I spoke to a CFP when I first graduated college (2017) and learned a lot. I don't remember much of what we spoke about... but, by the end, I was a converted Boglehead. I didn't tell him my goal of becoming FI-- at the time I was almost embarrassed to say it/ didn't want him to discourage me from trying. I've been thinking about seeing another one since my finances are more complicated and I have a better understanding of FI/RE. (let's go 2030!)-- this was a very timely video. :)
I haven’t visited with one due to a lack of trust. How many of these CFPs are invested the way they recommend? I use to work in the financial industry and saw these guys over their heads in debt, living paycheck to paycheck. I’m a KISS investor influenced by JL Collins and the advice of other wealthy like Buffet and the like. I still continue to learn everyday and you are one of my resources.
I'm a fee only financial advisor and this was fun to hear! (I do monthly ongoing fee but no AUM required) There are many people who have no idea what their assets are or how they will retire. I love helping those people get on track.
Thanks, Jenna! We appreciate you checking it out. There sure are a lot of those people out there. We're hopeful that many of them seek help earlier rather than later...
Thanks, guys, for another great discussion. We've been thinking about doing a consulation like this and have been stumped about how to find someone. Your lists in the show notes are helpful. Finding the right person is tricky!
My husband is planning to take a traditional retirement in 6 months. We are definitely in the 2 years of cash place! I appreciate the information in this episode, as it's a thought-provoking review before we take the plunge. I suffered a sudden debilitating illness 5 years ago that turned out to be caused by exposure to toxic mold. I have since recovered but the remediation and medical expenses were $75,000+ the first year and completely came out of left-field. I had to do the credit card thing to manage that sudden demand for cash. I will never again think that 3-6 months of expenses is enough to keep on hand.
Thanks so much for sharing, Mary. We're sorry to learn of your health issues and glad to learn you've recovered. You're so right about the very real possibilities of life changing expenses that can come out of nowhere. Depending on individual situations, there may be a variety of ways to address these. For many of us that includes having sufficient liquid assets. Best wishes to you and your husband.
This show is great! Since you are both on the two sides of FI, one thought I would like to leave you and your viewers is what if retirement comes sooner than you expect? I've now reached 65 after suddenly finding myself "retired" at the age of 59. It was only because I had begun thinking about the future was a prepared for a crash-landing. Folks seriously need to consider what if your day comes sooner than you expected, either due to illness or job loss. That cash cushion of one to three years of expenses should be considered for everyone over the age of 55. And everyone in their 50s should definitely be doing all the catch-up contributions to max out retirement savings. Just in case.
I found your channel several months ago and I've loved every minute of it. I had decided to write a comment just before you started discussing how broadly influential these topics are. I'm not necessarily on a FI journey, but listening has definitely made me think of my finances differently.... I'm retiring in January from my career as a firefighter. I'll have a pension and I have/ had (until everything took a hit) what I consider significant 457b savings. I'm super heavy in equities and also had a one time meeting with an advisor who gave the go ahead prior to this recent market. On top of that I'm building a very expensive house. My grace is that I also have a growing small business that should make it unnecessary to have to access my portfolio. I just turned 52 and would love to turn my financial sacrifices into generation wealth.... I say all of this to say THANK YOU for sharing your journey. It has been both very helpful and inspiring! Keep the content coming.
Thanks so much for your comment, Christopher. We sincerely appreciate your support and are so glad to learn it's been helpful to you. Sounds like you have a really great plan underway. Anything you can do to delay the need to touch your portfolio is only going to pay off in the long run. Best wishes to you!
Great info guys. I've had similar experiences with fixed-fee advisors. They tend to cover the basic financials then reasonably slide the specifics to additional hours.
Great episode. One thing that really hit me was the brief discussion about friends of yours that had no idea about their retirement funds, goals or plans. You two and those watching this represent a very small subset of the general population where most folks are completely clueless about retirement. Just interesting to know that even you two have friends who aren’t in the retirement planning mindset
Jason here - Thanks, Keith! So glad you liked it. I was always amazed that even working in high tech (I told a story about an Apple engineer in an earlier episode), I would meet people who weren't doing nearly enough to plan for retirement - or even worse, were making moves that were harming their portfolio. Personal finance simply isn't taught broadly enough in the US, and from comments we've seen, elsewhere as well.
Thanks for putting this content up! Im still pretty early in my FIRE journey and its super helpful to get a perspective for what close to my retirement date might look like.
Great show, maybe the best from you I've heard so far. I'm a lifelong DIY, but I'm open to hiring some objective advice from time to time. Our income includes real estate, salary, and investment, and I worry most financial planners don't know how to factor in real estate income. Your show gave me some confidence to look for someone with those skills. Insurance seems less important, and taxes send more important the older I get. Keep it up, guys, this is a great service to the rest of us
I loved this episode. I recently quit using the AUM model and have been thinking about doing this. I'm bookmarking this for later rewatching, you guys had a ton of content in there.
Excellent show! Thank you for providing your insight into the process of working with a flat fee financial advisor. Definitely something to consider as I approach my retirement date.
Been watching you guys for a couple weeks now and I really enjoy you each being very genuine and honest with each encounter. Shared yall with my friend! Another informative video. Thanks!
Arguably the biggest problem with targeting a withdrawal rate is getting lost in the math and underestimating actual expenses. It's one thing to debate whether 3% or 4% is safe, but another to suddenly have something like expensive medical issues that require drawing 8%.
Absolutely. This is an excellent point. And it’s why we are both big believers of setting your WR lower than what your portfolio can bear. You need to be able to handle unexpected expenses when they inevitably arrive. Stay tuned as in a few days a new ep is coming that is highly focused on SWR.
Great show guys, as usual. You always get me thinking, and challenging my plan. I was surprised your financial advisor didn’t think a 3.3% withdrawal rate was sufficient….? That amount seems realistic and conservative to me. What withdrawal rate did he recommend?
