#85: Recently I’ve really started to notice the impact of inflation on daily spending. Have you?

At first, it was just 1-2 things. Then it was a handful. Now it seems like everything is noticeably more expensive. (Assuming it’s even in stock in the first place.)

Gas. Groceries. Takeout. Toiletries. Utilities. Car maintenance. Healthcare/supplies. Pre-school. Appliances.

Everything seems to cost more and you just can’t buy as much with the same budget anymore.

This got me wondering about how recent macroeconomic changes over the last 6 months might impact retirement safe withdrawal rates and asset allocations.

The macro changes I’m referring to are: Inflation at a 40-year high. Stock valuations doubling since their pandemic lows. Interest rates that are scheduled to increase a minimum of 3 times this year.

In these times, what should investors and retirees be doing to defend their portfolio values and retirement security?

This week, I asked my friend Karsten Jeske (aka “Big ERN”) to help us make sense of all that is going on right now in terms of macro trends…and what it all means for safe withdrawal rates and asset allocation. We had a wide-ranging, nearly 2-hour(!) discussion full of insights and tips that you won’t want to miss.

We discuss:

• Major recent macroeconomic changes that (early) retirees may want to factor into their retirement planning
• What new safe withdrawal rate % retirees should consider right now
• Whether investors should potentially update their asset allocation given current macro trends
• Whether he believes asset prices are overvalued right now
• Alternative assets (like cryptocurrencies) and their merits / concerns
• How much cash he believes is advisable to hold right now

Do you plan to make changes to your asset allocation or safe withdrawal rate in light of recent macroeconomic changes? Let me know by leaving a comment!

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Links mentioned in this episode:

• Karsten's Safe Withdrawal Rate Series
• Karsten's Google Sheet DIY Withdrawal Rate Toolbox
• Karsten's post on Preferred Stocks
• The shockingly un-simple math behind safe withdrawal rates (HYW035)
• How to use a bond tent to reduce sequence of returns risk (HYW068)
• Does the “yield shield” protect against sequence risk? (HYW069)
• Is rental real estate a safer type of “yield shield”? (HYW070)
• Schedule a 1:1 consult with me
• HYW Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#84: Today's episode is about an important end-of-year planning topic: asset allocation and portfolio rebalancing.

Many otherwise smart investors set their portfolio once, but then fail to rigorously monitor their asset allocation and rebalance regularly.

Whether due to inertia or hassle, this inaction is costly. It results in lower returns and greater risk as your asset allocation drifts…bad for wealth-building.

How do you set your target asset allocation optimally and rigorously? And how do you rebalance tax-efficiently?

This week, I show you how to set your target asset allocation to match your risk profile and investment goals. I share how to track your asset allocation to see how much it has drifted from your target allocation. And I explain step-by-step how to tax-efficiently rebalance.

If asset allocation and rebalancing feel like a mystery or chore, then don’t miss today’s episode. I’ll show you how to do it systematically, efficiently, and rigorously…all in 1 hour or less per year.

What you’ll learn:

• Why it’s prudent to sell your winning investments and rebalance toward your underdogs
• How to create and define your target asset allocation starting from first principles
• How to determine your investment style and risk tolerance in an intellectually honest way
• How to track your current allocation and analyze drift from your target
• How to rebalance your portfolio tax-efficiently step-by-step
• How often you should rebalance

Check it out here:

https://hackyourwealth.com/asset-allocation-rebalance-portfolio-replay

How often do you rebalance your portfolio? Let me know by leaving a comment!

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Links mentioned in this episode:

• Download my FREE spreadsheet to track your current vs. target asset allocation
• My 4×4 FIRE framework for creating and protecting wealth (HYW002)
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#83: You’ve worked hard all your life. At retirement, it’s time to kick back and relax, right?

Not so fast.

You still have to get THROUGH retirement.

That means knowing how to draw down your portfolio to:

1. meet all your monthly cash flow needs
2. cushion against unexpected expenses
3. minimize tax liability
4. ideally help your kids / grandkids, give to charity, or leave a legacy
5. ensure your retirement nut doesn’t run out before you do

This is very challenging because you have to forecast things you simply can’t know with certainty. Inflation rates. Market returns. Sequence risk. Tax rates. Your health condition and anticipated healthcare needs.

So, how can retirees plan their retirement portfolio withdrawals to actually enjoy retirement and not worry about running out of money?

This week, I sit down with Steve Parrish, Co-Director of the Center for Retirement Income at The American College of Financial Services, to talk about tax-efficient portfolio withdrawal strategies in retirement.

