my stock portfolio went through the GFC and COVID crisis. On paper the loss was great. However did not crystalize the loss. Both time it recovered and gained even more. In fact buying more stock during the bargain phase was a good move. During GFC went from 500k to 400k or even lower, on recovery it was 600k balance. During COVID 2020, balance was 900k at peak, and went to 750k. During recovery phase around 2021/22 it gained back all, was closer to 1m in balance. Meanwhile kept buying blue chip now it is around 1.3m
A reverse mortgage will allow you to creat a tax free income stream from your home equity. This is no different than creating an income stream from your retirement account. The main difference is that the opportunity cost on the reverse mortgage is the future appreciation of your home, which historically has appreciated at 3% VS Drawing from your retirement account (equity,s) at a opportunity cost of 8%. A reverse mortgage will allow to you preserve the asset that appreciates at 8% at the expense of the asset that appreciates at 3%. This is why I will continue to count my home equity as an asset in retirement.
Being debt free and living in a lush shrangrila type mid century modern neighborhood in Minnesota, I can't imagine ever turning over the rights to my property to some bank or investment org. I want to sleep well at night. Many of my neighbors - original owners of their homes lived in them their entire working lives. My cross street neighbor was widowed at 55 and lived in his brick rambler untill 99. I was widowed 2 yrs ago at 57. But i will pay the reasonable property taxes and insurance to keep my little slice of heaven. No, my home although worth a decent amount will not be counted as an asset other than to my kids 😊
what is a port folio? all i know is i believe my life was saved by retiring. as my bp numbers dropped by 40 points. down from a 220-240 area to well under 200. stress is the number one killer of white men over 60. my bp numbers dropped just because on not working and all the related rat race problems from working.. now time for me to work on my general health. what good is money if i am dead.
Excellent video. Although my house is currently valued at 1.2M and paid off, I never include it as part as my net worth UNLESS I decide to sell it. I consider my net worth as any assets that puts cash into my pocket on a regular basis. With my current cash flow, I was able to fully retire at 57 and will be waiting 3 more years to apply for my max SS at 70. My passion in retirement is continuing to invest in equities while my wife is gardening. Thanks for the video.
Considering your home as a retirement asset is not properly addressed in this video. Retirement assets impact the balance of income vs expenses. If your home is reducing your housing costs significantly than it is in effect an "asset". For example in places where property taxes are controlled, like California, a home with a payed off mortgage, is an asset. The cost of living in it represents a much lower monthly expense than renting. At 5% interest, paying an additional $ 2500 per month for housing would require an asset of $600,000. This is roughly the difference between rental of a like home in my neighborhood and the operating cost of my home, with taxes, insurance, and maintenance.
I dont know why people are always saying that owning ones home that they will live in is not an accet. It is an accet that is unless you are planing on living under a bridge. If you don't own your home then you will have to pay rent somewhere to live. Not paying rent makes your home an accent as it prevents one from having to have the liability of paying rent.
To be clear "retirement' has nothing to do with how much money you have, or how much money you will get from Social Security. The primary definition of "retired" is simply, no longer working. I retired years ago at age 62. Here's how I did it. One day I went to work and the next day I didn't. That's it.
We plan our numbers on one SS income and it is fine. Between my SS which would be my spouses SS if I go before her, she would be fine on that alone. Along with plenty in investments, the need is only 10 to 20K pull down in heavy spending years to provide the income needed. If we put all the money in safe things like bond funds earning currently 3.4 to 3.6%, well it would generate more than that. So bottom line is, no worries. We will have to find new and improved ways to spend all the money with 2 SS incomes and a small pension in addition to dividends and gains on investments. I am happy to have that problem instead of the other side of that coin, where we worry about where the money is coming from. Provides contentment.
Another great video James, thank you. A question. I have 8 years until retirement. Currently I contribute 15% to my 401k and 5% to my Roth 401k. I'm going to increase my contributions another 5%. Should I put it towards my 401k or the Roth 401k? Thanks!
