DO THIS for a Happy Retirement (feat. Wes Moss)

21:25Brian Preston:Well, I think one of the reasons Brian did it so poorly in this draft is he's already let it known. He's never going to retire. So he doesn't want to be a happy retiree. He wants to be a happy worker. And I think right now you've already got the five close friends. You've got a couple income streams. I don't know if you sleep eight hours a night or not. But you're already doing the things in retirement right now that would make you happy. And I think that's awesome. Even though you came in. Bo, you bring up a really, this is an interesting point. Again, this is surprising when I get this data back.

21:55It's the most arduous part of this whole process, but maybe the most fun because it's almost like you're sifting for gold. And once in a while when it shows up, you're like, oh, wow, whoa, that's something. This chart, guys, where this is a question that was asked through the research on, are you able to say yes to this question, which is I am retired or I'm in a position to not have to work? Even though I may be working, I'm in a position to say yes to that. It really is a financial freedom question, but it's also I really don't have to work and I'm not working for some people. The difference between the non-retired group and the retired group relative to the happiness baseline.

22:42So I look at this as like alpha. If you're above this line, you're doing something right. If you're below this line, you're doing something wrong. There's a 21 % jump when you say, I'm in the position to stop working.

22:53Brian Preston:Yeah. Financial freedom. 21 % jump. Financial freedom. It's huge. Yeah. It's one of the reasons why we do this is because we do believe that it's possible and it's attainable. And it's something that everyone can achieve. It's why we choose every Tuesday at 10 a.m. to show up right here to answer questions and load our folks up. So right now what we have is we have the team out in the wings collecting questions. And if you're willing, we'd love to just kind of answer some questions from our audience. Reby will throw them to us. So if you have a question, you want to get our take, you want us to weigh in, make sure you get it in the chat.

23:29Brian Preston:It can be about financial planning stuff. It can be about retirement. It can be about happiness. Whatever you want to get our take on, we believe there's a better way to do money, and we want to load you up. So with that, Creative Director Reby, I'm going to throw it over to you. Yes, I've got a retirement question queued up from Travis. But first, to my MoneyGuy family, remember to go to moneyguy.com slash early access today if you haven't already, because we have a secret project, big announcement going on behind the scenes. And if you want, we've already had two hints sent out to this list.

24:04We've got a third one coming very soon, plus actual early access to the secret project. So if you want in on the secret. Can I share one of them? Because I saw it this week on the newsletter.

24:15Brian Preston:Can we share the hits? I saw one on the newsletter and I was like, ooh, I finally can say that out loud. It's free. It's free. That was revealed on the newsletter this weekend. Whatever the secret project is. It's completely free. It's completely free. So yes, go to moneyguy.com slash early access. Get on that list today so you can actually see that third hint drop. Be part of the guessing. Be part of the secret channel in the moneyverse. And then also actually be the first to know and get the early access. I don't want you to miss out on that. So I just wanted to throw that out there. Hey, can we give away Tumblr today?

24:48Or is it not a Tumblr day? We can give away Tumblr. Let's give away Tumblr. And by the way, I'm doing a renewal on the Tumblr. They've gone up 15 to 20%. So you're now getting Tumblr that are worth, that are literally appreciated. So we're going to start charging. They're literally appreciating with how things cost for us to replace. All right. Let's head back to Travis's question. He says, once I retire, in what order should I draw from my taxable brokerage, traditional 401k and IRA and Roth accounts to minimize taxes? What do you guys think?

25:21Brian Preston:Yeah, so we get this question all the time. We talk about like when you're building, when you're saving, when you're adding in retirement, there's generally an order that makes sense to follow. We call that order the financial order of operating. You're rounding the thing up. If you're following the financial order of operations, you're likely naturally filling your buckets in that way. You're getting money in the Roth and then in the pre-tax. And then usually, at last, you get money in the after-tax bucket. When it comes to distribution, or even as you talk to retirees, Wes, where do people's money come from?

25:49Brian Preston:Like when they go to start creating an income stream, how do they think about pulling the money out? Well, it's a smart question. And it's one of the, I would say, the unsung hero when people stop working is management of your tax bracket. And we have so much control once we have stopped wage income. We've got distribution. We can choose which accounts we want to take out from. And there's a lot. Of course, there's the Roth, right? That's the quant of all accounts because it all comes out tax-free, and that's amazing. So we can always look at that depending on the balance, depending on how large of a piece of the equation the Roth is.

26:29But I love being able to, and again, depending on the balance of the, and this is why it's so important to have after-tax money as well as retirement money. But if you, let's say you have a relatively good proportion of each, then what I'm thinking about, if we're not talking about conversions, let's say we have a low, we stop working, excluding Roth conversions here. I love to be able to look at an individual account and see where I have my gains or not. And if I can manage taking$50 ,000 out or if a client can take$50 ,000 out and have zero taxes because you're essentially looking at positions that don't have big embedded gains, then you can dramatically drop your overall effective income tax in retirement.

