How to Retire ASAP - and Where to Save to Get There - 505
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Riche j in colorado, and her husband want to retire as soon as humanly possible. Are they on track? Should they save their surplus ones to a broker account for a solo for one cake that's today on your money, your wealth podcast number five, o five plus.

Michael in south dakota wonders whether having forty thousand dollars to hear an attention is basically the same as having a million dollars in bonds according to the four percent rule. What to join big? I will think barney and betti will be in the twelve or twenty two percent marginal tax bracket, but their effective tax rate will only be between ten and twelve point four percent.

So how much should they convert to off? Are they asking the right question? And finally, join, beg people on ways to ensure that a mere in new mexico has the maximum possible retirement income to last into age ninety or ninety five. To ask you your money questions or to get a retirement spit all analysis of your own, click ask, join big gallin the episode's ript and send us a message. I'm executive producer andy last, and here at the host of your money, your wealth, jill Anderson, c.

Fp and bigger copy cpa, hi jol, andy riche.

ricki j.

Ricky J. I was gna tally butcher that, but I I took a gust that .

I was Ricky shape for, yeah, yeah.

Is is here from a rk I J for colorado. Now this is surely what my golf, nicky would be if I played more. Uh, will recreate, but you know, bladed, right the trees.

Thank you for taking my question. I started to listening to show about a year ago, and at first I wasn't sure about IT. Well, just one of you I see.

like the .

wine just takes time. Bin love, but you've grown. Andy and I joined. Listen each week during my commute, not really in a car. So i'll tell you, the last exciting place we travel was the monocle in the canary islands or moraca, whatever you say mocco. I go to monocle IT turns out their .

different place .

is so beautiful.

Love a little Better in monaco. In my and beth.

Look at snow. The coastal moraca is amazing. It's worth the road trip. Drink of choice for me is a pola or a glass sive charme human as a drink. But IT does love those athletic and a beer.

No alcohol. Yeah.

never had one of that.

I have the pretty good, are they?

Um I think i'd rather drink water. N A B mabe。

Now I give you, I give you ten more years when you don't need quite as much alcohol, but you still want to have a taste, little taste.

Okay, right? I am looking for a spitball on our situation and wondering how best to direct in expected increase in income in the future retirement funds. Okay, I work for a municipality and my husband self employed.

My question is whether we are Better off directing surplus funds to a broken age or setting up a solo ballon k for him. Here's our info. Um we have a combo income up two hundred thousand dollars in next year.

I expect to have a pain increase to about A A fifteen thousand and forty five. My husband fifty one. We also have a general sun. We have currently retirement savings at two hundred and eighty five thousand hundred twenty five thousand doors and roth area, eighty five thousand thousand a roll, roll over irin seven, five thousand years in a roth four one k to our current employer.

I been maxing auto ROI, including catch up for me in my husband, the rough for one k each year and plan to keep doing so. I'll be eligible for a pension. And since i'm already close to ten years and I think I in IT to win IT and will try to stay in the system, my hope is to reach a point where I will receive around fifty thousand year from the pension.

I'll have to say at least another ten years, uh, to wait to drop on IT until my early sixties. We have a broken age account I just set up this year. We have about ten thousand five hundred dollars a month to this.

Our primary homes were eight hundred thousand, and we all three hundred thirty and a three point two five percent interest rate. We also have a rental home and denver also worth around eight hundred thousand hours with no markets left. We currently IT currently lets up thirty thousand thousand year in red after expenses, thirty grand and eight hundred.

That's really good. That is right. Our sun is about thirty five thousand five twenty nine planner account and our account in the grandparents we keep will keep putting funds into this.

And i'm a little more worried about a retirement right now. So not going crazy with that in just any three hundred dollars a month. Ww wj is .

go.

Spent about eight thousand hours a month, depending where is hockey season for our sun. A K, A, the longest, the most expensive sport a kid can play. Uh, never playing hockey. But my best friend did high school school expect we'd spend the same or a little bit more and retirement since we'd love to travel. Alright, we like to retire as soon as humanly possible.

But I known reality that IT won't likely be until ler, early sixties if we could work some spit pal magic to see you if late fifties were in for us, in early sixties for my husband, that would be great. Since my husband is six years old and could tap into was reform. And k, sooner than I can access my funds.

