Latest / TaylorMade Retirement with Taylor Demars, CFP® / I’m 55 With $3,000,000 Saved. Can I Retire?

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I’m 55 With $3,000,000 Saved. Can I Retire? · TaylorMade Retirement with Taylor Demars, CFP®

• 0:00
  SPEAKER_01: Today's content is pulled from Taylor's YouTube channel.
• 0:04
  SPEAKER_01: If you want to watch the video version or catch more great content, subscribe by clicking the link in today's show description.
• 0:13
  SPEAKER_01: Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life.
• 0:20
  SPEAKER_01: With third generation certified financial planner Taylor DeMars.
• 0:28
  SPEAKER_00: If you're 55 with 3 million saved, there's a very real chance you can retire right now.
• 0:33
  SPEAKER_00: There's also a very real chance that doing it without checking a few key numbers could force you to cut your lifestyle later, pay far more taxes than necessary, or even go back to work.
• 0:43
  SPEAKER_00: I'm Taylor DeMars, I'm a third generation retirement planner and tax strategist, and I sat across the table from hundreds of people making this exact decision.
• 0:51
  SPEAKER_00: What surprises them is that two people can be both 55, both have 3 million, and only one can be completely ready to retire while the other is absolutely not.
• 1:01
  SPEAKER_00: And that's why the articles telling you to save a bit more or even work a bit longer aren't especially useful.
• 1:08
  SPEAKER_00: Your spending, taxes, income sources, and the way that your money is invested can change the answer far more than even another million dollars sitting in the account.
• 1:17
  SPEAKER_00: And getting this wrong cuts both ways.
• 1:20
  SPEAKER_00: Retire before the numbers work, and you could be making painful decisions in your 70s and 80s.
• 1:25
  SPEAKER_00: Keep working another five or 10 years when you were already financially independent, and now you've given up years of retirement that you can never get back.
• 1:34
  SPEAKER_00: So I'm gonna show you the three questions I need answered before I would tell a 55-year-old with 3 million that they're ready to retire.
• 1:41
  SPEAKER_00: So by the end of this video, you'll be able to look at your own restitution and understand whether 3 million is enough for you to consider to stop working now.
• 1:48
  SPEAKER_00: So let's start by meeting a couple who's standing right where you are.
• 1:51
  SPEAKER_00: I'm gonna call them Craig and Janet.
• 1:53
  SPEAKER_00: He's 55 and an engineering executive at a large company, been in there 20 plus years.
• 1:59
  SPEAKER_00: Janet's 53 and runs administration for a hospital system.
• 2:03
  SPEAKER_00: They have two kids and 3.15 million saved.
• 2:07
  SPEAKER_00: Not in just one pile, but in six separate ones.
• 2:10
  SPEAKER_00: First is a 401k at Craig's job, then Janet's 403B.
• 2:14
  SPEAKER_00: They have rollover IRAs from former employers, also a Roth IRA, a joint brokerage account, and cash at the bank.
• 2:21
  SPEAKER_00: These six piles have six different sets of rules the day that their paychecks stop.
• 2:27
  SPEAKER_00: And we'll open each one in a minute.
• 2:28
  SPEAKER_00: When they first sat down across from me, they addressed the same question about when they can retire from opposite ends.
• 2:35
  SPEAKER_00: Craig came into the conversation fully loaded, an impressive spreadsheet, even cross-referenced against his own projections from his Bolden subscription.
• 2:42
  SPEAKER_00: On the other side, Janet was just weighting all the numbers aside and simply trying to ask, where will our paycheck come from each month?
• 2:49
  SPEAKER_00: And more importantly, what happens if he dies first?
• 2:53
  SPEAKER_00: When trying to answer this question, one is working the numbers and one is zooming out to see the big picture.
• 2:58
  SPEAKER_00: And I can start to feel for a lot of couples like they're taking one step forward but two backwards.
• 3:03
  SPEAKER_00: Underneath the surface, they're both in a pretty common emotional state for people in their mid-50s with this kind of money saved.
• 3:10
  SPEAKER_00: There's a strong hunch that the numbers can support pulling the trigger, but even their social circle doesn't help.
• 3:16
  SPEAKER_00: They have friends who are already retired telling them that they're overthinking it and they need to take the leap of faith.
• 3:21
  SPEAKER_00: That doesn't help because what their friends don't know is exactly what Craig and Janice's life costs or how these six piles get taxed.