Traditional IRA/401: Better if your tax bracket is likely higher now than it will be when you retire (this is most likely). When you use a deductible IRA you are in effect getting an instant ROI equal to you tax bracket. Roth is generally better if you have a long time for the money to grow. Worse case: Contribute to Roth now (no deduction) and it does not grow. BEST Tool (usually overlooked): Health Savings Account (HSA). IF you have a High Deductible Health Care Plan now, you can contribute $7,750/family/year. Is IS deductible now, grows tax-free, AND can be used w/o tax consequences for qualified expenses. Note: Confirm all w/advisor.
The data on the S&P return in a distribution phase is false! No accounting for sequence risk, or management/fees. Also most people don’t buy or sell at the bottom or top. Studies show that actual returns are often much lower for these reasons. On the other hand Treasuries or other fixed rate investments don’t suffer from sequence risk or timing to anywhere near the same degree. Reverse Mortgages can solve the home equity problem.
Do both . Contribute into the traditional and take the tax savings to contribute into a Roth or an after tax brokerage account and as long as they are both invested the same the Roth will always be there to pay the tax come retirement This strategy works great if you are not sure that you will be in a lower tax bracket retirement.
You could use a reverse mortgages to use your home equity towards retirement if you absolutely had to. In this case, your home would count towards your retirement assets.
I'm 62 and retired at 48. In 2019, I did a cashout refinance, which paid most of my living expenses & paid a lot of my taxes on Roth conversions. I now have nearly $1,000,000 (estimated $1,340,000 by 12-31-25) in my Roth. My average Roth conversion tax rate will be 12.4% federal tax rate & 0% Texas tax rate on 11 years of conversions (2015 to 2025). I plan to sell my current home in 2026 (& move to California) & I have more cashout refinances planned at age 73, 80 & 87. And, if alive, a reverse mortgage at age 95. My point: monetizing this retirement asset (home), can be lucrative, even 'if you absolutely DON'T have to'.
Good video. Thanks. Another fallacy is expecting to spend a consistent amount throughout retirement. Spending almost always decreases as we age.
my stock portfolio went through the GFC and COVID crisis. On paper the loss was great. However did not crystalize the loss. Both time it recovered and gained even more. In fact buying more stock during the bargain phase was a good move. During GFC went from 500k to 400k or even lower, on recovery it was 600k balance. During COVID 2020, balance was 900k at peak, and went to 750k. During recovery phase around 2021/22 it gained back all, was closer to 1m in balance. Meanwhile kept buying blue chip now it is around 1.3m
Good for you! My ETFs haven’t recorded much unfortunately 😢😢😢
A reverse mortgage will allow you to creat a tax free income stream from your home equity.
This is no different than creating an income stream from your retirement account.
The main difference is that the opportunity cost on the reverse mortgage is the future appreciation of your home, which historically has appreciated at 3%
VS
Drawing from your retirement account (equity,s) at a opportunity cost of 8%.
A reverse mortgage will allow to you preserve the asset that appreciates at 8% at the expense of the asset that appreciates at 3%.
This is why I will continue to count my home equity as an asset in retirement.
Agreed. And, a cashout refinance can provide the same benefit.
Being debt free and living in a lush shrangrila type mid century modern neighborhood in Minnesota, I can't imagine ever turning over the rights to my property to some bank or investment org. I want to sleep well at night.
Many of my neighbors - original owners of their homes lived in them their entire working lives. My cross street neighbor was widowed at 55 and lived in his brick rambler untill 99. I was widowed 2 yrs ago at 57. But i will pay the reasonable property taxes and insurance to keep my little slice of heaven. No, my home although worth a decent amount will not be counted as an asset other than to my kids 😊
Great video. You need to plan for the first first death and what that does to income. Always something new to learn, thanks
what is a port folio?
all i know is i believe my life was saved by retiring. as my bp numbers dropped by 40 points. down from a 220-240 area to well under 200.
stress is the number one killer of white men over 60. my bp numbers dropped just because on not working and all the related rat race problems from working.. now time for me to work on my general health. what good is money if i am dead.
The biggest misconception for me was that I might not have enough to do. Plainly wrong.
Excellent video. Although my house is currently valued at 1.2M and paid off, I never include it as part as my net worth UNLESS I decide to sell it. I consider my net worth as any assets that puts cash into my pocket on a regular basis. With my current cash flow, I was able to fully retire at 57 and will be waiting 3 more years to apply for my max SS at 70. My passion in retirement is continuing to invest in equities while my wife is gardening. Thanks for the video.