We discuss:

• Key principles retirees should understand when deciding which assets to draw down and in what sequence
• How those principles change when you have alternate monthly income sources (like rental real estate, pension, etc)
• Why your wealth bracket determines what is the most tax-efficient sequence of portfolio withdrawals
• How soon-to-be and current retirees can protect themselves against sequence of returns risk
• When it makes sense to use legal tools like tax-free gifts, GRATs, etc, to reduce tax liability on retirement assets
• Why you might want to pay taxes now to do annual Roth conversions to ratchet down your IRA/401ks and the ticking tax time bomb attached to them
• Portfolio withdrawal advice for early retirees (FIRE)

Check it out here:

https://hackyourwealth.com/retirement-withdrawal-strategies

Do you worry about running out of money in retirement? If so, what is the biggest reason why – not saving enough, spending too fast, market tanks during retirement, something else? Let me know by leaving a comment.

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Links mentioned in this episode:

• Steve Parrish
• The shockingly un-simple math behind safe withdrawal rates (HYW035)
• How to FIRE with confidence, step by step (HYW060)
• How to use a bond tent to reduce sequence risk (HYW068)
• How long will your retirement savings last?
• Schedule a private 1:1 consultation
• HYW Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#82: Are annuities a good investment for retirement?

With $250 billion in sales each year, and $2.5 trillion in retirement annuity assets under contract, annuities comprise a huge slice of US retirement assets.

Understanding annuities – whether annuities are right for you, and how annuities fit into your retirement strategy – can get complicated given all the annuity options out there and the extreme uncertainty in today’s markets.

So this week, I sat down with Stan Haithcock, aka “Stan The Annuity Man,” to deep dive on annuities. We chat about how annuities work, why annuities are not investments (in the portfolio sense), and why there is no such thing as “best annuities.”

We discuss:

• What annuities are and what purpose they serve
• The different types of annuity options (immediate annuity, deferred annuity, fixed annuity, variable annuity, indexed annuity, multi-year guaranteed annuity, life annuity)
• How annuities account for inflation
• The mechanics of how to buy an annuity
• How insurance companies that sell annuities make money
• The different type of annuity fees you can expect, and typical all-in costs for different annuity types
• How to vet the insurance companies that sell annuities
• How to vet an agent and questions to ask before buying an annuity from them
• How agents who sell annuities are compensated
• Annuity taxes and the tax profile of annuities
• Basic protections your annuity gets if the insurance company you bought it from goes bankrupt
• Who annuities are best suited for, and whether annuities are a good idea for early retirees (FIRE)

Check it out here:

https://hackyourwealth.com/annuities

Have you purchased any annuities before, either for yourself or a family member? What kind of annuity did you buy, and why? Let me know by leaving a comment.

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Links mentioned in this episode:

• The Annuity Man
• National Organization of Life & Health Insurance Guaranty Associations
• Social Security: How it works and optimal claiming strategies (HYW050)
• How Medicare works: eligibility, enrollment, cost, and coverage options (HYW048)
• How Social Security Works: The Ultimate Guide For Laypersons
• Retirement withdrawal calculator: How long will your savings last in retirement?
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#81: With the market rallying like crazy this past year, you might have significant capital gains on stocks right now.

Now might be a good time for some of you investors to harvest some capital gains. Maybe you’re looking to buy a house. Or maybe you just want to rebalance your investments.

But when you sell stock, you pay taxes on the sale.

And capital gains taxes can get complex because the effective tax rate you pay when you sell stock depends on whether there are long-term vs. short-term capital gains, whether there are any long-term vs. short-term losses, what your marginal tax rate is, and even whether you are required to pay the Medicare Surcharge Tax.

That’s why this week I invited CFA Scott Stratton to explain the intricacies of how capital gains taxes work. We discuss key rules and strategies you need to know to do thoughtful capital gains tax planning. If you want to learn how to minimize capital gains taxes, then don’t miss this episode.

You’ll learn:

• What types of assets capital gains taxes apply to
• Difference between short-term vs. long-term capital gains tax treatment
• How capital gains and losses work in tandem come tax filing time
• How to harvest capital losses and harvest capital gains
• Current proposed legislative changes to capital gains tax rates
• What investors may want to consider doing now before potential changes take effect

Check it out here:

https://hackyourwealth.com/capital-gains-tax-on-stocks

What other tax planning questions do you have about capital gains taxes? Let me know by leaving a comment.

