How To Balance Health & Wealth For An Early Retirement (Special Guest)

A lot of people will ask to be on the show , but I often will decline , and the reason for that is I want to make sure that all of you that tune in every single week are getting maximum value . You're going all right , yep , five , ten or fifteen minutes .

On this topic , i'm thinking differently about an early retirement , specifically with Roth conversions , or investing a certain way , or making sure that I'm doing all the right things on how I pull income and how to prepare for retirement .

So today you're going to hear a story from this individual and I want to give it away too early , but what he alludes to is the fact that your health is just so important and he's amassed a good amount of wealth at a fairly young age and he talks about how he did it and what he wishes he would do differently , because now he does have this good amount of

wealth and now he wants to make sure that can create the life he's always dreamed of . So you're going to hear that from him . If you want to listen to this video , excuse me . If you want to listen to this episode , you can see the video on YouTube .

So right now , if you're just listening on the podcast app , apple or Spotify or Google , that's perfectly fine , but you can actually see us , if that's of interest , see our radio faces just kidding , maybe just my radio face and Alex's face . You will see that on the episode on YouTube . So you'll see that in the description . You can click right there .

But other than that , i think you're really going to enjoy it . I want to keep creating content that I think really resonates with you , so I'm always trying to come up with new ideas and I'm going to keep doing my episodes . So my solo episodes are still going to come out , which is why I'm not replacing my traditional Monday episode with this .

You will still get that on Monday . You're going to get a really fun episode , but I can tell you right now I wanted you to get this before the weekend and some of you are not going to be able to listen to it , of course , this Friday , but I wanted to publish it now so that you can think a little bit differently this weekend about your retirement .

I want to talk about what you can do to start preparing for this next stage of life which , like I say , financial independence , retire early . I like to reframe it Financial independence , recreational employment . So I'm going to stop talking so you guys can listen to Alex .

Let's hop into the show , alex , if you don't mind introducing yourself with just how old are you and where are you coming from today ?

And traditionally it stands for financial independence , retire early and if you guys have heard the podcast , i have a different definition Financial independence , recreational employment . Most people don't want to do nothing . They want to do something . They just want it to be fulfilling . So we're going to talk about this today .

But , alex , real quick , what are your total liquid assets today ? So not your net worth , but your investments today ?

I had a pinched nerve that was causing some significant sciatica pain kind of going down my right leg and it got to the point where I couldn't even really sit down and I ended up going to physical therapy and having to basically take time off of work . And I realized I've been in a career where I'm sitting ever since I as long as I can remember .

And how much longer am I going to be able to do this ? It was the question . And then it happened again about a year later and I was like this is serious . This is a reoccurring problem . I've been trying to resolve it with exercise and diet and things like that , but it's not . How much longer of a career do I have left ?

And as I was laying there trying to recover , i kind of stumbled into the well another podcast called The Money Guy Show Yeah , well , aware , yeah , you know about them and the Choose Fi podcast , and that kind of brought me into the greater world of maybe , if I work toward this aggressively , if I get to the point where I no longer can work , then hopefully

me and my family will be okay . And I really think about those like this injury . I've had it happen a couple more times since then . It's been about four times since 2017 or so And I think about the root causes of that And I think a lot about how , in my 20s in particular , and even my early 30s , i worked a lot .

By a lot , i mean , i was almost sleeping at work . I was 70 , 80 hours a week working at jobs that weren't necessarily compensating me appropriately for that level of work , but I was hooked on it .

Sometimes software engineers like I know it's a pretty common thing , but you get hooked on solving problems and you feel this sense of autonomy and it's kind of addicting , and that addiction can really catch up with you if you let yourself fall into it , and that's , i feel , a lot of what happened to me .

This reoccurring back injury was a result of not taking care of myself for decades , kind of prioritizing work over my health .

I also got about 12 years ago or so I was diagnosed with diabetes and type two diabetes , and that was purely the result of poor health habits I had developed over a lifetime of like all right , well , it's two in the morning and I'm still working . I'm gonna down a couple energy drinks and drink some soda to keep myself going .

When I was at my worst health , right when that happened , i weighed 313 pounds and it was right . Now I'm at about 210 , i'm actually controlling the diabetes mostly through diet and exercise . But I had to kind of reject that life that I had been living in my 20s .

