Can He Retire in 10 Years? (We Ran the Numbers)

23:30Does that go for Roth 401k as well, Mindy?

23:32Mindy Jensen:It does. I just looked it up because I wasn't sure. Just the contributions, not the gains. The gains would be taxable. I don't know how you figure that out because I'm not at a position where I'm going to start withdrawing from there. But I mean, if you're maxing it out every year, that's pretty easy. You know,$7 ,500 last year. Okay, well, I can take out$7 ,500 and it'll be fine. And I can take out the year before that was$7 ,000. I can take that out too. We switched over. So we used to be Roth IRAs forever in our 20s and our 30s. And then we started adding in the Roth 401k in our 30s as we built up a larger income.

24:09And recently in the past just three years, our income has gone up more than what we could have imagined. And so we've gone more traditional. I would say it's 75 % we put into the traditional now for maxing out 401ks and only like 25 % Roth. So we've made that switch to be able to account for tax efficiencies. I think that what's awesome about this is you are basically on the cusp of financial independence right now. And again, I'll go back to if you stay invested this way, market could go any which way or whatever. But if we get anything close to average historical returns over the next 10 years, you're going to see this portfolio more than double adjusted for inflation, plus maybe double again, depending on how much you contribute and add to the pile on this.

24:52So you're going to have a paid off house and it's going to start to be silly money at that point. And so this is awesome. This is a great situation. And I think that what the challenge is, if you came in and said, I want to retire right now, we'd actually have a fun financial planning challenge. At that point, it's no fun. There's no fun there because you're so far beyond it. You have fun. You have to spend more and retrain your brain to spend more at that point in 10 years if we get anything close to historical average returns. But in the current situation, I think there's a real argument to be made that we have to be a little careful because you can't quite be totally confident in your FI plan on there.

25:28But what's awesome about your situation is at this like 4 % withdrawal rate, which you're right at basically once you pay off that mortgage and the car loan, even with a little bit of snow burn, if you could bring in like$25 ,000 or$30 ,000 in active income in the first few years or in a down year, for example, that essentially totally negates the small percentage of situations that either run out of money or begin to see your accounts dwindle as you approach traditional retirement age, which is a big challenge mentally for a lot of folks. It would be for me. That's one option that's very realistic for you guys.

26:00You guys, I think literally might be able to be in a position where if you wanted to spend this amount of money, you could potentially sustain it for life. If you bring in just a little bit of income and you would significantly de-risk your situation. Our goals and our focus is 10 years down the road, mainly because our youngest son should graduate from high school in nine-ish, 10 years. And so when he graduates and goes off to college, we're using that time as our exploring us time frame, where we snowboard not a second home. We plan to bounce around to different locations, explore different parts of the country.

26:38But we want to enjoy that as well. And that's why, yes, right now, based off of basic needs and stuff like that, you're right. We're probably close to that five number, but we don't want to live a basic needs life. We want to live to enjoy it. And so that's where some of the nuance and why did the anxiety builds up a little bit as far as our spending. So it sounds like you have a five number that's larger than this. You're living way within your needs, your means now. But your goal is much bigger than that. Do you have any idea what that looks like? Yeah, our goal number is somewhere near a cash flow of between 110 to 125.

27:10And that would account for increase in medical costs, as we discussed here. It includes snowboarding for three to four months of the year and being able to rent a place wherever we want for that time and be able to withstand our current bills and spending habits, which also includes some inflated costs. because we do have two kids in sports and all this other stuff that probably goes away in that time, but I don't know. So I can't really plan for it. You're absolutely on track to get to that point. That's that, that implies a$3 million financial portfolio, essentially that will go a lot farther than what you're spending today.

27:47So it'll feel like a lot more once this mortgage is paid off, for example, that won't be a part of that. And you'll probably be debt-free by the end of this year. So what I'm reading here is how do you protect what you've built while also growing towards that number? Is that the main crux of that question? That's the main part of that one. And also, how do I fund certain aspects? Like, do I continue to pile in as much as I can to the retirement accounts like the IRA and the 401k? Or do I now set a bigger portion of that budget into the taxable brokerage, even though it's not as tax efficient, so that I can have that freedom fund, that freedom bucket for those years before those retirement accounts can be withdrawn from.

