IRA or Roth and I max my contributions of $31,000 a year, plus the employer contributes $1 for one up to 8%. Wow. One to one up to eight. That’s a good match. That’s a great match. I also have a previous work, 401(k) that I moved into an IRA, which is currently $509,000. A separate Roth IRA, currently 53 that I now max at $8,000 a year.

Wife has a small IRA of 26,000. Okay. Wow. Very good. There’s, plenty here. Plenty here, plenty. On retiring at 62, 63 max. I have a pension at 63 of $3,500 a month and another $475 a month. Social Security for wife, will be $830 a month starting this year. My Social Security will be $2,700 a month at age 63. Another small pension for me. No survivorship starts at 65 at $500 a month.

Al: So just to add that up, that’s about 96,000 a year.

Joe: Yeah, and I bet he doesn’t spend anywhere near that. We’ll find out. Okay. Our land and home is paid off. You know, I’ve never heard someone say that or land and home. My land and my home I got the land paid out. I got the, but the home, dont forget about it. Fully leverage to the hilt, unless he’s got some land next to him, it’s paid off. It’s worth $850,000. No current debt. He said that twice. He’s He is, yeah. He’s serious that Yeah. He is stoked. Yep. Yep. we spent about 4,500 to $5,000 a month.

So you spend $60,000 a year and you make $96,000 of fixed income.

Al: Yeah. So far. So this is looking all right.

Joe: It looks real good depending on if we travel to Okinawa. Oh my God, I, that was a total guess.

Al: Yeah, you got it. You killed it.

Joe: I know I was like, I’m nervous.

Al: But isn’t that where Mikey Martin went?

Joe: Just, yeah. Awa, yeah. That’s what, that’s why you know it, you’ve heard it before. Well, I just, I guess like.

Al: Or you’re an expert at Japanese pronunciation? Yeah.

Joe: Just wait. Yeah. More, more to come.  Okay. Okay. He’s gonna travel to Okinawa, that year. We have about $50,000 also in the bank. In retirement, we would like to maybe spend seven to $8,000 a month enjoying our time with our granddaughters and visiting Okinawa. One to two times a year to see the family there. Okay, question?

Al: Yeah.

Joe: So now by the way, now we’re wanting to spend 84 to 96,000. Okay. Call it a hundred grand.

Al: Yeah, call it a hundred.

Joe: All right. Question. In your opinion, does it look like we can accomplish this? I wanna start Roth conversions when, conversions, when in retirement, if it makes sense. Love you guys. Thanks for all you do to us little people. Never little people. No. PS hope all the advisors at Pure are as knowledgeable as you two as we are planning to hire. Oh, interesting. Very good. I didn’t mean to read that little commercial there. Yeah. but, well, very good. So yeah, I think Joe’s in a really good spot.

Al: When your, fixed income is, call it a hundred thousand, and your spending is 80 to a hundred thousand and you got call it 900,000 and you’re gonna be adding to it for a few more years. Yeah. You’re in a great spot. Nothing really to worry about.

Joe: Yeah. What do you what?

Al: He’s got a million bucks. Close to it.

Joe: Yeah.

Al: I mean it’s a hundred, maybe a hundred thousand in, Roth, maybe 800,000 in tax deferred and you know, 50,000 plus in savings. Yeah.

Joe: yeah, I think they’re in great shape. Even if they burned through a lot of the retirement accounts, let’s say over the next 10 to 15 years, they have fun, right? Just go, they go to Okinawa. Yeah. Several times. Yeah. maybe three or four times. Maybe four or five. and yeah, I’m going to Korea.

Al: Yåou? No way.

Joe: I, think so. They’re gonna have to drug me, but I guess that’s the plan. Did you handle one of those flights? I don’t think so. No.

Al: Yeah, No.

Joe: I can barely fly to Minnesota.

Al: I know.

Joe: So, yeah, that would Okay. But, what I was saying is that, let’s say if Joe kind of. They spend a little bit too much money. It’s all right. They got $96,000 of fixed income.

Al: Yeah. No matter what happens. Yeah. I think, and if you’re spending a hundred or 120 and you need to tone it down to 90, you got 96,000. Oh, that works.

Joe: Right. So, I mean, they could probably spend 150 to $160,000 for, you know, their first several years in retirement. Have a little bit of fun and stuff.

Al: Yeah. and by the way I would say anyone that has $900,000 plus is doing fantastic. Fantastic.

Joe: Yeah.

Al: I mean, what’s the average 401(k), like 200,000?

Joe: Yeah, a couple hundred thousand, 200 someone thousand dollars. And that’s what people that have 401(k)s, if you average all the people, it’s. Less. Less than a hundred. Yeah. Thousand. I mean, so you, have a couple hundred thousand, 300,000, 500, 800,000. You are doing fantastic now. Now, the only caveat is the relationship between what you’ve saved and your fixed income to what you spend.

Al: Right? If you can get buy on less, it doesn’t really matter how much you have.

Joe: It’s the same mathematics,  but you, gotta know your audience too. Let’s say if someone doesn’t have. They don’t listen to this podcast, so they’re not gonna write in.

Al: Well, yeah, we, you know, it’s funny, we answer questions of people that write in.

Joe: Yeah. Right. We don’t, make ’em up.

Al: We don’t make ’em up. Joe and Al, I’ve got about $18. Yeah. In a sep IRA. Right. Should I roll that? Should I convert that? No, we don’t get those letters. So, we just read what you send us.

We’re 33 with $200K. Can We Retire at 65 and Spend $159K/Year? (Reid, IN)

Joe: Yeah. We got Reid.

Andi: Reid.

Al: Reid.

Joe: Yeah. I haven’t heard that.