Hi Brandon, thanks! We're not aware of one big PDF to get the whole series. He did publish a working paper from the first eight posts that you can find here: papers.ssrn.com/sol3/papers.cfm?abstract_id=2920322 Here's the landing page for the whole series, which also has good guidance on the structure of it: earlyretirementnow.com/safe-withdrawal-rate-series/
I really appreciate the information you guys talk about and share your experiences. Very cool to see both sides of FI! My wife and I are within 4-5 years of the RE and I believe close to FI. We plan to take a trial retirement for 8-12 months within 4 years. Save what we’re putting into investments for a year and see if we can live off that while travelling to various locations in the world for a month each during the winter months! Then come back and decide if we need another year of working or not. At 52, our retirement is on the horizon! Especially with some friends already retired!
Thanks, Jason! Taking mini/trial retirements is a great idea. De-risking such big decisions is always a good thing, right? Best wishes to you on your journey. The finish line is within sight!
Another good show! Love your shows style as it is like having a look behind the curtain of what your thoughts are in two different stages. Keep up the good work!
In process of my first engagement now (fee only). Lifelong DIYer and about 5 years out from early retirement. At least the option to…. My main goal is tax planning decisions now that will impact the Re phase that has gotten too complicated for me. I found it nice to get outside of my own head. As an aside I did get some good defensive advice that really helped. Thought some about Jason’s point on mortgage pay off. Probably a good idea while income still coming in but harder after the RE phase due to tax implications on withdrawals. If you get a chance, The Money Guy has some good thoughts on when it does and when it doesn’t make sense to pay it off that is nuanced and I personally found helpful.
Jason here - Thanks for sharing, Brian! I follow the MGS pretty closely and I've seen their content on this topic. You're right - it was definitely useful.
One thing that sticks out to me in this conversation is no matter how much research you have done try and get an educated opinion from someone on the the other end of the risk spectrum. Good practice to make sure you understand the pros and cons of your allocation strategy.
Couple comments around I bonds from your chat. I have read that you can covert them over to 529 and avoid all taxes so may be something to look into. Also, you can get around the 10k per year limit a tad by using gifting with your spouse and realizing the gifts in future years.
I just did this recently and love the full report that Northwestern Mutual provides. It’s all I personally need. Especially as my asset mix has become more complicated in recent years. What’s great is that the fee is higher in year one ($1500) and lower in subsequent years. (~$750). Rates vary. Caveat - I’ve known my advisor on a services level for 12 years and the following are very important: 1. The right credentials, not just CFP 2. Experience in executing for larger clients (scale changes needs) 3. Clear understanding of the output There are plenty of CFPs out there. It’s important to find a competent one that doesn’t just check lists off and is flexible to your needs.
This was the best show of yours in my opinion because of sharing some of the advisors thoughts on your specific questions. Thank you! Speaking of, could you share the article about risk adjusted returns that made you consider a change from VBTLX to VGIT? $1,000 for that service seems like a great value. Advisors generally command $200-300 / hour in my research so it seems very reasonable in my opinion.
Thanks very much, Aaron! Really glad you enjoyed it. We both do still hold some other bond funds, like BND or similar like AGG. But we both moved majority portions to intermediate treasuries. There's actually a lot written on the topic of the corporate bonds + mortgage-backed securities elements of the bond funds. Here's a few examples: www.morningstar.com/articles/1074416/is-your-bond-fund-really-a-stock-fund-in-disguise seekingalpha.com/article/4216473-downside-of-corporate-bonds it's a bit older, but Swensen's "Unconventional Success: A Fundamental Approach to Personal Investment" is also a great resource.
I enjoy all your shows, and this one the most so far. I appreciate you both for your honesty and your willingness to expose where you’re learning and might be vulnerable. I’m 61, still working, and DIY so far. I’ve considered seeing an advisor, but for me the $1k or so seems like it would be a lot and what they would tell me seems predictable, much like what you heard. I will have a pension that covers almost all our expenses in addition to savings, and I’m obviously not going to retire very early, but there is always risk (LTC, etc.), and I predict that I would probably hear the same things.
I've managed my portfolio for over 30 years and grew it to $6.5M and recently hired a wealth management company paying 1% fees. I have to tell you I'm stressed, I don't feel like I have control over my portfolio and I don't see much value month to month for what I'm getting from that. I hired them initially to help with Roth conversions but I definitely having regrets.
Sorry to hear you’re feeling stressed. You can always change your relationship, or get a second opinion from others. Best wishes to you in resolving things.
Great show. I am struggling w/ going to assests under management vs fee only. I've paid fee only & as we enter retirement im leaning towards fee only w/ yearly check ins.
Hi Cathy, thanks for the comment. It's definitely a personal decision as to what makes the most sense. Many like the idea of regular check-ins with the same person, as they will build familiarity with them. Sometimes this is in a retainer model but that is more expensive. If you can find an advice-only person where you can do annual check-ins as you suggest, this may be a great option. Best wishes to you!
This was good stuff. I've talked w/ Fidelity about some of this but have, so far, been unable to get clarity on things like retirement income plans. I don't think that's their gig. But still enjoy talking with their advisor about various investment strategies.
Thanks, Tim. Both things may be true, where the Fidelity service is good for investment strategy but others may be more helpful on retirement income planning. You may well be able to find someone who can do both to your liking! Best wishes to you.
Fidelity doesn’t provide a detailed plan outside of a wealth management account. For no fee, they use standard modeling and general investment guidance, but not a specific withdrawal or income plan
Awesome video. Did they advise on whether index are better in todays economic trend or index funds in taxable brokerage account and what percent allocation of each ?
Jason here - Thanks! The advisor is definitely a Boglehead so overall a big fan of low cost index funds. Each of our situations is different with respect to asset location, so Eric and I had different discussions there. The answer to your question will be tailored to the individual, and what they already have saved + where.
