I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Got it! Buying stocks during a recession when prices are down could be a good move. You might get them at a lower price and sell later when they go up. Just do your homework and be aware of the risks before diving in!
That's awesome! Investing in stocks with a reliable trading system can lead to great outcomes. It's fantastic that you've been working with a financial advisor for a year now. Starting with less than $200K and being just $19,000 away from making half a million in profit is impressive! Keep up the good work!
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
I'm 10 weeks out from my retirement day at 55. I am widowed. I have a pension and will also take survivor's benefits from Social Security at 60 so my savings won't draw down as fast. After losing my spouse, I realize how fleeting life really is and don't want to wait.
This. First sorry for your loss. But I don't understand people that are ok to retire but want to wait until Medicaid just in case. Life is fleeting as you said they may not make it to that time and never enjoyed the fruits of their labor
I started my SS at 62 1/2, my wife who is 20 months younger than me started at 62. With my pension for working 25+ years we’re doing just fine.That was over 3 years ago & we never looked back. Haven't touched our investments other than to travel. I had two brothers die of cancer 3 years apart. One died at 62 & never drew a dime of his SS. The other died at at 65 & drew 10 months. Let's be honest here, the reason the Government is offering you a bigger payday at 70 is because they're banking on you not making it!
I was going to retire at 55, since I had a sweet working from home-office job in the woods in CO I decided to continue working. Wife had a stroke when we were 64, retired to care for her. That was 2019, I've yet to withdraw anything from IRA, still building savings on both on 2 pensions, SS, and rental houses income. Bottom line checking out at 55 would have been no issues, I wish I had and lived a little before being destined to care-giving. Life is short.
Care giving is such an immense responsibility and can be so difficult. But we do it for our loved ones as you are doing. Bless you and thank you for sharing your thoughts here.
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determines a lot of things, my parents both spent same number of years in the medical profession, my mom was investing through a financial advisor while my dad through the 401k. On retirement, my mom retired with about $5million, while my dad retired with roughly $3.8million.
You are right. I’m in my mid 50’s now, my wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with profits over the years, but at least I’m earning more. I’m making money even before retiring and my retirement funds has grown way more than it would have been with the 401k.
It’s unfortunate most people don’t have such information, I don’t really blame people who panic cos lack of information can be a big hurdle. I’ve been making more than $25k passively by just investing through an advisor, and I don’t have to do much work. It doesn’t matter if the economy is crashing, great CFA will always make good returns.
I had around $800K at 55 but kept working. Now I’m closing in on 63 and I have over $1.7 million - and during the last 8 years I paid $300,000 in college expenses for my kid. Once you get over about a million, the accumulation effect really accelerates. I decided I didn’t want to retire only to live small on a small budget (plus I wanted my child to get a college degree debt free.) I’d rather live large while I’m working and have a very comfortable retirement. I could have accumulated more than $1.7M by now if i had lived more frugally, but I decided if I was going to continue working I would spend money on things I really enjoy (some of which are not cheap). Life is about choices - very few of us have it all.
THANKS. Just what I needed to watch. My wife and I are administrators of our farming business and our own properties, as well as small pensions. am almost 56, my Wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn passive income online and retire comfortably let's say 3 million bucks.
I sorta retired at 54, sold my business. Wonderful life change. At 61, I still manage several real estate properties(rentals) but ready to sell and go into glide mode cause we're runnin out of runway folks and ya can't take it with ya.
Rental property seems like a go to for a lot of middle to upper middle class people for building wealth. My reason for never being involved? It's tough keeping up with my own house let alone rentals on top of it!
What a great post, thank you. As a habitual saver I feel comfortable with my portfolio, I turn 64 next month. My greatest fear is with health cost as my wife and I age. This fear has crippled me to keep working until 65. I am pulling the trigger this year and stepping away from work, it took over watching more than 40 of your videos to do this. Thank you. I will continue to learn from you even after I stop working your advice is sound and we are always learning.
Same here. Also turning 64 this summer and was planning on working to 65 at least. But the company has changed, it's not so fun anymore. So getting my ducks in a row to retire sometime this spring or early summer.
One of the best things you can do to retire early is to save money outside your 401k, In this example, the couple could retire at 55 if they had money to bridge the gap to 591/2 or even 62 for SS to kick in. Another option is to work part time to and look for wok that provides healthcare (Though hard to find). It does not have to be all or nothing retirement.
This is misleading. Retire at 55 with 800k with 75k yearly withdrawal. at age 62, take SS with 25k per year. stop taking 75k per year out of the portfolio. take 50k out of portfolio with SS at age 62 of 25k per year equals 75k per year. SS preserves the portfolio to last longer.
This is an absolutely fantastic vid on this topic . Clear, thoughtful, not too long and full of exactly the right help. THANKS doesn’t begin to cover it. (More like grateful relief !)
Hi Azul, I'm 40 and currently venturing into the stock market, my ultimate goal has always been to retire at 55, is it possible to raise over $8million in portfolio size before my retirement at 55, I earn about $800k annually.
Generally speaking, a good number of people discredit the effectiveness of financial advisors in retirement planning, but over the past 10years I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but retirement doesn’t seem so farfetched anymore.
bravo! i'm 46, inherited money from a childless relative and traveled overseas, got married to a lady almost my age, but the only issue is how to preserve and grow my wealth in view of retirement, can your advisor be of help please?
Definitely, Trudy Renee Soper is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment.
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
Azul, a suggestion for another take on this, how about plan for 80k a year and 4k SS at 67 and then show how much savings is needed at 55, 60, 62, 65. It could help people set some goalposts and they can adjust amounts based on their situation.
What I don't see in the simulation is the addition of Social Security when they decide to take it. I would like to see Monte Carlo simulations of taking SS at 62, at 67, and at 70 with the various savings amount. That passive secure income, which lasts forever, completely changes the charts and forecasts.
I had to retire at 58 and had practically nothing saved. I had to really suck it up. Today, 16 years later, I have almost $300K invested and adding $21K/year more of my excess income. $800K is insane wealth to me. Don't give up, but just make a start. You never know what the future will bring. I probably won't ever have a $800K portfolio but ..............?
I've been keeping a substantial amount of my savings in cash. It feels safe, but I wonder if it's the right approach for retirement. I want to invest roughly $400K in stocks since I've heard that even in challenging times, investors may turn a profit. I’m not sure where to go from here.
It’s amazing you were able to save that much during your active years. Not a lot of people are able to save that much in a lifetime. But now you are retired and depend on your investment, it’s best you redistribute your capital, so you are not left devastated during a market crash or recovery. To simplify the process, you could allocate your resources with the help of a financial advisor.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $30k passively by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
in times like these, it's crucial to be cautious and not rush into the market , Who is this your FA , my portfolio needs urgent attention , been a lot of loss.
Christine Ann Podgorny is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
I'm not a big fan of Monte Carlo as it's more of a brute force approach and can generate unnatural cycles for example two black swan cycles together etc... markets usually progress in a fairly deterministic way of phases between euphoria and panic. For this reason my preference is to use historical back testing.
These financial Monte Carlo simulations are fundamentally flawed. They inherently assume that yearly returns are independent and identically distributed. This is not valid.
Azul. I love your 10 minute videos to help us “hopefully ready to retire” folks out there. I’m 52 and looking to retire at 59. The information that you convey in this short amount of time is really helpful. I have been sharing the honest math website with all of my friends for the past few months. Keep the videos coming brother.
i'm thinking 55, 5 more years. , And wife will be at 62 then. Were over 800 K right now by a good bit, with no debt... And were contributing about $2200 a month to Roth/401.. It's just thee medical insurance/health issues that bothers me
I’m 55 now and have more than that saved plus a pension but I’m still not ready. It just feels to young to me. You might feel the same way when you hit 55. Also I would have to pay medical expenses for 10 years 😢
Use Roth to make your income look lower to qualify for lower cost health insurance through ACÁ. Look up the rates by income levels. The info is out there. You will feel much better. Not possible if you don’t have quite a bit already taxed though.