Al: No. Some time, yeah. I used to have a, I knew Reid when I was in, in, elementary school, so that was a while ago. That was

Joe: do you have any Marshalls and Wesleys?

Al: No, but my, grandfather’s first name was Marshall, and so my, brother Todd, his middle name is Marshall, and my son Ryan, his middle name is Marshall also.

Joe: Yeah, my nephew’s name is Marshall.

Al: Oh, okay. Look at that. Very cool.

Andi: And this guy is Reid.

Joe: What about Richard? You think that name’s dead?

Al: I don’t hear him Richard much. I’ve got a brother, Richard, but I

Joe: You call him Dick? Rich?

Al: Well, we, grew up calling him Rich, but now he wants Richard.

Joe: Oh, got it.

Andi: We have a Rick that works for us.

Joe: Is that Richard?

Andi: I would assume Rick in our biz dev department. I would assume his name is Richard. I dunno.

Joe: I haven’t really found, it’s not too common anymore?

Al: No.

Joe: Okay. Well let’s get back to Reid. A hundred thousand dollars in Roth IRAs, a hundred thousand dollars.

401(k), 403(b), a hundred thousand dollars left in the house. We’re $200,000, saving about $21,000 a year into retirement. Maxing out Roths at 14k. Saving at this rate. Are we on track to retire at 65 if we want to be able to spend $150,000 a year in current dollars? My wife and I are both 33. We are a hundred percent invested in the market and we have other savings for kids, college, future cards, et cetera, so that our only debt will be the mortgage.

God willing. Thanks for your time. An update that I forgot to add, and I’m not sure how to calculate how much Social Security we will have in retirement, but we won’t have any other sources of fixed income. I’ll work full-time and my wife works part-time, combined income, a hundred thousand dollars. All right, let’s see what we can do for Reed.

So for those of you at home, you can teach a little teaching moment here, little

Al: teaching moment. Okay. I’ve done a little calculation, but let’s see what you come up with.

Joe: So let’s say he’s 33 years old and he wants to retire full retirement age. What did he say? Yeah,

Al: 65.

Joe: Alright.

Al: Okay. I got 32 years.

Thank you. Thank you. Just for the simple math part.

Joe: Got it. So $150,000. That’s, he wants to spend that in today’s dollar.

Al: Today’s,

Joe: yeah. This is gonna be a big number al. It’s a big number. It’s a giant number. 30. So let’s say I’m gonna use 3% inflation. Oh yeah, that’s what I did too. So $150,000 today in 32 years from now, it’s gonna be $386,000.

Al: it’s a big number. And I, did it the other direction, but I, like your calculation. So you continue. So 300, the big numbers, that’s giant. So you gotta divide that by 4%.

Joe: Well, let’s give him some Social Security. Okay.

let’s give him, all right, so I’m gonna a hundred grand. Well, it’s gotta be more than that.

If he’s making a hundred thousand dollars, let’s say, I’m guessing his Social Security benefit is, I don’t know, $35,000 in today’s dollars, and his wife is probably, maybe half that.

Al: Yeah.

Joe: If she works part-time. Years. Yeah. Yeah.

Al: that’s what I guess too. Alright. 30, 36, actually. 3000. Wow. For Correct.

So look at that. Just off the cuff first. First time off the cuff.

Joe: Oh. All right. So, okay, so we got $50,000. That’s today’s dollars. All right. So we got 32 years there. What do you want to, what was, what’s Social Security just came out with their inflation rate. Yeah. 2%. 2% go with, that. All right. Yeah.

Okay, here we go. 32, 2%. And then, so that’s gonna be worth 94. So a hundred grand. Yeah, that’s what I figured. All right. Yeah. So

Al: still a huge number. Still a couple hundred thousand divided by 4%.

Joe: four. Let’s see. He needs 6 million. Six. Six. Yep. Point something. 6.5.

Al: Yep. And I compute he’ll get to four based upon these numbers.

So, but you think about it, 32 years from now is a long time. There’s no way that this is gonna be a sweet, right? That’s, the hard part about this is when you do a calculate, I mean, three years is gonna be a completely different story. I mean, you could probably think about it this way.

Joe: WI don’t know, c can you even remember 32 years ago?

Hardly. I, have a 3-year-old, so at 30, like, what was your mortgage payment or rent payment or, you know, car payment, you know what I mean? So it’s like, you, we run these numbers and it’s like there’s no way it’s gonna be $350,000. Right. But we’re running at a three and a half percent inflation.

I mean, that’s the true impact of inflation here. It’s crazy. Yeah, that’s right. Because time goes by so fast. Right, right. And so anyway, so $6.5 million, if he’s got $250,000 today or 200,000 and he’s saving 21,000. Yeah.

Al: So I did that math. So a couple hundred thousand now saves 21,000 a year. 32 years at 7%.

He ends up with about 4.1 million. So, so I took that number, Joe. So this is the way and the different way of calculating the same thing. So I said, well, okay, 4.1 million, you could take about 4% of that. So that’s about 165,000 in future dollars. What does that in today’s dollars, I did a 3% inflation rate to get it back to today’s dollars.

That’s about 64 grand. And then I said, all right, Social Security, let’s just say three grand a month. I just ’cause I have no idea. So that’s a hundred grand. He wants one 50. So he is based upon these numbers alone, he is two thirds of the way.

Joe: Yep.

Al: Yeah.

Joe: Okay. So I think he’s close. We’re running straight line, be it numbers, which will never happen.

I don’t know if you’re saving, he’s saving 21% of his income.

Al: Yeah. I think Reed is gonna be just fine. Yeah. and see that’s the thing. I mean we, so Joe, we tell people try to save 20% and I think, he can sort of. Quick rule of thumb, if you can save 20% of your income by the time you retire, depending upon how long you do it, you’ll probably be able to spend at least as much as what you’re already spending.

