Episode summary
Safe Withdrawal Rate Debate: How Much Can You REALLY Spend in Early Retirement?
Your Money Your Wealth
· · 43 min · Hosts: Joe Anderson, Big Al Clopine · Guests: Rand, Elayne, Ron, Harry
Summary
The hosts focus on how to think about safe withdrawal rates when retirement is early, temporary, or somewhere in between. Two listener cases anchor the discussion: a couple in their 30s with a high-risk career, rental income, cash, and a plan to relocate to Portugal in a few years; and a doctor-and-nurse household with about $1 million invested, two young children, and a desire to take a multi-year sabbatical before returning to work.
For the Portugal couple, the hosts argue that the plan looks feasible if their spending really stays near $38,000 a year and if they keep earning from side work and rentals. They prefer selling the Florida home rather than managing a foreign rental, and they think a 2% to 3% withdrawal rate from taxable assets could work depending on savings and the eventual size of the nonqualified account.
For the doctors, the hosts are more flexible than their usual early-retirement stance because the plan is framed as a sabbatical, not a forever retirement. They say the right trigger to return to work is less about a specific withdrawal rate and more about a “sleep factor”: if market declines make the plan uncomfortable, it is time to go back. The episode closes by stressing that spending flexibility, taxes, and account structure matter as much as any rule of thumb.
Key takeaways
- The hosts think the Portugal couple may be able to fund a $38,000 lifestyle if rental income, side income, and savings continue to bridge the gap.
- The hosts lean toward selling the Florida home rather than keeping a U.S. rental while living abroad because of management, vacancy, insurance, and maintenance hassles.
- For a true sabbatical, the hosts are comfortable with a higher withdrawal rate than for permanent retirement, but only if the couple can go back to work later.
- The hosts say the best trigger to return to work is not a fixed market-loss percentage but whether the portfolio decline starts hurting sleep and confidence.
- The hosts argue that a 1% advisory fee is only worth paying if it clearly adds more value than it costs.
Notable quotes
“How do you live on $38,000 a year? Apparently, Portugal's got a low cost of living”
“I think you're good there. Yeah, actually even though it's modest, everything counts”
“When you get to the point where it feels like your money's slipping away”
How the episode opens
Today on Your Money, Your Wealth podcast number 582, join Big Al address something a not insignificant portion of this audience has been complaining about for years. Their so-called absurdly conservative safe withdrawal rates for early retirement. Rand and Elaine from Ohio are here to gripe about it directly with a thought experiment.
Million bucks at age 36 and a 3-year sabbatical in France. When, if ever, would Joe and Big Al say they should cut it short and go back to work if the markets turned ugly? Mike to me 17 miles on with his own SWR take about AUM fees in his Apple Podcasts review.
But first, a real-world example. Ron and Harry from Florida are elite performers with a high-risk specialty job. Can they safely pull off moving to Portugal and living on $38,000 a year in their early 40s?
If you're one of the people yelling at your podcast app every time Joe or Al mentions a 2% withdrawal rate, today's your day, and we welcome you to leave more of your thoughts on the topic
In Apple Podcasts, YouTube, on Reddit, in our inboxes, like everyone else has. I'm executive producer Andy Last, and here are the hosts of Your Money, Your Wealth, Joe Anderson, CFP, and Big Al Clopine, CPA. Hey Joe, Big Al, Andy.
I'm Ron, 38, and my husband is Harry, 35. We are both European, both working in the US since 2020. I found your podcast 2 years ago, and I listen to it every Tuesday on my way to work.
I am sure we are not your typical listeners. We are elite performers with a high-risk specialty job. Elite performers, Al, that's kind of like you and I.
Elite. Very elite in our performance. — Well, I'll put it this way, we try.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- safe withdrawal rate
- 4 percent rule
- early retirement withdrawal
- aum fees
- international retirement
Companies and tickers mentioned
- AAPL
- Pure Financial Advisors
- Apple
Watch the episode
Watch “Safe Withdrawal Rate Debate: How Much Can You REALLY Spend in Early Retirement?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Your Money Your Wealth, this episode and its artwork belong to Your Money, Your Wealth. Octagon is not affiliated with the show; this page is an independent summary.
