transcript

Speech-to-text transcription can look a little quirky. Please excuse any grammar or spelling errors.

Episode #627 - Retire on FIRE: Rocking an Early Retirement- Henry and Lucy's Resources

“A dream doesn't become reality through magic. It takes sweat, determination and hard work.” - Colin Powell.

Roger: Hey there. Welcome to the show dedicated to helping you not just survive retirement, but to have the confidence and comfort to lean in and create a great life and rock retirement. My name is Roger Whitney. What is my name? Roger Whitney.

ROGER INTRODUCES WEEK 3 OF THE RETIREMENT PLAN LIVE CASE STUDY WITH HENRY AND LUCY.

Roger: Welcome to week three of our retirement plan live case study with Henry and Lucy. Now last week we had them dream about the goals that they have for when they retire early. In this case in their 40s. And we talked about dreaming expansively, leaning into the magic and not self editing. That is an important exercise, but we gotta rub it up against reality. The reality of the resources that we have to pay and fund all of these dreams that we have. That's an extremely important step and that's the feasibility pillar of a plan of record. So today what we're going to do is to talk with Henry and Lucy and have them outline, well, what resources do they have right now to fund the goals that they set last week. And then on our online meetup that we all do together at the end of the month, we're going to look at all of this in context and see if it's feasible. Rub it up against reality so you can register to hang out with us live. On Thursday, I believe the 29th at 7pm Central, you can go to livewithroger.com and register to hang out and ask questions and see the analysis. And if you register and you can't be there live, you can get the replay. We'll send you the replay. So you just go to livewithroger.com now in the case of Henry and Lucy, they are actually giving up one of the resources they have to fund their goals. You know which one it is? Well, they're going to have Social Security, maybe. I don't even know if they have a pension. I forget. They may have a pension. They're going to have their 401k accounts, their savings accounts, their IRAs, et cetera.

WHAT ARE HENRY AND LUCY GIVING UP TO RETIRE EARLY?

Roger: One resource that they're giving up if they do retire in their 40s is their human capital, their ability to earn income, right? If they retire in their 40s, they're giving that up. They're not going to have income to pay for their life. They're also not going to have income to save for their future selves. And that is a trade off that they're looking at making. And so this idea of dreaming up all these goals, leaning into the magic, once we do that and not self edit, then we have to Count the cost of what are we willing to do to get those goals? Because there are no solutions. As Thomas Sowell says, there are only trade offs.

I think of this, I'm, out here in Colorado at the moment, and if you go to a trail to hike or to mountain bike and you come to a fork in the road and let's say one goes straight up for a while, one looks pretty flat and the other one's meandering. When you're deciding which trail to go on, you're evaluating what kind of experience do I want? Do I want to go up that one that goes up and up and up so I can see the alpine lake? That's the goal, or do I want the meandering or the flat trail? We have to decide how important is seeing the alpine lake, because I'm going to have to give up something for that. And what I'm going to have to give up in that context is I'm going to have to hike up at elevation, and that's going to be strenuous. You know, I'll be slower, I'll be more tired, my bones will ache and my muscles will ache, et cetera, is it worth the trade off? So when we think of a goal like I want to have a lake house or I want to fund an endowment, what are you willing to give up for that? That is essentially what we all have to decide. In this case, Henry and Lucy, it sounds like they're willing to give up earning income and the safety of having a career and saving for things that they value most. So this, that's life is all trade offs. And it's important to understand that that's why this rubbing it up against reality is so important. So we're going to do that with Henry and Lucy today by organizing their resources, and then we're going to share some advice for them from people.

RETIREMENT PLAN LIVE

Roger: Happy New Year, Henry and Lucy. How are you? I say Happy New Year because we're actually recording this on the 2nd of January. So happy New Year.

Lucy: We're good.

Henry: Yeah, we're good.

Roger: Had a good holiday?

Henry: Yeah, very good, Very good. You?

Roger: It was wonderful. Now I choose a word every year to sort of be my theme. Do you guys do anything like that?

Lucy: No. I listened to your podcast last week, so I was wondering if you would bring it up, because I'm like, I don't do that.

Roger: That's okay. Just because someone else does something doesn't mean you need to, Nicole used to, and, and she's out on that now. So totally cool. So last time we talked, we talked about your goals, and today we're going to talk about money. Any thoughts or observations from the first two discussions we had?

HENRY AND LUCY REFLECT ON WHY RETIRING EVEN ONE YEAR EARLIER FEELS UNCOMFORTABLE WITHOUT PROOF.

