Going through a pre-retirement checklist to prepare for post-pandemic life is a smart move. Like packing for a long trip, it’s easy to forget something you may end up regretting not bringing without such a checklist.

Retiring from a job after years or decades of work is a scary proposition. This fear is one of the reasons why retirement researchers who feel confident about their safe withdrawal rate assumptions still won’t retire. It is much easier to pontificate about retirement when you are still gainfully employed.

One of the top 10 worst times to retire is during a pandemic. With so many things shut down, spending all your days at home doesn’t sound like a great retirement at all. There are only so many books you can read, Netflix shows to watch, and meals to have with your family before a deep sense of dissatisfaction begins to seep through your veins.

The decline in mental health is a HUGE issue that is currently being underreported. The rise of clinical depression is no joke. Please be more empathetic to everyone during this time.

People who have little-to-no money worries are getting divorced. Normally peaceful retirees have taken to social media to wage jihad against others they don’t know. When there are few release outlets, there is a tendency for people to manifest the worst version of themselves. Prolonged isolation can be dangerous.

The ideal financial scenario in retirement is steady income and conservative returns. Financial loss creates stress. And given stress kills, your goal as a retiree should be to remove as much stress from your life as possible.

Recently, I’ve been thinking about being OK with no longer making a lot of money from investments. With such huge returns in the S&P 500 and the real estate market since leaving work in 2012, I kind of feel like Anthony Bourdain when he said,

“I should’ve died in my 20s. I became successful in my 40s. I became a dad in my 50s. I feel like I’ve stolen a car — a really nice car — and I keep looking in the rearview mirror for flashing lights. But there’s been nothing yet.”

There are two different retirement philosophies that will determine your safe withdrawal rate. It is up to you to decide which retirement philosophy is best for you. There is no right or wrong philosophy.

The first retirement philosophy is to spend all your money before you die. In other words, you wish to accomplish complete portfolio depletion or very close to it upon your death. Your money, which you earned, is mainly there for you to spend. Since you can’t take your money with you, you might as well spend it all while alive. Let’s call this the YOLO retirement philosophy.

The second retirement philosophy is to leave a legacy with your estate which will survive long after you are gone. Your legacy may involve providing a perpetual giving machine to charities you care about. It may also include an ongoing donation to your college alma matter or steps to ensure your family business continues to run for years into the future. Let’s call this the Legacy retirement philosophy.

Most people are likely somewhere in between. However, the people who closely adopt the first retirement philosophy of spending everything they have before they die seem to be the main critics of the Financial Samurai Safe Withdrawal Rate formula (10-year bond yield X 80%).

Forget about not believing the risk-free rate is intertwined with the returns for all-risk assets. Forget about my formula including a diversification of investments in retirement beyond bonds. Let’s also ignore how my formula is to try and encourage early retirees to earn supplemental retirement income through something meaningful.

For the critics, it is unfathomable to comprehend the idea of creating a perpetual giving machine after death due to different philosophies. Let’s dig deeper.

I was talking to a tennis friend of mine who said his sister checked out once she cleared 10 million dollars. She was 37 when she decided to quit her job and go on an Eat, Pray, Love journey to Southeast Asia. She had made a bulk of her fortune as an early investor in an internet consumer company.

My friend and I then got to talking about other people we knew who checked out in their 30s and 40s. They too, had cleared over 10 million dollars in net worth or investable assets. They had all been early employees at successful startups. Or they had risen up the ranks at a big tech company while holding a lot of shares.

Even a 30-year-old softball buddy of mine who worked at Uber said he’s shooting to have a $10 million net worth before he retires.

As a personal finance blogger, I subsequently got to thinking: Is 10 million dollars the ideal net worth amount for retirement? Is 10 million actually the new one million due to inflation?

Top One Percent Net Worth

10 million dollars is a lot of millions. If you have a 10 million dollar net worth or higher, you have a top one percent net worth in America. Therefore, if you can’t retire off 10 million dollars comfortably, you’ve got some serious problems!

