Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

I Want To Retire (Or Just Work Less). Will I Still Be On Track For A Comfortable Retirement?

• Ari Taublieb, CFP®, MBA • Episode 270

Share episode

Some choose to grind a few more years in a high-paying job they dislike, aiming for an early, full stop at retirement. Others step into more fulfilling work that pays less, but adds purpose to their days—and often still results in more wealth than expected.

Take John and Jennifer. Both start at age 50 with $1M saved and $150K salaries. John works five more years at a job he doesn’t enjoy, retiring at 55 with $1.62M. Jennifer switches to work she loves at $100K for 10 years, retiring at 60 with $2.1M. The math is surprising—Jennifer ends up with more assets and more joy along the way.

The concept? Recreational employment—working because you want to, not because you have to. Even modest income in “retirement” years can keep your portfolio compounding instead of depleting, lowering risk and increasing freedom.

Your retirement strategy shouldn’t just hit arbitrary financial targets—it should serve your life goals. Explore the scenarios and see which path fits you best at earlyretirementpodcast.com.

-

Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements

Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

Create Your Custom Early Retirement Strategy Here

Get access to the same software I use for my clients and join the Early Retirement Academy here

Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.


Speaker 0:

I'm going to give you two scenarios, two different people, and I want you to ask yourself which person resonates more with you. I promise this is going to help you determine what your ideal retirement should look like. So here's person one. Now, these two people they are both clients of Root, and I'm just changing their names for security purposes. So here's person one John.

Speaker 0:

John is 50 years old. John doesn't love what he does. He would really love to be done sooner than later. He has a million dollars. Once again, age 50, he wants to be done. He, though, recognizes he wants to make sure he can at least spend what would make him excited in retirement, which he has identified as $80,000 per year. That's after taxes adjusted for inflation.

Speaker 0:

Now, john, he doesn't want to do part-time work. He would rather grind it out and then just be done. So John has decided. He's 50. He's got a million dollars. His salary is $150,000 per year. So John has decided he's going to grind it out for five more years. Doesn't love what he does, but he goes. Hey, this is what I'd rather do than have to work any longer. So, at 55, he wants to be done entirely with work for the rest of his life, and he has no children and he has no partner. So he wants to spend $80,000 per year working from 50 to 55. If he does that and he saves $50,000 per year from his 150,000 salary, that for five years would mean he's saving a $250,000 total amount, but he already has a million dollars. I'm assuming a super conservative growth rate of 6%, which would put him at about $1.62 million at age 55, when he would be retired. Assuming a 5% withdrawal rate, he's at about $80,000 per year. So that's scenario number one. That's a John. Nothing wrong with that. Just that's the logic. That's the math right there. Now I'm going to go through example number two, but if you don't already know, my name is Ari Taublieb. I'm a certified financial planner. I'm the host of the Early Retirement Podcast. This podcast, and of course all my content, is on YouTube as well.

Speaker 0:

Now here's person number two. Person number two we're going to call her Jennifer. Here's person number two. Person number two we're going to call her Jennifer.

Speaker 0:

Jennifer has the exact same situation where she's 50 with $1 million. She makes $150,000 per year. Today. She doesn't love what she does either, but she doesn't want to just stop at age 55. She wants to find something else that's more fulfilling and she's looking at maybe just a complete career switch. Maybe it's doing what she's doing now, but at a different company, she's not sure yet. Now she has identified that she wants to keep that same growth rate of just 6%. But she has already shared she doesn't want to just stop and do nothing.

Speaker 0:

John is ready to retire at 55 and go travel, and that's what he wants to do. Jennifer is not at that stage of life yet. So Jennifer says you know, rather than me working from 50 to 55 at my current stressful job, I would rather work from 50 to 60, maybe even later. If it meant I actually enjoyed it more, then I do want to be done entirely at one point. So Jennifer has decided to go look for another job. And Jennifer found one, and that other job pays $100,000 per year, not 150,000, like her current role, but 100,000. And she's not able to save $50,000 per year like she was before. Now she could try, but she would be living off top ramen and eggs, maybe like the college days, which she does not want to do. So now Jennifer has decided she can only save $25,000 per year if she wants to maintain her quality of life, which you know I'm a big fan, if you've heard the podcast before. I don't want you to just try to max everything 401k, roth, hsa and now you have no money to spend on what you actually care about most, which is today and traveling and all these other fun things. But I also don't want you to just not save at all, so in the future you can't do those things. Of course, there's a balance there, but a lot of you are good savers and good investors, so you will skew towards the. Let me max out my 401k and I just don't want you to delay too much in exchange for today.

Speaker 0:

So, with that being said, back to the example. Jennifer is 50 million bucks, she's decided she's going to work this job and make 100,000, not 150,000 per year, and she's going to save 25,000 per year. Now she's decided she found the perfect role and she's going to do it for 10 years, not five, so she's saving the exact same amount. It's also 25,000 a year times 10 years, or 250,000 of total net new savings, as opposed to John, who saved 50,000 a year for five years also 250,000.

