What You Need to Know About Open Enrollment
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Joan routine and asked, what are the rules for living off of stocks before retirement? I'll have a few years of no income because of grad school, but I have about three hundred fifty k and broke in a broker account. Do I sell slowly or all at once? And what do you think about this idea?

What are the rules .

about living off of stocks before retirement? I have a few years of no income because of gradual, but I have broken count to a sell slowly once. What are the rules about at all? We know this.

If we've been saving the time my account, if we've been saving into four one keys or r or counts like that, we can use them until a certain time. We can actually get to those assets til or if it's a four in k, we retire the year return fifty five. We can do that with these are like retirement essence.

And so I think the question Joseph asking is, okay, before I get there, before I get to fifty nine and a half, how should I think about creating an income stream? And if I have a portfolio, he said, right now i've got three hundred fifty thousand dollars. How do I think about that? And we have a lot of folks who do in or into early retirement.

There are part of the fire movement or fine movement, and there are some things that you can think about when IT comes to early retirement, like one of the ones I think about that. Now we do, for a lot of clients, know if you are able to manipulate your income to the extent that you can keep IT super low, you might qualify for zero percent capital again. So even if you have these stocks and you begin liquid date them as needed, you can pay zero percent capital gains if you stable low certain income threshold. What I think is interesting though for .

josh is if is says no broken age account of of the things that I think .

through is a if you're in ing into retirement, if you're earning the suo retirement, what I would argue is that before you even think about like, okay, how my selling my stocks and how I selling my broker, jess, that or is my cash or is my level of liquidity the place that did not to be a cause?

You know, we say that when you're accumulating and you're instead for the financial of Operation, you will have three to six months of living expenses and liquid cash. However, when you get to retirement, when you get to the financial and opinion, you start living off of these assets. We want to see your cash levels increase.

We want you to have somewhere between twelve, the eighteen months of distributed table living expense is available for you will if you do that, what you're not gonna do is in the situation where you have to start immediately selling stocks or selling stocks at the worst possible time. So my immediate question for josh, I would be like, okay, what's the strategy? What are the rules for pulling out early retirement? My question would be what's the rest of your finding ing situation looks like? Because that's going to dictate what the rebalancing strategy, the portfolio.

I think it's interesting because i'm going to take the stance .

that he is .

Younger and he's on sebak .

al on .

is what makes weird is like if you are a retirement, it's not hard for us to say let's make sure you have twelve, eighteen months of cash in your account and will replaced this every twelve, eighteen months so that we can go to market, take a vange of we in a good time or bad time and take a range of what's been performing the best and look at the tax rates and all the other things.

And and it's a nice clean system I worry about for somebody who's in their choice is because if I did guess your asset allocation is going to be equity and in cash, that's IT, where is your tire is going to have equity, is going to have bond. So even what if we're done with cash for retirees, if the markets getting its teeth kicked in and I still need to get access to assets, I have A A whole huge basket of fixed income and other very conservative assets, I can still go replenish the cash flow in retirement. Where's you in your choice if you don't think about the sabbatical of our period time? Well, you might if you only did if you were pulling a just in time accounting system on your cash flow and selling every month what you go do in those months.

So there's inter year of volatility periods. Were the markets down fifteen percent, the bills on this and you're going to get caught making a desperate decision fast forward? Maybe you even said I i'll just go head and i'll click ate for the next twelve months or even eighteen months because I heard the guys talk about twelve, eighteen months as what they do with the retirees.

And then what happens you get in the twenty four months and the market is down thirty percent, forty percent. You because your asset allocation is all equity. It's not going to to be as well.

So grad school, that here's a thing began with the end of mutton. You know the time period, you know the goal, which is grad school, make sure that you you know I don't mind if you want to have A A multiple tears system here with IT. But but you probably need to go heavily more on the cash side of the thing of what the total value of the goal is because you don't have a backup planning.

You're definitely within that three to five years of what I consider short term. This is that money you want to have at risk. So don't just assume you look like the same as a retirement because you're asset allocation and all the other things don't all in the same way.

But I think probably missing the question. I think in the time of this, this is how to fund something like an inter media term goal. So if that's the question, here's a rule. I think that I would think that I want you to go a money guy that comes last, resources, and I want you to check out our wealth multiple. Here's what I really want you to understand.

If you're going to take us a bad access or if this is gona cover your grad school, you really need to on stand the cost of every dollar that you take off the table, right? So if you have three hundred and fifty thousand dollars in an atra ached account, that's wonderful. Twenty eight years old, you are well on your way for that money to turn into the millions of dollars by the time you get to retirement.