If your state offers a tax deduction for putting the money in the 529 then it makes sense to put the money in the 529 first even if you are going to pull it very quickly to pay for school expenses
I just saw that Michigan passed legislation requiring a financial education course in high school. The initial vote was 57-43. It’s a little bit mind boggling to me that so many people could be against that. Granted at that age a lot of the information wouldn’t yet resonate, but some of it would stick. Back when I was in college I still thought of the stock market as a casino.
As a parent of a recent graduate who went through some education (he’s a 2022 grad), it is… well, better than nothing but only so helpful. I’m now working to set him up with an account prior to college and a credit card to manage and build credit. Some things he knows from class but many things he doesn’t. I think that unless it’s interesting to the student the financial education in high school is too early - kind of a use it or lose it thing. Probably better than nothing, but I don’t think it’ll prevent the financial illiteracy that permeates our culture.
@@06dak69 you’re probably right. The information is out there for those that seek it. I just wonder if there would be any difference if financial education was made a core subject like math and hammered into kids minds early and often. It would be interesting to see if there were any difference in their behaviors as adults. A one-off, unmemorable course would easily be forgotten .
I have not had any professional oversight or review. My wife has questioned that, especially as she is less steeped in personal finance knowledge. I have trouble trusting that I will find a trustworthy person, who will be a good fit for our style and situation. Going through estate planning, it was clear to me that having more opportunities for my wife and I to be forced to sit down together and really get on the same page and have a joint plan would be useful. We should renew our search for a good fit.
Hi Guys, really enjoyed the show. I appreciated you tailoring some of the segment towards those who are at middle/accumulation phase which I suspect the majority of your audience is in - I found a heap of value from where you guys said, 'hey, I'm doing X now, but if I was still 5-10 years out, this is how I would approached the question'. The mortgage segment of your episode got me thinking. I am from Australia where 100% offset accounts are HUGE. These basically allow you to have bank account with the lender which also holds your mortgage, and you only pay interest on the net amount owed between the two. Think of it like a guaranteed HELOC which the bank can't take away as technically its a separate bank account. What are your thoughts on if access to this type of home loan would change your approach to asset allocation, specifically regarding fixed income when pulling the trigger for retirement, and mitigating sequence of return risks?
Jason here - Thanks very much, Mark! So glad you liked it. Yes, we think you're right. We love the diversity in our audience and do try to ensure we address as many parts of the FIRE journey as we can. Thanks for sharing the details of those offset accounts. We weren't familiar with them before. Using leverage is definitely an individual decision and does have a risk tolerance piece to be considered. I'm not sure what Eric would think but for me, it certainly would make me feel good about no having an emergency fund. I'm not sure that it would change my approach to asset allocation, though I need to think on that a bit. An interesting option to be sure! Perhaps someone else will weigh in who has similar access to such a structure?
So... at the beginning of the podcast you were like "We'll help you find an advisor" and then you were like "I found this guy on TikTok" and I was like uh... that's not a good place to find financial advisors. Thank goodness for the show notes! lol
You guys seem very knowledgeable on this subject. My only thing is that two months of cash seems really thin. I get you can get money through credit cards or brokerage but is that really the way you want to get cash if you need it above and beyond what’s in the bank?
Eric here - this comes down to your personal risk capacity. My wife and I have long-established careers and predictable cash flows so, this works well for us. The opportunity cost of keeping more than 2 mos. cash-on-hand is higher than we're comfortable with given we have liquidity elsewhere. I don't pretend this works for everyone though!
That's an excellent topic on which to consider talking with an advisor, H B. Fritz @ The Retirement Manifesto recently wrote a post on this topic as well: www.theretirementmanifesto.com/how-to-determine-when-to-claim-social-security/
Can you expand on the conversation and thought around paying off a low mortgage interest (say 2.8% fixed). Because in a non-retirement situation, you would just keep paying that monthly and ideally invest into the future. But, if you are retired, what is the reason for paying off the mortgage? Trying to connect the dots there. Thanks!
Hi, Alan - Eric here replying. This is a huge topic, with lots to consider (investing horizon, tax situation, interest rates, allocation, etc.) I can recommend two resources for further reading: www.bogleheads.org/forum/viewtopic.php?t=338509 and, whitecoatinvestor.com/debt-is-a-negative-bond/ Hopefully that helps clarify!
At some point, I'll need to talk through the rationale behind using Bond funds. Bonds look like value destruction to me, especially the referenced VGIT fund which actually produced a ~0% return over the last 10 years after inflation. To me, fixed income could be far better handled by a diverse set of dividend paying equity stalwarts.
Jason here - I think I’ve explained my position plainly enough over a few episodes, so I won’t bore you by repeating it. So here’s another take: jonluskin.com/should-i-invest-in-bonds-when-interest-rates-are-rising/
I am wondering about password managers. I don’t have one but maybe I should. Do you get concerned about your passwords being compromised? Do your spouses have access go these managers in case you pass? I like the idea….
Hi, Patricia- Eric replying here...Jason recommended I use Bitwarden and both my wife + I use it exclusively. Your password vault can be set up to be shared with your spouse (which is what we do). There are browser extensions and an app for your phone so you'll have it anywhere you'd need it. Highly recommend.
Great video. I signed up with Intuit Mint coach... and they shut it down the pilot program before I can talk to them! It was supposed to be $150 for 2 hour consultation. so, Do you recommend the XY people or not really?
You both say your retired early. , but both have businesses . How old are you guys. I consider early retirement in the mid 50's. I am 60 and going back and forth on retiring . At 60 yo construction work is not fun any more.
Jason here- we are both 48. Eric is actually pre-FI. That’s what the 2024 date (his target) on screen indicates. I left my career two years ago and don’t have a business. I do pour wine one day a week as a fun “job”. But that is more for the fun (and wine discounts) than for the small amount of spending cash it yields. Earlier on after retiring I thought consulting might be fun. After a few calls I realized I had little interest in that. Maybe my feelings on that will change someday? For now I love not working.
Or you're being overly conservative? If you're right, many would find that an enviable position. It could suggest opportunities for increased spending , whether on yourself + family or via giving to causes you care about. Best wishes to you.
