0:00

Hello and welcome to choose a fight today

0:02

on the show. We have a real treat.

0:04

We have a listener case study and this

0:06

was a really cool one. So last year

0:09

in episode four 63, we had an episode

0:11

called from food stamps to F I. And

0:14

I introduced you to one of our community members

0:16

named Teresa, and it was a remarkable story. So

0:18

if you're new to choose a fight, you haven't

0:21

heard this episode, just stop. Stop listening to this

0:23

right now. Go back to episode four 63. I

0:26

think it is just the perfect

0:28

embodiment of what a community is all

0:31

about. You're really going to get a lot

0:33

of value out of that. So anyway, towards the

0:35

end of that episode, Teresa was talking about the

0:37

struggle she was having figuring out her next

0:39

steps and I basically said, Hey,

0:41

why don't we reach out to a retirement

0:44

expert in our community to help you sort

0:46

out this transition from, okay, we are financially

0:48

independent, but now we want to reach retire

0:50

early status. And what do we have to

0:53

do to get from here to there? So

0:55

that episode came out on September 3rd, 2023.

0:58

Four days later, I reached out to

1:01

my good buddy Fritz from the retirement manifesto.com

1:03

and asked him if he could help out

1:05

with this. I just thought he'd be the

1:07

perfect person. And he instantly said yes, which

1:09

was really wonderful. And they spent hours upon

1:11

hours going over Teresa's situation and coming up

1:13

with a case study that we're going to

1:15

bring to you today. I think you're going

1:17

to get a lot of value out of

1:20

this, no matter where you are in your

1:22

five journey. So with that, welcome to choose

1:24

a fight. All

1:27

right. This

1:32

should be fun. Fritz and Teresa, thank you both for

1:34

being here and thank you for the time and care

1:37

you both put into this. Hey, thanks for having me

1:39

back on and Teresa, great to see you again. And

1:41

I loved your first episode and I was really honored

1:43

to be able to be a part of the crowdsourcing

1:45

solution to your situation. We had a lot of fun

1:47

working on this together. We did. Thank you so much

1:49

for saying yes. And I'm so happy to be back on

1:51

the show. Yeah, this should be really

1:54

great. And Fritz, you use the perfect

1:56

word, which is crowdsourcing. That is how

1:58

we have conceptualized choose a fight. from

2:00

the very, very beginning. And thank you

2:02

so much for stepping up and helping

2:04

and just giving, like I said, your

2:06

time care, attention, your expertise. It's just,

2:08

it's wonderful. So really appreciate that. And

2:11

you also had some other people step

2:13

up. Yeah, I took your crowdsourcing

2:15

another step further. I reached out to Steve

2:17

Chan at New Retirement and Mike Piper at

2:19

Oblivious Investor as part of this, and they

2:21

both jumped in and helped out as well.

2:23

So this thing has really gotten some legs

2:25

and there's quite a few people in the

2:27

community that have been involved. Yeah, it's remarkable.

2:29

It is absolutely remarkable. So all right, let's

2:31

dive into it. So Fritz, now you obviously

2:33

spent a lot of hours with Theresa. You've

2:35

thought about this in terms of a process,

2:38

right? Because I think that

2:40

was some of the trepidation was how do

2:42

I get from here to there, right? And

2:45

the reason why we're doing this on the

2:47

podcast is there are a whole lot of

2:49

people listening who need to figure out how

2:51

do I get from here to there? I

2:53

believe I'm fine. I think I'm fine on

2:55

paper, but A, how do I discern that

2:58

for real? And B, how do I actually

3:00

make this leap to RE at some

3:02

point in the future? So I'd love to hear

3:04

your thoughts on this. So yeah, Brad, you know,

3:06

really the question that Theresa had is the same

3:08

that everybody has. It's, it's when can I retire?

3:11

When can I stop working? And I think the

3:13

process that we used is really the value for

3:15

the listeners. Obviously, Theresa's is a great story and

3:17

it was a pleasure to work with her. But

3:19

I think the benefit for everybody is how did

3:22

we answer the question? And on

3:24

our first call, Theresa and I talked about

3:26

kind of the methodology. And we agreed that

3:28

taking a parallel approach where we do it

3:30

in a spreadsheet, but then we also bring

3:33

in a retirement calculator. I really like what

3:35

new retirement's doing. So she was already a

3:37

user, it made sense. So we ran parallel

3:39

models. One was with a calculator, new retirement,

3:42

and one was with a spreadsheet. The fortunate

3:44

thing is new retirement also threw in a

3:46

couple of really nice bonuses for Theresa and

3:48

we got some time with the CFP. We

3:51

got some time with one of the model

3:53

Experts. Thanks to Steve and his team. That was really

3:55

generous of them to offer those up. So We definitely

3:57

need to give a shout out. Maybe we can serve.

4:00

Oh back in touch on those because there were some value

4:02

in that as well. Yeah, they are greed friends

4:04

of the show. I've known Stephen for a while

4:06

and yet we do have a link at she's

4:08

about a com says new retirement and that's in

4:10

the show notes to for anybody who wants to

4:12

the make easy way to click over there. It's

4:14

a really great outta and and it's a great

4:16

model in either. Theresa was already using it, He's

4:18

comfortable with it. I'm so let's walk through kind

4:21

of how we did he to those. And we

4:23

started with a spreadsheet because even if you're going

4:25

to use of a calculator, you have to have

4:27

certain assumptions. What's your net worth right? what's your

4:29

spending gonna be? So Theresa and I felt more

4:31

comfortable. She's very good with spreadsheets. We we to

4:33

set up a google work seat where we could

4:35

share. It will work and back and forth you've

4:37

seen it with. Entity is a good look through

4:39

it and we just started building tabs based on

4:41

the questions we were trying to answer. So.

4:44

The first thing we did was we started

4:46

with or net worth and we updated or

4:48

current net worth and then the question is,

4:50

how's that going to change each year So

4:52

Theresa built a tab or sheep calculated her

4:54

savings every year. Here's how much I want

4:56

to save in my four o one K.

4:58

Here's how much I'm gonna save and my

5:00

after tax brokerage account. And we

5:02

just adjusted those lines in the

5:04

net worth. By. How much

5:06

she was gonna contribute every year? And we

5:08

put in an estimated growth rate every year

5:10

and we could project her net worth year

5:12

on year on year. As far as we

5:14

wanted to go, So. We looked at that

5:16

as the first line as income and spending,

5:19

right? That's the formula trying to solve. So.

5:21

As we project that her net worth out,

5:23

we would put a calculation down below. Were

5:26

using a four percent safe withdrawal rate here.

5:28

So much income you could draw at a

5:30

three and a half percent safe. With right?

5:32

here's how much income you could draw and

5:34

as that net worth increased, you can see

5:37

her ability to spend increased. so we now

5:39

know how much income she can count on.

5:41

Well, how's that going to compare to spending

5:43

right? So we created another tab that Theresa

5:46

did all on her own. Where. She

5:48

calculated their current spending and how she expected

5:50

that would change your retirement and then is

5:52

just a matter of one of the lines

5:54

cross right is not rocket science. math. And.

