I'm not kidding when I say that the market crash and high inflation have me really stressed out and worried about retirement. I've been in the red for a while now and although people say these crisis has it perks, I'm losing my mind but I get it Investing is a long-term game, so focus on the long run.
I can’t focus on the long run when I should be retiring in 3years, you see I’ve got good companies in my portfolio and a good amount invested, but my profit has been stalling, does it mean this recession/unstable market doesn’t provide any calculated risk opportunities to make profit?
There are a lot of strategies to make tongue wetting profit especially in a down market, but such sophisticated trades can only be carried out by proper market experts
I agree, my profit has been consistent no matter the market situation, I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2020 this time with guidance from an investment adviser that was recommended by a popular economist on a subreddit, long story short, its been 2years now and I’ve gained over $850k following guidance from my investment adviser.
@@hermanramos7092 All of this happened in less than a year after ‘Catherine Morrison Evans’ told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.
I admire the financial independence of people, But you can live better if you work a little more. After watching this I think there are people out there, on the extreme, who plan to die early just to be able to retire early. To each their own but to me, retirement isn't just about not having to work, it's about having the freedom to do whatever you might reasonably want, such as travel, buying things, enjoying life, etc. I don't think I could retire with less than $3m in income-generating investments, maybe $2m at the very minimum. I plan to work until I'm at least 45
Nobody knows anything, you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving
@@BrunoLuke Having an investment adviser is the best way to go about the market right now, especially for near-retirees, I've been in touch with a coach for a while now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I netted over $220K during this dip, that made it clear there's more to the market that we avg joes don't know
There is a benefit to hearing people retiring on (what seems to me) insanely high numbers. As a single dad with three kids I reached fi in less than ten years. Starting from 89k in bad debt and starting with income less than 40k. I’m counting on zero from ssi. I don’t live frugally. With house hacking and rental income from only 7 doors, I will never have to work again. Flip your thinking. Eliminate your housing costs as young as you can and your saving rate increases faster than almost anything you can do.
You have 3 kids, rental properties and made it to FI in ten years, but you started at 89k in debt and a low income? How did you buy that many rental properties with such a low income? And what is house hacking? Doesn't add up.
@@aaron___6014 Could be untrue as you can claim anything on the internet as there is no way to verify it. I find many stories on the internet that I call BS on as its clearly pure fiction. Now this could be true as one can find houses that are close to being condemned or buy on tax leans and with a lot of real hard work bringing them back. Also turning them into rentals is far easier than bringing them up to a true saleable condition. Who knows what condition the rentals are in.
Wow--this is so much money, annually--to me--for retirement. I moved myself to Portugal to cut my costs by 4/5ths and to insure that I could afford health care as I get on in years (midlife, now, single). I have private insurance AND am on the national plan--way more care options than I ever had in the states. I have a better quality of life, lie in an amazing country, have the option for a 10-year tax holiday, and can still get SS payments when the time comes. Now to create a good financial plan for this new scenario...
Awesome case study - perhaps because the circumstances really resonated with me. I will have this episode bookmarked for going back to review for catching the nuggets that are super pertinent.
Finally! A video that covers the important mechanics of both conventional and early retirement such as a withdrawal amount from a traditional IRA to cover taxes.
These are the important podcasts, the ones that go into the nuts and bolts of how to actually do it. General ideas are inspirational and all, but it's the how-to that matters. Thanks guys.
Hey guys! While I’m enjoying some of your content and trying navigate the FI community, I’m finding that it’s not always easy to truly understand the pillars. For example, when we talk about the vehicles and buckets for savings, the most emphasized are workplace plans and IRA’s. That can help you be FI....at 59 1/2. Just not seeing much about tips on how to achieve that much sooner. If your goal is early retirement how should you shift contributions to each bucket? Tax implications? I’m sure the answers are there but I’m just not finding them. Even in JL Collins book it seems the emphasis is Retirement Age. I’m not so worried about retirement. I’m 42 and have a Net worth of about 800k with 500 in Retirement and the rest in Equity. My interest is geared toward having the opportunity to retire early should I want to and how Navigate from where I’m at. Can anybody steer me in the right direction?
