Show Notes

• 00:00 – Intro: This Week on the YMYW Podcast
• 00:53 – Middle Class Retirement Spitball For Those Not in the .01%: Are We On Track? (David)
• 06:37 – $5M Roth, $5M Brokerage: Can We Retire and Buy a Dream Lake House? (Mia & Jessie, Seattle)
• 17:26 – Pay Off the Lake House or Keep the Low Rate Mortgage? (Yosemite Sam, Allen, TX)
• 25:23 – Should We Shift More Funds into Pre-Tax Retirement to Retire Early at 50? (Todd & Margo, TX)
• 38:45 – Can We Afford Early Retirement at 55 and a $500K Beach Home? (Birdie & Bogey, Wililamsburg, VA)
• 46:27 – Outro: Next Week on the YMYW Podcast

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Transcription

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

Intro: This Week on the YMYW Podcast

Andi: Today on Your Money, Your Wealth® podcast number 559, David wants to know if he and his wife are actually on track at age 47 – without realizing they’re creeping toward that .01% crowd that David swears he is not part of. Mia and Jessie from Seattle want to retire and still pick up a dream lake house with a combined ten million dollars saved. Can they pull it off? Yosemite Sam from Allen, Texas, wonders if he should wipe out the lake house mortgage or keep that low-rate loan to hang on to more flexibility as he approaches retirement. Joe and Big Al also spitball on whether Todd and Margo should shift more into pre-tax accounts to leave their corporate jobs at age 50, and whether early retirement at 55 plus a $500,000 beach home is in the cards for Birdie and Bogey from Williamsburg. I’m Executive Producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP®, and Big Al Clopine, CPA.

Middle Class Retirement Spitball For Those Not in the .01%: Are We On Track? (David)

Joe: We got David. He wants a little spitball at one point. Oh God, we’re coming out hot.

Al: We’re right off the bat. He’s got 14 million.

Joe: 14 million in my 401(k). 5.1 million in my Roth. 14 million in a 401(k). That’s probably the largest 401(k) we’ve ever talked about on this show.

Andi: keep reading, Joe.

Joe: Oh, it’s all bs?

Al: Yeah.

Joe: Got it. Alright. $976,000 in cash at three and a half million dollars home we own outright. We make $2.7 million a year, but only spend about $500,000. I’m 33. Can I retire at 67? Purely fictional, fictionalized.

Al: Yes,

Joe: but not too far off from a typical demographic you’d like to hear from some people who are not in the 0.01%. Okay. All right. Could you imagine 33-year-old, 40 14 million?

Al: I don’t know how you’d do that unless you’re with a tech company and it just went through the roof.

Joe: Remember, was it Romney?

Al: Yeah. Oh yeah.

Joe: He had lots, like a hundred million dollars in his retirement, I guess.

Al: Yeah, because he had company stock and it went through the roof. Yeah, Right.

Andi: That would be a lot of Roth conversions.

Al: Yeah. Yeah.

Joe: Okay. Let’s, let’s get to it. you could use me. All right. Okay. This is David. Someone not in the 0.01 real percent. Yes. He’s not in the 0.001%. Okay. He’s 47. Wife is 53. We drink seldom. 1.5 in our 401(k) two 50 in a Roth 66 in savings. Only debt is $95,000 left on a $450,000 home. I max on my 401(k), and that company matches dollar for dollar up to 6% and adds an additional $10,000 ish per year on top of that. It’s pretty good. That is good. Also, I have $120,000 to find 29 plans for my 15-year-old. And 12-year-old boys. I’d like to retire with my wife as soon as possible. I’m planning on working until 67. I make about 200,000. My wife makes a hundred. We would like to be able to spend $10,000 a month in retirement, golfing and skiing.

Al: Okay. Good goal.

Joe: So 10,000 a month just on golf and skiing.

Al: I’ll assume that’s inclusive of other stuff. Sounds like my golf budget. It doesn’t it?

Andi: I was gonna say, is that what you spend, Joe?

Joe: Yeah, on lessons.

Al: I thought you were getting good. I spent 10,000 a month on lessons that I bill. Shoot, 200. But don’t you win.

You don’t win all the time. win all that money. Is that paying off?

Joe: Could you imagine spending $120,000 a year?

Al: Yeah.

Joe: On golf?

Al: That would be a lot. That’d be a fun. Hey, so let’s assume his second set of numbers is right. So, so here’s what,

Joe: 70 months retired. 67.

Al: Yeah. Here’s how it looks. So, 1.8 million today, 20 years from now. 6% rate of return being conservative, adding about $40,000 a year to savings. He ends up with 7.2 million. And first I will say David.

Joe: Just like everyone else,

Al: everyone on the show. what you talking about? So 7.2 million, that, that’s where you’re at. what do you wanna spend? 120,000 a year. I just did a 3% inflation rate. You could pick whatever you want. 20 years. So that’s like 217,000. So what’s your distribution rate? 217,000 divided by 7.2 million. Even without regard to Social Security, you’re at a 3% distribution rate. So this looks amazing. And I think, like I say, I think you’re in the demographic that you’re complaining about already.

Joe: He makes 200,000, they got roughly 2 million bucks at 47. That’s 10 x.

Al: Yeah.

Joe: You should have 10 X at 60.

Al: Yeah, right. Or 65. Yeah, 65. Yeah. And he’s

Joe: 20 years younger almost.

Al: Right. So he’s doing well. So.

Joe: It’s all relative.

Al: It is.

Joe: You know, I think people that listen to the show actually save a little bit. Yeah. And that’s why they listen.

Al: That’s why they listen. what do I do with it? Right.

Joe: But, all right, let’s give him a little bit more. He’s 47, 1 and a half million. They’re pumping in a ton of money into the retirement account.

