Can I Retire At 55 And Spend $10K/month? Early Retirement Hotline

Wanting to retire in five years is a good goal. Knowing if you actually can is a different question.

In this episode, Ari walks through a real case study of someone in their early fifties trying to determine if early retirement is realistic. The numbers look strong at first glance. But the real question is not how much you have saved. It is whether your plan supports the life you want to live.

Ari breaks down how income would be generated in the early years, how account structure impacts taxes, and why having access to flexible funds can make or break an early retirement plan. He also highlights the tradeoff many people miss. Continuing to save more versus letting the portfolio do the work through growth.

The takeaway is simple. Retirement is not just about hitting a number. It is about understanding how that number turns into income, adapts to change, and supports your lifestyle over time.

Because the goal is not just to retire. It is to retire on your terms.

--

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.

Transcript

A New Voicemail Response Series

SPEAKER_01 0:00

Over the last few months, you have heard me speak with real retirees as well as people who want to retire early, and I hope that that has been helpful perspective. I love everything early retirement related, but I hope it's hit different hearing it from real people. So what you're actually going to hear now is a new series for the next few months where I'm actually responding to real voicemails for people who are asking me a wide range of questions, such as, how do I know I have enough money? When should I actually look at a Roth conversion? Should I be worrying about healthcare? And a million other things like that. And so these are people who are calling me to leave a voicemail, hoping I respond in a future episode. If it's up to me, I'd respond to every single one of you. But fortunately, many of you have similar questions. So what I try to do is put them into one episode that I feel would be most helpful.

How To Submit Your Question

SPEAKER_01 0:43

So if 10 people ask, hey, what should I do about XYZ regarding healthcare? I try to do my best to address those, whether it's me addressing your specific point. But if you would like, you can of course call my number, 213-316-8397. I do read through every single one, as well as my team. And if you say in there, hey, the truth is I just don't even know. When does it make sense to work with an advisor? I have no idea. Should I even be looking at retirement? Should I have retired 10 years ago? Am I in a good spot? What you will hear from us is at a minimum, hey, here's absolutely what I would recommend considering in your situation. So not a formal, yes, go retire, or no, why did you retire? We would never say it like that. But what we would do is say, hey, even though we're not gonna maybe respond to your specific voicemail, here's a guide that I think is gonna be really helpful for you. Or here's a video that we've recorded in the past that went out a year ago that applies to your situation. Make sure to check that out. So I'm always gonna make sure that you feel the effort that you put in to make the voicemail to leave for me will be equally responded to with effort to make sure you're getting the help that you're looking for. So once again, if you would like, you can call and literally tell me anything. But the the phone number is 213-316-8397. The next few months you're going to hear voicemails and me specifically responding to those voicemails. I hope you enjoy this next series. I'm always trying to come up with new creative ways that are helpful for you. As always, if you're wondering, okay, am I in a good spot to retire? Email me and put in the subject line the word retire. Very simple, just the word retire. And that my email is ari at rootfinancial.com. That's ro tfinancial.com, and I will respond with that free guide just for you. And thank you in advance for always listening to the podcast episodes and hope you enjoy these.

Framing A 4 To 5 Year Goal

SPEAKER_00 2:28

And I wanted to put together a retirement four to five years old. So what do you think?