27:21I mean, you can be at zero in long-term capital gains. You've got to have a lot of wiggle room even taking gains if your other income sources maybe don't get you over a certain threshold. So I like going individual, supplementing with the Roth, and then at some point you're going to have to take 401k money because of the RMDs, but that we have little choice unless we've already converted. I'll add a little bit of flavor. I always say, because Bo alluded to it, if you think about the financial order of operations, you're going to fund your Roth first because that's step five. Then you're going to load up the 401k and the traditional side of things, the tax-deferred.

28:06So that's going to be your second savings account. Then usually most people, not until step seven, do they really have, beyond their emergency reserves, do they have the ability to start doing taxable brokerage saving. So you think about that. You did Roth, traditional, and then you did after-tax. In retirement, you go the exact opposite order. You go after tax because exactly what Wes said, you can get access to that money very easily. And then I like, and I'm not going to take Roth conversions off the tables because the second, you're probably going to have the ability because of the manipulation you were talking about to do, you're going to get the tax rate so low, you'll start turning that traditional into Roth assets.

28:44So that's why, and then even after you start living after beyond the Roth conversions, you'll probably start pulling out of because you're on a race with the government to beat the required minimum distributions. So you'll probably hit the traditional. And then you save your precious. Because I know everybody in the fire community and so forth tells, hey, you can go get access to your basis for your Roth. You'll want to use your Roth. No, you won't. You'll want it because your Roth turns into your legacy. Because you're like, my kids can inherit this and get 10 years of tax-free growth. I hate paying taxes.

29:17is I want my kids to inherit this awesome tax-free growth. So the last account you'll touch is your favorite child of the three accounts, which is your Roth. So you're going to do it the exact opposite way.

29:27Brian Preston:I agree that the only thing, the only small thing I'll add is in practice, like this is all like academic and theoretical. In practice, what actually happens is the order changes a lot based on number of things that you have going on. I just wrote down a few. When you take social security will affect when you begin to draw to different accounts. Once you start that, it's going to do it. how you handle Medicare. If you're going to hit with IRMA surcharges, when you have to take RMDs, the size of your RMDs. Are you an early retiree and you have to figure out how to stay below some sort of subsidy level?

29:57Brian Preston:Are you available for 0 % capital gains? There's a number of different years, times, seasons, and periods where your strategy might change. It's why personal finance is so personal. It's why oftentimes this is the stage where it does make sense to retouch a professional to think about hiring someone to help you navigate that. Because maybe your strategy from 55 to 60 looks different than your strategy from 60 to 63, from 63 to 70, from 70 to 75, and from 75 all the way out to 100. And you want to make sure you're doing that well. I think it's not a one size fits all. Way to bring it all together, bro.

30:32Brian Preston:I do what I can. Thank you for that. That was good. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs.

31:11It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Well, Travis, thank you for the question. Just email winner at moneyguy.com if you would like a Tumblr since Brian has dubbed this Tumblr Day. You're welcome. I felt like I would punish myself even more.

31:44So this is a Tumblr.

31:46Brian Preston:This is a Tumblr. Do you want to tell them about what's so special? Okay, it's actually a transforming Tumblr. You are using it since it's holding nice, crisp, cold water in it. You're actually using it as a Tumblr. If you notice, it just shifted and changed into a koozie. So this thing, it is a dual purpose. It's like the Swiss Army knife of beverage. Yeah, that's a mustache on there. I know you're asking. That's a mustache. That's because I can't grow mustaches. Bo can't either, but he attempts to try. So I felt like to be in solidarity with my friend Bo, you know, I would put a mustache on my Tumblr.

32:21There has been Tumblr inflation. There has been Tumblr inflation. And you are the beneficiary of that Tumblr inflation. All right. Next question is from RiverSniper09. It says, hello, Money Guy team. Currently expecting and due in March. So congrats. Oh, wow. Baby. We have an HSA with a$3 ,600 annual employer contribution.

32:45Brian Preston:Wow. Recently, you have mentioned Cadillac plans for years of birth and things like known medical expenses. Is it worth changing plans? The classic question. Should he keep that HSA or consider the Cadillac plan? I hear you talk to young people all the time. Yeah, but me and Wes, we've been out of the baby stage for a little bit. You're probably the closest. Oh, sure. So I'll let you over the top. I'm 10 years out. Okay. I'm not that many. Well, I am 10 years out, but I just kind of kept rinsing and repeating. Yeah, so we tell people, obviously, we think it makes sense at Open Enrollment to review which health plan makes sense every single year.

