(beeping) (music) Welcome back to Ask the Compound, live from New York. I'm in the same room for the first time in a while. We've got 40 other people going through our Google Docs this week. A lot of good questions. I'm appreciative of the thought and effort that goes into these.

I feel like a lot of the questions are similar in nature, but they're always different from the unique circumstances. So we really appreciate it. Keep them coming at thecompoundshow@gmail.com. Today's show is sponsored by Bird Dogs. I finally got the Bird Dog Polo. And it is muggy as all getup in Manhattan right now.

We just walked from lunch and just sweating and hot. And this shirt is comfy. It's breathable. It's active. It's got the stretch material just like the shorts. It's stylish. I'd say good for golf, but I don't golf. It's an active -- maybe a dinner date if you want to wear a collar in the summer.

And if you go to birddogs.com/atc, you get a free white tech hat. I don't have one because I was wearing it all weekend last week. I'm not a big hat guy. I used to wear more hats in college, but it was like backwards frat bro hats. Nice. And then I become a dad, and the rule is you cannot wear your hat backwards if you're a dad.

Is that a rule? I don't know. I don't make them. That's the rules. So I'm not a big hat guy. You got to have a little more fun. You got to wear a hat backwards. You got to play golf. And you got to drink coffee. You could do it when you're doing a good shot, Duncan, like you turn the hat backwards.

Sure. So that's just alone and over the top. Birddogs.com/atc, and you get a free tech hat. Check out the new polos. They've got a bunch of different colors. And, of course, the shorts, as always. Before we get into the questions, got a feedback from last week. Someone was wondering why do target date funds not have -- how can you not get a 100% equity target date fund?

Jeff says, "The likely reason target date funds for most people "retiring more than 40 years from now still maintain a small bond "position is because a fund with 100% equity position would not "qualify as a QDIA default fund in a retirement plan." I didn't know that. Sounds right. All right.

I'll take him for his word. All right. First question. Okay. Also, I'm sorry. I told you I was going to cue you when we were live. I didn't. So everyone watched you for a couple of seconds. Sorry about that. But, yeah, we're doing this live. Okay. Up first today, we have a question from Matt.

"I'm 38, and for most of my adult life, "I made just enough to survive with nothing left to invest. "Everything changed a few years ago. "My salary increased from $35,000 to $140,000 over four years. "At first, I spent everything. "For the last two years, I've done the opposite. "I save everything.

"My monthly expenses, including mortgage, are less than $1,000, "and my after-tax savings rate is 80% to 90%. "In the last two years, I've saved about $150,000, "not including maxing my 401(k) and Roth. "My job isn't going anywhere, but I have a constant fear that "something is going to happen and everything will be ripped away.

"The key thing is that I have no real skills, "but I hit the lottery at a company that has rewarded me "for a decade of hard work. "Most financial experts would probably say I'm saving too much, "but what do you think my situation justifies "regarding savings rate?" Not hyperbole here.

I think this is one of the favorite questions that we've ever gotten. Because we've got this question before about, "Hey, I save too much, what do I do?" But this question just shows how it's way more about mind than money for a lot of people. And also, I'm very glad I'm wearing the bird dog shirt, because it's hot in here, Duncan.

It is. I turned my AC off. That's okay. Got to go for the good sound. So I think a lot of the questions we receive are similar from a financial perspective, as I mentioned, but the circumstances are different. And this person has their own type of money trauma. So first of all, I say don't sell yourself short here, Matt.

You do have a real skill. You work hard. And obviously, your company likes that, because they gave you a four-times raise in four years. You're obviously doing something right. Yeah, I find that refreshing, instead of the typical, "Oh, I just out-hustled everyone else." To be like, "I don't have any skills.

I'm lucky," basically. Yeah, I do appreciate them being humble and having some self-awareness, but give yourself a little credit. You obviously do something right that your company values that. So I understand the trepidation for the spending, right? The lottery minds that I think can bring conflicting emotions. So most people spend their entire career, they slowly and methodically build up their income and their savings, and the wealth doesn't come all at once.