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If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• Good Life Wealth Management
• Tax Loss Harvesting: Rules and Strategies with Bob Dockendorff (HYW022)
• How to take a year off, earn 6 figures, harvest capital gains, do Roth conversions…and pay zero taxes on it all
• How to earn 6 figures and legally pay zero taxes (updated for 2020) (HYW021)
• Avoiding capital gains tax on real estate: how the home sale exclusion works
• How the Home Sale Capital Gains Tax Exclusion Works (HYW033)
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#80: Teaching kids about money isn’t easy, but it’s crucial if you want to boot them off your payroll after they graduate from school.

But while financial literacy is good, helping your kids build the mindset and momentum to achieve financial independence is even better.

It requires that they internalize (and value) aggressive saving, investing, and compounding…not just living within their means.

That’s why I was so excited to chat this week with Doug Nordman and Carol Pittner, father and daughter co-authors of a new book on how to teach next-generation financial independence.

We discuss:

• Why it’s important to let kids make their own financial choices (and mistakes) when the stakes are low
• Why letting your kids buy “One Special Thing” per shopping trip is an effective teaching strategy
• Why you might want to pay your kids for jobs, but not chores…and the difference between the two
• Why it might not be a good idea to pay your kids for getting good grades, and what you can do instead
• Why “profit sharing” is an especially powerful strategy to teach kids about savings and frugality
• How to create a “kid 401k” to teach your kid lasting lessons about compounding and long-term investing
• How to incentivize your kid to contribute to a Roth IRA early on
• How to handle the question of “how rich are we?”

Check it out here:

https://hackyourwealth.com/teaching-kids-about-money-financial-independence

What strategies do you use to teach your kids about saving, investing, and compounding? How are you helping them learn about financial independence, if at all? Let me know by leaving a comment.

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If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• Raising Your Money-Savvy Family For Next Generation Financial Independence
• The Military Guide
• childFIRE
• Financial literacy for kids: how to teach your kids about money (HYW077)
• 9 Crucial Money Lessons Your Kids Must Learn to Succeed as Adults (HYW027)
• How to financially prepare for starting a family with Kevin Mahoney (HYW038)
• The best parenting guidance I’ve learned for raising successful children
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#79: This one’s for you parents who have kids in college or soon going to college…

In the COVID relief stimulus bill that passed at the end of 2020, there was a big chunk about federal student financial aid.

New rules are bringing significant changes to college financial aid. This week, I deep dive with my friend Ann Garcia, aka The College Financial Lady, on what these changes are and how they will impact you and your family.

We discuss:

• Overview of the federal student financial aid application process, including key dates
• Important changes coming to the federal financial aid process: for the FAFSA application, families with multiple college-aged kids, grandparent 529 plans, divorced parents, and more
• Timeline and phasing of these changes coming in 2021, 2022, 2023 and beyond

Check it out here:

https://hackyourwealth.com/fafsa-federal-student-financial-aid-changes

Will you be applying for college financial aid over the next few years? What one thing brings you the biggest worry when it comes to college financial aid? Let me know by leaving a comment.

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If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• The College Financial Lady
• College financial aid tips and strategies, with Ann Garcia (HYW053)
• 529 college savings plans: rules, tax benefits, & qualified expenses (HYW026)
• College financial aid strategies to optimize your assets, income & EFC (HYW025)
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#78: For this episode, I polled other influencers in the personal finance community to ask for their best tip on teaching money lessons to kids.

I had four different personal finance influencers weigh in – a range of bloggers, podcasters, authors, and community admins. All of them are parents themselves.

I asked each person to answer one simple question:

“When it comes to teaching your kids about money, what single method or strategy have you personally found to be most effective?”

Check out their collective tips here:

https://hackyourwealth.com/money-lessons-for-kids-tips-from-personal-finance-influencers

What strategy have YOU found to be most effective when it comes to teaching your kids about money? Let me know by leaving a comment.

 Don't miss an episode, hit that subscribe button...

If you liked this episode, be sure to subscribe so you don’t miss any upcoming episodes!