Al: Yes, they are.

Joe: With the 6% match dollar for dollar and another $10,000 on top of that. Right. They make, 200,000.

Oh, the wife makes 300,000 or a hundred thousand. Another hundred. It’s 300,000. so call that two 50, what is he in the 20? He’ll be in the 24% bracket. 24? Yeah. 24% tax bracket. I don’t know. I would switch contributions to Roth. I agreed. And if he’s got the mega backdoor, I think I would do that too. I would imagine, I don’t know.

He works probably for a small company. 6% match is pretty healthy. Plus another 10,000 on top of that. Do you think that’s a smaller private company? Could be hard to know. Yeah. If you, it’s for a big public company, then you probably have the after tax component in here.

Al: Yeah. Then I would definitely would wanna be doing at four seven, right.

Joe: Yeah.

Al: The only problem with that is there’s not a lot in taxable, so he’s probably spending. For the most part. Oh, everything that comes up. Yeah. So maybe there’s not that much. I don’t know. But if there were extra, that would be a great idea.

Joe: I think was he got 60, 60, 70 grand in cash. Yeah.

Al: No, non qual. That’s what it looks like. Yeah.

Joe: House is paid off. Maybe you just paid off the house.

Al: Yeah. Maybe, you know, paying that down aggressively, probably.

Joe: really good shape though. 529 plan solid for the kids.

Al: Mm-hmm.

Joe: yeah, I think you can spend $10,000 a month just on golf alone. There, David.

Al: Let’s, okay. Check. Let’s go to and, the fictionalized numbers. Those look really good.

$5M Roth, $5M Brokerage: Can We Retire and Buy a Dream Lake House? (Mia & Jessie, Seattle)

Joe: All right. We’re gonna go to Mia and Jessie in Seattle, Washington. Hi, Joe, Big Al, Andi. I was searching for retirement pods and yours came up after listening to a few episodes, I’m hooked. Perfect. Wow. Thank you. Love the humor in the back and forth analysis from Joe and Big Al. My husband, Jessie and I live in Seattle and have a 23-year-old daughter who graduated from UW last year and is working for Amazon.

Al: Okay.

Joe: I’m 51. My husband’s 58 years young. I thought she was gonna say 58 years younger. Like that doesn’t work. Doesn’t quite work. 58 years young. We both are W2 paying jobs and we wanna work for another five to eight years.

We love our jobs and don’t have any issues. That sounds like Big Al.

Al: Yeah. Yeah. It’s great job. I get to be with you once a week

Joe: And yeah, it’s so great. That’s all I need. I work for an aerospace company in Seattle with great benefits, and Jessie works for an AI startup. Here are the financials. You have five and a half million dollars in a Roth, 401(k) in IRAs, five and a half million dollars in brokerage accounts.

Al: Geez, about 11, 11 million. That’s pretty good. Not too shabby. At, at 58 and 51,

Joe: boy, our home is valued at two and a half million dollars. We have a million dollar mortgage left on it. We have seven investment homes in Ohio.

Al: Wow. Okay. You’re doing pretty well. Okay. Missouri and Alabama. You wanna know if you could retire? Yeah.

Joe: I spent $10,000 a month. Can we retire?

Al: Yeah.

Joe: All right. So they got seven investment homes in Ohio, Missouri, and Alabama. We make about $3,000 in rental income at 7.35% interest rate. Okay. we hope to refinance to lower rates and increase our monthly rental income. Okay, good. We have not done any Roth conversions and we wanna start, our income is $440,000 annually, and we asked our CPA, he told us not to exceed total $500,000 of income if.

Okay. Is this the strategy we should stick to? I’m worried that we will have large RMDs. Can we convert more than a suggested amount every year? Also, should I stop four one k contribution in it’s hard since I get a 10% 401(k) match. Should I only contribute to the Roth 401(k) and let go of the company match or just put all the savings into a brokerage account? Let’s stop here. Let’s stop.

Al: There’s a lot here. Yeah. Already.

Joe: Yeah. So $500,000. Why is the accountant saying 500? He’s just that’s the top of the 32, I think, right? Mm-hmm. 400,000 is the top of the 32? No,

Al: that’s the top of the 24. You’re looking at that wrong?

Joe: No. What? 200? I’m looking at single.

Ah, that’s why 500 in $1,000 is the top of the 32.

Al: Yeah. So I think that’s probably what, ’cause then it jumps to 35%.

Joe: Yep. They make $440,000 annually. So if they do a conversion, they can get to 500 and

Al: 530 with the, yeah. 530. With the standard deductible. With the standard de. Yeah, so, so maybe,

Joe: but they’re also maxing out the 401(k) plan, so that’s another $60,000 pretax.

Yeah. So it’s 60, 70, 80, 94. 43 50. So they could do $150,000 conversion. Good. Yeah. in, in stay in that and stay 32 2% tax bracket.

Al: That’s probably what I would do. ’cause if they retire in five to eight years, they’re gonna have a lot of time, Joe, to be able to do Roth conversions, in lower brackets.

So that, that’s, then I would go hard on Roth conversions at that point.

Joe: But if they, I’m not sure they have five and a half million dollars in retirement accounts. I’m not sure what is the breakout between IRAs.

Al: Yeah. They didn’t tell us.

Joe: Right. And 401(k)s and Roth.

Al: Right. Right. With the question,

I’m assuming it’s mostly in a non-Roth, in a regular retirement account, so you can convert as much as you want in any given year.

True. If you wanted to convert a hundred percent of your retirement accounts in one year, you could do that. There is no limitation on how much money that you convert. Just know that you’re gonna be subject to income tax on every dollar that you convert. That’s why the account. Is seeing 500,000. Yeah, don’t exceed that because that’s the top of your current tax bracket.