I'm in my mid 30's and the number my wife and I have in mind is $900k by age 55. At age 55, we will also move to her home country (Thailand) and reap the benefits of low cost of living and excellent, affordable healthcare. We anticipate monthly expenses to be less than $1,500/month, but we are aiming for $3k/month (wiggle room and extra cushion for travel, medical costs, etc). So $900k with a 4% withdrawal rate will get us that $36k/year (or $3k/month). I still did not factor in social security income that will kick in at age 65, and I did not factor in my US home which will be providing rental income while we're overseas in Thailand.
I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do I keep contributing to my 401k or look at alternative sectors to meet my goals?
I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit me the time to analyze stocks myself. Thankfully, my portfolio has just 5X in barely 5 years, summing up nearly $1m after subsequent investments to date.
bravo! I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
She goes by '‘Natalie Ann Brinkman’ I suggest you look her up online. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
I'd like to see that same simulation run, but have them retire at 62 which would supplement their retirement plan withdrawals and then see how long their portfolio lasts.
I'm thinking retiring at 55. 5 more years. wife will be 62 at that time. 1.3 now. No debt. And Contributing around 2100 a month to retiremen now. It's just health insurance/medical i'm concerned about.
I am recently retired and now 55. Health insurance is incredibly expensive for early retirees. My former employer's retiree medical plan is $30K/year with $6K deductible for employee+spouse. ACA plans are all over the place depending on how good of a plan you choose and how much income you have. I saw ranges from $0/yr (with $13K deductible) to $25K/yr (with a $4K deductible) depending on income level and plan. A lot of early retirees game the system by living off of money that doesn't count as income so they can get maximum ACA subsidies. For a 55-year-old retired couple, the prospect of paying a quarter to half a million dollars for health insurance over the next 10 years is very real.
It really was so very helpful. And that tool you showed us is fantastic. I now empowered to model my own retirement plan knowing how the tool works. Great job. You have such a kind voice too...
Azul, what percentage of your clients die with a bunch of unspent money in their accounts? Just wondering since you used a high tax rate and high inflation rate and it doesn’t look like this takes into account the normal spending decrease as people age- reality retirement model.
My financial planner told me years ago he had a client who received over $800K due to a workplace injury settlement. This induvial was in his late 20's when he received the cash settlement. My financial advisor strongly encouraged him to set aside $200K as a basis for a retirement fund; the rest of the cash - $600K could be spent in whatever way he wanted. Well, this person wanted to invest in his friends business instead. Within 2 years all of the money was gone, along with any chance of building an awesome retirement nest egg. My financial advisor said that person left his services shortly after that. If I came into $800K in my twenties, I probably would have invested most of it for the long-term. Erin - I would most likely click on any video you send out regardless of the title!
Yeah, but this falls into if I only knew then what I know now. I inherited a descent but small amount of money in my 20's. If saved and invested it would be quite large now. But I was making $10.00/hr with three kids back then. The next opportunity that happened much later I knew better and invested 100%. I wish I had this wisdom , discipline and current income 40 years ago.
The only issue you might have is the fear of missing out, just like everyone else. A good number of people discredit the effectiveness of financial advisors in exploring new market opportunities, but over the past 10years I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but i'm financially secure.
Thank you so much for this “real world” example. It’s one thing for my wife and I to talk about how much we think we might need to retire, but this video gives us a lot to think about and shows off a great simulator to experiment with and see how things could potentially play out. We appreciate all of your videos and the great information you provide, so again, thank you!
Expenses will go down with age too. I think that makes me more comfortable with higher risk of running out of money when aming for a calculated scenario.
Best retirement video I have seen yet! Thank you so much, Azul. My husband and I are so concerned over healthcare/medical costs in the USA during retirement, we are considering another country when it comes time.
Thank you so much for your content. Hearing what you have to say is always interesting. Financial books have been so helpful. I'm 54 and my wife 50 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. No longer putting blames on FED for our misfortunes. Saving and investing lifestyle in the stock market with the assistance of a licensed broker who we met at a financial seminar made it possible for us this early, even till now we earn weekly.
Congratulations to you both! My husband and I just had this same conversation this morning. This is exactly how we wish to get our finances coordinated ahead of retirement. Can I get access to your advisor?
Azul, thanks for posting this video. I've been managing the family finances and although I feel somewhat confident about our financial security based on my own models I've run, it's nice to use another tool to help validate that we're on the right track for retirement. You have a new subscriber and I'll keep checking in for future videos.
Thanks for the video. My gut immediately went to NO on that being enough, and the results match. I'm 52 now, and my 401k will be in line to be at $800K in 3 years. What I like about the calculator is that it includes the expected tax. I've got about 40% of my 401k in Roth. I intend to only add it to Roth as I increase my contribution rates. My 401k plan administrator has modeling software, but they do not discriminate between a regular 401k and a Roth 401k. This tool lets me make that adjustment. I'm still struggling with the plan on Social Security though. My payments go up SO much between 66 and 70.
Hey Azul, I don't see much on Pension retirement. I am a federal employee with a pension and TSP (governments 401K basically). My TSP is 100% stock, but my pension is guaranteed and only available to draw monthly no option for one time payment. When I search pension retirement videos I rarely find anything in the detail I find for those without.
Spend some money now in your 30’s, 40’s and 50’s to travel, etc. while you are young and healthy. Retire at 67 or later when you are slowing down. It makes no sense to retire in later years to enjoy life when in fact you are not going to enjoy it. Who says that to travel and do the things you enjoy you need to be unemployed.
I retired 2 years before full SS. We don’t have much in an IRA. We depend on SS and a pension. We have more in monthly income than if I stayed working. BTW- house was paid off at 57, and currently no debt except a car payment.
I recently started using Honest Math for projections. Very good simple tool to give a bit of clarity. Makes me realize I am a lot closer than I really thought. I like putting the life expectancy out to 99. Just because I am conservative. Then put in numbers to see if my median extends beyond $0 at 99. Not saying that is what I will do in real life, but that is how I like to run the simulations.
The social security of 3800 per month is for lifetime. Although the 800k is depleted at 66 initially the simulation graph cannot go down to zero as your social security starts at 67. And this is 45k per year not to be ignored. What I am saying is that you can never go to zero provided the social security is good enough to live on. Not to mention that as you get older you spent less money.
Mid 50s and wanting 75k out of only 800k is walking a tightrope with no net. That is 4xs more than I intend to pull from a million starting in my mid 60s.
thanks for the walkthrough, Azul! can you do one sometime for those who haven't quite yet hit the typical early retirement threshold of age 55? maybe just to illustrate the importance of the bucket strategy?
@@AzulWells $500k in a 401k at age 50 and looking to retire as early as 55. assume they keep doing their 401k contributions to get their employer match. maybe also assume they've got some funds in a Roth IRA, a little in a brokerage and the employer pays a small pension at age 65. does that make sense? thank you for entertaining my suggestion.
@@MidlifeCrisisManagement Got it. It seems like these videos are helpful to people so I plan to keep doing them. One additional suggestion, you can use the exact tool I am using for free. This way you can put in your exact situation. I am not an affiliate. I just think it is a helpful tool for people. Don't use it to make your final "I have enough / I don't have enough to retire decision" (hire a fee-only financial adviser for that). But, to see if you are getting in the ballpark, it is a great tool. www.HonestMath.com
@@AzulWells we're on the same page. your example today finally convinced me to try Honest Math. it's a very basic tool, but good enough for most folks to start with. basic examples like today's mixed in with your walk-and-talk philosophy episodes will further enhance your content. glad to know you plan to doing more moving forward.
