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How Much Do You NEED to Retire? It’s Less Than You’d Think


Everyone tells you you’ll need millions to retire, let alone retire early. You hear it all over mainstream financial media, “You need FIVE million dollars” or “Three million dollars is enough, but you have to be frugal!” Even having half a million dollars in investments seems like a lofty goal for most Americans. Are these financial “experts” just out of touch with the everyday person? And if so, is there a way to retire with less than a million dollars? Surprisingly, yes!

Wes Moss, certified financial planner, money educator, and author of the best-selling book You Can Retire Sooner Than You Think, is here to show you that retirement isn’t that far away. Through some simple calculations, Wes enlightens us on how many Americans are already in the position to retire and why you don’t need many millions to live a comfortable post-work life. But that’s just the tip of this financial education iceberg.

We get into a much deeper discussion with Wes about what a happy retirement really looks like and the key signs that you’ll live a satisfying retirement life. There are two main factors to a happy retirement, and if you haven’t been paying attention to them, you can almost guarantee you WON’T enjoy financial freedom when you achieve it. So, if you want a happier, healthier, wealthier, and longer retirement, stick around!

Mindy:
Hello, my dear listeners. And welcome to the BiggerPockets Money podcast. Today we talk to Wes Moss about the common traits of people who are able to retire early and the ones who are able to maintain a happy retirement.

Scott:
Yeah, you’re going to learn from Wes here, an expert who has worked with thousands of retirees. And in addition to his game plan for getting to retirement, we’re also going to get a deep dive on maybe the more important work that he’s done in the research that he’s conducted unto what makes retirees happy and unhappy. Lots to think about there.

Mindy:
This is a great show. Hello, hello, hello, my name is Mindy Jensen. And with me, as always, is my 4% rule loving co-host, Scott Trench.

Scott:
Awesome, Mindy. Great to be here with my always banging on about the validity of that 4% rule co-host, Mindy Jensen.

Mindy:
That was awesome, Scott. That was the best one ever. Always banging on. I love it. Oh Scott, you’re so good. Scott and I are here to make financial independence less scary, less just for somebody else to introduce you to every money story because we truly believe financial freedom is attainable for everyone no matter when or where you are starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or cultivate today the things that will take decades to bear fruit but lead to ultimate happiness in retirement, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.

Mindy:
Scott, I am so excited to talk to Wes Moss today. He is fabulous. And this show is awesome. And I don’t want to wait another minute to bring him in.

Scott:
And without further ado, let’s bring in Wes Moss.

Mindy:
Wes Moss is a seasoned financial educator and a certified financial planner. He’s the host of the podcast Retire Sooner and the longtime host of Money Matters, a weekly call-in financial show on 95.5 WSB, Atlanta’s news and talk. Wes is also the author of four books, including bestsellers, You Can Retire Sooner Than You Think and What the Happiest Retirees Know. Wes, welcome to the BiggerPockets Money podcast. I’m so excited to talk to you today.

Wes:
Awesome to be here. Thank you so much for having me.

Mindy:
Wes, you write a lot about retirement. What gets you so interested in it?

Wes:
Early retirement is something that… I think that I’ve always thought about this relationship, Mindy, between money and happiness. What is enough money to be able to stop working? And I’m always fascinated by… Gallup does this, there’s a bunch of research firms that do research around job satisfaction. How much do people like working in America? And if you look at LinkedIn, you’d think that everybody loves their job in the United States. And the reality is as much as we’d like to say we are the best working culture, and I think we are, by the way, most people just don’t like their work, they hate it or they could take it or leave it. And the Gallup poll that originally opened my eyes to this was, I don’t know, 15 years ago. And they’ve continued to update this research and it’s still similar to this. But it’s essentially such that of one in five people in America, 20% do love their job, they’re totally engaged, they’re good at it. And then three in five, Mindy, they don’t hate work but they don’t love it either, they’re just take it or leave. It’s okay. And then one in five dislike their work so much that they’re trying to bring their company down. They would like to see their company do poorly, they’d like to see their boss get fired, they’d like to see their…
Think of how that is, in the world that we live in, 80% of people don’t love work but 100% of people want to get to economic freedom. 100% of us want total economic freedom. To me, this idea around just shaving off a year of retirement or two years or five years for the Retire Sooner podcast and the books I’ve written is really about helping that 80% of people in America just get to financial freedom a little bit sooner than they otherwise would have here in the United States.

Mindy:
People in the personal finance space mean all sorts of different things when they say retire. What does retirement mean to you?

