retirement planning

Throwing Yourself for a Loop

Sometimes life’s big milestones arrive in a neat, straight line. And sometimes that’s just not what happens—or what we want to happen. How do we plan for a swoopy life?


Want content like this in your inbox each week? Leave your email here.

If I Had a Million Dollars…

photo shows a road through a wooded area with "RETIREMENT" painted in yellow on the pavement

It’s a premise we’ve heard in songs and any number of written works. “If I had a million dollars…” It’s a great prompt—sometimes serious, sometimes humorous. I’ve decided to take a crack at my own entry into the million-dollar discussion!

I had the privilege recently of meeting a young person who shared their goal of retiring at age 30. I was struck by the ambition, shared by many in the FIRE movement: its mantra is “Financial Independence, Retire Early.” So here I am thinking about a million dollars. What I have to say is all about the numbers. Money and numbers are how we fund the life in which we act out our values, plans, and dreams.

Wondering what it takes to retire early? It’s not a universal formula, but we can take the idea of accumulating a million dollars of invested capital as a decent proxy. In this scenario, one has to be able to imagine someday living on, say, a $50,000 a year. But it also requires a willingness to endure the ups and downs of ownership. They are just part of any long ride in the markets. (And keep in mind it would take a far bigger number to retire on today’s low interest rates on stable forms of money!)

Two factors really affect the path to retirement. One is how we spend and earn along the way; the other is inflation.

First, because financial independence is all about our resources exceeding our needs—income exceeding outflow—reducing your needs is one way to get there sooner. The other side of the coin is finding ways to maximize your human capital in these working years, getting paid more for your labor. So the first best investment might be in yourself to improve your earning power. Fewer expenses, more income—more money to invest for retirement.

Second, inflation will affect how the path to retirement unfolds. Inflation risk is the extent to which our money loses purchasing power over time, so we have to take that into account as we plan for our future spending in retirement.

So let’s get back to the numbers. How much money would we need to invest each year in order to have $50,000 (in today’s dollars) as annual income in the future?

Let’s assume 3% inflation and 9% investment returns—neither of which is guaranteed—and 5% annual withdrawals in retirement. Starting from zero, we could be…

  • retiring in 7 years by investing $129,782 annually ($10,815 monthly)
  • retiring in 15 years by investing $51,529 annually ($4,294 monthly)
  • retiring in 25 years by investing $23,999 annually ($2,000 monthly)
  • retiring in 35 years by investing $14,349 annually ($1,196 monthly)
  • retiring In 45 years by investing $6,982 annually ($582 monthly)

These numbers are just one way to slice it. If you could live in retirement on $25,000 of today’s dollars a year, for example, take those amounts above and cut them in half. If you would want $100,000 a year, then double the figures.

We don’t know the future, and these calculations are not the future. But it’s a place to start toward a plan.

Clients, if you want to sort out your situation—or help a younger person get started—email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.


Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

This text is available at https://www.228Main.com/.

22, 44, 66: My Life in Thirds

My birthday is approaching, and I’m ruminating about the meaning of another year in the life—but you already know how much I like to take a step back, get the big picture, and imagine the long view.


Want content like this in your inbox each week? Leave your email here.

What the IRS Knows: Getting Down to Brass “Tax”

photo shows a light letter box with the word "TAXES" sitting on top of various cash bills

While paying taxes is generally a good sign that you are making money, it seems most people want to avoid paying more tax than they need to. It’s a common enough question we field, and one worth considering.

How do we handle the tax impacts of our choices?

For smaller investors with tax-deferred vehicles like IRAs or 401(k) plans, tax considerations are simpler. Only deposits and withdrawals have any tax implications (and for Roth IRAs, rarely even then.)

Things get more complicated for investors with substantial balances outside of retirement accounts: most trading activity has tax impacts. You pay taxes on interest and dividend payments; you also become subject to capital gains tax when selling investments.

The principle of capital gains is straightforward enough. For instance, if you buy stock for $100 and later sell it for $100, you made no money and owe no tax. If you were to sell it for $110, you would have to pay some percentage of the $10 profit in tax (but not the rest of the $100: that was money you had in the first place.) And if you sold it at $90, you would have a loss of $10 that you could use to offset taxable gains elsewhere.

The important thing here is that the IRS generally only cares about the value of investments when they are bought or sold. If your $100 stock position balloons up to $1,000 one year and then collapses back down to $100 the next, the IRS has no interest in the round trip. They only see the difference from your original purchase, regardless of how high or low the price got in the meantime.

It is easy to despair when an investment is underperforming, but according to the IRS, those losses do not exist until you decide to sell. And if a high-flying investment should pull back from its highs, the IRS would give you a very funny look if you tried to claim it as a loss.

So if the IRS does not care about your gains or losses “on paper,” why should you? A drop is not a loss, and value at inception is a great anchor to come back to when you need a jolt of perspective.