If you can bring in even a little income for the next few years -- maybe $1000 a month -- it will dramatically improve the projections of your retirement account, and may also boost your social security income. Retirement doesn't have to be all or nothing.
Numbers don’t add up. If you have 800k under your mattress, not invested in anything, will last you more than 15 years spending 4,000/month; not to mention the SS at 67. Therefore if you have that kind of money, invest in govt bonds at 3% and you have guaranteed income of +50k/year in perpetuity when considering the SS; forget software & Monte Carlo,
Though from 55 to 67 you get no SS so you're drawing down on that 800K plus the 3% interest. So by the time you get to 67 you've cut that 800k down. Not sure how much w/o a calculator if that would prevent the 50k/year in perpetuity you mentioned.
Investing 800k at 3%, you could withdraw 50k per year and have an end balance of 430k at the end of year 12, when they turn 67. Investing 431k at 3%, you could withdraw 21k per year for 30 years, adding the SS that would be more than 60k/year until 97 years old
@@Larry_Kabberga So it does look like they could get away with withdrawing 50k/year. But to get that (relatively) large of an SS amount each month of over 3k, I would think they made much more than 50k/year so they'd have to adjust to that. Also, if that 800k is tied up in retirement accounts, they won't have access to it until 59.5 anyway. But good to know that amount of money would generate more than that monte carlo algorithm was predicting.
Can you be clear in your various scenarios whether free and clear home ownership is considered a given in these calculations. You never seem to mention this, just the amount of savings in a 60:40 portfolio. Can also provie estimates what is the 'fee only' amount expected to be paid would be.
My mother grew up during The Great Depression so she was terrified of running out of money and was very frugal through out her life. I wasn't but my wife grew up in third-world poverty in a single-parent household so she was big on savings. I had 5 times her income but she had 5 times my savings when we got married. Our savings rate was 38% from 2000 until around 2019 outside of when we put our kids through college. My job went away in 2020 though the company said I could look elsewhere in the company and there were lots of openings but I have a rather severe disability and decided to take a year off and then look. I wasn't able to get any responses on applications so I guess I retired. I didn't know if I could do it but most retired friends I know said that I wouldn't have any problems. The key is to save like mad in your working years and that gives you options.
This is a quick estimate but it does not handle couples with a few years of age difference. We have been retired 9 years ( me at 59, Spouse at 57) and our FA ran a detailed analysis for us and it showed we had enough money then. This tool shows we have more than enough to continue living as we have. We travel about 6 months per year.
REQUEST: Retirement is often talked about in individual terms. How should we think about retirement as a couple, or household? In our case we both work, we both belong to a strong local government pension system which also provides a health plan stipend and is expected to replace about 75% of our income. We have both worked hard to build our 457b plans (upper 6 figure combined). We plan to retire at 62 and 56. Our son will be in his last two years of high school and we have built a decent 529 account for him that should cover 2 to 4 years of college depending on where he goes to college. Lastly, our mortgage will be paid off about 18 months after we retire and we will have no long-term debt other than incidental use of our credit cards which we often pay off at the end of each month. How do we know if we have enough or are over saving?
@@MidlifeCrisisManagement my wife doesn’t get social security, and what small amount that I am eligible for is Pennie’s on the dollar due to the windfall elimination (WEP). I’ve worked hard and we have given up a lot to be where we are at. I agree with you that we are probably okay. My question is more one of household versus individual net worth and if we should continue our savings at the current rate or is it okay to pull back some.
@@JonesFamilyRanch I understand where you're coming from. my wife will have her state pension, but no social security. she will retire as soon as she hits the minimum age/years-of-service requirement for an unreduced benefit to work in the private sector for probably five more years. fortunately, we live in a state with no state income tax.
As a single person I feel that most of the illustrations are about couples. In particular I believe the illustration in the video we are commenting on, was about a couple, hence his taking the average Social Security and doubling it.
I'm a single, 43-year-old father who resides in Hamburg. If everything continues to go well for me, I intend to retire at age 50. I couldn't be happier right now than I am that I just bought my first house last month. I'm so happy that I made wise choices that altered my life forever.
Salutations, dude. At your age, you're doing extremely well. I'm 54 years old, and right now my finances are a mess. Any helpful advice would be greatly appreciated in helping to mold my life. I want to buy a home of my own.
It seems like I used the FIRE movement to manage my finances. Investigate it further by doing some research. With the help of a financial professional, they were then successful when investing in stocks, cryptocurrencies, and real estate.
a highly respected figure in her field. I suggest delving deeper into her credentials,Aileen Gertrude Tippy ’ as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
I calculated my retirement. I timed it to 60 and assumed a 25year retirement and a 1 % return on investments to allow for inflation and i calculated my income compared to my net salary with deductions to reflect a non commuting life. I took tax into consideration and i found i could afford to retire at 60. 15 years on it was the correct decision. The calculation became quite involved but all these free retirement calculators were just rubbish.
For the person asking the question, your calculations for $900,000 and $1 million are wrong. They are currently age 55. This means the age where the money runs out needs to be shifted to account for the age where they are likely to have that money. Showing the calculations relative to age 55, is great for people younger than age 50. For the run with $900,000, the age where the money runs out would be about 82 1/2 since the person asking the question would have to work at least 1.5 more years. For the run with $1 million, the ages where the money runs out would be about 88 1/2 since they'd have to work at least 3 more years.
The cost of living numbers I see (for a comfortable life) on some youtube videos is a cause for concern. They range from 50k in southern states to 75k in northern states and even higher, for a single person. In most cases retirees are going to be living on less than half of this.
I live in California with my house paid off I project I will need 80K a year. That’s pretax though, so roughly 65K a year. I plan on funding that with my pension and 7 figure 401K.
My parents spend less than $3600.0 a month and been retired 7 years. They have 1.3 in there total portfolio. It’s more about how you want to retire. They save money in retirement and live solely off SS even thought they have much more money to pull from. House paid off, cars paid off. House worth $350k. I question what people are doing with there money that they need so much.
Been retired for 12 years, here is my reality, actual inflation rate has been 6% so expenses double every 12 years (72 / annual compound interest rate, 72 / 6 =12), a person need to cover expenses plus grow income during retirement. To cover current expenses and growth of expenses a person needs to live on half their income while growing income, so if a person has $800k, they can reasonably earn $800k * .04 = $32k, so to live on half while continuing to grow income, they have to live on $16k/yr, THEY CANNOT AFFORD TO RETIRE
Really cool video. I think that you've made a small mistake. Changing $800k to $900k should be accompanied with a change in the retirement age by definition to 56.5, but you didn't run a simulation at $900k and 56.5 retirement. It actually looks surprisingly better than $900k at 55. Sorry to be knit picky. Loved the video!
When you say stocks you mean stock price. If investing in dividend stocks, you never sell the stock you just collect the dividend. Investing in dividend kings, or a dividend ETF seems lower risk than growth stocks. The real question is how do you make it from 55 till 67... or 62 with early social security.
@@bruced.370 Yes, I know. Some people would rather have someone else do the investing, thus an ETF, but if you enjoy researching companies or don't like the idea of someone else having your voting rights, individual dividend stocks may be a better choice... Thus the "or".