33:25Brian Preston:It's not like just to set it and forget it. And we love HSAs. HSAs. We love high deductible plans because you're able to get triple tax advantage. You put money in, you can grow, you can pull it out tax-free. But in those years when you know you're going to have big medical expenses, and for young people, one of the biggest medical expense years will have is when you do start a family, when you do start having babies. If you have a highly subsidized, very low cost plan, or even if it's not highly subsidized, it can often be more expensive. If the coverage is great and you know you're going into a year where you're going to have those types of procedures, those types of costs, I think it makes all the sense in the world to probably switch to the Cadillac plan, even if it's a little bit more expensive from a premium, so that you can have that covered.

34:06Brian Preston:And then once you've done that, once you've made it through that expensive year, once you've made it through the childbirth and all those sorts of things, next year you go right back to the HSA. I think there's nothing wrong with that. And I see a lot of people, a lot of, a lot of young people do that, but you got to do the spreadsheet, add up what you estimate the cost to be under both plans, what the premiums are under both plans, what the tax benefit is, what the employer subsidy is, and then figure out mathematically which one puts you on top. Yeah, I would agree with that. I mean, it's hard to not want to continue to contribute to HSA long term.

34:38But I guess in real life, if you have a really expensive year, you're going to end up spending, you might spend all of the HSA money. It might be gone in a year. And that's the lumpiness of parenthood. I have four kids. And I go back to some of those years of the initial year is always really expensive. So maybe the Cadillac plan works even better. But then you've got potential extra medical costs. If you have a kid that gets sick and you don't, that's the other thing that you don't know when that's going to, if or when that'll ever happen. I've had that happen in my family. So it really, you've got to assess your family situation.

35:22I would be curious because it said the employer is contributing$3 ,600. Which is huge, by the way. That's a big employer contribution. Because usually most employers, you know, realize most employer health insurance, they're usually doing like at least a 50 % subsidy behind the scenes. So and then for them to come on top and put a$3 ,600 contribution in the HSA, I mean, I would consider this the hug your employer today. you know go to work actually say thank you to your employer they're being so generous

35:54Brian Preston:HR recommendation well but it is one of those things I'd be curious if they're that generous with the HSA what are they doing what type of insurance are you doing on the Cadillac side of things with the PPO because you might find I mean look my wife on our first job she worked for a fortune 500 company I kid you not I think our first child caught us the first ten dollar copay That was it for the entire chopper? She was fortune five. I mean, the benefits, believe me, when she left that job, it was like, holy cow, are we really giving up these type of benefits because they loaded you up? So I think it is, back to Bo's point, it's a math equation.

36:32Some of these plans on the PPO side are so generous that you probably want to be strategic, especially on years that you're growing your family. But do the math. Don't just assume because you know what that does to you. So just actually go through the mathematics of the exercise, and I think you'll find a clear winner.

36:51Brian Preston:Congratulations on the pending baby. That's awesome. Love that. River Sniper 09. Just email winner at moneyguy.com if you would like to do it. What's a river sniper? A fisherman. Oh, look at you. Someone who fishes, and they're like. That would make sense. Is that like somebody that's doing fly fishing, you think? I would guess. River Sniper. Because it's a river. That kind of gives away the fly fishing thing. I would think that's what it does. Both hangs out with a bunch of operators. You could be also a fish. You could be gigging as well. There you go. That's a thing. That's a thing. Could be the sniper.

37:20Let's move back into the topic of retirement with Devo 6912's question. How do people with guaranteed retirement income, a.k.a. a pension income, then delayed Social Security, differ from people that exclusively are living off their 401k investments and take Social Security before 70?

37:40Brian Preston:I'd be curious. and some of the research you did, did pensions come up a lot? Did guaranteed income streams come up? Does that lead to a higher level of happiness amongst retirees knowing they have fixed income? Do they think about retirement differently than others? So here's the, I know that we, in our industry, we'll get every month there's a new study from someone that says Americans say they need this in retirement, right? It's like this insurance company, this annuity company, this wealth management company, and it's 1.25 million or 1.75 million. So there's a lot of research around the amount you need to have in order to fund your lifestyle.

38:26My research is actually in reverse. It's really not that. It is, all right, what's the happy population have? And how are we moving the meter, what I call happiness alpha, which is above the U.S. baseline. So we take the whole population set. This is the average happiness level. The money green zones I talk about in this book are based on what level of assets moves the meter on the happiness level. And a lot of that comes back to the peace of mind and the war against the fear of running out of money, which 39 % of millionaires still say one of their primary fears is running out of money, even millionaires.

39:11It's still one in four with the three million plus group. Are still afraid of running out of money. Yeah, as a top or primary concern. So the way I would look at this is that I would look at, I think of it a little bit more because there's a separate money green zone on the amount of income. And we had it in the draft. It's an important one, 100K plus. That's a money green zone from an income perspective. But what I would say to Devo, my real thought is that a pension can influence your investment allocation because you can look at the pension and then essentially look at the value of that and say, well, that's a big part of my fixed income.

