Michael Kitces – The 4% Rule and Financial Planning for Early Retirement

Financial Independence Podcast

The Mad Fientist

Taxavoidance, Business, Geographicarbitrage, Investing, Tax, Earlyretirement, Travelhacking, Entrepreneurship, Travel, Personalfinance, Stocks, Minimalism, Realestate, Frugality, Retirement, Financialindependence

4.8 • 1.7K Ratings

🗓️ 31 August 2017

⏱️ 67 minutes

🔗️ Recording | iTunes | RSS

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Summary

One of the internet’s most-respected retirement researchers and financial planners, Michael Kitces, joins me for an episode of the Financial Independence Podcast!

You may remember that my Safe Withdrawal Rate post drew heavily from the incredible research Kitces has done on the topic so it was great to talk to him directly to dive even deeper into important topics related to early retirement.

During the interview, we discuss…

Safe Withdrawal Rates and whether the 4% rule is still safe in the current market environment
The unique challenges early retirees face that normal retirees don’t (and also some of the unique advantages early retirees have)
How Michael tackles early retirement from a financial planning perspective

If you’re worried about figuring out how much you can withdraw from your portfolio after you retire, this episode is for you!

Highlights:

Why Michael began researching safe withdrawal rates
What the Shiller CAPE is and how it can be used to determine a better safe withdrawal rate
Why the initial criticism of the 4% rule was that it was too low
What would be a safe withdrawal rate to use today, considering current market valuations
Human capital vs. financial capital and the advantages of having both
How to find a financial advisor and what Michael would do if a client came to him with early retirement plans
The biggest wild card that early retirees need to be concerned with that standard retirees don’t

Transcript

Click on a timestamp to play from that location

0:00.0	I'm blind, if you're going to do finance.
0:05.0	Hey, welcome everybody to the Financial Independence Podcast, the
0:09.3	podcast that gets inside the brains of some of the best and brightest in the personal finance space to find out how they achieved financial independence.
0:16.0	Today's guest I am super excited about it is Michael Kittsis from Kittsis.com
0:21.0	and if you're not familiar with his work he is one of the internet's most
0:25.2	respected retirement researchers and financial planners and if you read my safe withdrawal
0:31.2	post his research was the core driver for that post.
0:36.0	I referenced many of his articles and white papers and he's just created some great stuff and he's an incredible guy. I'll list some of his qualifications.
0:45.6	He's got a master of science and financial services. He's got a master's in taxation.
0:50.0	He's a certified financial planner, a chartered life underwriter, a chartered financial consultant, and he speaks probably at, I think, 50 to 70 events every year talking about all this stuff and he's got over 17 years
1:05.5	experience in the business so loads of knowledge he puts out some great content
1:10.0	and I'm excited to dive in deeper and really talk to him about unique challenges that early retirees in particular face and to dive into some of the early retirement research that he's done and the research into safe withdrawal rates.
1:24.3	So before I get him on the program, I wanted to run a quick experiment.
1:31.4	This story just proves how bad I am at like internet business stuff.
1:35.0	So as I mentioned in my first year freedom post that I released earlier in the month,
1:40.0	the credit card search tool I created has been bringing in some unexpected income.
1:45.0	So rather than just keep that income and be taxed on it, I've been trying to think of ways to reinvest it.
1:51.0	So I was listening to a podcast at the gym and I was like, oh, maybe that would be a good way to reinvest the money. I could pay for advertising on somebody else's podcasts and then tell more people about the credit card search tool and that may be a good investment and that would be a way to spend some of these
2:07.0	profits productively.
2:08.6	So it wasn't until later that I thought to myself, hey you idiot, you have your own podcast and you haven't even tested it out there.
2:15.0	So why would you pay money to put an ad on somebody else's podcast when you don't even know if podcast advertising works?
2:21.0	So, really stupid not to think of that but I'm going to
	...

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