And if after all this you find yourself with more resources than you would need in your lifetime, there are estate planning opportunities to consider. If you are sitting on long-term investment gains that you do not think you will be spending, there is little reason for you to sell those holdings and pay taxes on your gains yourself.

If those assets are passed down to your heirs, however, they would generally only need to worry about gains made after they inherited them, so whatever gains you accumulated during your lifetime can pass to them tax-free.

Lots to think about! It’s an important topic for many investors. Clients, when you need to talk about your tax considerations, please reach out.


This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.


Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

What the IRS Knows: Getting Down to Brass "Tax" 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

A Terrible Case of the “Shoulds”


Better sleep can contribute to a longer life. Who are we to get in the way of your peace and calm? Your choices are yours. Don’t let anybody “should” all over you!


Want content like this in your inbox each week? Leave your email here.

The Great Myth of Mind-Reading

photo shows a large white question mark on a chalkboard

A friend of ours tells the story of an argument they once had with a parent. Both parties got more and more frustrated, realizing that they were not on the same page—and things were only getting more tangled.

Things escalated until the parent threw their hands up helplessly and yelled, “Listen to what I mean, not what I say!”

Funny, huh? Yet it sounds so familiar to many of us.

We do our best here at 228 Main to express ourselves clearly. We want to make our expectations known, to expedite understanding, but we know that words have their limits. When I say “chair,” you may picture a dining chair while I was thinking of a throne! When you say “retirement”… well, see where I’m going with this?

It happens in the financial news, too. Pundits think they can get into the minds of investors, to read each decision as if it were the same as an inner monologue. If anyone could read minds, though, wouldn’t a lot of people be right a little more often?

Instead, we like to remember our limits. How many resentments, how much confusion could be eased if we turned to the important people in our lives and said, “Oops! Forgot… You can’t read my mind.”

We believe an important ground rule for our work is that we will not treat each other as if we’re all mind-readers.

Clients, fair enough? With this in mind, please reach out when you’ve got anything worth mentioning—and we’ll do our best to check our understanding, together.


Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

This text can be found at https://www.228Main.com/.

Life Is Short… Pick What’s Precious

photo shows a winding path through brush on a causeway

Decades ago, my father told me something about perspective. He said, “The mortality rate is 100%.” It was a lesson, one which gave me a better understanding of his terminal illness. But the more lasting perspective is the one it gave me on life, a lesson that reminds me how precious—and short—life is.

We got into a discussion recently with a person who is close to retiring from an active career. After getting a sense for what life in retirement might look like for them, our talks focused on money and numbers.

After it became evident that this whole retirement thing could work out, anxiety about the change began to build.

When we spend four or five decades earning a paycheck, having them every month for several hundred months in a row, it is sort of jarring to step into the unknown—to live without the steady comfort of that paycheck coming in. Some uneasiness is understandable.

It is one thing to understand the concept of owning the orchard for the fruit crop—living off your portfolio—but it is a whole different thing to trust that concept with your wellbeing and way of life.

Yet if we never make that leap of faith, we might labor at a job forever, even one that drains us, even when our means actually exceed our needs.

And we can’t think or logic our way out of facing our feelings. (If we could, many of us would’ve already flexed our smarts and sidestepped these pesky feelings, right?)

So perhaps it is useful to try to finish this sentence: “Life is short, we better __.”

The fact is, time is what life is made of. Another day spent as an employee is one not spent on our own, personal priorities. When we fill in the blank, we are defining those priorities.

Clients, if you would like to talk about how you would fill in the blank, or finance it, please email us or call.


Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

This text can be found at https://www.228Main.com/.

Three Rocks

photo shows river rocks on the ground

I have a yard now that was sadly neglected for years. My ambitions for it are modest. I still cut the grass with a checkbook, but I myself am working in fits and starts to reshape it into something better.

With many trades facing supply disruptions, price spikes, and labor shortages, it seems prudent to defer some projects until things loosen up. So… I have not called in the landscaping company yet.

In the meantime, there is a space that would benefit from a layer of rock. On my daily walk, I am picking one up and bringing it home. Three days into this plan, there are three rocks. They weigh about a pound all together.

The internet suggests I might need a ton of rock for this area—2,000 pounds. If I maintain the current rate of rock accumulation for, say, 300 days per year, it would take me 20 years to get a ton of rock. Twenty years to cover what I need.

I’m struck by three things: how insignificant three rocks seem against the total need, how simple arithmetic shows it could be accomplished over time, and how similar this all is to the challenge of saving money for retirement.

The first month’s deposit in a long-term investing plan might be a tiny fraction of 1% of the eventual sum accumulated over 20 or 30 years. It might feel like three rocks compared to a whole ton!

But simple arithmetic provides some hope.

Clients, if you would like to talk about your own accumulation plans—or start one with a younger relative in mind—please email us or call.


Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below: