I’m 57 with $700k: Can I Retire Early With My 401k and Social Security?
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- เผยแพร่เมื่อ 15 มิ.ย. 2024
- Ready to retire at 57? How can you access your 401k principal, and how long will it last? Watch this video to learn all about Social Security timing, early withdrawal penalties, and income strategies exceeding conventional wisdom. I’ll address the significance of sequence of returns risk and its impact on portfolio longevity, navigating scenarios of both optimal and adverse market conditions. It’s important to also think about tax and health care planning when making financial decisions as well. You’ll gain the insights you need to make more informed choices towards financial security throughout your retirement.
🏃🏻 Jump right in:
00:00 Introduction to Retirement Planning
00:20 Understanding Life Expectancy and Social Security
01:53 Dynamic Income Planning Beyond the 4% Rule
03:41 Simulating Retirement Scenarios: A Thousand Trials
05:14 Sequence of Returns Risk: Navigating Market Volatility
07:24 Impact of Social Security Timing on Portfolio Longevity
10:11 Analyzing the Effects of Social Security Election Age
12:31 Stress Testing Retirement Spending Levels
14:42 Tax Planning Considerations in Retirement
19:25 Healthcare Planning and Final Retirement Insights
#401kwithdrawal #earlyretirement #retirementplanning
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💭 Have questions or specific scenarios you'd like us to explore in future videos? Leave a comment below, and we may feature it in an upcoming episode. Your feedback is invaluable to us!
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Disclaimer:
This video discusses fixed-income investing and utilizes the 10-year U.S. treasury as a general representative fixed-income investment. Conclusions reached, opinions stated, and downside risks and potential returns presented should not be construed as applying to other types of bonds or fixed-income assets. Other types of fixed-income products carry different levels of risk and return potential and should be evaluated as an element of a diversified portfolio with your specific risk tolerance, investment objectives, and timeline in mind. Nothing in this video is investment advice, an investment recommendation, or an offer to buy or sell any security. Investing involves risk.
The 401k is good, because retirement choices determine a lot of things. My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k. My mom retired with about 4.2 million, but my dad retired with roughly 1.8 million. So it really does.
My journey into FIRE has taught me a lot of lessons, at the top of that list is that it never pays to live above one's means. I have managed to grow a nest egg of around $600k to a decent 7 figures in the space of 14 months. Sad to say but a lot of us have poor money management skills. My 2 cents - get an advisor to keep you accountable and aid you make better decision, I find it better to pay a little bit more for peace of mind than worry about money or market trends and still get burned.
I totally agree, money management is vital to early retirement, reason I prefer my day to day invt decisions being guided by a invt-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a invt-coach for over a year and I've netted over 1.5million.
I've been thinking of going that route, been holding on to a bunch of TH-cam-commended stocks that keeps tanking and I don't know if to keep holding or just dump them, think your inv-coach could guide me with portfolio-restructuring?
Sure, the inv-coach that guides me is Lisa Ann Moberly, she's popular and has quite a following, so it shouldn't be a hassle to find her, just search her.
Thanks, I found it. I booked a call with her on her website, her résumé seems pretty tight.
This is the best “retirement scenario” video I’ve ever seen on TH-cam. Thank you so much…very informative.
This was a great analysis, thank you!
I love this analysis. What I like doing is using these ideas and creating my own plans using Excel. I can do all these scenarios and more. I take more control of my finances, and its enjoyable.
Great information educational! Every individual should do their own research and calculation. I appreciate the outline and how different scenarios and potential outcomes are presented. My question is around the cost of this analysis one should expect to pay just for that type of info.
This is an excellent video thank you very much. What software program did you use?
Great video
Thank you @dday11!
Look at your monthly budget. Take 4% of your investment account each year add your SS check. Does that equal your monthly budget.
You can retire for under $2000 at Goodyear Tires.
Do the plan documents need to explicitly say that the administrator allows the rule of 55?
What’s the tool to run my own calculation?
You can withdraw from 401k at 55 without incurring penalties.
Turn off her Amazon account and there is a 109% success rate.