So I think one of the reasons so many lottery winners end up broke is because it's not normal to experience this abrupt change in your wealth. So my favorite lottery anecdote, Duncan, every year, Americans spend more money on the lottery than they do on movie tickets, music, professional sporting events, video games, and books combined, which is why it's always on the news, I guess.

I actually researched the psychology of winning the lottery for my book, "Don't Fall For It," and they said one-third of all lottery winners end up bankrupt, declaring bankruptcy. And even the neighbors of people who win the lottery are more likely to declare bankruptcy than average, like the herd mentality kind of thing.

So I think that first reaction of Matt-- You seem like a big lottery person. I doubt I've ever played in my life. I got scratch-off tickets for Christmas. I used to be big into scratch-offs. That was fun. I don't know. I'm not a big fan. So I think that first reaction of his to spend everything he had made sense.

But I think it's also understandable why he has the opposite extreme of, "I went from $35K to $140K. "I have this memory of making a much lower income. "What if it is all taken away from me?" So I think it makes sense that he whipsawed back to the other extreme.

The good news is that he already has the ability to cut back. An after-tax savings rate of 80-90% would make Mr. Money Mustache blush. He's living on less than $12K a year, which is crazy. I think most of the flier people say $25K a year is what you should shoot for.

So even if that biggest fear is realized and that new six-figure income is gone, you've already given yourself a margin of safety, a savings rate combined with a low burn rate. Most people can barely handle one, let alone both of those. Think about it. If he's got $150K sitting in a taxable account, that's, what, 13 years of current lifestyle expenses?

If we include those 401(k) and Roth IRA max contributions, we're talking 18 years of living expenses. He's in fantastic shape financially, so he knows how to cut back. I think if he decided to give himself a little raise, he could double or triple his spending and still be well on the way to financial freedom.

The only way he's truly going to be comfortable spending a little more money is by tapping into the feelings and emotions about money. It's always about trade-offs, and I think the biggest regret he's concerned about right now is what happens if this higher income goes away. But he also has to think about the regret you might feel if that extreme frugality makes you miss out on life.

John, throw up this comment from Ramit on Twitter this week. He shared this Reddit comment, and it basically is someone who says, "Hey, I reached my fire number, "but I had this unhealthy fixation with money, "and I feel like I've missed out on life." So that's a regret, too.

I think some people have this unhealthy fixation with spending, some people it's over-saving. I think we all have our own issues. No one's perfect in these things. But I think if we're looking at a psychological solution here, instead of going cold turkey and saying, "I'm going from 80% to 90% savings rate "down to 30% or 40% or 20% or whatever is more reasonable," I would say instead of ripping the band-aid off, do it in a stair-step approach.

Do 5% each paycheck or each month or each quarter or something, and slowly work yourself down and give yourself a slow raise so it's not going back the other way where you're spending a ton. But I also think you have to figure out what makes you happy prioritized in terms of spending.

I think you have to pick a few categories. It can be anything, really-- going out to eat or going to a concert or buying clothes or shoes. Whatever brings you joy, and spend on those things without worry. Studies show that experiences and building relationships gives you the biggest bang for your buck.

But even if you want to spend it on material goods, I don't care. I think the fact that you are such a good saver, you probably just want to budget for it ahead of time. Put aside a set amount or a set percentage and say, "This is my worry-free money.

I'm going to spend it." Spending money on yourself doesn't bring fulfillment because you already tried that. I don't know, take your friends out for drinks every once in a while and buy a round, or take your family out to dinner once a month and pick up the tab. I think you just don't want to be living in that constant financial fetal position.

At a certain point, you have to enjoy it a little bit. But you're doing great, so cut yourself some slack and enjoy some of your money. It sounds like they've got some imposter syndrome maybe going on too. Like you were saying, they obviously have some skills. They're being paid a lot of money.