Speaker 0:

I'm a CFP, so you guys just saw that math in real time right there. No, I'm just joking, but there's a lot of CFPs, certified financial planners like me, who I spoke to in my class when I was getting that certification, who I would not give a dime of my money to. So I will tell people all the time when you're interviewing an advisor, if they're like I'm a CFP, I'll say how many doctors would you never let touch your body? Like, just because they're an MD, don't hire them.

Speaker 0:

Bringing me back to the point here so Jennifer has decided I'm going to work from 50 to 60 and enjoy it more. So here's the question how much do you think Jennifer has at age 60 and how much does she want to spend? I'm assuming here which is the truth Jennifer has no children and no partner. So both single people just go in different directions. Jennifer's working 10 more years. John's working five more years.

Speaker 0:

Jennifer, if she does this for 10 years, from 50 to 60, million bucks, 6% growth rate, saving 25,000 a year, she will have approximately $2.1 million at age 60. Not 1.6, but 2.1, which means she could spend a bit above $100,000 per year every year, assuming she's doing all the right things and the guardrails and the withdrawal approach that I talk about in my videos and podcasts, but, assuming she does, that, that is what she will be able to spend Now. That's a significant amount of money and it's what's going to bring her happiness. But it's not ultimately the reason she's doing it. She's doing it because she still wants purpose and fulfillment in her life, it's not at her current role. So what's the big takeaway here? The big takeaway when I'm talking to clients about this is it's not right or wrong, but the big takeaway to me is Jennifer is not just able to spend more money, it's the fact that Jennifer didn't have to withdraw from her account five years earlier, which lets her primary account balance continue to grow.

Speaker 0:

So when people come to me and go, oh, part-time income, it's just not gonna make a big deal, I go don't do it if you don't wanna do it. But if you're saying financially it doesn't really help, you're totally off. Because if you have $2 million and you're like well, I make 300,000 a year and now I only make 50,000 a year and you're gonna quit because 50 feels so small, 50,000 a year is a big deal. That's 50 less I need to send you from your 2 million, which lets your 2 million keep growing, and if your 2 million gets 10% growth, that's $200,000. That's a big deal.

Speaker 0:

You want to make sure you're looking at the math here. So for some of you you're like I know me, I'm more of a John person. I'm going to grind it out two, three more years, then I'm just done. Other people are like Jennifer hey, I'd rather do something I enjoy more. Maybe I would do it even longer if it's really fulfilling. So I do all of these different stories and examples that you can try to ask yourself what would make me happy in retirement. Hopefully this episode resonated with you. These are two clients that I have in my brain right now that I'm thinking of, and they're both happy. So it's not like you're going to be wrong with either of these. So I want to make sure you are looking at it correctly.

Speaker 0:

Now. I went over a million other things today. Tax planning didn't talk about that. Estate planning didn't talk about that. Insurance didn't talk about that. Estate planning didn't talk about that. Insurance didn't talk about that. Legacy healthcare there's so much. I didn't go over A very simple example, a simple analysis, but for many of you it should help give you the thought of hey, I just didn't know.

Speaker 0:

Working a job, maybe if it paid less than 100,000, 50,000 a year, but I did it for longer. Wow, I'd still be in a pretty good spot and I would have way less stress. So what I often encourage clients who are stressful at their current position is if you were to go to your boss and say I'm going to start taking off Fridays, is that okay? If they were to say no, you hopefully would know that you're in a good position, that you could retire anyways. I call that recreational employment. Are you working because you want to or because you have to? Once you know that, that gives you the freedom to go have those conversations.

Speaker 0:

So pretend you're now, I don't know let's say 55. You've got one and a half million and you know that's enough for you to walk away and live a happy retirement. You might go to your boss and say, hey, I would love to take off Fridays and Mondays, and they might go. You're really valuable and I don't know how much you know this, but whatever you want, mondays, fridays, we'll get you massages, we'll bring lunch in for you, whatever you want.

Speaker 0:

Now, I've never had someone say that, but pretend they did. Okay, well, kudos to you. If they do that, you might go. Wow, so now I'm working three days a week, kind of practice retirement a little bit. This is cool. Maybe they're like well, to be honest, you're great, but we have to have a policy for everyone. So it's been nice knowing you. Hopefully they don't say it like that, but that could occur and you have to know that is the risk. And it's really hard to ask those questions unless you know you're in that recreational employment state. So I encourage all of you, if you've not already, go play around with the tool in my software, the Early Retirement Academy, because you can go math it up. You can make sure the math is working for your ideal retirement, see how much you want to spend. You can really go have a blast in there and run what-if scenarios If you want to make sure that everything's happening properly the tax, the estate, the withdrawal, the healthcare. This is what we do for our clients and we love doing it.

Speaker 0:

I know today was a little bit more of a math heavy episode, but I needed to go through this example and I hope it resonated. If it did, please like this. If you're on YouTube, please comment below what resonated. If you're listening on the podcast app, shoot me a note. I love getting to hear from you guys. It makes my job way more fun. So when I record these, I get extra excited, and that's it for this episode. Please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always, and you can, of course, submit a question on my website, earlyretirementpodcastcom. If you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it, at the very least give you some insight. That's it, thanks, guys.