5:57

we came up with an answer of twenty twenty

5:59

nine There's always some

6:01

play in the numbers. How conservative do you want to

6:03

be on your spending? How aggressive do you want to

6:05

be on your growth? It's an unknowable answer. But

6:07

we knew when the lines crossed and we

6:10

knew when the income from her portfolio would

6:12

cover their spending. Good enough. Now let's

6:14

look at new retirement and see how that compares.

6:16

So Theresa, I'll throw it over to you. Any

6:18

comments on the spreadsheet work that we did? Theresa-

6:20

So I think you covered it all pretty

6:22

well, Fritz. I did want to talk about

6:25

my question on Social Security because I don't

6:27

have my 35 years of

6:29

earnings in. I was wondering

6:32

how that would impact my drawdowns

6:34

or my Social Security benefits when

6:36

I do start withdrawing. So

6:38

we used a tool from Open

6:40

Social Security, which is a Mike

6:43

Piper tool. And I was

6:45

able to play around with those numbers and

6:47

figure out, you know, if I were to

6:50

retire at 31

6:52

years of earnings, what is my estimated

6:54

Social Security coming in? If I were

6:56

to withdraw five years from now, you

6:58

know, what would my earnings be? So

7:01

it was important, I think, for me to

7:03

understand those numbers. And if I did have

7:05

some zeros, it's not the end of the

7:07

world. I did see a pattern of probably

7:10

the longer I worked, I would earn about

7:12

an extra $100 a

7:14

month. And so each year, it would

7:16

go up by $100. So

7:19

for every year I continue to work, I would

7:21

earn an additional $1,200 from Social Security. So,

7:26

okay, let's slow down here, because I think

7:28

this is important. And it's funny, because as

7:30

we're recording this, our good friend

7:32

of the show, Cody Garrett, just mentioned this

7:34

in the Facebook group and tagged me and

7:37

said, oh, this would be something interesting to

7:39

talk about on a future Choose of I

7:41

episode. And lo and behold, within 24 hours,

7:43

we're actually talking about it. So this is

7:45

amazing. Crowdsourcing, right? Yeah, it is all about

7:47

crowdsourcing. So, okay, as I understand it, and

7:49

Fritz, I'd love for you to jump in

7:52

after I'm done here, is Social Security works

7:54

on your highest 35 years of

7:56

income history. Now naturally, for people

7:58

who are retiring early. However, you

8:00

want to define that, 35 years is a very heavy

8:02

lift. It's going to be hard to get to that

8:05

35 years, assuming, let's say you go to college, you

8:07

come out at 22, you're at 57, right, before you

8:09

have all 35 years. So

8:14

for a lot of people, there are

8:17

going to be zeros in there as

8:19

part of some of these years. And

8:21

I think a lot of us are concerned,

8:23

how is that going to impact us? Is

8:25

this going to crater my potential social security?

8:28

And Theresa, what you just said, and now naturally

8:30

this is person specific, I have to assume based

8:32

on the number of years you put in. So

8:35

I believe based on our last conversation, we're about

8:37

the same age, so early to mid 40s. And

8:40

so I know I have about 22 years at

8:42

this point, I assume yours is somewhere plus or

8:44

minus the same. And I

8:47

guess that means every subsequent year, you

8:49

would work, you're saying you get $100

8:52

more in social security benefits. So it's about $1,200 per

8:54

year. But

8:57

that's actually to be perfectly honest, not as

8:59

massive as I feared, which is really great. I

9:02

agree. So I'm at my 30 year

9:04

mark. So I only have five more to hit

9:06

the goal. And

9:09

although $1,200 a year isn't very much,

9:11

I think over that additional five year

9:13

period, it would be a significant increase.

9:15

Yeah. And we should say to

9:17

Mike Piper was the one that gave the tool, I just sent you the

9:19

link you can put in the show notes, ssa.tools. But

9:23

if you think about it this way, if it's calculated based

9:25

on 35 years of earnings,

9:27

and you miss three years, okay, that's

9:29

about 10%. I

9:31

don't know if it's linear. I didn't know the answer when

9:33

Teresa, when I listened to your show, Brad, and that was

9:36

one of her questions, like, I don't know the answer to

9:38

that one. But that's the beauty of crowdsourcing. Mike's like, oh,

9:40

yeah, here's a place where you can blow in zeros, and

9:42

it'll calculate it for you. And Teresa didn't say,

9:44

oh, that was easy. Now I know the impact. And it was done. So

9:47

that link was very helpful. That

9:49

is awesome. So ssa.tools. And

9:51

that's a big, big hat tip to Mike

9:54

Piper on that. Thank you for stepping in. Yeah,

9:56

you can also go down the rabbit hole on

9:58

this one, just like with anything else. Because

10:00

you know, looking at my social

10:02

security statements, my first an oral

10:04

ten years of the earnings was

10:06

so low and I'm sure that

10:08

if I were to continue working,

10:10

you know those higher earnings would

10:12

pump out the lower. Your earnings.

10:15

But. Again, where do you draw the

10:17

line? When is enough enough? And when

10:19

do you step away and say I

10:22

have what I need. I don't need

10:24

to optimize everything. I don't need to

10:26

max everything out. And. Some other

10:28

things that my husband Paul and I have

10:30

been talking about: Because he is about eleven

10:32

years older than I am, when should he.

10:35

Start drawing down his social security.

10:37

And when should I start? So there was another.

10:39

Tool. That we worked with for if

10:41

you can feel it's open. Social Security

10:43

Calculator Agenda was developed by my paper

10:45

and you put him each of the

10:47

spouses social security numbers from though So

10:49

security website and it will tell you

10:52

the Daves you should claim spousal that

10:54

he should claim in Oh wait for

10:56

full benefits? It literally will say April

10:58

of Twenty Twenty Five is when he

11:00

should claim a minutes is very specific

11:02

yes and that was very useful. Slid

11:04

open so security.com or will have linked

11:06

to that as well. Yeah, that's wonderful

11:08

and you get. Those actual details of

11:11

the my account at the As As

11:13

A.gov Ray exact go my as I

11:15

say And to be right to this,

11:17

I had created an account years ago.

