Afford Anything - Q&A: I Want to Retire Early Without Selling My Stocks in a Crash

Episode Date: January 13, 2026

#680: Mia: Mia and her husband are planning early retirement and want to draw down their taxable brokerage accounts for the next decade. She’s considering a securities-backed line of credit to defer taxes during market downturns. Can a securities-backed line of credit smooth taxes in early retirement, or are there hidden risks? Jean: Jean, a freelance creator, wants to take a self-made sabbatical in three years and fund it without stress. She’s unsure whether to keep her savings in a high-yield account, a brokerage account, or split between the two. How should she balance growth and safety when saving for a short-term sabbatical? Jared: Jared has been reading about pensions and 401(k)s and sees pros and cons on both sides. He wants to know whether pensions really offer an advantage or if the nostalgia is misleading. Are pensions truly better than 401(k)s, or is the preference mostly sentimental? Resources Mentioned: affordanything.com/community affordanything.com/newsletter affordanything.com/financial-goals affordanything.com/your-next-raise quince.com/paula Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, you've taken a couple of sabbaticals in your day, haven't you? I have. I just call them extended vacations. How long do they last? The longest that I've ever taken off is a month, but not like you taking off six months or taken off a year. I've never done that. A month is great. Yeah, I enjoy what I do too much, but getting away for a month, generally two weeks into it,

I feel itchy. I want to get back to work. But then along about week three, I forget about it again. Like, you know what I mean? It comes and goes. But then generally after a month, I'm ready to get rolling again. Nice. Well, we're about to answer a question from someone who is on the verge of taking a sabbatical.

In doing so, she needs to make some decisions about how to handle her savings, where to put it, how to manage it. We're also then going to go one step beyond that and talk to somebody who is going to early retire a permanent sabbatical. Permanent. Yes. So we're going to start with sabbatical. then we're going to have a high-level philosophical discussion mid-show, and then we're going to end with early retirement. Wow. All in one show. Welcome to the Afford Anything podcast, the show that knows you can afford anything, not everything. The show covers five pillars, financial psychology,

increasing your income, investing, real estate and entrepreneurship. Aconym is Fire with two eyes. Double-I-fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. every other episode-ish, I answer questions that come from you. And I do so with my buddy, the former financial planner, Joe Sal C-high. What's up, Joe? Wow, that's me. That is me. That's you.

How are you? I am amazing. I'm loving 2026 so far. Knock on wood. Knock, knock, knock. This should be a great year. I think so, too. I think we're going to make it a great year for three people right about now.

We absolutely are. And our first question comes from Gene. Hi, Palma. Long-time listener here. and first-time caller, thanks so much for all the years of amazing advice. I'm calling in looking for advice on how to save up for a mini-retirement. In the next three years, I'm planning to take a self-made sabbatical of sorts. I'm a freelance creator, so I expect that I will be doing work during that time, but I really want to only do work that I enjoy and not worry about my living

expenses for the year. So my goal is to save up anywhere from 30 to 36,000. that's very attainable for me, and it will actually cover all my expenses for the year. What I can't decide right now is where I should be saving this money. At the moment, I have a high-yield savings account with 4.5% interest, and then I also have a Vanguard brokerage account that's mostly made up of ETFs. I know that I have the most growth potential in the stock market, but I'm feeling a little bit risk-averse just because of the short time frame. Again, I'm trying to save up for only the next three years and then have enough to fund that year off.

So right now I'm thinking about doing a split, something like 50% in my high-yield savings account and 50% in my brokerage account. I'm just having trouble deciding what's going to be best given my time frame. So I'd love to hear your thoughts. And thank you so much. Jean, thank you for the question. And you have asked one of the most. Most common questions in financial planning, which is what to do with funds for a medium-term goal. I think we all, most of the people who are listening to this know that if you have a 10-year goal,

and I'm just going to broaden this out for the sake of the whole audience to orient it. Most people listening know that if you've got a 10-year goal, then you can invest that money because that money is likely to grow in the next 10 years if the future is like the past. And most people know that if you've got a one-year goal, you keep it all in savings. But that three to five year, that middle term, that's the big head scratcher. That's the question mark. You don't want to be losing out to inflation or missing out on gains that you otherwise could have had for a relatively reasonable risk profile. But at the same time, if we do another 2008, you don't want to be caught on your butt.