So you’re in the 32% tax bracket. Don’t go over 500,000. You could go more if you wanted to. Okay? But then that just jumps you into a higher tax bracket. That probably is too expensive to pay, given that you’re pretty, really young, 51 and 58. You still have several years. You know, to convert.

Joe: Yeah to convert.

Al: Yeah. So that’s right. So I think we’re probably agreeing. I think the, I think I would convert to the top of the 32% bracket, which is about $500,000. There’s a standard deduction of 30,000, so you can actually convert to about 530,000.

Joe: Should I stop401(k) contributions? No.

Al: Mm-hmm.

Joe: Go to the Roth 401(k) doesn’t change the match, they’re gonna still match you.

Al: You could go, I think. I think that’s the misconception.

Joe: So yeah, if you go Roth, they’re still gonna match, but they’re gonna match pretax. So I would go a hundred percent Roth in my 401(k) contributions, so don’t stop that. Continue to get the 10% match. The 10% match will go into the pre-tax bucket. You can convert those dollars out later.

Al: Mm-hmm.I agree.

Joe: So, no, don’t stop. Keep that. All right, so we’ll move on here.

Al: Okay.

Joe: We also want to buy a lakefront dream home here in SNA, which will cost around three to $4 million. Will this push us out of our target retirement timeframe? Is this doable with a large down payment of 50% and carry a lower loan amount? Any thoughts on how we can buy our dream home? Love to hear your spitball on this. Thanks for all you do. Okay. They have five and a half million dollars of non qua They wanna buy. Yeah, a three to $4 million dream house. They want to put a couple million dollars down.

Al: Yeah.

Joe: you okay with that?

Al: Yeah. Are they gonna sell their current house and have a lakefront dream home? And then let’s presume they don’t.

Joe: So let’s just say, they got seven other homes that could probably sell ’em.

Al: They like a yeah. They could do a couple 10 31 exchanges, have a renter in the dream home and later pick ’em out.

Joe: Yeah, I think everything still works because she’s 51 I, yeah. And they’re gonna work another five to eight years and they’re saving a ton of money.

Yeah. so let’s just say they got $11 million today. You take away 3 million of that.

Al: Mm-hmm. So call it eight or take away 2 million. If, they do 50% loan, would you go 50% or would you go more? I don’t know. That’s a good that it depends on the interest rate. I would personally not like to use all of my, I wouldn’t do like, what do you think they spend?

Andi: she does explain, yeah. She says that they spend 300,000.

Joe: So if they spend $300,000 a year, they make 440,000 and they’re saving into their 401(k) plans after tax, they’ll probably break even.

Al: Yeah.

Joe: How do you think they got $5.6 million in a brokerage account?

Al: because, he, Jessie works for an AI startup, so he probably worked for another high tech company that did well.

Yep. I’m guessing that’s usually how that happens, Hughes and mm-hmm. Then she works for Amazon? No, the, daughter works for daughter, she works for aerospace company with great benefits. So I’m gonna guess Jessie, with stock options. Yeah. I don’t know.

Joe: Maybe the AI company goes bonkers with their stock.

Al: maybe. Yeah. I think that’s why they’re thinking a little dream home. Yeah. I, so the, I will say this is non-scientific. Because this is just for the, by the gut, but I if I wanted to buy a dream home for three or $4 million, I kinda like your idea. 50% down payment, 50% loan, probably the interest rate will be a little bit too high.

So we’ll look for opportunities to refinance to a lower rate when you have that opportunity. I’d just hate to use. Too much of the taxable account that, that’s how I would feel, I think. But I don’t know. What do you think?

Joe: I would probably get a pretty large note to start. And don’t touch the brokerage account and then just see how that payment feels.

Al: Mm-hmm.

Joe: And then I would just probably be like, okay, can I stomach this?

Al: Yeah. that’s a way to think about it too.

Joe: And then, I think that then I would throw more cash at it depending on what interest rate that I could get. I would

Al: say the older you get, the less you like debt. they’re. 50 and you’re younger than me.

Joe: So if she’s 51, it’s a dream home that they’re gonna retire into. Yeah. Yeah. And they make great income. He’s gonna get more stock, I’m guessing, maybe, right? If it hits you just take the stock and

Al: pay off the note. could. There’s

Joe: liquidity.

Al: Yeah. I like the, yeah, that’s why I wouldn’t do more than half.

Joe: Okay.

Al: But yeah, no, I get it. You could do more. but I wouldn’t do it all cash. That would take too much outta my liquidity.

Joe: Yeah. I would not do all cash. I would probably do the 20, 30%. Yeah.

Al: I might even, like you said, think about selling a property or two in Ohio, Missouri. Alabama, or Yeah.

Joe: Do you like to be a, have all these seven properties all over the place?

Al: Yeah. I mean,

Joe: or they think that’s gonna be a cash cow.

Al: and probably usually being a, rental property owner, myself and I used to have more rentals. You could have lots of rentals. I guarantee if there’s seven rentals, there’s two or three you’d rather not have compared to the four or five that you really like.

So maybe you take those under performers and sell them and use some of that cash. I don’t know. I would think about that,

Joe: but yeah, I don’t know. You’re making dreams come true here.

Al: Yeah. I just, I want, I’m, all for living, living your best life. And if it’s not a, if it’s a lake home up in, Seattle, then I’d say go for it.