• 3:28
  SPEAKER_00: And then they also have friends who can't retire yet, but plant the seed of doubt saying, How are you going to afford health insurance without the employer footing the bill?
• 3:36
  SPEAKER_00: So it's no surprise that there's been a pattern in how Craig talks about when he wants to retire.
• 3:41
  SPEAKER_00: It used to be once I hit around 2 million, then I'm done.
• 3:45
  SPEAKER_00: Then he felt good about making it all the way to three.
• 3:48
  SPEAKER_00: Now he's saying two more years and we'll nearly be at four.
• 3:51
  SPEAKER_00: And if that sounds familiar, you're probably also running through your head that working two more years scenario, seeing that it's a lot more money.
• 3:58
  SPEAKER_00: You're in your peak earning years between your salary, your bonus, 4.1k match, potentially getting some stock vesting from your employer.
• 4:05
  SPEAKER_00: It adds up really quickly.
• 4:07
  SPEAKER_00: Not to mention keeping the health insurance for the family.
• 4:09
  SPEAKER_00: That's exactly what fuels moving the goalposts and what makes one more year of work feel responsible instead of expensive.
• 4:16
  SPEAKER_00: And that's where our conversation with Craig and Janet pivoted away from what would feel better on the balance sheet and towards the real question they're trying to answer.
• 4:24
  SPEAKER_00: Does Craig actually need an additional million dollars or just a plan that helps him use the three he already has?
• 4:30
  SPEAKER_00: So the first thing we did was figure out what their life costs.
• 4:33
  SPEAKER_00: Craig's spreadsheet said they needed around$8,900 a month, which is a great place to start.
• 4:38
  SPEAKER_00: But I have yet to meet a client who is about to retire arguing against having a cushion of around 10 to 15%, just for some elbow room, so they're not tracking a spreadsheet on a month-to-month basis.
• 4:48
  SPEAKER_00: For Craig and Janet, we're rounding them up to$10,000 a month,$120,000 a year.
• 4:52
  SPEAKER_00: And then we add to that$10,000 what is not captured yet.
• 4:56
  SPEAKER_00: Health insurance at full price, which we're assuming at the national average cost for government marketplace coverage, which is unsubsidized at$17,500 per person per year.
• 5:08
  SPEAKER_00: Deductibles and co-pays, call it another five grand, another$20K towards a goal I'll describe in a moment.
• 5:14
  SPEAKER_00: Then add taxes to the mix, and we're already looking at a lifestyle that all in costs$190,000 a year.
• 5:20
  SPEAKER_00: And that's before replacing cars, say every seven years, taking care of the HVAC and the roof when they eventually need repairing, or maybe they want to help their daughter with a wedding, or finally getting to finishing that big kitchen renovation.
• 5:33
  SPEAKER_00: Each one of these other goals gets its own line out of in the budget because we'd be kidding ourselves to pretend they fit neatly inside of a tight monthly number.
• 5:40
  SPEAKER_00: Now, I'm not forgetting the single most common goal we hear from clients retiring in their mid-50s, which brings me to an experience I had in Thailand.
• 5:47
  SPEAKER_00: In college, I spent a month backpacking through Thailand.
• 5:50
  SPEAKER_00: Three of those days were on a motorbike riding through what's called the My Hong Song Loop, up through the mountains.
• 5:55
  SPEAKER_00: They say this route has over 1,864 curves, and as you can imagine, most of them are on the edge of a mountainside.
• 6:03
  SPEAKER_00: It was gorgeous.
• 6:04
  SPEAKER_00: But I'll never regret taking the time and money to leave my comfort zone for that experience.
• 6:09
  SPEAKER_00: It was a completely foreign experience.
• 6:11
  SPEAKER_00: I was always driving on the opposite side of the road in a Southeastern Asian country where the driving rules and norms can seem absurd compared to the daily commute I'm used to.
• 6:21
  SPEAKER_00: I bring up this experience for two reasons.
• 6:23
  SPEAKER_00: The first is that making memories that pay dividends for life is exactly what people retiring in their mid-50s are after.
• 6:30
  SPEAKER_00: It's one of my greatest joys is to help clients capture this opportunity to use their wealth while they still have their health.
