5 Tips So You Only Retire Early ONCE!

I would have been able to do everything I wanted to do without worry . Today I'm going to go over what you need to know so that you truly can retire early only one time and without any regrets . Now I am going to go over , of course , a recent review . I love highlighting the reviews that come in , so please continue to leave those .

Today's review demeric lots of useful information for getting the most out of your hard earned retirement savings . I didn't know what I didn't know before listening in , so glad that this has been helpful . As always , if this has been helpful , please do leave a review . It helps more people find the show and my goal is to help a million people retire early .

So let's hop right into today's episode , which is , of course , I hope you only have to retire early once and for a lot of you our clients listening to this . A lot of you are people that have been listening for some time . For the new listeners , please know that when you look at an early retirement , there are two people .

There are people that retire early and there are people that retire early with confidence , and I've seen both . I've seen the people that retire early and they second guess going out to eat and they second guess traveling and they worry oh my gosh , if I spent X today , what does that mean when I'm 85 ?

And then I've heard other people that are like I retired early already . I did it with confidence . I have a plan and that thing in the back of my head I just don't worry about anymore because I have confidence .

And so today I'm going to go over what are the things you need to think about the five core things plus a bonus thing at the end of how can you make sure to think about these things so that you retire early truly only one time , with confidence . The first thing is income .

Now , this is pretty straightforward , but I'm going to show you how I think through it a little differently and I hope , if anything , it's just more not confirming , but it just brings more clarity . That's my goal today . Your first priority is to ensure you have enough income to never run out of money . That's obvious .

But you don't want to just run out of money , you want to optimize your money . So it's not just the first year of retirement or the second or the fourth or the 10th . It's all the years 20 , 30 , 40 plus years . And for a lot of you , you want to retire early mid 50s , early 60s , late 40s . For some of you , okay , we need income for 50 plus years .

How much do you need ? That is the question , and it depends on what your retirement looks like . Yours can be very different from your neighbors and your coworkers . So start here . Don't beat yourself up with getting an Excel spreadsheet right . Going Ari , what am I going to pay for cable in 20 years from now ? Oh my gosh , what's my phone bill ?

Excuse me , I'm going to be with inflation . That's not the goal here . The goal is to stay high level . Don't get that paralysis analysis . Just start high level . Go through this podcast . You don't need to be writing anything down , but have a very clear sense of okay , here's what I should be thinking about . What are basic living expenses ?

Okay , I think housing reasonably might be in this boat . Maybe I'm going to relocate and it's going to cost less at that time . Don't have to go through deep analysis . But housing utilities , insurance , food what are the costs to survive and live comfortably ? That's what I want you to do . Number one in your head basic living expenses .

Most people have a general sense of this . Number two is what about the fun stuff ? Travel , hobbies , entertainment , giving lifestyle . Some people call it discretionary , but just what are the fun stuff ? And what I'm going to do to help out is I'm going to give you a link to the budget here , a budget tool that I want you to use .

You're going to be able to see it in just a second here . Actually , you can see it right now , of course , in the description below today's episode . If you're on the podcast app , you'll see it there , probably the second or third link there . You're going to see it clearly listed as the budget to use and I'm just giving that away . Just go use the budget .

I hope it's helpful for you . Number two determine this is of income . Just be clear here . Kind of sub points to income . Determine where's income going to come from . It's easy enough when you're working , income comes from your salary , but guess what ? There's a new employer in town and it is you when you retire early .

So in retirement there's going to be savings , meaning you probably have some cash . You're going to have a 401k , maybe a Roth IRA , a brokerage account , inheritance , social Security , pension , rental income , multiple smaller income streams that probably make up your total income . So ask yourself what's the best Social Security strategy for my situation ?

What amount in account should I pull from first , how many income needs will change over retirement ? Because most people don't spend the same amount in the first year as the last year . And there's a smile it's known as the retirement smile that a lot of people talk about in the industry which is you smile , also known as retire . You tend to spend more .

You have your energy and health . Then it comes down . You spend a little bit less , then it shoots back up . Call it the smile comes back up . Maybe there's some frowns and smiles along the way , but the goal here is that you're not marrying your expenses . Excuse me , but the one question I get all the time is how much do people actually spend in retirement ?