There's something going on there. Don't sell yourself too short. If it doesn't last, then you want to enjoy it while it's here. I think you've already put yourself in a good position. You're doing good. Alright, another one. Up next, we have a question from Colin. "I've always wanted to start a podcast, but the reality is that 90% of podcasts don't make it.

I was fearful I wouldn't be able to keep up the pace of producing content and was hesitant to make the commitment. To overcome this, I started a podcast with my dad. We have zero expectations and are just trying to get some reps in. We meet once a week at the local library, use their recording equipment, and talk for an hour or so.

We've tested different segments and topics and are trying to improve each episode. Our goal is to reach 100 episodes, and we're currently at 15. Worst case scenario, I spend an hour each week chatting with my father while learning a new skill. Are there any specific processes, habits, or strategies you've implemented that significantly improve your podcasting skills?" Alright, well, let's bring my fellow podcast host in here, who's got a great-looking shirt on.

First of all, I didn't know that you could go to a library and do podcasts. That's pretty cool. I think a library isn't going to put you out of business, because if they have equipment there at the library, I did not realize that. It's true. All you need is the equipment.

Michael, we probably shared our story a few times and that's your thing. - Two things. - Comes in ready, coming hot. One, how great do we look and feel? It's pretty nice. Actually, my friend came over the other day and saw this and said, "Let me feel that." Nice shirt.

Great shirt. You guys should match more often. Number two, and this is a segue into what we're talking about. I want to pat you on the shoulder, on the head, on the back. You've gotten really good at this. I'm proud of you. It's not easy, right? Well, that was part of the thing with us, Randall Spirits.

We froze. We didn't know what to do. Colin's question here. A little behind the curtain. We probably told this story before, but Ben and I, when we first started the podcast, I think our strategy was to turn blog posts into a podcast. It was a script. We were reading on a script.

God, it was bad. All the best podcasts are read from a script. There's some people in life that are just naturally good at certain things, but for the rest of us, you have to put in the reps. I think the fact that he's doing that is good. I do like the idea of low expectations in terms of building an audience.

We spent years building a blog audience before we ever started a podcast, so we had a little bit of a built-in base. I think your worst-case scenario of you're spending some quality time with your father and you have these recordings that you could potentially go back to years later and share them with the family, I think that's just a good starting point.

I would just keep the expectations low. He asked if there's anything that we would recommend for him to improve his skills. There's no substitute for reps. Talking, as silly as it sounds, there's a big difference between shooting the breeze with your friends and talking into a microphone where you have to be coherent, where there's the light on.

It's a lot of pressure. I have a lot more respect for DJs. Yeah, it's hard. It's difficult. So there's nothing that can replace reps, whether it's podcasting or any other walk of life. One specific thing that I can give advice on that helped us a lot, and I think we did this pretty early, was even though we don't have anything written out as far as, "Okay, when this happens, say this," or "Segue to this," we don't do any of that, but we have a Google Doc.

And so we have topics, and we have articles, and quotes, tweets, whatever it is. Yeah, there's a structure. So there's a structure to the show, so we're not just completely rambling. I think that the most important thing is to keep your expectations low. You're getting an hour with your father, which you probably wouldn't have otherwise, which is a beautiful thing.

And I encourage the hell out of this. Will anything come out of it? Who knows? But I like Patrick Arshonis's mantra of growth without goals. You do something for the sake of doing it. You don't know where it's going to go, and you see where it takes you. And I would talk about stuff you're interested in, because if you're doing content about stuff you don't care about, then that's going to come off.

So do the stuff you're interested in. You have to enjoy it, too. Right, that's part of what makes all of our shows work, is that I think people can tell that you guys really enjoy it, and that you're doing it because you want to. We were basically doing this show with each other on the phone before we ever hit record.

Love it. So we started this in November 2017. It's been almost six years. Yeah. I mean, we've been doing this a long time. All right, we've got a question from the Animal Spirits mailbag, actually, for the next one. Okay. I love this question. Oh, one other piece of advice I wanted to give the podcast person, though.