Wes:
I think very simply, it’s economic freedom. It’s not having to work at the job that you don’t love.

Mindy:
Okay, it sounds like you are defining retirement as synonymous with financial independence.

Wes:
Correct. For the most part. The other thing, Mindy, too that I’ve written more about in the last year is unretirement. I discovered this in two different ways. One, our mission statement for the Retire Sooner podcast is to help a million people retire at least one year sooner. I thought, oh, a million people one year sooner, that’d be a million years extra economic freedom. And then if you look at the 55 plus civilian labor force, it dropped by about 2 million people in the early days of COVID.
I remember checking in with this a year after we started the podcast, I think, wow, we did it. We helped way more than a million people retire early because the civilian labor force of 55 plus dropped by almost two million people. And you can make a case that obviously not all of those people retired, but they did leave the labor force for one reason or another. And a lot of those people, or what I think of pull forward people where they weren’t quite ready to retire, but COVID rocked everyone’s world and they said, “I was pretty close to being able to retire. I’m just going to pull this forward a year.” There was a lot of people that just said, “I’m going to retire sooner than I maybe had planned.”
And then as we sit here today a couple years later, almost all of those people have unretired and they’re back in the labor force in the 55 plus. There’s been a movement in the last year and a half to two years of people that said, “Wow, maybe I retired a little bit early.” Some of it is that we’ve had massive inflation and people that thought they were ready for retirement weren’t quite ready for prices to go up by 20% over the course of a couple of years and they decided to go back. In addition, we have a really strong labor force right now. It’s a really tight labor market. That experienced group of people, the 55 plus have been coaxed back into labor force because people want them to work. And they’re entering back into the labor force, this unretirement, much more on their terms as opposed to working the job that they may not have loved.

Scott:
That leads me into a question I wanted to ask here about, you said one in five Americans loves their job, three is indifferent and one in five actively hates it so much they’re trying to bring the company down. Oof, interesting stat there, there’s an interplay with this. You keep using the word economic freedom. And the way you’ve used it implies your belief that it is just a broad 100% universal wish for Americans.
I’ve wondered in the past if, as folks progress towards that journey, let’s say most of the way they’re getting close to this point of economic freedom, financial freedom, is there a relationship between the way they feel about their job and the gradual attainment of that goal? For example, do the one in five Americans who love their job, are they disproportionately folks who have good savings habits, wealth, optionality to leave if things get bad, the ability to speak up and say, “No, I’m not going to take on that responsibility,” or, “I’m not going to do it that way if you want me to work here”? Is that relationship correlated in your mind?

Wes:
Yeah. Say that again. Correlated in that there’s a group that they do love what they’re doing, they do have good savings habits and they’re not trying to run from work. Is that what you’re-

Scott:
If I’m one of the Americans who hates my job, is that directly related to the fact that I’m totally dependent on my job? And is the fact that I love my job likely to be related to the fact that I like it but I don’t need it to sustain my lifestyle?

Wes:
I think that’s a smart question. I think that to some extent, and again I see this not just through these Gallup polls but just in the real world, it is hard for people to land in a spot that gives them both, which is this career they really feel like they’re contributing to the world and they’re being paid well to do it. It’s a hard thing. I wish we could all do that. When you get out of college, your graduation speaker tells you that you can do that. It’s like, “Go out, save the world. And you’re going to follow your passion and the money’s going to come.” A, it does happen for a fair amount of people, and B, we want it to happen for everybody, but it’s just the reality is that’s hard to land.
And then you end up with having people that, they get into a career, America’s expensive, the career’s paying for everything that they’re paying for life, and then they get a little bit trapped into it and it’s hard to jump out of it. I think it is a really good aspiration. A fair amount of people can do it. 20%, maybe 30% of Americans find that perfect balance between I really do love this and I’m making money, but it’s just not as easy as we’d like it to be. And maybe, guys, it’s because this economy evolves so quickly. The army of America productivity is great, but it also can quickly leave people behind.

Scott:
That was going to be another question I always have here is we talk a lot about financial freedom. I love the term economic freedom. Same thing here. Whenever BiggerPockets content or financial independence retire early content seems to get outside of the bubble of the financial independence community, it’s immediately shot down by a hoard, it seems, of naysayers who say how ridiculous it is, how unattainable it is, how it can never get started, how the folks that are pursuing financial independence can’t seem to relate to normal people who would never be able to possibly get ahead. You’ve said 100% of Americans would take economic freedom, and I believe you, but I don’t think 100% of Americans believe it is attainable or realistic in any sense. What’s your take on that problem set?