Yeah, it could be, this could be a really bad thing if you take on too much risk. because of the importance of this goal and because of the fact that it sounds like it is definitely for this very fixed time frame, I think I begin even more risk-averse, Paula. Yeah, same. I'm thinking high-yield savings account. I think the more that you think about this question, the more when you look at studies over short periods like five years, the things that can go wrong. versus what can go right in the threats and what the biggest driver of your gains is over a five-year

time frame. And bar none, the number one thing you can do to rock this over the next five years is save more money. Over the next three years. Excuse me, over the next three years. Excuse me, over the next three years. Yeah. So I think with a three-year time frame, I'm not doing anything besides a high-yield savings account. I think I'm thinking as hard as I can. can about how do I put more money away? The money's completely safe. I don't ever have to watch the news, think about what's going on with economic indicators. I'm just sitting the money in a very safe lockdown place. Let me push back on that a little bit, Joe. I would not put the money into equities because I agree. My sense listening to Gene's question is that the time frame

is reasonably fixed. It sounds like she wants to pursue this goal in three years. Maybe there's a little wiggle room like four years, but I don't think she wants to go too far outside of that three-year zone. Right? Like this is not going to be delayed for seven years. This is three years, maybe two to four, we can say, if we want to buffer it on either end.

And so give an N-Gene, please correct me if I'm wrong or modify this if I'm wrong, but if this goal truly is a three-year-old. year goal. I think putting the majority of it in a high-year savings account makes a lot of sense. But I would push back a little bit, Joe. I think that she could put some money into bonds and some money into Ginny Mays. Well, I mean, you know, Ginny May bonds I really like. You know, the reason why I got hung up and I said five years instead of three was because, A, I can't rebound handwriting. But the thing around five years, I think five years is really the

time frame when you talk about a medium term, you know, medium term goal, I think three years is way too much of a short term goal to even, even do that. I mean, the things that can go wrong, even in as something I like as much as Ginny May's, in one year, the destruction in Ginny May can still be so bad that it can wreck the other couple years. What if she went like 80% high yield savings, 10% total bond market index, 10% Ginny Mays? Looking at the last 10 years of the I shares Ginnie Mae Bond ETF, which very creatively has the ticker symbol, GNMA. Very, very difficult to look up. You know, in 2022, you lost 10.8% in Ginny Mays, which take on almost no risk. Now, since then, you had in 2023, 5 and a third, just over 1% in 2024, 24, 2025 last year,

you had a wonderful 8 and a quarter percent. So you've had some really good years. But with a three-year time frame, that negative 10.8, Paula, still sticks out to me, as does the year before where you did almost negative 2. So for two years, you were losing some pretty big money in Ginny Mays, which I I think of is a fairly risk. I'm not going to say free, but you know what I mean? Very, very low risk. I almost said fairly risk free, but but it's really very, very, very low risk position in Ginny Mays and that negative 10.83 speaks volumes to why I wouldn't go there. I mean, I guess as I'm thinking through

this, the other element of it is, is the juice worth the squeeze. And so, all right, if she put 10% in Ginny Mays on a $30,000 bucket of money, that's $3,000. If it went down 10%, she's losing $300. That's not the end of the world. No. That being said, if it goes up 5%, she's making $150, that's... If it goes up 10%, right? Yeah, yeah.

I mean, we're talking about such a... What ultimately will sort of come out in the wash as a rounding error anyway, because we're talking about a relatively small pool of money. Well, and I like two things about that. I like that you're getting rid of the risk through minimum. the downside of this negativity by putting less money toward it and by dollar cost averaging into it. So I think a dollar cost averaging approach, I would definitely espouse. I think that's really good because if it starts going down during that time, you can do one of two things. Number one is you can

shut it off. Now, I never like doing that because I don't like jumping in and out of my plan. because then I think that I'm Nostradamus and I'm going to call the future. And the second that I turn it off, it's all of a sudden going to start rebounding. Not the case. But I can shut it off. But the second thing I like is we're getting this variable pricing. We're not locking all the money in in one fell swoop. So to that degree, I think it's okay.

What I really, really would like to see Gene do before she does that is just go to Morningstar and take a look at the risk reward profile. And I think when you see the negative years and the positive years, I think knowing what you're getting into and knowing what the bounce around is going to be in that exchange trade of fun is a big part of winning because you won't jump out at the wrong time. I still think for three, four years. Yeah. Okay. What do you think then about total bond market index? Let's put the Ginny Mays to the side.

What if she just put 20% into a total bond market index? fund. Well, I think that's worse because of the fact that you're taking even more risk when you're putting in other types of bonds. The thing I love about Ginny Mays is it, this is a government-sponsored entity, right? So even though there's not explicit government backing, there's implicit government backing, which means that this is going to have less volatility than something that is no government backing. So when I take a look at the Vanguard Total Bond Market Index Fund, ticker symbol B&D. Now you had some downside in 2018 that you didn't have in the Ginnie Mae Fund, negative 0.11%, so barely lost money.

But in 2021, you lost almost 2%. And then in 2022, instead of 10, you lost 13%. Now, that sounds like, oh, well, negative 10 versus negative 13. What's the difference? That's 30% more money. You lost 30% more. Like when you think of terms of percentages, it's a big difference between 13 and 10 when you start talking about the actual dollars that you lost.

The only thing I like about the bond index is when you talk about dollar cost averaging, volatility can work in your favor when your dollar cost averaging. But I couple that with a three-year goal. And I think, okay, we're going further out on the risk chart. So I think if you're going to do it, Jenny Mays is. far as I would go. That negative 10, of course, is a year that I had not seen during my career. And you rarely see in an investment like that, which is why I like it so much for an application, maybe a couple years longer than this. She said five years. I'd be like, yep, let's go Ginnie Mae.

But I don't, I don't think so, Paula. By the way, for anybody who's wondering why I didn't say tips, Treasury, Inflation, protected securities, it's because she's getting 4.5% in her high yield savings. And that's better than likely better than what she's going to get from tips. Well, and even if she does get slightly better in tips, the fact that she's got this guaranteed outcome, right? Which she doesn't have. She's going to have some volatility in tips. I, yeah. And you know, and that's the other thing. When she said 4.5. Yeah, I mean, there's volatility in that too. Like that is that is a number that constantly changes. Yeah, but she, but that also tells me, she's in one of the higher performing

high yield savings accounts out there, maybe top 5%, top 5 or 10% of all of the high yield savings accounts that are available. So she's done a great job of picking one that does very, very well. Tips again, 2022, negative 12.24. And also lost money in 2018 where the Ginnie Mae Fund did not. And this is also interesting. Tips versus Ginny Mays in 2025. Ginny Mays actually won. So you lost more money. Wow.

In 2022. And you didn't make as much last year. Interesting to see both sides of that coin. Now, what changes the game here, and you and I have talked about this when people have called in with similar ideas. Let's say that she put some money into the Vanguard total bond market ETF. Or she put some money into the I shares, Ginny, May fund. And we do have that negative 10, negative 12, negative 13 percent year. And she does her 50-50

that she's talking about now. My question around the 50-50 that she was talking about would be, how upset are you if you have to push this off? Now, if you go with a bond fund, either that total market bond fund or less risky into the Ginny May fund, she probably only need to push it back a year or two because bonds historically have come back fairly quickly. Stocks, which we'll get to later, can be a whole different story. That's right. I forgot that when I was running the, what's the actual dollar amount she might stand to win or lose, I was running that off of the full savings, $30,000.

She said she wants to save between $36,000. If half of that's going into a high-yield savings account regardless, and the other half, let's say, is going into a bond fund, okay, now we're talking, you've invested 15,000, and there's a 10% haircut. You've lost $1,500. Yeah. If she makes up the $1,500 in six months or in whatever timeframe, and she has to take her sabbatical six months later, how does that make her feel? That'd be my next question. Right. And then again, is the six months worth the risk? Right. Because the more flexibility. you have around the date, the more risk you can take. Absolutely. That's why if we're bracketing this

goal as, let's say, two to four years or two and a half to four years, or maybe three years is the soonest, but if it's four years, that's no big deal. Yeah, then she can take a lot more risk, a lot more than she could if she was like, no, this needs to start in precisely three years. I think it's interesting kind of the yin and yan of this, that in general, with a lot of financial planning questions, when somebody's talking about taking a life risk, like, I'm going to have this period of no income. We want the other side, the portfolio side, to be less risky. We want it to be much more certain, where if you're 30 years old listening to this and you're going to have an income stream for a long period of time, as far as you can project, you know, hopefully you'll have it for a long

period of time, well then very comfortably notch up the risk in your portfolio because you have the safety of this career, this money coming in that you think is going to continue. So I feel like there's this back, you know, this push and pull. One take the risk on one side, abandon the risk on the other. I'm glad you brought that up, Joe. That's a very important mental model. Again, to broaden this out to the whole audience, because this is something I talk about with the students in my rental property course all the time. It's a mental model for how to think about risk. And it is that if you are going to have risk concentrated in one dimension, then you counterbalance that by reducing risk in other dimensions. And so the way that that plays out in a rental

property context, for example, is that in rentals, you've got risk across all of these various dimensions, right? You've got the age of the property. You have the separately, but sometimes related, sometimes not, the condition of the property. You have the type of neighborhood that it's located in. You have the economic prospects of the city and state that it's located in. You have risk across all of these dimensions. And of course, you have the level of financing, right. And so if people ask, all right, what is a reasonable amount to borrow for a property? Well, I'd be far more willing to leverage up on class A rentals in an economically dynamic location, then I would be class C rentals in a place

with declining population. That's an example of if you're going to have risk in one dimension, you counterbalance that by reducing risk in other dimensions so that your overall net net risk across the entire spectrum is balanced. And I think along that, no, I think that when we talk about risk too, we don't talk broadly enough about risk. Like we get questions you and I all the time about taking more risk in your portfolio. But really, a lot of the time, the portfolio risk, you can do that.

But the juice may be worth more squeeze if you take some more risk with your income streams or you take some more risk in your life, you decide to take a sabbatical like Gene is and go do the thing. I feel like when we talk about risk, we're always talking about our money. And I think if you expand that, especially the more I see numbers lately about the huge impact your savings rate makes, you know, and I've known that. Like cerebrally, I've known it forever. But just some of the studies I've seen lately about how just impactful that savings rate can be notching it up just a little bit. And if we take a little risk to say, I'm going to save just a touch more money than I did last month, or I'm going to go ask for that raise that might be a no, but heck, might be a yes, but I never asked.

Taking some of those risks can really improve outcomes a ton. But we're so busy looking at do I choose small cap versus minors. It cap. Says Mr. Efficient Frontier. That we don't consider the bigger picture. But there is a bigger picture there, right? Yeah. I mean, that bigger picture, you know, what's the level of risk, again, broadening this out

to the whole audience? What's the level of risk in your career? If you are a tenured professor, then you don't have the same type of income risk as an entrepreneur. And that influences the types of investments that you might choose. It certainly influences, again, back to real estate, the amount of leverage that you might take out. And I'm not just talking. Oftentimes when people say, how much can I borrow? What they mean is, how much will a bank or financial institution allow me to borrow? It's funny. When you Google,

how much house can I afford? People use that question synonymous with how much do I qualify for. But they're fundamentally very different questions. Very different. And it's a shame that it's used so synonymously. Because a bank will help you get in trouble really quickly. Yeah. That's another way to think about risk is what is the risk in the career or industry that you're in? What level of risk does that carry? And how does that translate to your investing and leverage decisions? I've also seen along another parallel line here, Paula, is the chance that you're going to make a mistake in your financial plan goes up the closer you get to needing the money. which means that if you are taking risk, let's say Gene takes some risk in her portfolio right now with half of this money, she puts it in a stock-based mutual fund.

Let's go crazy. Let's say it's a small company stock-based mutual fund. The other half is in high-yield savings. The chance of her messing up and doing the wrong thing overthinks it, decides to question whether it's going to make money or not, pulls the money at the wrong time, right? the chance of you doing that goes up as the goal gets closer and your brain knows the delta between the risk that you're taking with your money and the amount of risk you should be taking with your money. So as that delta grows and grows and it becomes more of a bet and your brain knows it's more of a bet, the more likely you are to do something destructive that wrecks your portfolio, which is why gets to another piece of this. And I know, Gene, we're going way off of your question here with this. But I think it's still important to widen this out. When people get

toward retirement, you know, the number one thing to do regardless, historically, the best solution is to stay in equities. And yet the reason people don't stay in equities, and most people probably shouldn't stay in equities, has nothing to do with the market. It's that that that, perceived risk you're taking and the volatility of the equity positions versus the fact that in your brain you're retired and I may need some of these dollars, even though it's ridiculous to think you're going to need your entire retirement portfolio tomorrow, right? What are you going to do with that? And why would you do that? But your brain sees it as, I might need this dollar tomorrow. And people mess it up. The same people that when they were 30 years old would not have messed it up

because at 30, they were still a significant amount of time away from the perception in their brain of needing to use that dollar. Essentially, the brain feels fear and reacts accordingly. Brain feels the fear. Right. Yeah. You know another thing? I'm sorry, Gene, this is way off your question now, but this is something that I've never

heard anyone talk about and that I think really ought to be discussed. It's something I've been thinking about a lot lately. There is a certain level of risk that comes from suffering from depression, managing ADHD, if you know yourself well enough to be able to anticipate that you might be going into a state in which you are going to have to be focusing on your inner life and you're probably going to let the ball drop in some areas of your outer life. If you know that that's going to happen or if you have a sense that that might happen, there's a strong case for de-risking so that you can focus on your inner life. It's hard to anticipate

those times, and I don't think that that's talked about enough. But often in these financial conversations, we act as though people have the same level of motivation and attention, that that is static throughout a person's life, when in fact, that is incredibly dynamic. But I do think that all of these threads, all these different hallways that you and I just walked down, Paula, lead me back to, I'd use a high-yield savings account. So, Gene, there you have it. Thank you, Gene for sparking such a great discussion. Best of luck with your sabbatical.

Yeah. We're going to take a moment to hear from the sponsors who make this show free and available. And when we return, we're going to hear from someone who actually loves one of our sponsors. And he talks about that in his question. That's coming up next. Welcome back. Our next question comes from my fellow quince lover, Jared. Hi, Paula and Joe, Jared here. At the time I'm calling you and you recently answered a broader philosophical question and that inspired me to call it with my own. Over the course of the year in financial media, I've been seeing more discourse about pensions versus 401ks.