What IT makes sense for us to start one of those for him? Or should we start putting more funds into a broken account? IT seems to me the solo round would be a Better option given at the end there is is any tax on the first time I go broke age, and we use either to bridge the gap until I could use or turn on the pension and now paying is so security currently.

So my projective payout as long twelve, uh, twelve thousand and eight, sixty seven or fifteen thousand and seventy, fifteen thousand and fifteen hundred, fifteen hundred. And yes, my husband is twelve, fifty and sixty two, one thousand, one hundred and sixty seven, twenty four, fifty eight, seventy. We have a loose plan that as we nearly time and time, we move back into our rental to get two years of primary residents back before something the lot we love to move around maybe france or move abroad, maybe france, france and live in a country with the national health care.

Um but we will see what the state of the world is in ten fifteen years. I'd like to see what the state of the world is when I get done. Really nice question.

It's still going.

I'm sweater. This is hard work here. Can you spend on how we're dealing in how I should be drinking? Our new friends is our dream of living in the land of 把 buckets， baskets, baggage, baggage in on track.

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thank you. I'm also curious you approve of my acid allocation strategy i'm going having on stocks since I have a pension coming. I have my husband's rap area, uh, seventy, thirty, the broken age olan stock market.

We're just trying to sort out how to best fun the gap until we can start reaching society and our pension, hoping that between some of the house sale funds in the broken age of around so thanks so much for insights, people, the great work. All right. so. She's got some extra cash, right? So that.

Easy.

so total asset she's got three hundred thousand dollars, eighty five in a little over eight ten thousand dollars in a procreate, two hundred and thousand thousand and rough yeah .

red one come thirty k fifty eight year and pension later. So let me let me recap a couple of things. So you so first of all, question whether we're Better up directing surplus funds to brokers or setting up a solar for one k for him.

I would do the solar for one k every day. The way, particularly since when is the funds might be needed according to the year your uh, explanation or question, he'll be in the sixties and I will be full available for withdraw, right? So yes, do the do the soul for okay, it's going to be tax free.

So that feels an easy one in terms of whether you're gonna be OK. At first of all, thanks so much for your question, but this really is a Better question for a financial planner to run analysis instead of us trying to figure all these numbers in our head. But nevertheless, I did I did spittings all for you.

So i'm going to say this, uh, you get three hundred thousand now. You're adding about thirty eight thousand per year based upon two rough area and maxing out of four one k i'm going to say twelve years from now. I just made that up here.

Fifty seven has been sixty three, six percent interest end up with about one point two million. okay? So right now you want to spend about ninety six thousand year, three percent inflation, twelve years from now.

That's about one hundred thirty seven thousand. Kay, there's A A pension of fifty thousand year, although you won't get IT intel. I think he said sixty, but i'm put that in anyway uh and real a real real state thirty thousand so that's about eighty thousand after one thirty seven.

So other words, you need fifty seven ground from your portfolio, then you take fifty seven thousand dollars ort fall to buy that into what you have at that point. At the six percent return, one point two million are you get four point eight percent, which is a little bit higher than we'd like to see. However, if your husband take social security sixty two, which were not necessarily recommending, but if he did, then that distribution rate would go down to three and a half percent. Um and if you're kind of write on the cup, but that that I am going to say maybe IT may work out for you, but this is something .

that you there is easier way to do this, don't start peddling financial planning services over there.

Well, yeah, but I mean, because it's hard to football this when there's so many variables, it's I don't I don't care if possible, I don't care if if they is a program.

Self is ninety six thousand dollars what he wants to spend, and she's forty five years old, right?

SHE is forty five.

Husband is fifty one, right? So he wants to retire the late fifties, yeah, okay. So forty five, fifty five, i'm going to i'm gonna get her retired at sixty.

Okay, you're you're fifteen years.

i'm going to go present value and then you get fifteen. And then let's say inflation is at three and half percent and then so that's one hundred and sixty thousand dollars living expenses fifteen years from now. I'm just taking that ninety six thousand .

push one for five years can the but .

so at sixty she's gonna fifty thousand and I know there's A A pena p but she's pretty excited about the pension. So I I would be two fifty thousand plus another thirty thousand of of rent. I don't know there is going to be an increased rent.