This is not to be construed as investment advice, etc. Please do your own due diligence. If you are aggressively maxing out your pre-tax retirement accounts through your employer, there are strategies to withdraw that money prior to 59.5 years of age. Most FI bloggers recommend using pre-tax accounts so that you can do Roth conversions later at a lower tax bracket since you can artificially control your income when you reach FI. Early withdrawal strategies include IRS code 72(t) Substantially Equal Periodic Payments (SEPP) or the Rule of 55 (if you will be retiring at that age and not earlier). Here is one of my favorite articles about this option: www.madfientist.com/how-to-access-retirement-funds-early/ I prefer having monies in tax-advantaged accounts (traditional and Roth) as well as a taxable brokerage since I want tax diversification to better control my tax bracket in the future. Of course, YMMV. Hope this helps. Jen, Community Manager
yep - I think this will be a recurring theme - the real challenge is having an actual case to reference- as opposed to cherry picking a hypothetical - but we definitely will
So 60 and retired. Assuming i have enough to live the next 7 years to make the math easy. If I take ss at 67 (combined with wife) $40,000, have a 34000 dollar a year pension (start at 61), and need 100,000 pre tax. My math says i need around 515000 to 648000 in my account when i turn 67 (to last 30 years). Am i even close to calculating that right? What am i missing?
On the mortgage, I disagree with the guest. I would rather suggest accelerating mortgage's principle-only payments for at least the first quarter of the amortization schedule because that's when the majority of the mortgage interest (wasted $) is paid.
That would depend on interest rates. If the mortgage interest rate was 2 to 3% I would say heck no! If the interest rate was 6 to 7% or even higher then I would 100% agree with you. Now 4 to 5% I would say that would depend on your risk tolerance.
It definitely sounds scary to draw down your portfolio and hope 20k withdrawal will cover and SS benefits will still be at the same levels. Then there's inflation and taxes. It's Scary out there...
Not sure if i like this guys advice when it comes to FIRE people. Its heavily reliant on SS. If FIRE folks retire early, they probably wont have the full 35 years of income record. Therefore, SS wont be as high as if they were to have worked till standard retirement age (and probably their highest earning years). I do agree that we would eventually start spending our principle...but probably not in the first 6 years lol...that sounds crazy.
This was tied to episode 152 (timely) I think we will use this format to analyze different situations and definitely will discuss how it would be different for someone doing this at a younger age. thanks for the feedback
6:47 this kills me. Wouldn't it be better to take social security as early as possible and invest that money in a separate account? You may not live to 70 and never collect a dime. If you take the money early it is available to your heirs.
NOOOO!!! You are forgetting survivor benefits if one passes away. The survivor would only receive the higher of the two benefits. Then the survivor's tax brackets automatically goes up. Also, at 64, there's a good chance one of the two lives to 90.
@@ChooseFI let's say I would draw $1500 at age 62 and $3000 at 70. I would elect to draw at 62 and save/invest the money because the assumption is that if I can wait until 70 then i wouldn't need the money at age 62 to begin with. If i stick the money in a savings account at 0 percent i will have $144,000 in my account at age 70.
@@ChooseFI starting at age 62 drawing $18,000 annually for 16 years equals $288,000. Starting at age 70 drawing $36,000 annually for 8 years also equals $288,000. You wouldn't catch up in this scenario until age 78. This is at 0 percent interest rates.
@@ChooseFI if I could put my money that I didn't need to begin with at age 62 in VTSAX I dont believe the later start at age 70 would ever catch up. Also, I consider social security the worlds largest ponzi scheme. They have actuarial information and penalize you for continuing to earn passed a certain amount annually to keep you from drawing early. They know that this will allow them to pay out less per capita.
When you retire, pay zero attention to your current income amount. Scrub all expenses going forward to determine what you must spend and also carry zero debt by that time. The current 12% bracket is very generous for early married retirees, so your income tax on a AGI of 100K or less is about 6%. No guarantee that will exist in a few years with Liz Warren steering the boat....
In the case study, if all retirement funds are converted to a Roth, then Social Security would be completely tax free. Only 1/2 of Social Security is included in provisional income.