How can a couple live on $ 50,000 per year. And does this take into account infllation and taxes?
With paid-off house and cars....easily.
If you're only getting a 5.31% return from your investments after using a financial adviser. That's your first problem.
Exactly, if you use 700k and sell cash secure puts on SPY, you could make a lot of money. 5% is a joke
He useing worst case
Good info.. and very close to my own personal scenario. The biggest concern I have about retirement success is the looming Republican goal of reducing, delaying, or eliminating of social security benefits.
Give me a break. Is that why the vast majority of people are saying the economy would be better under Trump? My 401(k) and IRAs were much better under Trump. They averaged 22% growth EACH YEAR under Trump. Not so with Biden the last 2.5 years. Grow up. 😂
Back in 2014 I had a manager who retired and used IRS rule either 55T or 57T that allowed him to take early withdrawals from an IRA account that he had to deplete by 59.5 years old, and he didn't have to pay the penalty. Did that change in 2017?
Hi @user-dv2se8km7x, it’s 72t, actually! Here's a video we did on it: th-cam.com/video/pO_1SkZdogs/w-d-xo.html. Thanks for watching!
@@OakHarvestFinancialGroup so why didn't you mention that strategy in this video for avoiding the tax penalty?
In our original video, we tried to provide a broad overview of retirement planning options applicable to a wide audience. As much as we’d like to, due to time restraints we aren’t always able to mention or delve into every specific strategy every single video. Thanks for bringing it up in the comments though - we do try to respond as much as we can with requested resources/education when we’re able. Thank you for being a part of our community!
Someone needs to edit this and add the blade runner interlinked everytime he says interlinked.
Awesome! I appreciate your viewpoint. I currently earn $600k per year. I have no home or investments, and my job is in New York because I work from home. I need to act quickly or else I'll owe the IRS thousands of dollars come tax season. What should I do?
And I thought the UK retirement rules were complex 🤓🤯
I get it but these types of videos frustrates me because theres so many different factors for different people...
I feel you....every single case is different. You are not alone in your frustration.
You are exactly right. These videos are laughable. Every situation is different.
He’s not running your numbers, he is giving you an example so you can use the same methods for evaluation on your situation. I’m not sure what is frustrating about that? Maybe hire a CFP to look at your specific situation rather than relying on generic examples on TH-cam?
You get it! The point of the video is to show these decisions are not always straightforward. That is, they require either using a retirement planning tool or hiring a qualified Retirement Planner to do it for you.
Don't let it frustrate you.....let it allow you to think of your factors and when you go and talk with someone like this guy you can figure out if it will work for you.
You can if you don't have any medical problems and you're not dependent on expensive prescription medications.
Hi @jayjohnson1169, thanks for bringing that up! This was just a generic hypothetical situation, but we definitely recommend taking into consideration any health or medical needs that you know you'll have when financial planning your retirement - that's something that we look at fully as part 4 of our Retirement Success Plan. Here's a video we did on that specifically: th-cam.com/video/flVXKx2PRlc/w-d-xo.html
With the age and money keep working for 3 years or go work a different line a work.
i am 54, i have 750k , in mostly ira 100k in annunity, in nov they cut my pay 50 percent i quit. i only need to live on 2k a month because i live rurarl tennessee, now i have no medical insurance, that's bad, i asked back at my job at reduced pay for insurance. gov't contractors take a long time to get approved, so we see.
But essentially I could live on 3% return. Mainly in $aapl cash secured puts may. yes risky.
but i enjoy this type of math and analysis. my mortgage is only 517, we see what happens.
I retired 22 years ago at 45. I currently live in central Phoenix, own my home. My average spend for everything has been $600/mo for the past 15 years. I've not had any investments so my reportable income has been basically $0. That qualified me for free healthcare, Medicaid $0 cost, $0 copay, $0 deductible, At 65 Medicare plus Medicaid so Part B & D paid plus $0 copay, $0 deductible. Also free smartphone and plan (LifeLine). Home internet was free for a couple years but looks to be ending now.
However Tennessee isn't a Medicaid expansion state so you would have to move to a more progressive state.
