Retired Early? Here’s How to Pay Yourself

How do you plan to set up your retirement paycheck to avoid running out of money? In this episode, Jason talks with Eric about how he uses a free online tool to manage his finances in early retirement. Topics covered include his variable withdrawal strategy, managing cash, portfolio rebalancing, and much more.
**FREE SWR tool and show notes: twosidesoffi.com/toolbox
Timestamps:
00:00 Huge change giving notice!
02:20 FREE Safe Withdrawal tool
03:48 Making my paycheck
07:58 My CAPE-based strategy
10:11 Managing cash
13:58 The mental side
19:55 When pull back spending?
22:28 How to rebalance
26:15 Managing budget swings
29:01 How to account for taxes
32:20 Spend less time on finances?
**Show notes, tools, resources + information: twosidesoffi.com
**Our podcast: twosidesoffi.com/podcast/
**Eric’s "NOW" page at 30X40 Design Workshop: thirtybyforty.com/now
**Eric’s KZread Channel: thirtybyforty.com/youtube @30by40
**Jason's Blog: thenextphaseisnow.com
#twosidesoffi #financialindependence #firemovement
**Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.

Пікірлер: 78

  • @TwoSidesOfFI
    @TwoSidesOfFI24 күн бұрын

    What's your process for paying yourself in retirement? Let us know in the comments

  • @adam872
    @adam87224 күн бұрын

    That opening comment from Eric about how his and Laura's relationship has changed (for the better) since she pulled the trigger on retirement was fantastic. I think for all of us considering the same path that's a great piece of validation of the "why".

  • @papasquat355
    @papasquat35524 күн бұрын

    The unloading of that employment related stress that most of us don't even recognize is on us, is a HUGE relief. For the first time in our lives we begin to understand the meaning of "peace of mind".

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    100%

  • @sewnsew6770

    @sewnsew6770

    20 күн бұрын

    Have been seriously considering retiring for that reason But want to be sure money is there to support the family long term Looking out 30 years is impossible

  • @retiretosomething9868
    @retiretosomething986824 күн бұрын

    I thought I would closely track my spending, but I have only been casually tracking my cash accounts. I had an idea how much I needed each year and after 3 years I have been spending a little less than that. I update my net worth statement annually, which lets me know if I'm staying on track. It's been a big change from how nerdy I was being before retirement.

  • @observingman1053
    @observingman105324 күн бұрын

    We harvest dividends in taxable accounts. Then pull enough money from an IRA account for our needs/plans but minimize taxes based on stacking of capital gains and ordinary income.

  • @maxpayne7419
    @maxpayne741924 күн бұрын

    Time freedom is a beautiful thing.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    100%

  • @johnsherwood6395
    @johnsherwood639524 күн бұрын

    Great topic. Keep up the good work.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    🙏

  • @cyrillebaillif
    @cyrillebaillif24 күн бұрын

    Thank you guys!

  • @knh0250
    @knh025024 күн бұрын

    Very helpful! Thank you

  • @PH-dm8ew
    @PH-dm8ew24 күн бұрын

    love your show and love Erns toolbox. I was looking for a cape based program for years before i saw some of his stuff online and your episodes really helped me understand how to use it.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    Thank you for your support 🙏

  • @susanharkema2888
    @susanharkema288824 күн бұрын

    Congratulations on rediscovering each other, Eric and Laura. I've noticed (2 months pre launch) that we have a new energy and perspective that IS like dating again.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    Thank you! The countdown is on for you...congrats!

  • @jaydacon4729
    @jaydacon472924 күн бұрын

    Hi Jason. Have you looked back to compare where your portfolio would be using a 4% swr as is instead of a cape-based strategy? I know its still a small sample size, but curious to know how they stack up against each other.

  • @AnhNguyen-bi6vg
    @AnhNguyen-bi6vg24 күн бұрын

    Always something new to think about when listening to your podcast. Great fun as usual. Thank you. Would love to know had Jason used the standard SWR (4% rule) what would the % have been last 2 years. I am hoping to use 3.5% but thinking it might ne too close to the edge.

