I Dont Save For Retirement Anymore - 184

Alright, hey there, passive traders. This is Allen, coming to you with another episode of the Option Genius Podcast.

Today, I wanted to talk about something that has been a pretty cool milestone for me, something I'm very excited about, but it's not something I can really share with friends or family. But I thought that if I shared it with you, you guys would appreciate it. And there's also a human relations, human nature lesson as well.

And so, you know, it comes back to, like, is there ever a time, or is there something that you know to be maybe not true, right? It's like it goes against your common sense, but you still do it because you've just heard it done so many times, and so many people have said to do it, and it's just what everybody does. Yeah, you know, anything like that? And you just keep doing it.

I mean, I am known as the passive trading guy, right? And I preach it all the time that, hey, look, if you can get your money to make money for you as much as you spend every month, then you can essentially retire, right? So if your expenses are, say, $10,000 a month, and from your trading, you can make $10,000 a month, then you can retire. You don't have to work anymore. You've just replaced your income.

But I guess I don't follow that. I mean, I do, but I don't. And it goes back to, like, when I was very young, right after I got married, my wife was a big saver, and I, at that point, was not. And so she had savings. I had nothing. I was starting to trade. But her savings were really, really significant, and so I had to do something to show her that, look, we're going to be secure. I'm going to take care of you. And so I started putting money away in our Roth IRAs at that point, right?

So I'm putting the money away, and that's the thing to do, right? You put your money away, you put it in a retirement account, and you let it grow, and you let it compound, and then eventually you get old, and then you retire, and you don't have to worry about money, right? That's what you're supposed to do. Now, my goal all the time was to retire early, but I'm still plugging all this money away into the retirement account every year.

And then I started a company, and then the CPA told me, "Hey, you know, you should probably start a retirement account from the company. So the company pays money into your retirement account. For you, it's deductible. You'll save some money on your taxes." And I'm like, "Okay, that sounds good. I like saving money on taxes." So we started putting more money away. We started putting more money away, and it just kept going. And I didn't really think about it.

Now, I read a book recently. It's called Die With Zero, and that got me to think. And so recently, at the end of the year, I went and I looked at, you know, all my finances, the balance sheet, and the net worth, and assets, liabilities, all that stuff. And I'm looking at it, and I'm realizing that, look, in our retirement accounts, for me and my wife, we have a substantial amount of money, especially with last year, you know, the market going up 20%, the year before that the market was up 20%, and so it's grown a lot, and we have a substantial amount of money in our retirement accounts. Maybe I don't have to put any more money in there, I don't know.

So I took out my calculator, and I'm like, "Hey, this is going to be... let's see, right?" So I took the amount of money that I had, and let's call it "A," right? Just to make it simple, let's call it "A." And I said, "Okay, if I have this 'A' pile, right? I have 'A,' and that's the nest egg. Now, I'm going to retire at 65, let's just say, it's the number everybody uses, 65, want to retire, and I've got 17 years left. So if I have 'A,' and it grows at a decent rate of return, maybe 6, 7, 8, 9%, I don't know. You know, it varies. But if it grows at a decent rate of return, how much money am I going to have in my retirement account, my nest egg, in 17 years when I'm 65?"

I did the numbers. We did it at different percentages, and it's going to come out to a very big number, you know, let's call it "Y." So the future nest egg is "Y," alright? The current nest egg is "A."

Then I talked to my wife, and I'm saying, "Hey, babe, you know, 15 or 17 years from now, I'm going to be 65, you'll be a little younger. How much money do you think we can spend every month?" You know, we talked about it, we went over like, "Hey, you know, the kids will be grown. We're not really going to spend much money on them. Maybe the house will be paid off. And we're not big spenders as it is. So maybe we'd be spending, I don't know, on average, maybe $150,000. Now with, you know, inflation and whatnot, I'm not going to count that in. I'm not going to count taxes. I'm not going to count other expenses. And also, that's not the only, you know, this nest egg, the 'Y,' is not the only money I'm going to have. I'm going to have other investments and Social Security and Medicare, Medicaid, whatever, and all that stuff too. So I'm not going to even count any of that." So she said, "Okay, $150,000." I'm like, "Okay, that makes sense."