11:20

Frankly, I don't remember when or why

11:22

did I read. For instance, I still

11:24

had to create an account for my

11:26

wife Laura. So I'm going to be

11:29

going through this now. And yes, with

11:31

the actual numbers you're getting from As

11:33

As A.gov you can and plug them

11:36

into one or both of these and

11:38

figure out. Okay, here's. how it actually

11:40

make decisions off of this i'm guys this

11:42

is gold this is wonderful your and acid

11:44

mention to bread teresa not to self promote

11:46

but i have written a couple articles on

11:49

this and i have zero one called how

11:51

to determine when to claim social security and

11:53

it took me about fifteen minutes using this

11:55

tool to come up with the dates that

11:57

my wife is going to start claiming hers

12:00

dates I'm going to start claiming mine and

12:02

it's driven by a bunch of algorithms that

12:04

supposedly maximize your lifelong benefits but I'll send

12:06

a copy of that link. It's got links

12:08

to the calculator and it shows how I

12:10

used it. It covers exactly what we're talking

12:12

about. That is brilliant. That's gonna be so

12:15

helpful because yeah I mean Social Security seems

12:17

to be a black box for a lot

12:19

of people in the FI community for

12:21

a number of reasons. I think so

12:23

many of us are just ultra ultra

12:25

conservative when it comes to our money

12:27

and we factor our FI number and

12:29

don't think of Social Security at all

12:32

which means by definition we're being too

12:34

conservative with our safe withdrawal rate right

12:36

and I think the other thing is

12:38

there is some political concern about whether

12:41

Social Security will be there and in

12:43

what form. I think based on and

12:45

this is not the platform to dive

12:47

into this and we could not prognosticate

12:49

anyway based on everything I've heard I

12:51

think the worst case scenario is 70%

12:53

of current benefits is

12:56

what most people are saying is realistically the worst

12:58

you can anticipate. So if you want to factor

13:00

that in and even be more conservative take whatever

13:02

it's showing you and multiply it by either 0.7

13:04

or 0.6 call it a day unless

13:08

something crazy happens zombie apocalypse style

13:10

you're going to get 60 to

13:13

70% of current estimated benefits is what my

13:15

opinion is. Yeah and that's basically what I

13:17

did Brad is I took 75% you

13:20

know I think if you ignore it entirely

13:22

you're being too conservative you're working longer than

13:24

you have to work so you can't ignore

13:26

it I think it's reasonable to be conservative

13:28

and take a haircut on it just I

13:30

always like surprises to the good rather than

13:32

surprises to the bad so I always plan

13:34

conservatively as did Teresa by the way we

13:36

were so aligned as we went through all of our

13:38

spending decisions he's like well it could be 1500 or 2000 I'm

13:40

gonna go with 2000 because I want to be conservative

13:43

and I'm like man you are just perfectly

13:45

aligned with me it's always speaking to my

13:47

soul yes it's you know there's a trade-off

13:50

right if you're too conservative and you estimate

13:52

all your spending high and all of your

13:54

investment returns low you might end up working

13:56

longer than you have to right so there's

13:58

a trade-off there. But in general

14:01

my feeling is unfortunately trees and i were

14:03

aligned on this approach be a little bit

14:05

conservative have a little bit of a factor

14:07

in your numbers because once you get into

14:09

retirement it is so nice to say wow

14:11

i'm only pulling three point two percent safe

14:13

with the right of i was gonna be

14:15

a three and a half or whatever right

14:17

it's better to be have a surprise to

14:19

the good. Totally totally agree i love

14:22

that so okay there's still a lot

14:24

here so trees and we're talking about the

14:26

spreadsheets i think you're a spreadsheet lover the

14:28

three of us i think. I think you

14:30

could all claim that at this point as

14:32

i'm seeing there are a couple different strategies

14:35

right so there's frits is network spreadsheet which

14:37

again will have in the show notes but

14:39

then you created some type of income and

14:41

spending spreadsheet talking through that. Yeah so

14:43

i've been tracking our spending for

14:45

over three years now i can't

14:48

remember if it was one of

14:50

your articles fritz or if it

14:52

was billy and ikasha catterly i

14:54

don't know if you guys have

14:56

heard of them but this couple

14:58

has an online book that i

15:00

downloaded many years ago. And

15:03

they actually started i think

15:05

they retired back in the mid

15:07

nineties like before the

15:09

five movement was popular and

15:11

they really recommended calculating your

15:13

daily spend rate. So

15:15

that prompted me to start okay so

15:17

every month i just record what i

15:20

spend by category i still love my

15:22

paper and pencil and i've

15:24

got a little journal notebook and i buy

15:26

category record how much i spend and then

15:28

once a month i translate that into a

15:31

book. So i'll just change that up a

15:33

little bit and i'll just change that to

15:35

my spreadsheet so by month for the past

15:37

three and a half years i have my

15:39

annual spending by category now i actually just

15:41

recently within the last couple weeks changed that

15:43

up a little bit because brad you interviewed

15:45

tiffany sub budgetista. And i

15:47

really loved her split it before you

15:50

get it technique so

15:52

i just rearrange my spreadsheet a

15:54

little bit by expenses and

15:56

then by discretionary spending which i already had

15:58

it modeled that way but i really loved

16:00

it. I went a step further and I

16:02

pulled out my one-time spend and

16:05

I isolated that in one category because I

16:07

know Fred says we were going through this

16:09

business case. I'm like, well, I'm not gonna

16:11

spend this much when I retire because we

16:13

did some remodeling on our home. We

16:15

purchased a couple of vehicles, just

16:18

those one-time things that I don't

16:20

anticipate that spending again in the

16:22

future. So I

16:24

isolated that spending to one

16:26

particular line and then I

16:28

was able to really project how much I

16:31

was gonna spend even further. And

16:33

then split it before you get

16:35

it, I changed my paycheck and

16:37

I created two new brokerage accounts

16:40

so that one is exclusively

16:42

for bills, taxes, insurance

16:45

premiums, things like that. And then

16:47

my second brokerage is just for

16:49

spending, groceries, gas, fun, shopping,

16:52

whatever. So yes, I

16:54

do have spreadsheets. I've been tracking my

16:56

spending for a long time and it

16:58

really prepared me for this business case

17:01

with Fritz because I think we were

17:03

able to get running on that very

17:05

quickly. Yeah, well, one thing I

17:07

should say, Brad, too, Theresa obviously pays a

17:09

lot of attention to this. One thing I

17:11

will say to the other listeners, I did

17:13

not track my spending ever. We saved what

17:15

was an aggressive savings rate. We knew we

17:18

were saving aggressively so we knew we could

17:20

spend the rest. And if you would have

17:22

asked me how much do we spend on

17:24

automotive versus this, I couldn't have told you

17:26

at all. Okay, if it's in the checking

17:28

account, we spend it. So how did I

17:30

go about what we just talked about? You

17:32

can't plan for retirement. You can't calculate your

17:34

RE date without knowing a reasonable spending estimate.

17:37

So in my case, we went through 11

17:39

months. We tried to go a year and

17:41

we just couldn't do it. I don't have

17:43

the tolerance that Theresa does. But for 11

17:45

months, we tracked every penny and we built

17:47

a spreadsheet every month, broke it out by

17:49

category, built the baseline, and then said, okay,

17:51

now we know what we're actually spending. How

17:53

is that gonna change in retirement? And that's

17:55

what we use for our calculation. So you

17:58

can either go about it as Theresa. Teresa

18:00

did with very long tracking, very good consistent records.

18:02

Or you can say, you know what, we've never

18:04

really tracked this and start pulling out your credit

18:07

card receipts or just start today and track it

18:09

over the next year. But you've got to have

18:11

a firm baseline for your spending because ultimately the

18:13

decision on when you can retire is a math

18:16

question. It's how much can you draw from your

18:18

investments, how much other income are you going to

18:20

have, and what's your spending going to be? And

18:23

you can answer the spending question more accurately than

18:25

the other ones. So you've got to do some

18:27

work on the spending side. Yeah, I

18:29

love that. So critical to have

18:31

your current spending or an idea

18:33

of what your current spending is.