Andi: Along with their email list and their HP12C financial calculators, the Key Financial Data Guide is a must-have for Joe and Big Al to be able to spitball for you. It’s also a must-have as you prepare for end-of year tax-planning. Download a free copy for yourself from the link in the episode description. It’ll show you at a glance the 2025 tax brackets and capital gains tax rates, the retirement plan contribution limits, tax on Social Security, Medicare premiums, and all the current credits, deductions, exemptions, distributions, and exclusions. All the numbers that affect your financial strategies as you plan for retirement. One listener said that, basically, this guide alone is worth the price of admission to YMYW – so, it’s priceless! Just click or tap the links in the description of today’s episode to download the 2025 Key Financial Data Guide, and for more valuable end-of year resources. Yours free courtesy, of Your Money, Your Wealth® and Pure Financial Advisors.

Pay Off the Lake House or Keep the Low Rate Mortgage? (Yosemite Sam, Allen, TX)

Joe: Hello, Joe, Big Al. Enjoy listening to you guys. You can call me Yosemite Sam. Remember Yosemite Sam?

Al: I do. All right.

Joe: Considering I’m going loony chasing the retirement roadrunner.

Al: Yeah, usually that’s the, usually that’s the coyote.

Joe: Yosemite. Sam wasn’t he the gun slinger.

Al: Yeah, he’s the guy with the beard.

Joe: Yeah. Yeah. He was in the road runner?

Andi: the handle bar mustache. Yes.

Al: Yeah, he, and then he talked like

Joe: Got cotton paper grab.

Al: Yeah, he did. He did. But I mean, I think of the roadrunner, I think of the coyote. Yeah. His chasing the road runner.

Joe: Yosemite Sam have his own cartoon? Or was he part, or was he like a,

Al: he got character in that little pride gig maybe.

Maybe. Was he?

Andi: He might’ve had some of his own cartoons. Wow. And his real name is Aloysius Bartholamew Sam.

Al: Oh, but Yosemite Sam’s easier to say.

Joe: Yeah, I take it from Yosemite probably. All right. my wife and I are both 54 years old, turning 55 next summer. Okay. All right. We are considering retiring soon between ages 55 and 60. We know too many friends in their forties, early fifties who have passed away recently. Wow. Okay. Ugh. And so even though we are in excellent health, we know life can be short and we want to be sure. We not only have a long and enjoyable retirement, but also enjoy time without working in our younger years to travel and experience life should the unthinkable happen to one of us. I drive 2024. Ford Ranger is a first time truck owner, native Texan. Imagine that my wife drives a 2025 Kia Sportage. All right, so we, just replaced both of our vehicles and intend to drive them for 10 plus years. I do miss my 2016 BMWX five. We traded in for the Kia, quite the downgrade in performance/fun factor. Wow. Yeah. We went with a Kia from A BMW.

Al: Yeah, that’s a big change.

Joe: Yeah. I prefer a hazy IPA, but have been known to sip a 12-year-old scotch. My wife and I both enjoy glasses of both white and red wines. Here’s our current savings. Taxable IRAs, A 401(k)s 2 million bucks. Roth IRAs 300 grand HSA 30,000 brokerage account, 50 k.

Primary home is paid for worth 600,000, lake House worth six to 800. We got a mortgage on that $400,000 balance with 26 more years. the lake home is our future retirement home. Current plan is to sell our primary home at retirement. We have estimated in today’s dollars about $128,000 of expenses, which includes the mortgage, medical insurance, and some travel.

We have no debt besides the mortgage, and currently our employment makes us around $200,000 combined. We have no pensions. Social Security estimates will be around 50,000 for me, 30,000 for her at age 67 and 70. So here’s our current plan. We want to quit our jobs, sell the paid off house and move permanently to the lake house, placing the roughly $500,000 of house proceeds in a safe account to fund the loss of income in our early retirement years, and also to fund some taxes for Roth conversions.

Al: See Yosemite, Sam has got the magic neighbor rug where you can, you know, just go next door and neighbor sleep, and so you go under the rug.

Joe: Another option we are considering is to pay out the mortgage and use the additional 350,000 from our current employer, 401(k)s as a rule of 55 without penalty to use as income, but this moves a larger chunk of our savings into non-liquid equity.

A Dave Ramsey, follower in previous financial peace coordinator. I know how rewarding a paid four houses. However, in this instance, we only have two and a half percent interest. It seems like we would be better off keeping that mortgage given us more liquidity cash to allow us to retire early. What do you think?

Pay up the mortgage. Tap the 401(k) or live off the proceeds from selling the house. Also, can we even retire this early? I’m a little concerned we will have be a little higher than a 4% withdrawal rate until Social Security kicks in every year. Though we delay retirement, the prediction improves considerably, but we don’t want to be the ones that delays year after year.

We have an adult child who had mental issues and we may end up having to pay for some of his living if he can’t make it on his own. So we’ve exhausted. They are exhausted. So we are exhausted from dealing, with that. but also are simply just tired of our full-time jobs. We’re ready to relax.

All right? And tend to be a little, woodworking there. Okay. Gonna begin a hobby of doing woodworking. Once retirement is real or very close though, we’re not opposed of doing some part-time work. I don’t know how long can you do woodworking? You probably do one little quick project and you’re like, Hey, I got splinters.

Al: There’s spot us everywhere. I’m good. some people probably like it now for you and me. Maybe a couple days. I don’t know. I, don’t think, maybe a couple hours. Couple hours? Yeah. And then you burn your finger on something or Yeah. You cut it with a saw, you know, and then it just looks like crap and it’s like, and then you go, and then you put it in the fireplace.

I spent two weeks making this little wood thing. Yeah. It’s like your wife says, what is it? Yeah, it’s a, I don’t know. Yeah, it’s a knickknack. I’m not sure. lemme start with the retirement, because. Let’s say you retire now, which is basically, you know, right around the corner next summer. So just going with current numbers, between what you have and selling the home, you’d end up with about 2.7 million.