And I'll tell you right now , most people are between that six to 8,000 of core expenses , and then maybe it's another 20,000 a year for travel or something along those lines Doesn't mean it's right or wrong . You might listen to that and go , all right , it's way more than I could spend if I wanted to . Or it's all right .

I don't know how on earth I could retire with that . And you're not wrong and you're not right . People typically think I'm retired , it's time for me now to move into my 60 , 40 portfolio , and so you can guess . Number two here is your investments . It's the wrong way to look at it .

In fact , I had someone and if you didn't see it , if you're not on my email list , you might've missed it but I had someone send me the best gift ever , and I'm looking at it right now .

So if the audio kind of comes out for a second , forgive me , I'm trying to use the microphone it says anti-cookie cutter jar love the pod , meaning someone literally sent me the coolest gift ever , which is , yeah , I am anti-cookie cutter . I don't believe in asking you what's your risk tolerance on a scale of one to 10 ?

You're like already , I don't know , maybe a five or an eight that day , or a two if I had a bad week , and how old you are . Those are two questions that I don't believe in asking when it comes to creating your actual investment strategy . So investments , how do I come up with them ?

It has to be a reflection of your lifestyle that you're trying to create in retirement . So I don't start with your age and risk tolerance . I start with how much income do you need ? Hypothetical here ? You go , ari , I want 100,000 bucks . I say great . What's the average market downturn ? You go , I've heard your podcast .

You say it's between two to two and a half years . I go great . But what if we retire at the worst time ? Let's just double it five years .

So that tells me , as an advisor , I need at minimum $500,000 or five years worth of living expenses set aside in safe call it war chest assets , we say here at the firm , so that you can not have to worry whatever's happening in retirement . The rest can be , of course , fluctuating for growth .

Now some people go Ari , I get it , but I don't want that fluctuating for growth . I wanna make sure that I can touch those . I've worked very hard for it . I don't wanna see it go down tremendously . I say wonderful , you don't need to . But there's two terms here that I like to give Risk tolerance and risk capacity .

Risk tolerance is essentially how do you emotionally feel with your investments . I might show you that a 90% equity allocation and a 10% bond or cash allocation can meet your goals financially . And you might go , ari , I get it . But I'm just not looking for that experience .

I'm looking for , at most , my million bucks , or two million bucks , or five million bucks . 10 million bucks comes down by 20% at most . I say great , we can do that . Here's the trade-off . It's we're limiting growth over here . You might go , ari , that is a trade-off I'm so happy with I just I needed to see it . Awesome .

So you can see it and make the decision there . But investments just have to be a reflection of the lifestyle you want . So don't start with your investments , start with your income . If you have a great pension and social security benefit and that covers all of your needs , okay , well , your investments can be a little bit more aggressive .

If it's the opposite and it's hey , I don't have any pension that I don't wanna rely on , I don't have rental income , it's just my investments , okay , well then guess what ? We need to be a little bit more conservative because we need that income to come from somewhere .

Now you live comfortably , maybe on partial social security and the timing of it , and pension and rental income . Maybe all the timing's different and it's Ari . How do I plan for that ? Well , the way you plan for it is you make sure your strategy is showing the different ways you pull income in different years .

So that's kind of on the investments , fairly high level . Third one here is the tax strategy . Taxes could easily be one of your single largest expenses in retirement and you should consider Roth conversions .

For most of you Not everyone , but most of you should consider at least it doesn't mean implement , but consider shifting money from your pre-tax IRA to your Roth IRA .

I say it in most of my episodes on taxes , but you probably have heard the famous cauliflower example where I tell people , if you were to not do anything I'm talking about on taxes , you in the future might have a dinner plate and that dinner plate might be full of cauliflower and you're going Ari , I want pasta or I want steak , I'm going too bad .

You only get cauliflower and you're going why is that ? It's because you didn't eat your vegetables early on . And this is the whole example with Roth conversions . That I give is and also I get it . Trust me , I can hear some of you already . You sent me a note saying Ari , I like cauliflower . Choose a different vegetable .

Sorry , cauliflower is the one I'm stuck in with and so most people just know it by now . With cauliflower , what I tell people is what you're trying to do is eat a little bit of cauliflower so that in the future you're not forced to eat a ton of cauliflower , even when you're full .

Eating a little bit of cauliflower is like doing a little bit of a Roth conversion , so that in the future you don't have to eat a ton of cauliflower or pay a ton in taxes . It's this idea to minimize your taxes , not in a given year , but over the course of your lifetime . That's number one , Roth conversions . Number two is tax gain harvesting .

If your taxable income is under certain limits , you can realize gains from the sale of stock and you might not have to pay any federal taxes on it . So are you taking advantage of that when you hear how do the ultra-wealthy pay 0% in taxes ? This is what they're talking about . I have a whole episode dedicated to it .

Number really I think I'm sub-point four here . Tax loss harvesting , donor-advised funds these are other tax strategies that , at a minimum , you should be considering , Is charitable , giving an important part of your plan . If so , it makes a big impact to your overall retirement strategy .

Tax loss harvesting Are you looking at your accounts and going if I had losses , can I sell those to lock in that loss and then buy a very similar investment for tax purposes ? How does that factor into your income streams with Social Security ? What does that mean ?

Well , it might mean that when you're looking at Social Security , you're going to be pulling Social Security earlier than you expected , because you need that income to live off of .

Maybe it's the opposite If I'm going already , I don't want to collect Social Security until I have to , because I know I can implement some of these strategies and keep my income even lower . So there's all these different ways of looking at it . Now , those are some of the fun , sexy things .

I'm not saying the next few aren't , but these are two things that a lot of people overlook that I just want to make sure that you go . Okay , I know I need to do it . It's not fun to talk about , but how is your plan protected ?

Life insurance , health insurance , long-term care , homeowners umbrella , depending on where you live , earthquake insurance , flood insurance I know it's not fun to go speak with an insurance agent about these things . I get it , I do it , my clients do it , but these are one of those things that I say you just have to do it .

It's like going to the gym doing that one exercise that you know you don't like doing , but you know it's good for you . These are the big ones , though , that I see in retirement Life insurance . You still need it . A lot of people are still paying premiums that I believe are potentially unnecessary .

Now , if you're sleeping well because you enjoy the policy , okay , but most people do not need it . For those that come to me not everyone , but for most so what if you redirected those premiums to actually pay them toward yourself and invest them and do what you want with those proceeds ?

Health insurance you can imagine this is a big one , so big that I wrote an e-book on it and you can see it in my description of healthcare . Can you make sure ? Here's the complete guide to healthcare for an early retirement health insurance Are you or your spouse under 65 ? What health insurance plan is best until you reach Medicare Once you're at 65, ?

What Medicare plan is best for you Before 65, . Do you need to keep your income low to qualify for a subsidy ? That guess what ties back into your tax strategy .

It doesn't matter how good your retirement looks on paper , if it's not properly protected through a quality insurance strategy , it could be dismantled pretty quickly , even if you worked very hard for it . And then lastly , here before the pro tip is estate planning .

Money is very personal and for most people they don't just want to protect themselves , but also the ones that they love . So is your estate plan properly updated and is it most effectively implemented ? If something were to happen , do you have beneficiaries updated ? Very easy , very quick . Can you go into your accounts and ensure you know ? Have you remarried ?

Has your name changed ? Do children need to be adjusted there ? Any other update there to life where it's hey , a best friend did pass . I need a different contingent beneficiary on my one IRA , or you know , yeah , I do have that one account , but I think my advisor has a different account . Did that get updated everywhere ?

Very quick , very not so fun , which I realize here , let me be the not so fun person that reminds you of these . Is your trust and will up to date ? Do they still contain provisions that reflect what your intent is . Is there an intent to leave money to children ? If so , is that going to be dramatic ? What does that mean for tax purposes ?

A lot of people don't want to wait to leave the money to kids once they've passed . They'd rather help today , while they're still alive and when their kids could actually best use it , whether it's to buy a home , saving for their education , paying to bring the whole family on a vacation .

Estate planning a lot of people just think about when they pass , less so about what are things you can do while you're here . So estate planning is not just about ensuring what do you do if you were to pass . But what can you do today ? Can you have the right documents in place and can you be intentional about going ?

My estate plan is to try to spend every last dollar . I worked for Other people . It's hey , that's not what I'm looking for . I'm looking to leave X number to my children . Other people it's hey . If there's a home leftover , great , that's what kind of I want them to receive . It's totally dependent and there's no right or wrong .

