Cody Garrett and Sean Mullaney: ‘For Most Americans, You’re Going to Pay Less Tax in Retirement’ - The Long View Recap

Podcast: The Long View

Published: 2026-01-20

Duration: 56 min

Summary

Cody Garrett and Sean Mulaney discuss tax planning strategies for early retirement, emphasizing that many Americans will pay less tax during retirement than they expect. They highlight the importance of understanding withdrawal rates and the role of Social Security in retirement income planning.

What Happened

In this episode of The Long View, hosts Christine Benz and Amy Arnautt welcome Cody Garrett and Sean Mulaney, financial planners and co-authors of 'Tax Planning to and Through Early Retirement.' They define early retirement as any time before Medicare eligibility, which typically occurs at age 65. Surprisingly, they note that around 70% of Americans retire before this age due to various factors like layoffs, health issues, or family obligations.

The discussion dives into the profile of early retirees, with Garrett noting that most of his clients are generally high earners and savers, though they aren't typically extremely frugal. Mulaney emphasizes that while the 4% withdrawal rate is often referenced, it's essential for retirees to consider variable income sources like Social Security. Both experts warn against relying solely on Monte Carlo simulations that suggest high success rates, as this can lead to underestimating spending needs and missing out on valuable experiences during retirement.

Key Insights

Key Questions Answered

What defines early retirement according to Cody Garrett and Sean Mulaney?

Cody Garrett and Sean Mulaney define early retirement as retiring before Medicare eligibility, which typically happens at age 65. They reference a study indicating that around 70% of Americans retire early, either voluntarily or involuntarily due to circumstances like layoffs or health issues. This broadens the scope of their book, which targets those who may retire earlier than expected.

What is the typical profile of early retirees discussed in the episode?

Garrett explains that most early retirees he encounters are high earners and savers, benefitting from favorable equity market conditions over the past decade and a half. However, he clarifies that extreme frugality is not a common trait among them, as many do not identify strictly with the financial independence movement beyond occasional engagement.

How do Cody and Sean approach withdrawal rates for retirement?

Cody highlights that the 4% rule, while a useful guideline, can be misinterpreted. He advises those considering retirement to think beyond the 4% rule and factor in variable income sources, including Social Security, which many DIY investors tend to overlook. He suggests that retirees should also explore risk-based guardrails for more tailored spending strategies.

What caution do they provide regarding Monte Carlo simulations?

Garrett warns against using Monte Carlo simulations that indicate 90% or 100% success rates, as this can mislead retirees into assuming they can spend more than they should. He emphasizes the misconception that a 100% probability of success means there is no risk of underspending, which could lead to missing out on valuable experiences while alive.

What insights do they provide about Social Security in retirement planning?

Both Garrett and Mulaney discuss the critical role of Social Security in retirement planning, with Garrett stressing that ignoring it can be a significant mistake. They suggest that retirees should incorporate Social Security into their financial plans, recognizing it as a vital component of income rather than an afterthought, thus enhancing their overall withdrawal strategy.