And that’s what I just calculated. A hundred thousand is what he’s spending and that’s what I said he could spend in the future. Yeah. And that’s what he’s making. Yeah. Now, if. If he wants to spend a little bit more than that in the future, then you gotta save a little bit more than 20%. And you know, so I think that’s, so re over time will probably save more and then this will be great.

Yeah, inflation could be higher, it could be lower.

Joe: The rate of return on the overall investment the market be higher, who knows what’s gonna happen there. So I, again, I think, you know, as you, think about planning, and this is an ongoing process that you want to make sure that you’re updating and looking at on an ongoing basis because things pivot all the time, so, right.

I, like that he’s a hundred percent in, you know, VTI and VOO, you know, really inexpensive stock, ETFs, right. So I, don’t mind that. I think as the wealth increases, you probably wanna diversify more. Yeah. you can kind of cut that pie a little bit differently to take advantage of different parts of the overall market.

Andi: Right.

Joe: but no, I think Reid, you’re doing things right. Just keep saving what you’re saving and, you know, good things will happen great from a financial standpoint, but, you know, finances, money’s not everything else. No, I know it’s, it does help though.

Calculate your Free Financial Blueprint

Andi: It does help! So have you given our Financial Blueprint tool a try yet? It’s a free and self-guided way to calculate the likelihood that you’ll have a successful retirement. Click or tap the Financial Blueprint link in the episode description. Input your current cash flow, your assets, and your projected retirement spending, and it ’ll output a detailed report with three different scenarios that map out your possibilities, with actionable steps to take now to achieve your financial goals in the future.  Get your Financial Blueprint for retirement. Click or tap the link in the episode description to get started.

We’re Early 40s With $795K. Can We Retire at 55? (Mr Buckeye, OH)

Joe: Let’s go to Mr. Buckeye. Got a lot of interesting names that come through now. All right. He goes. Hey Joe, Big Al, Andi, discovered the show a little bit over a year ago and really enjoyed listening to the new episodes while taking the evening walk in our small town in Ohio. Not only do you provide very useful advice, but your friendly banter makes it quite entertaining. Well, thank you sir. I’m 42, wife’s 41. We have an 11-year-old daughter and 9-year-old son. We drive a 2006 Toyota Prius, a 2009 Toyota Sienna Van Prius. Yes. Still make ’em.

Al: they do.

Joe: Alright. That was the first of the, it was the electric vehicles, right?

Al: The first, first of the hybrids.

Joe: Got it. Okay. Little drink of choice here. My wife is a white wine and or a margarita. I enjoy red wine in old fashioned. Okay. Okay, here’s the specifics. My wife makes $80,000 a year. I make $85,000 a year. We have smaller salaries than most of your listeners, but if saved consistently since college and are content to live a lower means. All our retirement accounts are invested in low cost index funds and are combined to growth s and p 500 dividend International REITs, and small amount of bonds.

401(k) wife has 110. I have 200 this year and an option of start putting my portion of the 401(k) in the Roth employer con, contributes to the traditional 401(k) Roth. IRA wife has one 60. I have two 20. Man. Okay. HSA $18,000. I fully fund $4,300 annually to my HSA. All the money is invested and I don’t plan on touching it.

We currently use cash from our savings to pay all medical costs. Oh my God. This is long. Oh, you got a whole nother page. Okay, Mr. Buckeye, take a deep breath. This is a long ass walk. This, you may have to and do it, you might have to do some stretches here. brokerage $40,000. He’s got a 5 29 plan of 53,000.

We can’t, he’s gonna contribute $2,500 per kid there. we got cash of 52,000. Our only debt is $82,000 on our mortgage at 4%, which will be paid off in 10 years. Current value is 325. We both fully fund $7,000 into our Roth IRAs every year. For our 401(k), I contribute 6% and my employer matches seven while my wife.

Both contributes to get the match to six. Currently with an employer match around 35 to 40% of income, with matches. We say we’re around 35 to 40% of income. Yeah. Our current annual expenses are around $85,000. Alright, expected 60,000 in today’s dollars for retirement. My parents just started gifting my siblings and I each $15,000 per year and I’ll continue and we’ll continue this going forward as an early inheritance instead of just lump sum after they’re not around.

They’re both 72 years old. Pretty good health. So I expect this to continue for quite a while. After they pass, I expect still get a couple hundred thousand dollars. Social Security. I pulled these numbers for myself. I didn’t do it for my wife, but assume hers would be similar to mine, so they’re gonna get about 22,000 at 62 or 32,000 or 40.

I’m interested in potentially using the rule of 55 to tap my 401(k) at this point. My wife would be interested in early retirement as well, but isn’t set on a specific age. At age 55, my kids would just be finishing up college if that’s the route they decide. Here’s the questions.

Al: Okay.

Joe: My God, how long did that take?

Al: It took a while. I think that’s, I need a drink of water. I think that’s the show. We’ll answer the question next show.

Joe: Yeah. Well, that’s all we got time for, folks. We’ll see you again next week. Do you think it’s realistic, given my scenario? Or is it just a dream? If not, what age do you think is more feasible? I’m also not against working part-time. So Al I’m sure you did some homework here.

Al: I did.

Joe: Alright. what about Mr. Buckeye here?

Al: Well, okay, so based upon how much he’s saving as a percentage, and I know the gross, I could calculate it. So, got 800,000 to start 60,000 of savings per year. 13 years, 7% ends up with about 3.1 million.

Joe: Okay. So, to recap what you just said. That he’s got $800,000. Totally safe. He’s 42 years old. Wife is 41. Yep.