Lucy: Not really, I guess. I guess one thing that I thought about after we talked, you know, or like just in terms of when we want to retire and stuff, and having gone through the numbers that I know we said, oh, work one more year, but I just, I didn't know, like, it's gonna feel like this isn't feasible in terms of like doing it early on because we're still in our accumulated, especially we're working on now our cash bucket was the plan for these last two to three years to do that. Because with early retirement, not being able to just get the cash the same way we would normally to just sell it and leave it in the account and take it when we need it versus this way we want to have that big bucket we have to save ahead of time.

Roger: So I want to make sure I understood what you just said. It was like when we said like one more year or as soon as we can, that would, I would love, love to do it, but it's like something. We're there, but even saying it feels uncomfortable because you don't think, yeah, I.

Lucy: Just feel like if, we save, you know, one more year, like, oh, that one's definitely not going to be feasible.

Henry: Yeah, we would. Somebody, you know, would have to show us exactly how it could happen. You know what I mean? Like, right now we don't see how it could happen that soon. Somebody would have to pretty definitively prove out, like, no, this is how you.

Lucy: Could get there because we're still doing our bridge account. So that was the one thing that I went thinking about after. I'm like, yeah, I would love to do it, but I just don't. I, I would be shocked that it, would be feasible.

Henry: Yeah, we were, we were yesterday actually. We were doing some Monte Carlo stuff, just, you know, kind of looking at things like beginning of the year, doing our net worth kind of stuff. And Lucy was having me do a lot of that for the first time. And that was a lot to take in.

Roger: Oh, for the first time? Yeah, yeah, yeah.

Henry: on New Year's Day. And it was just funny because we'd run some of these scenarios and I'd be like, oh, so when I go to work tomorrow, I should be putting in my notice. It's the bridge account that we don't have where we need it to be yet.

Roger: so, yeah, it's interesting that it's uncomfortable to say. And you're right, it was like, even if I get, I get very anxious with software when it says oh, it says I can, I'm like, I don't believe it. You gotta poke around a lot because quality checking, bug checking errors and finances, just like in software, I imagine. Now I have also found that people, when they literally see they can, they sort of back away from that conviction that they want to.

Henry: I don't see that happening. If I could see like here's the proof where you could do it.

Lucy: Yeah. If I could feel comfortable that, yep, this is how we could do it. And we can have enough money like, and figure and have the plan to do it to access the funds that we need to prior to 59 and a half. Like yeah, I don't, I wouldn't have trouble pulling the plug, but I just don't think I do.

Roger: Yeah. I've often debated this internally and with other planners whether it is good to do version one as if I could have everything right. Because ideally it should fail. Right. Because it's so aggressive, like you dream so big that it should fail. It's like, does that set somebody up from success? Is that a bad way of doing it? Or should you be more reasonable and then go up? I don't think there's necessarily a right way. I like to do it because it just starts to get people thinking more expansively.

Lucy: Yeah, no, I mean there's definitely things in our wishes and stuff that you know, we didn't have before and stuff like that. So even thinking about those things that are beyond my plan like that, I really think like yeah, we're not ready for those things. But those are the things. Yeah, I understand, those are the negotiable. So yes. What do you, are you willing to get rid of to do this when you want or whatever.

Roger: And, and then you have the logistical challenges of you're 46 when you're going to retire. In theory. How do you get money out when you're 46? and that's that bridge bucket that you were talking about? Well, I don't have a clue of what you have in terms of assets, so I'm doing this with a very open hand and realizing version one might crash and fail. But that's okay, that's just a little skip to get to what is feasible. and we'll work on that together live on the 29th.

REVIEW OF SOCIAL SECURITY ASSUMPTIONS AND WHY IT’S EXCLUDED FROM THEIR BASE PLAN.

Roger: So why don't we go into what resources we have to even See if it is possible. And I want to start with traditionally Social Security. I think you said that you did the detailed estimates at one point.

Lucy: Yep, I downloaded their program and did that again over the weekend. And for me it was 24,000 a year.

Roger: Okay, let me.

Lucy: Hold on, Go ahead.

Roger: Let me get my. Let me. I'm going to enter this for myself as, Okay, so for slow here. Okay, so for Henry it was what, 31,000 for Henry, 31,000 for Henry.

Lucy: And for you, 24,000.

Roger: And when. And you said you did you do the detailed estimate, put zeros with the idea that you weren't going to have income.

Lucy: Correct.

Roger: Okay.

Lucy: So that ends with 20, 26 being our, last year of income.

Roger: Okay. That's actually not bad considering how many years you would have as zeros there, given how it takes the average.

Lucy: Yeah, I think it ended up being like seven to ten zeros yet.