Spending Targets And Lifestyle Reality

SPEAKER_01 4:23

Whenever someone says they want to spend between eight to ten thousand a month, that's ten thousand a month as the minimum. Because the last thing you want to do is retire and not actually enjoy your retirement. So if this person actually enjoys spending eight thousand a month and they don't want to spend ten, that's different. But I find most of the time when people retire early, they have more time, more health, more energy, and I want them to enjoy it. I just want them to enjoy it knowing they're not overspending and potentially running out of money. So before we actually get started, we're only hearing a small snapshot of this person's situation. We're gonna walk through what a typical CFP might consider in a situation like this, but this is not personalized financial advice. I'm Ari, a certified financial planner and host of the Early Retirement Podcast. I am the CGO here at Root Financial. And if you want to retire early, aka not work forever, and just understand when work can truly become optional, make sure to hit subscribe. First thing I want to do is just applaud this person because it sounds like they've got a really good head on their shoulders and they're wondering, can I retire in four to five years? And I find most people, even if they enjoy what they do, they want to know when work can truly become optional. And I have a phrase for that. I call that recreational employment. There's a lot to consider, and sometimes I'll joke that it's the wallet keys phone analogy of you know, when you go to the airport and you're like, oh my gosh, did I forget something? Wallet phone keys, you don't have that feeling of, oh, before I retire, did I forget something? So if you all want my free guide, it's completely free to know. Hey, did I miss something? It's a long checklist. You can comment the word retire below on this video, and you can get access to that. Once again, that's retire below. Now, when here first started listing as assets, my initial assumption is, oh my gosh, is this person gonna be qualified rich? Does that mean they're gonna have so much in their 401k or IRA that even if they wanted to retire early, they'd have to pay huge penalties and taxes, even if it felt like they had enough. And that's not what I heard because when we've heard we heard

Brokerage Vs 401(k) Tax Choices

SPEAKER_01 6:08

their stock options, they have $650,000 in their superhero account. So the qualified rich phrase is one I talk about often because many people are house rich, cash poor, and they've heard that before. It's yep, the majority of my money is in my home. And so although I have this asset, I don't want to sell it, it doesn't really create income in retirement. So when people tell me, yeah, I have a significant net worth, that doesn't tell me whether or not they're in a good position to retire. If your net worth is 20 million, but you never want to sell that home that might be worth 19 million, it doesn't create any income for you. Now, could you eventually, of course, sell and downsize? Yes, but assuming you don't want to, we want to make sure we're being smart about this. So in this case, we have someone with 1.6 million and a 401k. If they wanted to retire at 55 and use the rule of 55, that's an option. And that might be what this person has thought about. But generally speaking, it doesn't make sense to pull from your 401k if you have another option, like a superhero account, because when you pull from a 401k or IRA, you pay what's called ordinary income taxes, which means it's assuming you just made more money. It's that schedule you know far too well. If you're a high earner where it's 10% bracket, then 12%, then 22, 24, 32. With the capital gains brackets, it's lower. It's zero, 15, 20% plus state taxes. So if this person were to retire, let's just call it not in four to five years, but today, they could start pulling from their superhero account to generate income. And they have a substantial amount there, $650,000. So if we just did some simple math, let's assume they wanted to spend $10,000 a month after taxes. What I didn't hear about was healthcare. What I didn't hear about is what if the girls want to go to grad school or their son. So of course there's more assumptions here. But if we're just keeping it simple, $120,000, let's just say times that by five. Okay, so $120 times five is $600,000, which tells me they have about five years worth of superhero account funds that could generate $10,000 a month. That assumes they get no growth at all, which is unrealistic. So maybe it's five years, maybe it's six, maybe it's seven.

Rule Of 55 And Bridge Funding

SPEAKER_01 8:06

Well, what we want to make sure is if we want to use the rule of 55 as a potential option, a reminder, what the rule of 55 is, it allows you to pull from your 401k before 59 and a half, but you can only pull starting at age 55 as long as you retire in the year you turn 55 or later. So the rule of 55 is a great option. In this case, we have stock options that are more than likely to be sounds about 500,000, and that would go towards the superhero account. So my concern isn't is this person going to be okay to retire? It's are they gonna retire on their own terms and spend what they want that would actually provide enjoyment