• 6:36
  SPEAKER_00: So that$20,000 a year expense is to fund what Craig and Janet want to fulfill so they can look back on them the same way I look back on hiking to visit a mountaintop Buddhist temple on the top of a 1,300-step staircase.
• 6:50
  SPEAKER_00: And the second reason I bring up the experience is because this is similar to what early retirement does to people when they treat it wrong.
• 6:57
  SPEAKER_00: Being on cruise control is easy.
• 6:59
  SPEAKER_00: Cruise control is what got me on my motorbike to the mountains.
• 7:03
  SPEAKER_00: But if I kept cruise control on through those hundreds and hundreds of turns, I would be in a bad spot pretty quickly.
• 7:10
  SPEAKER_00: What Craig and Janet don't know is that's the transition that they're about to make.
• 7:14
  SPEAKER_00: They're used to the 30 years of cruise control, saving diligently, investing aggressively, building their nest egg.
• 7:21
  SPEAKER_00: But the rules change and it doesn't work for the next 30 years.
• 7:24
  SPEAKER_00: The day that the paycheck stops, every one of those six piles we talked about has its own set of rules.
• 7:30
  SPEAKER_00: And nobody's going to hand you the rule book just because you crossed the threshold of age 55.
• 7:35
  SPEAKER_00: So let's walk through the three questions that decide whether retiring at 55 is in the cards for you.
• 7:41
  SPEAKER_00: The first question is the one that stops most 50-year-olds right off the bat, which is can they reach the money?
• 7:46
  SPEAKER_00: Because about 2 million of the 3 million that they have saved is pre-taxed.
• 7:51
  SPEAKER_00: And the general rule is that touching it pre-59 and a half comes with a 10% penalty on top of the income taxes.
• 7:58
  SPEAKER_00: So at first glance, it looks like their money is sitting behind a locked door for another four and a half years.
• 8:03
  SPEAKER_00: Fortunately, the easiest money to reach is the cash, about a quarter million dollars, and then their joint brokerage account, around 600 grand.
• 8:09
  SPEAKER_00: And neither one of them has an age rule restriction for accessing them.
• 8:12
  SPEAKER_00: Around$350,000 of their brokerage funds is what they put in, and the rest is gain.
• 8:18
  SPEAKER_00: We'll talk about that distinction in a minute.
• 8:19
  SPEAKER_00: JNS403B of$300,000 and the IRAs of$400,000 do have to wait until age$9.5.
• 8:27
  SPEAKER_00: There is an exception called this 72T distribution, but it locks you into fixed, rigid payments for years, and this couple doesn't need that.
• 8:35
  SPEAKER_00: They do have a Roth IRA with a quarter million dollars, and yes, you can make withdrawals of contributions penalty-free pre-59 and a half, but this is the pile we need to protect the most.
• 8:47
  SPEAKER_00: This is the golden goose that we want to leave as a last resort for a true emergency, not their ongoing early retirement paycheck.
• 8:54
  SPEAKER_00: That brings us to Craig's 401k, just shy of$1.4 million, which is the single biggest pile and has a door that most people aren't even aware of.
• 9:03
  SPEAKER_00: It's called the Rule 55.
• 9:05
  SPEAKER_00: If you leave your employer in the year you turn 55 or later, you can pull from that employer's 401k without the 10% penalty, so long as the money stays in that plan.
• 9:16
  SPEAKER_00: And it means truly that if you retire in that year, not based on your birthday.
• 9:21
  SPEAKER_00: So if Craig turns 55 in December, he can retire and leave his employer in January and still qualify for this exception.
• 9:29
  SPEAKER_00: It's always worth reading the nitty-gritty within your retirement plan summary plan description to confirm that your plan allows it.
• 9:36
  SPEAKER_00: That's the first thing we need to do before we give them the green light to lean on a 401k this way.
• 9:40
  SPEAKER_00: So although at first glance, the access problem feels more like a wall, it's more like a sequence.
• 9:45
  SPEAKER_00: So let's walk through it.
• 9:47
  SPEAKER_00: First, the brokerage account alone can't cover a$190,000 need for four and a half years.
• 9:52
  SPEAKER_00: So we're going to create a paycheck out of a mix of that as well as Craig's 401k through the rule of 55.
• 9:58
  SPEAKER_00: The trick is how much are we going to take from each based on how each is taxed, as well as what thresholds we're trying to fill.