Treat things like they're live. What I see too many people rely on is they just say, like, "Oh, we'll fix in post. "We'll edit. We'll do this or that." You'll do so much better if you treat things-- I was on a podcast-- Do we see somebody-- I was on a podcast with someone, and every two minutes, he'd go, "Three, two, one, start over," and I'd be like, "Whoa, I can't--" No, yeah, that's a recipe to have a really, like, disjointed, like, not a very free-flowing, nice podcast.

Duncan, credit to all of us. How often would you say that we say, "Start over"? I would say never. Almost never. Because we want it to be more natural. Because I would just weave it in. No, I'm just kidding. No, there's been some times where, you know, I might have crossed the line, but other than that-- No, never.

Yeah. Okay. Cool. Up next. But yes, you're a professional, and we never have to edit. Not to brag. Thank you, Duncan. Okay. This is my favorite question this week. Question three is from Dan, but maybe I shouldn't have named him because his friends are going to be hitting him up if they see this.

"I'm the commissioner of a fantasy football league, "and every year, I get $1,300 from the rest of the league "that just sits in a Venmo account "waiting for whoever wins the league. "I've decided that this seems like a waste of capital. "Should I invest it in a six-month CD, "get like $30, and reduce my share of the pot to $70?

"Or should I gamble everything and invest it into crypto, "knowing that I'll have to make up any difference "at the end of the season?" I love this question just because the other people in the league will be so pissed off if they knew he was thinking about this. Yeah.

Nine-month targeted fund. I'm usually not a fan of speculation, but I want this guy to YOLO this just to see what happens. Because he already said he knows, like, "Listen, I'll have to make up the difference if I lose some money." I think he kind of has to do it now.

Not financial advice. What do you got? What's on your mind? What are you bullish on these days? You're the one who's trying to bottom pick all the time. What are you putting your money in these days? Uh... I mean, come on, that's so tough. I know, but I like the idea, and I think that should be part of the fantasy league going forward, that everyone who holds the money has-- like, the winner has to do this each year.

And if they lose, they have to make-- if they lose, the league has to make up the difference. Wait, that's a great idea. Have everyone involved. Whoever's in last place at the end of the year has to make up the difference if there's a loss. Well, that could work.

But also, how about each person involved in the league gets to pick a stock, they put it in a portfolio for the season, and they see how they did. Winner takes the-- I don't know. I like it. The real answer is do not gamble this money away. I mean, come on.

But the fun answer is-- no, just come on. The real answer is don't tell anyone about your fantasy football team because no one cares. That's the real answer. Well, also, I like that their options are a CD or crypto. There's nothing in between. I would do NVIDIA puts weeklies and just keep rolling them.

Oh my god. All right. Michael. Am I out of here? All right, well done. Thank you for having me. That was fun. Yeah, thanks, Michael. Next question. Okay, up next we have a question from Steven. I max out my pre-tax 401(k) and Roth IRA every year. I now have access to a Roth 401(k).

If I move to a Roth 401(k), I'll take a big hit on taxes and miss the tax deduction every year moving forward. I have a decent pension coming to me when I retire in 25 years. It should cover my monthly expenses such as utilities and a mortgage. With that, the Roth IRA and Social Security, I won't make withdrawals until I'm forced to take RMDs in my 70s.

I don't want to save too much money now and enjoy life less while I'm young. Am I thinking too much about today and hurting my future a little bit if I don't convert to a Roth 401(k)? All right, I'm surrounded by tax bills here. Our two tax experts at Ritholtz Wealth, Bill Sweet and Bill Alceronian.

We get a lot of questions about Roth 401(k)s lately, and I think people do try to think of the Roth. The people who get this far and have this detailed question are thinking like, "Do I really want the benefit in the future or do I want it now?" What say you?

We'll start with Mr. Sweet since he's been here longer. First, can I ask, who's playing the role of Michael now that Michael's left? Is it me or Bill? That's you. That's me, okay. So I'm going to Josh Spen about something silly. But notice, too, that tax guys don't get cool shirts.

