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471 | Mailbag: Inflation and FI, ACA Subsidies, Roth vs. Trad and More | Cody Garrett
Jan 8, 2024
In this episode, Cody Garrett, Founder of Measure Twice Money, joins the hosts to answer listener questions on topics such as inflation and financial independence, ACA subsidies for early retirees, Roth 401k vs. Roth IRA, and diversifying a concentrated portfolio. They discuss the importance of accounting for inflation when calculating the FI number, maximizing ACA subsidies through strategic withdrawals, and strategies for reducing concentration risk in investments. A valuable episode for those interested in early retirement planning and optimizing their financial strategy.
45:40
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Quick takeaways
- Inflation-adjusted future expenses should be considered when determining the FI number.
- Careful distribution planning can optimize ACA subsidies while planning for early retirement withdrawals.
Deep dives
Understanding inflation and its impact on FI number
In this episode, Wilson asks about the impact of inflation on the FI number. He clarifies that using a 7% return rate already accounts for inflation. However, he wonders if annual spending should also be inflated for future costs. Cody clarifies that the 7% return rate reflects the real return after adjusting for inflation. He explains that the 4% rule already accounts for inflation in retirement distributions, but not on the path to retirement. Cody recommends considering inflation-adjusted future expenses and understanding the different calculations involved in determining cost FI adjusted for inflation.
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