28:28Mindy Jensen:Yeah. I like that option. And it isn't like an all or nothing thing. It isn't all 401k or all brokerage. You can still, I don't know if you get any sort of company match, absolutely do whatever you have to do to get the entire company match. But then if you retired in 10 years, so then you'd be 52 and then you've only got like a seven year 72T. So you can start accessing those funds. That's a much different story. I like the brokerage idea because that is you don't have to do anything with that. Those are your funds. You can pull them out anytime you want. You're only paying taxes on the gain.

29:07Mindy Jensen:So if you sell a stock that's priced at$100 that you bought for 75, you're only paying taxes on that 25, but you still get the whole$100. So it's a lot easier to like manipulate that income for tax purposes. So you have a better handle on your taxes. I would personally, in your position, do what I could to max out the Roth IRA for sure. The Roth 401k gives you a lot of options. You can pull the contributions out at any time. But the after-tax stock portfolio gives you like all the gains too. You have access to all the gains. What I really want to focus on that Roth since 66 % of our assets are already in Roth.

29:49And our spending is going to be a lot lower in retirement than it is currently at our income levels. This is our highest earning income years the past three years. So I want to focus on bringing that taxable amount down. Here's what I'm thinking, right? So I'm going through this and I'm saying the 22 % bracket for married filing jointly starts, goes from$100 ,000 to$211 ,000 here, right? After your standard deduction and deferrals, right, you're going to be in that 22 % bracket with a good chunk of this. I think that's right. Like when we talk about the middle class trap, right, in these other episodes, we're not talking about your situation, which I think is Roth heavy and really enviable here.

30:29We're talking about people who have it all in the pre-tax side of things. And then if they want to access it early, they have to literally stop working to move into a lower tax bracket to begin accessing that money or doing Roth conversions. You don't have that problem. You did it right the whole way here. You maxed out the Roth while you were in lower income tax brackets for years, decades, clearly, to get this going. That's an awesome position. And now in the higher income tax bracket, I completely agree. right? We want to balance across these accounts, but in your situation, in your timeline with this Roth balance here, probably a good amount of principle.

31:07I would be focusing on this one. I would take your match 401k. I'd be focusing on maxing out the HSA. We'd love to get that to a hundred grand plus by the time you're hitting that retirement goal, that'll be a huge boost to you. And it'll drop you in there. And then I'd max out this 401k. And what's great about your situation is you don't have to choose and sacrifice because watch this. When we knock out this mortgage payment, you're spending drops to$66 ,000 per year. You're generating$134 ,000 even with a huge pre-tax deferral contribution. You're still generating$134 ,000 in after-tax cash generation.

31:44You're only going to spend$66 ,000 of that. You're going to build up your after-tax brokerage account anyways, even after going through this stack and adding a little bit more to your HSA and your 401k. So that's what I would be doing in this situation. I think it's very simple and straightforward from an order of operations, like very traditional here. And it's because you did it right and didn't defer for 20 years to have a huge balance here, right? As you hit your peak earnings years and want that optionality. So I think we can do a very uncontroversial or very straightforward approach in your situation.

32:15And the wonderful thing is because once your expenses will be so low after you've knocked that out. And plus, by the way, you're gonna have your vehicle payment down, right? So we can knock this down to like 150. So you're going to generate even more cash after that. When the mortgage is paid off, we're going to put all that into the brokerage, that 2 ,500 a month into the brokerage. So that's going to build that up. Should we lower that 45 ,000 in deferrals to a smaller number to pump even more into that brokerage to be able to float those years before age 60? I think if you want to get really technical about it, I'm having a little trouble getting, because it's very complicated here, but we have the HSA is going to be like 8 ,500.

32:54You're going to have a match. And if you max both of these 401ks, you're going to get to something like 49 ,000 in 2026 or 2027, the inflation is just equivalent. So if you really want to get technical, then I think that it would be hard to argue that you shouldn't do that for every dollar over the 22 % tax bracket. In the 12 % tax bracket, then we have a different argument maybe. Because this tax estimate needs to be precise because it matters and it's not yet to the way it needs to be. But we've got the one big beautiful bill tax credit for child tax credit, which is going to change your taxable income a little bit as well.

33:31There's a couple of other nuances in your tax situation that I haven't quite nailed in this particular spreadsheet in terms of how things are treated in here. But I wouldn't be surprised if you did a more sophisticated analysis, you were like, I'm going to contribute like somewhere in the$40 ,000 range, my 401ks. And that couple with my HSA is going to move my marginal tax rate on the next dollar into the 12 % bracket. And at that point, I think you've got a very strong argument for not contributing that to your 401k and building up your after tax position. And again, I think the target that we want to build is we want these to be roughly a third, a third, a third by the time we hit retirement, but we don't mind if the Roth account is by far the really big third.

34:12That's a great situation. So that's how I do it. And you want a little bit in your HSA as well. That one would be really nice to bump up to 10 % of your position if you could. I've been using that as kind of like a payment plan for the medical bills and stuff like that. I know it's not the FI thing to do, but that's where I put that money in the bucket and that's the bucket that's paid for medical expenses. I would quibble with you there, but it doesn't really matter because you're doing everything else right. But I think it's a great, like you got a great situation here. As far as taxes go too, I will let you know that my salary is not a salary, it's commission.

34:46I earn what I make. So I put in basically what is expected, but the variation in the past, let's just say take the five years. Five years ago, our household income was like 125. Last year, it was more like 340. So it varies so much. And I mean, it just, it's hard to predict where I'm going to land each year. What I might consider in that case is wait to contribute to these traditional accounts until closer to the end of the year. So this is perfect. You implicitly already do this. You have a large cash position. That's going to be almost three years of expenses once you pay off your mortgage, right?

35:27By the way, I don't know why you wouldn't just pay off your mortgage and your car loan with this cash position right now, or that will reduce your expenses. Five weeks, Scott, five weeks. Okay. Fair enough. Okay. Now we're sitting there and we're saying this number is really variable, 125. So if that number is huge, then you max out the pre-tax and you say, I'm going to hit everything over this. You pick 22, 24, or 32 % bracket. I think in your case, I like the 22 % bracket, but if you had a huge 401k balance already, I might just pay taxes on that and begin building out something differently, but you did it so right for the last 20 years or whatever that we can do the classic playbook in the situation.

36:03And then I think if it's lower than that, so let's say you have a bad year and it comes in like at 100, then all of a sudden everything's going to be in the 12 % bracket and you can just max out the, I would still max out the Roth in your situation because this accumulation rate is so huge. Why not put the Roth contribution to the limit and then put everything else in the after-tax brokerage? But I think you can choose and you can do that towards the end of the year when you have a better line of sight into what bracket you're going to be in. And I just do it 100%. Like when I did this at work, I would literally have a cash transition like yours and I would have 100 % of my paycheck going into the whatever retirement account until it was maxed.

36:39And then I would make the next decision because if you're going to do it, you might as well put your foot on the gas and do it the whole way. I did that for a couple of years when we didn't have in between mortgages, when we paid off one house before we started the next, I would basically have 50, I think it was like 50 % of my income Going into the retirement, I'd max it out by, I don't know, April, May, and then have the cash flow to do whatever the rest of the year. That's perfect. That's changed with having the mortgage.

37:04Mindy Jensen:Do you get a company match? My company has one where it's a safe harbor. So it doesn't matter if we put in or not. They automatically put it in. My wife's, it is based off of, yes, how much she puts in. So I think she has to at least put in 6 % or 7%. And it's only if they have a profitable year and they do it all lump sum in January or February or something. Okay. I want to just point out to anybody listening who has a company match, make sure you talk to your HR department. Some companies will only match when you're putting in that paycheck. So you lump sum it in the front and then you miss out on the match towards the end of the year.

37:42Mindy Jensen:And you might not realize that until after you've lump summed it. So definitely make sure you, if your company has a match, you know how they're matching so that you're maximizing your match as much as possible. I've heard stories of that. I'm like, oh my goodness. And you only learn this after you lump sum it. So you miss out on the match the whole rest of that year. And that's an expensive lesson. I've never worked for a company with a match. So we always just front loaded and just 100 % of the salary went into the 401k until it was maxed out. That's right. BiggerPockets did not have a match program because we did a safe harbor.

38:17Yeah, you did a safe harbor. So that should be a good incentive to sell more because every time you sell more, you also get the 3 % more safe harbor. Yep. What's also remarkable is that this has been going on for a while, the sales job. No. So after we paid off our first house, that is when I was like, all right, I have now the relief of like the stress and stuff like that. I've been able to have to pay for this mortgage that I was like, all right, let's try this position that, you know, I feel like I could do. And that's when our income exploded for the last four years. And it's a great earning avenue for us.