So kids, when you're out there picking careers-- Well, you guys have the real collars on. Right. But no, I think Bill Alceronian is going to take this one. I do have a quick question, like why do we need to think about converting? That would be my question. But, Bill, your take on this.

Unfortunately, we're not going to first take this, and Bill Sweet and myself are not going to go back and forth debating why. We're generally-- So you're saying they're thinking about this question wrong, potentially. Well, I think so. There's no need for a conversion in this case because it sounds like this individual might have access to a Roth 401(k).

They can make direct contributions to the Roth 401(k) in lieu of a conversion. They noted that they are eligible for a Roth IRA contribution, so that tells me that their income cannot be more than the 24% tax bracket. And a 24%--Bill, I think you showed a chart a few weeks ago-- that 24%, it's kind of up in the air.

Like, does a Roth conversion make sense? In this case, you can make the contribution instead of a conversion. You don't have to worry about paying the tax out of pocket. It's all going through your paycheck. And when it goes through the paycheck, you're less inclined to think about the tax bill.

Amen. And my take on it is, look, Roth IRA, 401(k), you say it's maxing out a 401(k). We're doing a Roth IRA each year. That's $29,000 in 2023. So a pretty good saver here. That's a great savings rate. And if you're going to do that over 25 years, that's $725,000 of contributions.

If you're lucky, you get roughly 7% annualized return. That's $2.1 million of annual Roth assets at the end, and that's going to support 4% rule, about $80,000 of spending a year. My take is, exactly like you said, Bill, start contributing to the 401(k). Max that sucker out every year.

You're saving a lot. If you can support a lifestyle on $80,000 in today's spending plus Social Security, I think you're winning the game. I would focus on the balance. And this person has a pension also. You know that he has a pension. He's 25 years from retirement. It sounds like Stephen here is going to be set up well.

So my point with Roth versus pre-tax, it doesn't have to be all or nothing. You can split the difference as well. And that's my big Ben Carlson takeaway from Asset Compound. Live your life. You can't take this money with you guys. Right, especially with a pension as a fallback.

Amen. Podcast with your dad or your Bill. Duncan. That's what Rihanna says, right? Live your life. I thought it was Bon Jovi. Okay. Up next we have a question from Andrew. I inherited an IRA back in April worth $106,000. I'm 53 years old, married with two kids in college, and don't need to take my first minimum withdrawal until December 2024.

I don't need the money now, so what should I do? Withdraw it all now and take a tax hit and reinvest it in a new Roth? We already have a 401(k) that we're way behind on. Keep as is for the maximum 10 years and take the minimum withdrawal annually, or should we take the final withdrawal at the 10-year mark, which would be a large withdrawal, meaning a large tax bill?

I think you talked about this one before, but I didn't realize this. So you inherit an IRA, the stopwatch starts, and you have 10 years to divest of that money. Does it have to be in, like, a certain amount each year, or is it just by the end of 10 years it's gone?

Yeah. Funny you ask. The IRS has not given us great guidance on this over the last couple years since some of the COVID tax changes. If you inherit from a spouse, generally those rules haven't changed, and you can take distributions over the rest of your life rather than the 10-year rule.

Oh, okay. So it's different if it's a parent? Correct. And Andrew, sorry for your loss. If you inherited an IRA, that means you lost somebody very close to you. We're sorry to hear that. I know Bill put together some visual for this one. But the thing is, if you waited until the end of 10 years, if you really thought that, and you happened to, like, take it all at an inopportune time, then if you didn't dollar-cost average out or something, you're-- Yeah.

Well, that's the key question. So Andrew gives us some hints. There's two of them. One is that he needs to do RMDs next year. So it's actually, like, the worst of both worlds. He needs to continue RMDs. The rule there, Ben, is once you start an RMD, if you pass that on to someone, the RMDs need to keep going.