Actually you would have to rely on money from a non retirement account until 59.5. to avoid penalties. Then at 59.5 you could start withdrawing from retirement accounts until you get to at least 62 when you can start taking SS, though at a much reduce rate. So yeah until you get SS, you will be drawing quit a bit down on on your retirement money from 55 to 67 (or 62 if taking SS early).
It is odd that the first scenario, with 800k at 55, ran out of money at 66 yo. 800/75=10.6 years. I guess they assumed that there were no gains? I like the simple calculations the site you used offers. Gives folks a decent idea.
The biggest problem I have with these simulations is the static withdrawal rate. If the economy crashes, human nature would push most people to cut back. If it does exceptionally well, perhaps they feel confident and spend more. How do they account for this basic psychology? Also, perhaps people would retire sooner if they recognized their capacity to make adjustments and shift these levers throughout the years.
You can create an account with SSA and find out exactly how much benefit you would get by age if you continue working at your current wages or if stop today and don't make any future contributions.
I think I can retire now at 62 but don’t want to just sit around the house. Until I have a worthwhile plan I’ll keep working. Don’t want to spend the day watching Law and Order marathons.
RISK, RISK, RISK. It can't be understated enough. I've been on the winning end and the losing end. Risk has always been there to laugh at me on the losing side.
He needed to adjust the retirement age up in the calculator to match his scenarios. Would have made the $1,000,000 case look better to add 3 years, as he discussed. That would be 3 fewer years without social security.
Azul, appreciate your vids as an Oz living here in the US for now. With expenses here, was the avg income $70 odd thousand/yr, gross or net? Little amounts seem to change outcome so much, but as you say, we humans 'adapt ' - will keep watching 👍
Doesn’t make a sense. He is supposed to receive social security benefits of $3,600 every month beginning at 67. Why does the Monte Carlos chart show he runs out of the money at 66 when he retires at 55? Isn’t he getting nonstop social security benefits right after he reaches 67, which means he never runs out of money?
@Azul - I see you put in zero for "Other" Income. What about interest income? These days people are getting significant (5% ish) interest rates on cash. They could easily have 100k in cash bringing in $400 to $500 /mo. and compounding. Also, on the simulation page, you should click the Edit button, change nothing, then run the simulation again - do you get a different result? I did. It appears that 10,000 simulations is insufficient to create a repeatable result. Also, I get results where the median line runs above the Lucky range or below the Unlucky range - how is that possible!?
TLDR: Unless I had $3 million and a paid off house...I should keep working. This is great. I'm 58 and my wife is 53. We have about $900k in retirement plus about $1mm in home equity. We did the math...and...I'm working another 7-9 years. We can pay about $60k a year on our mortgage and add about $60k a year into our investments. Saving $120k a year is huge compared to spending $75 k a year in this example...since not even taking growth and dividends into account, that's roughly a $1.7 million swing..plus preserving our $900k to grow by maybe another 60% or by over another $.5 million - so in total a $2.2 million swing.
Hey 👋 Azul! Love your videos. I was wondering what you think about partial retirement? My husband and I both have careers where we could transition to working part time for other businesses rather than owning our current companies. Possibly even seasonally if we snowbird. Two part time incomes would certainly help us to retire sooner.
I may bot have been paying attention, but..let's say you have liquid cash to live off of until you can withdraw from retirement accts until you can withdraw soc sec.. Example: take their $800K and assume it is cash/liquid, that could last 10yrs(50yo-60yo) and they begin withdrawing their 401k/IRA at 60yo, ($x) then decide to draw soc sec (single or as a couple) That would math My opinion is that ret accts keeo you from retirement until 59-1/2(possibly 55?) I know it goes against the traditional advice, but if you can have the cash and not tie it up til 60yo - go for it
Azul, are the subsequent Monte Carlos for 900k and 1 million assuming $4000 monthly as well? Or , is it assuming the $75k a year withdrawals? Increasing for inflation?
Retire, What is that? I'm a boomer and I will NEVER get to retire. It will be work until I die. I know a lot of people will comment, "well that's your choice". No, I blame the government. Why in Gods name do we have to be taxed on EVERYTHING? Taxed on property, taxed on food, taxed on anything we purchase. Buy something on ebay that is used, you pay taxes. Sell it again and again, taxes will be collected. I don't know about you but I'm going to party when I die to celebrate not having to pay taxes. Your all invited!
your words “put in anything that you want” is really what makes retirement income impossible to determine… a 1 or 2 percent difference in actual inflation or growth makes all the difference in being successful…. add 1 more perecent inflation over 35 years in retirement and u run out of money… just that 1 percent has that much effect...
If I was 62 andhad 300k in savings, I could retire. Why? Well, 300k over 8 years would allow me to live a lifestyle as good as I do now. At 70, I file for social security which is scheduled to exceed my needs. Now, this doesn't allow for much room to secure myself against major risk events and doesn't give me much in the way of 'beer and date' money or money to outsource all the work I still hate doing but now no longer have the time excuse to not do.
Great video. Question: when I use HonestMath and change the age at which I take SS from 62 to 67 to 70, it seems better to start SS at age 62, despite monthly payments being about half of what it would be at 70. This is assuming 50/50 stock bond with 7%/4.5% growth respectively. This is contrary to what I would have thought, with it being better to delay SS. Is it because there's more portfolio from which to earn returns, rather than drawing it down from retirement until 70?
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Got it! Buying stocks during a recession when prices are down could be a good move. You might get them at a lower price and sell later when they go up. Just do your homework and be aware of the risks before diving in!
That's awesome! Investing in stocks with a reliable trading system can lead to great outcomes. It's fantastic that you've been working with a financial advisor for a year now. Starting with less than $200K and being just $19,000 away from making half a million in profit is impressive! Keep up the good work!
Mind if I ask you to recommend this particular coach you using their service?
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
I'm 10 weeks out from my retirement day at 55. I am widowed. I have a pension and will also take survivor's benefits from Social Security at 60 so my savings won't draw down as fast. After losing my spouse, I realize how fleeting life really is and don't want to wait.
Sorry to hear about your loss. I'm happy that you're able to retire early and I wish you a very happy and satisfying retirement.
Sorry for your loss. Life is short and fleeting for sure, I'm beginning to feel this as I turn 50
Can't you take survivor's benefits now? It won't increase by waiting.
Sorry for your loss
This. First sorry for your loss. But I don't understand people that are ok to retire but want to wait until Medicaid just in case. Life is fleeting as you said they may not make it to that time and never enjoyed the fruits of their labor
I started my SS at 62 1/2, my wife who is 20 months younger than me started at 62. With my pension for working 25+ years we’re doing just fine.That was over 3 years ago & we never looked back. Haven't touched our investments other than to travel. I had two brothers die of cancer 3 years apart. One died at 62 & never drew a dime of his SS. The other died at at 65 & drew 10 months. Let's be honest here, the reason the Government is offering you a bigger payday at 70 is because they're banking on you not making it!
I was going to retire at 55, since I had a sweet working from home-office job in the woods in CO I decided to continue working. Wife had a stroke when we were 64, retired to care for her. That was 2019, I've yet to withdraw anything from IRA, still building savings on both on 2 pensions, SS, and rental houses income. Bottom line checking out at 55 would have been no issues, I wish I had and lived a little before being destined to care-giving. Life is short.
Care giving is such an immense responsibility and can be so difficult. But we do it for our loved ones as you are doing. Bless you and thank you for sharing your thoughts here.
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determines a lot of things, my parents both spent same number of years in the medical profession, my mom was investing through a financial advisor while my dad through the 401k. On retirement, my mom retired with about $5million, while my dad retired with roughly $3.8million.
That’s an unusual amount of money to save!
My husband gets a tax break investing with his company 401k and his other 401k’s have been rolled over into an IRA.