18:36

But then clearly there are some

18:38

adjustments once you reach

18:40

early retirement or any type of

18:42

retirement. How did you both think

18:44

about that in terms of Teresa's

18:46

numbers or Fritz, how you conceptualized

18:49

this? I'll touch base on mine first

18:51

and then we'll talk about Teresa specifically. In our

18:53

case, we thought about what our... And I don't

18:55

think Teresa's quite there yet in terms of thinking

18:57

about what your retirement lifestyle is really going to

19:00

be. Hers is more when can I

19:02

retire, not what's retirement going to look like? And

19:04

you have to do both. We'll touch maybe on

19:06

that later. But so we basically said, okay, how

19:08

is our life going to change? And what's that

19:11

going to drive in terms of spending? So RVing

19:13

was a big example. We knew we were going

19:15

to RV a lot. So we said, okay, if

19:17

we RV 100 days a year, campgrounds, 40 bucks

19:20

a night, certain number miles, certain miles per

19:22

gallon, how much diesel are we going to

19:24

have to buy for my truck? We did

19:26

down to that level of detail to basically

19:29

try to reflect, oh, we were going to

19:31

downsize, which we did. So we're going to

19:33

sell the house. We're going to use the

19:35

proceeds to pay off our mortgage. We know

19:37

our mortgage rates, our taxes were going to

19:40

go down. So we modeled the big lifestyle

19:42

changes and what that impact would be. In

19:44

Teresa's case, I'll let her talk about it. The big

19:46

question for her I think was the insurance question. And

19:48

Teresa, I'll turn it over to you. Because that was

19:51

a question in our case too. I

19:53

planned conservatively. I went with a high open

19:55

market number. Teresa kind of took a different

19:57

approach, which I think was an interesting discussion.

20:00

as we went through this. So Teresa, you wanna talk about

20:02

that and any other questions or any other thoughts you had

20:04

on the spending and retirement question? Yeah,

20:06

so let's start with the medical insurance

20:08

because I currently carry the medical insurance

20:10

for myself, my husband and my two

20:12

kids. So they can stay

20:14

on until they're 26, which is another

20:17

five, six years. So

20:19

that's not an issue now, but when I

20:21

retire and using the new

20:23

retirement calculators, we were estimating about $1,000

20:25

for myself and for Paul. If

20:29

we went through aca.gov for our

20:31

medical insurance and $2,000 estimate

20:34

and now that has a lot to do

20:37

with your income. So it's based

20:39

on your income. That's how they determine your

20:41

premiums. And it was

20:43

really high and it was making

20:45

my numbers a little bit short

20:47

and I wasn't really comfortable with

20:49

that. So we're considering a health

20:51

share ministries coverage as an alternative,

20:53

which the premiums are much more reasonable.

20:56

We're both very healthy as of

20:58

right now. We don't

21:00

have reoccurring doctor appointments

21:02

or pharmaceuticals that

21:04

we take. So I would be comfortable

21:06

with using an option like

21:08

that. And it's important to

21:11

note that every time you use

21:13

a government program, there's

21:15

always stipulations that go along

21:17

with it, which further complicates

21:19

your numbers. So whether it, like

21:22

I said, they base your premiums on your income

21:24

or like when you

21:26

start withdrawing social security, the taxation

21:28

is different. So and you have Irma

21:30

limits. So there's a lot

21:33

of additional factors that you need

21:35

to consider when you're participating in

21:37

government program. Yeah, and

21:39

I think another thing, this shows how individual

21:41

this whole retirement planning gets, right? The other

21:44

big situation with Theresa and Paul was they've

21:46

got 63% of their net worth in pre-tax,

21:48

before tax and they want to do Roth

21:51

conversion. So you say, okay, well, look, let's

21:53

just not do any Roth conversions. We'll go

21:55

to zero income for a couple of years

21:57

before we start social security. get

22:00

all the ACA subsidies and we get that just

22:02

as cheap as health sharing coverage. Yeah, but then

22:04

you're not going to be able to do any

22:06

Roth conversions, right? Which is something that Theresa wanted

22:08

to do. So we had to work through what's

22:11

the trade-off of doing Roth conversions and

22:13

driving up your income, but potentially paying

22:15

more for insurance versus do you do

22:18

something, an alternative type of coverage, which

22:20

is where she landed. She's

22:22

got five years until she has to really figure

22:24

this out. But from a planning standpoint, the

22:27

answer was, okay, let's just assume kind of

22:29

a health sharing ministry type approach. We'll use

22:31

those kinds of spending and let's layer in

22:33

these Roth conversions during those first five

22:36

years of retirement when you've got low income and

22:38

you can convert quite a bit of this over

22:40

in those early years. And that's how we balanced

22:42

out that dynamic. Yeah, that's very

22:44

interesting. Like you said, this is very,

22:47

very personal. So I do want to

22:49

jump in here quickly on the health

22:51

sharing ministries. And just first off health

22:53

insurance premiums, I think we all are

22:56

aware that if we live in America,

22:58

we understand our system is almost irreparably

23:00

screwed up. And we look at

23:02

these premiums where frankly,

23:04

I'm paying $1,500

23:06

a month right now for my family.

23:09

And we use our insurance very infrequently

23:11

because we're all fairly healthy. But I

23:13

look at it as catastrophic, get hit

23:15

by a bus type scenario. And

23:18

for me, that makes sense. It's just

23:20

part of the deal, right? Like obviously I

23:22

could complain and moan about it or move

23:24

to a different country or whatever else I

23:26

wanted to do, but this is the reality,

23:28

right? So I think most of us are

23:30

wondering, okay, what do we do? Like how

23:32

do we deal with this? How do I

23:34

factor in? Okay, you just go to healthcare.gov

23:36

and you find out what's the absolute worst

23:38

case scenario. And it's yeah, I mean somewhere

23:41

in the vicinity for a bronze plan, depending

23:43

on your state, yada, yada, yada, a thousand

23:45

to $1,200 a month for a family. And

23:47

that's just a line item. Okay. Is it

23:49

unfortunate? Yeah, it's really unfortunate, right? Like

23:51

we're not going to sugarcoat this. It's unfortunate.