I had to realize like this addiction to work was killing myself literally And that's kind of what ended up driving me here . I don't know whether early retirement is necessarily in my future . I mean it might end up being forced on me if . I if I can't get this back to you .

I'm in love with the concept of you being able to do more of what you wanna do , and if , financially , you can be in a position to do so , that's wonderful , even if it means you keep working . Well , you just said there , alex , is the key is hey , you just kept working because it's , oh my gosh , it's ingrained in me that level of autonomy .

A lot of people listening right now are in their 50s . They're a few years out from retirement , they're early 60s .

We have others in their 30s , and what you just shared is I just cannot tell you how real it is , because I have an ebook And in the ebook I forced people to answer a question , to download it and say what are you most excited to never have to deal with ever again ? People say answering emails on the weekends . People say working till 2 am .

People say all these things that you just said . So it's one thing to hear it from me . It's another thing to hear it from you , where it's very real , so safe to say . Correct me if I'm wrong here , alex , you're going already . The wake up call was my health was being deteriorated .

I wanted to focus on the financial side to understand when am I in this position to take care of my family if , god forbid , anything doesn't allow me to keep working ? Is that right ?

And as time went by , i realized well I could actually run towards things too , once I achieved a certain level of I wouldn't say I wouldn't call myself financially independent right now , but I feel like I'm coming onto the cusp And I realized well I can take risks in my career that I didn't feel like I could before , and I can enforce my personal boundaries

between work and life in a way that I was not doing intentionally before . And someday , if I achieve a strong enough level of financial independence , i could take a very long sabbatical or even go into early retirement and focus on my health even further and focus on my family . These are all great things to run towards . Love it .

Yeah , it's morphed over time , but that's yeah .

It's already a little comfortable , even if your health is being negatively impacted . So what you're actually doing is noble , and other people sometimes just need to hear it .

While , yeah , i need to think about this or I'm not taking care of the health to the degree that I feel I should , and I feel that today I love what I get to do , but some days , meetings get back to back And then all of a sudden , you're like I didn't go work out And I didn't take a lunch break , and now more than ever , because we're working from

home , a lot of us , it's like works with us forever . It just never leaves you . So , alex , what I think you brought up there was really wise . I'm going to ask you a few quick fire questions . Then I want to get into a few other things that you noted over email , which I just think are too important not to bring up . What is your income today ?

you know , my actual living expenses end up being about $60,000 a year , so I've got plenty of buffer room , to you know , to continue to save and invest aggressively .

There was a time where I was doing the backdoor Roth , you know , conversion . It's a complicated story , but I ended up feeling like maybe that's something I ought not to do . It's kind of complicated . I ended up deciding , kind of for personal ethical reasons , I decided to stop doing it .

Not that I would ever blame anyone else for doing it , but it's , yeah , Absolutely .

That's kind of the allure to it , but sometimes it actually makes most sense to not do it . It's like Hey , what if I do want to retire early ? I don't want to have to worry until this age to worry about things , and it's just simpler . Also , it's you don't have to worry about . Hey , do I have another IRA ? What does that mean from an aggregation rule ?

There's lots of nuance to it , but what you just said is actually fairly common . But I now want to talk about which is a little different . This might surprise you , but I often ask people how much are you spending on you ? And I'm not talking about the mortgage , i'm not talking about you know , gas or groceries .

I'm saying how much do you spend on fun , alex , things ? And if you don't know , that's okay . But that's question one . I'm going to give you part two to the questions . You can think about both .

The part two of the question is is there anything today that you feel you're not doing for financial reasons that you say already if I did have more , i would absolutely , you know , go to this gym instead , or I would , whatever that may be .

The actual amount varies pretty widely per per month , but I kind of try to shoot for a target goal of about you know $300 or so a month for , like you know , dining out and , like you know , having a you know kind of kind of fun as a family and like discretionary spending , usually about 500 bucks a month .

But it definitely ebbs and flows And it's been particularly interesting seeing it during the , during the pandemic , because there's been some months where it's like , well , you know , we literally can't do anything especially because we also had our kid during the pandemic . So those things combined to , you know we had .

we were completely shut in for the for those couple of years So that was like a really low point in time in terms of discretionary spending . But things have mostly gotten back to normal now , maybe even a little bit over , you know , because we're doing more things with the kid , taking her out to museums , if you're .