39:55Right. So I look at that. It's great to have multiple income streams, but if we're safely able to get to the$100K level of annual household income, that's a money green zone as well. So I would look at the pension and say, well, what is the pension worth? You take the annual number, divide it by 5 % or 6%, and you get a larger amount that you could say, oh, well, that's worth$500K. If it were an asset, that means I've got an extra$500K in safety assets. And so I look at it as how does that impact my long-term asset allocation? Love that. I had written down two big things, and both of them, I think we've covered kind of both of them.

40:34I look at if you have a pension or guaranteed money, the size that you need to have that happy retirement is probably going to be much lower. That's why you see a lot of studies that teachers are good with money. But I think a lot of it is same with retired military people. They have huge pensions that come in, good pensions that come in. That means that they very well, you can have a very successful person that doesn't have a million dollars, but their retirement cash flow is covered. But Wes is exactly right, too. The second thing I wrote was asset allocation is impacted because I had a conversation with two retired educators.

41:09One was retired as an assistant principal and administrator, and then his spouse was an educator. And they have so much money coming in that they're now thinking legacy because they don't even spend what the pensions come in. So now their asset allocation is going to go beyond their life so they can think about grandkids' educations and other things like that. So that's what, Devo, when I'm looking at this, you have to ask yourself, what camp do you fall into? Does this impact your savings rate? Because maybe you have your employer putting in 12 % a year for you, so you don't have to put as much into it.

41:47Or is this impacting your retirement and how you'll shape that asset allocation?

41:51Brian Preston:And then I would just note that not all pensions are created the same. One thing I'd want to know is, okay, based on this pension, if I am going to let it change my allocation or change my savings rate, how confident am I that that pension is going to be there and be fully funded by the organization or entity that's funding it, that I have an extreme level of confidence there. Because what you don't want to do is say, okay, I'm going to count on this retirement income to be there for the rest of my life. And then something happens and it goes defunct. And all you have is some fraction of that.

42:19Brian Preston:And if you are a person that has a pensionable benefit that's coming to you, it's going to affect the planning you do in other areas. If you have pension income coming in, you may very well decide to delay your social security as long as you can to get out to age 70 because you've at least got your living expenses met. It may affect how you think about Roth conversions, how you think about the other planning that you're doing in retirement. So I definitely think, again, this is another area, personal finance is personal. It's certainly going to have an effect, but it's going to affect a number of different pieces, not only your investment allocation, but also your cash flow, your tax allocation, how you're navigating your legacy planning, it's certainly a consideration to take in.

42:58Thank you to Devo 6912 for that question. And Devo, if you don't have a Tumblr yet, email winner at moneyguy.com to cash in on that. And Wes, where should they go if they want to read more about the data that you shared? I just wanted to make sure we told them where to go that you can get your book. Thank you for that. Yeah, in the book, so retiresuitermethod.com. That's the easy place. That's the place. Amazing. That's the place to get the, and we're still pre-sale, a couple weeks until the book is live live, September 1, but in the next couple weeks before that. Oh, this is game time now. It's game time.

43:33You guys remember this? Yeah. You guys remember this? Oh, yeah. Oh, yeah. You're eating and sleeping promotion right now. Right. By the way, thank you guys for having me on. Oh, absolutely. Well, we had a couple retirement questions, So I just wanted to make sure they wanted to do some extra reading. They knew where to go. So it's also in all the book. Like if you went on Amazon, Barnes and Noble, Walmart, it's available on all those things for pre-sale right now. It is. And you just take your order code and you go to retire sooner method. And that's where you get the four bonuses prior. I love that.

44:08We love it. Love that. There's four things you can get if you do it pre-sale. Okay. One's a retire sooner workbook. The other thing that is cool that I did in this book and I've never done before is that there's a secret QR code in here. And it goes to, it's black and white. I was thinking about doing a color book, but it ended up looking like a coffee table book, which the pages have to be thick. Yeah, it's a whole different thing. You can't really do a color book. So I did all the, so they're all black and white, obviously, but there's a QR code in the book that goes to a webpage that unlocks all these charts in color.

44:43Okay. And there's 30 charts in the book, and then there's another 18 in addition to that that didn't even make the book. So there's like a secret goldmine of content. I love that. So you heard us talking about in the bottom back of our building, I don't think I'm breaking any confidence, we have a speakeasy in our building. So you've essentially created a speakeasy in your book. In vivid color speakeasy. I like that. I love that. All right, let's hit another question from Matthew. It says, what is a reasonable amount of time to rebuild an emergency fund? Should it be a rice and beans approach, like get it done as fast as possible?