38:49Okay. So you're asking us all these questions about how you're going to retire with$3 million. I'm an optimist about this, sometimes too much. But I think in five years, you're going to be like, well, this is dumb. Why am I waiting until 52 for this? Because I have all this optionality right now. I can probably sell some things while snowboarding right now and live a very fire version of life in there. So I think that day is coming sooner than you think based on what I'm seeing here. Maybe don't retire, but you just generate a little bit of the sales income that totally de-risks traditional. And that is an option that I have thought about, I've discussed.

39:22I generally like my job. I like working. I like doing stuff. I like servicing for people. And if that comes with the freedom of being able to live where I want to, then, yeah, I could see myself working longer than even what the original plan is. You mentioned protect what we built. That was your second question when you came in. What does that word protect mean in this context? We discussed the optimal portfolio mix and the taxable brokerage and various arguments there, but we did not discuss this question. It's a sequence of returns type of question. So we're here early to mid 40s now, and we have this 10-year time frame.

40:03So it feels to us, man, this is crunch time. Now we have to get our stuff together. We both started investing in 2001, right as everything was tanking with the dot-com bubble. Then we both lived through 2008. My wife lost her job for eight months. I mean, we were living off of, I think, and my pay at that time got deducted by 25%. We were living off of$28 ,000 a year. We know what these cycles go through. And so we're just apprehensive. How do we avoid a 50 % drop in the next 10 years? because to rebuild that back up is a very daunting task. Okay, so we got several options here. Now we're getting into territory.

40:44We don't provide specific investing advice here. Yes. But let me give you some resources because I love this question, right? Because here are risks I've been worried about, right? Like CAPE, the cyclically adjusted price to earnings ratio, even if you go to Karsten, I've been going down the big earn rabbit hole in particular lately on this. And even with his adjustments, it's at a very high ratio. And that is a real threat to 4 % withdrawal sequencing. And people argue that, but I think he's done really rigorous research on that. You should definitely check out Early Retirement Now and begin diving into that because that'll get you more comfortable with these risk profiles.

41:18I think that one potential answer to that or various options to begin exploring to address this concern is one, the Paul Merriman website. So we had Paul Merriman on recently. He is fantastic and has done a lot of research around growth portfolios. And he's got a couple of different portfolios. Let me see here. Basically, you can factor tilt your portfolio. So you could say, you know, US, I'm going to tilt to US and international, or I'm going to tilt to I'm going to have 25 % in large cap growth, like the S &P 500. You know, I'm going to have 25 % in small cap value. I'm going to do the same thing, 25 % in the international equivalents there.

41:57And you can do all these different variations of that, that, you know, the whole market can go down. So you can lose big no matter what you're investing in here. But you might get a little different flavor of those returns, right? Like the dot-com crash, someone who had a 50-50 large cap and small cap fund had a very different experience for the next 15, 20 years than someone who was all in the S &P 500, for example, right? There's tradeoffs. There's only tradeoffs. There might be – there will be complexity with that. There will be rebalancing, and there will be – there are still return profiles that will be different over that time.

42:27But that's the rabbit hole to go down if you want to stay invested in growth portfolios for the next 10 years and maybe at least gets a different flavor of return profile than just the S &P 500, for example, if you're starting to think about this word protect. The other option on the farther extreme is going to be something like Frank Vasquez's risk parity portfolio. So a risk parity portfolio is going to have exposure to a variety of different asset classes. We're going to try to get very – ideally things that are totally uncorrelated or even negatively correlated with the portfolios. The problem with a risk parity portfolio, and I think Frank has done wonderful research on this, is for someone who is as young as us, right, you're early 40s and I'm in my mid-30s, there's a real drag on the portfolio returns over the next 50 years that we might live in.

43:22So that portfolio might be suboptimal, might not have enough growth tilt depending on how you build it. There's a bunch of different flavors of risk parity that you can build as well. But those would be the two things I'd point you towards in terms of optimal portfolio mix. Again, noting that once we start saying, here's what to invest in, we begin to find ourselves getting in trouble here on BiggerPocketsMoney. Speaking of the risk parity portfolio, how's your$10 ,000 portfolio, Mindy, that you guys did and withdraw, what,$7 a month or is it$40?