I could see it going up if we were to like , i think when our daughter's a little older and we're able to like kind of travel a little more easily with her , i could see a world where we start setting aside more money for travel And you know , because I have missed that but with the realities of our kind of two and a half year old kid right now it's a

tougher situation . So I picture that maybe being something we do . you know , maybe when she's like four or five , you know , hopefully in a better position to start really getting out there .

And you know it's funny , i can't even really imagine driving another car at this point , because it is . it's such a comfortable little car Like it rides high . But it's also , like you know , it's nice and compact .

You can see all the windows , Like whenever I get like a rental car or , you know , like the cars in the shop and they give me a loaner , like all these , all the newer cars that I've driven . they feel like these . you know these kind of like you're driving in a tank in comparison , just because I've been driving this little car for so long .

But , like , like you know , i can't picture driving like an SUV or anything like that Like I'm . I'm in this cartel of wheels fall off , i guess .

I want to talk now , alex , that's okay . You sent me an email . I'm going to read a little bit of what you said , because it's just too wise to not share , and then I want your input on it . You just sent me a note And , by the way , those that are tuning in , this is the first time I'm speaking with Alex .

So the idea here is I want you to hear from people who are going through it right now . They're trying to save their invest and they want to make sure they have a healthy work life balance , because it's really easy to just save , save , save , save , save , save and not take time to do more fun things .

So if there's anything you're hearing from this , alex , it's I want you to go spend a little bit more on you , not because you're going already , you know . If you feel you can do everything you want to do , then great . Now , hey , we've got a little girl , we're not traveling .

Maybe , though , you can set aside funds now , so that when you do travel , it's guilt free , and you're kind of putting that off . So I invite you really to , because , I'm telling you , right now , i speak with people who are retired They're in their late 60s , people retired in the early 50s And all of them say Ari , i'm in a good spot now .

I wish I had traveled more . I wish I had done this while I had my energy and my health , because it's not fun to talk about . Nobody knows when we're going to have a back issue . I'm a soccer player that I can guarantee I'm going to need hip surgery with the amount that I play , and so none of us know .

So I just want to allude to that , but let's talk now a little bit . This is what you had said , alex . You had said the following . I mean , i appreciate once again you sharing this . You said , ari , i worked in a lot of closets and secondhand smoke filled rooms .

I spent many years without health insurance , barely scraped by working out startups that I'd given my heart to , but never got a chance of working out in retrospect which , of course , none of us can know . I only stabilized from a financial standpoint once I ended up scoring a job out in Seattle at a larger company And a lot of people .

By the way , i'm a pause , there's more to it , but , alex , a lot of people are like Ari I want to go work for this startup . It's exciting , it's new . There's also a lot of value in working with a larger company where you do have benefits and you know that income is stable .

And you had said here the journey was interesting , full of crazy stories that you don't hear about when you talk . To , say , an engineer who worked at you know Facebook , apple , amazon , netflix , google , their whole career . And you could talk about the lessons which I want to hear .

But you said , ari , the early part of my career , one it caused the end of my first marriage .

It caused health problems that persist to this day and also set my career progression back , and I would love the opportunity to warn and educate other people about some of these negative effects that can sneak up on you if you're chasing the high of work without paying attention to the other aspects of your life .

So that , to me , is a very powerful statement , alex .

Of course , if there's a story that comes to mind , i want you to share it now , but if there's anything else that you're going , ari , i really would love people to know this about my financial situation and what I wish I did differently and how I'm thinking about health specifically in relation to my money .

I worked , you know , just a stupid amount of time at that job And yet you know you don't realize how harmful that is until it's too late . You know , like , the harm that it does is harm that it's doing while you're still feeling good .

You're getting this high from , you know , from working late and solving these problems , and you know making a bunch of cool features or you know troubleshooting things . If you're like , you know you're getting this high , it's an adrenaline rush , but you don't realize , like you know , the damage it's doing . You find out years later .

You know , or you find out when you look back . You're like , what did I really do with my 20s ? You know , like we're . You know like , like all you know , when all your memories are sitting at a desk . You know and you know it's something I wouldn't want anyone who's earlier in their career to have to endure . You know it's a .