45:23Or is there more flexibility in being able to spend on the quote unquote nice to haves? Give them some guidance here because step four is emergency reserves. It's very important.

45:32Brian Preston:My opinion is it depends on how depleted your emergency fund is. If you're someone who's supposed to have a six-month fully funded emergency fund and you have this thing that happens and it drains you down to four and a half months, I don't necessarily think you need to go to rice and beans to get that built up as fast as you can, although not a bad strategy because the emergency fund is there to protect you from emergencies. But if you're someone who you just went through a thing, you had a thing happen, and you have depleted your emergency fund and you are literally now paycheck to paycheck, and if that next check doesn't hit your account, you're going to have some problems.

46:06Brian Preston:I do think that's where you have to go. Scorched earth. You have to get that emergency fund built up. It's why, Brown, you hold the thing up for me. It's why we put it so early on in the financial order. Two steps. But financial mutants, they always struggle with this. It's like, oh, I don't want to pause my Roth. I don't want to pause my 401k. I don't want to. Oh, let's just go. Financial mutants hate cash reserves. I know. They think cash is trash. I know that you don't want to do that. And that should be motivation to do it, build it up quickly, cut everything, cut all the nice-to-haves, all the not-have-to-haves, get it built up, and then get back to saving money.

46:37Brian Preston:That's what I would tell Matthew. Well, that's what you think. Economic shutdown. That's what I call it. My term for rice and beans is economic shutdown, which is as soon as you go beyond or below that level, that makes you feel comfortable, because a huge problem in personal finance is fear. And that's why, again, you guys have in the FOO, is that it's an early thing to make sure you have. If you don't have it, you have this cloud of fear and it makes you make bad decisions. So my term for my family is economic shutdown. That's when I was building up back in the days of getting my reserves. And I call it economic shutdown, which means spend nothing on anything until we have the base.

47:21I love it. I always, one of the things I always tell people is that you, if you, how close to the edge are you? You really need to be, because it's back to the fear method. If you really are, if you're naked out there on the risk and making desperate decisions as Wes was laying out, you probably need to go full stop on everything. But if you're nibbling around the edges that, yes, you had an emergency, but you're not so desperate, you don't have to freak out. But you just need to be honest with yourself. Is this a three-month, six-month? I wouldn't let it be more than really a six - to nine-month correction period.

47:56because, and that's why it's back to, and I know there's a theme with all this, you have to do a personal triage on your financial life and be honest. I think sometimes us, especially if we're good with money and we think the cash is trash, we do everything in our mind to justify why we don't need a cash reserves, but you probably need to be honest to avoid the desperate decisions on how close are you really to losing your job or having the car blow up or having the water system go out. These are the type of things that, and be honest and then act accordingly. Love that. Yeah. Great thoughts. Matthew W., if you would like a Money Guy Tumblr, just email winner at moneyguy.com.

48:36We would love to send you one. Next up is Kelly S. It says, at 58, when should I shift from aggressive to more conservative investments? Since I'm still building my savings, what investment mix would you recommend to balance growth and protect what I have saved. Yeah, this is one where you, it's back to the, you have to triage. I don't know if you're behind the curve, ahead of the curve or right where you're supposed to be. Because look, if you read our comments, everybody's just going to say vu for life. And then, you know, you slam, you cross over the retirement threshold. And then I guess you just hope that the S &P 500 just keeps rocking and rolling forever.

49:18I always give it the analogy of that feels like a flight plan to where all of a sudden you're flying smoothly and then you decide you go retiring. You just slam the plane down to the runway and yeah, you might survive it, but emotionally you're going to be devastated and probably never get on an airplane again. What's much more appropriate is to while you're in cruising speed, think about how you're going to run, you know, land the airplane and hit it as smoothly as possible. If you know any commercial pilots, they'll tell you they're constantly trying to think about how do I land this plane so that it doesn't impact people.

49:53And that's why I want you to think about your retirement so that you can adjust that glide path or landing path for your retirement. So it doesn't stress you out, but it also is going to be contingent upon, are you ahead of the curve behind the curve? Because sometimes you have to make really hard decisions if you're way behind things. Do you guys remember the movie? I think it was Batman, Dark Knight Rises and Batman fought Bane down that cave. Oh, yeah, yeah, yeah. I can't remember some of his kids.

50:21Brian Preston:No, no, give me one of the lines. And the actor in that, who's the actor in that? Tom Hardy. Tom Hardy. Is it Hardy? You know, that dude, he wins jiu-jitsu competition. He's a bad, bad dude in real life as well. Back to your point. Sorry, I just got to start thinking about it. He's getting excited about that. Like, you bring up that movie to any guy. He's got a really cool voice in that movie. Well, Batman turns off the lights. And Bane says, oh, you think you have an advantage in the dark? He's like, I was born in darkness. I was born in darkness. I was born in darkness. You really adopted it.