• 10:05
  SPEAKER_00: Now I mentioned the brokerage account's basis, which is the amount that is untaxed.
• 10:09
  SPEAKER_00: Any gains above that amount receive capital gains tax treatment, which is more favorable than the tax treatment of the 401k money, which is taxed as ordinary income.
• 10:19
  SPEAKER_00: So we're going to size the withdrawal around whichever tax or healthcare subsidy line we're targeting that year.
• 10:24
  SPEAKER_00: This is representing two piles for one paycheck, and in the effort to create a smaller tax bill than a simple cookie cutter approach would have produced.
• 10:33
  SPEAKER_00: Now, I know what you're already thinking.
• 10:35
  SPEAKER_00: Why aren't we necessarily going just to optimize the plan to lower the single biggest expense in early retirement being health insurance?
• 10:42
  SPEAKER_00: It's a fair question, because Medicare is 10 years away for him and 12 years away for her.
• 10:49
  SPEAKER_00: Full price, as I mentioned on the marketplace, averages$17,500 per year per person before a single deductible co-pay.
• 10:58
  SPEAKER_00: Before inflation, that's like$350,000 over the next decade.
• 11:02
  SPEAKER_00: I've seen how that number alone keeps people tied to their desks longer than money actually needed them to.
• 11:08
  SPEAKER_00: Now, I'll answer why we assume their plan will continue to pay full price instead of chasing subsidies all the way through in question three.
• 11:15
  SPEAKER_00: But to answer this first question, number one, asking, can they fund a retirement that starts at 55?
• 11:20
  SPEAKER_00: The short answer is yes.
• 11:22
  SPEAKER_00: The money can reach them and the paycheck can be billed.
• 11:25
  SPEAKER_00: And while health insurance is no joke, as one client told me, that's simply the price of freedom.
• 11:31
  SPEAKER_00: So it is a yes with a caveat.
• 11:34
  SPEAKER_00: Reaching the money and paying the premiums is the part that lives on a spreadsheet.
• 11:38
  SPEAKER_00: The condition is the rest of this video that the plan has to survive the real world and how these six piles are going to work together.
• 11:45
  SPEAKER_00: Neither one of them happens by accident.
• 11:46
  SPEAKER_00: If this starts to feel surprisingly achievable, I put together a sample retirement readiness roadmap in the description.
• 11:53
  SPEAKER_00: It's built around a couple that look a lot like Craig and Janet, so you can walk through and see what we feel a comprehensive retirement plan fitting all these pieces together actually looks like on paper.
• 12:04
  SPEAKER_00: Now, most people who get this far think that the hard part is done.
• 12:07
  SPEAKER_00: The money is reachable, the paycheck's funded, the premiums are budgeted for, and that's a fair conclusion.
• 12:12
  SPEAKER_00: But what I've also watched is the most confident plans get humbled very quickly in retirement.
• 12:18
  SPEAKER_00: Because a plan on paper is one that's not ever been put through the pressure tester.
• 12:22
  SPEAKER_00: And Craig and Janice is about to meet the two greatest threats that your retirement will face.
• 12:27
  SPEAKER_00: Because being able to fund retirement means the money is there and you can reach it, but knowing the plan is resilient means it holds up against market volatility, inflation, and the uncertainties that come with a 30-year horizon.
• 12:38
  SPEAKER_00: Our first question only tested that first part.
• 12:40
  SPEAKER_00: So let's see what happens when their plan actually gets tested.
• 12:43
  SPEAKER_00: Because what we need to prevent against are the two single greatest threats, challenging your wish to not run out of money before you die.
• 12:50
  SPEAKER_00: So let's start with the problem that everyone pictures.
• 12:53
  SPEAKER_00: The market dropping 30% in the first year of retirement.
• 12:57
  SPEAKER_00: If we rewind a bit, we can go back to April 2025 when we had a similar version of this scare.
• 13:02
  SPEAKER_00: The Trump tariffs, Liberation Day.
• 13:04
  SPEAKER_00: The stock market dropped about 12% in a single week.
• 13:07
  SPEAKER_00: And despite the chaos, one meeting that same week was actually the highlight of my year.
• 13:12
  SPEAKER_00: I happened to have a semi-annual review already on the calendar with a retired client I'll call Gene.
• 13:17
  SPEAKER_00: He was in his 70s.
• 13:18
  SPEAKER_00: When I walked into the room, I braced to talk someone off the ledge, but instead he came in beaming.