You know you may do something like that and it may work out or it may not . It's kind of a gamble , you know either way when it comes to a startup . But even if it does pay off , you know what have you lost . You've lost time . You know , if you got in as deep as I got in , you lose relationships , you know you .

You know it's a and those are things that you can't get back . You can always . You know , like I did , you could always start the financial journey later in life and catch up and it doesn't take . You know , like , like you don't have to be in a .

I guess if you could consider , like the tiers of software engineering jobs you don't have to be in that like like a tier , you know , naked in $400,000 a year at Amazon kind of tier to catch up with your financial goals .

But you , no matter what you do , you're never going to get that time back And and it doesn't feel real when you're in your 20s When you're in your 20s , that time feels cheap , but then when you're looking back on it , it was , it's actually very expensive .

You know what ? I know there's going to be ramifications , but I just don't want to think about it right now because it's easier . And then you're like oh my gosh , my weight , my health , my relationships and prioritizing is not difficult .

It's not as if the people listening right now are going Ari , i love my work more than my family but it's almost as if the implementation of their life . If someone were to look at them from outer space , it looks like that , cause they're like I see you're always working .

You're not actually with your family , even though you say that's most important , because it's easier said than done . What are you doing today , alex , to take care of your health ?

So I don't work more than 40 hours a week , and you know . So that's one nice boundary that I've set which lets me have time with the family and time to it's time to exercise , time to prepare healthier food , where , you know , like in my 20s , i just go grab whatever I could .

You know like go , take a 10 minute lunch break to go out and grab some fast food and bring it back to . You know the little closet I was working in , you know , and it's so a lot of those things . Yeah , i guess those are probably the three biggest things . I also taking my vacation time , you know , kind of more aggressively .

I guess I'd say I didn't even really have vacation time back when I was working at these earlier jobs . They weren't the kind of places that gave vacation time .

But this place they give a generous amount of vacation time and I try to take it with the pandemic made it more difficult , like we were talking about with the kid also makes it a little more difficult .

But you know , like getting out there , and you know , especially just before the pandemic happened , you know we went out to Japan and to France and then we went on our honeymoon to Spain and it was , you know , taking two or three weeks at a time to get out there and really kind of enjoy it and get past the work mentality .

You know what I mean When you're on vacation but your mind's still thinking about work . You need a few days to get past that . You know , making the amount of vacation long enough that you kind of forget that work is a thing that exists , and then that is .

And some people go , ari , oh my gosh , i just never considered it this way . Other people it's hey , i kind of already knew that , but I just didn't know .

I don't want to leave anything on the table , and to me , the reason that I'm so obsessed with this planning is if I could get you one , two , three , four years back of health , good luck quantifying that for the latter years of your retirement .

So I tell people this 1.6 number that you have in your head , alex , part of this is a early retirement audit , where a lot of these episodes I'm going to be doing is educating , to help you understand whether that's realistic , whether it's not . And the first thing I tell people is not if we get X number of growth or 9% or 10% , but spending .

Spending is the gigantic variable here , where , if you said , ari , i want to spend $60,000 a year , adjusted for inflation after taxes , every single year , would I ever run out of money ? And so the first temperature check is what is a sustainable withdrawal rate ? And most people talk about the 4% rule . It's not totally applicable to an early retirement .

So there's a new study done by John Geithner . It's called the guardrails approach , and the idea here is , if you follow certain rules and take from certain accounts and invest a certain way , you can take out between 5.2 to 5.6% And you're never going to run out of money , and that's for 40 years , which is a lot more applicable to people retiring at age 50 .

Even then , we want a little bit of buffer , because you just don't want to always say , oh my gosh , i retired one or two years earlier and that's going to stress me out . I tell people there's a difference between retiring early on paper and retiring early .

The difference is there are people that retire early on paper but they second guess travel , or they second guess going out to eat and they second guess that gym membership , and to me that's not a successful early retirement . So what you just said there , alex , like all right , we're spending $60,000 .

Are there going to be more expenses in the future , with more kids , of course Are there going to be education and travel , and these are good expenses , but it's not as if you're just probably going to be doing nothing for the next 40 , 50 years from an income perspective .