So I took my "Y," divided it by $150,000. So if that money does not grow at all, you know, I take it out completely, out of the market. It's sitting in cash, it's sitting in my mattress, whatever, and it's not making any more money. Doesn't grow at all, and I deduct $150,000 every year from it to live off of, that money is going to last me roughly about 30 years. Now, I'll be 65, 30 years, I'll be 95. I don't know if I'm going to make it to 95, but most likely, I probably will have enough money to last for the rest of my life in retirement from just "A," if it grows the way it's been growing.

And so I do the math several times, and I'm like, "Wait a minute, I don't have to put any more money away for retirement. My retirement is secure, in a sense, right? It could always go down, yes, but then, you know, there's going to be other stuff that we have as well. And worst comes to worst, I'll tell my kids they gotta, you know, take care of Dad and Mom." I've got that backup plan; I have, like, Plan C.

So anyway, to me, that was really exciting. I was like, "Oh my God, this is really, really cool. This is awesome. This is..." And it's sad that I can't really talk to any friends or family about it because they're just going to get jealous, or, you know, they're going to say stuff. But I thought that you'd be interested in it. And, you know, you might be thinking, "Okay, hey, is that going to be enough money? What if you run out? Inflation, this and that?"

And in that book I mentioned, Die With Zero, the author talks about this concept. He didn't bring it up, he didn't make it up. But he talks about something called the three stages of retirement. And so, in the first stage, right when you retire, those are called the Go-Go years, and then you have the Slow-Go years, and then you have the No-Go years. So in the Go-Go years, right away, you're like, "Hey, I just stopped working. I'm energized. I've got energy, my knees work. Let's go traveling. Let's go see our friends. Let's go travel the world. Let's knock off all this stuff on the bucket list, right? Let's go climb a mountain, maybe.

Let's go climb a mountain, maybe. And so you're going to use more money, and you're going to go more places, and you do more things in the first few years, the Go-Go years. Then you transition into the Slow-Go years because now you're like, "Man, you know, if you've seen one museum, you've seen one cathedral, you've seen them all, right? Like, I don't need to see another museum."

And so maybe you take up hobbies like gardening or trains, or whatever, right? And so you still go places, but you don't go as much, and you don't spend as much. And then, unfortunately, we have the No-Go years, which is, like, you know, when we're really old, and it hurts. Everything hurts. It hurts to get up. It hurts... you know, "Oh my God, I can tell when it's going to rain," kind of thing. And, you know, "It's a good day when Jeopardy has reruns," right?

So those are the No-Go years; you're going to spend very little money. And so, I mean, that made a lot of sense to me. I was like, "Oh, okay, so yeah, I think even if we spend more money upfront, in the later years, we won't be able to spend that much. We won't be doing that much, and we're going to be fine."

And if something happens to me, and if I pass away, like, you know, I've got life insurance, my wife has life insurance. So if one of us passes away, we'll have even more money, and then we'll definitely not run out of money. And plus, I probably won't be... I don't know, we'll see. I don't think about it, but without her, I don't want to do much traveling anyway.

But, um, that's the thing. So, like, that's the goal, that's exciting. And it's just... it's the opposite of what I teach, but it's something that people always drum into our heads, like, "We have to do it, we have to do it, we have to do it."

I have to interrupt this message because I am super excited. I haven't been this excited about something in trading since I first discovered trading options. Okay, it is that important. Now look, this is a new strategy that I've discovered recently that is just out there kicking butt and taking names. I can't give you all the details here, but if you go to marketpowermethod.com, you can get all the information. Again, that's marketpowermethod.com. Trust me, you want to know what this is.

Now, back to the show. So what are you doing that has been drummed into your head that doesn't make sense, you know? It's counter to common sense, counter to what you know. But everybody else is doing it, and everybody's telling you to do it, and if you don't do it, people are like, "Man, you're stupid. You know? Why are you rocking the boat?" kind of thing.

Now, in this case, it kind of worked out, right? It helped, you know, that I would have had the extra funds, but now I have the extra money. So the money that I'm not putting away... because every month, every year, I was putting a lot of money away, right? I don't have to put that money away, and now I need to spend it on us.