4% Rule Vs Guardrails Thinking

SPEAKER_01 8:40

in retirement? Now, assuming we use the 4% rule, which I'm not a big fan of, I talk about this often, I prefer the guardrails approach. But if you want to know my true opinions on the withdrawal strategy, meaning how do you pull your income in retirement, comment the word withdrawal below, and I'll send you a free guide so you can understand how to do that. But for this specific case, what I would encourage is if we're just using the 4% rule as an assumption, as a starting point, if you will, well, 4% on a $3 million portfolio, that would generate $10,000 a month or $120,000 a year. And so if this person would go, oh my gosh, that would allow me to do everything I want and more, well, this would say that this person's in a good position. But I don't know if that's factoring in healthcare, additional travel, grad school, how often are they buying new cars? What about if they want to do a home remodel? And then the big risk is what if they do it all at once? So I, if there's one video I would ask this person to consider watching, it would be this video here on why an 8% withdrawal rate doesn't mean you should pull off retirement. Because if you had a high withdrawal rate for a very short period of time, it doesn't mean you can't retire. For example, if you had a 10% withdrawal rate, you might say, Oh, I there's no way I can retire. Because if I pulled out 10% of my portfolio every year, surely I would run out of money, which in most cases would be the truth. But if there was one year where there was a major expense, what if a medical event came up, or what if you want to buy a new car at the same time you're retiring? So now there's no more income. You might assume you can't retire, but if you have one big spike, one big year of a withdrawal rate, that doesn't mean that these future years being really low means you can't retire. So I don't want this person to unnecessarily push back retirement. They're saving $5,000 a month to their superhero account, my nickname for a brokerage account. So they are clearly, I hope, saving a healthy amount of income. And I hope they're not pushing back what they want to do today. It doesn't sound like that from their tone. I don't get the sense that they're miserable or not able to do things they want to do. But if that was the case, I would urge this person to understand this concept, which I'm sure they've heard a million times, so it's not anything new I'm inventing here. Compound interest and the example of, hey, if you have a $3 million portfolio and you get 10% growth, the historical average of the S P 500, that's $300,000 of growth versus

Big One Time Expenses And Spikes

SPEAKER_01 10:46

saving. They mentioned they're saving the max to their 401k. So if they're doing $70,000, doing everything they need to do to get as much in there, because that's their personalities. I got to max it out. I would urge them to consider potentially not maxing it out. Not because I don't want them to be on track, but just adding $70,000 of your own income, well, it's not as valuable as getting good growth at this time. So ideally, you do both at the same time. That's obvious. But my point here is if they were, for whatever reason, not feeling confident, they didn't enjoy their job, would they rather do something else different, even if it pays way less? Would they want to consider that? If I told this person you wouldn't have to wait five years, what if you could retire earlier? How would that make them feel? Would they go, oh my gosh, I don't, I'm not even ready. My friends and co-workers aren't even talking about retirement. I don't know who I'd hang out with. Well, that changes things. Maybe they go, no, I have no concerns there. It's just financially. Can I do this or can I not? Because I don't want to run out of money. Well, that's a different conversation. So I would add them to make sure they're considering healthcare. Social Security is certainly a factor, but it's early to think about. I'm okay with them thinking about it, but I don't want them to marry a, yeah, I'm collecting at 62 or 65 or 70. It should remain dynamic based on how life goes. This is someone in a good position. I think they're in a good position. I think they should run what if scenarios to get really clear and understand sequence of return risk. I bet that's

Sequence Of Returns And What Ifs

SPEAKER_01 12:02

what the the about the back of this person's head whether that whether or not they know it. Um the back of this person's head rather that whether or not they know it. And what that is is sequence of return risk is a fancy thing, as advisors like me say, so we feel like we get to be smart. But it's really just saying, what if we get unlucky? What if markets go down and for whatever reason, right when we retire, we're the unluckiest person ever? What if I live till I'm 100? What if growth doesn't do what it's done in the past? What if, what if, what if to get confident of wow, so even if I was the most unlucky person ever, I still see I could accomplish my goals and more. Wow, I really do see I'm working today because I want to, not because I have to.

How To Work With Us Safely

SPEAKER_01 12:39

Now, if you can't tell, I love this stuff, and so does my team. We want to help as many people as possible, retire early with confidence. So you can scan this if you're watching on your TV, or click the link in the description to find out how you can book a free call with us. You can also just go to our website, rootfinancial.com, click the get started, see if you're a fit, answer a few questions, and then we might be talking very soon. Additionally, call the number on the screen that my editor put somewhere, and that number is 213-316-8397. That's 213-316-8397 to submit your situation for the chance of having me respond to it in a future video. Thanks, love you guys. Thank you all, as always, for listening to the early retirement podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years, and that is because I love getting to do this. Now, please be smart about this before you actually execute any strategy that you see me talk about or hear me talk about, should I say, please talk to your financial advisor, your tax preparer, your estate attorney. 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, early retirementpodcast.com. 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.