What scars me is that its possible for me to have happen to me what could of happened to my parents if they lived long enough to live through it. From January 2000 to December of 2012 the stock market ended flat after that 13 years, bonds paid crap and inflation was around 2%. What if when I retire the stock market crashes and it takes 15 years to recover to where it was 15 years earlier. An advantage I have is though I work 12 hour shifts I only work seven days out of every two weeks, I have 25 paid days off, and I don't mind my job that much. I basically think of my self as semi retired. As long as I continue this I can do it forever.
The entire plan of using a ROTH conversion doesn't make sense for these people who need their money over the next 6-7 years. The ROTH conversion takes 5 years for everyone. The man speaking thinks it will be instant because these individuals are over 59 1/2, but that makes absolutely no sense. If that were the case everyone could do an instant conversion on their massive 401K accounts and completely avoid tax. That's not how it works.
Haha thanks for the feedback. It's kinda part of his charm though, admittedly not for everyone but he's been undeniably helpful towards a lot of our audience, and a really awesome person. If you prefer the less technical, more story driven episodes, check out ruclips.net/video/FA40xllqAgk/видео.html but thanks for taking the time to watch through the technical densities.
I'm not kidding when I say that the market crash and high inflation have me really stressed out and worried about retirement. I've been in the red for a while now and although people say these crisis has it perks, I'm losing my mind but I get it Investing is a long-term game, so focus on the long run.
I can’t focus on the long run when I should be retiring in 3years, you see I’ve got good companies in my portfolio and a good amount invested, but my profit has been stalling, does it mean this recession/unstable market doesn’t provide any calculated risk opportunities to make profit?
There are a lot of strategies to make tongue wetting profit especially in a down market, but such sophisticated trades can only be carried out by proper market experts
I agree, my profit has been consistent no matter the market situation, I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2020 this time with guidance from an investment adviser that was recommended by a popular economist on a subreddit, long story short, its been 2years now and I’ve gained over $850k following guidance from my investment adviser.
@@bob.weaver72 I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?
@@hermanramos7092 All of this happened in less than a year after ‘Catherine Morrison Evans’ told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.
I admire the financial independence of people, But you can live better if you work a little more. After watching this I think there are people out there, on the extreme, who plan to die early just to be able to retire early. To each their own but to me, retirement isn't just about not having to work, it's about having the freedom to do whatever you might reasonably want, such as travel, buying things, enjoying life, etc. I don't think I could retire with less than $3m in income-generating investments, maybe $2m at the very minimum. I plan to work until I'm at least 45
Nobody knows anything, you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving
@@BrunoLuke Having an investment adviser is the best way to go about the market right now, especially for near-retirees, I've been in touch with a coach for a while now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I netted over $220K during this dip, that made it clear there's more to the market that we avg joes don't know
@@harrisonjamie794 Who’s the person guiding you
@@BrunoLuke credits to KRISTIN GAIL CUNNINGHAM, one of the best portfolio managers out there. she's well known, you should look her up
@@harrisonjamie794 Thank you, I just checked her out and I have sent her an email. I hope she gets back to me soon.
There is a benefit to hearing people retiring on (what seems to me) insanely high numbers.
As a single dad with three kids I reached fi in less than ten years. Starting from 89k in bad debt and starting with income less than 40k.
I’m counting on zero from ssi.
I don’t live frugally.
With house hacking and rental income from only 7 doors, I will never have to work again. Flip your thinking. Eliminate your housing costs as young as you can and your saving rate increases faster than almost anything you can do.
Wow - would love to know more about your story !! that's incredible
That is super impressive! Congrats.
You have 3 kids, rental properties and made it to FI in ten years, but you started at 89k in debt and a low income? How did you buy that many rental properties with such a low income? And what is house hacking? Doesn't add up.
@@aaron___6014 probably did the BRRR strategy
@@aaron___6014 Could be untrue as you can claim anything on the internet as there is no way to verify it. I find many stories on the internet that I call BS on as its clearly pure fiction.
Now this could be true as one can find houses that are close to being condemned or buy on tax leans and with a lot of real hard work bringing them back. Also turning them into rentals is far easier than bringing them up to a true saleable condition. Who knows what condition the rentals are in.
