Tax Planning To and Through Early Retirement | Cody Garrett & Sean Mullaney | Ep 565

38 snips

Sep 22, 2025

Guest

Cody Garrett

Guest

Sean Mullaney

Cody Garrett and Sean Mullaney, co-authors of Tax Planning To and Through Early Retirement, bring their expertise to the table. They explore the complexities of tax strategies for early retirement, offering step-by-step guidance on drawdown processes and effective tax rates. They dispel common fears about retirement taxes, revealing how most retirees end up paying less than expected. Additionally, they break down the ins and outs of Required Minimum Distributions (RMDs), explaining their impact and how to navigate them successfully.

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ANECDOTE

Book Targets FI Drawdown Confusion

The book targets FI readers tired of vague drawdown rules of thumb.
Cody and Sean built step-by-step examples to give readers judgment rather than generic answers.

INSIGHT

Drawdown Needs Systematic Thinking

Drawdown planning is complex and under-discussed compared with accumulation strategies.
The authors wrote the book to give systematic, math-backed guidance to reduce fear around drawdown.

INSIGHT

Retirement Often Means Lower Effective Taxes

Early retirees often pay far lower effective tax rates than they expect due to capital gains rules and lower taxable income.
Living off taxable accounts can be more tax-friendly than W-2 income because of 0% long-term capital gains and no FICA.

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Brad Barrett hosts Cody Garrett and Sean Mullaney, co-authors of Tax Planning To and Through Early Retirement, exploring essential tax strategies for the FI community. They address misconceptions about retirement taxes, the drawdown process, and effective tax rates, emphasizing the importance of informed planning to navigate financial independence smoothly.

Key Takeaways:

Understanding the complexities of drawdown strategies is essential for early retirement planning.
Fear surrounding retirement taxes can often be mitigated through knowledge and strategic planning.
Most retirees benefit from significant tax reductions due to lower effective tax rates during retirement.
The podcast discusses common misconceptions about Required Minimum Distributions (RMDs) and their actual impact on retirees.

Timestamps:

00:01:38 - Overview of Tax Planning To and Through Early Retirement
00:02:33 - Understanding the complicated drawdown process
00:07:22 - Eliminating fear from tax planning
00:10:06 - Long-term capital gains taxation and early retirement
00:28:39 - Tax optimization strategies
00:39:01 - Strategic tax planning leading to zero tax liability
00:58:47 - Discussion on RMDs and tax implications in retirement

Key Insights:

The drawdown process is often misunderstood but vital for financial planning. (00:02:33)
Fear of taxes can hinder retirement planning; proper understanding can lead to rational decisions. (00:07:22)
Most retirees can pay lower taxes than perceived and often face less tax liability. (00:28:15)
Effective tax strategies can enable some retirees to pay zero taxes during retirement. (00:39:01)
Misconceptions exist surrounding RMDs; they may not be as detrimental as commonly feared. (01:00:14)

Actionable Takeaways:

Consider early Roth conversions to maximize tax credits, particularly if you anticipate low income post-retirement. (00:44:07)
Utilize long-term capital gains to minimize taxable income effectively in retirement. (00:10:06)
Aim to reduce ordinary income during retirement to take advantage of favorable tax environments. (00:41:37)

Discussion Questions:

What are some strategies that can minimize tax burdens in early retirement? (00:28:39)
How do RMDs impact retirement planning, and should retirees be concerned about them? (01:00:14)
What are the implications of long-term capital gains on retirement income? (00:10:06)

Resources Mentioned:

Related Episodes:

Episode 557: Health Insurance Planning for Early Retirees

Disclaimer: Sean's discussions on the ChooseFI podcast and articles and messages published on ChooseFI.com are intended for general educational purposes and are not tax, legal, or investment advice for any individual. The ChooseFI podcast and its owners, employees, and agents do not endorse Sean Mullaney, Mullaney Financial & Tax, Inc., or their services.