  • @dagreatstoney.5869
    @dagreatstoney.58694 күн бұрын

    Lads I don't understand half of what Yee are discussing, but it's always interesting

  • @jtierney2150
    @jtierney215019 күн бұрын

    Love your podcast--love the banter! I started watching a few months ago b/c of your clear explanation of how to use the Big ERN's SWR tool. At your suggestion, I was playing around with the Case Study tab from the tool and saw that a Glidepath shows better returns for every starting year I randomly plugged in. Do you use a Glidepath approach for your portfolio? I'd love to see a future Podcast on Two Sides of FI on how to implement the equity Glidepath in retirement. Thanks!

  • @HughSteeply-cc6tq
    @HughSteeply-cc6tq22 күн бұрын

    Jason are you using the cash flow assist tab in your process? Thanks for the Safe Withdrawal Toolbox series. Good stuff!!

  • @TwoSidesOfFI

    @TwoSidesOfFI

    21 күн бұрын

    Details here: twosidesoffi.com/toolbox/

  • @rx9116
    @rx911617 күн бұрын

    Great show guys. Been wondering what you would consider to be a really big purchase in retirement (something fun like an expensive sports car or jewelry) and how you would feel about it after the fact (buyers r we Morse, etc). Keep up the solid. work.

  • @BrianAnother
    @BrianAnother24 күн бұрын

    Did not expect the blancolirio reference. I also watch all of his videos :)

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    he's great, right? too bad we cut out the part where we exchanged our respective imitations of Juan Browne

  • @alastairford7145

    @alastairford7145

    24 күн бұрын

    +1 for blancolirio - discovered his channel and yours during lockdown, and remain a firm fan of both.

  • @andreawill9017
    @andreawill901720 күн бұрын

    I love listening to you both especially with your wives!

  • @TwoSidesOfFI

    @TwoSidesOfFI

    20 күн бұрын

    🙏

  • @TheRetirementality
    @TheRetirementality24 күн бұрын

    Great show fellas. All of our rental income just flows into our checking account and then we put anything left over in a High Yield SA and then when it builds up we just buy ETFs. I guess it's the opposite for us than for those who have money in different types of accounts.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    Thanks Jeff...makes perfect sense for your AA heavily weighted towards RE.

  • @Zizaco
    @Zizaco24 күн бұрын

    In flames 0:52 🤘 Nice! Super happy for her

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    \m/ jesterhead \m/

  • @hydrogolfer
    @hydrogolfer23 күн бұрын

    Eric and Jason, great video. Curious, are you using an a (intercept) of 1.75% in the CAPE SWR?

  • @TwoSidesOfFI

    @TwoSidesOfFI

    23 күн бұрын

    Thanks! I use 1.50 as it's a little more conservative. :)

  • @WillyTandLou
    @WillyTandLou24 күн бұрын

    Do you have a video or more info on the cape?

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    yes! check out kzread.info/dash/bejne/nYSXmtCgY9a_cpM.html and if you'd like even more background on the tool and how we use it, you can find all SWR content and links to related information at twosidesoffi.com/toolbox/

  • @zekeboz5533
    @zekeboz553324 күн бұрын

    Great topic and fellow Karsten SWR sheet user. Question on the Target Withdrawal (%pa) result on the CAPE-based rule sheet. If you leverage the Cash Flow Assist tab fully (income/expenses populated) do you view that earlier result (%pa) as wiggle room in being able to spend more, x%? My results fortunately have a small 1-2% positive value there after I full leverage the Cash Flow Assist tab. thanks and enjoy the channel!

  • @boombustinvest
    @boombustinvest18 күн бұрын

    Is that CAPE withdrawal strategy jut for US investors? (CAPE is just for US equities?)

  • @wulfster1234
    @wulfster123423 күн бұрын

    My wife and I both got a good chuckle with Jay's comment about Lori not wanting the details of the CAPE ratio spreadsheet. My wife says the same: "I don't want the nuts and bolts; are we doing ok?"

  • @TwoSidesOfFI

    @TwoSidesOfFI

    20 күн бұрын

    😂

  • @beelee1394
    @beelee139424 күн бұрын

    I'm interested in your tax spreadsheet. I'm still accumulating but I try and estimate quarterly with some assumptions during decumulation.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    Here's the spreadsheet I mentioned in the video: bit.ly/taxspreadsheet

  • @hydrogolfer
    @hydrogolfer23 күн бұрын

    Curious, do we know the probability of failure of the values from the CAPE tab (say if you use an intercept of 1.5%)?

  • @TwoSidesOfFI

    @TwoSidesOfFI

    23 күн бұрын

    If you stay within the parameters of the tool, the failure rate is zero.

  • @janitoronfire
    @janitoronfire22 күн бұрын

    I’m just thankful that I will have a federal pension, and I don’t have to worry about downsizing my portfolio. I plan on living off of my pension and my wife’s pension, and never drawing a penny from our investments. Fingers crossed.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    20 күн бұрын

    Sounds great. Do you have a plan for the investments? Legacy, giving, or otherwise?

  • @janitoronfire

    @janitoronfire

    20 күн бұрын

    @@TwoSidesOfFI my wife and I contribute to the C fund in the thrift savings plan. It's basically an S&P 500 index. We also have a small Roth each thru Vanguard. We have two rental properties and we will both a federal pension and social security. I am eligible to retire as soon as June 29th at the age of 56.5 She has 8 years to go before she is eligible at age 57. We plan to travel as much as possible to low cost countries.

  • @wulfster1234
    @wulfster123423 күн бұрын

    Keep in mind that the 2% average inflation rate, and other assumptions, are for the life of your plan. Just because inflation is high today doesn't mean it will be continually high for the next 30 years.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    20 күн бұрын

    Very true

  • @Jonzard
    @Jonzard23 күн бұрын

    What "bonds" do you own, bond funds or specific bonds associated with your timeline?

  • @TwoSidesOfFI

    @TwoSidesOfFI

    22 күн бұрын

    We're index investors, so own bond funds. We prefer the ease of this approach vs. laddering.

  • @KG-oe8oo
    @KG-oe8oo24 күн бұрын

    Where are you keeping things such as sinking funds for large items like a new roof or new a/c unit? I'm having trouble segregating emergency funds, long terms sinking funds and accounts for large dollar deductibles like homeowner's insurance.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    Larger, long term sums are kept in money market funds in my brokerage acct, while shorter term expenses are kept in checking. I keep the latter organized in my budget (I use YNAB) as separate line items.

  • @KG-oe8oo

    @KG-oe8oo

    24 күн бұрын

    @@TwoSidesOfFI thanks! I think because my pot of money is so small, keeping them in cash or money market funds puts me over a 5% allocation to cash LOL!

  • @likethesky

    @likethesky

    23 күн бұрын

    That was going to be my follow up question for Jason @twosidesoffi which is: are all of your sinking funds a portion of your 5%? Meaning maybe 2-3% of cash is earmarked (but not usually spent) and the other 2-3% is just for monthly checks? I’m sure you’ve seen Karsten’s thoughts on buckets just being an illusion, so the only real need is to avoid rebalancing more often.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    23 күн бұрын

    @@likethesky none of my sinking funds are a part of my 5% cash allocation. I also don't follow a bucket strategy.

  • @likethesky

    @likethesky

    22 күн бұрын

    @@TwoSidesOfFI hmmm, I don’t understand. Isn’t a bucket strategy any allocation to cash? (Other than monthly or quarterly cash raising from “whichever side (bonds or equities)” is needed to return you closer to your desired asset allocation, or equal from each if AA hasn’t shifted due to market?)