23:54

But okay, if that's the worst case scenario, that goes

23:56

in my budget and it is what it is. So

23:58

Teresa, like you were saying, don't. depending on

24:00

income, you can get subsidies for those

24:02

premiums. And if you're at a point

24:04

where you're retiring early and

24:06

your income is dramatically reduced, well, the subsidies

24:09

are gonna be significant, but then like Fritz

24:11

so wisely said, okay, well, there's a give

24:13

and take here if you wanna do rough

24:15

conversions, right? So there's always a give and

24:18

take. And I think just us understanding this

24:20

and knowing it gives us more information because

24:22

again, why we're doing an episode like this

24:24

is how can someone else do this? What

24:27

do they have to think through? And just

24:29

final word is many years ago,

24:31

I had my insurance, quote unquote insurance,

24:34

it's not insurance, through Liberty Health Share,

24:36

which I know, like you said, most

24:38

of them have religious requirements. Liberty did

24:41

not have a religious requirement. So that

24:43

was one that our family chose for

24:45

a couple years. And to Liberty's great

24:48

credit, they for us were fantastic, but

24:50

I was always cognizant of the fact

24:52

that it is not insurance. So

24:55

in the back of your mind, you need

24:57

to be aware that even if this company

24:59

is good, and I'm not making

25:01

a value judgment on any company including Liberty,

25:03

but even if they're good, even if they

25:06

do what they say, it's not insurance, so

25:08

there is some risk. And this is for

25:10

everybody out there. You look at the health

25:12

sharing ministries, the premiums are lower, there's no

25:15

question about that. But usually the party that

25:17

I found was the negative one was the

25:19

hospital actually. They balanced bill, they came after

25:21

us multiple times, Liberty went to bat for

25:24

us. This was in just a fairly short

25:26

bit of time. So I had some fairly

25:28

significant issues with this whole deal, and

25:30

that led me to stop being on

25:32

Liberty and going to a traditional

25:35

and true insurance, because it was just too

25:37

big of a risk for me. So

25:39

Theresa, I know you have wide eyes right now. This is

25:41

not to frighten you. It's just to go in truly with

25:43

eyes wide open of this is not insurance. So, Fritz, I

25:46

know you're dying to get in here. We

25:49

had exactly this discussion Brad Theresa and I did

25:51

when she said, you know, I think I like the health

25:53

sharing ministry approach. Well, recognize it's not

25:55

insurance and there is some risk. And

25:58

I Went through the same decision making. I

26:00

retired at fifty five and bread ironically we did

26:02

the same approach. We decided against the house

26:04

hearing because I had use the higher numbers and

26:06

are in are forecasting in our spreadsheets and

26:08

I was like look I've already built it into

26:11

the numbers I know that we can cover

26:13

it was just by you know an open market

26:15

plan. I end up getting us retiree plan which

26:17

any way to matters is so that it's

26:19

glop a lot as twenty five hundred a month

26:21

now my wife and an outward were sixty

26:23

right region over. But even see your point it

26:26

was in the numbers At that level I planned

26:28

conservatively. I planned twenty five hundred dollars five years

26:30

ago. it's just now they're now so my I'm

26:32

actually have a good guy off at a

26:35

bar ahead of experience. That's

26:37

okay, I got five years below

26:39

that rights. Again, it's just a

26:41

number and you've gotta think about

26:44

your risk versus reward. And my

26:46

anxiety was always. They can say

26:48

no and there's. Nothing you can do

26:50

about it and that is that bothered. Me

26:52

That really bothered me. Not that we have anything

26:54

I mean when you know but I would hate

26:56

to end up with the answers until know it's

26:59

something we're not going to cover because we think

27:01

it's distributed with the all about whatever and there's

27:03

nothing you can do So you do have to

27:05

think about their to recess. Not just the cost

27:07

is your peace of mind with taking on some

27:10

of that risk of potential coverages. Yeah,

27:12

that goes back to my home

27:14

mortgage deal to we pay off our

27:16

house early. Or it's not just a

27:18

mathematical thing, it is an emotional thing,

27:21

right? Very much so. And I think

27:23

a lot of personal finance. True years, emotional,

27:25

behavioral and psychological that says that. The numbers

27:28

I wouldn't either use the obviously as shown

27:30

by would you guys have been here by

27:32

their the easier part but say Ray like

27:34

it's all in our head And and that's

27:36

okay. Where humans, this is where we do

27:39

right? So through that lover on it though,

27:41

because a lot of people do go back

27:43

and forth like what are you thinking in

27:45

terms of paying off your mortgage before you

27:47

hit or he? oh gosh, we paid it

27:49

off And twenty eighteen. Or with i

27:52

don't read about my cat an orange and at

27:54

one bet. Especially going through Kobe. Then

27:56

yeah, the possibility of losing our jobs?

27:59

That a problem. So much

28:01

piece it was no worry

28:03

at all. Highly recommended. Eleven.

28:05

So. Bread. I think you know talking about

28:08

these things. These kind of show the considerations

28:10

you have to think about. and the important

28:12

thing is whether you're going to do a

28:14

spreadsheet or whether you going to do a

28:16

calculator. You've gotta think about these links because

28:18

you've gotta have some assumptions regardless of what

28:20

tool used to determine when you're going to

28:22

retire. So let me go here. I guess.

28:24

We talked about the spreadsheet. We talked about

28:27

the assumptions. It was a great exercise. It

28:29

was very useful to have that as a

28:31

baseline because we knew what is spending assumptions

28:33

were. We knew what the net worth assumptions

28:35

were and that exercise. In the spreadsheet. Was.

28:38

Very helpful. For one, we shifted over to

28:40

the second methodology with I guess by reasonable

28:42

to go and talk about that now. Yeah,

28:44

perfect com okay. So. The second approach.

28:46

quick reminder. The spreadsheet said she could retire

28:48

twenty eight, Twenty Nine Somewhere in there, depending

28:50

on your some sense. Okay sir, Twenty Twenty

28:52

Eight or Twenty Twenty Nine So about five

28:54

years approximately cracked. Theresa was happy with that.

28:56

We we could show assumptions were she could

28:58

retire and Twenty Twenty Six right? you can

29:00

have a much more aggressive market returned. You

29:02

could have lower retirement spending. You can make

29:04

the number, say what you are. So the

29:06

beautiful thing with the spreadsheet is you could

29:08

look at changing your assumptions and you could

29:10

say okay, if I want to retire at

29:12

Twenty Twenty six, how much do I have

29:15

to reduce. My spending in order to be

29:17

able to get to that four percent

29:19

safe withdraw, right? right? Or how much

29:21

more aggressive do my returns have to

29:23

be in order to support it? Because

29:25

as she goes for here, she's gonna

29:27

get actual returns for Twenty Twenty Three.

29:29

Twenty Twenty four, Twenty Twenty Five. And

29:31

if she's getting ten fifteen percent returns

29:33

and we assumed six or eight, she's

29:35

gonna start seeing, hey, maybe twenty twenty

29:37

six as possible, right? So the spreadsheet

29:39

gives you a nice baseline that you

29:41

can make changes to see what's the

29:43

impact. if I do want. To get out

29:46

earlier. That was really helpful. That said, the

29:48

most important part was getting the spending assumption

29:50

and the net worth assumption, both of which

29:52

we use when Teresa went into new retirement

29:54

and seated this entirely. on or on. I've

29:56

gotta give her credit as look, I'm not

29:58

going to log in to. The retirement You

30:00

already use it. Go in there, make sure

30:02

all the numbers reflect this and Trees will

30:05

will throw it over to you and your

30:07

new retirement experience and will circle back with

30:09

our discussion with their. Model. Expert

30:11

that went through your numbers with us. Yeah,

30:13

so that was really great because I was

30:15

already a user actually. Had all my accounts

30:17

connected to New Retirement so I had

30:20

live data to work with. but for

30:22

the case of this study that we

30:24

did. I unconnected everything and then

30:26

just put in our. Numbers manually.

30:29

So. They wouldn't change. And so

30:31

that's what our study was based off

30:33

of. The we met with Nancy and

30:35

she actually helped me update the model

30:37

because I had some changes with in.

30:41

The model requires a few workarounds when

30:43

it comes to and play or four

30:45

o one k matches, so she had

30:48

to show me how to work around

30:50

that. She was really great! And.

30:52

Then we met with Bruce who the

30:55

Cfp. We walked through all of the

30:57

assumptions that we had already put in,

30:59

we had some conversations around the Roth

31:01

conversions which for it's touched on are

31:03

ready and then he also pointed out

31:06

that maybe I need to look at

31:08

increasing my spending for the first send

31:10

a fifteen years after retirement because you're

31:12

healthy and you're younger. You know if

31:14

you want to travel or whatever plan

31:16

that you come up with. You.