You wanna spend 128,000, that’s a 4.7% distribution rate at age 55. Yeah, that would make me a little nervous, but I’m not gonna say not to do it. Just have to get, just do it. Live your life. Just find that leg home. Just get, just get some part-time work. To supplement, right? Yeah. Throw some wood, makings.

But without part-time income, I would be a little uncomfortable with that. now in five years, Joe, I just kinda ran that, you know, I don’t know how much you’re saving, but let’s just say you start with what you got 6%, add 30,000 a year for five years, you end up with 3.2 million plus the 500,000 on the real estate.

Maybe it’s higher, but. Let’s say you end up with 3.7 million and by then your 128,000 with 3% inflation is 148,000. Now it’s a 4% distribution rate at age 60 with Social Security coming. Yeah, I’m okay with that. But your goal is to retire earlier. So yes, you can do it, but you probably want to either reduce your expenses a little bit, get some part-time work, or maybe a combination of both to feel more comfortable with this.

You know, Dave Ramsey and that’s, this is exactly what he would tell you as well. So, you know, don’t get yourself, don’t spend too much and then have to go back to work when you don’t really want to. So that’s what I would say on that.

Joe: You do, getting pay off that mortgage?

Al: no. That’s, to me, that’s a big mistake at a low mortgage rate.

Like that two point. Yeah. You want your liquidity in retirement. Now if you, if your mortgage is 7%, then that could be something totally different. But what is it? 2.6% interest rate? I keep that. Yeah, I had one

Joe: of those one

Al: way back. Yeah. Oh yeah. Back before you bought the new home.

Joe: Yeah. I still dream about that mortgage.

Still dream about it. I do. Yeah. Right.

Should We Shift More Funds into Pre-Tax Retirement to Retire Early at 50? (Todd & Margo, TX)

Joe: We got Todd and Margot from Texas. We’ve been listening to your podcast for about a year now. And it’s a great way to learn bits of information about a broad range of tax and retirement topics. We love a good champagne, spicy margaritas, and old fashions. check and check.

Al: You like champagne?

Joe: Not really.

Al: Okay.

Joe: but I’ll have a glass at a wedding or something. sure.

Al: Yeah. I had a glass at your wedding.

Joe: You did?

Al: It was good. Very good. Yeah. Spared no expense.

Joe: That’s, that wasn’t me. You would’ve got a Coors Light.

Al: I got the special box.

Joe: Yes you did. You did. All right. We had a paid off Tahoe in a leased work vehicle paid by company Margot owns. Okay. Margot owns a company.

Andi: By the way. Todd and Margot, Joe. Does that name those names sound familiar to you?

Joe: Todd and Margot.

Andi: Yeah,

Joe: from Texas.

Andi: It’s apparently the suburban yuppie neighbors of the Griswold family in the 1989 movie, National Lampoon’s Christmas Vacation.

Joe: Oh yeah, that, that’s Todd and Margot.

Al: That’s what in movies too. Yeah. Todd and Margot. Okay. It’s was that the Christmas vacation one?

Andi: Yes.

Joe: Yeah. Drive where they ended up burning down the Christmas tree, whatever it was.

Joe: Yeah, the cat blew up.

Al: Yeah. That blew up.

Joe: Blew, yeah.

Al: Got it. Yeah. ’cause cousin Eddie, lit the sewer on fire.

Joe: Yeah. Lit the sewer on fire. The, yeah. I forget the old man. What was his name that lit the cigar?

Al: Oh, yeah. With the toupee. Yeah.

Joe: I kind blew it out.

Al: Right.

Joe: Okay. uncle Charlie. Yeah. We’re, I think maybe Uncle Charlie.

Al: Maybe.

Joe: Don’t have any children and, we’re happy being an aunt. Uncle Todd works at a corporate job. Margot owns her own company where she is the only employee. Our goal is that Todd can retire from a corporate job when he’s 50, and we can live off our non-retirement funds and Margot’s company until we can access the retirement funds. All right. Much of Margot’s job can be done remotely or in focus months when we’re in our hometown.

She can still mostly likely earn 50 to $75,000 working only six months outta the year. We’d like to amass $4 million in non-retirement assets, by the time Todd retires. When we get closer to 50. We will look more closely at our yearly spending needs. Overall saving and desired lifestyle. If Todd needs to work longer, he’ll just work longer.

We’d love to travel and spend months at a time in various countries. Okay, because we’re focused on bridging the gap from age 50 to 59, most of our yearly contributions is focused in non-retirement investments. However, we’d love a little more insight on other tax strategies or if you could shift more of our funds into a pre-tax retirement.

Look at some ideas. All right? Yeah, me too. Let’s see what we got here. We got current savings. They got a four one K, traditional IRA of $450,000. Roth IRA is 135. Brokerage in savings is 450,000. Small company investments of 50 K. They got a real estate primary home, $1.2 million investment condo, 450 vacation condo in Cabo two 50. Paid off with a cash flow. Yeah, a low cash flow, $10,000 annually.

Al: Wonder how often they get to Cabo. I don’t know, but probably from Texas, probably frequently. I don’t know, a couple times a year. Okay. Three.

Joe: All right. Earnings, Todd. He makes $250,000 salary plus bonus, plus $200,000 of RSUs with a promotion in the near future.

Oh, congratulations Todd. Love it. Margot’s company is fairly stable and predictable. She files a S Corp and is the only employee. She pays herself a salary, $60,000, and the company will make about a 80 to a hundred thousand dollars of profit while also allowing us to utilize several tax advantages. Okay.