Al: Alright. And maybe he wants to retire at 55, 13 years from now. 7% add 60,000 a year. You get 3.1 million.

Joe: So he potentially could have $3.1 million in his accounts when he turns. His desired retirement age.

Al: Yeah. Keeping that same savings. And at a 7% rate of return. So there’s some caveats here, of course. And so retiring early, I just said 3% distribution just to throw out a number. That’d be 93,000 he could get from the portfolio. Then you look at, he wants to spend 60 grand in retirement. So he says, I just said inflation, 3%, 13 year, it comes out to 88,000. So yeah, it’s close, but it looks, pretty good.

Joe: So he wants to retire at 55. And so at age 55, his living expenses is going to be 88 or nine, call it $90,000,

Al: call it 90,000. And he could. He could get about, if he takes 3% of his portfolio, it’d be 90, 95.

Joe: So 0.03, he would need $3 million at 3% at that point.

Al: So yeah, that’s, what I got. So I, think that, looks pretty good.

Joe: So he  just has to bridge the gap until Social Security for 10 years.

Al: That’s right.

Joe: So if you look at it from a assuming no growth in the overall portfolio, right. You got, he’s gonna retire 55, 65, 67 waits until full retirement age.

You know what gets scary with that long of a bridge? Is that the total dollars that he would have to pull out from his retirement date till his Social Security date. Would be over a million dollars. Yeah. So if you think of it, man, you start retirement with 3 million and you know that you’re gonna have to pull a third out of that.

Al: But that’s a no growth.

Joe: I know, but you’re, you always say that, and I know I

Al: disagree with you, and I totally disagree with you. That’s why I keep saying it. How, could you, I mean, we, everything we do, we include a growth rate E except for this,

Joe: but that’s a true dollar figure.

Al: I agree, and that’s assuming no growth, which, is, I

Joe: think that could happen. You retire at 55 years old.

Al: I think it totally could ha I think you could have a negative 10% like we did in the last decade. See, what is the total dollar figure that needs

Joe: to come from the portfolios? A million dollars. I agree with that, right? Yep. So that’s, if I look at, alright, you gotta pull a million dollars.

If it were me and I had $3 million and I had to pull a third of that total balance out, assuming no growth, okay. To me, that would. Make me pause.

Al: Okay, so now I finally agree with your statement. Then the reason why I would pause is not that calculation, just because it’s too close.

Joe: Sure.

Al: I’d rather have a part-time job and eliminate some of the risk.

Joe: I, try to think of worst case scenario.

Al: Agreed.

Joe: If it’s a worst case scenario, it’s like, okay, I’m not gonna have, let’s just assume zero over 10 years or 12 years. That’s pretty bad. That’s pretty

Al: bad. It’s happened and it could be worse.

Joe: It could be a lot worse. Right. So that, I mean, maybe the worst case scenario is a 20% loss, maybe a 50%.

Yeah. I don’t know about that. I don’t think you, over a 12 year time period on average, you know, I think you’re right. You got it. I mean, most you’re always gonna look at, all right, a assumed growth rate, right. Of, but I, from a probability standpoint,

Al: yeah. So, but

Joe: if I’m looking at worst case scenario, I’m gonna look at it that way.

If it were me,

Al: yeah. And, I come up with the same conclusion for a different reason. My, my, reason is it’s just, it’s a little more tight than I would like at age 55. Not, and so I would probably have a part-time job. to sort of cover some potential gap.

Joe: Yeah, I think he’s close. He’s doing a good job.

I think so too.

Al: that was the first question. What’s, oh, second question. He’s got a Roth I a All right. When, let’s see. He wants to bridge the gap. Help bridge

Joe: the gap. I plan to see, look at the, this like I’ve already read this. Yeah. He help bridge the gap. I plan to prior, oh we already prioritize savings into our brokerage account.

Until we’re able to take Social Security and eligible for Medicare. Most times it makes sense to hold off and take Social Security as long as possible. But if we waiting to retire is the main goal, is it unwise to think about? taking, one at least one of us, taking it at 62. Yeah. And I’m okay with that.

I think so too. I would much rather probably do that if you had that long of a bridge. But you would make that decision at 62 depending on what the, market value is of your portfolio.

Al: Not right now.

Joe: Yeah.

Al: Right. Yeah. When honey, when you’re 42, you know what?

Joe: in 20 years,

Al: you’re claiming,

Joe: so security, okay.

Whether you want to or not, right? Yeah. We’re writing this down. Yeah. All right. Currently with our highest risk tolerance in still being on the younger side, we are heavily invested in equities 90 10. I’m curious on your thoughts. Would you dial it back? he’s got 10, 12, what, did we say? He’s got 12 years, 13 years.

Al: 13 years, I would, stay the course, maybe, I don’t know, five years ahead, maybe start getting some more bonds in there maybe.

Joe: Yeah, I don’t know. 90 10. If I’m, if I’m looking at it, if,

Al: I

Joe: mean

Al: you could, come down to 80 or 70% and then

Joe: 70 30 I probably like a little bit more. Yeah. Given the fact that you need the portfolio in 10 years.

90 10 is fine, but he’s young, so it’s like in 10 years if he still doesn’t wanna pull the trigger, it’s not like he’s 65 years old and says Like, I’m

Al: totally burnt. Right. You know? Yeah, I know, right? I mean, and part of this, I mean, at least I’m thinking about myself. I might keep it that way. If I was gonna be okay with a part-time job, so I didn’t really have to use the portfolio that much.

And then, you could keep a, higher allocation. But you’re right, you get to less than 10 years, certainly less than five years. You want to tone it down ’cause you’re gonna need access to that capital. And what if we have a prolonged downturn and your stocks are all down, you’ll pull money out of the wrong time and never, it’d be hard to recover.