Wes:
It’s Suze Orman’s fault. And here’s why I say that. Because Suze Orman says that you need at least $5 million to retire and you need to work till you’re at least 70. A, very few people can even conceive saving $5 million in after tax money, number one. Number two, not all Americans want to work till they’re 70 unless you’re in that group that really loves work. And again, I wish we were all there, but we know that not everybody’s there. A lot of people, 1/2, 2/3rds… I don’t know what the exact number is. I don’t know if Gallup’s totally right on that, but I know, and I can just think about the client base I’ve worked with over so many years, most people, by the time they’re ready to stop working, it’s pretty rare that people are like, “Oh, I really love it.”
The other thing is that you get even someone that does love their job, after 30 years of it, they’re like, “I’ve done this for 30 something years. I want to do something else.” That’s the first step. And I’m joking about Suze, obviously. But the financial, whether it’s Wall Street, whether it’s someone like a financial pundit that says you need X amount, it makes it seem totally unattainable to most people who say, “Look, oh, just get to 5 million bucks.” Okay. Talk to a 30-year-old about is that really going to work? And after a year come back and say, “Are you on path to save $5 million?” How many people are able to do that?
Here’s my answer to that is that the world propagates numbers that I think do seem pretty unrealistic. Then I published a book 10, 11 years ago, You Can Retire Sooner Than You Think, and the median, not mean, but the median number to jump from the unhappy to happy retiree camp is $500,000.
Wait a minute. That’s attainable. Now, it’s only one of a couple financial things you need to do, but think of it this way. $500,000, pay off the mortgage, multiple streams of income, and you can live in America. And even to this day, now it’s been 11 years, you can still make that work if you don’t have a mortgage and you live… I see people do it every day. I’ve worked with many families over the years that their monthly amount of spending is really low and they can, to some extent, live on that because they have a really good social security payment, and they may have a little bit of a pension. And they’re married, so they have two social security payments.
Now, I will say those numbers have gone up. If you were to adjust that, guys, today for inflation, that median number looks more like $700,000 in liquid retirement savings, not net worth, in liquid retirement savings. And about $1.25 million for the average of that group. Those are still big numbers, but they’re also not, I think, inconceivable if you give yourself 20, 30, 40 years to do it.

Scott:
Awesome. $1.25 million includes the paid off house, right?

Wes:
It does. That’s a big part of it. Yep.

Scott:
Because I was setting up for a question around what is enough? Because that was a word used really illuminating in the very early part of this interview. And is that your definition of enough for the median American who’s looking for a comfortable retirement here? And do you think that most people would agree with that definition of enough?

Wes:
And it’s tight, no question about it, but if 10 or 11 years ago you had $500,000 and you had a balanced 60/40 S and P 500 and bond portfolio, which it’s been a terrible couple of years for bonds, but that 500, using the 4% rule, taking out 4% plus inflation every year, would be over $800,000 today. That worked over the last decade even with the crazy inflation that we’ve had.
And let me just do quick math on that. Imagine you have that $1.25 million. Some people say that’s too low, some say, “I can’t even get there. That’s crazy high.” And I know there’s a debate around the 4% rule. I think Dave Ramsey came out the other day and said 8% is cool. You make 12%, inflation’s 4%, you live on 8%.

Scott:
There are a lot of YouTube responses to that that I think Mindy just summed up succinctly the tone of many of those responses there.

Mindy:
I am going to throw out there if you have not yet read through the original Bill Bangen article in the journal of whatever from 1994, I have a copy of that article, email me [email protected]. I will send it to you. It is fascinating. You can do 4%. 8%, don’t bet on it.

Wes:
And Mindy, I’ll offer this up too. Bangen had not updated his study for 30 years, or it’d been like 25 years. And we had our team, we totally recreated it. And the 4% rule absolutely works. I actually think of it as the 4% plus rule because it makes it so that you know it’s a dynamic rule of thumb to follow. And it’s really more like 4% to 4.5%. And that’s a range that you always want to come back to. Anyway, I don’t know of a more important number in all of financial planning because it solves for all the things we’re looking… It solves for not running out of money. That’s important. It’s a number one thing. I keep saying number one. It’s a super important thing. It’s a fear. It hearkens to your allocation says you need at least 50% in equities because that’s where you get your inflation protection, so it also solves for that, and then it solves for inflation. It raises what the dollar amount you’re withdrawing every single year for whatever inflation is.
It checks all those super important boxes, yet we have an industry that is totally at war over the number. Wade Fu Foul says you can only do 2.5%, Dave Ramsey says you can do 8%. No wonder everybody’s so confused. Just get an email from Mindy, she’ll walk you through the most important financial rule you need to understand in order to have the confidence to live on the money that you’ve saved.

