Today on Your Money, Your Wealth® podcast 320 with Joe Anderson, CFP® and Big Al Clopine, CPA: William has investing experience, money in the bank, and a retirement plan. Is he ready for early retirement at age 59.5? Plus, BRRR real estate investing and Roth IRA, Backdoor Roth conversions, and “Megatron” Roth contributions. Also, capital gains vs ordinary income, and are restricted stock units (RSU) ordinary income? Do they impact Social Security benefits? When can you collect spousal Social Security?

00:00 – Intro
00:56 – I Have $1.8M and I’m 59 and a Half. Can I Afford to Retire Now? (William)
07:29 – Using Roth Money to Fund Investment Real Estate and the BRRR Strategy (Marcus, Alabama)
12:50 – Unique Way to Fund a Roth 401(k): Backdoor Roth (Mark, Morgantown, WV)
18:42 – Should I Contribute to Roth IRA or Traditional IRA? (Grant, AL)
25:14 – Is a Roth IRA a Good Way to Get Kids Interested in Investing? (Esteban)
27:55 – Capital Gains Vs. Ordinary Income: A Case Study (Richard)
33:47 – Do Restricted Stock Units Impact Social Security? Are RSUs Earned Income or Ordinary Income? (Tom, Chicago)
42:36 – When Can My Spouse Take Spousal Social Security Benefits? (Thomas)

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Early Retirement: Can You Afford to Retire Now?

Retirement is a dream for many, a time when we can finally leave the daily grind behind and enjoy the fruits of our labor. But is it possible to retire early? And if so, can you afford to do it?

In the latest episode of the Your Money, Your Wealth® podcast, host Joe Anderson, CFP®, and Alan Clopine, CPA, delve into the topic of early retirement. They discuss the financial considerations and pitfalls of retiring before the traditional age of 65.

One of the first things to consider is whether you have enough savings to support yourself for potentially several decades without a regular paycheck. Anderson notes that a common rule of thumb is to have at least 25 times your annual expenses saved up.

However, this rule may not be applicable for everyone. Other factors such as lifestyle, health, and potential inheritance need to be taken into account. A thorough analysis of your current financial situation, including assets, debts, and expenses, is essential to determine if early retirement is a feasible option.

The hosts also stress the importance of considering the impact of inflation and rising healthcare costs on your retirement funds. It’s crucial to have a diversified investment portfolio that can provide a reliable income stream to cover these potential expenses.

Another factor to keep in mind is Social Security. While you can start receiving benefits as early as age 62, your monthly payment will be reduced compared to if you wait until full retirement age, typically around 66 or 67. Waiting until age 70 can maximize your monthly payments even further. Taking these factors into account can help you make an informed decision about the best time to start receiving Social Security benefits.

Another potential hurdle to early retirement is healthcare. If you retire before you are eligible for Medicare at age 65, you will need to find alternative healthcare coverage. This can be a significant expense, and it’s crucial to explore all options, such as COBRA or private health insurance, to ensure you are adequately protected.

Lastly, Anderson and Clopine discuss the emotional and psychological aspects of retiring early. Some people may find themselves at loose ends without the structure and purpose that work provides. It’s important to have a plan for how you will fill your days and find fulfillment after leaving the workforce.

In conclusion, early retirement is an achievable goal for some, but it requires careful planning and consideration of various financial and personal factors. Seeking the guidance of a financial advisor can help you navigate the complexities and make informed decisions about when and how to retire. Remember, retirement should be a time of enjoyment and fulfillment, so it’s crucial to ensure you can afford to retire without compromising your financial security.