Roger: Okay.

Lucy: Per income.

Roger: And so for those of you that don't know that are listening, it's that they assume that you're earning the same amount whatever statement you look at until you hit full retirement age. In this case with Henry and Lucy, if they retire in their 40s, they're going to have a lot of zeros because they won't have any income from 40, say 7, until they reach full retirement age. So that can impact the average or the PIA that it takes it off of. And we've done shows on that, so about $2,000 a month for one. And okay, so this money will come in, Lucy, for you in 2048. Well, both of you, 2048. So how do you feel about Social Security? I know. Do you feel like it's going to be there for you? Are you really suspect about it?

Lucy: I'm very suspect about it. I, I've never included it fully in our plan at all. I recently, I think within the last year updated my spreadsheet so I could toggle it on and off. But even then I use half the amount of what, what we have, like when I toggle it on and off. So, again, I guess that's one thing that why I say, like, I don't think it's feasible because we don't include Social Security in our, our plan. we kind of look at it as if there's something there. Okay, well, now it's icing on the cake, but we're trying to not cone on it.

Roger: Yeah, that's

Henry: I feel like since even college. I can remember college professor saying, don't even count on it. Like, by the time. By the time you get to that age, it's probably not going to be there, you know, and that was a while ago already now, you know, So.

Lucy: I think there'll be something there. I don't. I don't know how they're going to fix it, but, you know, I listen to the different podcasts, and there's. There's different ways that it might get fixed and, you know, that they'd still be there. so. So I think there'll be something, but I don't want to count on it, I guess.

Roger: Yeah. I just don't know what form it takes. If we assume it's going to be there, it could be any, you know, what kind of form it's going to take in terms of age and means testing. So. Okay, we'll toggle that on and off when we look at it, because you're definitely on the younger side now. What about other income outside of Social Security? So assuming you retire at 47, let's say, will you have any other income sources for the rest of your life?

Lucy: The plan is no.

Roger: Okay.

Henry: Okay.

CONFIRMATION THAT THE PLAN ASSUMES NO EARNED INCOME AFTER RETIREMENT.

Roger: And I was just talking about this the other day. There's, you know, Fi from Fires, financial independence, and one way to think about that. Right now, you're financially dependent on your income to fund your life today and to continue to fund for your future life. And that's what Fi is. You're not financially dependent on income. So the plan is no, and I like how you close the door on that because most people hedge. So give me a sense of that.

Lucy: Why it'll be no. Is my point is we're not. I don't want to pull the plug, until we feel that we are at that point, that we have enough assets to last us for our lifetime to not have to work. I think if we had to go back to work, it would be something. Something's gone wrong in the. In the process, in terms of like. Like, I think we talked before, like, one of us got really sick or something like that, that something went sideways then that.

Roger: So you're very binary in how you frame this. It's not like you. You want to go work at Lowe's and have a. Just a different pace at life. You'd rather do what you do now longer and then be done.

Lucy: Yes.

Henry: Yeah. I, was even thinking about it today. I don't know why I started thinking about it, but it was like, okay, if, you know, right now, being still in the workforce, I can think about, like, okay, if I was Retired for a little while, then I had to go back. That, wouldn't be the end of the world. But then I think about, well, if it's been five years, 10 years, well, now I don't even know, how you go back at that point. Like, yeah, you could go do something at like a Lowe's, a Home Depot, whatever, you know, like a, you know, just a, a part time or, you know, a job that doesn't require, you know, any kind of specialized training. But it's, gosh, even just having to change and, and lose the freedom of being able to do whatever you want like that, that would be, that'd be a little depressing.

Roger: That's very interesting because in my experience in working with people over the years, I find some of the most happiest people where they're doing some work at Lowe's. I was at the ER the other day and the lady I was talking to definitely didn't need to work. She was a radiologist and she just loved the people come in a few days a week, felt like she was engaged. But, but there's no right or wrong. Given that it's binary. And you're thinking that if we had to work at any level, something went wrong, I think was the way you said it. Lucy, what level of confidence do you need to have? What number would you put on that to feel safe in this binary framing?

Lucy: Like, what's my goal? Asset goal?

Roger: No, well, I mean, asset gold doesn't mean anything really. What percentage of. I got to be 99% sure.

Henry: Oh, like on the Monte Carlo.

Roger: Well, yeah, I'm just thinking personally, well, even just personally confidence that this really is going to work.

Henry: I bet you our numbers are very different.

Lucy: Say like 80%, but, but I feel like I'm more conservative that way that I feel like I'd probably be at like a 90%.

Henry: Like, that's what I would guess.