Scott:
I wonder what the $5 million and work till your 70 advice from Suze Orman implies. Was that a 1%, 0.5% Withdrawal rate?

Mindy:
And then you’re working until you’re 70 when you don’t need to. You’ll probably have all this money and then you’ll never spend it because you’re 70 and you don’t have any place to go now. Not that 70 is the end all be all; I hope to still be kicking around when I’m 70. But Wes, back to what you said, this $500,000, which was a few years ago and now it’s $700,000, that is including a paid off house. Having a paid off house is difficult if you’re constantly upgrading your house and you’re constantly spending all the money that you have in your account. But if you buy a good solid house that’s going to fit your needs forever and you don’t move, it’s very easy to have a paid off house and then retire on this $500,000, $700,000 that you were saying. And you can still live a comfortable life. Can you go on extravagant vacations every single week? No. You’ll need more money. But you can have a very comfortable retirement. Yes, you can retire. And the people that are arguing against this, I have to be nice because they’re probably listening, but I want to just shake them and be like, “Could you please listen to what I’m saying? I’m saying it’s possible. Let me show you how.”

Scott:
I agree with the 4% rule. I think we’ve talked about this at length. Michael Kitces I think has taken Bill Bangen’s work and really evolved it even further in a lot of ways with those studies. If people are going to argue about the 4% rule, I think first they’re wrong, and second, we’re not going to convince them with more discussion at this point. But where I think someone will argue with you, Wes, potentially, is saying is %700,000 enough at a 4% withdrawal rate even if I’ve got a paid off house? I just did some quick math here, and $700,000 at 4% is $2,300 a month. And 4.5% withdrawal rate is $2,600 a month. Could you walk us through how you’d envision this median American maybe not living in one of the most expensive cities in the country but in a suburb that’s got a $400,000 or $500,000 house, how do they make that work, that spending work? Or at least bridge it until the time where they can collect that social security.

Wes:
Let’s do the math on the $700,000, which, again, I think of this as a bare minimum in liquid retirement assets, number one. Number two, we have to remember that we do need essentially to have a paid off mortgage because then our living expenses are ultra low. And then the third really important piece to this is multiple streams of income. Now, if you have no other streams of income, then that combo doesn’t work.
Think of it this way. $700,000, 4.25% is about $30,000 a year. It doesn’t sound like a ton, but it’s $30,000 plus whatever inflation is over time. That’s one. Two, social security one, husband, social security two, wife. Now you’re talking about $3,000 a month for one, $2,000 a month for the other, that’s $36,000 a year, then it’s $24,000 a year. That’s $60,000.
This is the other thing that gets a bad rap. Now, you could also say those social security numbers sound a little bit high. I see social security numbers like this all the time for people that have had decent, pretty good wages over time. Put those two together and now you’ve got $30,000 and $60,000. And that’s without even a pension. Imagine you work for a utility company for 20 years or 15 years, then you could maybe have… And I see people that have 1,500 bucks a month. “I worked for a little while with a utility company. It wasn’t a lot, but I get 1,500 bucks a month.” $30,000 from your savings, $60,000 from social security one and social security two; that’s $90,000 a year.
To Mindy’s point… Or to your point, Scott, you’re not maybe living extravagantly, but if you don’t… You’ve got your $700,000 plus your social that leads to $90,000, you’re going to be at a super low tax bracket by the time you get to retirement, extraordinarily low tax bracket, and with very minimal housing costs. If the mortgage is paid for, then that’s enough to live even in America. Now, maybe not San Francisco, maybe not New York City, but there are a lot of great places in the United States that you could go live a really comfortable life on that. I’m not saying it’s an extravagant existence, but it’s more than… And here’s the reality, it’s more than most retirees live on.

Scott:
I think I buy that. I think that sounds super reasonable. I just checked, and the median household income in 2022 was 74,580 bucks. With a paid off house and the income streams that you just described, this is not… I think that plenty of people listening to this are going to say, “No, I want more than that.” That’s totally fine. But this is a very reasonable bar to set for the median American in terms of what enough is, I think.
And the next question is how realistic is it? How does somebody go about approaching that? And what’s the simplest way that you would give advice to somebody to approach that? Maybe they’re starting this journey at 35, 40 years old and want to catch up. How do they get there?

