The Middle-Class Trap That Could Keep You from FIRE (How to Escape It)

BiggerPockets Money Podcast

Buying a house, maxing out your 401(k), and leveraging real estate can help you achieve financial independence. But suppose your goal is to retire early. Could relying too heavily on these principles actually delay early retirement? Today, we’re going to show you how to break free from the “middle-class trap” that stops so many from retiring early!

Welcome back to the BiggerPockets Money podcast! Is most of your net worth “stuck” in home equity and retirement accounts? This is a widespread issue in the FIRE community. On one hand, you could sell your home or refinance your mortgage to tap into your equity, but interest rates are too high! Meanwhile, you can’t withdraw money from your 401(k)—not without incurring severe penalties. In theory, you could already be a millionaire but have little to no cash flow to fuel your retirement. So, what should you do?

In this episode, you’re going to learn all about the middle-class trap, how to avoid it, and, if you’re in it, how to get out! Mindy and Scott will share the “ideal” portfolio for an early retiree and the bridge accounts you need to retire today. Finally, is the FIRE community wrong about the 100% index fund portfolio? Stay tuned to find out!

In This Episode We Cover

The middle-class trap explained and how to avoid (or escape) it

The “ideal” investment portfolio for the early retiree

Tweaking your asset allocation to achieve financial freedom

The power of owning a paid-off rental property in retirement

Bridge accounts and investments that will allow you to retire today

Why a 100% index fund portfolio could come back to bite you

And So Much More!

Links from the Show

Mindy on BiggerPockets

Scott on BiggerPockets

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BiggerPockets Money 554 - Should I Pay Off My Mortgage or Invest? (We Did the Math)

(00:00) Intro

(00:42) What Is the Middle-Class Trap?

(03:42) The “Ideal” Retirement Portfolio

(10:31) Scott’s Path to Financial Freedom

(16:13) Mindy’s Early Retirement Roadmap

(24:12) The Power of Paid-Off Property

(29:18) Middle-Class Trap “Timeline”

(33:55) Share YOUR Portfolio!

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-602

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