Her company rents the investment condo. Oh God. As an office. Yeah. They’re getting pretty great. if it really is to Margo, that’s funny how I ask how often they make it to Cabo. Yeah. They should be there every day. May need to. Yeah. Her company rents the investment condo. From us as an office and covers the entire mortgage taxes and HOA fees through 33 33 monthly.

So that’s Oh, the

Al: investment comp. Yeah. Not the Cabo one. That, right, right. Yeah. So that would be okay if it’s a fair market rent, first of all. And secondly, if it’s actually being used as an office and not any personal use. So just remember you gotta be doing those two things and then those two things.

Are true, then that’s okay.

Joe: $3,000 a month. That sounds fair. Market value for rent could be, her company rents a storage unit in parking space from us at $500 monthly. So stor. What? He’s got

Al: a closet. it’s the garage. It, you know, I’m gonna say, I’m going to, I’m gonna call BS on that because, she’s got a predictable and stable business.

That sounds like a CPA doing tax returns, service, business. I don’t know what she would need to have a storage unit for, but files, that’s what the investment card is for.

Andi: Boxes of paperwork, tax returns.

Joe: Okay.

Al: Anyway.

Joe: Okay, go ahead. We use the Augusta rule and our company rents our vacation condo from us at fair market rate.

Al: Now that one, that, that’s an interesting one. That’s, Augusta, Georgia. so, and that came about when people were renting their homes for just the Masters.

Joe: Okay,

Al: so here’s the rule, which is if you rent any property for 14 days or less, it’s tax free. What the Augusta rule is. Okay, and by the way, just for grins, that’s IRS section two 80.

Joe: We use the.

Al: I, when I was younger, there were people that quoted code sections and I just thought, I’m never gonna be that guy. But I thought, you know what? Once in my life I should be that guy.

Joe: I love quoting this.

Al: I love

Joe: quoting the tax code

Al: two 80 Capital A, parenthesis little G.

Joe: Okay,

Al: got it. Check it out.

Check.

Joe: I’ll check that box. All right, so the Augusta Rule, intercompany rents our vacation condo from us. You did that one. I know, but that doesn’t make any sense. He’s amazed. 14

Al: days. No, That’s another, that would be another property.

Joe: We use the Augusta rule. Inter company rents our vacation condo.

The company rents our vacation condo from us.

Al: That’s probably, that’s the one in Cabo. That’s probably in Cabo. So the company’s renting, so it’s tax free company gets a deduction. Yeah. So they’re, so the company rents the Cabo. Condo. 14 days. Yeah. She’s taking clients to Cabo. She’s gotta work down there and he sleeps in a hotel ’cause it’s a hundred percent business.

Joe: Her company credit cards generates $15,000 worth of travel credit that we use for vacations.

Al: All right. That’s a lot of spending. That’s 15,000 travel. Maybe I take that. Maybe she doesn’t have a service business that’d be a lot of spending to get that much credit.

Joe: Oh, yearly savings contribution.

Todd contributes $9,000 salary. Okay. 9% of his salary, I’m sorry, $18,000 in a $9,000 company match to a 401(k), which maxes out his company match. Todd immediately sells his RSUs and will contribute at least a hundred thousand of those after tax into our brokerage account. We contribute $15,000 annually into the brokerage account.

We put 10% of Todd’s salary into an ESPP account where he can purchase stock at a 15% discount. They do $20,000 a year there. Yep. We aren’t currently contributing any additional funds into traditional retirement accounts, and our modified adjusted gross income is more than 264 limit for Roth IRA contributions Question mark.

Okay. Sham Max out his 401(k). yes. Are there tax advantage accounts that Margo, company could set up? She doesn’t plan to hire any full-time employees in the future. Can she create an employer 401(k) plan? The answer is yes. Other than the company sponsored 401(k), are there other tax advantage ways for Margot’s Company to think about the 80 to a hundred thousand dollars profit that you’ll make each year?

Sure. Okay, so I, yeah, I think Todd should max out the 401(k). Yep. Margot could set up a solo 401(k) plan. So individual 401(k).

Al: Yep.

Joe: She could do traditional or Roth. Mm-hmm. she could contribute even more to, she could set up another defined benefit plan on top of that

Al: if she wanted to. Yep. So she could, they wanna save more.

Joe: Yeah.

Al: I think that, Part of their goal is to retire At what age? 50. Yeah. Age 50. So they’re thinking, we don’t want so much money in a retirement account. they

Joe: wanna spend $130,000 a year.

Al: Yeah. Yeah. And she’s gonna make 60. Yeah. She’ll

Joe: make, but she’s making 200 some today.

Al: Yeah. She’ll

Joe: or

Al: one 60 today.

Yeah. She’ll mostly, yeah. She’ll earn 50 to 75,000 part-time. Okay. Sounds like. Yep. So I think that I agree with you on the 401(k), but I think I would do, I would say this, use the Roth option. Because, you know, if a lot of people don’t tax

Joe: treatment.

Al: Yeah. Right. A lot of people don’t understand this rule with a, Roth, I a, contribution comes out tax free when you pull it out regardless of how old you are.

So let’s do a little example. You got 500,000 in a Roth, IRA. And 200,000 of that is contributions. Just to make up an example, you’re age 50, you wanna pull out 10 grand to cover some living expenses. You pull out 10 grand, it’s tax free because you have $200,000 of contributions. It’s FFO tax. Treatment first in first out, meaning that contributions always come out first.

I think a lot of people don’t and they think they have to wait to 59 and a half. You don’t necessarily on a contribution. Now the truth is we’d rather have you let your contributions grow for decades, so because you got that money into the tax free in the first place. But if that’s what you need for your retirement, I’d rather have the money be in a Roth and pull it out from a Roth than in a non-retirement account where you’re paying taxes on capital gains and interest and dividends.