Oh, so this person was over the age of--okay. And now 10-year, too, Andrew got whacked with the SECURE Act, meaning that by 2033 he's got to distribute 100% of the balance. The clock's ticking. So we did do some math here. I hate to scare you guys. John, can we pull up chart number 1, please?

So what we're taking a look at here, if we take a look at the chart, is what the math looks like on a lump sum distribution on the left column versus an annual distribution. Don't need to go too much into details. You can hit pause or take a look at YouTube.

But under a lump sum distribution, you end up with a larger account balance, about $201,000, versus doing annual contributions at roughly $12,000, $13,000 a year. You can take a look. If your goal is to minimize taxes, you're actually better off doing it annually, but if your goal is to increase your after-tax income, you actually want to wait and defer until the end, and that's making a couple assumptions.

When we did the math, me and Bill in the office, the difference in tax-equivalent rates needed to be more than about 12%, meaning that your jump in that final year needed to be pretty large to get all the way to 37% versus the current rate. And your big risk there would just be you wait to the end of 10 years, the market crashes, and you're not diversified enough, and then your account goes down and you lost all that benefit.

True, but it also depends on financial planning. Once you take a distribution and you can reinvest the assets, that brings us up, John, to chart number two. And so chart number two, the question Andrew asked is, "Should I take a distribution and put that into a Roth?" Bill, can we do that?

Can we just take an RMD and put it into a Roth? No, at this dollar amount, even if the taxpayer has earned income, they can't make a direct Roth contribution north of $100,000. What if they did the traditional and then backdoored it? Can we not do that? No, I mean, we're talking six figures here, and there's no world in which they can put six figures into a Roth.

Over that amount, yeah, right. Right, right. So what we did, though, as a model here in chart two is what would happen, hypothetically, if we took the traditional IRA, the inherited IRA distribution, invested the $7,500 max, because Andrew's 53, so he can make a catch-up contribution, and what would happen to that Roth?

You actually do outperform the lump sum option, assuming a 6% flat rate of return, and obviously do better there. So that's actually an interesting option. Assuming he's not contributing to a Roth or traditional IRA right now, taking those distributions, reinvesting in the Roth, he actually comes out ahead by about $12,000 in my analysis.

Is Rothification in the tax code? Rothification without representation is what we thought the Dawson P. Party thought. Here's the real kicker, though--tax changes. We don't know what's happening in the 2024 elections, future elections. We could be subject to different tax rates in the short term and the long term, and that is well outside of anything we can predict.

Right, so stretching out 10 years could be a good thing or a bad thing. Yeah, we just don't know, and so that's why diversification actually probably is the right angle here. Okay, that makes sense. All right, we've got one more question, Duncan. Okay. Last but not least, we have a question from Travis.

"My wife and I are 39. "We're diligent savers in a variety of tax-deferred retirement accounts. "My concern is that most of our nest egg will be in tax-protected accounts "that are not meant to be used until 59 1/2. "If we want to retire between 50 and 55, "should we contribute less to 401(k) and Roth now "and more to our taxable brokerage account?" Good question.

I think a lot of-- Yeah, this is a good one. I shortened this question a little bit. Travis gave us some numbers. They're doing very well. We're at their stage in life, almost 40 years old. Good on you, Travis. They've got a lot of money saved. So I think this is something you have to think about in terms of diversification for retiring early.

What are your thoughts here? Because I know you've talked in the past maybe about, "Well, if you used a Roth, then you could take the contributions out," but you have to think through what are the spending levels going to be at that time in 15 or 16 years. Totally.

Brings up Bill's point before. But diversification, big principle. You do not want all your assets in a traditional. You do not want them all in Roth. And if you're planning on retirement, think about retiring in your 50s. You probably don't want everything in a retirement account. I would think about an order of operations, right, Bill, is that ultimately there's a couple of different buckets you could go to if you retire at 52, 53.

First, you're looking at a 9-year time horizon, so you're not looking at a large time frame. Second, skip all the way to the end, what's the worst-case scenario? You need to take a distribution from a traditional IRA. What are you looking at if that's the case? In that first year?

