Episode summary
What $4.7M at 39 Really Gets You in Early Retirement
Your Money Your Wealth
· · 36 min · Hosts: Joe Anderson, Big Al Clopine · Guests: David Larry, Bandit, Chilli, Leon
Summary
The hosts first evaluate David Larry in Michigan, who plans to retire in two years at 64, sell a condo, and use the proceeds plus a pension lump sum to build a $1.5 million home. They conclude his plan looks workable because his projected shortfall is roughly 3.5% of assets, even after allowing for a $200,000 annual spending level and an assumed $40,000 of Social Security. They also note the biggest risk is not the headline math but liquidity, taxes, and the possibility that the build costs more than expected.
They then discuss Leon in Chicago, who paid nearly $500,000 extra on his mortgage and wants to know whether a recast could lower his payment while preserving a 2.75% rate. The hosts say recasts are generally something lenders allow only in hardship situations, not as a routine way to keep a cheap mortgage and simply reamortize it lower. If a recast is unavailable, they suggest the practical alternative is to wait and refinance later if rates fall.
The last major question comes from Bandit and Chili in Atlanta, a high-earning 39-year-old couple with $4.7 million invested, $563,000 of annual savings, and $470,000 of spending. The hosts say the couple is on track for retirement at 55, and probably even earlier if spending is trimmed, but they urge caution about relying on very high income and about deciding whether to pay down the $1.3 million mortgage. Their main takeaway is that the plan works either way, but the mortgage decision depends heavily on the interest rate and job stability.
Key takeaways
- The hosts say David Larry’s home-build plan still works because his projected spending gap is only about a 3.5% distribution rate from assets.
- For Leon, the hosts say a mortgage recast is usually a hardship tool, not a standard way to keep a 2.75% rate and cut payments in half.
- Bandit and Chili’s numbers suggest they are on track to retire at 55, with room to retire earlier if they reduce the recurring $70,000 in extra annual spending.
- The hosts say Bandit and Chili should think carefully before paying down the $1.3 million mortgage, because the right answer depends on the mortgage rate and how durable the income is.
- The hosts emphasize that even strong retirement plans can be stressed by liquidity needs, taxes, and cost overruns on a new build.
Notable quotes
“I don't think so. I don't either. I mean, if they do, great. Go for”
“I think the the asset level is is fine. I I'm not worried about the build”
“I think when you have $26 million you can kind of do what you want now”
How the episode opens
Bandit and Chill in Atlanta are 39 with $4.7 million already invested. They're gunning to retire at 55, but they spend $470,000 a year. Will the money last?
That's today on Your Money Your Wealth podcast number 607. Before we get to Blooies, folks, we have a couple of home and mortgage questions. David Larry in Michigan wants to retire in two years at 64, and he's planning to sell a condo and build a $ 1.5 million dream home.
Do his finances look good? And is he crazy to try to pull this off? And Leon in Chicago threw half a million dollars extra at his mortgage, but now he's wondering if a mortgage recast would help him free up some cash flow and maybe work less someday.
If YMYW makes your money make sense, follow along wherever you watch or listen to us. I'm executive producer Andy Last, and here are the hosts of Your Money, Your Wealth, Joey Anderson, CFP, and Big Al Clopine, CPA.
We'll start with uh David Larry from Michigan. Hey, pretty pretty good. — You know that one, right? That's from Curb Your Enthusias. That's actually Larry David. — Larry David is the the character. — Yeah. Curb your enthusiasm this show. — Okay. U who loves any log or wine in scotch depending on his mood. Love to golf. Currently I'm 62 employed. Have 40 uh 400,000 in a Roth 290 in a brokerage account. About $2.6 million in my 401k. An additional lump sum of 1.3 when I retire. Our funds are in low cost ETFs. I'm at a 70 ETF 30% bond mix. So he's saying ETFs is stock even though you can buy bond ETFs.
Yes. — He's using a product as a proxy for stock. — Yeah, that's what I that's how I read it to you.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- early retirement planning
- mortgage recast
- retirement spending sustainability
- retiring with large mortgage
- tax-optimized retirement strategy
Companies and tickers mentioned
- Pure Financial Advisors
Watch the episode
Watch “What $4.7M at 39 Really Gets You 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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