Did you consider your state health insurance options? I looked at mine and they’re reasonable.
@@deborahb.277 no i didn't thank you for your suggestion
If you’re expecting interest rates to be 2.5% over 30 year. You’re dreaming not happening as history has shown us
Hi @firstlast1732! Thanks for watching and weighing in with your perspective on things!
How the heck do you pay for healthcare and how much is it when you retire in 50's??
Hi Richard! We actually have a couple videos on this - here are a few of them: Step 4 of the Retirement Success Plan: Health Care Planning th-cam.com/video/flVXKx2PRlc/w-d-xo.html. Your Health and Long-Term Care Planning In Retirement During a Bear Market th-cam.com/video/e2kEmq6CGPg/w-d-xo.html.
Hope this helps! Thanks for watching.
Improvement Feedback: consider testing different smart screen colors/contrasts or lighting or camera settings.
At least for me, watching these videos on a large, high quality flat panel TV driven by ROKU/AppleTV/FireTV, the text/values on your smart screen are very washed out and difficult to see.
BTW, I thoroughly enjoy these scenario videos and often learn something even when the assumptions do not match our situation.
Thanks for always tuning in, @M22Research. And thank you for the feedback as well. We're currently working on a better solution to show what's written/displayed on the board. Hopefully we'll get that deployed soon!
What is included in their $50,000 expenses? Is that sitting home doing nothing, or does it include non-essential, such as trips, movies, entertsinment, etc? If it includes non-essential, wouldn't you reduce spending in the early sequence of return down years, before looking at taking SS early?
Exactly why these types of videos are pretty silly. I retired 22 years ago at 45. My average spend has been $600/mo for 15 years. That would sound horrible to most people but I've enjoyed myself. I was a software engineer and could have gone back to work at any time for high pay if I wasn't having fun on $600. Haven't taken SS yet, could today at $3080/mo but no need.
There are many ways to retire. Most Americans seem to think retirement must be basically the same as when working. If you earned $200k/yr you'd need some huge budget in retirement, but if you earned $80k a much lower budget. Seems odd to me. There are endless things to enjoy that costs nothing and many hobbies can even bring in money. One thing I got into was gardening and fish ponds. Once I'd created gardens and ponds in the yards of my house I did a yard for someone else for money. But working for someone else wasn't as much fun. So I fixed up that house, sold and bought a dump of a house so I could create another garden and ponds. Found I really liked real estate, design and remodeling and that $250k cap gain was tax free. Working on house #4 now. Plan to move to SE Asia in 2025 to create a super garden and ponds. Plus all the other fun there of travel, exploring and dating beautiful young women.
Correction: (20:29) The Trump Tax Cuts do not expire at the end of “2026”. They expire at the end of 2025.
Thanks @M22Research!
What about healthcare in this example if he isn’t getting insurance from his employer he could pay upwards to $2000 a month for health insurance.
Affordable healthcare act
Retire outside the US. For instance Spain you could live pretty well on $50k a year and health insurance would only be like $80 a month and would cover everything like dental and vision with 0 deductible or copay.
Wrong, wrong, wrong. Affordable care act will pay a huge subsidy based on $50K income for two. They would pay less than $200 a month combined.
@@nickv4073 Keep reportable income under about $15k/yr and the cost is $0. I've had Medicaid $0 copay, $0 deductible. Best insurance I've ever had. Company that manages my insurance is a non-profit so super nice people, helpful, answer the phone quick. I funded retirement for 22 years slow flipping houses. $260k of cap gain is tax free, not reportable income. I don't even have to file state or Federal income tax.
@@JustinPratt1 I plan to move to SE Asia next year. I can cover healthcare costs out of pocket there and they have some great hospitals. Appointments in a day or so unlike the weeks, months wait to see someone and a lot of complexity. $24k/yr is considered very rich by locals and a decent income for Americans.
Plus I'm a single man and dating young beautiful fun women is plentiful and inexpensive.
I’m 62 with 3.6 mil. I have everything paid for. Can I retire?