31:18

Want to be able to spend that

31:21

money at that point in time and

31:23

then when you're older you're spending is

31:25

going to be drastically reduced. So that

31:27

something also to can said are so

31:29

there's just a lot of i'm. I

31:32

know we're not talking about specific numbers

31:34

in this episode very much, but because

31:36

that so person all that's like you

31:38

said, Brad, The easy part of it,

31:40

It's all the other things that you

31:42

need to consider when you're working through

31:44

your business case. in your situation

31:46

right it would almost be a distraction

31:48

to talk about your specific numbers because

31:50

it's really about the process rights and

31:52

i love with you said there which

31:54

is really burrito so the diver zero

31:56

book that i was still miss out

31:58

of the roka other I love that book. Yeah,

32:01

that's funny. You could see the idea forming

32:03

in my brain. Because right, I mean, when

32:05

is your spending going to be significantly higher?

32:08

It's going to be in those years when, hey,

32:10

you can still travel as significantly as you want.

32:13

This is not to say, obviously, that your life is

32:15

over at 80 or some arbitrary number and it's all

32:18

down. Like, we're not saying that clearly. But

32:20

if you're honest with yourself, are you going to be able

32:22

to travel and do more things at 50 or 55 or

32:24

60 than you are at 80, 85, 90? Yes,

32:28

very obviously. By definition. So we're

32:31

not telling anybody something that they don't

32:33

know intuitively. But you need to think

32:35

about this because your spending is not

32:37

going to be the same every single

32:39

year. And I think that's what's beautiful

32:41

about tools like this is that they

32:43

enable you to get much

32:45

more granular than just a spreadsheet, potentially.

32:47

Those spreadsheets, obviously, we can make them

32:49

as convoluted as we want. But most

32:51

people just say, OK, my five spending

32:54

is going to be X. And then

32:56

they gain that out for a 30-year

32:58

period. And the reality is, hey, sometimes

33:00

you might pay off your house six years

33:02

into five. You might have a college payment

33:04

for the first two years, but not for

33:07

the rest of you. You can adjust all

33:09

this. And that's what's beautiful about using a

33:12

much more significant tool like this. Yeah,

33:14

and I think, Brad, the other thing too is, I've

33:16

always struggled with it. When you first retire, you're not

33:18

going to have Social Security. OK, I'm going to use

33:20

safe withdrawal rate of 3.5%. Well,

33:23

realistically, if you look at

33:25

what that turns into when Social Security starts,

33:27

it's a lot less than 3.5%, right? So

33:30

wait a minute. Does that mean I can start with a

33:32

higher safe withdrawal rate? Well, yeah. But how

33:34

much higher? And how does that? That's really hard

33:37

to do in a spreadsheet. And

33:39

with a model, it does let you

33:41

run that out. And it'll show you the Monte

33:43

Carlo. It'll show you the projected net worth. Even

33:46

if you go to a 5%, 6% spending in

33:48

the first couple of years before your

33:50

Social Security kicks in, that may be

33:52

totally fine because your withdrawal rate will

33:55

drop so low after your Social Security

33:57

starts. And that's hard to model in

33:59

a spreadsheet. Whereas a model like new

34:01

retirement captures that and it runs all the

34:03

Monte Carlo's around it and it shows you

34:05

that's okay, right? It's hard to model, I

34:08

find that hard to model in a spreadsheet.

34:10

Yeah, agreed. And so, right, I think what

34:12

a lot of us miss is that social

34:14

security is current income in that year when

34:17

you get it. And it reduces how you

34:19

would do this calculation is, okay, my spending

34:21

is X, $50,000. And

34:24

I get social security of Y just making up

34:26

a number, $25,000. You're

34:28

not taking like a safe withdrawal rate out of

34:31

that social security. That is dollar for dollar.

34:33

Hey, I'm using that to cover my life

34:35

expenses. So in that case, okay, 50 minus

34:37

25, I just need to

34:39

cover from my fine number, my pot

34:41

of money, the $25,000 that's remaining, right? So

34:45

Fritz, what you said, which is so brilliant

34:47

is that then significantly adjust

34:49

upward. In an upward fashion, you're safe

34:51

withdrawal rate for the years prior to

34:54

when you get social security. And we

34:56

just, again, we're so simplistic with this.

34:58

All of us, when we think of

35:00

this in our head, it's like, okay,

35:02

my fine number is this, my safe

35:04

withdrawal rate is that. And it just

35:06

goes out till infinity. It doesn't work

35:08

that way. There's nuance. And

35:10

what the punchline is, a lot of

35:12

us are working more years than we

35:14

have to, right? And what

35:17

is the one non-renewable resource we

35:19

have? It's our time. I think we're

35:21

all being conservative upon conservative upon conservative

35:23

with our numbers, which I get. I

35:25

mean, believe me, I get it. But

35:27

I think when you layer on four

35:29

different levels of, oh, I'm just gonna

35:31

be a little more conservative with this

35:33

number, it gets to a point that

35:35

it's not reflecting reality. Yeah, and

35:37

the nice thing, if you look at, you know,

35:39

Teresa's case, again, we're talking about the second

35:41

methodology, which was new retirement. We're not necessarily promoting

35:44

them. It's just the model concept in general.

35:46

You can play with scenarios of, I'm gonna retire

35:48

a year early, I'm gonna retire two years early,

35:50

and it will instantly show you your probability of

35:52

success, right? So we did that and we looked

35:55

at, okay, right now we're gonna say 2028, but

35:58

what does 2027 look like? What is 2028? We

36:00

talked about how you can do that in

36:02

the spreadsheet. It's as

36:04

easy in the model as changing your retirement

36:06

date and it'll show you what your funding

36:08

ratio is. That flexibility to help

36:11

you decide how conservative you want to be

36:13

in your number and how long you want

36:15

to work, it's a functionality of these types

36:17

of models that's really helpful because you can

36:20

kind of vet out, am I being too

36:22

conservative? Am I sandbagging every single number and

36:25

maybe I don't need to do that.

36:27

I told Theresa, she's planning 2028, 2029,

36:30

I told her I'd be willing to bet she'll

36:32

be able to retire earlier than that because I

36:34

know how conservative we were on the growth assumptions,

36:36

the spending assumptions and she's going to continue to

36:38

update this every year and look at the new

36:41

retirement model when the actual numbers come in. My

36:43

guess is she'll be out by 2026, 2027, I'll say 2027 Theresa,

36:45

I'll put a dollar down that you'll

36:49

be out by the end of 2027. Well hang

36:51

on to that dollar because I had a little

36:53

life change. Oh no. Both

36:56

of my kids moved back home. Wow.

36:58

I just lost a dollar. I'd

37:03

rather lose my dollar than what you lost.

37:05

Hey, that's life, right? So yeah, we had

37:07

talked about in your assumptions, what should I

37:09

assume for continued care for our kids, right?

37:11

Right. And that's different than what you assumed.

37:13

It is. So Brad, after we

37:15

recorded the first episode, my younger one

37:18

moved home literally that weekend and

37:20

then my older one just moved home a week

37:23

ago. So this is breaking news. It's

37:25

not going to derail our plan too

37:27

much. They're pretty self-sufficient, but

37:29

it does make me think a little bit

37:31

more. I don't really think I'm going

37:34

to extend past 2029. I

37:36

think that is like my firm goal. But

37:38

I'm also considering the idea of maybe working

37:40

flex time, which is 24 to 32 hours

37:45

a week instead. That way

37:47

we can have a little bit of income

37:49

coming in and we can keep that medical

37:51

coverage reducing any huge premiums.

