Becky and her husband are about to semi-retire. But the four percent retirement withdrawal rule doesn’t make sense for them. Are there other financial frameworks they should explore?
Kris is excited about a potential boost in local real estate values when the World Cup comes to town. Will this have any significant impacts on his property?
Peyton’s parents are pressuring her to buy a house, but she’s worried this will cripple her early retirement goals. Is she right to be concerned?
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Becky asks (at 02:15 minutes): How do you think about retirement and drawdown strategies when the standard four percent rule doesn’t quite fit?
My husband retired last year after 30 years in law enforcement, and we made a big move from the West Coast to southwest Florida for a fresh start. He’s 55, I’m 50, and we’re taking a sabbatical before deciding what kind of work we want to do next.
His pension, which includes survivorship benefits, covers 70 percent of our expenses, including a generous travel budget. I’ll receive a smaller pension in 2029, at which point our expenses will be fully covered.
When factoring in even a reduced Social Security, we may never need to touch our nest egg—but we have mixed feelings about that. We’d like to apply some principles from Die Broke, such as helping our 18-year-old son with a house when the time comes.
We have $1.3 million in retirement savings, split between a traditional 457 (which we can access anytime) and a Vanguard IRA. We don’t need to withdraw from this at all in 2024, thanks to cash savings covering our sabbatical.
From 2025-2029, we’d only need to withdraw 1-3 percent of our portfolio annually — likely less, since we’ll generate some income.
Our other big goals are:
- Paying off our mortgage by 2029, if not sooner. We owe $200,000 on a $1.4 million home with an adjustable-rate mortgage currently at 2.75 percent, resetting in March 2029 with a max of 7.75 percent. Paying it off would free up $12,000 per year.
- Buying a boat, which would cost $75,000-$100,000, including the lift.
Given our irregular drawdown needs, how should we approach larger one-time expenses like these? I hesitate to withdraw more than four percent in any given year, but that rule doesn’t seem like the right framework for us.
Should we take out lump sums when needed like buying a boat and paying off the house in 2029? How do we stress-test different scenarios? Or would you recommend taking a steady four percent annually and using the excess to pay down the mortgage?
We’d love some creative ideas to help us enjoy our money while keeping our financial future secure.
Kris asks (at 23:33 minutes): I’d love to get your insight on how major sporting events impact commercial and residential real estate values. Here in Dallas, we have both the Soccer World Cup and the Olympics coming up.
Can we expect a significant boost in real estate values because of these events, or is the impact more temporary?
Peyton asks (at 43:23 minutes): I’m listening to the March 4, 2025, episode where you discuss the calculus of buying versus renting a home, and I’d love to hear more about that framework.
I live in Salt Lake City, where renting is slightly more advantageous, and I’m planning to retire early. Because of that, I’m prioritizing tax-advantaged retirement savings and don’t want to divert funds for a down payment.
The one argument for buying that resonates with me is locking in my housing costs. I was spooked after the pandemic when my rent jumped 23 percent in two years. That kind of volatility makes it hard to budget for retirement if housing costs keep rising.
But I hesitate to pull $60,000 from my $140,000 net worth — most of which is in tax-advantaged accounts. Some funds are in a brokerage account, so it’s more accessible, but I still question whether it’s worth reallocating those funds.
I think this would make for a great discussion, whether for my situation or in general — the idea that renting isn’t necessarily “throwing money away.”
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