So eighty thousand dollars call IT. So SHE needs an eighty thousand dollars, not including social security, he says, is going to have a pretty small, small security. And you ve got to bridge the gap of the husband. So if you need eighty, what was heard? Husband, social security?

Well, it's a it's sixty two is twelve hundred and nineteen hundred sixty seven and twenty four hundred eight seventy?

Uh, i'm gonna say he needs like what you said, fifty thousand dollars is what the short follows yeah that's .

that's what that's what I calculated.

I would say he needs to target like if if you can get to one and a half million dollars over the next fifteen years, I think you're is sitting in a really good at yeah right? So it's just kind of focus, he, not what the numbers. I think once people can get a number in their head and they're much more apt to to achieve IT.

But you're right. I mean, we're just spit balling. It's a back the ample up.

But if the more that you can save, right, and the more that you invest your all in stocks, you don't need the money for another twelve, fifteen years. I think all of that is really good. Your low cost index funds, great for you.

Should you put money into more raise? Yes, because you're gonna have a lot of fixed income. So you're doing all the right things.

I think where you're going driving yourself crazy or making yourself a little bit nervous is that yeah you want to travel more. You want to go get some wine and B, O, and begets or whatever the help that is. And so and then you're going to sell the house. So there could be equally within the home .

if they're going to hang out in front a, the reality can would go away.

But ah she's gna rental in the primary.

I know, but he's saying you .

might want to move into the rental there. But let's say if you just one to a hundred million dollars, right? So that's the target. So if you rk don't reckon this, just kind of keep focus, keep sitting. And then if you can get to one and a half million dollars, um I think you you're sitting a really good spot.

okay. Well, I accept that.

But right sometime to get super confusing because there's there's all these cash flow needs that have to happen in certain time periods because your so security time that are certain what right then your pensions gonna come in. You wanted retire a certain point, but then your husband's get to retire another point. So yeah, you have the spread shit this thing out.

But if you're just looking at back at the envelope, you can look at, all right, well, what what, what do I want to live, what I want to want to spend on the annual basis, and SHE figure red that out closely to one hundred thousand dollars year. You just need to figure out what that hundred thousands gona buy in ten or fifteen or whatever year that you really want to retire. And then look at, all right, well, to buy that by the distribution rate, three percent, four percent. And then that's gonna give you kind of a number to shoot for. So not at know were just dragon these things out.

You're big balin.

Good luck. I'm glad you I warned that like SHE only likes one about and that .

he likes both. Now really likes you Better because you .

like fine line. This keeps member that one guy was like, I came back like four times and I just do that. But they .

keep not .

really that .

if you just keep .

get enough .

of john big. I'll check out the way in my W T. V. Show this week. They're talking about financial freedom. Only about one in ten americans are living their definition of financial freedom. Fifty four percent say that means living debt free. Fifty percent say living comfortably, thirty two percent say that financial freedom means not having to work, and thirteen percent to find IT as being rich. But too many of us fall short of financial freedom because of lack of retirement savings, salary constraints, dead or unforeseen emergencies.

Watch this week brand new episode of your money, your wealth TV where join biga ll put you on your eleven step path to financial freedom, find out how to take inventory, invest in yourself, and sustain your financial dreams and goals. Our financial blueprint tool will help you with that first part, taking inventory. Click the financial blueprint link in the episode description into your details, and you'll get an analysis of your current cash flow assets and projected spending for retirement along with recent areas.

It'll help you determine your probability of success. Watch your eleven step path to financial freedom on Y N Y W T V. And calculate your financial blueprint for free. You'll find links for both. In the description of this episode.

we're got mica from m self to koto. Hello, my god, is IT safe to say that if I get forty thousand dollars in pension IT is somewhere to have been a million years in bonds according to the proper cent. 呃， yeah. It's a good way to look at IT.

IT is a good way to look at, I think, probably four percent rule that I was originally designed for a mixture of stocks and bonds. But but yeah, you're on the right track that to me, the main differences when you have a pension, you know that is it's forty six in a year, maybe of costa living.