Goodness no! You'll need to work until 70 for sure....inflation is a harsh mistress. Then, and only then, can you go from 99.9% success rate to 100%. Glad you posted and I could help you!
You are a better than most but not yet secure. The more important question is, can you live off 117,000 per annum which is a 3.25% draw from your 3.6MM. I wouldn't take more than that for a few years unless you don't have a long life expectancy. The 4% rule is usually good for a 30 year horizon and you might exceed that given your age, hence my more conservative draw rate. Once you add in SS and subtract any health care costs since you do not yet qualify for medicare, that will give you your answer. If you need more than 117K gross plus SS, than you can't retire. Sorry. The good news is you are only likely 3 to 5 years out from being in good shape provided you own your home outright or are close to doing so.
Too late I already retired. Guess I’ll just take my chances.
@@charleswells6890 You are fine, you may disclose some info about your plan... since you already made decision! $3.6M, Even if it gives 5% or 5.5% interest in last two year market, you could have made at least 180,000 to 200,000/Year without losing penny from this saving, Technically this would last forever! unless these are all pre-tax money, than technically they are not $3.6M but you can count 25% Fed and State tax if you live in CA or some high tax state. You still will be fine with even after paying that tax $1.26M Tax(Proximate 35% Tax) in next few years. still left with $2.3x, which still a lot as you are close to get your medical benefits. Enjoy your life!
You should have been retired long ago
That would probably work, if the potential of SS becoming insolvent in 2033 and the potential cuts of 23%. A newly formed Republican committee is looking at (which consists of 80% of the party, moving the FRA to 69, thus that would definitely impact a person's SS at age 62, especially if they leave the first eligible age for SS at 62 and don't move it up, when they move up the fully eligible age to 69.
Thus, you would probably have to take $50 longer than is indicated to cover expenses.
Scary. But then there is reality. I'm 67 and for 60 years I've been hearing "SS will run out". Realty is America is a very wealthy country. Republicans would love to end SS but haven't dared even approach the subject. No Republican would ever get elected again.
Increasing the FRA would have no effect on people close to retirement age and certainly no effect on people already retired. In 1983 FRA was raised from 65 to 67. I was 27 years-old in 1983 and my FRA increased to only 66 and 4 mos. Current CBO option for raising FRA to 69 effects people born 1962 and 1978 raising 2 months for each year. For those born before 1978 FRA would become age 70, So anyone 62 and older is not affected. A 61 year-old FRA would increase by 2 months. Not exactly the end of the world.
However, increasing FRA seems unlikely. It was only proposed by 176 Republicans as a way to fund making Trump's tax cut for the wealthy permanent. Standard politicking is to propose something that has no chance of passing so you can say you tried. If this minor tweak to SS actually got some traction in Congress the heat would be turned up and many Republicans would run for cover.
SS is like every other gov program. If we can afford it and people like it then it stays. If no tweaks are made and SS runs out of funds Congress would add funding. There are many other programs that could be cut. Taxes on the wealthy could be made. Tweaking SS will take bipartisan leadership and that is many years, decades away if it ever happens.
@@MrWaterbugdesign
When asked if he would join their committee on the proposed laws extending the FRA age for SS. Trump said no. I also find it very strange that this topic was brought up during an election year, as well. Unfortunately, as time marches on, the next president coming in 2029, would be stuck with the task, whether they like it or not to do something about Social Security's insolvency. Then it would become a last ditch effort, haphazardly done, possibly with poor results, when it could have been done more effectively earlier. But we will see.
Doesn't Trump tax cut ends in 2025?
Only if congress doesn’t extend the trump era tax rates
But ask you tax advisor
If nothing else is done they will ... if however, Trump wins the upcoming election and gets a republican house and senate i would suspect the tax cuts would be extended ...
Yes. 2025
I am assuming it will expire. Roth conversions till then
Rule of 55 is great for early retirees.
Thanks for watching @teams3345!
I would like to see a 5% withdrawal on 1.6m for a 57 year old couple. I think that’s more realistic and have inflation set at 3.25%
Or divorce. Seriously. Grey divorce is increasing and imo the single biggest threat to retirement. I divorced at 59 and that lowered my expenses a lot will increasing my happiness (I assume for my ex too since she asked for divorce).