We have the same game plan!
James , great video! I needed this.
Im so glad I found your channel a few weeks ago and subscribed. 👍
Considering your home as a retirement asset is not properly addressed in this video. Retirement assets impact the balance of income vs expenses. If your home is reducing your housing costs significantly than it is in effect an "asset". For example in places where property taxes are controlled, like California, a home with a payed off mortgage, is an asset. The cost of living in it represents a much lower monthly expense than renting. At 5% interest, paying an additional $ 2500 per month for housing would require an asset of $600,000. This is roughly the difference between rental of a like home in my neighborhood and the operating cost of my home, with taxes, insurance, and maintenance.
I've wondered if "freedom to..." leads to a different kind of pressure, to "not waste time"? Especially if it's an early retirement.
I dont know why people are always saying that owning ones home that they will live in is not an accet. It is an accet that is unless you are planing on living under a bridge. If you don't own your home then you will have to pay rent somewhere to live. Not paying rent makes your home an accent as it prevents one from having to have the liability of paying rent.
Don’t forget COLA w social security also
Did your S&P 500 numbers include dividends?
To be clear "retirement' has nothing to do with how much money you have, or how much money you will get from Social Security. The primary definition of "retired" is simply, no longer working. I retired years ago at age 62. Here's how I did it. One day I went to work and the next day I didn't. That's it.
We plan our numbers on one SS income and it is fine. Between my SS which would be my spouses SS if I go before her, she would be fine on that alone. Along with plenty in investments, the need is only 10 to 20K pull down in heavy spending years to provide the income needed. If we put all the money in safe things like bond funds earning currently 3.4 to 3.6%, well it would generate more than that. So bottom line is, no worries. We will have to find new and improved ways to spend all the money with 2 SS incomes and a small pension in addition to dividends and gains on investments. I am happy to have that problem instead of the other side of that coin, where we worry about where the money is coming from. Provides contentment.
Amazing, eye opening, freedom from vs freedom to…
great video
Another great video James, thank you.
A question. I have 8 years until retirement. Currently I contribute 15% to my 401k and 5% to my Roth 401k. I'm going to increase my contributions another 5%. Should I put it towards my 401k or the Roth 401k? Thanks!
Good question! Waiting to hear James’ response.
Traditional IRA/401: Better if your tax bracket is likely higher now than it will be when you retire (this is most likely). When you use a deductible IRA you are in effect getting an instant ROI equal to you tax bracket. Roth is generally better if you have a long time for the money to grow. Worse case: Contribute to Roth now (no deduction) and it does not grow.
BEST Tool (usually overlooked): Health Savings Account (HSA). IF you have a High Deductible Health Care Plan now, you can contribute $7,750/family/year. Is IS deductible now, grows tax-free, AND can be used w/o tax consequences for qualified expenses. Note: Confirm all w/advisor.
Not enough information, anything anyone could say would be a guess
The data on the S&P return in a distribution phase is false!
No accounting for sequence risk, or management/fees. Also most people don’t buy or sell at the bottom or top.
Studies show that actual returns are often much lower for these reasons.
On the other hand Treasuries or other fixed rate investments don’t suffer from sequence risk or timing to anywhere near the same degree.
Reverse Mortgages can solve the home equity problem.
Do both .
Contribute into the traditional and take the tax savings to contribute into a Roth or an after tax brokerage account and as long as they are both invested the same the Roth will always be there to pay the tax come retirement
This strategy works great if you are not sure that you will be in a lower tax bracket retirement.
You could use a reverse mortgages to use your home equity towards retirement if you absolutely had to. In this case, your home would count towards your retirement assets.
I'm 62 and retired at 48. In 2019, I did a cashout refinance, which paid most of my living expenses & paid a lot of my taxes on Roth conversions. I now have nearly $1,000,000 (estimated $1,340,000 by 12-31-25) in my Roth. My average Roth conversion tax rate will be 12.4% federal tax rate & 0% Texas tax rate on 11 years of conversions (2015 to 2025).
I plan to sell my current home in 2026 (& move to California) & I have more cashout refinances planned at age 73, 80 & 87. And, if alive, a reverse mortgage at age 95.
My point: monetizing this retirement asset (home), can be lucrative, even 'if you absolutely DON'T have to'.