Maybe when you get a million dollars, you can spend more than forty thousand a year or you can spend less than forty thousand a year or you can convert some without terra I R A, A lot more flexibility. I'd rather have the million than a forty thousand and a pension because of the flexibility. But that can back fire. Just sometimes people spend too much. And then they were run out of money.

One thousand seven hundred, four percent seven hundred.

And what I I said is i'd rather have the million, but there's risks .

and that yeah because you have got a lot of extra dollars and .

you're big that oh, come on that if I if I had if I had a choice, I mean, what would you if you if you had .

a choice because I think we have experience in the business and we right. So let's see if if unconservative .

depends .

on the client， I would be like, all right, well, here, if you don't want to deal with investing this right now and if you want to .

get um or if you want .

to have a little bit more flexibility, but there's risk there, right? That million, he got a one point two or one point three. But if you to ask someone, okay, you've got a million dollars and that million dollars went to two million, or that million dollars went to five hundred thousand.

yes.

right, right? People would be like, no, I don't want that game, and much rather take to forty grand.

right? So lot of people say that I.

all right, you will go. Handy job. I hope to get a football question I answered. And sixty two in my wife is sixty, were both retired.

We have no debt, about one point three million dollars in all the third iris, with very little in a broker account, but two hundred thousand dollars and roth accounts, and have thirty four hundred or thirty four thousand knowledge per year and pension with the council, live an adjustment or life. I will get about sixty thousand dollars per year between my White and I. So here he started in the age seven. I want to do a little red convergence to the couple percent tax bracket for the next few years.

But my question is this, if I will be in the twelve or twenty two percent marginal tax bracket, but my effective tax rate will only be between ten and power point four is doing conversions to the poll percent or twenty two percent margin tax bracket make any sense? Also have the summer percent state tax to worry about? I think I spent about sixty to seventy thousand or six to seven thousand thousand per month. Hello, well, so funny about that.

You really should .

figure .

that part out. That's that's a about six or seven thousand hours per months. hello. L ah I think what what .

he meant or SHE, I guess he meant to say, as I really should figure that part out, right? right? L well, that's Better.

Best love IT best regards, love you show. Well, we love you. Barney and Betty, right? We have .

another burnt in Betty before. But of lines, one thing, different.

different of something. Yeah, yeah. Okay, let's see. He got very little bit. So he got one point five billion dollars in total assets. He's got fixed income of ninety four thousand and thirty four from a pension, sixty from security. He's going to and eighty is not going to touch that the fund assets does he do a conversion and he is i'm sorry, he's sixty two. So his retiring um is a bridge .

um retired .

retired .

so we need to bridge .

the gap. He's sixty two so they need um it's call IT eighty thousand dollars a year yeah I OK for .

the next eight .

years he needs because he got .

thirty four thousand and t fls about fifty grand in one point five million. It's it's about a three point three percent distribution rates. So I think that's good. Has especially since social security coming.

So fifty thousand post thirty four uh minus standard reduction, he's in the twelve percent. So the question is does he take out more of the retirement account that he has on one point five and convert remain at the top of the twill? Yeah.

I would.

I would deal all day, every day, even on sunday.

Wow, on the day of the day, rest again. Get IT. yeah.

The the reason is because two percent bracket, that's that's a great bracket, right? And so you want to take advantage of a particularly when you get over million dollars, right? And and our tax defer account social security is coming.

That's tax the ordinary income. Your pension is tax the ordinary income. So you want to try to get as much as out of that feature required menu of distribution taxi e as possible by filling up the two thousand percent bracket.

One year questions was you're going to confuse about marginal bracket and and effective rate. Effective rate is your blended rate. Your marginal rate is your highest r rate for purposes of roth conversion.

You always look at your marginal rate, your marginal rate, your higher rate. That's the rate that you'll pay tax on for the conversion. And then the question is, is that rate or that tax worth IT compared to your future rate? And in this case, two percent rate is about as low as ago. So I would do that all day. yeah.

Well, said my friend.