Joe: Yeah. He wouldn’t retire then.

Al: Yeah. You have to keep working Right. So, and, to keep working when the stock market is down is, not necessarily easy. Yeah.

Joe: okay. Appreciate your time and response. Keep up the good work. All right. Looking forward to listening for many more years. Right. Big gal. Take care.

That’s right. I don’t think they listen to many more years. I think they get totally burnt out listening to this garbage for like six months. How

Al: many years do we have on podcasts, Andi?

Andi: since 2016 is when it started, officially. That, that the archives are available. Seems like

Al: they’d be good for life, don’t you think?

Andi: Well, interestingly, the YMYW podcast survey, I think the vast majority of people who have filled it out have said that they’ve listened for one to five years. Anything more than that, it just drops dramatically.

Al: it doesn’t happen, right?

Andi: Yeah.

Joe: I don’t think there’s anyone that’s listening to the show for more than five years, and I think the number of people that would actually stick with us for longer than six months. It is pretty low. Because it’s it’s like, all right, it’s the same stuff.

Al: Right, right, right.

Joe: Trust me, I know I read the questions and then the same questions over and over again.

Al: Yeah. We probably have one guy just out there, just rinse and repeat.

Watch Going Solo: Navigating Your Financial Future Single YMYW TV, Download the Going Solo Guide

Andi: Joe and Masako and Reid and his wife and Mrs and Mrs Buckeye have laid out their retirement plans, but what happens when you’re single, like Old MacDonald and Conway Kurt, whose spitballs are coming up shortly? Watch Going Solo: Navigating Your Financial Future Single, this week on YMYW TV. Learn how to create a budget, and manage debt, and map out your solo retirement journey. Joe and Big Al have specific tips and strategies for singles in every generation around emergency savings, Social Security, saving for retirement – including catch-up contributions – and managing your investment portfolio during market downturns. Check it out and download the companion guide. You’ll find the links in the description of today’s episode. And if you’re not single, why not share the episode and the guide with someone who is?

I’m 43 With $50K and a Paid Off House. Can I Retire ASAP? (Old MacDonald, Limington, Maine)

Joe: Alright. We got Old MacDonald. That’s what, my kid calls McDonald’s. Old MacDonald. Old MacDonald. Oh, well sure.

Al: That’s what he knows. Yeah. ’cause he had a farm. Yeah. Yeah.

Joe: All right, here we go. Hey, Your Money, Your Wealth® crew love listening to the podcast while I’m driving around delivering medical supplies and prescriptions. In a POS whitish, GMC box truck all day. Wonder what that stands for? POS, that’s a piece of, I know what it stands for. Yeah. Old MacDonald man. Just cruising around, getting little prescriptions.

Al: Yep. Medical supplies.

Joe:

Yeah. All right. After commuting, 45 minutes from the Willywacks of. What is that?

Andi: Limington Maine, I think.

Joe: Liman Limington.  Limington Maine.

Andi: Do you know what the Willywacks are? I had to look that one up.

Joe: No. After commuting 45 minutes from the Willywacks,

Andi: It’s like the boondocks or out in the woods.

Joe: Oh, no. Yeah. Boondock like I’d never heard the term Willywacks before.

Al: No. Okay. That maybe that’s an East Coast thing.

Joe: It’s a Mainer East Coast thing. Yeah. Main, exactly. Yeah. Okay.

Joe: Well, Willywacks. Yeah. Cool. I think I might have to use that. Yeah. In my 2021 Racer Red Ford Ranger. Oh, that’s a car. Now you’re talking. Yeah, I had a Ford Ranger. It’s enough to drive anyone crazy and maybe it has. I have to. Thank you for keeping me sane while I’m doing this. I’m 43 years old and need to. And n and new to all this financial planning stuff and love how you guys approach it. Around six months ago, started saving about 63% of my gross income.

Wow, that’s a lot. We just said 20. Yeah. He goes old MacDonald goes bull. Well, I’m going 63%. I’m gonna

Al: say I sixty’s. Not even good. Now let’s do 60 K.

Joe: He’s maxing out my 401(k) in the Roth IRA. I have $50,000 in a rollover. IRA. And my house is paid off and it’s worth about 400. After moving in with my girlfriend, I started renting it out for $30,000 a year, but so far all of that has gone right back into the house.

I spend 20, $24,000 a year. Oh, MacDonald’s splurging.

Al: Could you get by on two grand a month?

Joe: Al I have two children. I one grand fors.

Andi: And you live in California?

Al: I don’t, think so. You, I guess there are property taxes. Yeah. Property’s gasoline. There’s mortgage. Oh yeah, there’s a home mortgage and, And, Hey, you gotta currency. Get

Joe: some clothes

Al: insurance.

Joe: Yep. I’m trying to retire as soon as possible because I’ve had enough. Okay. I just wanna work. The land and develop my chainsaw sculpture skills. I was planning on retiring about 10, 11 years from now, but after using your Easy retirement tool, I think I can, but it’ll be close and I know if I can make it that long before I snap, I was thinking of selling my house and investing it, winning the lottery, starting a life of crime, or maybe even marrying a sugar mama or my sugar mama. After a two week stint in Thailand, we are very seriously considering selling everything and moving there. No kids ever.

Al: Okay.

Joe: Any ideas or thoughts on what else I might do to stop the grind on my soul? That white truck is killing this guy. He just doesn’t wanna, he wants to do the Ford Rangers cop. It’s just killing him.