Lucy: and what's yours?

Henry: well, I was thinking you were actually going to be a little bit higher than 90, but, for me, I would say 80, 85%. I feel pretty good.

Roger: So if there are 10 of you doing this, one to one and a half of them could fail.

Lucy: Well, there's just ways to fail, like, you know, you know, ways to prevent the failure. So I think I'm, why I can feel comfortable with the 90% is that like, well, we plan to do something different if all of a sudden, you know, market's really bad and we need to cut back, tighten our belt, you know, things like that go on less vacations, you know. So I think that's in my mind that that's still like a fail safe before.

Henry: Yeah, there's love.

Lucy: It's gone all wrong.

Roger: Well, and I think of you guys, I think of like an airplane that's flying and if it's one degree off, and I don't have the math in my head at the moment, but if it's one degree off and it's going 100 miles, that's a very different, you know, off course than if you're flying 1,000 miles or 2,000 miles. And in your case at 47, you're flying 40 years, not 20 years. So there's a lot more that can go wrong. A lot more unknown unknowns, whether it's the economy, the state of the dollar, of Social Security, of AI and all of that. None of that. Do you think you'll get to 90% certainty? Yes, because we'll just keep working. Okay. Okay.

Lucy: All right.

Roger: If you're wrong and you had to go back to work, is that really a failure?

Henry: No, I, don't, I don't look at it as a failure. I, it's just things that now we're off course. To me it's okay. Everything that could go wrong went wrong. Right. There's no way you can know that all those things were going to go wrong. You did all the planning you could do.

Roger: You know, it doesn't have to be a lot though.

Henry: Everybody's got a plan until they get punched in the mouth.

Lucy: Right?

Roger: Right, exactly, exactly. I was talking with a buddy today who made the conscious choice to really lean in to experiences with his family and his kids in his 30s and 40s. And now he was a little bit down because he wasn't as financially where other people were, but he lived a lifestyle and the of being with his children and creating experiences and that you can't put on a net worth statement. Right. okay, I'm a little sidebar there. So no income we're adding in there.

OVERVIEW OF AFTER-TAX ASSETS, CASH BUCKETS, AND SINKING FUNDS.

Roger: Okay. Now let's talk about the assets you have. So let's talk about after tax assets. So those are monies and savings accounts, joint brokerage accounts, etc. Give me the hard numbers and then we can. I know you do some things a certain way and we can talk about that.

Lucy: Okay. Oh, let's see. So actually I gotta. So the hard number of after tax is $1,086,000.

Roger: And I know this is accurate numbers because you just did your end of Your net worth statement. And you built this all up from savings. How did this money come about?

Lucy: Yeah, just working and saving, not being in debt. As we need something, we choose to start saving for it. And then I don't. We're just savers.

Roger: Okay. And, before we came on you, we were talking about your income again. You think on average it was like 130 over the timeframe with one child?

Lucy: Yes.

Roger: Okay. I just want to make sure I call that out to people. That is the power of compound. Obviously money, but actions. Okay, so, if I look at that million 86, is that cash? Is that stocks? Is it crypto? What do we got going on here?

Lucy: A little of all of that. We do have a little bit of crypto, which I don't include in our planning because it's crypto, very volatile. So of that right now that's worth about 75,000 in our after tax.

Roger: So stock, bond or stock, not, how much in stocks then just roughly is fine.

Lucy: I mean, I guess what I include in this would be our cash and our stocks and bonds would be 710,000.

Roger: Okay.

Lucy: M. Everything else, the rest of that is all either crypto or earmarked for things that we've saved, are saving for and stuff. So.

Roger: Okay, so let me do some math there. So that's about 220,000 of that million or 1,086, 250 ish is earmarked for other things.

Lucy: Yeah.

Roger: So explain what that means. How do you operate that? What are you doing there?

Lucy: so we don't take out car loans. So we are always saving for our next vehicle. So we have in our budget that we had given you, we have basically a car payment in there because we're paying ourselves. So, we are saving for the camper van. I think that was part of our goals. but we've been saving for that. So that's not money that we'd be taking out of our retirement plan funds.

Roger: Okay.

Lucy: the crypto, which I don't like to include, our emergency fund, which I don’t include.

Roger: How much is in the emergency fund bucket?

Lucy: 25,000.

Roger: Okay.

Lucy: And then even just like how I do our budgeting, it gets paid out like the year or, sorry, the month before. Plus I'm always saving up for like the big bills and stuff, our sinking funds for the year. So that that amount of cash too is. Gets kind of large, but it's like. Well, that's already spent in my mind.

Roger: Yeah.