But if you live off of that three, fifty and you pull IT all out over the next four, five years, you need to recognize that what you did in that season was you pulled millions of dollars out of your future financial self. So you have to figure out, does that make the most sense? This is where I think special for people who are gonna h flow grad school or gna, try to live off of their resources while they're still the accumulation phase, being as clean as possible and having a small of a foot footprint of as possible. Probably the best solution what you do to do is live high on the hall, get to the end of the to get to thirty three, thirty four years old about the start in your career, and a holy cow burn through all the stuff I save now on behind. Right now you are in the head position to stay in cases becomes .

a highlight. What is great about doing a live show is that we were getting additional details fed to us. So that came off as like why this is segmented. It's because I give the content team you were giving us, I guess, information coming through the chat. Now we are putting on the teleprompter study on the teleprompter, but it's in from the monitor, the comfort monitor.

the comfort minor.

We have a teleprompter too. No, it's just a screen. So we see slides .

is a thing like we feel like like speaking. And I was .

the book or I was like, can we just have a comfort monitor so I can see the .

slides and notes .

and we didn't so remember .

the location .

like .

we did in the text location.

I can tell you how well my, if you be my favorite venue, has been far enough along that. I can say this. Now, IT was a delusion, which was in a movie theater. I kidgin out where, and they basically just go in a movie theat and flip on the lights, and then just bring two nerds sustain in front of everybody. And I loved IT because there were so many unique things that happened, like we had a cockroach go across the four or the Carter kicked out of you. Lovely people who in the audience with the lights cross right in the second row, know, just gone to town while is talk in which was just kind of a unique thing to look up and see somebody. There was the .

only place where you could see the money, you could see people like make eye contact with them. And I think IT made for a funny er show. But I think you and .

how about the fact there no Green room? There was no Green room or a wait place for so but I was just hanging out in the entrance of another of another movie theater that we thought, like there was no movie in there. There was no show going on.

And then I was on this older woman. I guess he was going be the only person that watched this movie i'd never heard of. And she's like, what I think .

we're wrong.

So nice funy things.

And that was a really fun show.

That was A, I think, pretty much sold out thing. Everybody guys that I I love that not only thinking the barbecue was really good, but I was like, maybe I could live in out. I mean, for .

me. Said dallas was the best because I was there. He said that chat right now yet .

because js wife was there.

SHE gave all .

the beans, by the way, he just spill IT. All.

all right. Good side bar there, but all that to say. joke. Thank you for that question.

If you would like a money guy toward just email winner at money guy dot com, and we would love to send you one since we answered your question on the show today. All right. Speaking of people, we met on the door, Carlos, as a question.

Hey Carlos, I just wanted to know how big should my emergency fund be if we are dual income and plan to rent our our house, should we have separate emergency funds for each? And I like this question because he's respecting your a real estate and cash rules, bran and both. So maybe you can speak to you and give me a little Better guidance.

yes. So let's talk about what is your baseline emergency, fn, B, A. If you're a dual income household and let's say that you have about the same income, there's a lot of folks who say that we want to be a little bit more aggressive.

We feel comfortable with three months of living expenses for our mart, and that's a problem because we both income earth and were both at about the same spot that would be permissible and allowable. But say your dull income earth, but one of you has a much higher income than the other. I would argue that there's more risk and hair in your situation.

So a mercy fund should likely be greater than three months and should probably somewhere closer to four, five, maybe even six months of living expenses. Well, I just in the Normal circumstances is in the Normal environment, whenever you start introducing reale estate, 你 start thinking about having a rental property， having other assets and obligations. I think that also affects the emergency funding. The appropriate emergency fund levels are great.

yes. And that's why I think when you get into this level, complexity is not look, the input of what your current to create is only to be as good as all the scenario you plan. And that's why I know we throw about there all the time, but IT really is when you get into doing rune property and rinsing out a house that you use to live in, you kind of starting a new business.

I mean, there's a lot of things even when you thinking about taking on a brand new job, that's a new endeavor and it's gna change your cash for is going to change your house dynamics. Don't sleep on doing the three d glasses plan. I mean, there's a reason we talk about this is that I want you to do some preparation and do some homework and figure out, hey, what's going to happen if this goes really well.

That's a dream plan. If IT goes, how I think IT will, that's the downtown th plan. And then what happens when literally this thing goes belly up and is the studio plan? Don't don't sleep on that.