You are right. I’m in my mid 50’s now, my wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with profits over the years, but at least I’m earning more. I’m making money even before retiring and my retirement funds has grown way more than it would have been with the 401k.
It’s unfortunate most people don’t have such information, I don’t really blame people who panic cos lack of information can be a big hurdle. I’ve been making more than $25k passively by just investing through an advisor, and I don’t have to do much work. It doesn’t matter if the economy is crashing, great CFA will always make good returns.
Do you mind sharing info on the adviser who assisted you? I'm 40 now and would love to grow my stocks investment portfolio and plan my retirement..
I had around $800K at 55 but kept working. Now I’m closing in on 63 and I have over $1.7 million - and during the last 8 years I paid $300,000 in college expenses for my kid. Once you get over about a million, the accumulation effect really accelerates. I decided I didn’t want to retire only to live small on a small budget (plus I wanted my child to get a college degree debt free.) I’d rather live large while I’m working and have a very comfortable retirement. I could have accumulated more than $1.7M by now if i had lived more frugally, but I decided if I was going to continue working I would spend money on things I really enjoy (some of which are not cheap). Life is about choices - very few of us have it all.
Thanks for sharing I’m in similar situation. Blessings
THANKS. Just what I needed to watch. My wife and I are administrators of our farming business and our own properties, as well as small pensions.
am almost 56, my Wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn passive income online and retire comfortably let's say 3 million bucks.
This is exactly how I wish to get my finances coordinated ahead of retirement.
Can you recommend the financial advisor you used to get ahead?
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get
I sorta retired at 54, sold my business. Wonderful life change. At 61, I still manage several real estate properties(rentals) but ready to sell and go into glide mode cause we're runnin out of runway folks and ya can't take it with ya.
Rental property seems like a go to for a lot of middle to upper middle class people for building wealth. My reason for never being involved? It's tough keeping up with my own house let alone rentals on top of it!
I love when you demonstrate how to use free retirement tools!
I watch a few financial advisors on here, but Azul just seems like a good guy to hang with.
What a great post, thank you. As a habitual saver I feel comfortable with my portfolio, I turn 64 next month. My greatest fear is with health cost as my wife and I age. This fear has crippled me to keep working until 65. I am pulling the trigger this year and stepping away from work, it took over watching more than 40 of your videos to do this. Thank you. I will continue to learn from you even after I stop working your advice is sound and we are always learning.
Same here. Also turning 64 this summer and was planning on working to 65 at least. But the company has changed, it's not so fun anymore. So getting my ducks in a row to retire sometime this spring or early summer.
One of the best things you can do to retire early is to save money outside your 401k, In this example, the couple could retire at 55 if they had money to bridge the gap to 591/2 or even 62 for SS to kick in. Another option is to work part time to and look for wok that provides healthcare (Though hard to find). It does not have to be all or nothing retirement.
This is misleading. Retire at 55 with 800k with 75k yearly withdrawal. at age 62, take SS with 25k per year. stop taking 75k per year out of the portfolio. take 50k out of portfolio with SS at age 62 of 25k per year equals 75k per year. SS preserves the portfolio to last longer.
SS at 62 is not the scenario he ran.
I have the same question. SS income should prolong his balance much longer.
There’s a reason why he mentions more than once that you can plug in your own numbers. He can’t go through every scenario.
No. SS income is not seen even in his own example
@@jacobkowski7705 It should be else the software is worthless.
This is an absolutely fantastic vid on this topic . Clear, thoughtful, not too long and full of exactly the right help. THANKS doesn’t begin to cover it. (More like grateful relief !)
Hi Azul, I'm 40 and currently venturing into the stock market, my ultimate goal has always been to retire at 55, is it possible to raise over $8million in portfolio size before my retirement at 55, I earn about $800k annually.
@zullard565 why won’t $8million be enough? it basically boils down to your expenses and maintaining a healthy budget after retirement.
Generally speaking, a good number of people discredit the effectiveness of financial advisors in retirement planning, but over the past 10years I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but retirement doesn’t seem so farfetched anymore.
bravo! i'm 46, inherited money from a childless relative and traveled overseas, got married to a lady almost my age, but the only issue is how to preserve and grow my wealth in view of retirement, can your advisor be of help please?
Definitely, Trudy Renee Soper is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment.
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
Azul, a suggestion for another take on this, how about plan for 80k a year and 4k SS at 67 and then show how much savings is needed at 55, 60, 62, 65. It could help people set some goalposts and they can adjust amounts based on their situation.
Working longer would have a huge impact. If you don't mind working longer, then that works as well. However, many people would rather not work longer.
What I don't see in the simulation is the addition of Social Security when they decide to take it.
I would like to see Monte Carlo simulations of taking SS at 62, at 67, and at 70 with the various savings amount. That passive secure income, which lasts forever, completely changes the charts and forecasts.
I had the same question.
I had to retire at 58 and had practically nothing saved. I had to really suck it up. Today, 16 years later, I have almost $300K invested and adding $21K/year more of my excess income. $800K is insane wealth to me. Don't give up, but just make a start. You never know what the future will bring. I probably won't ever have a $800K portfolio but ..............?
I've been keeping a substantial amount of my savings in cash. It feels safe, but I wonder if it's the right approach for retirement. I want to invest roughly $400K in stocks since I've heard that even in challenging times, investors may turn a profit. I’m not sure where to go from here.
It’s amazing you were able to save that much during your active years. Not a lot of people are able to save that much in a lifetime. But now you are retired and depend on your investment, it’s best you redistribute your capital, so you are not left devastated during a market crash or recovery. To simplify the process, you could allocate your resources with the help of a financial advisor.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $30k passively by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
in times like these, it's crucial to be cautious and not rush into the market , Who is this your FA , my portfolio needs urgent attention , been a lot of loss.
Christine Ann Podgorny is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
I'm not a big fan of Monte Carlo as it's more of a brute force approach and can generate unnatural cycles for example two black swan cycles together etc... markets usually progress in a fairly deterministic way of phases between euphoria and panic. For this reason my preference is to use historical back testing.
These financial Monte Carlo simulations are fundamentally flawed. They inherently assume that yearly returns are independent and identically distributed. This is not valid.
Azul. I love your 10 minute videos to help us “hopefully ready to retire” folks out there. I’m 52 and looking to retire at 59. The information that you convey in this short amount of time is really helpful. I have been sharing the honest math website with all of my friends for the past few months. Keep the videos coming brother.
i'm thinking 55, 5 more years. , And wife will be at 62 then. Were over 800 K right now by a good bit, with no debt... And were contributing about $2200 a month to Roth/401.. It's just thee medical insurance/health issues that bothers me
I’m 55 now and have more than that saved plus a pension but I’m still not ready. It just feels to young to me. You might feel the same way when you hit 55. Also I would have to pay medical expenses for 10 years 😢
Use Roth to make your income look lower to qualify for lower cost health insurance through ACÁ. Look up the rates by income levels. The info is out there. You will feel much better. Not possible if you don’t have quite a bit already taxed though.
I'm in my mid 30's and the number my wife and I have in mind is $900k by age 55. At age 55, we will also move to her home country (Thailand) and reap the benefits of low cost of living and excellent, affordable healthcare. We anticipate monthly expenses to be less than $1,500/month, but we are aiming for $3k/month (wiggle room and extra cushion for travel, medical costs, etc). So $900k with a 4% withdrawal rate will get us that $36k/year (or $3k/month).
I still did not factor in social security income that will kick in at age 65, and I did not factor in my US home which will be providing rental income while we're overseas in Thailand.