Lucy: Okay, so. So really? Yeah, the 710,000 is what I.

Roger: Long term. Okay.

Lucy: Yep. That's retirement, like for our fine number.

Roger: And for those of you that might not be following. So it's very much like if you run a homeowner's association. That's the. It's like if you have. And they have a pool, if it's run relatively conservatively, they'll have a sinking fund. So they'll be paying for the new pool filter every month and basically building up the cash to replace it with whatever estimate estimated time they're going to need to replace it rather than figuring it out when it happens. Okay. do you use any kind of software for cash management like a YNAB or a Monarch or any of that?

Lucy: I used to use Quicken, but then I didn't want to pay. They moved to that subscription based. So I didn't want to have to pay for that monthly. So then I just built out in Google sheets. Basically all my spreadsheets in there.

Roger: Yeah.

Lucy: Okay.

Roger: Okay. So about 700 or 710,000 long term with about 75 in crypto and the rest are sinking funds and emergency funds.

Lucy: Yep.

Roger: Are you building up the long term assets at all like on an annual basis right now?

Lucy: Yes.

Roger: Okay, and how much are you doing.

Lucy: For that this year? We're planning on 60,000 into our cash fund, because that's what we're working on right now. And then if we're counting dividends, we've stopped reinvesting our dividends and capital gains in our brokerage. So that would be like another 17,000 that would get added to our cash fund hopefully at the end of the year too.

Roger: And this is because you're working to get to retirement and you need to have money to pay for your life.

Lucy: Yes.

Roger: Right? Yeah, yeah.

Henry: That bridge count, right?

Lucy: Yep.

Henry: Okay.

Lucy: So in this, you know, we shaved a few years off previously what we had planned. So then it's like we're kind of push on that cash bucket a little bit more now.

REVIEW OF RETIREMENT ACCOUNTS, SAVINGS RATES, AND LONG-TERM STRATEGY.

Roger: Okay, now let's talk about retirement accounts. Let's talk about pre tax or traditional IRAs. Traditional 401ks.

Lucy: Okay. Do you want just the total?

Roger: Yeah, let's just do the total.

Lucy: That's 1.3 million.

Henry: Okay.

Roger: And then how much are you saving annually into that?

Lucy: including our what, our employers? Yes, as well. that'll be 61,000.

Roger: 61,000. Okay. All in. Okay. And then that's invested stock to bond or what have you?

Lucy: Yep, yep. It's 90, 10, 90% stock. Yep.

Roger: Okay.

Lucy: Our after tax Money is less aggressive.

Roger: Okay, and then what about Roth? Or tax free, like Roth. And also say HSA if you have.

Lucy: One of them separately. our total Roth is 627,000.

Roger: Okay. Are you contributing there at all?

Lucy: Oh, sorry. yeah, sorry. That one is 24,000.

Roger: Okay. And then what about your HSA? You're going to say.

Lucy: Oh, and then our HSA is 55,000. And we use money every year, so we end up probably still investing, by about 4,300 a year on that.

Roger: But you're contributing, you're what, about 8,000 or so. I forget the number for this year.

Lucy: Yeah, we max it out, but we end up using probably about 4,4000 a year.

Roger: Okay. And so you're saving 24,000 in your Roth 60, 60, 1000 all in on your 401ks, but your contributions are in the high 20s. Right. So about 55,000 there. And then you're saving 60,000 after tax. And what income, combined income are you going to have this year, you think?

Lucy: 250 maybe. Gunner, you. I don't know if you'll get a raise, but I'll find out mine in the next couple of weeks. so mine will probably go up a little bit, but I would say pre tax, 250,000 between the two of us.

Roger: And so you're saving about 55% of your income pre tax. Okay. And you don't look thin, it looks like you're not. That you're big. I'm not saying that, but you look like you're eating. Here's my point.

Lucy: We're not skin and bones. No.

Roger: I'm always good at putting my foot in my mouth.

Roger: Okay, and then on your Roth, are you investing that or is that mainly cash?

Lucy: That's all invested.

HOME EQUITY, COLLEGE SAVINGS, AND INHERITANCE ASSUMPTIONS.

Roger: Okay, and then tell me about any other financial assets.

Lucy: I mean, our house.

Roger: Okay, so your house. What is your house worth, would you say?

Lucy: $235,000.

Roger: And there's zero debt.

Lucy: Correct. Okay.

Roger: Do you expect to have, you know, have any pensions or anything?

Lucy: Nope.

Roger: Okay. Do you expect to have any inheritance?

Lucy: I don't know.

Henry: No, Hard to say. I would say probably not.