The percent rule does not make sense to me at all. If I withdrew 4% right now I would be drawing more then I currently use. It seem like such a dumb simple rule, and it just does not make sense. I made a spread sheet that has my draw based on my current draw adjusted for inflation.
Hi Jamie, we agree there's too much reliance on this "rule of thumb". Like some others in the community, we think it's a great starting point for back of the envelope calculations, particularly earlier in one's financial journey. It sounds like you have a good process for your own situation. Blogs like Early Retirement Now and The Retirement Manifesto also have great content on the topic of withdrawal rate, which we've found useful. Best wishes to you.
@@TwoSidesOfFI I'm not sure how good it is, but I have put together a spreadsheet based on some that I found online. Mine takes my current spending and adjusts to inflation along with my investments. It also handles (roughly) taxes, 401K min distributions, and allows me to do one-time spending events for a given year. I also added a "Monte Carlo" simulation to see how the dice might roll. This imperfect crystal ball tells me that even though my house is paid off I need somewhere above 4 million to be worry free living to 100. More like 5 million. I'm not there yet, and the current market is NOT cooperating!
@@TwoSidesOfFI Love your show BTW. It can be hard to talk to people about how much I have in the bank. It's so easy for that to sound insulting or just bad.
I am in the process of starting a monthly fee advisory service, I am modeling a simple single page plan. If you are both up to it would love to run you through my advice to see what your thoughts are. It would be free of course. Let me know if you are interested.
We've all got our own perspective on risk tolerance, right? Check out our recent conversation with Karsten Jeske (ua-cam.com/video/ZXHh1gtO1lA/v-deo.html) and our episode on holding cash (ua-cam.com/video/HXeCHpFo8Ps/v-deo.html) for more thoughts on this.
I did a mix of 529, ESA and brokerage account. To me the flexibility of the brokerage account is worth the tax hit. That I think simply comes down to comfort level. There are tradeoffs.
@@slimdawgwoof for me is that college tuition is like car purchases. The sticker price is not what you usually pay. Over funded education accounts have tax implications, too. And if you are just a few years out or in the middle of paying those expenses, will the tax benefit be worth it? I feel that is a very personal.question.
Hard to say, Anna, as this is a personal question. It could be a good time for a check-in with a 3rd party to ensure your plan is on track to help you achieve your goals. 10 yrs sounds a little far out for concern, but if it would put your mind at easy to have another opinion, the money could be well worth it.
Depends on your situation, number of employees and income but usually a Solo 401k will allow you to save faster than a SEP IRA as the Solo 401k allows both employee and employer contributions.
Did FP talk about inflation and rising interest rates (from historically low levels) hurting bonds/treasury returns. I’m not sure bonds are really risk off in current environment.
Opinions vary but when it comes to risk-off assets, treasuries are about the best we have considering history to date. All assets have risks of course.
@@paulturner4419 VGIT is down 8.6% YTD vs. VTSAX which is down 19.9% or 2.3X as much over the same period. It is of course true that there is no "truly safe" asset. We're talking about about diversification and risk reduction. It's also true the the correlation between bond and stock performance is not what it once was. But flat may be OK when it comes to capital preservation, no? Naturally this is more of a concern in an inflationary environment. What do you see as a viable alternative to holding treasuries or other bonds?
Have you used a similar service? If so, how did you find the experience? Let us know in the comments below.
I spoke to a CFP when I first graduated college (2017) and learned a lot. I don't remember much of what we spoke about... but, by the end, I was a converted Boglehead. I didn't tell him my goal of becoming FI-- at the time I was almost embarrassed to say it/ didn't want him to discourage me from trying.
I've been thinking about seeing another one since my finances are more complicated and I have a better understanding of FI/RE. (let's go 2030!)-- this was a very timely video. :)
@@reynoldscf95 You're way ahead of the game compared to us if you were checking in right after college - bravo! Best wishes to you
I haven’t visited with one due to a lack of trust. How many of these CFPs are invested the way they recommend? I use to work in the financial industry and saw these guys over their heads in debt, living paycheck to paycheck. I’m a KISS investor influenced by JL Collins and the advice of other wealthy like Buffet and the like. I still continue to learn everyday and you are one of my resources.
I'm a fee only financial advisor and this was fun to hear! (I do monthly ongoing fee but no AUM required) There are many people who have no idea what their assets are or how they will retire. I love helping those people get on track.
Thanks, Jenna! We appreciate you checking it out. There sure are a lot of those people out there. We're hopeful that many of them seek help earlier rather than later...
Eric’s groan after Jason asks us to “smash the like and subscribe buttons” is priceless.
Jason here - I agree! And naturally I was kidding :)
Thanks, guys, for another great discussion. We've been thinking about doing a consulation like this and have been stumped about how to find someone. Your lists in the show notes are helpful. Finding the right person is tricky!
You’re welcome, Andrea! Glad you’ve found the resources useful. Best of luck to you in finding a good fit.
My husband is planning to take a traditional retirement in 6 months. We are definitely in the 2 years of cash place! I appreciate the information in this episode, as it's a thought-provoking review before we take the plunge. I suffered a sudden debilitating illness 5 years ago that turned out to be caused by exposure to toxic mold. I have since recovered but the remediation and medical expenses were $75,000+ the first year and completely came out of left-field. I had to do the credit card thing to manage that sudden demand for cash. I will never again think that 3-6 months of expenses is enough to keep on hand.
Thanks so much for sharing, Mary. We're sorry to learn of your health issues and glad to learn you've recovered. You're so right about the very real possibilities of life changing expenses that can come out of nowhere. Depending on individual situations, there may be a variety of ways to address these. For many of us that includes having sufficient liquid assets. Best wishes to you and your husband.
This show is great! Since you are both on the two sides of FI, one thought I would like to leave you and your viewers is what if retirement comes sooner than you expect? I've now reached 65 after suddenly finding myself "retired" at the age of 59. It was only because I had begun thinking about the future was a prepared for a crash-landing. Folks seriously need to consider what if your day comes sooner than you expected, either due to illness or job loss. That cash cushion of one to three years of expenses should be considered for everyone over the age of 55. And everyone in their 50s should definitely be doing all the catch-up contributions to max out retirement savings. Just in case.