Maybe there's something you really like , maybe they offer health insurance , maybe your wife still wants to keep working . So there's a lot of moving pieces to this , but you are closer than you think And I'm not in the business of telling anyone a rosy picture .

But if you're going already , i've got nearly a million bucks And you just said 5.2 to 5.6 is sustainable . Yeah , i just told you you could reasonably take $50,000 a year and go spend that for 40 years and you won't run out of money . The difference is , what if markets don't perform well ? What if tax brackets change significantly ?

What if there's a major health event ? Okay , let's plan for those . But the reason I love doing what I do is because I want you , alex , to know oh my gosh , what if it's not 1.6 ? What if at 1.3, ?

I would be comfortable , because the difference between that $300,000 right there might just save your life from a health perspective , and so that's why I care about this so much . But any questions or thoughts here on any of that ?

I can take out $40,000 a year and I'm not going to run out of money . But it didn't account for taxes . So it's do we need to take $45,000 or $50,000 to end up with $40,000 ? That's my first kind of issue with the study from an early retirement perspective .

Number two is okay , ari , what if I invest in just two asset classes intermediate term US bonds and US large caps ? That is the 4% rule . This other study was saying , ari , i don't want to just , you know , invest in two asset classes . What if we don't just close our eyes and pull from certain accounts ? What if we pull from the Roth last ?

What if we pull from the brokerage first ? What if we do these tax strategies in between ? Those strategies showed that you could take between 5.2 to 5.6 and that will last you for 40 years . That's a big difference , that 10-year gap right there . And so for some people they're like Ari , i didn't even know that was a thing .

I retired six years earlier because of the planning process , and I have clients right now that listen to these episodes and like , yes , ari , we use this approach and we love it . The other thing is you're not giving yourself this income that , no matter what you're taking . that sounds really weird , but I'll rephrase it .

When you're implementing the guardrails approach , what you're doing is you're saying , if markets are performing really well , i'm going to say , alex , pretend you're a client . I'm going to say , alex , i know you want to go to Tokyo again . Let me , please . this should be the year you do it .

Markets are performing well , please give yourself a raise from your portfolio . And then in other years I might go Alex , can we push that trip off ? maybe three months or six months , if we're in a market downturn , you might go Ari , nope , i've already got it planned . I'm going . and I'm going to say great , alex , you're in a position to do so .

Please do it . But it's my job to show you the opportunity cost of if we were to push that off because of the market downturn . it could mean 40 , 60 , 80 thousand more dollars in the future And you might go , ari , wow , that's a trade-off I like knowing about . I'm still going to take the trip , or you go , you know what . No , this is a flexible trip .

I could push that off . And so the goal here is how do we just optimize our money ? Yeah , i dig that . That's cool , awesome , awesome . Well , alex , that's really what I wanted to go through today . I hope this I can tell you right now . people are going to resonate with this . The last question I'm going to leave you with pretend you're retired tomorrow .

What does your day-to-day look like ?

I have a number of hobbies that I enjoy photography and it's probably the one that I enjoy the most lately , but I have a number of them . I could see myself doing any of those . I also have a lot of side projects . I'd love to have more time to work on that .

I think would be fun , but , unlike when I was younger , i don't want to do them layered on top of my day job .

See what you really like , understanding what you're going to do with your time and retirement . It's not easy , and so I love that you're already like yes , ari , i've got side projects , i've got hustles , i've got photography , i've got all these different things that I'm excited to do in addition to family .

I just want to tell everyone right now once again , if this is something where you're like , wow , this was a really helpful episode , shoot me a note . I want to know about it .

If you're like I want more stories like Alex , or I want Alex again to tell this other story , or you know what I want to tell my story , i think I've got something I'll resonate with people , reach out to me . I tell people . My email is ari . That's Ari at rootroutfinancialpartnerscom . You can submit a question on my website , earlyretirementpodcastcom .

Check out our YouTube community page , check out the podcast And I tell everyone it's more fun to retire early with your friends . So if this episode was helpful , please do share it with someone who you want to travel with , who you want to be retired with , so you guys can spend time together . That's it for today , alex .

Thanks again for coming on , thank you for having me , 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 , earlyretirementpodcastcom .

That's earlyretirementpodcastcom , 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 . Everything 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 .