37:54

Right. It is very easy

37:56

to fall prey to one more year syndrome,

37:58

right? Which I think a lot of us.

38:00

or like we want that safety, we want

38:02

that security, it's just, it's natural. And

38:05

again, to not wish away your life of

38:07

like, okay, yeah, it would be a little

38:09

safer and yeah, the number is ugly. And

38:12

I'm not giving you advice here, obviously, too.

38:14

So this is your life. You have to

38:16

figure out what works. But I would just

38:18

caution. I've seen so many people do that

38:20

because that's, I mean, we're savers, right? Like

38:22

we're people who were worried about the future.

38:24

We're thinking about the future. And

38:27

sometimes that leads us to maybe make

38:29

potentially suboptimal decisions for our

38:32

lives. And if I

38:34

could just quickly jump in on your kids are

38:36

back, like, I have to say like, that was

38:39

such a gift that my parents gave to

38:41

me. And I understand how fortunate I was

38:43

to be in this position, but I lived

38:45

at home for a couple of years after I graduated

38:48

from college. And I mean,

38:50

that was the springboard that set me

38:52

up for my path to F.I. I

38:54

was able to save essentially 90%

38:57

of my income for two and a half, three years.

39:01

And it was remarkable. I was able

39:03

to then purchase a co-op apartment on

39:05

Long Island, which turned into more equity.

39:07

And it's just that, again, that was

39:09

a springboard. So it was really just

39:11

such a gift. So I'm speaking on

39:13

behalf of your daughters. It's a really

39:15

remarkable thing to be able to do

39:17

that. Yeah, I'm glad we were able

39:19

to welcome them back home. I

39:22

am actually setting them both up with the

39:24

split it before you get it method and

39:27

brokerage accounts because, man,

39:29

those the money market rates are just

39:31

so great right now, instead of just

39:34

a standard checking account. Yeah. Oh,

39:36

it's amazing. It's hard to pass

39:38

up five. It really is. Right. We've

39:40

mentioned before we the bank that I personally use

39:42

is CIT Bank, which has a I just I'd

39:44

like them a lot. Their rate is really wonderful.

39:46

So we have a link choose about a comm

39:48

slash CIT. Fritz, just real

39:51

quick, I wanted to jump in. You said,

39:53

obviously, new retirement has bent over backwards to

39:55

help us. And they've been a great friend

39:57

of the show forever. That's not

39:59

the only software. that runs this. I

40:01

know my buddy Chris Hutchins has used

40:03

something called Projection Lab. So, projectionlab.com. For

40:05

people out there, we're not saying new

40:07

retirement is the only option. It's a

40:09

fantastic option. And they helped so very

40:11

much with this project, for prior projects

40:13

that choose to buy. But there are

40:15

different softwares of this. Just these pieces

40:17

of software are just remarkable though. And

40:20

I think it's very important to get

40:22

down to that granular level and use

40:24

one of them. So, just always one to throw

40:26

out. Yeah. And the other thing I would say,

40:28

Brad, let me piggyback on your comment. Because I

40:30

said this to Teresa too. So, I think it's

40:32

important. It's so easy to get concerned about, when

40:35

am I going to have enough to retire, right?

40:37

And one more year, one more year. It

40:39

goes with the die with zero approach. I actually

40:41

wrote an article, my most recent post called, The

40:43

Three-Legged Stool of Retirement. And when you were talking

40:46

about this, it triggered the thought. There's three legs

40:48

on your stool. One is your money, one is

40:50

your time, and one is your health. And as

40:52

much as we focus on money, the reality of

40:54

it is, money will be the last leg standing

40:56

on that stool. You're going to run out of

40:58

your health and you're going to run out of

41:01

your time before you run out of your money.

41:03

Almost guaranteed, right? If you're a conservative, if you

41:05

listen to this show, if you manage your money,

41:07

unless you retire at 25 or something stupid,

41:09

right? If you're methodical like Teresa is,

41:11

and you're managing this and you're making

41:14

educated decisions, you're probably... Think about this.

41:16

The safe withdrawal rate concept is kind

41:18

of worst case scenario. So in anything

41:21

better than a worst case scenario, you're

41:23

going to have more money than you

41:25

think, because that's based on the lowest

41:28

success rate over the past, the

41:30

Trinity study, right? Over the past 50

41:32

years, what's the level you could withdraw

41:34

from that would work in basically every

41:36

market environment? So by definition, that's a

41:38

lower than average market return. So

41:41

you do have to be careful about getting hung

41:43

up on the what-ifs, because they

41:45

will eat you alive. You can never

41:47

answer the question, absolute black and white,

41:50

Teresa, you can retire in December of

41:52

2028. You'll never have to

41:54

worry another day in your life. You can never make

41:56

that kind of statement because there are always the kids

41:58

that move back home. There's always the... roof that

42:00

needed replaced. There's always the car accident,

42:02

right? There's always a health issue. Those

42:05

things are life. Don't get

42:07

so focused on, and this isn't Teresa, this

42:09

is everybody, don't get so focused on the

42:11

money side that you don't realize that the

42:13

more scarce resources are actually the time in

42:16

your health. Those are as scarce or more

42:18

than the financial side of it. Yeah, here,

42:20

here, and that's a big part of certainly

42:22

why so many of us are really focusing

42:25

on our health now, right, is how can

42:27

you extend what's known as the health span.

42:29

You may or may not be able to

42:31

affect your lifespan, which is the number of

42:33

years you're going to live. You probably have

42:36

some level of impact on that, but that

42:38

health span, the number of healthy years, you

42:40

have to put in the work, right? And

42:42

this is really an important part of this

42:45

whole, this three-legged stool of just life in

42:47

general is you have to realize as you

42:49

get older, again, just biological fact is we

42:51

start losing muscle. Then it all just kind

42:53

of keeps compounding negatively in terms of, okay,

42:56

I can't walk as easily, and then it

42:58

just keeps going and going and going. So

43:00

you have to understand that's gonna happen. I'm

43:03

spending six hours a week at the gym

43:05

lifting weights at this point, and it's because

43:07

I understand I can do this at 44,

43:10

but I need to set the groundwork for what is it gonna look

43:12

like when I'm 75, 85, hopefully

43:15

95, right? And there's

43:17

things I want to still be able to do,

43:19

and I have to put the work in

43:22

now because it doesn't just magically appear,

43:24

right? You've obviously read Peter Atia's

43:26

Outlive, which is a great book, I read that

43:28

too, and that's where the health span concept, and

43:30

the thing that really struck me with that book

43:32

is he talks about, let's say your dream is

43:34

that 75 years old, you want to

43:36

be able to pick up your granddaughter or grandson. Okay,

43:38

let's say it's a 40-pound grandkid at 75. Well,

43:41

that means you've got to be able to

43:43

pick up like 80 pounds today, right? Because

43:45

you will naturally atrophy, and that concept from

43:47

that book, I've started doing protein supplements as

43:49

a result of that book. I

43:52

started taking the fish oil, right? He's got

43:54

some really good tactical advice, and I've always

43:56

done weights. Since I've retired, I didn't beforehand, I've

43:58

always been a runner. But focusing on

44:00

the weights is hugely important. It's not just

44:03

cardio, right? It's cardio and weights. So yeah,

44:05

that's one of those legs of the stool,

44:07

right? So you can manage your investments to

44:09

maximize your return. You can manage your health

44:12

to maximize your return. You can manage your

44:14

time, right? You talk about the 1% stuff.

44:16

A lot of that is time related. How

44:18

do you be more efficient with your time

44:20

to do the things that you

44:23

want to do rather than wasting your time

44:25

doing things that aren't of value to you?

44:27

Each one of the legs, you can have

44:29

a discussion just like we just had on

44:31

health, just like we've been having on financial.

44:34

You should think that way about each one

44:36

of those legs and invest in all three

44:38

of them equally. Yeah, Fritz, I love that.

44:40

And as you surmise properly, I've

44:43

been following Dr. Atiyah for many, many

44:45

years. And yeah, it's just so important

44:47

to think about this. And it really,

44:49

it touches every aspect of your life.

44:51

And like you said, it really

44:53

is, it's all of these things. It's

44:55

not just the finances. You need to

44:57

really think of it. So kind of

44:59

speaking of it's not just the, there

45:01

were two different parts of how you

45:03

both went through this case study. And

45:06

obviously we have spent this whole

45:08

episode, and this is really where we're

45:10

largely going to stop here, but we

45:12

spent this whole episode thinking about the

45:14

process, right? Like, how do you get

45:16

to the point where the numbers make

45:18

sense? I'm confident with the numbers. I

45:20

feel like in the future, this is

45:22

my date. And I know obviously Fritz,

45:24

like you said before, reality intervenes both

45:26

good and bad, right? Which

45:29

is, this is not just something you do

45:31

one time as new reality comes in. And

45:33

every year there are market returns, there's new

45:35

income, there are new expenses. You update this,

45:38

right? Like this is not just set in stone. Theresa

45:40

is going to close her eyes and wake up in 2029 and ta-da,

45:42

here I am, right? She

45:45

might find out that ta-da moment comes in in 2027, like you

45:47

think it might. And

45:50

that's what's great about this. So there's that side, but

45:52

then there's also, okay, preparing

45:54

my actual finances for

45:57

early retirement. What do I

45:59

think about it? about in the years beforehand, do

46:01

I think about as Fritz, you love the

46:03

different buckets, right? And we talked about this

46:05

a lot a couple of years back in

46:08

episode 206, which I think we entitled what

46:10

happens when the paycheck stops. But I wanted

46:12

to give you just a couple of minutes,

46:14

maybe to just give a super

46:16

high level overview of how you thought

46:18

about that with Teresa. And then, like

46:21

I said, I think that's outside the

46:23

scope of what we can do in

46:25

this one episode, but we can refer

46:27

people to articles on your site and

46:29

that prior episode for sure. Yeah, great.

46:31

I agree. It's a good point to

46:33

wrap. And really the focus has been how do you

46:35

decide when you can retire? For Teresa, we answered the

46:37

question. It's 2028, right? Maybe

46:40

earlier, we'll watch every year, but we answered

46:42

the question, we went through the process, and

46:44

it was a great exercise. And Teresa, I

46:46

really admire you. You're a remarkable woman, and

46:48

congratulations on reaching this point. To

46:51

your comment though, Brad, that's not the end of it.

46:53

You know, the second phase, and Teresa and I did

46:55

go through this, it's in the article, I'm sure you'll

46:57

put it in the show notes that I wrote up

46:59

about the case study. We also spent quite a bit

47:01

of time saying, okay, now as you get closer to

47:03

this retirement date, here's some of the things

47:05

you've got to think about. And the biggest one that

47:07

jumps out as kind of being obvious when you think

47:09

about it is you've got to build a little bit

47:12

of a cash buffer, right? You can't just be selling

47:14

stocks every year to fund your spending because you run

47:16

into that sequence of return risk. Well, how do you

47:18

build, let's say you want to have three years of

47:20

cash. You can't wait until six

47:22

months before you retire to start building three

47:24

months of cash, right? So part of what

47:26

Teresa is doing now is redirecting some of

47:28

those savings to start building those buckets, which

47:30

is what I use, but you don't have

47:32

to, but you have to have some kind

47:35

of liquidity buffer. So there's a

47:37

whole stage of things as you move

47:39

from the accumulation phase to the withdrawal

47:41

out of your investments of

47:43

positioning your portfolio and how do you

47:45

think about that? That's all in

47:47

the article, and it is a part of this

47:49

planning, but it's kind of the second phase of

47:51

this planning. And then the third thing is

47:54

not only the financial stuff,

47:56

but the psychological preparedness for

47:59

retirement. offside as I call

48:01

it. And I would say both of those,

48:03

if you're thinking about a process, the first

48:05

process is when can I retire? The second

48:07

process is how do I transition my portfolio

48:09

for retirement? And the third process is what

48:11

am I going to be when I retire?

48:13

Those are the three phases to the general

48:15

planning. Yeah, I love that. And yeah,

48:17

we have been remiss to

48:19

this point of not mentioning this incredible

48:21

case study article that you put on

48:23

your website. So that is really essential

48:25

for everybody. If you're listening to this

48:27

and you've gotten to this point in

48:30

the episode, check out this article, I'll

48:32

link it in the show notes. It's

48:34

this case study of Teresa. And like

48:36

you said, Fritz, you go into a

48:38

lot of the numbers, but then there's

48:40

also this critical part at the end,

48:42

the strategy overview, the final working years,

48:45

and then the drawdown strategy overview, the

48:47

retirement years. And I think that's where

48:49

people will get a lot outside of

48:51

the scope of what we're doing here.

48:54

So yeah, super duper helpful. Teresa, like

48:56

Fritz said, this is amazing. I'm just

48:58

so happy for you. I mean, to

49:01

see the remarkable path you've taken, it

49:03

is just so inspiring. And I just

49:05

want to thank you for being a

49:08

member of our community, for coming on

49:10

the podcast, for being so open. It's

49:13

really, it's remarkable. And now to reach

49:15

by in your forties and retire

49:17

early. That's not

49:19

too shabby, right? My

49:21

heart is just overflowing with gratitude for

49:23

you Fritz and for you, Brad, and

49:25

this whole community, because I wouldn't

49:28

be here if I hadn't found this show all those

49:31

years ago to kind of help

49:33

me, you know, guide me and lead me

49:35

and to, um, poise myself to be in

49:37

this position. I'm just extremely

49:39

thankful. I appreciate all the time and

49:41

effort you guys poured into me. And,

49:44

uh, like I always tell my kids, you win or

49:46

lose by the way you choose. Oh,

49:48

that is, that is beautiful. What a perfect

49:51

way to end the episode. So thank you

49:53

both. Teresa, again, thank you for being here

49:55

Fritz. A huge thank you for all the

49:57

time and care you put into this. remarkable.

50:00

And to our friends in new retirement,

50:02

they just went out of their way

50:04

to help. I mean, hooking you up

50:06

with a CFP to chat with and

50:08

to use their software, it's just amazing.

50:10

So yeah, huge thank you to everybody

50:12

involved. Thank you

50:14

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