That's why you might come to the, because i'll let you do a gut check on your personality and how you handle the emotional stuff as well as if you if you are two separate people from an emotional of what you look at money and you you see the dude o plan and you like full on panic. We can't we got to make sure that we boost up our cash to get us through this point here. But then you're married to a cowboy that's like, you know you're in this relationship with somebody is like, i'll be all right, you know we are in you are in completely different different places. You've gotten go and have that communication plane and what if the the you're in two different places and warning else income exactly what both talk matter in two different places on who can provide what you got to reconcile those things and why not do IT now before things goes south, either with the property or with the dynamics of if you're having, if you are, have a tough time in the relationship, is Better to go head and plan this stuff now while things are good versus letting this be the thing that creates a lot of stress and strive in your relationship.

I do think what me ask this, what are your thoughts on keeping those fun separate? Like can you have all want them to find if you have a rental property? Should you think of that as a separate bucket of emergency to be?

Can I look? I don't there's a state who owns what is relationships are tough, and I didn't hear carlist talk about marriage or whatever so that his own other dynamic and there as well. But i'm trying to be respectful of the fact that if this this is a couple you living together but not married is that these things are strange done. And i'm talking .

about the household emerging fund verses. If you have a rental property, like should that all be combined into one emerge fund? Should you have a separate .

think you can treat IT as a separate because I essentially have an entity together. But I do think what i've thought you were are looting to. And I i've had this conversation with somebody else recently when you have two people making completely different incomes and they are living together and sharing a house is that the money can become a power dynamic and I always think that that's a weird thing um because relationships are already hard. Um so you just want to make sure that I have really good communication about the dynamics of money and emergency reserves and access and all the other stuff because that's that's that's the hard part to make a relationship you know where can get difficult if your communications are good, I can fall apart. I don't know that was clear.

but lots of angles, but I mean, they were all good things to think about. I'm always thank you for the question. If you don't already have one and one of money guy tumble, just email winter up money guy 点 com。

Alright, eric caz, a question up next. IT says my company offers you to buy into ownership. Shareholder bonuses usually are about ten to twenty percent of the initial investment and the value of the shares increase over time. What step of the food is this?

Um okay. So the company offers you to buy in the ownership shares of ownership use about interiors in the making partner of the making partner opportunity at my employer because here's what you didn't say. You did not say this with some sort of like employee stock purchase plan where you're getting a discount on the shares.

If you're getting a discount of the shares, i'd argue that's like free money. That would be more of a step to think if this is something where you're just able to buy into the entity for whom you work and you're able to do IT at a reasonable market valuation. In my opinion, this is gonna be a ste p 7， hyper accumulation, step tie goal because you want to make sure you've done all the other things brand.

Can you hold up the thing? You want to make sure that you've got the emerging fund in place and you're building in your financial foundation. You've maxed out a you've done your agra, you're funding your retirement ment accounts and is no different.

Then quote on quotes, starting a business right? Like you would put this in the same place as starting a business is basically what you're doing is you are, in fact, investing in a business IT just happens to be a business that you also work for us. And not only where are you saying, hey, my human capital is tied up in the thing and this one a paycheck comes from, but now I also wanted tie on my financial capital to. And while that could be a wonderful thing and could have an amazing or eye, you want to make sure you're doing IT at the right stage of your financial journey or not too earlier.

you become way over concentrated. I've got a word for a liquid. You think about this sort laid out all the details. But even when we get to step five and six of the financial Operations, I mean, I don't want to you.

I would make me crying, I mean, physical went, tears coming down my cheek if you actually try to get to your roth R A for emergency. But you could do IT. I mean, you really could do four one.

K would probably allow you to take alone or hardship. You could get that I would not advise IT. It's not a good idea.

But if you you know getting a picture of a situation and you call your owner of the company is so hey, you know that that stock purchase plan i'm in, i've got a little hardship going on right now. I'd like to get to get some of that money back there. No, he doesn't work like that.

This this is an illiquid investment. You have A A period certain or there's windows where you can take action, but only in those windows. So that's why I boa spot on, since this has limited access, IT is illiquid.

This is a step eight of the financial water Operation. This is something after you built the financial foundation underneath you and you want to maximized the opportunities of what this could create for you, both from cash flow as well as from an investment in your employer. Um but I also I think both said something I think is very valuable and should be emphasize be careful having both your human capital and your financial capital all loaded up and only one entity.

Look, some of you can help avoid IT like you look, I ve started several small businesses and it's just the nature that sometimes that becomes one of your biggest financial assets. But i've tried in the background to be building up as much liquidity and access to assets elsewhere, outsides of my small businesses as fast as possible. Don't just assume just because things have been good this year for the last five years, ten years, the trees don't grow to heaven.

great. Well, eric, I know I was reading all the names that I had already done, but eric, if you would like a tumble, just email winner at money guy that com we would love send you. And thank you for submitting your question.

Alright, embers questions up next for you. It's an open enrollment question. He says, yes. When I know at that time of year when my in h sa. Or a high deductable plan, not be a good idea.