By the way, I used to drink bottom shelf vodka. Straight out of the bottle, just rubber bottle. You think, oh my god, this guy’s awesome. Yes. Oh. So these days I just look forward to a nice dark roast. My girlfriend has two cats of squirrel bees and an old man that sits around all day. Her father, E-I-E-I-O. Thank you for your time. Old MacDonald. Ah, okay. That’s pretty witty.

Al: Yeah, it’s pretty good.

Joe: So he wants to go to Thailand. Have you been to Thailand Al?

Al: No, it’s actually, I might do the, might go next year.

Joe: No, I might go next week.

Al: February or March. Is kind of the plan right now, Joe.

Joe: Okay. Nope. Never been to Thailand. Pretty inexpensive though.

Al: Yeah, that’s what I heard.

Joe: 24,000 a year probably could go a long way.

Joe: You probably need a little more than that, but can we do a little calculator or something? What’s the average cost of living in Thailand? Sure.

Andi: Let’s find out. I would say cost of living Thailand.

Joe: I would say it’s pretty reasonable.

It could be. It could be. Okay, so

Andi: according to Google AI, it says a single person can expect to spend between $7000 and $2,000 per month while a family of four might spend 1500 to 3,500 monthly, depending on lifestyle and location.

Al: look at that.

Joe: 2000 a month. Oh, MacDonald, here you go.

Al: So I, you know what? Old MacDonald, you forgot to tell us how much you’re saving, so it’s hard to do a calculation. I know you’re 63%, but I don’t know what your gross is. But here’s what I did. I did a little calculation.

Joe: Hold on. I think I, let me see.

Al: You didn’t say no, you, well, I talked you. You tried to find it. So you got 50,000 to start with. I’m just saying. You’re saving 50,000 a year, 7% interest rate. 10 years, you end up with 800,000.

Pretty good. Sell your house. It’s worth 400. Now. I just said 500 in the future. Now you got 1.3 million. You retire early. Maybe say 3% of that. You could live off 39,000 if you live in Thailand. We just found out you probably can do it. But, Joe, I can relate at age 43, I really was ready for a change too, and I’ll tell you what I did.

is I, had a CPA practice and I started to think about selling it and trying something new and different, and I started working on building a new career and I, got into financial planning wealth management and that actually has propelled me to where I’m at. And, no, you’re welcome. And I’m, I, you should be grateful.

So, for the man sitting next to you. So I, here’s what I would say I is, sometimes when you do a little pivot on a career, you get all kinds of new energy again. So that’s maybe one of the best things I can tell you. However, Thailand sounds, tempting. I gotta say he’s making $63,000 a year. No, he isn’t.

Sure he is, he’s saving 63% of his gross.

Joe: I know. Divide that into the, your max 401(k)  contribution in, Roth IRA contribution.

Al: I know, but he’s eventually gonna have money coming from his rental, so I don’t know. It’s hard to know.

Joe: Okay, so he’s making a hundred, he’s saving 63%. We know how much he’s saving. I know.

Al: We know a percentage. We don’t know the total.

Joe: Yes. Well, I know what the max contribution is for 401(k).

Al: I know, but the thing is, I think he’s got extra money coming from his rental eventually after he starts fixing it up. After it stop stops fixing it up.

Joe: But I think that’s what he’s saving anyway.

Al: But what if he’s saving 30? So my, so now he’s got 600 said 800. the numbers are pretty close. So, so he, could spend about 30 5K if we go with your numbers. Yeah. Okay. Give or take.

Al: And he wants to spend 24,000.

Joe: Yeah. I think he’s in good shape. 43 years old. Yep. I don’t know. That’s he’s got a long way to go though. Yeah. I mean, I don’t know. Let’s say you go to Thailand, you move. Yeah. And I mean you could afford Thailand because what, 2000 a month is what the number is?

Andi: 2000 a month for a single person. He is talking about taking the sugar mama with him.

Joe: Well, he has sugar Mama probably makes we more than that. She’s got the house. She’s got the old man in there. That’s right. Maybe she doesn’t want to go. She’s going, I don’t know. I think they’re both ready to go. And then you’re there and then you hate it.

Al: Yeah. And then it’s how do you come back? You come back, can’t even hardly afford the plane ticket.

Right,

Joe: right.

Al: Oh.

Joe: So I don’t know, maybe. Well, they spent a couple weeks there.

Al: Are you going back to my suggestion? Think about a new career

Joe: and I like that now. I wasn’t really paying attention.

Al: I know you weren’t. You were looking for the gross income.

I’m 35 With $1.4M. Can I Retire at 45 and Spend $75K/year? (Conshohocken Curt, PA)

Joe: alright. We got… Koon Chaka Khan.

Andi: Conshohocken.

Joe: Conshohocken.

Andi: It’s a town in Pennsylvania. So this is Conshohocken Curt.

Al: Yep. Yeah, so I, Andi, I looked that one up. I’m sure you did too. That’s not a straightforward. So Google AI said Con, Kan. Shah. S-H-U-H. Haw. HAA. Ken. KIN.

Joe: Got it.

Al: Conshohocken.

Andi: I actually have a friend that lives in Conshohocken, so I knew it in advance.

Al: Oh, you already know then You don’t have to look it up

Andi: But he actually shortens it to Conshy Curt, so that helps.

Joe: Okay. Okay. All right. So we got, good afternoon, Joe. I’m Big Al. I’m from Conshohocken and my desk overlooks the, where is this?

Andi: The Schuylkill River. (skoo·kl)

Joe: The Schuylkill River. That’s Schuylkill? Outside of Philadelphia.

Andi: Yep.

Joe: I listen on the treadmill and in the car I drive a 17 Toyota Corolla and I drink Kona Big wave. That’s your beer. Isn’t that big Al

Al: You know, that was my favorite beer for a long time. And like most beers, eventually you get tired of it and then you move on like most beers.