• Apple Podcasts
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I need your help, please leave a listener review :)

If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• Couple Money Podcast, Thriving Families FB group
• Raising Your Money-Savvy Family For Next Generation Financial Independence
• KateHorrell.com
• Personal Finance for U.S. Military Service Members and Families FB group
• Her Dinero Matters podcast
• Financial literacy for kids: how to teach your kids about money (HYW077)
• 9 Crucial Money Lessons Your Kids Must Learn to Succeed as Adults (HYW027)
• How to financially prepare for starting a family with Kevin Mahoney (HYW038)
• Hey, rich people. Wealth management includes telling your kids how rich you are.
• The best parenting guidance I’ve learned for raising successful children
• How to motivate your kid to win the national spelling bee (and excel in life)
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#77: Teaching financial literacy for kids may seem like a tall order…when considering that financial literacy even for adults is a national deficiency.

But teaching kids about money is crucial if you want your kids to grow up financially responsible and independent.

As a parent, you will have a strong vested interest in it, because if you fail at it you’ll eventually pay the consequences (literally), e.g., if your adult kid can’t support themselves and move out of the house.

And early retirement? You can probably kiss that goodbye if your kid is financially reckless.

So, instilling good financial education for your kids is a wise investment…maybe even the wisest investment.

This week, I spoke with Robin Taub, author of the book “The Wisest Investment,” about how to instill financial literacy for children. We discuss strategies, role modeling, and techniques for teaching personal finance and money lessons to your kids.

What you’ll learn:

• Why teaching kids about money is hard
• What financially well-educated kids have in common
• The right age to start teaching kids about money in earnest
• The crucial money lessons kids at each maturity level should know to have healthy skills, habits, and mindsets about money
• Robin’s core framework for teaching kids about money
• Common mistakes parents make when teaching their kids about money, and the most effective role modeling parents can do to successfully teach their kids about money
• How to get kids to become self-motivated to learn about money, saving, investing, and budgeting
• How parents can create teachable moments in daily life and turn them into money lessons for their kids
• How to answer awkward questions like “how rich are we” and “how much money does our family make”
• How parents can help teach their kids to embrace impulse control and delayed gratification when it comes to money
• Guidelines for paying kids an allowance or paying kids to do chores
• How to teach kids about budgeting (and when it’s age appropriate)
• For affluent families: how to make sure your kids don’t take money for granted or become spoiled entitled brats

What methods have you found to be effective when it comes to teaching your kids about money? If your kids are self-motivated to learn about personal finance – earning, budgeting, saving, investing – how did you get them to be self-motivated? Let me know by leaving a comment.

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Related links:

• The Wisest Investment: Teaching Your Kids to Be Responsible, Independent and Money-Smart for Life
• Robin Taub
• 9 Crucial Money Lessons Your Kids Must Learn to Succeed as Adults (HYW027)
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#76: Retiring early to travel the world is a common goal for FIRE aspirants.

But full-time travel can lose appeal quickly. Churches and temples quickly start to look the same. Gardens and palaces quickly look the same.

When you’re responsible for creating all the structure to your day – every day for weeks and months on end – it gets exhausting and can feel purposeless.

But what if you could design early retirement travel around language learning?

By enrolling in language immersion courses at local language schools in countries you travel to, you not only learn how to communicate conversationally with locals. You also get structured and even vibrant exposure to local culture, food, people, and activities because being situated in a school or university environment creates that exposure and structure for you naturally.

This week, I invited Ingrid, a software engineer turned early retiree and successful travel blogger, to share about her early retirement experience pursuing language learning through travel immersion courses. Making language learning the focus of early retirement has brought joy and purpose and structure to her travel experiences.

We discuss:

• How Ingrid came up with and built strong confidence in her FIRE number
• Her asset allocation and withdrawal rate
• Her blog’s revenue contribution (and what helped her blog get traction)
• How Ingrid plans travel around language immersion courses
• How she meets and connects with locals when she travels, plus her advice for solo female travelers
• How she handles health insurance and healthcare costs as an early retiree and when she’s traveling
• How she believes one’s emotional well being and personality change in early retirement
• How she contemplated family and children alongside her early retirement plan, why she decided against having a family, and her thoughts on loneliness, dating, and companionship as an early retiree
• What Ingrid would have done differently if she could do it over again

Check it out here:

https://hackyourwealth.com/language-learning-courses-retirement-travel-immersion

Have you ever studied abroad or taken a language immersion course in another country? What do you think about the notion of pursuing language learning through travel immersion courses in early retirement? Let me know by leaving a comment!

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If you liked this episode, would you please leave a review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• Second-Half Travels
• Firecalc
• Couchsurfing
• Squaremouth
• Nomad Cruise
• Remote Year
• WiFi Tribe
• Schedule a 1:1 consult with me
• HYW FB community

Intro/Outro: Old Bossa by Twin Musicom.