So if I had gone back in time, I probably would not have put so much money into retirement because, I mean, I got there 17 years early, right? I mean, I could have waited a little bit, a little bit, a little bit, until I got closer to 65, and then put a lot of money in, but it grew, right?

But my point is that I probably wish that I had spent more money, you know, because there's... to me, in my mind, there's, like, two types of rich. There's one kind of rich, which is when you have a lot of money, you know, you have the big nest egg, you have a lot of money in savings, you have a lot of that, but you don't feelrich because that money is sitting there. You don't use it. It's there for a rainy day. It's there for retirement. You don't really get to go and play with it, right? And so you're still living on a budget, you're still living under your means. You're still like, "Oh, no, no, no, can I afford that?" And you have to think twice.

The other type of rich is the person who's making a lot of income now, whether they have money in the bank or not, it doesn't matter, because in that person's mind, right? The money's going to come every month. So, "I'm going to make money this month, I'm going to make money next month, I'm going to make money the month after that. And so what do I do with all this money? Yeah, I could put it away, or I could have fun with it."

And so there are two different types of rich. One is income rich, and one is asset rich. Asset rich is great, but you can't spend it. You know, all my money for all these years has been sitting in these retirement accounts that I can't even touch until I'm 65. I'm not supposed to touch it, right? Otherwise, I pay fees and taxes and all that stuff. So it's like, I don't even have it. Is it there? Yeah, great. But it doesn't make me feel rich.

But if you have the income coming in, then that's when you're like, "Oh, yeah, you know, like, I mean, I want to buy a new car. Well, I found this car I want to buy. It's going to be around $2,500 a month. That's the lease payment. Okay, that's an expensive car. If I was asset rich, I would have to take out, you know, $2,500 every month from my assets. So I'm actually getting poorer every month. I'm getting poorer by paying for this car. And I'm like, 'Oh, that's not a good feeling.'"

But if I have the income, and I know it's going to replenish every month, I don't feel that bad paying $2,500 for a car payment because, I mean, I have a lot more, and I'll get more next month, right? So no big deal. And eventually, I'll pay off the car and be fine, and then I'll have the money saved over.

So you really have to figure out, like, what type of rich do you want to be? You can do both. You can try. I do think that income rich is a lot better because when you're income rich, and you know how to make the money, even if something bad happens, you still know how to make the money. You can start over. When you're only asset rich, and if that money goes away, you're done because it took you years and years and years to get that money.

And for most people, what they do, all they do is they know how to save it. They know how to put it in an account and just let it sit there. They don't know how to make it grow. So you guys need to decide what type of rich you want to be. You could be both, but which one is the priority? Asset rich or income rich? I think, and I preach, income rich.

But, right? What is it? Like they say, "Do what I say, not what I do," right? Kind of. So I'm telling you, "Hey, go for income rich," but I went for asset rich, even though, in my mind, I'm preaching this stuff every day. So that's human nature, right there, right? And it's crazy.

So hopefully, this episode was helpful, hopefully, this gave you something to think about. And I hope that you go for income rich, but you can go for both. Or maybe, depending on how old you are, it depends, you know, maybe you're just going for income, but I think income... if I would do it all over again, now that I know what I know, I would go for income rich first. I would want to focus first on generating my income to a certain level. You know, it's like, keep focusing on income, keep growing the income, keep growing the income to maybe something that's, you know, more money than I can spend every month. And then I take that extra and I put it away, and then that becomes a safety net.

But in the beginning, while I'm young, while I can work hard, while I can put in the hours, I think that generating income is the best. So saving for retirement, saving in your IRA, saving in your 401(k), even if there's a match, might not be the best idea, even though that is what every personal finance book tells you out there.

Yeah, you have to make the decision for yourself, and so I'm not going to give you the answer because it's different for everybody. I went one way when I should have gone the other way, but hindsight is... well, you know, I'm still going to get to my goal. I still have the income, but now I don't have to put any more money in for early retirement. So hey, that's great, too. I'm going to have an extra several thousand dollars every year, and maybe I'll use that to go buy a car. I finally hit the car.

Alright, folks, well, you take it easy. Have a good day. Trade with the odds in your favor, and we'll see you next time. Bye.