BiggerPockets Money Podcast

Finance Friday: Signs You’re Saving TOO Much for Retirement

Nov 1, 2024

Ethan, a 48-year-old tech entrepreneur, explores early retirement planning and financial strategies. He questions if he's saving too much for retirement and if he could retire by 55. They discuss how his expenses, currently at $20,000 monthly, could drastically drop once his kids are independent. The conversation also covers the balance between enjoying life now and future savings, while considering options like part-time consulting or real estate investing as income sources after retirement.

57:21

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Episode guests

Ethan

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Episode notes

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Quick takeaways

Ethan realizes that his anticipated FIRE number may significantly decrease as his children's financial-related expenses reduce over time.

He considers how transitioning to flexible work opportunities, like part-time consulting or investing in rental properties, may support his early retirement plans.

The podcast emphasizes the importance of conservative financial planning, particularly in managing upcoming significant expenses like college and weddings for Ethan's daughters.

Deep dives

Ethan's Background and Financial Journey

Ethan is a 48-year-old tech entrepreneur with a history of successful ventures, including founding a tech startup during the dot-com boom. He transitioned to a lifelong career in technology, where he currently holds an executive position. Alongside his primary income, Ethan has built a real estate portfolio that includes three rental properties and has committed to regular stock market investments through index funds. His early experiences with house hacking and the acquisition of rental properties from family members highlight a proactive approach to financial growth.

Intro

5min

Navigating Monthly Finances: Income, Expenses, and Future Planning

3min

Balancing Present Enjoyment with Future Savings

2min

Navigating Monthly Expenses for Retirement

14min

Navigating Retirement Budgeting and Investment Strategies

5min

Navigating Healthcare Costs in Early Retirement Planning

2min

Balancing Retirement: Investments and Strategies

26min

Are you saving TOO much for retirement (or early retirement)? Could you retire years sooner than you think? Will retirement expenses be even less than what you spend now, allowing you to reach FIRE faster with a smaller nest egg? Today, we’re getting into that exact question as Finance Friday guest Ethan asks how he can ensure he’s on the right track for early retirement by age fifty-five. And if you’re like Ethan, you could retire RIGHT NOW…but should you?

Ethan is spending a LOT of money every month. He’s got two kids in private school, extracurricular sports fees, pricey car payments, and a mortgage. The good news? He’s raking in cash at his high-paying tech job! His current expenses cost him nearly $20,000 per month, but this number could be cut in half (if not more) once his kids leave the house. This means that his FIRE number might be a fraction of what he thinks it has to be to retire early.

Speaking of early retirement, is it wise to leave such a high-paying career to sit on the beach all day? Ethan has the skills and the energy to make a sizable income, so what should he do instead of full-time work once he reaches early retirement? Should he transition to part-time consulting, focus more on rental property investing, or buy a business?

In This Episode We Cover

Why your FIRE number may be WAY off from what you need to retire early

The retirement expenses that disappear once your kids are out of the house

Making money in retirement and whether buying a hands-off business is your best bet

Planning for future weddings and how much you should set aside for your kid’s big day

Limiting your taxes by qualifying for real estate professional status (REPS)

Whether or not you’re keeping too much cash on hand (is the bank account interest worth it?)

And So Much More!

Links from the Show

Mindy on BiggerPockets

Scott on BiggerPockets

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