Joe: here’s what I’m coming up with, bud. What do you get? Okay. $450,000. What they currently have in brokerage savings. Mm-hmm. He’s got RSUs that’s gonna net them a hundred thousand dollars that they’re gonna sell and put in a brokerage account. Plus they got the ESPP of $15,000.

Al: Yep.

Joe: Okay. So that’s $115,000 of non-qualified savings that they’re gonna save over the next 15 years.

Al: Yeah. Now the only, the reason I said what I said is because I’m not necessarily counting on the RSUs. Maybe they happen every year, maybe they don’t. If they happen every year, I like where you’re going. So continue.

Joe: So that’s 115,000. So 450,000 plus $115,000 of savings is like 4 million bucks. So they got plenty.

Al: Yeah. Right.

Joe: That’s gonna cover the shortfall for sure. Yeah. That they could bridge. So everything else, given the tax brackets that they’re in, I would want to get a as much in the Roth as possible. Yeah. Or even the traditional IRA, they only got four 50 there as well. Sure. So it’s not like

Al: it’s

Joe: outta 0.4 0.5 million.

I mean, they’re 35 years old, just watch it. Right. So there are 260,000 plus she plays self-employment tax. They’re doing a lot of interesting things from a tax perspective. They really

Al: are.

Joe: Yeah, they probably went to like how to save tax. Seminar that, Al gave them,

Al: probably did. Chattanooga, we,

Joe: bye bye in Texas.

Let’s see. Buy little Condo and Cabo. Rent it out to yourself. Music. Augusta Pool.

Al: Yeah, I used the Augusta rule. That’s yeah. Yeah, probably that was.

Andi: One of the most important financial decisions you make could mean thousands more dollars of income in retirement. How and when you claim your Social Security could completely change your retirement lifestyle – but it’s complicated! The Social Security Administration’s Basic Guide to Social Security Programs contains 2,728 different rules! This week on Your Money, Your Wealth TV, Joe Anderson, CFP® and Big Al Clopine, CPA expose 6 Social Security Myths That Will Make Your Retirement Miserable. Don’t let these common pieces of misinformation cause a permanent reduction in the full amount of Social Security benefits to which you’re entitled. Just click or tap the link in the episode description to watch Your Money, Your Wealth TV and to download our companion Social Security Handbook. It’s free, and it’s all yours, courtesy of Your Money, Your Wealth® and Pure Financial Advisors. Spread the word and you’ll be giving the gift of financial literacy this holiday season.

Can We Afford Early Retirement at 55 and a $500K Beach Home? (Birdie & Bogey, Williamsburg, VA)

Joe: Birdie and Bogey. Oh, we gotta go to Birdie and Bogey.

Al: That’s, yeah, that’s right up your alley.

Joe: Yeah. Birdie and Bogey from Williamsburg, Virginia. Would love to get your spitball on. Two questions. First, let’s get the important information out of the way Birdie loves a glass of per, oh, you know what? I screwed up on that last one ’cause I was already on Birdie and Bogey and they’re 35 years old. How old is, Margo and Todd? 39 and 41. 41, 0, 39 and 41. So it’s close.

Al: Close. Close enough.

Joe: Yeah. Close enough. Alright.

Al: Sorry. You were looking at the wrong one. I was looking disclaimer on the everything you just said.

Joe: Yeah, everything I just said is just terrible spitball. Would love to get your spitball on two questions. First, let’s get the important stuff outta the way. Birdie loves a little glass of Prosecco. I love a nice hazy. IPA. We drive a Volvo and Toyota that are paid off. We’re both 35 years old and have the following, 150,000 in savings, 200,000 in a brokerage account, $700,000 in retirement, 400 being post tax. But I’m working on increasing that amount in the future, man, 35 years old. That’s incredible. How are these people doing it? I don’t know. We have $450,000 left on our house that is worth about 700,000 with no other debt I calculate. We save about $45,000 a year that I split between our cash savings brokerage account. We are able to save $90,000 a year into our retirement accounts. Do you live in your parents’ bedroom? I mean do basement.

Al: Could be. Maybe they’re part of the FIRE movement.

Joe: Yeah. $90,000 we’re able to save in our retirement accounts, plus $45,000 in cash. That’s a hundred. A hundred, okay. We spend one 50. My plan is to cut back my hours to the bare minimum around 55 years old, so I can spend more time on the golf course with my wife. How am I doing? You’re doing fine. Just fine. Agreed. Most importantly. Can we afford a beach home? Nothing too fancy. Just a place where we can go to get away from the daily grind. So I have a $500,000 budget for this home. Would it be reasonable to purchase in the next five to eight years, or would it be foolish for us to even entertain the idea as we have $450,000 left on our home? Let me know what you think. Think of all you do. All right. I like this question.

Al: Yeah. Yeah. So first of all, you think they’re okay?

Joe: I do. How you doing? I wanna play golf with Birdie and Bogey.

Al: Yeah, Birdie and Bogey. You’re doing great.

Joe: So, can they afford the beach home, would they, what? What do you do? What do you do, Al? They’re 35. They wanna buy it at 40.

Al: Yeah. 40, 40

Joe: $500,000 budget.

Al: I think they can do it. I, think I would probably, I wouldn’t do all cash. I’d get a loan on it. Boring. Yeah, no, I’ll take, I mean, if you just take where they’re at now at roughly a million dollars and 20 years and add another 140 grand or a year 6%, seven, you’re somewhere between eight and 10 million just right there, right?

Joe: So if they buy the house, $500,000, you’re gonna take $200,000 onto the brokerage account or the savings for down payment. Agreed. You’re gonna have a note of 300,000 that’s gonna add to the expenses. So they’re not gonna be able to to save 130,000.

