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JL Collins Part 2: What Happens When You Don’t Need to Work Anymore?

2025-07-15

#625: What do you do when you've reached financial independence? JL Collins says it depends entirely on your spending rate, not just your net worth. Collins joins us for part two of our conversation about what happens after you reach financial independence. He tackles the question of whether you should invest differently once you've "won the game." Someone with $5 million spending $100,000 per year sits in a completely different position than someone with the same amount spending $200,000 per year. The first person can...

#625: What do you do when you've reached financial independence? JL Collins says it depends entirely on your spending rate, not just your net worth.

Collins joins us for part two of our conversation about what happens after you reach financial independence. He tackles the question of whether you should invest differently once you've "won the game."

Someone with $5 million spending $100,000 per year sits in a completely different position than someone with the same amount spending $200,000 per year. The first person can afford to stay aggressive with stocks. The second person needs bonds to smooth the ride.

Collins walks through his withdrawal strategy using his daughter as an example. She stepped away from corporate life in her early thirties and now follows an 80-20 stock/bond allocation.

She pulls dividends from both funds into her checking account, covering about 2.5 percent of her target 4 percent withdrawal rate. Vanguard automatically sells shares to cover the remaining 1.5 percent.

We cover Collins' thoughts on the 4 percent rule, which he calls extraordinarily conservative. He references Bill Bengen's research showing that 5 percent withdrawals succeed 86 percent of the time.

Collins would take those odds to escape a soul-crushing job, especially since most financially independent people end up accidentally making money anyway.

We discuss the tension between frugal habits that build wealth – and learning to spend money once you have it. Collins flies first class, but he drives a basic car.

Collins explains why financially independent people often stay engaged with work — the problem was never work itself, but working without agency.

Timestamps:

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(0:00) Intro

(2:00) Investing when you've won the game

(5:30) Spending rate versus total wealth

(8:00) Three-year versus ten-year timelines

(11:00) Adding bonds gradually or all at once

(14:00) Why 4 percent is extraordinarily conservative

(17:00) Soul crushing jobs and 5 percent risk

(24:16) Withdrawal frequency and dividends

(27:16) Automatic share sales setup

(31:16) Starting business while financially independent

(36:16) Accidentally making money after retirement

(47:09) Agency versus having to work