I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do I keep contributing to my 401k or look at alternative sectors to meet my goals?
keep contributing! I'd suggest you consider financial advisory at this point in time, remember you are in for the long haul
I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit me the time to analyze stocks myself. Thankfully, my portfolio has just 5X in barely 5 years, summing up nearly $1m after subsequent investments to date.
bravo! I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
She goes by '‘Natalie Ann Brinkman’ I suggest you look her up online. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
I'd like to see that same simulation run, but have them retire at 62 which would supplement their retirement plan withdrawals and then see how long their portfolio lasts.
That was one of your best videos, Azul. Practical steps to evaluate if we can retire! That's exactly what we need.
Please do more of these "Can I retire now?" videos. Very helpful!
I'm thinking retiring at 55. 5 more years. wife will be 62 at that time. 1.3 now. No debt. And Contributing around 2100 a month to retiremen now. It's just health insurance/medical i'm concerned about.
I am recently retired and now 55. Health insurance is incredibly expensive for early retirees. My former employer's retiree medical plan is $30K/year with $6K deductible for employee+spouse. ACA plans are all over the place depending on how good of a plan you choose and how much income you have. I saw ranges from $0/yr (with $13K deductible) to $25K/yr (with a $4K deductible) depending on income level and plan. A lot of early retirees game the system by living off of money that doesn't count as income so they can get maximum ACA subsidies. For a 55-year-old retired couple, the prospect of paying a quarter to half a million dollars for health insurance over the next 10 years is very real.
@@BrianW211 The cost of healthcare in the US is what keeps many people working longer than they otherwise would.
Great video, a lot of useful information I'm right at 55 and on track to retire at 63.
All this talk about healthcare costs .. so glad I live in Europe where healthcare isn’t privatised. In America the costs are terrifying
It really was so very helpful. And that tool you showed us is fantastic. I now empowered to model my own retirement plan knowing how the tool works. Great job. You have such a kind voice too...
Azul, what percentage of your clients die with a bunch of unspent money in their accounts? Just wondering since you used a high tax rate and high inflation rate and it doesn’t look like this takes into account the normal spending decrease as people age- reality retirement model.
My financial planner told me years ago he had a client who received over $800K due to a workplace injury settlement. This induvial was in his late 20's when he received the cash settlement. My financial advisor strongly encouraged him to set aside $200K as a basis for a retirement fund; the rest of the cash - $600K could be spent in whatever way he wanted. Well, this person wanted to invest in his friends business instead. Within 2 years all of the money was gone, along with any chance of building an awesome retirement nest egg. My financial advisor said that person left his services shortly after that. If I came into $800K in my twenties, I probably would have invested most of it for the long-term. Erin - I would most likely click on any video you send out regardless of the title!
Yeah, but this falls into if I only knew then what I know now. I inherited a descent but small amount of money in my 20's. If saved and invested it would be quite large now. But I was making $10.00/hr with three kids back then. The next opportunity that happened much later I knew better and invested 100%. I wish I had this wisdom , discipline and current income 40 years ago.
Would have been ok if it was split the other way. Although I'd say blow at most 10%. So blow 80k and invest $720k.
The only issue you might have is the fear of missing out, just like everyone else. A good number of people discredit the effectiveness of financial advisors in exploring new market opportunities, but over the past 10years I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but i'm financially secure.
@@louisairvin3052 Are you still working with the fiduciary? i'm in dire need of proper market direction on what assets to have amidst this bull run.
Impressive! How can I contact this advisor? My portfolio hasn't performed well this year, and I'm seeking guidance.
Thank you so much for this “real world” example. It’s one thing for my wife and I to talk about how much we think we might need to retire, but this video gives us a lot to think about and shows off a great simulator to experiment with and see how things could potentially play out. We appreciate all of your videos and the great information you provide, so again, thank you!
Expenses will go down with age too. I think that makes me more comfortable with higher risk of running out of money when aming for a calculated scenario.
Best retirement video I have seen yet! Thank you so much, Azul. My husband and I are so concerned over healthcare/medical costs in the USA during retirement, we are considering another country when it comes time.
Thank you so much for your content. Hearing what you have to say is always interesting. Financial books have been so helpful. I'm 54 and my wife 50 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. No longer putting blames on FED for our misfortunes. Saving and investing lifestyle in the stock market with the assistance of a licensed broker who we met at a financial seminar made it possible for us this early, even till now we earn weekly.
Congratulations to you both! My husband and I just had this same conversation this morning. This is exactly how we wish to get our finances coordinated ahead of retirement. Can I get access to your advisor?
This was great. I always learned more with a concrete example. thank you!
Azul, thanks for posting this video. I've been managing the family finances and although I feel somewhat confident about our financial security based on my own models I've run, it's nice to use another tool to help validate that we're on the right track for retirement. You have a new subscriber and I'll keep checking in for future videos.
Thanks for the video. My gut immediately went to NO on that being enough, and the results match. I'm 52 now, and my 401k will be in line to be at $800K in 3 years.
What I like about the calculator is that it includes the expected tax. I've got about 40% of my 401k in Roth. I intend to only add it to Roth as I increase my contribution rates. My 401k plan administrator has modeling software, but they do not discriminate between a regular 401k and a Roth 401k. This tool lets me make that adjustment.
I'm still struggling with the plan on Social Security though. My payments go up SO much between 66 and 70.
The key is no debt.
You can go 100% stocks if you have a pension…the pension basically becomes your bond…
Hey Azul, I don't see much on Pension retirement. I am a federal employee with a pension and TSP (governments 401K basically). My TSP is 100% stock, but my pension is guaranteed and only available to draw monthly no option for one time payment. When I search pension retirement videos I rarely find anything in the detail I find for those without.
Spend some money now in your 30’s, 40’s and 50’s to travel, etc. while you are young and healthy. Retire at 67 or later when you are slowing down. It makes no sense to retire in later years to enjoy life when in fact you are not going to enjoy it. Who says that to travel and do the things you enjoy you need to be unemployed.
I retired 2 years before full SS. We don’t have much in an IRA. We depend on SS and a pension. We have more in monthly income than if I stayed working. BTW- house was paid off at 57, and currently no debt except a car payment.
I recently started using Honest Math for projections. Very good simple tool to give a bit of clarity. Makes me realize I am a lot closer than I really thought. I like putting the life expectancy out to 99. Just because I am conservative. Then put in numbers to see if my median extends beyond $0 at 99. Not saying that is what I will do in real life, but that is how I like to run the simulations.
That was a dynamite presentation, Azul, thank you!!!
The social security of 3800 per month is for lifetime. Although the 800k is depleted at 66 initially the simulation graph cannot go down to zero as your social security starts at 67. And this is 45k per year not to be ignored. What I am saying is that you can never go to zero provided the social security is good enough to live on. Not to mention that as you get older you spent less money.
This was amazing. Thank you so much for sharing!
Mid 50s and wanting 75k out of only 800k is walking a tightrope with no net. That is 4xs more than I intend to pull from a million starting in my mid 60s.
Extremely helpful! Thanks!
thanks for the walkthrough, Azul!
can you do one sometime for those who haven't quite yet hit the typical early retirement threshold of age 55? maybe just to illustrate the importance of the bucket strategy?
Sure. Give me an idea. What amount of savings would be helpful for me to deep dive on?
@@AzulWells $500k in a 401k at age 50 and looking to retire as early as 55. assume they keep doing their 401k contributions to get their employer match. maybe also assume they've got some funds in a Roth IRA, a little in a brokerage and the employer pays a small pension at age 65. does that make sense? thank you for entertaining my suggestion.
@@MidlifeCrisisManagement Got it. It seems like these videos are helpful to people so I plan to keep doing them. One additional suggestion, you can use the exact tool I am using for free. This way you can put in your exact situation. I am not an affiliate. I just think it is a helpful tool for people. Don't use it to make your final "I have enough / I don't have enough to retire decision" (hire a fee-only financial adviser for that). But, to see if you are getting in the ballpark, it is a great tool. www.HonestMath.com
@@AzulWells we're on the same page. your example today finally convinced me to try Honest Math. it's a very basic tool, but good enough for most folks to start with. basic examples like today's mixed in with your walk-and-talk philosophy episodes will further enhance your content. glad to know you plan to doing more moving forward.
If you can bring in even a little income for the next few years -- maybe $1000 a month -- it will dramatically improve the projections of your retirement account, and may also boost your social security income. Retirement doesn't have to be all or nothing.
Numbers don’t add up. If you have 800k under your mattress, not invested in anything, will last you more than 15 years spending 4,000/month; not to mention the SS at 67. Therefore if you have that kind of money, invest in govt bonds at 3% and you have guaranteed income of +50k/year in perpetuity when considering the SS; forget software & Monte Carlo,
Though from 55 to 67 you get no SS so you're drawing down on that 800K plus the 3% interest. So by the time you get to 67 you've cut that 800k down. Not sure how much w/o a calculator if that would prevent the 50k/year in perpetuity you mentioned.
Investing 800k at 3%, you could withdraw 50k per year and have an end balance of 430k at the end of year 12, when they turn 67. Investing 431k at 3%, you could withdraw 21k per year for 30 years, adding the SS that would be more than 60k/year until 97 years old
He is trying to give them 75K, not 50K.
Watch the video again, at 6:20 with the 48k/year exercise he is saying that they would run out of money by 76
@@Larry_Kabberga So it does look like they could get away with withdrawing 50k/year. But to get that (relatively) large of an SS amount each month of over 3k, I would think they made much more than 50k/year so they'd have to adjust to that. Also, if that 800k is tied up in retirement accounts, they won't have access to it until 59.5 anyway. But good to know that amount of money would generate more than that monte carlo algorithm was predicting.
Excellent audio upgrade. Sounds great.
What a helpful video- Thank you Azul!!!!
Can you be clear in your various scenarios whether free and clear home ownership is considered a given in these calculations. You never seem to mention this, just the amount of savings in a 60:40 portfolio. Can also provie estimates what is the 'fee only' amount expected to be paid would be.
Home ownership is not included unless if one considers their home to be untouchable.
Thanks for this info. It's great!
My mother grew up during The Great Depression so she was terrified of running out of money and was very frugal through out her life. I wasn't but my wife grew up in third-world poverty in a single-parent household so she was big on savings. I had 5 times her income but she had 5 times my savings when we got married. Our savings rate was 38% from 2000 until around 2019 outside of when we put our kids through college. My job went away in 2020 though the company said I could look elsewhere in the company and there were lots of openings but I have a rather severe disability and decided to take a year off and then look. I wasn't able to get any responses on applications so I guess I retired. I didn't know if I could do it but most retired friends I know said that I wouldn't have any problems. The key is to save like mad in your working years and that gives you options.
This is a quick estimate but it does not handle couples with a few years of age difference. We have been retired 9 years ( me at 59, Spouse at 57) and our FA ran a detailed analysis for us and it showed we had enough money then. This tool shows we have more than enough to continue living as we have. We travel about 6 months per year.
REQUEST: Retirement is often talked about in individual terms. How should we think about retirement as a couple, or household? In our case we both work, we both belong to a strong local government pension system which also provides a health plan stipend and is expected to replace about 75% of our income. We have both worked hard to build our 457b plans (upper 6 figure combined). We plan to retire at 62 and 56. Our son will be in his last two years of high school and we have built a decent 529 account for him that should cover 2 to 4 years of college depending on where he goes to college. Lastly, our mortgage will be paid off about 18 months after we retire and we will have no long-term debt other than incidental use of our credit cards which we often pay off at the end of each month. How do we know if we have enough or are over saving?
I hear you on this because I'm 58 and my wife is 51.
with pensions and social security, you will never run out of money. no mortgage and no other debt, so not sure what the concern is.
@@MidlifeCrisisManagement my wife doesn’t get social security, and what small amount that I am eligible for is Pennie’s on the dollar due to the windfall elimination (WEP). I’ve worked hard and we have given up a lot to be where we are at. I agree with you that we are probably okay. My question is more one of household versus individual net worth and if we should continue our savings at the current rate or is it okay to pull back some.
@@JonesFamilyRanch I understand where you're coming from. my wife will have her state pension, but no social security. she will retire as soon as she hits the minimum age/years-of-service requirement for an unreduced benefit to work in the private sector for probably five more years. fortunately, we live in a state with no state income tax.
As a single person I feel that most of the illustrations are about couples. In particular I believe the illustration in the video we are commenting on, was about a couple, hence his taking the average Social Security and doubling it.
I'm a single, 43-year-old father who resides in Hamburg. If everything continues to go well for me, I intend to retire at age 50. I couldn't be happier right now than I am that I just bought my first house last month. I'm so happy that I made wise choices that altered my life forever.
Salutations, dude. At your age, you're doing extremely well. I'm 54 years old, and right now my finances are a mess. Any helpful advice would be greatly appreciated in helping to mold my life. I want to buy a home of my own.
It seems like I used the FIRE movement to manage my finances. Investigate it further by doing some research. With the help of a financial professional, they were then successful when investing in stocks, cryptocurrencies, and real estate.
a highly respected figure in her field. I suggest delving deeper into her credentials,Aileen Gertrude Tippy ’ as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
I calculated my retirement. I timed it to 60 and assumed a 25year retirement and a 1 % return on investments to allow for inflation and i calculated my income compared to my net salary with deductions to reflect a non commuting life. I took tax into consideration and i found i could afford to retire at 60. 15 years on it was the correct decision. The calculation became quite involved but all these free retirement calculators were just rubbish.
The first 100K was hard, after that it goes up faster, one time I increased my 401K by 100K in 3 months !!
The bad thing is that it can swing in both directions.
@@southbound1969always comes back tho.
@@southbound1969 Yes !! I don’t want to say how much I lost in one month 🤬😂
For the person asking the question, your calculations for $900,000 and $1 million are wrong. They are currently age 55. This means the age where the money runs out needs to be shifted to account for the age where they are likely to have that money. Showing the calculations relative to age 55, is great for people younger than age 50. For the run with $900,000, the age where the money runs out would be about 82 1/2 since the person asking the question would have to work at least 1.5 more years. For the run with $1 million, the ages where the money runs out would be about 88 1/2 since they'd have to work at least 3 more years.
The cost of living numbers I see (for a comfortable life) on some youtube videos is a cause for concern. They range from 50k in southern states to 75k in northern states and even higher, for a single person. In most cases retirees are going to be living on less than half of this.
What are you basing the belief that retirees will live on less than half those amounts?
I live in California with my house paid off I project I will need 80K a year. That’s pretax though, so roughly 65K a year. I plan on funding that with my pension and 7 figure 401K.
It's well know that a large percentage of retirees will only have social security. Much less than that 50k to 75k.
@@marklynch8781You specifically caveated “for a comfortable life” - so my question stands.
I made my point, sorry your so dense as to not be able to undeerstand.@@Hidden2u
My parents spend less than $3600.0 a month and been retired 7 years. They have 1.3 in there total portfolio. It’s more about how you want to retire. They save money in retirement and live solely off SS even thought they have much more money to pull from. House paid off, cars paid off. House worth $350k. I question what people are doing with there money that they need so much.