  • @Jonzard
    @Jonzard23 күн бұрын

    What do think of the critique of CAPE that Shiller's views on what CAPE value is a predictor of poor returns have been criticized as overly pessimistic and based on the original definition of CAPE, which fails to take into account changes in accounting standards in 1990s, which, according to Jeremy Siegel, produce understated earnings. (Right off of Wikipedia)

  • @TwoSidesOfFI

    @TwoSidesOfFI

    22 күн бұрын

    Karsten writes about this here (we like his thinking): earlyretirementnow.com/2022/10/05/building-a-better-cape-ratio/

  • @thurianknight
    @thurianknight24 күн бұрын

    In Flames! Yeah!! 😀

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    Respect! \m/

  • @thurianknight

    @thurianknight

    24 күн бұрын

    Also, I am just over 5 weeks from retirement. Watching you guys talk about your FIRE journeys for the last couple of years has been an inspiration for me.

  • @TwoSidesOfFI

    @TwoSidesOfFI

    23 күн бұрын

    Congrats, the countdown is on for you!

  • @TwoSidesOfFI

    @TwoSidesOfFI

    23 күн бұрын

    @@thurianknight Thanks so much for your support. You're in the home stretch! Best wishes to you

  • @MicahsJourney...
    @MicahsJourney...24 күн бұрын

    Re: the "morbid" process of decreasing your months-remaining-to-live on ERN's spreadsheet, what's the plan if you end up living, say, 100 months longer than anticipated?

  • @TwoSidesOfFI

    @TwoSidesOfFI

    24 күн бұрын

    this is why I've always picked 95 or 100. I don't have to worry about it. -J

  • @Darknight00744
    @Darknight0074415 күн бұрын

    Are you guys take into account that you can no longer spend so much, especially in the last years of your life? I'd rather spend the money at 60 than at 92. I've read the book with zero and find the whole thing extremely exciting and sensible. My grandparents are well into their 80s and spend almost nothing anymore...they did alreday the big world tour etc..

  • @KG-oe8oo
    @KG-oe8oo24 күн бұрын

    I heard that comment from Eric at the end about leaving the show! I mean, understandably you may be too busy enjoying life! I keep hoping you guys will pick me for a case study in "how to do it all wrong but NOT be broke" LOL! Have all of your retirement in tax deferred accounts (traditional instead of Roth) without enough time to switch to Roth? CHECK! Have all of your assets that would have preferential tax treatment (stocks eligible to be taxed at capital gains rates) in your 401k so they are eventually taxed as ordinary income upon withdrawal while having all of your regular interest assets outside a tax advantaged account so they are ALSO taxed as ordinary income CHECK! Think you can time the market before finding the FIRE community and get out of the market at the exact wrong time while also getting back in at the exact wrong time? CHECK Pay off your 2.5% 15 year mortgage in 7 years rather than pay the minimum and invest the excess? CHECK! Overcomplicate your finances by spending an enormous amount of time tracking expenses and moving money to get every last bit of interest? CHECK! Can't figure out whether you will have plenty of money in retirement due to social security and a pension while also wondering if you will go broke and end up eating cat food and living in a cardboard box? CHECK! Seriously, it's not as bad as all of that but if you're ever looking for a case study, I'm still your gal! LOL! I did take your advice from a prior episode and changed the value of my real estate on my net worth statement from a loose current market value to purchase price. It was a gut punch to take that much value off (my house has easily doubled in value) but it was fun to see my net worth eventually come back excluding the increased real estate value.

  • @Jonah-in-Boise-ID

    @Jonah-in-Boise-ID

    24 күн бұрын

    If it’s any consolation I’ve checked a few of those off the list too. I think you have to make some mistakes along the way. The goal is to make small ones, like paying off your 3% mortgage early ✅, putting your money market cash into your taxable account ✅. And just be diligent with living modestly and saving and investing over the years. That’s actually the part that most people can’t actually put into practice.