Joe: Who, are you speaking of?

Al: Well, at least myself. So I, yeah, I, so I did that again, I did that with ale Smith 3 94. Love that beer. And now I can’t even drink it. Wow. Dunno.

Joe: Well, Conkashocken Curt, he’s 35 and makes about 400 to $500,000 annually in a hundred percent commission sales position.

Wow. Wow. Successful.

Andi: Very good sales guy.

Joe: Yep. He’s just jamming on the phones. I wonder how many dials he makes a day. That’s probably a lot. I, you know. I wonder if he’s got like a little post-it note on his phone that says “Next.”

Andi: How many dials did you do at the most when you were in the dialing business, Joe?

Joe: a lot. Couple hundred.

Andi: In a day?

Joe: In a day.

Andi: Wow.

Joe: Yep. Couple hundred.

Andi: Wanna buy? No. Click.

Al: Were half of ’em your mom?

Joe: No, it was the white pages.

Al: It was.

Joe: All sorts of different Yeah. I mean, that’s how you started out in this business.

Al: Yeah. I didn’t have to do that.

Joe: No, you didn’t. You’re welcome again.

Al: Thank you.

Joe: Yeah. Oh, are you implying I’m riding on your coattails? Oh, dude, my back is so sore over the last 20 some years. But no. Yeah, it’s, it’s a hard grind, you know? Yeah. but if you’re good, you can make three or 400. I wasn’t that good. But I had two phones. You had two phones and Oh wow. You have contest, right?

Andi: That’s like something out of a movie.

Joe: Yep. But I mean today, now the technology’s crazy where you can just push a button and then it leaves a voicemail versus waiting and then you leave a voicemail. So the time it for a search, yeah, much, much faster.

Al: You can do 300 now.

Joe: Oh man. Much faster. Technology today.

Al: Okay. yeah.

Joe: Then you interrupt people while they’re eating. You know, you got phone clinics early in the morning and late at night. You know, we’d stop. We wouldn’t stop calling people until nine o’clock at night.

Al: Oh, no kidding. Okay.

Andi: Oh That would piss me off so bad.

Al: I probably, I think I got one of your calls.

Al: remember those days.

Joe: It’s like I don’t, yeah. But then the do not call list came about and Kind of changed that.

Al: Yeah. Yeah.

Joe: Yeah. I have a 1-year-old and a little lady that makes $50,000 a year, but I’m single, so now counting on the roommate’s assets into retirement. oh, I wonder. Shocking the roommate.

Andi: Sure she loves that, that he’s calling her roommate.

Al: I bet not.

Joe: Alright. I have, $960,000 in a brokerage account. $700,000 in home equity. $350,000. Traditional 401(k) 90,000 Roth 35,000 HSA $22,000 in a 5 29 plan for the Cockashocken kid. You’re total, you’re in the ballpark. Yeah. Total of bit over two sticks. Two sticks.

Andi: 2 million.

Joe: All right. I got your, you said total liquid assets. 1.4. He’s counting his home equity.

Al: No. He is got deferred three 50 brokerage nine 60, Roth 90. I think we, we counted the HSA probably.

Joe: Yeah, that’s 35,000. That’s 1.4. All right. also the $700,000 home equity, will be paid off in the rental in Florida, $5,000. Social Security at age 70 will be $2,800 at 62 likely to wait. Okay. All right. Consider my age. Please spitball on converting my entire traditional 401(k) to Roth asap. I could use the brokerage to fund the 35 to 44 40% tax bill.

I envision this $350,000 in my traditional to soon become $3.5 million in 30 to 35 years. Let’s say I pay $135,000 on the conversion up 350,000 thousand. It’s only 3.6% of the 3.5 million that this money eventually becomes around age 65 to 70. I wanna retire at 45 and spend $75,000 per year. I’m currently contributing about $175,000 per year to retirement.

Mostly just want to know when I can retire with my current savings rate and my spending when appreciate the spitball. Your steamed viewpoints as my go-go years are fast approaching and I’m fighting the urge to FIRE. Cockashocken Curt.

Andi: Yeah, that’s actually pretty darn good for you, Joe. Conshohocken. Cockashocken.

Joe: Almost the same thing.

Al: Yeah, very close. Very. I agree. Yeah. Without even looking it up, like Andi and I did. You already knew. You already knew.

Joe: So, alright, this guy’s doing quite well, Curt. He’s got two sticks. I haven’t heard 2 million called two sticks before, but I’m thinking I’m gonna start using that.

You know, vocab, how many sticks do you got? That really wax got several sticks. I got a lot of toothpicks. Got a lot of toothpicks. Yeah. I don’t know about sticks. Yep.

Al: How many toothpicks do you have?

Joe: Yeah, that’s a do pickup line. How many sticks you got? Yeah. Okay. So I don’t know. Let’s, I, he’s got some creative math going on. I think he just wants to convert and make himself. Think that the, math is gonna work out. Yeah. There’s so many different assumptions. I would not convert a hundred percent of your retirement account and pay 35% tax

Al: at that. And Yeah, with the bracket he’s in single. Yeah. That’s the highest tax rate.

Joe: Yeah. I get it. And he is like, okay, well at age 60 it’s gonna be three and a half million dollars. I pay $130,000 in tax a day. If I use the future value of what that, but he’s using the present value of the tax and the future value of the dollar.

Al: I know that’s, why you’re mixing apples and oranges.

Joe: So you’ve gotta take the $160,000 and assume the same rate that you are. You’re gonna find that tax rate is 35%.

Al: Yeah, well, I guess what he’s thinking is he’ll leave it, he’ll, you know, there’s nothing coming out of the 401(k) that becomes a Roth.