Lucy: Yeah. The only inheritance that we would expect is the cottage.

Roger: That's right, cottage. Okay. Which is really going to cost you, not going to give you.

Lucy: Yes. And who knows? They're remodeling and now maybe they'll be a loan against it, so who knows? Yeah.

Roger: So right now, because you're right, you have, I mean, you have a lot of after tax assets and you got to get at least two. Now, doesn't your 401ks. Let's go back to those for a second. Do either of them have the. Well, I guess you're not going to separate service after 55, so it might not matter. So that's not going to matter. Something went wrong if you hit 55, right?

Lucy: Correct.

Roger: Okay.

Lucy: my employer does have that.

Roger: but that doesn't matter.

Lucy: We've never looked into his employer.

Roger: Okay, so you're trying to build a bridge of cash and after tax assets to get you to 59 and a half. Okay.

Lucy: Yep.

Roger: Do you have insurance of any life insurance, long term care insurance, any of those types of things?

Lucy: Just a very small life insurance and policy. I mean, everything we have right now is term stuff through our employers.

Roger: Okay.

Lucy: So that'll go away once we cease employment. And when I say small, I think it's like $2,500 that I had my parents bought for me when I was a child that for some reason I keep paying.

Roger: That's what they count on.

Lucy: Well, I figured the cash value always goes up by a little bit more than what I pay. So I'm like, whatever, it's fine. Yeah.

Roger: Okay. Anything else I need to know on the resource side or how you're thinking about this? Like on your. Let me, let me finish that question first. Anything that I need to know that you want to tell me?

Henry: College savings.

Lucy: Oh, yeah, I guess we didn't talk about college savings. we have that too, but obviously we're not counting on that. But that's at $116,000 in the $529,000.

Roger: Yeah. And I think I remember. Let me go back. We had made a decision about that when we looked at goals.

Lucy: Yeah. I think. And that was with like the camper van and that. That we have as part of our goals. But we kind of. We were going to put them in as a dollar.

Roger: Yeah, that's what we did. And then on. Yeah. I think the college savings we had said that is the fund for her college.

Lucy: Yep.

Roger: If she wants more, are you going to cover that gap or is that going to be just a discussion with the family or is that her bucket?

Lucy: well, that's her bucket. we do, we did leave in the plan, because we think that'll cover her four years of undergraduate. because she'll be funding a little bit and she will be doing federal loans as well. you know, we, we feel click at. That's what we did when we were in school. We left with about $20,000 each of loan debt that we were comfortable with. So I'm like, I think that's okay. And put some of that onus on her as well. And so anyways, I think that'll get her through her cover the four years. Our portion of that, plus probably one of graduate school. So we had left in our goals another, I think 40,000, I think we said for the second year of graduate school as a wish.

Roger: Yes, that's what we have in 2032. Okay. Okay. So that's how we accounted for it. Yeah. Okay. Correct.

Henry: Okay.

Lucy: But if we don't do that, well, that's on her at that point. We always had, we'll help with the undergrad, and things like that to not. We didn't want her to be in a huge amount of debt finishing her undergraduate school. So that was always our plan to help with that. And she also has been working a lot to be able to save money for college as well. That she has about $4,000 a year that she'll be able to contribute.

CLARIFYING THE GOAL FOR THE AFTER-TAX BRIDGE BUCKET.

Roger: Okay, what is your target on this cash bucket that we talked about earlier? We were saying, I did it next year. I don't know if I have enough built up. And do you have a target that you're shooting for?

Lucy: yeah, I think it was around a million for our after tax accounts.

Roger: So that'd be at 710 because of the bucket.

Lucy: Yeah. And I think it was like a little shy of that is. Is where it was a little shy.

Roger: Of a million, I think that you were targeting. Okay.

Lucy: Yeah.

Henry: Okay.

Lucy: Yeah. 950 is for my. My numbers are at.

Roger: Okay. I have what I need.

Lucy: Okay.

Roger: And so the next time we talk, we'll be live. And there may be some loose ends as I do some work on my end that I'll ping you guys on and then we'll look at it. If it. If it. This is like the hidden Hindenburg and it crashes and fails. Although that didn't really crash and fail, did it? It got burnt up. That's different. Titanic. If this is not the Titanic, Titanic would be a better one. If this is the Titanic, we will come with, like, the plan B.

Lucy: Okay.

Roger: But if it does act like the Titanic, that's okay because you weren't expecting. You know, why not start there and see. Knowing as long as we hold him with loose hands, I think is the key.

