Today's episode is a fun debate. It really won't be a debate by the end, but some people are thinking,

are you going to go political now for the first time? No, I'm talking about Roth versus pre-tax,

how to think through it specifically for an early retirement, because what a lot of you are doing

is the following and nothing wrong with this thinking, but you're going, yeah, I'm in a higher

tax bracket today, so I'm not going to do Roth.

I'm going to do pre-tax, get that deduction.

And then in the future, when I take the income out, hopefully I'm in a lower tax bracket, so I won't be taxed as heavily. Nothing wrong with that. A lot of you are going, you know what, I've actually got a little bit of a gap between I take my next job, or maybe I'm just not making as much as I used to because I'm doing something that I enjoy a whole lot more but maybe it doesn't pay as much. So you know what, I'm going to do Roth. I'm going to add more dollars. I'm happily going to pay taxes now so that in the future I'm never taxed ever. Again, nothing wrong with that, but there's another level to planning. And that's what we're going to be talking about today, is how do you make the decision of pre-tax versus Roth in light of an early retirement?

Because level one is, okay, what makes sense? Pre-tax or Roth based on where I am, future tax brackets, when on retire? Level two is saying, okay, what accounts should I have that I just don't

know about and to what extent is enough in each type

of account? So you might be going, oh my gosh, that sounded like Portuguese, but I promise you

there's validity to this. I'm going to tell you why. I want to make sure you have the right amount

in each bucket, not to the scientific degree, but for your specific plan. Because if you want

to spend 5,000 month or 10,000 a month, that's going to change exactly how much you have in your portfolio, because you might not need as much as your neighbor, your coworker. So I've given this basic example before, but I'm going to give it one more time before I hop into my real fun example. Now, before I even go into either of those, I am of course, of course, excuse me, the host of the early retirement podcast, the vice president here at Root, and a certified financial planner. One of my editors once said, hey, do you want me to take out all of those, you know, not just ums and us, because I try to keep those to a minimum, but if you say something wrong, and I said no, I just think it adds authenticity. I was listening to another podcast recently, and it just felt so edited. I didn't know if I was actually listening to the person or if it was like an auto-tuned version of the person. So if that is frustrating to any of you, of course, please let me know and submit a question on my website, earliertrientpodcast.com, or say, no, this is super helpful. Like, this is the type of content I want, it feels real, it is authentic. So with that being said, let's hop in. What I want to do is really make sure you understand that I do not believe in cookie cutter planning. And here's an example. Someone came to me and they had 100% in cash and they were 70 years old and another person said, hey, I heard you talking about that with like another client recently. Someone was at 100% in cash. You know, why would you even recommend that? And I said, well, you know, to be honest, there's more in depth planning than what you might just see. And they're like, yeah, but you said someone has 100% cash that never makes sense then another

client came to me and they were like hey does it ever make sense have 100% equities i go yes and they

go well well i'm sure but not for someone like in their 50s or 60s right and i go no even then

and they're like what do you mean so here's an example i'll give real client came to me and they

had about three and a half million dollars and that's just their investment portfolio, but they also had a pension that covered all of their needs.

Now, a lot of you are going, oh, my gosh, like, what did this person do?

They're crushing it.

Some people laugh at this, but I had a previous mentor call this the lucky sperm and egg club. Okay. So a lot of

these funds were inheritance. And so what was happening is this person had a pension that covered all

their needs, but they also had $3.5 million in their portfolio. So this particular client was like,

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