Thank you! And thanks for sharing. This is indeed an excellent point.
I found your channel several months ago and I've loved every minute of it. I had decided to write a comment just before you started discussing how broadly influential these topics are. I'm not necessarily on a FI journey, but listening has definitely made me think of my finances differently.... I'm retiring in January from my career as a firefighter. I'll have a pension and I have/ had (until everything took a hit) what I consider significant 457b savings. I'm super heavy in equities and also had a one time meeting with an advisor who gave the go ahead prior to this recent market. On top of that I'm building a very expensive house. My grace is that I also have a growing small business that should make it unnecessary to have to access my portfolio. I just turned 52 and would love to turn my financial sacrifices into generation wealth.... I say all of this to say THANK YOU for sharing your journey. It has been both very helpful and inspiring! Keep the content coming.
Thanks so much for your comment, Christopher. We sincerely appreciate your support and are so glad to learn it's been helpful to you. Sounds like you have a really great plan underway. Anything you can do to delay the need to touch your portfolio is only going to pay off in the long run. Best wishes to you!
Great info guys. I've had similar experiences with fixed-fee advisors. They tend to cover the basic financials then reasonably slide the specifics to additional hours.
Thanks! Glad to hear you've had a good experience too
Great episode. One thing that really hit me was the brief discussion about friends of yours that had no idea about their retirement funds, goals or plans. You two and those watching this represent a very small subset of the general population where most folks are completely clueless about retirement. Just interesting to know that even you two have friends who aren’t in the retirement planning mindset
Jason here - Thanks, Keith! So glad you liked it. I was always amazed that even working in high tech (I told a story about an Apple engineer in an earlier episode), I would meet people who weren't doing nearly enough to plan for retirement - or even worse, were making moves that were harming their portfolio. Personal finance simply isn't taught broadly enough in the US, and from comments we've seen, elsewhere as well.
Thanks, really interesting hearing both of your experiences here.
Thanks for putting this content up! Im still pretty early in my FIRE journey and its super helpful to get a perspective for what close to my retirement date might look like.
you're welcome! glad you found it useful
Love the conversational style and the perspective of people at different stages on your channel. Thanks a lot!
Thanks very much, Logan’
Really enjoyed this episode. Looking forward to listening to more of your shows. Thanks for sharing your ideas!
Thanks, Karen! We appreciate your support!
And to end Father's Day, we will surely conclude it with a new learning from you. Greetings from Spain
Buenos tardes, Alberto! Muchos gracias
@@TwoSidesOfFI By the way, thank you for your words in answering my letter.💪🏼❤️
Great show, maybe the best from you I've heard so far. I'm a lifelong DIY, but I'm open to hiring some objective advice from time to time. Our income includes real estate, salary, and investment, and I worry most financial planners don't know how to factor in real estate income. Your show gave me some confidence to look for someone with those skills. Insurance seems less important, and taxes send more important the older I get. Keep it up, guys, this is a great service to the rest of us
Thanks very much, Steven! We’re so glad you enjoyed it. Best wishes finding someone who is a good fit for your needs. Thanks so much for your support.
I loved this episode. I recently quit using the AUM model and have been thinking about doing this. I'm bookmarking this for later rewatching, you guys had a ton of content in there.
Thanks, Berney! So glad you found value in it.
Excellent show! Thank you for providing your insight into the process of working with a flat fee financial advisor. Definitely something to consider as I approach my retirement date.
Thank you, Anne! So glad to learn you found it useful
Great convo guys!! Enjoyed hearing both sides.
Glad you enjoyed it!
Been watching you guys for a couple weeks now and I really enjoy you each being very genuine and honest with each encounter. Shared yall with my friend! Another informative video. Thanks!
Thank you, Tyler! So glad you're finding value in the content. Thanks so much for sharing the show with a friend.
Arguably the biggest problem with targeting a withdrawal rate is getting lost in the math and underestimating actual expenses. It's one thing to debate whether 3% or 4% is safe, but another to suddenly have something like expensive medical issues that require drawing 8%.
Absolutely. This is an excellent point. And it’s why we are both big believers of setting your WR lower than what your portfolio can bear. You need to be able to handle unexpected expenses when they inevitably arrive. Stay tuned as in a few days a new ep is coming that is highly focused on SWR.
Great show guys, as usual. You always get me thinking, and challenging my plan. I was surprised your financial advisor didn’t think a 3.3% withdrawal rate was sufficient….? That amount seems realistic and conservative to me. What withdrawal rate did he recommend?
Hi Max, stay tuned as we revisit this question in the next episode!
Great channel guys, love the content! One question, Where did you download the PDF of big erns Safe withdrawal rate series?
Hi Brandon, thanks! We're not aware of one big PDF to get the whole series. He did publish a working paper from the first eight posts that you can find here: papers.ssrn.com/sol3/papers.cfm?abstract_id=2920322
Here's the landing page for the whole series, which also has good guidance on the structure of it: earlyretirementnow.com/safe-withdrawal-rate-series/
Great video, and loved the cameo of Gimli with a FI date!
Cheers, Chris...good eye!
Thanks for the awesome content. (pre-FI viewer)
Thanks, Clementina!
I really appreciate the information you guys talk about and share your experiences. Very cool to see both sides of FI! My wife and I are within 4-5 years of the RE and I believe close to FI. We plan to take a trial retirement for 8-12 months within 4 years. Save what we’re putting into investments for a year and see if we can live off that while travelling to various locations in the world for a month each during the winter months! Then come back and decide if we need another year of working or not. At 52, our retirement is on the horizon! Especially with some friends already retired!
Thanks, Jason! Taking mini/trial retirements is a great idea. De-risking such big decisions is always a good thing, right? Best wishes to you on your journey. The finish line is within sight!