And in my experience, a lot of this reporting and a number of the articles wax very nostalgic for the days of the pension. And I'd love to complicate that and get your thoughts on it a little bit. There are several things I can see being in favor of pensions. Number one, pensions remove the behavioral element. You can't undersave, you can't overspend, the pension is what it is, And sometimes removing choice can improve compliance and adherence to a program in your favor. So I see that as an advantage. A second thing is they're incredibly predictable.

You don't really have to worry about sequence of return risks. You don't have to worry about, say, withdrawal rates. Assuming it's well-managed and well-funded, and we could complicate pensions being well-managed and well-funded, you know exactly what you're going to get. Third thing is that pensions allow for collective risk modeling, and there might be more efficient ways to do collective risk modeling for retirement rather than a lot of individual 401k accounts. I kind of think about it like car insurance, where we can get some efficiencies by doing collective car insurance rather than individual everyone's self-insuring. However, there's several

different things that I do as being problematic with pensions. First, if someone thinks the problem with 401k's is that people don't earn a living wage plus enough to save, then why would we think an employer from a total compensation approach would provide a living wage and a robust enough pension. So, like, I don't understand how to reconcile that. Second, pensions often require vesting. For myself, I was part of a job where I was covered by a pension, but I left within the first five years, and I'll never see that money again. Whereas with a 401K, I would have been able to take my money with me.

And then a third thing is, based on the pensions that I'm aware of, and I'm a layperson, to be clear. Once you leave a job that is covered by a pension, assuming that you don't go to another job covered by the same plan, your growth becomes linear. Your salary won't be increasing within the pension plan coverage. Your years of service won't be increasing within the pension plan coverage, only your age, which usually grows as a linear multiplier. So you're getting linear growth on your pension rather than multiplicative or exponential growth through other investment options. So I'd love to hear what you and Joe think. Also, a quick shout out and appreciation for Quince, one of your sponsors.

I recently got my sister birthday gifts from Quince and got some major big brother points. So thank you for that. Have a great day. Yeah, I love Quince. I'm going to do a shout out. I'm obsessed with them. I am wearing quince. This was not planned, but like I come to every single one of these wearing quins because I literally wear it daily.

Wearing a quince sweater right now, wearing, oh, can you see it? Quinn's pants right now. I'm obsessed. Quince.com slash Paula. They are not even paying me for this added ad spot. I am just doing it because I am obsessed. Quince.com slash Paula. I also want to know, Jared, you said that age is usually linear.

I want to know when it's not. I know. I loved that line. I mean, in my brain it's not. I love that. I stop somewhere around 34 and I have an age since. Right. Yeah.

Sometimes it reverses. Yeah. So that would affect my pension. if that were real. Oh, but sometimes it's exponential. You know, you got,

yeah. Just feel old. Yeah. Yeah, you got a couple of, don't they say aging accelerates in bursts? Like when you're 44 and then when you're 60, you get a couple of bursts of aging.

That's what I heard on Stephen Colbert, which is my source of all medical information. Yeah. Yeah. So this is an interesting question around pensions. And I think he nails Paul. a lot of what people love about pensions. I mean, you overspend at your own risk because you know how much you're getting next month. Like if you spend more than that, then it's your problem because

you had the number right in front of you. And assuming it is a well-funded pension and it's a livable amount of money, then your freedom from worry about changing up your lifestyle or spending more money today and potentially running out of money goes bye. Chair, I think that was a fantastic breakdown of the pros and cons. If I could summarize my thoughts on the pension system, of course, there's the risk of solvency or insolvency, right? There's always the risk that a pension is underfunded and then you get to retirement age and find out that this thing that you were relying on is no longer there. And I think from a risk perspective, that is the single biggest risk. the other aspect of it from a societal vantage point that I don't like is that in many ways it decreases

mobility and disincentivizes entrepreneurship and small business. And here's what I mean by that. Number one, you talked about vesting. If you see yourself as tied to a job because you're sticking around for the vesting schedule, then you have decreased job mobility, or at least a self-imposed decreased job mobility. And that could lead to not getting – at an individual level, it could lead to not getting raises and promotions because people tend to get their biggest raises when they move jobs. So, I mean, you never know the counterfactual, but I would bet that there are a number of people who have missed out on the potential for promotions.