• 13:23
  SPEAKER_00: He couldn't wait to tell me about the bucketless trip he had just booked to go to the Isle of Man motorcycle race for himself, his son, and his four grandsons.
• 13:31
  SPEAKER_00: He wasn't ignoring the headlines, but he knew that the plan we built for him was designed to survive the real world, built on the assumption that a week like that was not only a matter of if, but when.
• 13:43
  SPEAKER_00: So, what does planning for downturns like this, instead of predicting them, actually look like for Craig and Janet scenario?
• 13:50
  SPEAKER_00: We want to build every client's retirement income in time segments.
• 13:54
  SPEAKER_00: The first layer is a rainy day fund we call the pantry, essentially your cash for emergencies and the expenses you see coming around the corner.
• 14:02
  SPEAKER_00: Then the second layer is inside the portfolio, we're reverse engineering what we call the bond bunker, which is money set aside to shelter against the market storms that are yet to come, size to be able to prepare for five years of withdrawals in their specific situation.
• 14:18
  SPEAKER_00: That's what gave my client Gene the peace of mind to book this bucket list trip in the middle of market hysteria.
• 14:23
  SPEAKER_00: It gives us enough time for the stocks to recover so no one's trying to sell in the bottom and a panic.
• 14:29
  SPEAKER_00: So in case the market tanks in year two of their retirement, Craig and Janet could see their portfolio drop by several six figures, but their monthly retirement paycheck doesn't have to change at all because the deposit has a backup plan in place.
• 14:41
  SPEAKER_00: The second greatest threat to most retirements is inflation.
• 14:45
  SPEAKER_00: And this is where I have to disagree with most retirement planning advice out there.
• 14:49
  SPEAKER_00: Everyone seems to plan around a single round inflation number, usually around 2.5% to 3%.
• 14:54
  SPEAKER_00: But the costs in your life don't inflate at one rate.
• 14:57
  SPEAKER_00: For example, things like healthcare, maybe college for your kids or grandkids, and long-term care expenses have all run far above general inflation for decades.
• 15:06
  SPEAKER_00: Worse still, most of those costs show up later in retirement when there's no paycheck left to absorb the surprise expenses.
• 15:13
  SPEAKER_00: So a plan that inflates everything at an even 3% underprices the back half of your retirement.
• 15:18
  SPEAKER_00: We want to inflate those categories separately.
• 15:20
  SPEAKER_00: It makes the plan look harder in some areas, but actually more doable in others.
• 15:25
  SPEAKER_00: Either way, it's more realistic, and that's the point.
• 15:27
  SPEAKER_00: Not to mention, a single inflation-adjusted spending number hides a second thing, that retirement spending realistically arrives in clumps.
• 15:35
  SPEAKER_00: For example, replacing a car every several years can be$60,000 here and there.
• 15:40
  SPEAKER_00: Replacing the HVAC and windows can run into the tens of thousands of dollars at a time.
• 15:44
  SPEAKER_00: And of course, don't get me started on the cost of helping a child with a wedding.
• 15:48
  SPEAKER_00: And what about the kitchen or bathroom renovation you've been talking about doing?
• 15:51
  SPEAKER_00: These don't happen every single month or every single year, but many times people spread these costs evenly across a 30-year retirement.
• 15:58
  SPEAKER_00: And it makes you underestimate what you need in the year that they hit and overstate in the years that they don't.
• 16:04
  SPEAKER_00: And the problem is both is wrong.
• 16:05
  SPEAKER_00: So they should rather get their own line item each and their own pile.
• 16:09
  SPEAKER_00: But not only do we need to account for the impact of inflation on our spending, we need to have a plan to make sure that we have an engine to combat it.
• 16:16
  SPEAKER_00: That's where the other side of the portfolio, not just the bond bunker, comes in.
• 16:20
  SPEAKER_00: And that's where we tailor the right amount of growth in the portfolio to your specific needs so it can become a key factor to make sure your purchasing power goes up with inflation.
• 16:30
  SPEAKER_00: If you're too exposed in growth, you're overexposing yourself to more risk than necessary.
• 16:35
  SPEAKER_00: Too little, and you may find your dollars can't keep up with rising costs that may be worse at the most fragile phase of your life.
• 16:41
  SPEAKER_00: So the second question is asking: can your plan survive the real world?