What should I consider? I currently have a low deductable plan but pay a higher monthly premium. So how do you think about this as we go into this open enrollment season, especially as a financial matter with that agc access .

potentially? So we love ages. We love what they can do for their triple tax venge. You can put money in on the frying, get a tax deduction, you can invest the dollars.

They can grow tax to third, and then you can use some tax free for qualified medical expenses. They are wonderful, but they are not the indebt. There are a lot of circumstances in which in, by the way, order to be able to contribute to A H, S.

A, you have to be covered under high deductive plan. Well, the high out of plane is not always the best decision. I'll speak to one scenario where it's not and i'll leave some more for you once. Scena, where IT doesn't make sense is lets say you worked for an employer that has highly subsidized cata insurance, you could go get the high deductable plan and maybe it's gonna a lower premium or maybe your employer covers one hundred percent of cost if they have another type of insurance that is fully subsidized or highly subsidize and it's just copies and it's not gonna you a lot either for the premium or for the services that you might receive throughout the year. And you're a health care user that goes to the doctor and needs of services, you may be much Better off taking the very, very affordable, really, really good catholic health ensure its instead of opting for the high deductable plan just because you want to be able to .

contact the example homework do you like meaning that open enrollment should not just be do what you did last year? He needs to be you need to think ahead. Begin with the end of mine.

And so hey, in the coming year, what am I going to be using health care for? Is IT just catastrophic protection like a hodel cable health plan will be providing? Because I feel healthy, things are good.

No big life changes are coming my way. That's one option. But always, you know, i'm the one I nuckles have that still does law the hr and payroll stuff around here. And I love one of my favorite things because it's kind of like a gossip thing.

This this is what IT feels like to to work at tms, I think, is that when we do open enrollment, I get to see what people are choosing on their health insurance. I, I O, oh, somebody's do family because they went to that. And they in the this year, I know, because we have a bunch work here, they'll do IT because I grow in the family.

More than likely in the next twelve months, I will have them kind of my office. And I guess what we're grow in the family. I might yeah, I kind of do IT you know, because I saw you, I saw your health insurance election.

So he's nothing wrong. And to look, that's the fun part of i'll tell you, I turned to certain age and so did other people in my households that I knew that there was like some testing that was required at these ages. expensive.

It's pretty invasive. And I put you to sleep and you know we go to facility to do all this stuff more. Well, I just tell you, I cheap all.

And they got this racket set up where you have to go talk to the doctor for you guys. I told me, we have to do this. Why do we have to have a consult beforehand to do this? Is know everything is to extract as much out of this process as possible.

You might want to catledge insurance. So you have a lot of procedures or surgeries or things coming up. I mean, so there's nothing wrong with you being a proactive participant, doing the homework, thinking about how you're going actually going to use this plan in the coming year and do IT, you know.

And then by the same token though, if you did grow your family last year, now you got open a room and coming your way and you know, hey, everybody's healthy. That looks like this is good. Don't just stay on the catholic because that's what you did last year.

Go to that how deductable playing. Get back on the ha savings and dont skip out on just doing the homework. But you always share.

I will screw this ups. That's sorry because I got you to protect me here. You're supposed to look at what the premiums are on how deductable versus the catalog. You and then go look at how you're using the money. So because you got the savings, you've got to go then compare where your deductable is on the two different plants, see where the differences, figure out where the break even, and then make your decision.

Yeah, that's the two. Then the next two are any employer? Ves, if your employer puts money in your h sa. Or if the offering sort of a health reinforcement account or something like that and in forth this tax savings, so you have premium costs, you have actual health care costs, employer.

And of the new of tax savings, you stack up those four columns are those four rows for all your health plans, and every and open a omen, you make your decision which one makes the most sense for next year. And the next year you rs, repeat, rs, repeat, rent, repeat. And you make you always optimizing, hey, we're done well.

Got problem.

You know, five.

Amber, great question. Um thanks for being here and we would love to send you a money guy tumbler just as a thank you since we answered your question on the show email winner, anybody out come to cash on on that remember just because um the live stream doesn't mean that the personal finance conversation ends, go to money guide up com where we have our entire archive of episodes on all kinds of topics along with money guide out come slash resources where you can get all of our free stuff. We have got some calculators and free downloads that go even more in depth on some of the topics we talked about today and more. So be sure to check that out because we .

made IT for you may be what I loved is that last question. Let me highlight they really did highlight the fact that mony's only at all is not really a goal. So you know, that's what I think we try to put out there to our money.

Our family is taking active role in your financial life. You actually realize a small little decision you're making really can lead to a great, big, beautiful tomorrow. I'm your host.

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