They've paid an invisible opportunity cost because they've stuck around for. for their pension. Again, not knowing hypothetical counterfactuals, that's pure conjecture, but there's, probabilistically, there's some degree of people to whom that has happened. Also, you run the risk of spending your career. I'm a big believer in calling. I believe everybody has a calling. And much of the work that I do here on Afford Anything is to encourage people to find their calling. I think that's, I recognize the reality that many people feel that they can't pursue their calling because of financial constraints. And so if we can solve those financial constraints, then that gives people the ability, the freedom to be able to pursue their calling. And that is a big

part of the mission and the underpinning of why I host this podcast of why I do what I do. And so to the extent that a pension makes you feel locked into a particular job that might not be your calling. I think at a broad societal level, that's a concern that I hold. And how that plays into discouraging small business and entrepreneurship is that, as we all know, when you go to work for yourself, you already miss out on a whole bunch of stuff. You miss out on the employer paid portion of that section of your taxes, you know, that there's that self-employment tax that you've got to pay. You miss out on health insurance. That's the big one. You miss out on a bunch of company benefits.

like paid parental leave, public transportation vouchers, a gym membership, all of the perks that corporate might give you, might or might not give you. You know, if you add pensions also as opportunity cost, it creates a model where small business becomes less and less attractive. Well, I think sadly, the pension system went away, Paula, partly because of the way companies do business. And the workplace became much more fluid than it used to. be. I mean, the average person will have, what's the number, 4.2 different jobs during the different companies that work for over four companies during their career. So they're not going to stick around for a long time with one single employer for all that long, for long enough

for a pension to make sense. I mean, a pension was an artifact from the days of you working for the same employer for a long period of time. So regardless of what it does to, I mean, entrepreneurship, companies don't manage a workforce the way that they used to manage a workforce. They see you much more as a cog in a wheel that if that section of the universe that they're working on no longer has a need for you, you go bye-bye. It isn't that the company doesn't care for you. But I remember a few years ago, we spoke to a gentleman, Ashley Goodall, he and Marcus Buckingham had a fantastic book. But even before that, the book was spurred on because of a Harvard Business Review piece that they wrote, this whole study. And Ashley and Marcus really did a

great job approving that company culture, there is no such thing as like Microsoft having a company culture. Your company culture is your immediate boss and the people you've lunch with every day, the people on your Zoom call. Like whether you love or hate Microsoft as an employee there is based on maybe five people in general. That is your company culture. So the question that Goodall in Buckingham were trying to solve for was if you're trying to create a company culture, you really need to incentivize and teach middle managers how to be experts in creating a culture that's likable. So it's not that the company doesn't care about you, but the company truly does, especially at the larger American corporations see you as a number here to do a thing competing against

other people to do that thing. It isn't about your personality. It isn't about the fact that you get along with Jane or Bill or whoever sitting next to you. It's that, you know what? Our need for this is gone or we only need two people doing this. You're the third one. So you're moving on. It truly has become a brand new universe. And even if you don't like that, that's just the world that we live in. Like, it's not about whether I want to be in that world. That is the state of the game. So I don't think you can take any job and think, wow, if I vest five years from now, because odds on, when you just look at the total landscape, you won't be there five years from now.

So pensions just don't work. Which is why if you're truly looking for benefits to wax poetic about today, I love that line, Jared, wax poetic about today, it's a monster freaking match on your 401. K. It is shorter vesting schedules. It's a signing bonus. God, if you can get a signing bonus just for joining up with the team of people, it's paying off your student loans. If a company will do that for you. Those are the things that I could see myself getting poetic about when I join a company. A benefit that looks like a great benefit, but every study has shown it is not, at least in American companies, unlimited time off. Unlimited time off, if your boss does it right,

can be a phenomenal benefit. But generally, limited time off and knowing what the agreement is and truly being able to go away is much better than, Paula, take as much time as you want. And then the whole time you're gone, we're going to tell you how much we needed you. And you shouldn't have taken that time off. Because when people are given the option to take less time off, they stay at work far more often, which isn't healthy for anybody. Yeah, if you have unlimited time off, you have to pair that with a company culture that encourages you to take that time off for sure, that never guilts you for it. Netflix was one of the first companies to do that.

And initially, I don't know how it runs today, but initially it was a really good thing. It really worked well. But it had to be top down. The leaders of the company had to go away. And they had to, when you went away, had to assume, that you were an adult and you were going to get your stuff done and you were going to be able to make yourself even more refreshed and ready to be there on the days that you were there because you were taking the time off that you truly needed.

Right. You know what benefit in a situation where you don't have unlimited time off and you have to justify your days off as either vacation days or sick days? I am a big believer that company should also offer bereavement days. Again, if you have unlimited time off, that becomes a moot point because you don't have to tell anybody why you're taking any time off. But if you are in the alternate scenario where you have to say, hey, this is a vacation day or this is a sick day, I would love to see a world in which if someone close to you passes away and that includes pets, you can take a couple of days. pet bereavement, pet grief is real and to have to send emails and say, let's follow up, let's circle back after lassie, your collie for the last 15 years passes away.