Been retired for 12 years, here is my reality, actual inflation rate has been 6% so expenses double every 12 years (72 / annual compound interest rate, 72 / 6 =12), a person need to cover expenses plus grow income during retirement. To cover current expenses and growth of expenses a person needs to live on half their income while growing income, so if a person has $800k, they can reasonably earn $800k * .04 = $32k, so to live on half while continuing to grow income, they have to live on $16k/yr, THEY CANNOT AFFORD TO RETIRE
Really cool video. I think that you've made a small mistake. Changing $800k to $900k should be accompanied with a change in the retirement age by definition to 56.5, but you didn't run a simulation at $900k and 56.5 retirement. It actually looks surprisingly better than $900k at 55. Sorry to be knit picky. Loved the video!
When you say stocks you mean stock price. If investing in dividend stocks, you never sell the stock you just collect the dividend. Investing in dividend kings, or a dividend ETF seems lower risk than growth stocks. The real question is how do you make it from 55 till 67... or 62 with early social security.
A dividend ETF is a collection of stocks ya know....
@@bruced.370 Yes, I know. Some people would rather have someone else do the investing, thus an ETF, but if you enjoy researching companies or don't like the idea of someone else having your voting rights, individual dividend stocks may be a better choice... Thus the "or".
Actually you would have to rely on money from a non retirement account until 59.5. to avoid penalties. Then at 59.5 you could start withdrawing from retirement accounts until you get to at least 62 when you can start taking SS, though at a much reduce rate. So yeah until you get SS, you will be drawing quit a bit down on on your retirement money from 55 to 67 (or 62 if taking SS early).
@@jg9002Thank you!
It is odd that the first scenario, with 800k at 55, ran out of money at 66 yo. 800/75=10.6 years. I guess they assumed that there were no gains? I like the simple calculations the site you used offers. Gives folks a decent idea.
No healthcare costs most likely in those numbers at 4k monthly for a couple. That take a chunk until medicare age.
The biggest problem I have with these simulations is the static withdrawal rate. If the economy crashes, human nature would push most people to cut back. If it does exceptionally well, perhaps they feel confident and spend more. How do they account for this basic psychology?
Also, perhaps people would retire sooner if they recognized their capacity to make adjustments and shift these levers throughout the years.
You can create an account with SSA and find out exactly how much benefit you would get by age if you continue working at your current wages or if stop today and don't make any future contributions.
I think I can retire now at 62 but don’t want to just sit around the house. Until I have a worthwhile plan I’ll keep working. Don’t want to spend the day watching Law and Order marathons.
RISK, RISK, RISK. It can't be understated enough. I've been on the winning end and the losing end. Risk has always been there to laugh at me on the losing side.
He needed to adjust the retirement age up in the calculator to match his scenarios. Would have made the $1,000,000 case look better to add 3 years, as he discussed. That would be 3 fewer years without social security.
You're never "Out of money" because you always received both your SSI
Capital=800,000
{
Expenses(10 Year)=600,000
Premium
Azul, appreciate your vids as an Oz living here in the US for now. With expenses here, was the avg income $70 odd thousand/yr, gross or net? Little amounts seem to change outcome so much, but as you say, we humans 'adapt ' - will keep watching 👍
Doesn’t make a sense. He is supposed to receive social security benefits of $3,600 every month beginning at 67. Why does the Monte Carlos chart show he runs out of the money at 66 when he retires at 55? Isn’t he getting nonstop social security benefits right after he reaches 67, which means he never runs out of money?
Agreed
Congratulations on explaining what the "fat tails" of the normal distribution are and why they matter when doing simulations.
Does this show when they start receiving social security and don't need as much from portfolio?
@Azul - I see you put in zero for "Other" Income. What about interest income? These days people are getting significant (5% ish) interest rates on cash. They could easily have 100k in cash bringing in $400 to $500 /mo. and compounding.
Also, on the simulation page, you should click the Edit button, change nothing, then run the simulation again - do you get a different result? I did. It appears that 10,000 simulations is insufficient to create a repeatable result. Also, I get results where the median line runs above the Lucky range or below the Unlucky range - how is that possible!?
TLDR: Unless I had $3 million and a paid off house...I should keep working.
This is great. I'm 58 and my wife is 53. We have about $900k in retirement plus about $1mm in home equity. We did the math...and...I'm working another 7-9 years. We can pay about $60k a year on our mortgage and add about $60k a year into our investments. Saving $120k a year is huge compared to spending $75 k a year in this example...since not even taking growth and dividends into account, that's roughly a $1.7 million swing..plus preserving our $900k to grow by maybe another 60% or by over another $.5 million - so in total a $2.2 million swing.
Hey 👋 Azul! Love your videos. I was wondering what you think about partial retirement? My husband and I both have careers where we could transition to working part time for other businesses rather than owning our current companies. Possibly even seasonally if we snowbird. Two part time incomes would certainly help us to retire sooner.
I wish you didn’t have to open account to use the software
Me too. They’ll sell your email address to a million different companies who want to target people who are near retirement with ads.
I’ve noticed no one considers cutting back a little in lean years in their planning. Maybe, if things go south a bit, get a part-time job.
You can retire with zero in the bank no problem
Now run it with realistic inflation of 12-15%.
The calculation improves though when social security kicks in
I’m 30 I invest 25$ everyday into dividend stocks.
I’m hoping to be in a very good spot in my 40s
I may bot have been paying attention, but..let's say you have liquid cash to live off of until you can withdraw from retirement accts until you can withdraw soc sec..
Example: take their $800K and assume it is cash/liquid, that could last 10yrs(50yo-60yo) and they begin withdrawing their 401k/IRA at 60yo, ($x) then decide to draw soc sec (single or as a couple)
That would math
My opinion is that ret accts keeo you from retirement until 59-1/2(possibly 55?)
I know it goes against the traditional advice, but if you can have the cash and not tie it up til 60yo - go for it
Azul, are the subsequent Monte Carlos for 900k and 1 million assuming $4000 monthly as well? Or , is it assuming the $75k a year withdrawals? Increasing for inflation?
Wondered that, too
Retire, What is that? I'm a boomer and I will NEVER get to retire. It will be work until I die. I know a lot of people will comment, "well that's your choice". No, I blame the government. Why in Gods name do we have to be taxed on EVERYTHING? Taxed on property, taxed on food, taxed on anything we purchase. Buy something on ebay that is used, you pay taxes. Sell it again and again, taxes will be collected. I don't know about you but I'm going to party when I die to celebrate not having to pay taxes. Your all invited!
your words “put in anything that you want” is really what makes retirement income impossible to determine… a 1 or 2 percent difference in actual inflation or growth makes all the difference in being successful…. add 1 more perecent inflation over 35 years in retirement and u run out of money… just that 1 percent has that much effect...
Great video! Though now I can't retire as early as I thought I could...
If I was 62 andhad 300k in savings, I could retire. Why? Well, 300k over 8 years would allow me to live a lifestyle as good as I do now. At 70, I file for social security which is scheduled to exceed my needs. Now, this doesn't allow for much room to secure myself against major risk events and doesn't give me much in the way of 'beer and date' money or money to outsource all the work I still hate doing but now no longer have the time excuse to not do.
Great video. Question: when I use HonestMath and change the age at which I take SS from 62 to 67 to 70, it seems better to start SS at age 62, despite monthly payments being about half of what it would be at 70. This is assuming 50/50 stock bond with 7%/4.5% growth respectively. This is contrary to what I would have thought, with it being better to delay SS. Is it because there's more portfolio from which to earn returns, rather than drawing it down from retirement until 70?
I swear he said at :10 “hey a-hole do I have enough to retire”. I was laughing