So that all grows Right. And then it’s just coming outta the brokerage account, which maybe he’s was gonna spend anyway on a car or

Joe: two. So he is got 350,000 in the 401(k). Wants to convert that. I do. I would not do that. He’s in a commission-based business. He makes a ton of money. he’s 35. He wants to retire at 45, so he’s got two sticks.

But I’m gonna take out the home equity, so I’m gonna call it a stick and a half. That’s a stick and a half is right. Right. And he saves a hundred and some odd thousand dollars a year, right. Or.

Al: Yeah. Yeah. So here’s the math. So he is got 1.4 right now, over the next 10 years, saving $175,000, which is a lot, but that’s what you said.

You’re saving 7%. That’s 5.2 million, Joe, and you retire at 45. Let’s just be conservative. Two and a half percent distribution rate, maybe more, but let’s just say that. So that’s 130,000. And he wants to spend in, in, today’s dollar 75 inflation, 3%, 10 years. That’s a hundred K. So he’s golden. It, it, looks fine from a numbers standpoint.

Joe: Yep. So if he can’t spend $75,000, but where’s the money going today? Let’s say he makes $500,000, saves a hundred thousand. That’s 400,000. Well, he saves 200,000. Okay? 500,000 minus 200,000 is 300,000 plus tax. I know. Let me finish another a hundred thousand dollars. In tax. I, know what you’re saying. It’s 200,000.

Al: Yeah, I get it. Yeah. So is he

Joe: spending 75?

Al: Well, he’s

Joe: saying, so where’s the one 20? Where’s the other 125 going?

Al: He’s, well, he says, I’m just using his numbers. He says he wants to retire at 45 and spend 75 KA year. But I agree he’s spending more than right now. So at 35, you’re

Joe: spending.

Al: Call it 200,

Joe: 200 grand.

Yeah. That’s what it looks like to me. And then at age 45, it’s like, yeah, I slow down a little bit down. I’m gonna spend 75. I don’t, the numbers don’t jive.

Al: yeah. Well, so based upon my quick math, he could probably spend a hundred in today’s dollars, but that’s, half of maybe what he’s currently spending.

So I, if you’re making

Joe: $500,000 a year, four to five, that’s a ton of dope. It’s, it is. It, you don’t have, you probably have stress of your job because he’s on the phone all day making up $400 or whatever he is doing. He’s trying to, you know, get these new, jobs and yeah. get these people placed.

Right. but he doesn’t necessarily have financial worry. You know what I mean? No. Let’s say if something came up and Well, but I think part of this, the furnace blows out and he needs to spend $40,000 to do that. He’s not gonna, doesn’t even think about it. Yeah. He’s not even gonna, he’s just gonna cut a check.

He’s got a million in a brokerage account, so Yeah. But now he’s retired at 45 and then that same bill comes around. Yeah. That’s a little bit more stressful because

Al: now you’re on a fixed income. But here’s what I think. Alright, at age 35, you start getting kind of burned out and you think, God, maybe I can do this 10 more years.

So you just wanna have a little peace of mind. Could I retire at 45 and spend less? And the answer is yes. When you get there, are you gonna want that? maybe not, but it’s a little bit of peace of mind to know, Joe, that you could. That’s what I think. Yeah. I don’t know. He’s got a

Joe: 1-year-old Yeah, I, know.

With his roommate. Yeah.

Al: I get it. Yeah. So, Yeah.

Joe: $75,000. the 1-year-old is now

Al: 11. That includes college and health insurance. 11-year-old. yeah. Having mean college fund.

Joe: Yeah. I don’t know. Might have to rework your numbers here, but a little tricky. I don’t know. Why don’t you just do something that’s not as Yeah.

Stressful. That’s down a bit. Yeah. Yeah. He’s doing a hell of a job. Two sticks at 35. I didn’t have two sticks at 35. Big Al. me neither. Still looking for.

Al: Do you have any toothpicks?

Joe: I’m still looking for ’em. We probably had half a tooth thick at that point. Oh my God.

Next Week on the YMYW Podcast

Andi: Next week, Joe and Big Al spitball on inherited IRA rules for Dolly, those 5 year Roth withdrawal rules for “Peggy Hill”, a strategy to maximize capital gains for Jeff in Dallas, whether Skipper’s retirement payout is the killer deal he thinks it is, and HSA vs HRA for Larry in Rhode Island.

Andi: Your Money, Your Wealth is your podcast! If you enjoy YMYW, tell your friends and help us reach more listeners and viewers like you. Subscribe on YouTube to watch us do YMYW and join the conversation in the comments. Leave your honest reviews and ratings for Your Money, Your Wealth in Apple Podcasts, and in all the other apps that let you do that like Amazon, Audible, Castbox, Goodpods, Pandora, PlayerFM, Podcast Addict, and Podchaser. We’re on all of ‘em!

Your Money, Your Wealth® is presented by Pure Financial Advisors. If you’re worried about outliving your savings and wondering if you’re on track for retirement, you probably don’t want to rely entirely on a spitball from Joe and Big Al for peace of mind. Sit down face to face with one of the experienced professionals on Joe and Big Al’s team at Pure. You can do it from home via Zoom, or in person at one of our 13 offices nationwide. We’re in Southern California, Sacramento, Seattle, Salt Lake City, Denver, Phoenix, Chicago, and Nashville. A financial assessment with Pure is free, just like a spitball, but the Pure team will take a deep dive into where you are now, where you want to be in the future, and the smart ways to get you there – tailored to you and your needs, not the entire podcast audience. Click or tap the free financial assessment link in the episode description to book yours, or call 888-994-6257.

Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.
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