50:56Look at that. You are a nerd. Meaty nerd. So my point here is that we have been on a run. every bear market we've had lately, even COVID, was a really quick snapback. So the world has this idea that markets just go up and up and up and up. And when they go down, they come right back. Well, if you were born in darkness and you started in the investment business when we did, and I always wonder when I would start being able to reflect back. My first couple of years, I was like, the old guys in radio, they really can be like, when I remember that. We're here. When the Dow hit 10 ,000, it was the late 90s, and people were wearing hats.

51:40Then we had a couple really bad years. We had the 2001, we had September 11th and the dot-com crash. It took 11 years, essentially my first 11 years in the investment business, to get back to 10. Went to 10, and then squander and squalor, and then 11 years later, we got back to 10. The people that retired in 99, 2000, 2001, that didn't have some risk-tolerant management, which is exactly Kelly's question, are the people that had to – they answered yes to the question, I'm retiring. Then they had to recoil and say no and go back to work. And that was a brutal life experience. I was a super young advisor and I remember people that were really out on the ledge, leverage that said that this can never go down.

52:33They're the ones that had the most turmoil because they blew up their plan. That was also back in the day when financial plans were being run at 8%, 9%, 10 % a year. That was also a giant mistake. So as long as Kelly, at this age, you're getting to the point where you're going to need some safety, In my opinion, you said it's not, you know, index 100 % equities forever. And having three years of safety assets spending-wise, what you're going to need to pull out when it gets to retirement, to me, that's a starting point for the safety spot in the asset allocation. That's just, in my opinion.

53:11Brian Preston:I was going to say, people think it's just a gravitous change. I've got this allocation, and then I retire, and immediately it's this, like, different allocation. and I think they're amazed to see it's way more gradual than that. It's way more of an adjustment. The thing that changes the most in the first year leading up to retirement to the first year after retirement is your cash allocation, right? You go from that three to six month emergency fund to 12, 18, 24, whatever makes sense in your situation, that naturally pulls down your aggressiveness without you having to go from 70 % equities to 30 % equities.

53:44Brian Preston:If you're thinking through that well, it shouldn't feel like something like, oh, okay, what day did it pull the trigger? What day did it pull the trigger? What day did it pull the trigger? You get to do it gradually and systematically over time so that you almost don't notice that it's happening, but you have to pay attention to it. Wes brought up a great point that kind of took me back in time a little bit because I can remember that last decade. That's the decade you're talking about, the 2000s. I can remember in 2001 the quarterly reports where even though the S &P had gotten crushed because of small cap, because of real estate, and because of bonds.

54:18We had clients that still were making money. And that was one of those years I was like, wow, asset allocation crushed what happened with the S &P 500. Fast forward to you think about the 2008 where the market was down over 50%. I can remember that clients who were diversified, they had half of the volume. They still lost money. Still painful, but manageable. But it was half if you were just voo for life. And look, I love the S &P. If anybody watches our content, you know we love index investing. But I have experienced it in my career where you were very thankful if you had asset allocation, especially when it wasn't risk tolerance.

54:58It was what we call risk capacity, meaning that you're actually living off these assets. And you just don't have the time to wait 11 years for the money to come back to good before you need to go pull money out of it. And that's the thing I always remind people because we are – asset allocation has been a sucker's bet for really – I mean, we're going on close to 15 years.

55:18Brian Preston:S &P has been the top-performing asset class. I mean, now, look, we had 2022 where it got its teeth kicked in a little bit and 2020 to a degree for a moment in time. But I don't think people – I think that we're living in times now where people have forgotten that the volatility can bite. That's true. And it will bite again. It will bite again. There's no question about it. And by the way, we're talking about the 90s and 2000s. Go talk to people from the 70s. I mean, because that was, you know, the 70s was a decade that people were like, every assumption they thought about investing kind of blew up in their face.

55:51And it took a while for, then we got into the 80s where it was good time rock and roll again. But there are periods where people, once you think you've got it figured out, is probably when you're going to get kicked in the face. It's kind of that choppy water analogy too, that a boat can be in the middle of a storm and it's choppy water and it can still survive fine. But if the boat is in the harbor and it's close to a dock, something bad happens. It's a bad outcome. So it depends, meaning that it depends on when you need the money, depending on the location, your environment, your time. And if you need to start pulling money and markets are down 20, 30, 50%, which can happen.

56:33And if you don't have an asset allocation that has some non-correlation to help smooth that out, if you don't have some dry powder assets, some safety, then if you're too close to the edge in rocky water, that's when things can go wrong. That's right. Well, Kelly, you got some great thoughts for your question, a Batman analogy and a MoneyGuy Tumblr. So thank you for asking your question. Just email winner at moneyguy.com to cash in on that Tumblr. You know why Bo did so well? It's because he's a big fan of Robin. I knew you were going to get him today. I knew you were going to get him today. That's awesome.