Lucy: Yeah, I think for plan B, like, for us, it's. It's knowing, like, yep, we can work a few more years, you know, like that's that's our ultimate plan right now. So, like, to us, that's, that's easy to negotiate that back in because we're.

Roger: Not there related to that. Let me just ask this question as I come to it, Lucy. Do you feel like right now, because you guys are really aggressive savers, do you feel like your life is very unbalanced?

Lucy: I don't.

Henry: Yeah, I, I don't either. I. It was funny. We, we went out to dinner at a nice restaurant at a five diamond resort, you know, near us. And as we were walking through the lobby of that hotel that's there, I, I was just like, man, I. I am happy with our life and we're doing all the things we want to do. And walking through this lobby, I feel like I'm in a foreign country, like a fish out of water. Like, this is not where I belong and want to be belong. so, I mean, I, you know, I, I just, to me, I just have what. What I want to have. I think, you know, Lucy has what she wants to have. I don't. I can't think of things that I'm missing in my life, you know, And.

Roger: I'm even thinking, Henry, of like, are you working like 80 hours a week?

Lucy: No, no, I, I put the kibosh on that. Like, I'm always very aggressive. Like, hey, leave it at work, get off. Because we both work from home too, so it's sometimes harder to just step away and go back to things. But it's like, nope, you're on our time now, not on company time.

Roger: So you have time to walk and do all you're not.

Henry: Yeah, yeah, absolutely. Yeah. And, the place that I work too, is even very work life balance orientated. You know, that's part of the culture there. I'm not expected to work more than 40 hours, which is great. I think that's the same for you.

Roger: Okay, I'm excited. I'm excited to hang out with you on the 29th. one thing I like about these retirement plan lives is I don't do the analysis too far ahead of time from when you and I and Henry and loosely hang out live on our webinar. I don't, I don't do it too far ahead of time, so I don't know. And obviously I've been doing this for 30 plus years, so I have some ideas and it's always a game for myself. I wonder if they can do that or not. I wonder how. What the result, the feasibility of that Is. And I then I also wonder, what are the levers that they have in their life in case it's not feasible to make it feasible and getting creative there. This is a little game I play to keep it interesting for me. So it'll be interesting to see whether it's feasible or not. So now that we've heard what resources they have, let's listen to some advice from people like you.

ADVICE FROM A RETIREE

Roger: So if you have advice for Henry and Lucy, please go to askroger me M and type in your advice for them. Maybe a perspective that you have. You can leave an audio file. Audio. You can leave not an audio question, but you can leave your advice on audio. Next week, we're going to share whoever sends some stuff in. So we can not just help Henry and Lucy and give them some advice because they're just in their 40s. What do they know? But I think that perspective and advice will be helpful for you and me and everybody else listening. So just go to askroger.me and we'll share that next week.

LISTENER BONNIE SHARES AN ALTERNATIVE APPROACH USING SABBATICALS AND FLEXIBLE WORK.

Roger: All right. The one piece of advice that we're going to share this week comes from Bonnie, and she was kind enough to do this as an audio.

Bonnie: Hi, Roger and Nicole. This is Bonnie C. I'm a member of the Rock Retirement Club. I was listening to the podcast on Henry and Lucy, and my husband and I both were very interested in the fire movement many years ago, and listened to many of the podcasts when it first came out, or early adopters, per se, and tried to kind of follow that as far as savings and investment, which we did. And, I think we were both in very high pressure jobs as they are. So we felt, that was something we wanted to do as well. But we did kind of take a different path that I feel was more secure or maybe some other options that they could consider. We did a year and a half sabbatical. We both, you know, told our employers we were just taking a, you know, a year and a half sabbatical. Not that we were able to hold those jobs in any way, but didn't completely jump off or jump out and check out. So we. And we did. We traveled around the country. We did a lot of volunteer work while we were doing that. And. And of course you have COBRA during that time. we came back to the area that we were from originally and we got jobs there. My husband went in a completely different field and I went into the same field, but related to some of the volunteer work we were doing. So I was making Less money. But it wasn't the same pressure cooker environment we both had left. And it turned out really well for us. We've done that for years at this point. where my husband's in his 60s, I'm about to be, and we've been kind of slowly cutting back on some hours here and there, which we've had that flexibility, flexibility to do and that's been really nice, but yet still have the security of being in a career path and having that option to keep our skill sets and keep doing something and options for other things while, while kind of changing the pace of your life and what you're doing. So I wish them, luck and I thought I would just share that since I felt like we had a lot of connections with them but are certainly a good, probably 15, 20 years further down the road, than they are. But thank you again for the podcast and of course I'm a big fan being a member in the Rock retirement group and hope everything goes well for them. Thank you.