In any year before 55. Oh, there's a 10% penalty-- 10% penalty. --to distribute from an IRA early, before 55. Are there any rules of thumb for asset location, too? If they're in their taxable account, should they keep certain types of investments that they'll be using for spending purposes? Typically, if we're trying to bridge the gap between an early retirement and an IRA distribution age without penalties, I think there's a case to be made to build up the taxable bucket, the brokerage bucket.

And that bucket can bridge the gap between 50 and 59.5, where they're not paying penalties. And then at 59.5 and into the 60s, you have the IRA or the 401(k) money to draw on without the penalty. Yep. And so ideally, if you're retiring, that means you don't have any earned income at that phase.

You're not eligible for Social Security until 62. Filling up capital gains brackets at that point, to me, would make a lot of sense, because if you're under the 12% or lower tax rate, your capital gains bracket is actually zero. Right. And so that, Ben, to answer your question, I would love to have some long-term capital gains built up at that point to start to realize it was tax-free.

There are other choices, though, Bill, and we could just cover a couple of them. Number one is Rule 55. Do you want to go down to that real quick? That's pretty easy. Yeah. Rule of 55 says if you leave an employer at the age of 55, before 59.5, before you can roll it into an IRA and take penalty-free distributions, you can leave the assets in the 401(k) and take distributions from the 401(k) without penalty if you're over the age of 55.

It has to stay in the employer plan. It has to be in the employer plan. If it leaves the employer plan, you're out of luck. You can't roll it over. Correct. 403(b) is also eligible. 403(b) is eligible. And if you're a public safety employee, a police officer, a fireman, you can do this at 50 instead of 55.

And if you happen to have a business, you could potentially roll assets into a self-employed 401(k), right? A little more technical, but ultimately that could qualify, too. The key point, Bill said it. You have to be 55 or older when you leave service, so you can't retire at 52 and then wait for three years.

So many numbers. This is why we have tax professionals, because there's 50, 55, 59.5, which still never made sense to me. I've got another one for you, 72(t). If you do hit 55, you can file a 72(t) and ultimately take some penalty distributions on roughly, you annuitize. We're switching from 401(k) to IRA.

Right, correct. This is an IRA strategy. Or to start, you just take the penalty, right, if you happen to have this issue. And if you don't have a lot of income, maybe that's not a big deal. But I think planning ahead, you're 39. Travis, he's got 10 years to figure this out, 20 years.

I feel like if we're doing an average of, when people say they want to retire early, 55 is always the number, is it not? It's a rule of 55 in the tax code, right? Doesn't it seem like it, though? When people say, "I want to retire early," I mean, people are saying this in their 30s and 40s, and their life could always be completely different, which is, I think, to your guys' points about diversification.

But that seems like a number of people just pull out of the air and go, "55 sounds good." I think it all depends, right? In this career, in financial advice, people never retire. I mean, it's very rare to see that. I'm on Team Never Retire. I like being a useful, productive member of society.

But that said, I think it's more about choosing what you do, how you do it, and if you have a lot of assets, you can have options. I think mid-30s is where a lot of people get kind of burned out and are like, "I think I can do this for another maybe 20 years." A lot of the early retirement questions come from people in, like, 35 to 40, right?

Travis, 39. Look at that. And 20 years feels like a long time. So it's like, "Okay, I can do this 20 more years." Yeah, kids are in college. If you're in mid-30s, you have young kids, you're like, "Oh, I'll get them through college, and I'll call it quits." That's true.

Sounds good to me. Then you realize how much college costs, and you work for 10 more years. There goes the retirement. All right, I want to thank the Bills for their tax expertise, as always. Thank you to Michael for coming on and helping. Thank you to Bird Dogs for the great polos.

Thank you to Duncan and John and Nicole, everyone here helping out. Email us, askthecompoundshow@gmail.com. Leave us a comment or question on the YouTube comments. Subscribe, like, all that good stuff, and we will see you next time. See you, everyone.