Wow--this is so much money, annually--to me--for retirement. I moved myself to Portugal to cut my costs by 4/5ths and to insure that I could afford health care as I get on in years (midlife, now, single). I have private insurance AND am on the national plan--way more care options than I ever had in the states. I have a better quality of life, lie in an amazing country, have the option for a 10-year tax holiday, and can still get SS payments when the time comes. Now to create a good financial plan for this new scenario...
Parabens!
Can’t believe I had gotten this far and never heard of Big Ern!!! And Becky Heptig of Catching up to FI and the case study!?!??
Awesome case study - perhaps because the circumstances really resonated with me. I will have this episode bookmarked for going back to review for catching the nuggets that are super pertinent.
yeah there was so much content embedded in this episode- I totally agree it's one to refer back to!
Finally! A video that covers the important mechanics of both conventional and early retirement such as a withdrawal amount from a traditional IRA to cover taxes.
These are the important podcasts, the ones that go into the nuts and bolts of how to actually do it. General ideas are inspirational and all, but it's the how-to that matters. Thanks guys.
Hey guys! While I’m enjoying some of your content and trying navigate the FI community, I’m finding that it’s not always easy to truly understand the pillars. For example, when we talk about the vehicles and buckets for savings, the most emphasized are workplace plans and IRA’s. That can help you be FI....at 59 1/2. Just not seeing much about tips on how to achieve that much sooner. If your goal is early retirement how should you shift contributions to each bucket? Tax implications? I’m sure the answers are there but I’m just not finding them. Even in JL Collins book it seems the emphasis is Retirement Age. I’m not so worried about retirement. I’m 42 and have a Net worth of about 800k with 500 in Retirement and the rest in Equity. My interest is geared toward having the opportunity to retire early should I want to and how Navigate from where I’m at. Can anybody steer me in the right direction?
This is not to be construed as investment advice, etc. Please do your own due diligence. If you are aggressively maxing out your pre-tax retirement accounts through your employer, there are strategies to withdraw that money prior to 59.5 years of age. Most FI bloggers recommend using pre-tax accounts so that you can do Roth conversions later at a lower tax bracket since you can artificially control your income when you reach FI. Early withdrawal strategies include IRS code 72(t) Substantially Equal Periodic Payments (SEPP) or the Rule of 55 (if you will be retiring at that age and not earlier). Here is one of my favorite articles about this option: www.madfientist.com/how-to-access-retirement-funds-early/
I prefer having monies in tax-advantaged accounts (traditional and Roth) as well as a taxable brokerage since I want tax diversification to better control my tax bracket in the future. Of course, YMMV.
Hope this helps.
Jen, Community Manager
Great episode! Love ERN and I totally geeked out on this. I would like to hear about a case study on someone retiring at 40 years old though.
yep - I think this will be a recurring theme - the real challenge is having an actual case to reference- as opposed to cherry picking a hypothetical - but we definitely will
Thank you!
You're welcome!
So 60 and retired. Assuming i have enough to live the next 7 years to make the math easy. If I take ss at 67 (combined with wife) $40,000, have a 34000 dollar a year pension (start at 61), and need 100,000 pre tax. My math says i need around 515000 to 648000 in my account when i turn 67 (to last 30 years). Am i even close to calculating that right? What am i missing?
You all are awesome. I wish all financial groups and podcasts were as positive as you it would change so many peoples lives.
Wow Thank you !!!
On the mortgage, I disagree with the guest. I would rather suggest accelerating mortgage's principle-only payments for at least the first quarter of the amortization schedule because that's when the majority of the mortgage interest (wasted $) is paid.
That would depend on interest rates. If the mortgage interest rate was 2 to 3% I would say heck no! If the interest rate was 6 to 7% or even higher then I would 100% agree with you. Now 4 to 5% I would say that would depend on your risk tolerance.
Great information. Learned a few new tips to employ after I retire. Main tip is pay off my mortgage with Roth IRA funds to avoid taxes.
Is SS taxed (federal) if recipient has no other income, like if all other assets ate in Roths and HSA's ?
No. But the income thresholds are very very low, so you must truly have all your money in Roth assets besides a couple thousand dollars worth.
Also HSAs will be taxed as normal income unless they’re used for medical expenses.
It definitely sounds scary to draw down your portfolio and hope 20k withdrawal will cover and SS benefits will still be at the same levels. Then there's inflation and taxes. It's Scary out there...
Less scary if you have a plan !!
This guy is one of the most knowledgeable I've seen speak about these topics
does the spouse have to be enrolled in social security to take over the benefits if one passes away?
What about inflation of costs over the next 30 plus years? I don’t recall a discussion of that. Income requirements were all in today’s dollars.
ERN Builds Inflation into his Safe withdrawal Calculations but great question!
Not sure if i like this guys advice when it comes to FIRE people. Its heavily reliant on SS. If FIRE folks retire early, they probably wont have the full 35 years of income record. Therefore, SS wont be as high as if they were to have worked till standard retirement age (and probably their highest earning years). I do agree that we would eventually start spending our principle...but probably not in the first 6 years lol...that sounds crazy.
This was tied to episode 152 (timely) I think we will use this format to analyze different situations and definitely will discuss how it would be different for someone doing this at a younger age. thanks for the feedback
6:47 this kills me. Wouldn't it be better to take social security as early as possible and invest that money in a separate account? You may not live to 70 and never collect a dime. If you take the money early it is available to your heirs.
NOOOO!!! You are forgetting survivor benefits if one passes away. The survivor would only receive the higher of the two benefits. Then the survivor's tax brackets automatically goes up. Also, at 64, there's a good chance one of the two lives to 90.
yeah the spousal benefit is key here
@@ChooseFI let's say I would draw $1500 at age 62 and $3000 at 70. I would elect to draw at 62 and save/invest the money because the assumption is that if I can wait until 70 then i wouldn't need the money at age 62 to begin with. If i stick the money in a savings account at 0 percent i will have $144,000 in my account at age 70.
@@ChooseFI starting at age 62 drawing $18,000 annually for 16 years equals $288,000. Starting at age 70 drawing $36,000 annually for 8 years also equals $288,000.
You wouldn't catch up in this scenario until age 78. This is at 0 percent interest rates.
@@ChooseFI if I could put my money that I didn't need to begin with at age 62 in VTSAX I dont believe the later start at age 70 would ever catch up. Also, I consider social security the worlds largest ponzi scheme. They have actuarial information and penalize you for continuing to earn passed a certain amount annually to keep you from drawing early. They know that this will allow them to pay out less per capita.
When you retire, pay zero attention to your current income amount. Scrub all expenses going forward to determine what you must spend and also carry zero debt by that time. The current 12% bracket is very generous for early married retirees, so your income tax on a AGI of 100K or less is about 6%. No guarantee that will exist in a few years with Liz Warren steering the boat....
yeah the capital gains tax laws are incredibly generous for people with few expenses!
In the case study, if all retirement funds are converted to a Roth, then Social Security would be completely tax free. Only 1/2 of Social Security is included in provisional income.
your right about the % of social security that is included in taxable income - great feedback - We will circle back to that in a future episode
What scars me is that its possible for me to have happen to me what could of happened to my parents if they lived long enough to live through it. From January 2000 to December of 2012 the stock market ended flat after that 13 years, bonds paid crap and inflation was around 2%. What if when I retire the stock market crashes and it takes 15 years to recover to where it was 15 years earlier.
An advantage I have is though I work 12 hour shifts I only work seven days out of every two weeks, I have 25 paid days off, and I don't mind my job that much. I basically think of my self as semi retired. As long as I continue this I can do it forever.
😀
The entire plan of using a ROTH conversion doesn't make sense for these people who need their money over the next 6-7 years. The ROTH conversion takes 5 years for everyone. The man speaking thinks it will be instant because these individuals are over 59 1/2, but that makes absolutely no sense. If that were the case everyone could do an instant conversion on their massive 401K accounts and completely avoid tax. That's not how it works.
instant eyes glaze.....
Please stop interviewing this guy, it's too damn technical like hes reciting a textbook. Disliked, boring
Haha thanks for the feedback. It's kinda part of his charm though, admittedly not for everyone but he's been undeniably helpful towards a lot of our audience, and a really awesome person. If you prefer the less technical, more story driven episodes, check out ruclips.net/video/FA40xllqAgk/видео.html but thanks for taking the time to watch through the technical densities.
Disagree. Think it’s great