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Hello, my name is a mere eight. I'm sixty eight year old single man and born in november one nine hundred and fifty six oh can you give me the day what hospital .

we need more information we need just have .

much more in murad um yeah and have been working for the same company for twenty eight years, my curl ies two hundred sixty five thousand years. And i'm thinking about retiring in july twenty twenty five at one point two million dollars. The one k extremely conservative at four percent yearly return with someone ty percent of my money in the market, in money market, and thirty percent stocks in the pension plan that pays me sixty three hundred dolla month at the time my retirement, so he will also pay me forty one hundred thousand, much like twenty twenty five, forty four hundred one and sixty nine or forty six hundred, one hundred seventy.

I also have a total and hundred fifty thousand hours for the past fifteen years that pays me thirty hundred dollars a month in case I want to start taking money payments OK also on a condo in temple from which is clearing about eighteen hundred dollars, four hundred three thousand ID. I have about two hundred fifty thousand others. C, D, that matures in january of two hundred sixteen cash.

A primary resonance is in new mexico, is fully paid for. Prays that one hundred and sixty thousand. And talking about selling and moving in a house in urby, which is my second resident, me, he's got houses on.

yes.

i'm a fifty percent owner of a restaurant and coast a masa with my sister, which places about two thousand and dollars a month, will hook a brother up. We just right down the street from coast to make a, we are. I'd like to go your restaurant.

Can I have a he didn't even tells what kind we don't come on. A desire didn't come after retirement is to have one hundred and forty thousand thousand years of spending. I really appreciate any situation of my financial blueprint with an additional comment and suggestion that you may have.

My main concern is with placing taxes will be OK until nineteen ninety five. No idea what other advice you have for me to have a maximum, uh to have a maximum income possible. Okay, i'll be in something comforting about month, month, how that will meet. Great with, how do you think now you get some time for a mire? So any other .

should advise, recommended me with.

oh, oh, okay, come out close to make a yes.

is close to send ago, you know? Okay.

sixty eight years old, once return soon.

Kay wants to spend hundred twenty five thousand hundred forty thousand dollars gross. He's got one point nine million at eight sixty eight. You can do four percent distribution rate at seventy. His fixed income a with the rental l income is about ninety five thousand actually that does need to clear that um restaurant. So yeah if you add all that stuff and it's it's a close to two hundred thousand of spending, want to spend that much I mean that that could be max spending.

He wants one hundred .

yeah plenty .

of laying .

works just fine. So if you won't spend one forty, great. If you will spend a bit more ah you know maybe one eighty, one ninety would be max spending. But that see the thing is when you calculate max spending, basically that puts you on the margin at where you can make areas. So i'm not suggesting you would spend that much, but you could spend more than one forty from time to time if you wanted.

Yeah, he's a conservative benefit, al. Is most in cash money market is in the anybody that fixed is got cds. But it's funny to a restaurant.

Yeah well, probably his sister sister needs some capital, i'm guessing I don't know.

But is the restaurant pretty risky?

Yes, I can be so that twenty four thousand even can may not be forever you never know.

But um yeah I think you're sitting just find you just wanted. But for you can really use a four percent burn rate with him because he's probably not even getting close to four percent long term with this allocation.

Well yeah too. Well, we don't know what this form K S.

but yeah other seventy percent .

cash IT yeah you right so probably maybe three .

I would you three.

two percent yeah, maybe maybe some.

But he's trying to break up the most income and he possibly can with the least of on a risk. And I think that's what everyone's go is it's like, all right, how do I go about a creating the income that I need and not worrying about my investment and not worry about the markets in in soil and support. So um you've done a really good job of accumulating the wealth. I think if you take a smaller distribution rate, you can spend maybe a little bit less. He's got houses all over the place he's going to sell some of those homes .

moved to or even calculation.

I mean, you've done a great job. Now she's kind of planning and just figuring out what's the appropriate steps so you don't make mistakes along the way and then just come up with the appropriate allocation that you're comfortable with to to give you the return that you want with the least monoculture in the least one risk. Yeah, big is available anytime you want to be. I will set that point you saturday mornings before and in .

the office yeah just bring me bring me take up from .

the restaurant that's yet we're done. Thank you, me. Thank you, everyone, for the wonderful questions. Any great jama put all this stuff together.

Thank you.

Thank you for doing IT here, right? Your guys is good tels errent thank you for the lighting who recited IT we'll see all next week shows cutting many well James .

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