I mean, your best friend who sat by your side. Yeah, exactly. I had an early podcast editor whose grandmother died. I think it was the third time she died that I realized that somebody was making stuff up. Yeah, that's the whole college professor trope, right? You know, finals week is when all of the grandparents die. Right. It's horrible.

Again, unlimited time off solves that problem because then it becomes a moot point. It does. It just takes a really enlightened management team to make it work correctly. Jared, thank you for sparking the discussion. I will take this moment since we're talking about workplace compensation benefits to direct people to afford anything.com slash your next raise. We have made this rather than do launch cycles. This is open for anyone who wants to join at any time. We have live practice sessions on a weekly basis where I get on Zoom with you and your fellow

classmates and you can practice in real time how to have these conversations, how to ask for more time off, how to ask for a signing bonus, how to ask for a one day of week of working from home or a better parking spot or an extra $10,000 in your paycheck. Afford Anything.com slash your next raise. Live weekly practice on Zoom. I'll see you there. We're going to take one more moment to hear from the sponsors who make this show possible. And when we return, we're going to talk to somebody who doesn't need to have any workplace compensation conversations because they're about to early retire. Hey-oh.

So it also becomes a moot point, right? That's the ultimate how to make it a moot point. We're early retiring. So in the context of that early retirement, our final caller of the day, Mia, has questions about how to manage liquidity and how to manage taxes. We're going to hear from her right after this. Welcome back. Our final question today comes from Mia.

Hi, Paula and Joe. thank you for taking my question. My husband and I are planning for early retirement and we're looking for strategies to manage taxes and liquidity efficiently. Our plan is to draw down from our taxable brokerage accounts until we can access our retirement accounts in about 10 to 15 years. One strategy I'm considering for our taxable brokerage is using a securities back line of credit as V-Lock as a supplemental layer. Specifically, one, when we've already filled the 0% long-term capital gains bracket and the SB lock rates compounded are still better than 15% or two, during market downturns when we'd prefer not to sell and lock in our losses. The idea is to pay off the SB

lock within a year when the market rebounds or we have room in the 0% long-term capital gains bracket again. I realize we're just putting off taxes by a year and there's a risk for margin call. So my plan to minimize that risk is keeping our loan to value below 20%. We have about three years of living expenses in cash money markets. My questions are, one, am I evaluating SB locks appropriately as part of our broader retirement brought down strategy? And two, is there a scenario I'm missing in my analysis that I'm, I should really consider. Thank you so much for all the education and hope you're spreading for us

regular folks to gain time freedom. Ah, Mia, thank you for the question. And you have tapped into how wealthy people avoid paying taxes, borrowing against securities, right? That's how you avoid capital gains. Because when the interest that you're going to pay on the loan is lower than your capital gains tax, then you come out ahead. So you like this strategy. I think it sounds reasonable. I think it sounds reasonable. Less than 20% loan to value. I wouldn't use it for all spending. I think that she can harvest some long-term capital gains. But if she wants to use this to bridge a gap that might push her into the next tax bracket, yeah, I think for a portion of annual expenses as that gap bridging tax management tool, again, this is how very wealthy people who have a lot of securities, a lot of equities,

and assets. This is how they avoid long-term capital gains tax. Most of the wealthy people I know, though, who use a strategy like this, they're not doing it themselves. Right. Like they have a professional who's doing it for them because I will tell you that DIYing this strategy also gives you some, I don't know what to call it. Let's call it the hives. Exposure risk. It just makes you break out because you start thinking about what if. You know, she brought up the whole idea of a margin call and reducing the margin call, how much do you do? What's the right strategy to put the money back? Yada, yada, yada. It ends up becoming another career of playing these games around the edges. What's fascinating to me is that when you look at the vast majority of wealthy retired people,

they do things that are not necessarily smart. The vast majority of retired people pay off debt, even low interest rate, regular debt. It's not even a good tax strategy. When you look at arbitraging for more money, it's kind of dumb, right? I got this interest rate on a loan at 3% and I paid it off. Why? Why would you do that? Because wealthy people have enough money that freedom from worry rules the day. I just don't want to think about it. I don't want any mindshare toward it. There is this interesting passage in one of the Sherlock Holmes mysteries where Sherlock Holmes has asked trivia about some current celebrity. And Sherlock Holmes has no idea who this woman is that they're talking about. Kind of sounds like Paula Pan. No idea what celebrity

this is. No idea about pop culture. The person who asked him goes, well, you're Sherlock Holmes. You know everything. He goes, no, no, no, you only have so much room in your brain. And because I have so many bigger things that I'm worried about, I do not want this thing eating away at me. And I think that's the way a lot of wealthy people think that are DIYing their money. Well, Sherlock Holmes goes even further than that. He doesn't know that a solar system exists and he doesn't know that the earth revolves around the sun. Well, there's a lot of people that are just like that. You think he'll go on a conspiracy theory podcast. Yeah.