Wes:
I think that, Scott, that’s the reality here is that as long as you give it enough time, it’s super possible. As long as you’re giving it 20, 25, 30, pretty much any type of savings you put in a calculator for 35 years at a 7% growth rate… And yes, the S and P 500 has been more like 11, 11.5, but let’s just call it 7. It’s not too tough to get to a million bucks in savings if you’re giving it 35 years. And here’s the reality, most people are not really thinking about saving all that much at 25. To go to 65, that’s 30 years. It’s a long time. My math is right. 35, 45, 50… I’m sorry, that’s 40 years, that’s 40 years. You could start at 35 and you still have 30 years to get to age 65. That’s a lot of time for compounding there.

Mindy:
Well, yeah, and if you’re starting, then you don’t have to be putting away 50% of your income. It can be a nominal part of your income that isn’t really pinching. And I think that a lot of people don’t understand that. They’re like, “Oh, well, I’ve got to really live like a miser in order to be able to retire.” And Scott, do you remember we had a talk at work once where we were just presenting this idea to our coworkers and one of our coworkers raised her hand, and she’s like, “I don’t want to stay for retirement right now. I’m young. I want to live.” And I was like, “Oh, okay. I don’t have any comment for that.”

Scott:
Medium pocket.

Wes:
I don’t have that pocket. But the other thought is, I think back to our conversation, Mindy, when you were on the Retire Sooner podcast and your expertise around real estate and how you do it with buying a property, fixing it up, selling a property and doing that in a really constructive, methodical way over time, I’ve had a lot of families I’ve worked with over the years that the liquid retirement savings part of their overall plan is not the majority of it.
When I say multiple streams of income, I take that super seriously. It is social security number one, social security number two, so you and a spouse if you’re married. And it’s obviously financially a little easier to be retired because you’re splitting costs if you have a partner or a spouse. But then it’s not just that; pensions are still a real thing. There’s not a lot of 25 year olds that are going to have with them and they’re 60, but they’re not dying, they’re not extinct. They’re very real, number one. Number two, a little bit of real estate income can go a really long way. I’m not saying you need to be a land barren and have every green house on the monopoly board, but one rental property, two rental properties, cash flowing 1,000, 2,000 bucks a month. Again, we’re not talking about the Empire State Building here, but when I say multiple streams of income, that is another one that can obviously be extraordinarily powerful.

Scott:
I love it. I think that that’s the key is these additional streams of income. We don’t talk very much about social security and pensions here on BiggerPockets money because most, I think, of the folks listening are really thinking about how to achieve this goal early, and social security is that… It seems very distant to me sitting here at age 33 as an income stream. But it’s super real. And we had a discussion about this a while back with Tom from the Motley Fool and a great discussion there. And look, that is going to be there for this generation. It’s not going to maybe 100% all be there for the millennials, but something north of probably 65%, 70% will be there. And if you’re not factoring into the planning here, I think that’s a mistake because that absolutely will be, I think, something that Americans can count on to some degree.

Wes:
Scott, here’s, I would say, a broader example of that. When I hear pension, I think federal government, I think utility worker. I’m in the south, so Southern Company is the giant utility here. And if you work for them, you’ve got a pretty serious pension. But think of how many teachers there are in the United States. Think of how many teachers there are in every single state. I’ve been working with a teacher for the last 20 years. She was so young. When we would talk about her pension, it seemed like it was ridiculously far off. I just get an email two Friday nights ago, it’s 6:30 on a Friday night, and she goes, “I found out that I’ve only got 11 months left and I hit 30 years.” Teachers start early. She started when she was 24. 34, 44, 54 years old. You do 30 years in Georgia. And I’ve looked at a lot of other states. Texas is almost exactly the same. You get 60% of your highest three year salary for the rest of your life.

Scott:
Add social security to that, add another social security to that, add a paid off house; pretty much game over.

Wes:
And you too can be on a private island like Suze Orman.

Mindy:
And this is coming from the book, You Can Retire Sooner Than You Think. It isn’t coming from the book, You Can Retire and Do Round Trip Cruises, Luxury Cruises Around the World Every Single Day for the Rest of Your Life. Think about having a basic retirement and then, okay, I’ve cemented that. What do we call that? Coast fi. Now I know that I can have a great basic retirement. I don’t want a basic retirement; I think I want a little bit more. Okay, then save a little bit more; bump that number up a little bit more. Read my 4% rule article. [email protected]; I will send it to you. And just keep going up until you have the level of retirement that you want.

Scott:
Wes, you’ve done a great job walking us through the basics around enough and how people feel about retiring and moving toward economic freedom, but I think a huge body of your work has to deal with this concept of happy retirement. And so can you define happy versus unhappy retirement and what you’ve uncovered or thought through as it relates to that, whether it’s philosophical or practical?

Wes:
And I’ve done this through a couple different means, guys. I’ve done this through research, which has really informed some of these areas that are, let’s say, not exactly money based. I did my first research study back in call it 2013 around this and asked financial questions and lifestyle questions. But then to separate the happy versus unhappy group, really, I took the top two quintiles. I had five quintiles of scoring, if you will. And took quintile four and five, the happiest group, the [inaudible 00:30:37] one and two throughout the middle, and then compared those two groups. Some of this is just through survey data.
The other is just seeing this now in practice, because I did that 11 some years ago. And then seeing how that’s played out over the last 10 plus years, I can see how it works in practice and in real life. I think of that softer side of retirement, guys, as the, one, core pursuits, which you may not have to have this grand purpose. I got an email from a listener that said, “Wes, I feel like when you talk about core pursuits, you’re putting too much pressure on me. You’re saying these need to be your life passions.” And he said, “My only life passion is my family and my wife.” And then he listed all these things he likes to do, like plays guitar every week, he goes to SEC football games every weekend in the fall, he has a band, he plays pickleball and tennis, he runs.
I was like, “Dude, you got a million core pursuits. That’s all I’m asking. I’m not saying you need to be the Dalai Lama in retirement, but having three to five things that you love to chase and that you love to improve on and take up time and give you structure, that’s all we need.” Those are core pursuits. That’s a big part of the retirement happiest quotient is to have 3.6 core pursuits. Unhappy retirees have 1.9, so less than two, close to four. That, to me, is the first one, and then socialization and then family. Those are the three really big pieces of… And health, which goes without saying. But that’s the softer side of retirement.

Scott:
That is really insightful data here. What does socialization mean for what you were talking about as a second point there? How does one set themselves up for success in early or traditional retirement?

Wes:
One organized social group at least. What’s the rubber meet the road there? Or where does the rubber meet the road? You got to have one organized social group or more. And my only definition for that is that it meets once a month regularly. That’s it. If somebody doesn’t have an organized social group, then that, I think, is a pretty attainable goal and it sets the foundation for your socialization.
Now, of course you can do way more than that. And I’m sure your listeners like, “Well, I have church and bible study, and I’ve got a running group and a tennis team and my golf buddies.” For some people, that’s no big deal, and for some people it’s like, “Well, what do you mean? How do I do this socialization thing? All I did was work.” And a lot of entrepreneurs are like this. “I made all this money. All I did was really work, though. How do I have friends outside of work?” And work friends are cool too, and they’re fine, but they’re not there forever unless we work forever. That is one very practical thing that I think I’ve seen people do that absolutely works to give you a social foundation.

Scott:
This is all in your book, What the Happiest Retirees Know?

Wes:
I believe so, guys, but I get it confused on which book is in what. I don’t even know.

Scott:
Okay, so you got to buy all the books, all the books in order to get-

Wes:
No, no, no, no. It’s this book.

Scott:
I love it. This is super fascinating here. And I wonder how many of these patterns are set not in the years leading up to retirement but all of your adult life heading up into that point. Is that right?

Wes:
I didn’t use this in these books, but as I write new things about this is that I probably missed the word cultivation such a key. Again, we just talked about retirement. You’ve got to have a really long runway to get to the $700,000, to get to $1.25 million, to get to whatever it is. You got to have 20, 30, 40 years minimum for most people. To some extent, it is better and more helpful to do these other areas like socialization, like core pursuits to cultivate them all along the way.
You’re doing them in your 30s, so important because it’s harder to just reset and start when you are 60. And you’ve probably know folks, maybe your listeners can visualize this where you have friends or you have a couple where one of the two says, “They need to have more hobbies. They need to have more things to do. I do a lot of things. I do this and I do that, but Jim doesn’t do anything. He just likes to work and he piddles around. There’s only one thing that Jim likes.” And so Jim can go get a bunch of core pursuits and he can go start being maybe social if he’s not already, but I think it’s really hard if you’re in your sixties and you’re starting this. I think if you’re cultivating it in your 30s knowing that it is absolutely 50% of the equation for a happy retirement, the money side’s one half, lifestyle is the other half. And yeah, I think it’s much better to cultivate them over time.

Scott:
Because this core pursuit and the socialization thing are obviously interrelated. What you just said, “Here are one group.” Well, that’s your pickleball group, then you’re good if that’s whatever the core pursuit is. There seems like a really high overlap between those two things in my mind there. And then that leaves the family piece, which is another one that’s cultivated over a lifetime, of course.

Wes:
And one of my, I think, the most practical statistics out of that research, and I see this in play over and over and over again, is that we want independent children. I think the Millionaire Next Door book talked a lot about millionaires have independent kids. Along that same theme, you don’t want your adult children to live with you but you want them to live near you. And those parents that live near half their kids… Let’s call it you got four kids, you live near two of them and they’re in the same city, let’s say, or the same state so you can see them on a relatively frequent basis. The happiness levels there are through the roof relative to someone that has three kids and all three kids live in a different state. That’s not great long-term for the retiree. It’s not great. And you don’t have a ton of control over that, but it’s something that I just think that it’s super important to be near your adult kids in one way or another.

Mindy:
As an adult kid not close to where my parents are currently living, I agree. It has changed our relationship. It’s changed their relationship with their grandkids because you’re just not there to see them. I completely agree.

Wes:
Mindy, here’s the other thing. The question I have on all of this, is it just a statistic or is it prescriptive? Can you do something about it? And the answer is on this… This is one of the harder ones to do something about it, but it’s not impossible. I think about our family; I’m one of four siblings. And one of my siblings, just by work and school, he was pulled from the east coast to the west. And once you go to California, you get sucked in. And it’s really hard to leave because you can surf and you can snowboard all in the same day if you really wanted to. And if you’ve married somebody from there, their family’s from there, and guess what; you ain’t leaving. It’s not the parents’ fault that the kids just scattered all over the country, but I’ve seen very often a family in their 60s or 70s make the conscious decision to say, “I thought we were going to like Florida, but I have three kids and six grandkids, and they’re in Georgia. And I’m going back to Georgia because that is home for me, and it’s home because my kids are still there and my grandkids are there.” You can do something about it. You can move.

Mindy:
Yeah, it’s got to be a conscious decision and it has to be something that everybody’s on board with. And if you can’t be by all of your kids, maybe three of them are in a certain location or close enough that you could be by most of them. But yeah, it was not meant to be for me and my family, and that’s just the way it happens.

Wes:
And you can pick your favorite.

Mindy:
Exactly. Yes, pick your favorite kid. That always works out well. You have four kids, right Wes? Which one’s your favorite?

Wes:
They’re not adults yet. I’m sure I’ll have a favorite the older they get. Right now, they’re still young enough that I would say I still love them equally.

Mindy:
Yes. Yes. I love my girls equally as well. Scott only has one, so he can have a favorite right now.

Scott:
Yeah, I got a lot of work to do in pursuit of retirement here and getting first those kids and then those grandkids and then-

Mindy:
Your baby’s one. You can’t have grandkids for a while.

Scott:
Got a lot of cultivation to do.

Mindy:
Okay, Wes, this has been so much fun. I really appreciate your time. Do you have any final thoughts for our listeners?

Wes:
I would just say that the theme today, and I know that this is a theme for you guys, but it’s this attainability that it’s not impossible to get to, whether it’s financial freedom or… I don’t know why I call it economic freedom, but to me that’s the term that resonates. And all of its hard and it takes a long time. And if you look at the wealth statistics in America, they’re pretty dower. Scary retirement statistics, and it’s 60% of people have one year of retirement savings. You hear a lot of scary statistics, and I think it knocks people down before they get started very often. “I can’t even win at this game, so I’m not even going to start the race.” And I think the work that you are doing and we’re trying to do as educators is we’re trying to make it more attainable for more people. It’ll never be for everybody, but if we can take it from only 5% of people can really do this to 25% of people that can do this, I think that’s a good thing for the world.

Scott:
Wes, I’m sorry, I know we just asked for a wrap up question, but I do have one more here. You mentioned that there was the cultivation of court pursuits, the socialization, the family, did wealth, the number end up anywhere on the list? And how far down was it?

Wes:
Yeah. Okay, the answer was yes, but then it plateaued. It absolutely was. There was absolutely more happiness… Whether it was income, whether it was savings, liquid retirement savings, happiness levels rose the more income rose and the more overall liquid savings rose. However, at a certain point there was diminishing marginal happiness per new dollars. That’s a fascinating topic. And that’s what I found in my research. However, there’s research out of Wharton that says that’s not true and happiness levels just keep going up and up and up and up and up and up the more money we have. Sounds like it’s going to be the new 4% rule. Nobody will argue it forever. There’s no perfect answer. I just think that it’s really just about getting to a foundational number. And then beyond that, it doesn’t really increase your happiness.