43:51Mindy Jensen:It's$42 a month, which is over the course of a year would be a 5 % withdrawal. I started with$10 ,000. I have withdrawn$42 every single month. And my balance right now is$11 ,015.97. So gold has been my biggest performer. That's what I'm selling every time I'm selling something, trying to rebalance because it just keeps going up. And I didn't want to put gold in there, but Frank told me to, so I did. But yeah, I keep withdrawing and it keeps going up. And this past performance is not indicative of future gains, but it's been a good one. Awesome. And it's only been since July, but it's been a good performer since July.

44:33Mindy Jensen:And we've had some up and down in the market with the war in Iran and the tariffs, and then there's no tariffs. And then so the market's been up and down and up and down, and it's still chugging along. I have more money in there than I started with, and I've been pulling it out. What's fun about investing is these three guys who I really respect all three of them, Frank Vasquez, Paul Merriman, and Karsten Jeske from Big Earn, all have conflicting opinions on what's best here. And I think they're all right in different scenarios for different goals and portfolio allocations. So I think that's fun.

45:11But that's the rabbit hole I'd point you down, I'd point you towards. If I had to guess, I would imagine you'll find Paul Merriman more your current flavor and you'll find, you know, Frank and Karsten's conflicting arguments more appealing once you actually start trying to pull the trigger and live the fire lifestyle. That'd be my guess, but I don't know what you'll end up actually doing there. One of the things that I get caught up in all the time since I can choose my own flavor there is just all the different options. Whereas the 401k, you only have these options that the company provides for you.

45:46In the brokerage, I am all over the place. I, you know, VU, QQQ, you know, VYM. Those are my stalwarts. But then I get into like REITs and, you know, small caps, large caps, all this other thing. I have like 20, 25 different options when I know I shouldn't be in all of those. It's just any advice on how to control that urge to just diversify everything.

46:15Mindy Jensen:VTSAX diversifies everything. Then you own it all. I also kind of struggle with that. We are trying to streamline it a little bit more, but I don't know that we're actually going to do very much of it. Why don't you want to have all of these positions? I just think it's overkill. That's why I say I have those three core funds, you know, the S &P 500, the technology, and then a dividend fund. And then the rest are just kind of like supplements. Do you enjoy having them or does it cause you stress? No, I enjoy it. Then there's no reason why you shouldn't. I think it's not optimal. I have like REITs and stuff like that.

46:55It's like in a taxable brokerage, I know it's not efficient, but that's where I get caught up is like, is that the right thing to do? I think that a good exercise, something else Mindy and I are working on is an investment philosophy template. So we'll provide like a starting point of draft of like, here are the things that we like at Bigger Puckets Money in here. And we love index funds in the passive portfolio. And we also love the alternative space in there. And there's a role we played in each of those. And we believe that a lot of people have unique skills or unique interests that make all these alternative plays very appealing for them.

47:32And the income from those reacts with what the optimal portfolio looks like for them in the context of more traditional finance, right? So like someone with a rental property may need a different type of traditional assets there. I think that if you write down an investment philosophy and commit it to paper, and you can write it as a draft and sit on it for a year or two and evolve it. But that might be the tool you need to feel comfortable with your approach. But I'd also argue that at this point, you're talking about a very minimal tax drag on your portfolio. If you make this decision right, what we talked about earlier, and you have a good thesis for why you are deferring based on your income tax bracket, that's going to matter far more than 10 % of this after-tax brokerage position being tax inefficient because it's in a REIT instead of having that income.

48:21hitting your Roth or your traditional account, right? I mean, you have 83 grand in your after tax portfolio. It's like 5 % of your liquid financial portfolio. Yes. As of now, and just with my goals, it's going to start getting bigger as we pay off the house. Cause then it's, I'm going to be funneling a lot more in there. I'd like the idea of making the mistakes while it's small and then getting more optimal as I grow it. The textbook play, I think would look something more like having your income, if you have it, hitting in your traditional, your growth, long-term growth, hitting primarily in your Roth and the balance of the two hitting in the after-tax portfolio, avoiding the active income in your earning years, if you can, hitting in that after-tax position.