Another good show! Love your shows style as it is like having a look behind the curtain of what your thoughts are in two different stages. Keep up the good work!
Thanks, Kelly...really appreciate your continued support!
In process of my first engagement now (fee only). Lifelong DIYer and about 5 years out from early retirement. At least the option to…. My main goal is tax planning decisions now that will impact the Re phase that has gotten too complicated for me. I found it nice to get outside of my own head. As an aside I did get some good defensive advice that really helped. Thought some about Jason’s point on mortgage pay off. Probably a good idea while income still coming in but harder after the RE phase due to tax implications on withdrawals. If you get a chance, The Money Guy has some good thoughts on when it does and when it doesn’t make sense to pay it off that is nuanced and I personally found helpful.
Jason here - Thanks for sharing, Brian! I follow the MGS pretty closely and I've seen their content on this topic. You're right - it was definitely useful.
One thing that sticks out to me in this conversation is no matter how much research you have done try and get an educated opinion from someone on the the other end of the risk spectrum. Good practice to make sure you understand the pros and cons of your allocation strategy.
Well said, Matt...we totally agree!
Couple comments around I bonds from your chat. I have read that you can covert them over to 529 and avoid all taxes so may be something to look into. Also, you can get around the 10k per year limit a tad by using gifting with your spouse and realizing the gifts in future years.
I just did this recently and love the full report that Northwestern Mutual provides. It’s all I personally need. Especially as my asset mix has become more complicated in recent years. What’s great is that the fee is higher in year one ($1500) and lower in subsequent years. (~$750). Rates vary.
Caveat - I’ve known my advisor on a services level for 12 years and the following are very important:
1. The right credentials, not just CFP
2. Experience in executing for larger clients (scale changes needs)
3. Clear understanding of the output
There are plenty of CFPs out there. It’s important to find a competent one that doesn’t just check lists off and is flexible to your needs.
This has filled gaps for me that I didn’t realize existed. Well worth the money.
Thanks for sharing, Rommie. You've raised some excellent points. Glad to hear you've found a good fit for your needs!
@@TwoSidesOfFI - Thank you both for providing transparent, well researched, and relatable content. Big fan.
Great conversation, thanks for the detailed discussion. Still cannot bring myself to touch bonds 😀
Thanks very much, Robby.
Great topic just what I was looking for.
This was the best show of yours in my opinion because of sharing some of the advisors thoughts on your specific questions. Thank you!
Speaking of, could you share the article about risk adjusted returns that made you consider a change from VBTLX to VGIT?
$1,000 for that service seems like a great value. Advisors generally command $200-300 / hour in my research so it seems very reasonable in my opinion.
Thanks very much, Aaron! Really glad you enjoyed it. We both do still hold some other bond funds, like BND or similar like AGG. But we both moved majority portions to intermediate treasuries. There's actually a lot written on the topic of the corporate bonds + mortgage-backed securities elements of the bond funds. Here's a few examples:
www.morningstar.com/articles/1074416/is-your-bond-fund-really-a-stock-fund-in-disguise
seekingalpha.com/article/4216473-downside-of-corporate-bonds
it's a bit older, but Swensen's "Unconventional Success: A Fundamental Approach to Personal Investment" is also a great resource.
Always great stuff guys 👍🏼
Thanks!
I enjoy all your shows, and this one the most so far. I appreciate you both for your honesty and your willingness to expose where you’re learning and might be vulnerable. I’m 61, still working, and DIY so far. I’ve considered seeing an advisor, but for me the $1k or so seems like it would be a lot and what they would tell me seems predictable, much like what you heard. I will have a pension that covers almost all our expenses in addition to savings, and I’m obviously not going to retire very early, but there is always risk (LTC, etc.), and I predict that I would probably hear the same things.
Thanks, David! So glad to learn you liked it. Best wishes to you on your journey.
I've managed my portfolio for over 30 years and grew it to $6.5M and recently hired a wealth management company paying 1% fees. I have to tell you I'm stressed, I don't feel like I have control over my portfolio and I don't see much value month to month for what I'm getting from that. I hired them initially to help with Roth conversions but I definitely having regrets.
Sorry to hear you’re feeling stressed. You can always change your relationship, or get a second opinion from others. Best wishes to you in resolving things.
65k/year and still stressed...I would work with someone else
For this level of portfolio fixed fee or hourly fee works best…1% fee if annual would erode more than 200k to 300k from the portfolio if compounded…
@@riasingh very true
a 1 percent fee on 6 mil that 60 thousand a year. Totally not worth it unless you have seriously complicated finances.
Great show. I am struggling w/ going to assests under management vs fee only. I've paid fee only & as we enter retirement im leaning towards fee only w/ yearly check ins.
Hi Cathy, thanks for the comment. It's definitely a personal decision as to what makes the most sense. Many like the idea of regular check-ins with the same person, as they will build familiarity with them. Sometimes this is in a retainer model but that is more expensive. If you can find an advice-only person where you can do annual check-ins as you suggest, this may be a great option. Best wishes to you!
Great discussion! Lots to think about.
Thanks, Patrick!
Thanks for great content. Fee only advisor has been on my mind. I feel like I am not where I want to be yet to “open the books” to another opinion
You're welcome, Lucas. So glad you liked it.
This was good stuff. I've talked w/ Fidelity about some of this but have, so far, been unable to get clarity on things like retirement income plans. I don't think that's their gig. But still enjoy talking with their advisor about various investment strategies.
Thanks, Tim. Both things may be true, where the Fidelity service is good for investment strategy but others may be more helpful on retirement income planning. You may well be able to find someone who can do both to your liking! Best wishes to you.
Fidelity doesn’t provide a detailed plan outside of a wealth management account. For no fee, they use standard modeling and general investment guidance, but not a specific withdrawal or income plan
Great episode! Thank you
Glad you enjoyed it, Anh!
Great Episode guys!
Thanks, John!
Awesome video. Did they advise on whether index are better in todays economic trend or index funds in taxable brokerage account and what percent allocation of each ?