• 16:45
  SPEAKER_00: Likely, if you've planned on purpose for things such as market crashes and rising inflation, especially over a timeline that is longer than most people's retirement.
• 16:54
  SPEAKER_00: Neither of these get solved automatically.
• 16:56
  SPEAKER_00: Which brings us to the question where the real planning lives.
• 16:59
  SPEAKER_00: Because early retirement can create something that most people never get: an unusually long stretch of flexible tax years.
• 17:06
  SPEAKER_00: Craig and Janet potentially have 12 of them, not 10 because Janet is two years behind him on Medicare.
• 17:12
  SPEAKER_00: For most people, the paycheck runs straight into Social Security, Social Security goes straight into requirement and distributions, and their income never gets below that elbow room to get creative.
• 17:22
  SPEAKER_00: That's what creates this window such a golden tax opportunity.
• 17:25
  SPEAKER_00: 12 flexible years to attack the ticking tax time bomb of the roughly 2 million of tax-deferred funds they have, and actually, I would say co-own with the IRS.
• 17:35
  SPEAKER_00: Because at age 75, the IRS stops asking, and required distributions take effect.
• 17:41
  SPEAKER_00: Those distributions will start forcing a portion, whatever remains, to start filling up more and more expensive tax brackets, whether they need it or not, on top of two Social Security checks.
• 17:51
  SPEAKER_00: So this window that they have has a crucial job to get that pile smaller now at more favorable rates, so less of it bleeds out at higher tax rates later.
• 18:01
  SPEAKER_00: The challenge is this window presents a fork on the road on how to optimize this phase.
• 18:06
  SPEAKER_00: The first option we have to consider is the Maggie line of$84,600.
• 18:11
  SPEAKER_00: That's the household income limit in 2026 for a married couple to get help with marketplace premiums.
• 18:17
  SPEAKER_00: And Craig and Janet's subsidy help is worth around$15,000 a year.
• 18:21
  SPEAKER_00: A single dollar over that line, and the help doesn't shrink, it just disappears.
• 18:25
  SPEAKER_00: The second option in the fork on the road is the top of the 12% income tax bracket in their scenario.
• 18:30
  SPEAKER_00: Because for a married couple in 2026, that's around$133,000 of income before the standard deduction.
• 18:37
  SPEAKER_00: Once they cross that threshold, more dollars taxed at income rates are entering the 22% income tax bracket, not to mention state income tax, depending on where you live.
• 18:47
  SPEAKER_00: These two thresholds are the fork on the road and are mutually exclusive.
• 18:51
  SPEAKER_00: If you fill the 12% income tax bracket, they're nearly$50,000 over that subsidy line.
• 18:56
  SPEAKER_00: If they prioritize the subsidy line, then they leave nearly$50,000 of 12% headroom unused and then have to pull out more money from the brokerage account to stay under that income subsidy threshold.
• 19:08
  SPEAKER_00: Which route is right depends on the couple, their numbers, how they want to live, and that makes me cautious of anyone who automatically defaults to choosing one or the other.
• 19:17
  SPEAKER_00: Some clients I see get more value from the premium subsidies.
• 19:21
  SPEAKER_00: Others, it's better to fill the tax brackets with Roth conversions for long-term tax savings and flexibility.
• 19:27
  SPEAKER_00: And this isn't a one-and-done decision.
• 19:29
  SPEAKER_00: For our clients, we rerun this every year because there are to be things that are both in and out of our control that will change, including the tax code itself.
• 19:38
  SPEAKER_00: Not to mention, whatever you decide on this fork in the road will change other decisions, whether you know it or not.
• 19:44
  SPEAKER_00: I like to compare retirement planning to a Rubik's Cube.
• 19:47
  SPEAKER_00: Turn one face to a lineup of the colors, and three other faces will move, whether you are watching them or not.
• 19:53
  SPEAKER_00: Most people make retirement decisions one face at a time, and they don't see the damage on the other sides until it shows up years later when it's too late to turn it back.
• 20:01
  SPEAKER_00: So let's walk you through what the cube solved looks like for Craig and Janet scenario.
• 20:06
  SPEAKER_00: In years one and two, we're actually prioritizing the paycheck to come from cash and brokerage so we can stay below that Maggie line.
• 20:12
  SPEAKER_00: We're trying to afford those premium subsidies because of the extra expensive healthcare that is needed to cover Janet's medical procedures.