And then here's the big one , the pro tip that I'm leaving at the end . I want you to know your purpose , not because you need it a hundred percent doubt in before you retire .

But some people and this might shock you , but they're like all right , I am scared to death to retire , I don't know what I'm going to do and so much so that they keep working , even if that's negatively impacting their health . And I'll tell you why they do it because it's easier .

It's easier to keep working , it's familiar , you already know it and I'm going to guess you're really good at it . So I put this last . But it really could go at the beginning . If you don't have a clear purpose of what you want in an early retirement , well , it's a good chance you're going to be disappointed when you get there .

It's very hard to know , and one of the things that we did here at the firm is we added someone on staff who is a retirement lifestyle coach . Not because you need that , but for some people it's very helpful . I could call myself that , but the reality is I'm not .

I love numbers and that's how I do my planning , but it is , of course , only in light of what's the goal here . It's not to die with the most amount of money . It's not as if you look back on your deathbed and go . I did the best Roth conversion strategy ever . You go . No , I were able to do 10 more trips than I thought I could with my family .

I loved it . The goal here is to make sure you're really fulfilled in retirement , and what are your family expectations ? What would my parents think if I didn't work as long as I did ? That holds a lot of people back from retiring early Identity .

What are you going to be if you're no longer a teacher or an attorney or a business owner or a financial advisor Structure ? What are you going to do ? You're going to wake up Monday morning , okay . What time are you waking up ? 8.30 . And I know a lot of you are going Aria . You're making me think so hard already into the future . You're right , I am .

I want you to dial this in and I want you to feel confident about it . So ask yourself close your eyes , perfect world . What time are you waking up ? You're going , aria , maybe at 6.37 . And then , okay , are you going to go play pickleball ? Okay , if it's not pickleball , are you going to go read the news with a friend ?

Okay , if you're going to do that , then what does that mean in the afternoon ? Are we volunteering ? Is it every single day ? Is it a few days a week ? People often don't do this work because they think it's simple .

It's simple but it's not Easy , and it's one of those things where it is simple it doesn't mean it's just easy to go do , and so I want to make sure you're doing this tough work , because the older we get , the less often I find we actually put ourselves Into new experiences .

One of the most important things that you can do for a successful early retirement and this is coming from the people that have retired early is to embrace the beginners mindset , learn to love that process of starting over , recreating something , and let that be the . The real question is what would you do if you knew you just couldn't fail ? That's the reality .

You're now going into this new phase of life . It's not an easy one . It's a scary question , but what would you do ? Are you working because you know it's easier to keep working , or there's something you just have never done ? And if you knew you Couldn't fail , what would you do ?

To me , this is one of the scariest things for people to consider , and that's because you've done the same thing you've done for a very long time and a lot of you . Your identity is being an amazing saver , and it's really hard to get out of that mindset .

So I'm gonna keep sharing financial tips , as always , on how you can get the most out of your early retirement . But I also want to make sure that we do not forget why are we doing this ? It's to live this dream life . A lot of you are , and if you are going , alright , I just can't wait . Once I can retire financially .

On paper , I'm retiring , I'm good to go for you , awesome . You didn't need to hear that as much as others , but I want to make sure that you are absolutely Understanding . There's an end goal to this , which is , of course , not just the biggest number on your spreadsheet . So that is all I had for today's episode . Hope this was helpful .

If you're looking for a custom strategy , of course you can reach out to myself . I'm going to limit , of course , the number of clients I think I mentioned this last time and a few other episodes that I personally am gonna work with in the future .

I just want to make sure we're always able to service more people , and so if you're looking for a custom strategy , you , of course , can reach out to apply with me in the description of today's episode . Thank you all , and I'll see you next week . Thank you for listening to another episode of the early retirement show .

If you have a question that you want answered in a future episode , you can always go to my website , early retirement podcast Com . That's early retirement podcast Com , and you can go ahead and submit a question that I'll look to answer in a future episode . Thank you all for listening .

Please do rate it , review it and share it with someone who you think would benefit from this information . If there's anyone out there that you know , I certainly appreciate it and I will see you all each week . Hey guys , it's me again . Please be smart about this . Nothing in this podcast should be construed as financial , tax or legal advice .

Consult with your tax preparer or financial advisor before taking any action . This podcast is for informational purposes only .