How Much Can I Spend in Retirement With a $2.3 Million Portfolio?

What can I spend in retirement? In this video, Alex dives into a real-life case study of a retired couple who is 63 with a $2.3 million dollar portfolio. This video uncovers how much this retiree could spend in retirement.
James and Emma (not their real names), both 63 and residing in California, sought to retire and relinquish the financial reins to professionals. Their financial snapshot revealed $80,000 in cash, a $600,000 brokerage account under their family trust, IRAs totaling $1,580,000, and a home valued at $1.15 million with a $360,000 mortgage.
The couple’s income included Social Security benefits, projecting $37,000 annually for James and $26,000 for Emma, starting at their full retirement age of 67. With living expenses averaging $7,000 monthly and additional costs until Medicare at 65, a comprehensive income strategy became imperative.
Baseline Plan: The initial financial plan showcased a comfortable retirement, meeting the couple’s essential needs.
Extended Goals: James and Emma aspired to enhance their retirement experience with additional expenses:
Increased travel budget by $15,000 annually.
Kitchen remodel budgeted at $100,000.
Augmented charitable giving by $1,000 per month.
Adjustments:
After thorough discussions, compromises were made, with a reduced travel frequency, aligning their priorities with longevity concerns.
Traditional Approach: Traditional static withdrawal plans, like the widely known 4% rule, present challenges:
Fixed withdrawal percentages irrespective of market conditions.
Conservative nature can lead to surplus funds at the end of retirement.
Flexible Approach:
Monthly income planning for adaptability.
Adjustments based on market fluctuations.
Consideration of external income sources, like Social Security.
Willingness to lower income during market downturns.
Tax Projection: Traditional tax strategies often result in:
Low early taxes but potentially higher future taxes.
Opportunity in gap years before Social Security for strategic tax planning.
Tax Optimization: Proactive tax planning interventions, such as:
IRA conversions within the 12% federal tax bracket.
Smoothing out taxes for a more balanced approach.
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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you.
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[@melodyk.]

Very helpful! Yes, the video describing how to invest for this type of plan would be appreciated. Thanks!

[@g.ajemian4968]

I would absolutely love to see the next visit video. You mentioned about the investment part of this plan I am pretty much spot on with all of their age and dollar amounts desired income is different but the investment strategy would be great to see. Thanks.

[@onedegreeadvisors]

Noted! - Alex

[@gabesmith9171]

Can you do a video on 457b?

[@g.ajemian4968]

Hi I am still confused with their yearly withdrawals from their portfolio. Could you give me clarification of withdrawals at 63 and when ss starts. I think you stated they will be living on 16000/ month , thanks

[@g.ajemian4968]

They taking 16,000 a month plus Social Security

[@onedegreeadvisors]

In the initial months, yes - Alex

[@g.ajemian4968]

@@onedegreeadvisors wow I guess it assets are very similar and I would never dream of taking that much out with the without Social Security.

[@magicllama9614]

"A small mortgage of around $360,000....." lol

[@onedegreeadvisors]

Ok fine…small for SoCal 😂

[@ppw8716]

I like this. We also do have a mtg, even more than theirs. N even though I want to pay it off I’ve been advised by my husband and advisor that it isn’t smart financially.

[@heidikamrath1951]

@@ppw8716Same. I’m getting more in interest in a HYSA than the interest on my mortgage. It would be a shame to pay it off too soon.