49:07And that framework will get you most of the way towards tax efficiency, I think. Makes sense. How are we doing? Still answering your questions here? Is this what you're looking for? Yeah. I mean, you've touched on everything. That's the key points here. The medical, that's the highest anxiety point that hits me each day. And then the rest of it is just like, yes, should I be the 4 % or the 3.5%, which we touched on, and then how to model that in between the tax deferred, taxable, and Roth. And we touched on that as well. So yeah, I think we touched on everything. I think if you said, I want to retire today and never earn another dollar, I would say your friend is bigger at early retirement now and his more conservative case.

49:52And when you get to your goal, you're going to be fine at the 4 % rule, paradoxically, most likely, because you're going to have overshot to a certain degree. And I would also say that you can spend even more than that if you're willing to earn some active income starting potentially much sooner, which I think is probably where you'll, if I had to guess, where you'll land in the next four or five, six years or just doing something you like or enjoy. And I bet you that if you keep your expenses, your core expenses this low, you're going to have that feeling of freedom very well justified within five, six years with my hope.

50:24We'll see. I would love to, you tell me if we're right on that. Five years, I'll have to check back in.

50:30Mindy Jensen:We'll be here. All right, Carl, thank you so much for sharing your numbers with us and for sharing your time with us today. We really appreciate it. And we will talk to you soon. All right. Thank you, Mindy. Thank you, Scott. All right. That was Carl and that was his specific financial situation. and his specific goals. And Scott and I were answering those questions, but I think there's a lot of people in our audience who have a very similar situation. Scott, what did you think of Carl's position and my comment that our audience has a lot of these same problems? I think you're absolutely right.

51:01I think it's a great challenge. And I think what's awesome about this challenge and what we're learning about investing and optimizing for some kind of early retirement is two frameworks, right? One is there's a very simple path to building wealth, right? We know that, right? JL Collins, VTSAX or whatever it is, you know, we can't say specific funds or whatever, but you know, like the S &P 500, boring old-fashioned index funds. And that's great. That is an optimal way to passively build long-term wealth. Once we start kind of wanting to move a little more towards protection, however, that philosophy breaks down and we need some other version of that.

51:38And there are multiple schools of thought that I don't know if I have my fully formed framework around yet for myself, much less other folks. We have very good opinions from Paul Merriman, very good opinions from Frank Vasquez, and very good work done by Karsten Jeske over at Early Retirement Now. But I think that's where it gets a little more nuanced. That's fun. And the second major framework for someone in this position is, what should I be doing with my retirement accounts here. And I think that what we do know from Cody Garrett and Sean Mullaney is that the right answer or it is some kind of balance, having funds in the taxable account, having funds in the Roth and having funds in the pre-tax and HSA.

52:19That approach, when you have that framework in mind, you can begin to kind of move the needle there. And then it's what tax bracket am I in today and what tax back I'm going to be in tomorrow. And so it's always a custom, you know, analysis of what's the right answer. But if you apply those two frameworks, you can get pretty close, I think, on your own to getting a more right answer. It's always a guess in the end as to what's optimal. But in his case, I thought that his pre-tax balance was light. And so there's an opportunity to defer taxes now. And after he pays off the mortgage and the car, his after-tax accumulation will still be huge on an annual basis, building up his after-tax brokerage position.

52:58So that was my flavor on that. But I think plenty of people will disagree. And if you do disagree, please leave a comment here on YouTube. We'd love to hear different opinions on it. I think that this is a place where smart people can disagree.

53:08Mindy Jensen:Yes, absolutely. I think that you are correct, but also his timeline is about nine or 10 years. He's got such a great base. And I mean, he's two thirds of the way there. So even if he just lets it grow for 10 years, it's probably going to, he's probably going to get there anyway. And that's actually not something I even thought about until we, I'm looking at these numbers right now and considering his timeline, he's got a kid who's not going to graduate high school for about nine more years. And a friend of mine once said, you are only retired, like truly retired when your last kid leaves school.

53:49Mindy Jensen:You're, you're not really early retired, even if you're not working. If you've got a kid in school, not homeschooled, but in an actual school, you're location dependent anyway. So I think he's going to just continue to put money into these accounts. Honestly, does it matter where they go? Not really. He's going to be in a great position. He will probably get to 10 years from now with 5 million of his$3 million that he wants. I think there's a good chance he outperforms as well. And I, you know, I mean, I'm always very conservative and cautious about the markets and those types of things, which is why I'm so fascinated by these different schools of thought with Frank and Big Earn and Kitsis and Paul Merriman and all that.