Jason here - Thanks! The advisor is definitely a Boglehead so overall a big fan of low cost index funds. Each of our situations is different with respect to asset location, so Eric and I had different discussions there. The answer to your question will be tailored to the individual, and what they already have saved + where.
I always appreciate the excellent videos. Thanks.
Thanks, Tony!
Great video. Would you think it probably wouldn't be a bad idea every, say, 5 yrs, to check in with a pro, as tax and retirement laws change, etc.?
Hi Pete, great question. We've not heard of specific guidance on this point but your thoughts seem pretty reasonable to us!
Good content, thanks!
Glad you enjoy it, thanks!
I am loving your show!
Appreciate the support, Liza!
Happy Father's Day!
Cheers, thank you 🙏🏻🙏🏻
If your state offers a tax deduction for putting the money in the 529 then it makes sense to put the money in the 529 first even if you are going to pull it very quickly to pay for school expenses
I just saw that Michigan passed legislation requiring a financial education course in high school. The initial vote was 57-43. It’s a little bit mind boggling to me that so many people could be against that. Granted at that age a lot of the information wouldn’t yet resonate, but some of it would stick. Back when I was in college I still thought of the stock market as a casino.
Hard to believe is right! Hopefully more states and jurisdictions put financial education requirements in place.
As a parent of a recent graduate who went through some education (he’s a 2022 grad), it is… well, better than nothing but only so helpful. I’m now working to set him up with an account prior to college and a credit card to manage and build credit. Some things he knows from class but many things he doesn’t. I think that unless it’s interesting to the student the financial education in high school is too early - kind of a use it or lose it thing. Probably better than nothing, but I don’t think it’ll prevent the financial illiteracy that permeates our culture.
@@06dak69 you’re probably right. The information is out there for those that seek it. I just wonder if there would be any difference if financial education was made a core subject like math and hammered into kids minds early and often. It would be interesting to see if there were any difference in their behaviors as adults. A one-off, unmemorable course would easily be forgotten .
Great episode! What tools did you use to FIND the person that you ended up going with? What were the key factors in the selection process?
Cheers, we talk this through at 01:20
Great episode.
Thanks, Rob
I have not had any professional oversight or review. My wife has questioned that, especially as she is less steeped in personal finance knowledge. I have trouble trusting that I will find a trustworthy person, who will be a good fit for our style and situation. Going through estate planning, it was clear to me that having more opportunities for my wife and I to be forced to sit down together and really get on the same page and have a joint plan would be useful. We should renew our search for a good fit.
Best wishes to you in getting the support you're seeking. We have a few resources listed on the show notes for this episode at twosidesoffi.com
Hi Guys, really enjoyed the show. I appreciated you tailoring some of the segment towards those who are at middle/accumulation phase which I suspect the majority of your audience is in - I found a heap of value from where you guys said, 'hey, I'm doing X now, but if I was still 5-10 years out, this is how I would approached the question'.
The mortgage segment of your episode got me thinking. I am from Australia where 100% offset accounts are HUGE. These basically allow you to have bank account with the lender which also holds your mortgage, and you only pay interest on the net amount owed between the two. Think of it like a guaranteed HELOC which the bank can't take away as technically its a separate bank account. What are your thoughts on if access to this type of home loan would change your approach to asset allocation, specifically regarding fixed income when pulling the trigger for retirement, and mitigating sequence of return risks?
Jason here - Thanks very much, Mark! So glad you liked it. Yes, we think you're right. We love the diversity in our audience and do try to ensure we address as many parts of the FIRE journey as we can.
Thanks for sharing the details of those offset accounts. We weren't familiar with them before. Using leverage is definitely an individual decision and does have a risk tolerance piece to be considered. I'm not sure what Eric would think but for me, it certainly would make me feel good about no having an emergency fund. I'm not sure that it would change my approach to asset allocation, though I need to think on that a bit. An interesting option to be sure! Perhaps someone else will weigh in who has similar access to such a structure?
And if the Australian bank has loans in China that go bad and limit access to your account, then what?
So... at the beginning of the podcast you were like "We'll help you find an advisor" and then you were like "I found this guy on TikTok" and I was like uh... that's not a good place to find financial advisors. Thank goodness for the show notes! lol
You must've missed: 01:35
Great info
You guys seem very knowledgeable on this subject. My only thing is that two months of cash seems really thin. I get you can get money through credit cards or brokerage but is that really the way you want to get cash if you need it above and beyond what’s in the bank?
Jason here - I hold two years of cash, not months.
@@TwoSidesOfFI it was your partner as I believe you bumped up to two years?
Eric here - this comes down to your personal risk capacity. My wife and I have long-established careers and predictable cash flows so, this works well for us. The opportunity cost of keeping more than 2 mos. cash-on-hand is higher than we're comfortable with given we have liquidity elsewhere. I don't pretend this works for everyone though!
What about what age to take social security ?
That's an excellent topic on which to consider talking with an advisor, H B. Fritz @ The Retirement Manifesto recently wrote a post on this topic as well: www.theretirementmanifesto.com/how-to-determine-when-to-claim-social-security/
Can you expand on the conversation and thought around paying off a low mortgage interest (say 2.8% fixed). Because in a non-retirement situation, you would just keep paying that monthly and ideally invest into the future. But, if you are retired, what is the reason for paying off the mortgage? Trying to connect the dots there. Thanks!
Hi, Alan - Eric here replying. This is a huge topic, with lots to consider (investing horizon, tax situation, interest rates, allocation, etc.) I can recommend two resources for further reading: www.bogleheads.org/forum/viewtopic.php?t=338509 and, whitecoatinvestor.com/debt-is-a-negative-bond/
Hopefully that helps clarify!
At some point, I'll need to talk through the rationale behind using Bond funds. Bonds look like value destruction to me, especially the referenced VGIT fund which actually produced a ~0% return over the last 10 years after inflation. To me, fixed income could be far better handled by a diverse set of dividend paying equity stalwarts.
