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Catching Up to FI
Sequence of Returns Risk: What Every Retiree Needs to Know | Karsten Jeske | 106
Nov 17, 2024
Karsten Jeske, known as 'Big ERN,' is the founder of Early Retirement Now and a personal finance expert with a PhD in economics. He dives into the critical concept of sequence of returns risk, illustrating how it can impact retirees’ financial health. Karsten critiques the 4% withdrawal rule, advocating for tailored strategies that reflect individual circumstances. He also discusses market valuations and shares his personal journey from Germany to early retirement in the U.S., shedding light on the community support in financial independence.
01:16:31
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Quick takeaways
- The 'one more year' syndrome exemplifies the emotional and financial trade-offs individuals face when considering retirement, delaying life satisfaction for added income.
- Sequence of returns risk emphasizes the critical impact of market downturns early in retirement, potentially jeopardizing long-term financial security despite eventual recoveries.
Deep dives
The One More Year Syndrome
Many individuals in high-earning careers experience the one more year syndrome, where they ponder whether to retire after reaching savings goals. The allure of additional income, such as year-end bonuses, can lead to delaying retirement despite having sufficient funds. This phenomenon illustrates the opportunity cost of staying in a job, as it may come at the expense of personal life and happiness. Recognizing this syndrome can help individuals make more informed choices about their careers and retirement plans.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode