Early Retirement Resources 6/12/2023

Today’s resources highlight a key advantage early retirees have over traditional retirees, and the financial and psychological factors that often lead super savers who can retire early to end up with more money than they will ever need.

I’ll share troubling trends in the insurance and investment markets. Resources reinforce the importance of basic investing fundamentals and keeping things simple. We’ll also look at an exception to the rule, where incorporating a bit of extra thought and effort with your investments can pay off.

Finally we close with a story that highlights the challenges entrepreneurs face when it is time to retire and move on from businesses after spending years, decades, or maybe a lifetime building them.

Enjoy and I hope you find something that helps you on your financial journey.

Flexibility — An Early Retiree’s Biggest Advantage?

A common assumption is that early retirees need a lower withdrawal rate and thus a substantially larger portfolio balance than traditional retirees with the same annual spending needs.

The Mad Fientist and Nick Maggiulli teamed up, looked at data, and came to an interesting conclusion. The Problem with the 4% Rule (and Why You Could Retire Even Sooner).

This empirical take backs up Darrow’s more qualitative Retirement Flexibility Score for Choosing Your Safe Withdrawal Rate.

More Than You Will Ever Need

Many of us trend toward being financially conservative, sometimes to a fault. As such we end up in a position Jordan Grumet and Mike Piper discussed on the Earn & Invest Podcast: More Than You Will Ever Need.

Troubling Trends

Earlier this year, both Darrow and I shared concerns related to rising insurance premiums we faced. Recently, I had the opportunity to speak to a national insurance broker who assured me our situations were not unusual. In fact, he reported he was noting even bigger challenges in several insurance markets, most notably in the southeast and west, that were unlike anything he’d seen in his career in the industry.

What he reported was backed up by this article from Business Insider reporting Allstate joins State Farm in no longer offering new home insurance policies in California over climate risks.

Holly Deaton shares The Top Trends Shaping the Wealth and Asset Management Industry. One of these trends is a decreased share of investor’s portfolios in mutual funds. Most of the shift is going to ownership of individual stocks. This is a common trend I see in client’s looking for another opinion on portfolios managed by advisors after realizing the incredible amount of unnecessary complexity, cost, and risk this approach creates.

The first trend is challenging, because there are no easy answers. The second trend reinforces the need to keep hammering home the common message found in the next two resources….

The Magic of Index Investing

I’m currently reading Eric Balchunas’ book The Bogle Effect: How John Bogle and Vanguard Turned Wall Street Inside Out and Saved Investors Trillions. This fascinating read is a combination personal biography of the Vanguard founder and history lesson on how he revolutionized the financial industry to personal investor’s benefit. One key take home is the role luck and circumstance played in Bogle’s life, and how that in turn was a lucky occurrence for the millions of investors who benefit from it.

Ben Carlson reminds us The Stock Market Will Pick the Winners For You.

Taxation of Investments

Not all investment complexity can be avoided, and sometimes a little extra effort can be worth it as Allan Roth reminds us, writing The Case for Tax Adjusting a Portfolio.

More Than a Source of Income

Retirement can be harder for people in some professions than others because so much of your identity, who you are, is tied up in what you do. Entrepreneurs have a similar challenge when it comes time to walk away from businesses that they’ve poured so much of their heart and soul into building.

I’ll finish with the story of one such person from the Dirtbag Diaries podcast: Ask Us, We’ve Been There.

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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