The sad part about wondering whether 10 million dollars is enough to retire comfortably is that plenty of people who make a lot of money still go broke. Just look at so many ex-NFL players who end up with very little soon after their careers are over. The reason why they end up broke is due to a lack of financial education.

Good financial education will compound on itself. It will pay dividends for years to come. One of the main reasons why I’ve consistently been publishing on Financial Samurai since 2009 is to help people reach financial freedom sooner. We’ve only got one life to live and schools aren’t willing to impart any personal finance wisdom.

For fun, because this is what personal finance enthusiasts do, let’s discuss whether 10 million dollars is the ideal net worth for retirement. Of course, we can always retire with less. Most have. But where’s the fun in that?

As someone who plans to re-retire under the Biden administration, I’ve been thinking about how much investment risk to take in retirement. Clearly, I should tone down investment risk if I’m no longer going to be earning active income. But how by how much is the question.

If you are wondering how much investment risk to take in retirement, I will offer up various portfolio compositions to consider in this post.

Once you retire, you don’t want to take excessive risk. Instead, you want to enjoy life to the maximum thanks to your steady passive income streams.

In 2012, I retired from the the finance industry. I thought I had enough to provide a humble life for a family of up to four in San Francisco. But once I stopped receiving a bi-weekly paycheck, reality hit home. Maybe my ~$80,000 a year passive income and side hustle income wouldn’t be enough.

The fact that I tried to sell my primary residence in 2012 to live in an apartment 65% smaller and cheaper shows that I had reservations about early retirement. But I was determined to provide a free life for my wife and I both before the age of 35.

In early retirement, I concluded I needed to take the least amount of risk necessary to maximize my chances of never having to go back to work again. At the same time, I was still pretty young and it looked like the economy was recovering.

Therefore, I ended up constructing a 60%-70% stock and 30% – 40% bond portfolio. I hoped to achieve a 4% – 6% rate of return each year. Doubling my investments by the age of 50 seemed like a good enough goal to have.

But thanks to a bull market in stocks and bonds since 2009, my public investment portfolio returned more. And thanks to a strong recovery in San Francisco real estate, everything has turned out fine so far. I wasn’t smart, I just stuck to an investment framework that fit my risk profile.

President Biden has stated he will raise taxes on individuals making over $400K and married couples making over $450K to pay for his $1.8 trillion American Families Plan. Once you make more than $400K/$450K a year, President Biden wants to raise the marginal income tax rate from 37% to 39.6%. This is the return to the top marginal income tax rate under George W. Bush.

Under billionaire Donald Trump’s tax plan, only after an individual makes over $518,401 does he or she pay the top marginal income tax rate of 37%. For married couples filing jointly, their income would have to breach $622,051 before facing a 37% marginal income tax rate.

$400K For Individuals Or Couples

In the beginning, it wasn’t clear whether Biden is making the $400K income threshold for the top marginal income tax rate for individuals or married couples.

If the $400K pertains to married couples only, then the income threshold for individuals facing the top marginal income tax rate will likely decline to somewhere around $300,000.

If the $400K pertains to individuals and married couples, then high-earning individuals best not get married! It would be much more tax-efficient to earn up to $400K per individual and just live happily ever after with another $400K-earning individual.

Finally, in September 2021, President Biden clarified he wants to raise the top marginal income tax rate to 39.6% for individuals making over $400,000 and married couples making over $450,000. Not doubling the income threshold for married couples to $800,000 mostly penalizes women, who also want to build successful careers.

Now that the Democrats control both chambers of the house, federal income taxes are undoubtedly going up for the highest income earners.

In addition to raising the top federal marginal income tax rate, President Biden has also proposed raising the long-term capital gains tax rate for people earning more than $1 million from 20% to 39.4%. Therefore, more tax planning for high-income households is necessary.