DeepSummary
The episode begins with a listener question from Tim, a 42-year-old who wants to retire at 45. Although his plan checks out financially, he is struggling with the mental aspect of leaving his job when his kids are still young. The hosts discuss the importance of having a purpose and staying relevant after retiring early, as well as testing out the retirement lifestyle before fully committing.
Another listener, Chris, asks about factors to consider when deciding between contributing to a Roth or traditional 401(k) when in the 25-30% tax bracket. The hosts recommend looking at time horizon, goals, and account structure balance to determine the optimal strategy.
The hosts also address questions about transferring gifted money for kids into appropriate accounts like 529s or custodial accounts, transitioning from being a saver to a spender in retirement, and how pensions and 457 plans fit into the financial planning process.
Key Episodes Takeaways
- For those struggling to mentally transition from working to retiring early, it's important to find purpose, stay relevant, and test out the retirement lifestyle before fully committing.
- When deciding between Roth or traditional retirement accounts in the 25-30% tax bracket, consider time horizon, goals, and overall account structure balance.
- For gifted money intended for kids, transfer it into appropriate tax-advantaged accounts like 529s or custodial accounts rather than leaving it in a parent's account.
- Practicing increased spending a few years before retirement can help savers get comfortable transitioning to a spender mindset in retirement.
- Understanding the specifics of retirement benefits like pensions and 457 plans, including vesting schedules, is crucial for maximizing their value.
- Running the numbers to understand spending "guardrails" in retirement is essential before shifting from saver to spender mentality.
- Having a plan for maintaining relevance and thoughtfully enjoying accumulated wealth can ease the mental transition to spending money in retirement.
- Retirees should be intentional about deploying their assets since future generations may not have the same restraint in spending the inheritance.
Top Episodes Quotes
- “So I think the best way to transition is to practice doing it in the few years leading up to retirement.“ by Bo Hanson
- “Your kids and grandkids will have no trouble spending this money. So you go ahead. Since you were the builder of this, let's go ahead and begin with the end in mind and start thinking about what's the best way to use this money with your fingers in the dough of life to maximize this opportunity.“ by Brian Preston
- “I like for folks to start test driving retirement before they get to retirement.“ by Bo Hanson
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Episode Information
Money Guy Show
Brian Preston and Bo Hanson
6/26/24
"I'm 42 and want to retire early at 45. I’ve stress-tested my plan and everything looks okay, but I’m having a hard time mentally stepping away from the job. I know I want to spend more time with my kids (they’re my ‘why’).So why is it so hard to make the switch?"
We'll walk you through that question and more in today's Q&A episode!
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