57:12Big fan of Robin. That's awesome. We probably have a picture somewhere that we could pull up at some point. Here we go. Here we go. That's genius. Okay. All right. Let's fit one more question in. See if you guys can name each of your three things. You did. You did. You feel good. Let's face it. You would fit in the Batman costume much better than me, but it sure is fun. I'd look more like George Clooney in it. There we go. Because I think he's the least favorite Batman. Different versions of Batman. Well, we have a question from our friend Mel. Mel, you have a Tumblr, I'm pretty sure. If not, let's know.

57:45Mel definitely has one. He definitely has one. Mel probably has one that I gave to him when he was coming and hanging out. Mel has one of every season of them. So just, I would love to hear kind of your top three things from each of you. Just kind of quickly. what are the top three things someone should do for an effective transition from working to not? He's talking about the psychological journey in particular, because it is true. It's a big part of what retirement actually is. I would love to hear each of you run down your top three things. Now, just to give you perspective and also to kind of filibuster so we have a little more time for you all the right answers.

58:19Mel is a friend of the show. He's also a fellow author, a CPA. He's brilliant. He's super successful in his own right. So I think, and he's also super curious on life. So this is probably a teachable moment, but also he knows he's swimming in the waters that are very similar to his own.

58:39Brian Preston:All right, I'll go first, only because I wrote mine down already. Three top things to think about with your transition if you'd like to have a successful transition. Number one, I put what you are retiring to. So often people say, I know what I'm retiring from. I know what I'm running away from. I know what I'm getting out of without putting enough time into thinking through, well, what is it that I'm retiring to? How am I going to spend my days? What's the thing that I'm going to actively fill my time with when it's no longer going into my vocation, into my work, into creating wealth? So that's number one, know what you're retiring to.

59:13Brian Preston:Number two, I do think if you're going to have a successful retirement, you want to have a success, a lot of peace of mind, you have to stress test it. Have you done the stress test? Have you run through the Monte Carlo simulation? Have you made sure that you've done the hard work of saving what you need to save to be able to account for all the things that you want to do? That's baseline living expenses. That's taxes. That's travel. That's replacing automobiles. That's helping with the kids. That's all the things that you might do in retirement. Have you actually put it down on paper, run it through a stress test and make sure even if there's a bad outcome, if there's a bad sequence of returns, even if I get unlucky in the year that I retire, Is there a high probability of success that I'm going to be okay?

59:50Brian Preston:And then number three, I think this is something not just for people that are transitioning into retirement, but for everyone. As soon as you, from 18 all the way till 80, know what your why is. What's the thing that you're – Me and you go fight. What's the thing that gets you out of bed? What's your purpose? What's the reason why you were put on this earth? And if you can answer that question and live your life in such a way that aligns with that, I think it's going to allow you to have a successful transition. When you go from this thing you've probably spent 30 or 40 years doing to the next 30 or 40 years, it's likely going to look very different from a day-to-day standpoint.

1:00:30Brian Preston:That's what I got. I'm going to let you go next, Wes, and then I'll probably cuss you a little bit too because I bet there's going to be more overlap here. Okay, so there's this thought that we find, and those are, I agree with Bo. So all I can do is try to add some more color to that because you're right. One of the, what I've noticed over the last 20 years is that we live in a world that is very much about, we think about finding our purpose. And that's a great thing. Like it'd be great if we found it. And the, but purpose, particularly when your next phase, so we got like our adolescent phase, our working phase, our retirement phase.

1:01:12It doesn't come and knock on the door. and we think that it's going to be found. In the reality, it is created. It is up to us to create a new purpose. So one of the reasons behind having five-plus core pursuits, which I talk about in the Retire Sooner Method, and the happy group spends more time per week, they spend almost 20 hours versus 13 hours in the unhappy group. So the happy group is creating their purpose through these five, I call them super activities, core pursuits, hobbies on steroids. And that takes some work. It really takes some insight and some introspection to figure out what is my new schedule going to look like?

1:02:01Do I have five, six, seven, eight of these super activities that are helping me create my daily purpose that rolls up to my yearly? So I think that to me is such a big piece of the equation on the non-financial side. You mentioned a plan. So the plan is probably number one because the plan reduces our anxiety and gives us enough and gives us the mental security that we're in the money green zones and we're fine. And we can afford those core pursuits. And by the way, adventure is a, there's a lot of, core pursuits are almost unlimited, but I've found that more adventure core pursuits, adventure related, again, higher propensity to land in the happy camp.