Al:  No, they’re probably gonna be able to save a hundred. my point is there’s a lot of extra here.

Joe: There’s a ton of extra, so, so yeah, I would say yeah, live it up. Buy your place that you wanna buy.

Al: Yeah. The, problem with using all cash on something like that is you take too much outta your portfolio and the time value, money wouldn’t, you’d lose a lot of growth that way. That’s, why you wanna get a loan.

Joe: But, yeah, no, I think this works just fine, but here’s the – on paper, but real life will get in the way.

Al: Oh, sure.

Joe: So I don’t know how much he makes. probably a lot to save that much fun. So again, I think that’s their biggest asset.

Al: Mm-hmm. The, so let’s say they buy the beach house and something happens.

Joe: Yeah. the company goes bankrupt. Yeah. It’s a small, you know, or he gets laid off. I don’t know. He gets sick. Sure, That income goes. Now he’s got two mortgages hanging over his head. you sell one if you have to. Yeah. Fire sell. The stress just goes through.

Al: This guy is very prudent. Not when you get-

Joe: You know, he got a million dollars already at 35, I think, I guarantee the reason why he is got a million dollars at 35 is that he’s not buying beach homes-

Al: but he’s spending 150. That’s not nothing. He’s not living in the parents’ basement.

Joe: I suppose 150 is that’s a healthy,

Al: just healthy spend.

Joe: Yeah. But I guarantee this guy could probably live off of 50 probably. all right.

Al: Yep. I think it looks good.

Joe: I would, yeah, write back in five years. Let’s take a look. Yeah. then, yeah, we, but that, but a beach house for 500,000. What beach is he?

Al: it’s, he’s in Virginia. We don’t know the East Coast property, but I would think it’d be more expensive or as expensive as here. The where you go.

Joe: Yeah. I was just in Kiawah Island so a couple blocks from the ocean.

Al: Okay, Yeah. And I was just in Martha’s Vineyard and it was not 500,000.

Joe: Not 500,000. I mean, there’s some homes that were pretty old and we were looking and yeah, if you’re on the ocean, a beach home, several million.

Al: maybe by beach home it means like four blocks away or,

Joe: but how is, how relaxing is that? I mean, would you wanna live like in PB?

Al: No, that would be like a beach home, right?

Al: Yeah, no, that would a hustle and bustle like four or five blocks out. I mean, if you’re 25, that’d be fun. Maybe, I don’t know. Maybe it’s a lake home.

Joe: Maybe a, lake home is 500,000 a beach home. I don’t know if you can find a beach home.

Al: there’s not too many beaches in Virginia. I do know that. And Virginia’s a very expensive place. Maybe not for a lake home, I dunno.

Joe: But yeah, I would say. What’s the average beach house in Virginia, Williamsburg? How far away is Williamsburg from the ocean?

Al: I would think pretty far.

Andi: Let’s see. There are no beach homes in Williamsburg, Virginia, as it is an inland city.

Al: do a lake home.

Andi: Let’s see, average Lakehouse in Williamsburg, Virginia.

Al: I wouldn’t, just say Virginia.

Joe: Yeah, Virginia in general.

Al: Probably not William in Williamsburg.

Andi: Yeah, it’s not 500, maybe it’s a 250 to 500,000 for a 2,500 square foot home-

Joe: beach home?

Andi: Lake home.

Al: Lake Home.

Joe: Oh, let’s, go beach. Let’s go to the beach.

Andi: Okay. There’s no beaches in Virginia.

Joe: Isn’t there? I don’t even know where Virginia. yeah, there isn’t there beach?

Andi: The average beach house in Virginia, very significantly. But in the Virginia Beach area, the median home listing price was $429,900 as of September, 2025.

Yeah. The media sold price of three 90.

Al: I sat corrected. So they do have beach homes

Joe: that Oh yeah. I dated a girl from VA Beach.

Al: VA Beach. Okay. VA Beach.

Joe: She was a nurse.

Al: Huh. How about that?

Joe: Back in the day.

Al: Learned about a new beach to visit. That’s great.

Joe: But yeah, let’s go out. Yeah. Maybe you get canoe in it.

Al: I think so. I gonna, I graduated kayaks.

Joe: Okay. That’s it. Happy holidays. I guess we’re in-

Al: ‘Tis the season.

Joe: It is. I don’t know when this will air.

Al: Me neither, but I’m sure it’s gonna be holiday season.

Joe: Yeah. Happy, All right. we’ll see you soon folks. Show’s called Your Money, Your Wealth®.

Outro: Next Week on the YMYW Podcast

Andi: Next week on YMYW, Joe and Big Al spitball on high-yield investments vs. safe retirement income. How much risk is too much? How much cash is too much? Does a pension replace your need for bonds? How do you match your investments to the amount of time you have until retirement? Join us and find out next week, won’t you please?

Time flies, especially when it comes to planning for your retirement at year-end. So don’t put your financial future on hold! Get a comprehensive assessment from one of the experienced professionals on Joe and Big Al’s team at Pure Financial Advisors to see if you’re on track. It’s free, just like a spitball, but the financial assessment is one-on-one and customized just for you, not for the entire YMYW audience. The pros at Pure will analyze your entire financial picture, figure out where you are now and where you want to be in the future, identify potential roadblocks, and help you create a detailed, personalized plan to get you to your ideal retirement. Don’t wait to book your meeting. Right now, everyone is looking for last minute ways to save on their 2025 taxes and to prepare for what’s coming in 2026. So click or tap the link in the episode description now, or call 888-994-6257, to schedule your Free Financial Assessment, ASAP.

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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