We are in a very interesting time! As I am writing this, I am working on my application AiRA (https://aira.tiredtoretire.com/) that does retirement planning. If you are familiar with Boldin, then look at this is as a different view of the same but, for me, it’s answering harder questions while opening the sausage maker so you can tailor it to …YOU. AI should be your friend and you need to embrace it and use it to your advantage and these kinds of tools all help in the journey.
But, these are tools. We are talking about our future! Our future self and our future health.
Tools like AiRA can only predict a financial outcome. These are just a plan and one possible set of paths. It’s a variation of truth but not a true and certifiable prediction of the future. Once you get an answer, all these calculators can do is give you peace of mind if you are properly calibrated or kick your butt into gear to get moving into a better spot. That’s what I discovered by creating AiRA or inputting my data into Boldin. Each time I update the application to optimize something, hoping that the outcome will torpedo the plan, it still comes out in a way I wouldn’t expect but in a positive way that makes me more confident of the plan.
But what I discovered, after I started patting my back on how well the portfolio is doing, is that there are two areas of focus in the financial arc that I think people should pay attention to and they are:
- Minimizing taxes and withdrawing funds while optimizing for taxes
- Minimizing RMD’s and your own expenditures so that principal can still compound in your retirement accounts
But there is a constant question that seems to keep coming up in most forums or comments in YT videos and it is:
“How am I doing? Can retire early if I have $XXX?”
While this is a normal thing to want to know, I think the answer is “It depends! And it depends on YOU”. There is no cookie cutter pattern. There is no right time or right amount to retire with. What is an important question to answer is, given my obligations federally and personally,
Can I still retire adequately and if so, what do I need to look out for now that I decided to pull the cord?
Logically and common-sensically, if you are taking out $100 but spend $110, I think it’s safe to say that you are spending more than you make and probably will have difficulty in retirement. The idea about withdrawal strategies is that most have been developed and designed to allow a portfolio to continue to compound while you are withdrawing to pay for your retirement lifestyle.
It’s safe to say that if you use a combination of bucket strategies and guardrails (which is what I plan to do), a properly curated retirement strategy will not only help you preserve wealth but also allow you to spend that dream lifestyle that you wanted or dream of (no pun intended).
These days, I am probably doing something that you shouldn’t do, which is to keep checking the portfolio everyday. Watching it GO UP!! And GO DOWN!!! is a sure fire way to get nausea. The rule of thumb is if you are dollar cost averaging and ABB (“Always Be Buying”) buying index funds which automatically self-cleanse, then you really don’t have to do anything but let the compounding do it’s work. But when you so want to retire and just get out of the rat-race, how can you not help but check every day and countdown every minute. It’s a form of self induced torture!
I have made a few single-page applications that do retirement planning (AiRA) and a countdown timer which tracks the number of desk days I have. My countdown, is optimized for me to see how many “desk” days I have left before I can retire. I set 60 as the age, I counted PTO and sick days (of which I’m taking one today) and I update my portfolio to measure how far away I am by time and percentage complete from my retirement trigger number.
This has done one of two things for me. One, it has given me hope on where I am in my mind and that I don’t have to worry about my future. But , unfortunately for me, Two, it has given me a level of impatience and anxiety because I am constrained by the 59.5 gateway and because I have 3 more years until this hits. These are all self-inflicted and probably not something you should do because you shouldn’t be looking at your portfolio day in and day out. Let it sit and compound.
It makes sense to start planning with a tool and then migrating into other aspects of the retirement arc. The most important being the emotional arc. Are you ready to retire? Do you have everything you need to retire and is it setup? How do you want to plan your days? These are all questions that only you can answer but after you have answered the $$$ money part, then the most important questions become those of well being because after all, this is what we are planning for, the only hard part is programming your brain to think spending, not saving, relaxing and not working.
Stay tuned for other vlog and YT content (www.youtube.com/@vincentplansfreedom) where I talk about this and other retirement topics.