1:02:47And then finally, when I asked this, I had one open-ended question when I did my research. It was, what is the one activity, the one thing that brings you the most joy in retirement? You could only say it's one sentence. Give me one sentence. And there's a huge variety, as you can maybe imagine. Travel's big. Gardening was big. A lot of creative pursuits. I found people were playing music. They're painting. They're pottery. They're doing all sorts of creative things. So I have this great pie chart around it. But if you go, I went, actually, this is earlier days of AI, and I tried to have AI figure out like what the top things were.

1:03:32And it got confused because most of the sentences had two or three things in them. So I just went through it manually. So I've got like a thousand lines of sentences of what brings me. One thing I found in the majority of those answers was the word with. It was doing XYZ with someone. Someone, whether it's friends, family, doing X, Y, Z with. So the community piece, the four plus friends, it's only four, so you don't have to get a five. Five's a lot. Five's a lot, a lot of people. It's five plus corporate, four plus close personal connections. And if you can maintain, create, maintain that community, that would be my third thing as an essential for a happy retirement.

1:04:23So here's mine. I've had the most time. So now I didn't write a book on this part of it, but it is, I wrote plan, folks, fulfillment, meaning what gets you out of bed. What was that second word? Folk.

1:04:37Brian Preston:Folks. Folks. Like friends. Yeah, like po-folks. Got it. Just making sure. Just making sure I'm getting there. So think, here's a plan. Where are you going to? Folks is, hey, what are you going to do fun outside of work? because I think a lot of people, if you don't have somebody to hang out with, I like the with that you said. That was really good. And then, look, this last one, fulfillment, what gets you out of bed in the morning, this is going to be bigger than you. If you look at all the research on happiness, it is the people you hang out with, and then also it gets into spiritual or things bigger than you that you actually feel like when you wake up in the morning, you're making the world a little bit better and you have purpose.

1:05:17I've heard that from both. Why purpose? So I think that you've got to lean into what are the things that actually is going to make you wake up and feel like you actually have something to do on this planet. Because I think that's the thing that scares me. And I've dealt with clients. They retire, and it's just not what they thought it was going to be. And then they usually go right back to work because they're like, man, this thing was not what I thought it was going to be. So you better go ahead and spend some time on that. And then I'll put the book in because this goes back to the original plan.

1:05:44What are you going to do is just do the math. You've got a stress test. And that's where we, and I'll kind of put the bow on this, because we just did a show on when is a financial advisor worth it and are they worth it? And I got to tell you, you're going to want, when you cross that threshold that you've never been, you don't know what your blind spots are. You don't know where you're going with it. And a lot of you sitting out there, you're smart. You're brilliant. You're good with math. You're good with numbers. And you're going to find out. And that's why I love that Mel asked this question from a psychological standpoint is because just because you have all the skill set in the world doesn't mean that you know everything.

1:06:24And you're also going to want, yeah, you could get a single plan, but you know what's really great is when you call your advisor and they actually know who the heck you are. They don't have to go look at their notes. They know your wife's name. They know your children's name. They might know your dog's name. And, you know, because you're dealing with the same people over and over, you actually have a relationship. And that's why I love taking the relationship to the next level is because you actually build something that's pretty meaningful and you help people live their best life. You might even call it their great, big, beautiful tomorrow.

1:06:55On that note, two important things. Go to retiresoonermethod.com if you want to keep deep diving on retirement and take part in Wes's cool pre-order bonuses and buy his book. Check that out. And then for the Money Guy family, go to moneyguy.com slash early access to get on the secret list. Get our final hint for what's coming. Not a, uh, get our final hit for what's coming and get early access to the thing. Um, this has been really fun. We'll be back here every Tuesday at 10 a.m. Central. Make sure you check out those two links. In the meantime, lots more to dive into there. Wes, this was a blast.

1:07:32This is like, you're like, we're like best conference friends. So it was great having you in the office to kind of do the conference experience. Why do you guys have so many followers? This is, this is just a really good show. I appreciate it. It was awesome. We had a blast. Guys, thanks so much for tuning in. We love, please take advantage of all the free resources. It's moneyguy.com slash resources. We literally load you up. That is the abundance cycle. I want you to learn, apply, grow, become the best version of yourself. I'm your host, Brian, joined by Mr. Bo and Mr. Wes Moss. Money Guy team, out.

1:08:02The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice.

1:08:34All investments involve a degree of risk, including the risk of loss. I'm not giving up. I am selling the building.

1:08:44Brian Preston:The final season of FX is the bear. The restaurant is flooded. Everything's either going to be okay. No, stop. Or not. We are outgunned and we are outmanned. We have each other. FX is the bear, the final season. All episodes now streaming on Disney+. The Viore Cor short moves with you. with everyday versatility and classic athletic fit. It's the one short for everything your day brings. Invest in your happiness and get 20 % off your first purchase at viore.com slash core20. That's V-U-O-R-I dot com slash K-O-R-E-2-0. Exclusions apply. Visit the website for full terms and conditions.