• 20:19
  SPEAKER_00: Then starting in year three, we start tapping into the 401k for their lifestyle as well, either spending it or converting some of it to Roth, sizing it each year to the tax threshold we feel is best in that particular calendar year.
• 20:30
  SPEAKER_00: Then once Craig turns 59 and a half, the IRA is a free gain to use for income.
• 20:34
  SPEAKER_00: Then Janet turns 62, turns on her social security benefit, so she doesn't feel that anxiety of depending on withdrawal from their portfolio for maintaining their ideal lifestyle.
• 20:43
  SPEAKER_00: Once Craig turns 63, Medicare is already watching because it sets his premiums at 65 off of the income he reports two years earlier.
• 20:51
  SPEAKER_00: Then when he does hit 65 and moves to Medicare, we still have two years that Janet could be on the marketplace.
• 20:57
  SPEAKER_00: So we're going to continue to keep an eye on those Maggie premium subsidy limits.
• 21:01
  SPEAKER_00: And the 401k withdrawals can be filled with every tax bracket we want for raw conversions, with Medicare Irma surcharges being the threshold we want to plan on from there.
• 21:10
  SPEAKER_00: Once Craig starts his Social Security benefit, then we have a bigger check grown by waiting and helps protect Janet if something happens to him first.
• 21:18
  SPEAKER_00: And when he turns 75, required minimum distributions begin on a pile that we have spent 15 years by that point getting it smaller on purpose.
• 21:26
  SPEAKER_00: Now, suppose an identical couple with identical assets turns these Rubik Cube faces differently.
• 21:32
  SPEAKER_00: They might start by rolling their 401k into an IRA on day one when they turn 55, because that's what most people do.
• 21:39
  SPEAKER_00: Then they lose that rule 55 door until they can get the assets at 59 and a half.
• 21:43
  SPEAKER_00: They may say, hey, let's convert$150,000 into a Roth IRA because that seems smart, unknowingly tripping up into higher and higher tax brackets than they need to, not to mention missing out on healthcare premium subsidies unknowingly.
• 21:56
  SPEAKER_00: Statistically, most people take their Social Security checks at 62 because the money's right there and they want to cash in, but they're locking in their smaller check, not to mention for the surviving spouse for life.
• 22:05
  SPEAKER_00: Someone may say, hey, I'm going to pay off mortgage from their brokerage account in the early years of retirement, but they don't realize that that also is using up a very vital source of funds and tripping them up into higher tax brackets as well.
• 22:17
  SPEAKER_00: The problem is, is every one of those moves seems like a reasonable one on its own, but in conjunction in their situation, this difference could cause Craig and Janet to run into over six figures or more of costs that they didn't have to.
• 22:29
  SPEAKER_00: When we show this Rubik's Cube being solved for clients, they stop pouring over their spreadsheets looking for what error they might be missing.
• 22:36
  SPEAKER_00: And Janet gets the answer to her question, which was, where does the paycheck actually come from?
• 22:40
  SPEAKER_00: I'd like to think that there's a difference between retirement freedom and retirement confidence.
• 22:45
  SPEAKER_00: $3 million of savings can create the first, but a true and thorough plan creates the second.
• 22:51
  SPEAKER_00: So if you're in your mid-50s with$3 million saved and asking yourself, can I really do this?
• 22:56
  SPEAKER_00: I hope today showed you that the answer was probably yes long before you asked the question.
• 23:02
  SPEAKER_00: But knowing the math works and feeling ready to act on it are two very different things.
• 23:06
  SPEAKER_00: And there's a reality about having saved$3 million itself that no one talks about.
• 23:10
  SPEAKER_00: There are rules that start changing at this level that don't have to do with whether you can retire, but what could bring you back to having to go back to work.
• 23:18
  SPEAKER_00: Things like Medicare surcharges.
• 23:19
  SPEAKER_00: How do you prevent against a 20% drop in your portfolio?
• 23:22
  SPEAKER_00: And what happens to the money that you'll never spend.
• 23:25
  SPEAKER_00: And zooming out on all this, there's a part about having saved$3 million that changes how you can address not just the question of whether we can retire, but what are the traps that can make you go back to work if you haven't prepared past that point?
• 23:38
  SPEAKER_00: I break down those four traps and what to do about each one in this video on screen now.