54:28So I think there's really fun stuff going on there. But I also think that he's so close to being financially independent. You can basically defray so much of this sequence risk if you earn a little bit of money, right? If he earns 30 grand a year, which should be no challenge for him in his sales role on some kind of part-time basis or for some certain clients in there, that's half his spending, right? You almost never have to sell a portfolio. If his financial portfolio is$1.4 million and it generates 2 % yield across that, then he's covered his entire expense set, which is between those two items there.

55:04He doesn't have to sell – he doesn't have to actually liquidate any part of his equity position, and then he just let off the cash flow between those two things, and he'll be in a low tax bracket. So that's the last piece, I think, that in situations like this, I would argue many people are much closer to having the version of freedom that they want than they think as they're approaching this, if they start putting that into their minds.

55:25Mindy Jensen:I would argue that as well, Scott. I think a lot of people are a lot closer, and they've got this what-if syndrome. What if, what if, what if? well, you know what? There's a lot of what ifs that you can throw out there. What if the market crashes by 50 %? I read this great quote by Michael J. Fox. It said something like, don't worry about the worst case scenario. Chances are it's probably not going to be like that anyway. And even if it is, you'll just live through it twice. So don't worry about if the stock market's going to crash or if you're not going to have enough money for retirement. If you truly have the 4 % rule money.

56:04Mindy Jensen:I mean, what did it say? Kitsis says everybody's super conservative and they're way too conservative and start off at four, but then bump it up to 10%. There's so many different options for people who get themselves to the position of financial independence in the first place. I think they're really just borrowing trouble. What if I have almost a million dollars my Roth at age 42 and my kid, by the way, did you see that the 80 grand in the beneficiary account, which I'm assuming is the college fund for his kid who's nine years away from graduating high school, right? So, so I mean, the college is funded.

56:35We're all set. What if I could spend the next 10 years doing something I'm really passionate about, easily cover my living expenses and have plenty of extra spending money from the portion of my portfolio that is liquid right now? What if I could do that instead of grinding away for 10 more years and my health, my wellness, and some passion project develops in an incredible way over those 10 years? That's another what if as part of this. And that opportunity is going to pass too. So there's only trade-offs in personal finance.

57:02Mindy Jensen:Yeah. And why do we, what if the bad, but not the good? What if the good too? I always, what if the good and people complain about me being optimistic. Okay. Scott referred to an article that he wrote on our website about insurance. I am going to include that in next week's newsletter. So if you're listening to this episode now and you're not subscribed to our newsletter, you can rectify that right now by going to biggerpocketsmoney.com slash newsletter. And if you want even more financial independence information, you can follow us on Instagram, Facebook, and YouTube at BiggerPocketsMoney. I also put a call out here.

57:37I am now starting to find myself, I'm loving this. I'm having so much fun building this tax analysis for personal financial statements. I want to model out healthcare costs as they rise, So we can all model this problem on BP money and all that kind of stuff. I'm going to do it over the next year or two. But if anybody out there is interested, is very detail oriented and has a skill set in this stuff, I would love to reach out. Happy to attach your name to it or potentially we can work out some kind of small payment or whatever. But if anyone in the BiggerPocketsMoney audience loves nerding out about this stuff, I could definitely use help making sure painstakingly that these tax brackets are right.

58:15updating them every year, trying to figure out how to map healthcare costs to the right places there, all that kind of stuff. That's a modeling challenge. It's very solvable, but it's a lot of detail work. And if anyone out there is interested in that and wants to help contribute to these free resources, please let me know, scottatbiggerpocketsmoney.com. It will help me speed up the process here, which I tackle in spurts.

58:34Mindy Jensen:All right, Scott, should we get out of here? Let's do it. All right, that wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Minnie Jensen saying, chop, chop, lollipop. I think that filing my taxes is among my least favorite activities on earth. That's why we've partnered with a new tax planning firm here at BiggerPocketsMoney. They're a tech-forward, AI-integrated CPA firm that works with high-income business owners and professionals year-round, helping you find tax savings and plan ahead instead of just showing up when it's time to file. If your income is getting complicated, but not so complicated that you can justify$10 ,000 in accounting fees every year, our new partner in Gelt is worth a look.

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