Planning to sell my Phoenix house in 2025 and move to SE Asia with $550k cash and $5100/mo income. $3000/mo is considered very well to do even by expats there. As a single guy being able to date all the young beautiful fun women I want, maybe marry, is priceless. Men say it makes them feel 20 years younger. They go from being invisible old toxic males to rockstars. Worth a try imo.
why would you take a 5% draw rate on 1.6MM at 57. You would likely run out of money unless you both have very short life expectancies given family history. I'd be much more conservative and test run at 3.25% draw at that age and if you can survive you could consider retiring.
@MrWaterbugdesign good plan. I did it.
Life expectancy’s are no longer increasing they are decreasing due to the horrific lifestyle and diet of the standard American
Hi @firstlast1732! Thanks for watching!
This video is clearly a sales pitch for their services and sadly someone out there will think they can retire under these circumstances. Very risky despite his 98 percent probability claim.
Apparently you expected a small business to provide free advice simply out of the goodness of their hearts?
Of course these CFP videos, no matter who does them, are sales pitches.
And I, for one, have been using the many CFP channels I watch to evaluate these CFP’s to find a good match for us.
You can and you should. But you won't. a serf gonna serve until it can serve no more.
they'll drag yo' lifeless husk outta yo' workspace, but mop it before put a new serf in there
Correct. But many people seem to enjoy non-thinking and being a serf. I'm being serious. Being a worker in the US is a pretty sweet deal for many people. If you're in a crappy low paying job after age 30 you have seriously screwed yourself. A chunk of people take that path.
nope
I would not retire early if the plan was to only bring in $50k yer year!
I certainly would, just not stay in the US. There are places you could retire like a king on $50k a year.
i agree with you, but if they also got a $20k pension, that means they are living significantly more comfortable lifestyle ...
If the plan works, they should retire. Expenses of 50k per year is possible.
I travel now and when mortgage is payed off I will live on about 40k a year in current dollars and live well. SLOW TRAVEL! One 3 month vacation in an inexpensive country a year with a few shorter ones in the States. Easy Peasy;)
It’s so odd that so many of these YT financial scenarios involves a non working/ never worked female spouse.
It happens.
Pretty common. I'm a 67 year-old man dating American women age 55-65 all over the US (travel is no prob). I run into 2 basic types of women. Fair number of professional or divorced well with plenty of assets. The other type did crap jobs their whole life and starting to realize their retirement is not looking good so they're looking for a lifeboat in the form of a walking ATM.
Unfortunately both have issues for me. The well to do women have no intention of changing their lives. They ask me to move into their home, their lives. They want to travel and do things they want to do, the way they want. I'm a dude. I have my own life and plan. The lifeboat ladies general are in poor health. Poor financial decisions, poor health decisions, see the pattern? These ladies are more fun to date but not good long term partner material. I like being a provider but these ladies are delusional. Nearly all consider themselves financial experts and even on the first date are telling me how I should manage my money. I retired at 45. I really don't need that in my house.
So I'm moving to SE Asia. Plenty of women there eager to get on my plan and not tell me how to manage my money. Younger and more beautiful too so win-win.
If you’re offended by that, swap the genders. Not all families are two income.
Not offended just an observation about the lack of scenarios presented that make the content less helpful for audiences. Plus, women are generally ignored in the personal finance space
You can do what you want. Sure you can retire with 700k and be poor. That's a decision you'll have to make. Better to never retire, and just retire instead to meaningful work...e.g. growing your own food, running a soup kitchen, an orphanage etc.
Jesus. If I only had $700k at 57, I would be worried but then I want to earn the equivalent of $100k in 2018 when I retire in 2036.
What?
Same old crap… one video after another on this… 👎🏻👎🏻👎🏻👎🏻
We're sorry you feel that way, @skepticalmechanic! Is there anything in particular as it relates to retirement planning that you'd like to see instead? Thanks for continuing to watch one video after another :)
No. You need at least 2 millions to somewhat comfortably retire