Jason here - I think I’ve explained my position plainly enough over a few episodes, so I won’t bore you by repeating it. So here’s another take: jonluskin.com/should-i-invest-in-bonds-when-interest-rates-are-rising/
I am wondering about password managers. I don’t have one but maybe I should. Do you get concerned about your passwords being compromised? Do your spouses have access go these managers in case you pass? I like the idea….
Hi, Patricia- Eric replying here...Jason recommended I use Bitwarden and both my wife + I use it exclusively. Your password vault can be set up to be shared with your spouse (which is what we do). There are browser extensions and an app for your phone so you'll have it anywhere you'd need it. Highly recommend.
Great video. I signed up with Intuit Mint coach... and they shut it down the pilot program before I can talk to them! It was supposed to be $150 for 2 hour consultation. so, Do you recommend the XY people or not really?
Cheers...check out 49:20
You both say your retired early. , but both have businesses . How old are you guys. I consider early retirement in the mid 50's. I am 60 and going back and forth on retiring . At 60 yo construction work is not fun any more.
Jason here- we are both 48. Eric is actually pre-FI. That’s what the 2024 date (his target) on screen indicates. I left my career two years ago and don’t have a business. I do pour wine one day a week as a fun “job”. But that is more for the fun (and wine discounts) than for the small amount of spending cash it yields. Earlier on after retiring I thought consulting might be fun. After a few calls I realized I had little interest in that. Maybe my feelings on that will change someday? For now I love not working.
I'm only withdrawing .8 percent did i over invest?
Or you're being overly conservative? If you're right, many would find that an enviable position. It could suggest opportunities for increased spending , whether on yourself + family or via giving to causes you care about. Best wishes to you.
Nice
The percent rule does not make sense to me at all. If I withdrew 4% right now I would be drawing more then I currently use. It seem like such a dumb simple rule, and it just does not make sense. I made a spread sheet that has my draw based on my current draw adjusted for inflation.
Hi Jamie, we agree there's too much reliance on this "rule of thumb". Like some others in the community, we think it's a great starting point for back of the envelope calculations, particularly earlier in one's financial journey. It sounds like you have a good process for your own situation. Blogs like Early Retirement Now and The Retirement Manifesto also have great content on the topic of withdrawal rate, which we've found useful. Best wishes to you.
@@TwoSidesOfFI I'm not sure how good it is, but I have put together a spreadsheet based on some that I found online. Mine takes my current spending and adjusts to inflation along with my investments. It also handles (roughly) taxes, 401K min distributions, and allows me to do one-time spending events for a given year. I also added a "Monte Carlo" simulation to see how the dice might roll. This imperfect crystal ball tells me that even though my house is paid off I need somewhere above 4 million to be worry free living to 100. More like 5 million. I'm not there yet, and the current market is NOT cooperating!
@@TwoSidesOfFI Love your show BTW. It can be hard to talk to people about how much I have in the bank. It's so easy for that to sound insulting or just bad.
I am in the process of starting a monthly fee advisory service, I am modeling a simple single page plan. If you are both up to it would love to run you through my advice to see what your thoughts are. It would be free of course. Let me know if you are interested.
What is the company name for a fee base
See the show notes for the episode to find some good resources: twosidesoffi.com/1kadvisor
wow I can't imagine being worried about 3.3%
We've all got our own perspective on risk tolerance, right? Check out our recent conversation with Karsten Jeske (ua-cam.com/video/ZXHh1gtO1lA/v-deo.html) and our episode on holding cash (ua-cam.com/video/HXeCHpFo8Ps/v-deo.html) for more thoughts on this.
Dump in 529 as cash in the case there is a state tax deduction benefit with your 529.
I wish there were, sadly there are no tax incentives for me in Maine!
I did a mix of 529, ESA and brokerage account. To me the flexibility of the brokerage account is worth the tax hit. That I think simply comes down to comfort level. There are tradeoffs.
@@mikesurel5040 I am definitely seeing what you mean in terms of benefits of using a few different sources.
@@slimdawgwoof for me is that college tuition is like car purchases. The sticker price is not what you usually pay. Over funded education accounts have tax implications, too. And if you are just a few years out or in the middle of paying those expenses, will the tax benefit be worth it? I feel that is a very personal.question.
Do you think someone 10 years out would benefit from a consultation if they already have a plan in place?
Hard to say, Anna, as this is a personal question. It could be a good time for a check-in with a 3rd party to ensure your plan is on track to help you achieve your goals. 10 yrs sounds a little far out for concern, but if it would put your mind at easy to have another opinion, the money could be well worth it.
@@TwoSidesOfFI I think we may wait a few years just to get everything in place. Thanks for the reply.
The advisor is CORRECTLY steering you two away from security level discussions toward higher level advice
42:19
8:12 😆😸😆
Get that pet a Roth IRA! Add them to the channel's payroll! 😂
Now that's some next level financial advice! Good eye, Karla...
Small business income, establishe a SEP IRA!!!
Depends on your situation, number of employees and income but usually a Solo 401k will allow you to save faster than a SEP IRA as the Solo 401k allows both employee and employer contributions.
Did FP talk about inflation and rising interest rates (from historically low levels) hurting bonds/treasury returns. I’m not sure bonds are really risk off in current environment.
Opinions vary but when it comes to risk-off assets, treasuries are about the best we have considering history to date. All assets have risks of course.
@@TwoSidesOfFI IEF (7-10 yr) down close to 20% in past year. TLT down closer to 30%. Both flat for about a decade. They sure don’t feel very safe.
@@paulturner4419 VGIT is down 8.6% YTD vs. VTSAX which is down 19.9% or 2.3X as much over the same period. It is of course true that there is no "truly safe" asset. We're talking about about diversification and risk reduction. It's also true the the correlation between bond and stock performance is not what it once was. But flat may be OK when it comes to capital preservation, no? Naturally this is more of a concern in an inflationary environment. What do you see as a viable alternative to holding treasuries or other bonds?