Scott:
More money, more happiness. I guess we’ll be having to do more BiggerPockets money here for a long time then if that research proves out.

Wes:
And I want to clarify this too. To me, those happy versus unhappy, that inflection point, that’s that median of $700,000. And happiness may not be the perfect word for that, it may just be I’ve got enough financial foundation, I can make things work forever. I think that’s an inflection point.

Scott:
Awesome. Wes, where can people find out more about you and read these books and get some access to some of the data and the research that you’ve uncovered in your awesome career here?

Wes:
Just retiresoonerteam.com.

Scott:
Retire Sooner Team. Thank you so much. Really appreciate it. Really enjoyed the discussion. And thanks for all the work you do.

Wes:
Yeah, thank you, guys. Really, it’s so fun to be on a podcast. Thank you guys.

Mindy:
Thank you, Wes. This was super, super fun. I always love talking to you. And we will talk to you soon.

Wes:
Thanks, Mindy.

Mindy:
Holy cat, Scott, that was Wes Moss, and that was a fantastic episode. I loved hearing from him. I loved hearing the tips for what makes somebody happy. Absolutely agree 100%. To sum it up, you need to have something to do in retirement. And if you don’t, you are going to have a very miserable and rather short retirement… Because can I be very blunt, Scott? You’re going to die.

Scott:
Right you are, Mindy. Yeah. On that particularly dark note, here are some things that I took away from it, though. We’ve talked extensively about the game plan to get there. I love his definition of enough. Every retirement and every journey to financial freedom begins with defining the goalposts and setting achievable goals and getting them, knocking those out and not having them move and become more and more and more and more and more over time. And I thought his definition of enough was very carefully constructed, very thoughtful and very powerful. Now, an early retiree, someone in their 30s, 40s, or maybe early 50s probably going to need to be a little bit… Bump those numbers up a little bit because social security is so far away that they’re going to need other income streams and will probably be uncomfortable with a diminishing net worth along that journey to traditional retirement age. But the principles are really helpful there.
And like I mentioned earlier, I got even more out of the what makes you happy in retirement discussion than I did about out of the game plan piece. And lots to think about there in terms of cultivating. I’m glad we had that last question about a total net worth because there is a point to accumulating a little bit more and there is additional happiness probably that comes with having the more optionality with a bigger pile of money at the end of the day. But more important than that are the core pursuits, are the family dynamics that you start in your 20s, 30s, growing up, 40s, 50s, 60s, 70s, 80s, the friends in the social circles that you cultivate. And that threw some light on the fact that I’m glad I played more video games rather than going outside growing up because that is a lifetime hobby. And rugby, while I loved it very much, is probably not something I’m be able to do in retirement, whether early or traditional. What about you, Mindy? What did you learn from today’s conversation?

Mindy:
Well, I’m definitely not going to be playing rugby when I’m 70. But if you do, Scott, you should play a 70 and up rugby league. I bet there’s other ruggers out there that are wanting to play, but-

Scott:
You know what? There’s sevens rugby, so 70s. I think they like that. Yeah.

Mindy:
There you go. I could not agree more with his core pursuits. Yes, you need something to do in your retirement. I like that he says core pursuits. I have seen this in Carl’s early retirement where he is pursuing everything. He wants to do this and this and this and this and this. And he is busier now than he ever was when he had an actual job and… Figure it out now what it is that you love to do, because Carl has started to… He’s been retired for five years; he is starting to figure out what he likes to do and what he doesn’t like to do. But it’s been a process. And he could have been paying attention to this a little bit sooner, but he was so focused on the end goal of retiring early that he knew he had to have something to do in retirement but he didn’t really focus on core pursuits. Just like you’ve got a bucket list, think about your retirement bucket list. What are the things that you want to spend your days doing? I just think that there’s not enough thought given to actually what you’re going to be doing after retirement, especially in the early retirement community, so think about how you’re going to be spending your days more so than just collecting the money.

Scott:
Yeah, running to something rather than away from something. Right?

Mindy:
Exactly. Oh, wow. Thanks, Scott. Succinct is his middle name. All right, Scott, should we get out of here?

Scott:
Let’s do it.

Mindy:
That wraps up this episode of the BiggerPockets Money podcast. He is Scott succinct Trench, and I am Mindy not succinct Jensen saying see you around, hound.

Scott:
If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
BiggerPockets money was created by Mindy Jensen and Scott Trench. Produced by Kailyn Bennett. Editing by Exodus Media. Copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team from making this show possible.

 

 

 

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