Yeah. Yeah. Yeah. Yeah. So Sherlock Holmes is a fairly extreme example of being judicious with what you know. But I think the broader point there is that people don't, I just feel like this is messing around the edges. And when we talk about the stock market coming back, realize the stock market coming back,

can take a long time. I think Mia mentioned, you know, maybe a year or two that it would take that the stock market during the first decade of the 2000s, it took 10 years for the stock market to reach a high point again. So if you're willing to sit and wait 10 years for your stock position to come back to even, then great. But I don't know many people that have that built into their plan. I don't know. As you can tell, I'm like, yeah, okay. Yeah. Maybe. With a very small amount of money, again, I'm thinking like just the marginal difference that might spare that last piece that's going to be taxed at the highest bracket that she would qualify for. Let me tell you where I like this. I do like the fact of having it available and open. I like that. I like it's kind of like

the ice cream cone where you got the regular emergency fund, but then you've got the scoop on top, right? I think this is kind of the scoop on top. Do I need the extra scoop? No, I don't. But I have these assets sitting there and I have the ability, if push comes to shove, I have it open so that I can use it whenever I do need it, then I think that this is a great thing. So I do like, I like having it open. I like having it available. Okay. Minimal tax bracket gains and wins. I think if I'm already hiring a pro that I'm working with and I give this to them as a to-do that's extra so I don't got to mess with it. Great. As long as this is part of the fee I'm already paying them. Yeah, throw that on top. Yeah. Yeah, I absolutely would not do it yourself. I would have a financial professional

manage this entire thing. It's the type of thing where there are a lot of unknown unknowns and you don't want to get it wrong. And financial professionals live, eat, breathe, and sleep this stuff. Yeah. And I have the confidence then that my strategy has been checked over by somebody who does it every day. The chance of me having a margin call is even more minimized because not just with my own

prudence because it's your money and you still have to understand your plan, but you have a professional going, oh yeah, okay, this is, this is good as well. Then it's two minds versus one. I like that. I will say for myself, historically, my bias has been generally to be quite conservative about leverage. So I am a little surprised by my own answer. And it's a little outside my comfort zone to hear myself even give that the answer that I've just given. This is probably not an answer that I would have given three or four years ago. but I will reiterate the guardrails of tiny amount of money under the supervision of a financial professional.

And it falls under the umbrella of sophisticated tax planning strategy, not baseline way to live. Well, thank you, Mia, for the question. Best of luck with your early retirement. And please call us back to all three callers today and everyone who's ever called in. Call us back and give us updates on what has happened, what you've done. you've chosen, what you've done, you know, give us the update on how life has unfolded. Well, Joe, we've done it again. Tadda!

Where can people find you if they would like to learn more? You will find me every Monday, Wednesday, Friday at the Stacky Benjamin Show. And for people who have listened to Paula Pant on stacking Benjamins, coming up on Friday, we kick off another year of our year-long trivia challenge. challenge with some twists that means Paula Pant may, may win the Stecky and Benjamin's trivia challenge this year. But to hear all the new rules, which Paula knows about, but will not share. I've been sworn to secrecy. It generally is a lot of fun. I've signed an NBA challenge. And I think these changes for next year, Paula makes it a little more fun. Let's put it this way.

Mia talked about a margin call. We're adding a margin call. I won't tell you what a margin call is, but we're adding a margin call to our Friday trivia at Stacking Benjamin's. All right. Well, thank you to all of you for being afforders being part of this community. If you want to chat about today's episode with other members of the community, go to afford anything.com slash community.

And please sign up for our newsletter, afford anything.com slash newsletter. If you've got some big financial goals for the new year, we've got a free download that can help you find little tweaks in your budget that can help you find a little bit of savings, like five minute tweaks here and there that you can do throughout the 52 weeks of the year. And you can find that. You can download it for free at afford anything.com slash financial goals. I've thrown a lot of websites out in this episode. We also talked about afford anything.com slash your next raise. Quince.com slash Paula. Well, thank you again for being part of this episode.

If you enjoyed it, please share it with friends, family, neighbors, coworkers, with the financial professional who helps you borrow against your securities, share it with them. People that ran that pension fund at the place you used to work. The people who wrote the pet bereavement policy into your company's HR manual. People run in the Airbnb where you're taking your sabbatical. The people who manage Ginny Mays. The people at Morningstar, where you look up, I can hear Christine Ben's at Morningstar now. Why do you tell me about Paula?

What's going on? Wait, what? I know Paula. I share this with all of those people and more, because that is the single most important way that you spread the message of F-EE. Thanks again for being an afforder. I'm Paula Pant. I'm Joe Sol C-Hi. And we'll meet you in the next episode.