Roger: Thank you so much for sharing that perspective, Bonnie. I have had a client or two that has done this mini retirement rhythm. It's definitely something that is a little bit more progressive of leaving work for a year or two and then just going back to work, whether it's at the same employer or not, that can work really well as long as you are comfortable that you can become re employed and have some level of financial independence.

ROGER REFLECTS ON OPTIONALITY, SKILL RELEVANCE, AND MAINTAINING PROFESSIONAL NETWORKS.

Roger: Now if you're thinking about setting yourself up for that, it doesn't matter what age you are, some very practical things you can do is obviously be very good at what you do, and keep your skill sets relevant. But probably one of the most important things I've seen or impactful things I've seen people do that have accomplished this is to maintain a very healthy network, professional network, not just I know a lot of people, but I proactively keep in touch with them and by doing that in a more than casual way, generally opportunities are always coming to you because if there's one thing successful people want to do is hire other people that they know will do what they say they're going to do, etc. So, Bonnie, thank you so much for that perspective. So awesome that you've been able to do that for so long. What a way to, to really impact your life. Now let's go set a smart sprint.

SMART SPRINT

Roger: And we're off to set a little baby step that we can take in the next seven days to not just rock retirement, but Rock life. So in the next seven days, I think I asked you to do this at the beginning of the year, but if you haven't done it, let's do it again. Let's organize our financial resources, create a net worth statement or update your net worth statement. This is the best time of year to do it because it's right at the beginning of the year. Organize that financial statement. And if you're doing your retirement planning, you can update your goals now that you've dreamed big. And then you can update all of your finances and start to experiment whether it's feasible or not so you can identify one, what's important to you and two, where do you have some agency to improve the trajectory towards the things that are important to you? And so you can start working on that this year.

WORDS FOR THE YEAR

Roger: All right here at the end of the show, we're going to go back to some words for the year that people have been emailing. And it's so awesome to get all of these. We're creating a little spreadsheet. It's just a good exercise and I appreciate you all sharing because that perspective helps me personally and, I think it helps a lot of other people.

Our first one is from Alex, and his word for the year is healing. Alex says, I am 64 and have been retired for about 16 months after 24 years as a Vegas elementary school teacher. I am eating better, exercising on a scheduled PX90 DVD program Monday through Friday. Man, that's hardcore. Alex, make sure job number one don't have injuries. And, Alex continues, and I'm learning to let go of some of the stressors that defined a career in education and ultimately the last 40 years of my life. I have recently lost my dad on December 31st. He was age 87. Sorry if you're lost there, Alex. Lots of healing done. So much more to do. By the way, my word for the year in 2025 was decluttering. Alex. Consistency. Consistency in all the things that you're doing to heal not just your body, but your mind. And it's also, I think, a wonderful way to honor your dad. So bravo to you, buddy.

Our second one is from Valerie. Valerie says, I am, on target to retire by the end of June and will be relocating to South Carolina. I plan to be very intentional about reducing the amount of things that I have. One, to make it easier to relocate and two, because material things just don't matter much anymore. Also, because I'm retiring this year, I'm striving to streamline my finances and minimize the number of accounts I have to make things easier to manage when I retire. So Valerie's word is minimize. I love this for you, Valerie. We're here in Colorado at the moment and our kitchen's a lot smaller, our bedrooms are a lot smaller, and we were just having a discussion about how just the size is a forcing mechanism to keep things decluttered and minimized. You just can't just keep stuffing things into places. a random thought, Valerie, A little bit off topic on your minimize word, but I think something that is relevant to the stage that you're in.

My brother in law is about the same timeframe as you on retirement. And we were just having a discussion today about the next six months. One thing that he is working to be intentional about is when he retires. And I think this will apply to you too, Valerie. When you retire, you are going to develop new habits. When you wake up, what you eat, what you do, what you consume, all sorts of things, you're going to develop those habits. And it's a matter of whether you develop them intentionally or they are developed without intention. And so this is actually a really big opportunity. And you're relocating, which helps a lot too, because now your new environment's going to be all new. You really have. It's like going to a new high school. You could develop your whole new reputation. Everything's going to be new. Just be intentional about the habit you create because that's going to be the person you become in retirement, which is so exciting. All right, everybody, next week we're going to share more advice for Henry and Lucy. I hope you're having a wonderful week.

The opinions voiced in this podcast are for general information only and not intended to provide specific advice or recommendations for any individual. All performance references are historical and do not guarantee future results. All indices are unmanaged and cannot be invested in directly. Make sure you consult your legal, tax or financial advisor before making any decisions.