Ep. 583 — A Table of Contents for FI: Part 2 — The Detour is the Journey

I have been on my FI journey since I posted on my facebook on December 22, 2025. I asked about a budgeting app since Mint is not what it used to be. I ended up going with Monarch but that was the least consequential consequence of this post.

My friend Tim reached out, got me on the "simple path to wealth" audiobook, and the rest has been history. I have since: "Broken Up" with my financial advisor, optimized cell phones, home and auto insurance, and started Vanguard accounts where I have transferred my wife and I's existing IRAs and I even had a Roth IRA with a few grand in it that I was unaware of that was under my advisor's management.

I have listened to a bunch of episodes now of the choose fi podcast (Thanks again to my buddy Tim). I have been bouncing around episodes and I just landed on the Incremental Gains and this detour episode. I love them as rapid (ish) fire points, but this Detour episode had me scratching my head to some extent.

For Context: I am a firefighter and my wife has a more normal job. We are both 36 years old. I have been contributing to my 457 since I started my job ten years ago. These contributions have been all Roth, and total about 62,000. My wife has a 401k through her job that has a 3% employer match with a 6% employee contribution. She has contributed and has a total of about 80,000 in this account. A year or two she switched these contributions to Roth as well, so a small percentage of that account is Roth. We have approximately 26,500 combined in Traditional IRAs from old 401ks. We have approximately $3000 in Roth IRA as well. We currently have a mortgage with a balance of approximately 146,000 with an interest rate of 5.99. It is due to be paid off in November of 2042 (16 years). We had been paying aggressively on it but I think it will be more beneficial to put that money to work for us instead of just building equity. As it stands right now we are able to invest/save about 2,000 a month, As we optimize more, it will grow.

Anyway, my plan that I had hatched was to max out our Roth IRAs going forward and also to sock money into our taxable brokerage account. We have a goal of buying a second property for recreation in about ten years. We have a one year old daughter and would love to have the property in the family when she is able to enjoy it. We are thinking either hunting land or a cabin on a lake.

I am not truly looking to retire early, as I can retire with full pension at Age 53. I have calculated this (and also am most of the way through listening to "The Golden Albatross") to be about 7,000 a month that my pension will pay out, using conservative estimates of raises and overtime oppurtunities. This being said, it is also a goal that my wife could retire around the same age as me, where we thought in the past she would need to keep working.

All this being said, I am wondering if I should reconsider so much Roth and switch some contributions to traditional. I ran it through Chat GPT and it seems I could save about $1000 a year just by switching my Deferred Compensation (457) contributions to Traditional. My thought is that when my wife and I retire we will go from two incomes down to my pension income. This could perhaps have some opening for optimization with either drawing from my 457 at a reduced tax rate (if I switch to Traditional now) while still having large Roth options. These would include the money in our Roth IRAs and the growth on my 457 up to this point. Rule of 72, this would hopefully be around 240,000 at that point.

I would love to be a part of a case study if that would be an option. Maybe there are things I have not thought of in this as far as optimization. I have listened to the episodes with Grumpus Maximus and The Millionaire Educator. Loved the "Is my Pension Safe" episode and learned a lot from that. Any other episodes I should look at?

Thanks to anyone that reads through all of this. Shout out Tim for putting me on this journey!!!

Loving the incremental gains series! I've been in FI-land for 5+ years now so, most aren't new concepts but it's nice to hear the commentary about each and note any optimizations I can be making. The quick mentions about tax optimizing in retirement is an area I'm less knowledgable about and I look forward to future case studies!

I think there are a couple of admitedly minor points in the Roth discussion that haven't been mentioned yet. First is the flexibility you gain by having some money in a Roth account. It can serve as a "large expense" safety net during retirement. If you run into a large expense, say a significant house repair, family member has major medical bills or other financial difficulty you want to help with, you decide to buy a car and want to pay cash, etc., then you might want to withdraw a larger amount than needed for your annual expenses. If you only have traditional accounts, this would increase your income and all be taxed. If you have some money in a Roth account, you can withdraw to cover the unexpected expense with no change to your taxable income.

Second, if you plan on leaving some money to your heirs, then it makes sense to consider the tax rate they will pay on the inherited amount. If they are working during the ten years after inheriting the account, then their tax rate (affected by the size of the RMDs, whether they can be offset with increased 401k contributions, etc.) may be higher than your current tax rate, making the Roth option more tax effective.

Third, if there is uncertainty about what income tax rates will be, the "optimum" solution might be to have some money in both account types. You won't have as good an outcome as you would if you correctly predicted your tax rate, but you also won't have as bad an outcome as you would by guessing wrong.

I really appreciated the continued discussion on Roth vs Traditional, and the links in the show notes. I had to go back and look up the mailbag episode with Rachel Camp from June 16, 2024 and re-listen to it. This was the first time I heard that if you are in the 22%-24% tax bracket now, and anticipate being in the same tax bracket when you need to use your retirement money, that the tax outcome is the same for Roth vs. Conventional. But, it's all about how much you SPEND in retirement, right? That's really important to comprehend, since we've been focused on our EARNINGS for so many decades. I recommend re-listening to this episode. Thanks for all the thoughtful discussion!

I have a better detour than Brad as I was listening to the podcast. I was detouring to a random city called checks Ballarat Australia. Because there are a bush fires where I was originally supposed to be. I didn’t completely use this points, but I got about half of my hotel room paid for via Accor dollars.

Nice references to Cody and Sean's tax book, which is one of the most useful FI books to come out in a long time.

They announced they reached 10,000 sales yesterday and since Cody is a huge fan of Admiral Ackbar from Star Wars, I used AI to make the "Admiral Ackbar" tax planning summaries based on their book

The infographic will not upload here right now but Cody agreed that the slide show was fantastic, and here it is for your viewing and FI tax planning pleasure:

drive.google.com

BTW, I loved the discussion/explanation about the progression in thinking about taxes: what is my marginal tax rate? -> what is my effective tax rate this year? -> how do minimize taxes over a multi-year period? -> how do I minimize taxes over my whole life?

I wonder if there is enough there for a whole episode. Maybe have Sean Mullaney and Cody Garrett to provide some examples and explain the thought process?

OK. I'm a bit sad that the thing that resonated the most with me was left out of the highlights/summary.

It was Jonathan's comments/discussion with the guy from Apple around learning Swift. It resonated with me because of the idea of learning something purely for the joy of it. Last year I traveled to Greece, on a group tour trip that a family member convinced me to join. I made the booking a little over 12 months prior to the trip, and I thought to myself "I like languages, so I should learn Greek since I think that would be fun." So, I started learning Greek (even though on a group tour I knew that my opportunities to actually practice would be extremely limited), but I enjoyed learning it so much that I have kept at it. So, now nearly a year after the trip I have continued working on learning Greek daily.

I don't have a real, clear reason to keep learning. I don't have family there, I'm not of Greek ancestry, I don't plan to move there, I don't work for a company where speaking Greek would be helpful. But I very much enjoy learning and attempting to achieve mastery with a language that is quite a bit different from my native languages. And it seems to me like this is something which FI has made possible, by affording me the free time to engage in this long running experiment in self-directed learning.

So, I guess if I had to sum it up in a sentence/bullet point in a bullet point that might be suitable for inclusion in the show notes: One of the goals of FI is greater autonomy over how you spend your time.

Yeah, that's a bit elementary, but this episode and the previous one are all about the basics.

Looking forward to continuing the discussion here this week!