I am a bit taken back by how much people think they will need to spend per month in the formulas you discuss on the channel. Just saying I own my property and all cars etc outright for many years now and only have electric cable and a prop tax bill. We have Pretty much have all we need at age 60 (still working - put 401k and Roth to very conservative at begin of 22). Our spending is pretty sane compared to 6 or 8 k per month.. On what would you be spending that much money on? I have no idea. Unless they have mortgages and car notes etc.. Anyway my wife has not had to go to work for 30 years so looks like I'm still hauling the backpack for a couple more years but I don't feel like waiting till 65.. . I was talking to a friend who is turning 70 and HAS to retire.. but I'm just turned 60.. To me, other than an extra $100 bucks per month it seems not worth it.. IDK. as the children say.. I will probably keep working for a little while but I have other things I'd rather do.. Just starting to look into this 'retirement' SS thing.. so please excuse if I am not up to speed. BTW my Uncle and Father still living waited till 70 and seem to have enough.. but both are broken and barely able to walk at 70 years.. I'd at least want a good 6 years before I have to sit in a chair all day.. Just saying..
@@DMAX_DIY Agreed. San Diego here, and even living in my $2M home (appreciation value, not what I paid) with a new car, my annual spend was only about $5500/mo. I assume people want to reduce expenses as part of their retirement plan. For me that meant downsizing and paying off my home. My retirement burn rate is only $3400/mo including HMO premiums. There is so much less stress not having to have saved so much for retirement and not bringing any debts into retirement.
@@BSGSV I'm from huntington beach.. moved out a long time ago.. no debts.. so the 401 and such means a bit more I guess.. My burn rate is water bill, Cable and elect.. finally. that's it.
I, my family, all the workers at the company where I work, every one I know - are from a different world. People at the plant where I work are smiling when they accumulate 20k in their 401k account if they have one. However, most never use it or even collect social security because they're dead before or shortly after they retire. This is the segment of society that politicians do not know exists - those not making big money but neither a ward of the state. Your numbers are just astronomical to us.
My husband has had a "physical" job since 1987. He just had knee replacement and I was SO grateful to have him here because while he has worked all these years, I have taken care of our disabled son since 2001, 15 surgeries, multiple handicapped, epilepsy, blind, deaf, brain surgeries, while raising our 2 other sons while working. The point is, it was EASIER for me to take care of TWO special needs people ( my husband and son), then hear all the texts and demands of his job that he get's EVERY Day, especially when he has to return to work. Currently he has about 3 years left until 62 god help us. At least while I was physically and mentally helping my son and husband, he was home and could mentally support me with our special needs son. He wanted to work longer than 62. Are you kidding me! Try our life!
What does retirement success or failure even mean? Let's take "failure." Does that mean, at some point in time you will not have enough financial resources to live comfortably? Does it mean that you will not be able to afford to pay the electric bill, buy groceries or put gas in your car? How does retirement failure look like? Or, does it simply mean that if you were planning to spend $7000/month in retirement, there may come a time when you can only spend $5000/month in retirement?
Will be 64 in October. Looking to work at least until April 2023. 401k is down $150k. Would like to see that come back up but may need to wait for the next election in November 2024 which will make me 65 years old. Semi retired now - just living on the small check - no debt, low expenses, making it work with out dipping into the 401k or SS.
I will be retiring from full-time work at age 65 (October 2024). My FRA is 66 and 10 months. When I do retire I won't start collecting social security until January, 2025 because, as you know, those first 3 checks (Oct - Dec 2024) will be reduced because of the income I incurred from Jan - Sept. With that said, I will rely on part time work and my retirement portfolio (bumping up the monthly distribution just for these first 3 months) for the last three months of 2024. Starting in January 2025 I'll have social security, a (fun) part time job, and my retirement portfolio (reducing the amount from what I pulled down the first 3 months of retirement)...Phew!! Looking very much forward to retirement!
How about posting something that fits the typical American. The average retirement savings seems to be around 426k and the median is less than half of that. If you can’t make it on 1.6 million dollars you are doing something wrong, or living in a very expensive location.
I'll plan to work one more year if given the choice. According to multiple studies, the average retiree has far less invested than the numbers shown in this video. During the Recession of 2008-2012 the savings of many were wiped out forcing them to start over, and pay down debt incurred during the recession before restarting investment contributions. The stock market has done well since then, however these people had little or no money available to invest in stocks during that time. It might be more helpful to more of us if you can explain the best options and show the results if they have less money to work with, instead of 2 million which is out of reach for the average retiree. These videos are very helpful, thank you. Can you bring the numbers down a little closer to reality? Your advice will be more important and help more people. A person with 2 million in the bank would be watching different videos, in my opinion.
Not quite long I started investing. I'm very curious and need help on how to enhance and increase my returns. Any good investment tips would be appreciated💜
@@eadad4371 Alright so generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with (REGINA LOUISE COLLARO) an investment advisor who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance. She is quite popular for her services so you might have heard of her. She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy...So I’ll advise you do get a good Investment advisor for yourself.
@@davidforesto That’s great , your investment advisor must be really good,I have seen testimonies of people using the help of investment advisors in making them more financial stable. Do you mind sharing more info on this person?
@@eadad4371 I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot . This was of so much help to me .
@@eadad4371 look her up on the internet and leave her a message she's quite popular for her services as she was recently featured on cnn. She can work with anyone irrespective of where their located
@@HowToRetire not where I am… I’m 62 in December… I can hold off on SS for two more years… wife still working full time. I do intend on getting a part time job… ANYWHERE BUT WHERE IM WORKING!!!
I'd advise you leave as soon as possible. I left my job at 53. Every Sunday evening I feel such relief and relaxation now compared to the build up of stress I used to have anticipating Monday morning. I've seen lots of low stress (but low paid) jobs I would like to try, but right now I really can't be bothered, I'm just enjoying a relaxed lovely summer.
I am planning to retire from the va after I buy back my time from military service. 5 yrs an I will be vested, then go on the road as a travel nurse if my body holds out. otherwise I stay at the va until age 70, then retire va an start ssi. then go to a school district as a part time fill in nurse until age 75 then 100pct be a stay at home retiree. (actually a bucket list 4 months out of the year person).
You may be too old to really enjoy the fruits of your labor(e.g. money) if you work until 70 yrs old....no one knows the time of our depart from this earth and we can't take that money with us.
Let's rock through those numbers for a second. I thought I needed more to live than I really do. Here are my top 5 uses of cash (not all expenses) today and what they will be at retirement: Expenses Current Mo. Projected Mo. Mortgage P+I 3655 0 - will downsize house and have zero mortgage Mortgage T+I 950 950 - taxes and insurance aren't going away, though the number might be lower IRA / 529 3000 750 - will still be helping the child through college Income Tax (Fed/St)2000 1250 - income tax should drop dramatically Health Insurance 1300 400- replace health insurance with medicare 10905 3350 Annualized 130860 40200 So we see that my uses of cash in my top categories drop dramatically. Unless I'm traveling the world, there is no chance I'll need $8k a month. In fact, we might get by on just a little more than Social Security. I'm still planning to work to age 66 at this point (I'm 57)(and my child will hopefully graduate college when I'm 67 or 68, ending that other $750/month).
Am I misunderstanding something though? If for instance all my savings is in a Roth, and I retire at 60, won’t my income tax be pretty much nothing? Then I can get very cheap health insurance on the exchange. Thanks in advance
If you have everything in Roth assets, you'll absolutely have a tax advantage. For this video, I tried to hold as many variables constant as possible to show what kinds of differences in outcomes result from delaying retirement a year or two. I did a Roth vs. Traditional video a few months ago, I think...
Mathematically, it sounds great but is difficult to leave life mathematically. You can’t predict how long you are going to live. Yes, it would be great to live until 90 but how about if you only live until 80 or less. You would be leaving all that money for the Goverment.
The money does not go to the government, it goes to people who live past 80. Since you cant predict how long you will live, that money may be going to you.
I agree that it's basically a guessing game. If a person have saved a couple 100 thousands dollars and get a pension plus can live the simple life....I think most people will be fine until the start of Social security benefits.
Great video. This is also a great illustration of the concept of reducing risk in retirement by giving yourself an additional safety margin. I would like to point out that since we are talking about planning ahead (and so assume we have time before retirement) one additional risk mitigation move would be to reduce the amount of money one intends to spend in retirement. Steve and Suzie could cut that $8000/mo significantly if they had made it a priority to eliminate their mortgage/rent costs in retirement either through paying off their exisiting home, downsizing and paying off a smaller home perhaps somewhere less expensive, or perhaps by renting at a much lower rate than their current mortgage. Doing that would massively reduce that $8000/mo spend, reduce the amount of portfolio they need, and reduce the time they need to work before retiring.
sounds like Steve and Suzie needs to change their investments and cut back on their expenses. Who really spends 8000 dollars per month . I barely spend 2500 dollars.
Under current ACA(Obama Care) rules, ACA insurance is CHEAPER than Medicare if you manage your “earned income” properly. However my wife turns 65 next month and must go on Medicare resulting in a doubling of our monthly health insurance premiums.
In your estimate, how are you taking into account Social Security? Are you assuming they take it immediately when they retire or do they wait until 70 to take SS?
Great question, Chris. In these scenarios, I assume they both take Social Security the year they retire. That may not be the optimal solution in either case, but I wanted to make it as much of an apples-to-apples comparison as possible.
Last year, I made a property sale and had over a million dollars in proceeds. I allocated $400k to index annuities and put the rest in the trending algorithmic trading. So far I've more than doubled the annuity premium from the stock market. However I won't discredit annuities in any way, they buy you peace of mind but then, if you need growth, try other stuffs. Concepts like algo trading and diversification of assets can be of great help for growth oriented individuals.
I was wondering if investing in a cumulative ETF during this next decade is a sound investment. Or is it better to invest in a distributing ETF (even considering taxes)?
I use Josephine Guevara Laporte's popular program. She's a chartered financial analyst. Look her up and maybe schedule a call. Might be the best bet for you. Consistency and smart diversification skills were the clincher for me with Josephine. My portfolio has gone around 23% up from the last two quarters.
Hi, I'm planning for retirement and have like $600k in a CD account with a very low interest. I only need $20k for liquidity purposes(emergency fund) and plan on growing the bulk. I found Josephine Laporte's official website after I looked up her name. She's got some impressive stats and qualifications. Just dropped her a message. What's the fee structure though?
@@mattgallagher9940 Josephine takes ten percent of the profit she makes. And since it's an algorithmic based model, it's very much transparent. You can actually see what assets you have and how much growth your portfolio achieves over time.
If I have learned anything it is these 2 things. One is to be debt free. I have no bills, still working and turning 64 in October. Now I have lost 25% of my IRA Money as of June 30th. I do have over a years salary in my checking account. My plan is simple. I will start drawing social security in December but keep working. With the COLA I will be getting over $2,300 a month starting in January. All those checks will go in the bank. The following year 2024 I will work the months I do not get a check because of the overage penalty. Once the checks resume I will retire. I will not need to touch my IRA Accounts until the RMD age kicks in. Right now that is 72. The second thing I learned is you have to have a plan by starting to save as young as possible. In my case I was 21. I wasn't going to join the companies new 401k plan basically because I had no clue how it worked. My manger sat me down and explained it to me on my level. At 63 the first thing I do every morning when I wake up is thank him.
Yes. I also remember having a similar conversation with my boss. He said, Louis sign up, the company will match the first 6%, is free money! don't pass it up.
While the market's bear is...less than pleasant, I have the benefit of a couple (yup, as in "two") pensions and now, mere days away from FRA, full Social Security on top of meaningful IRA/401k balances (even eroded) so no delay for me! I do plan to delay taking IRA withdrawals for a few years, though hoping for market improvement and am fortunate to be in a position to do that.
I am only 57 so I have a few years to make a decision about when to retire but my boss (owner) said that when the time comes, I can work part time from home or wherever I choose to go. I know I'd still be making a comfortable income doing that and my husband should be able to cover insurance. By working part time for a few years (say at 61-65), this will not effect the amount I eventually get from Social Security, will it?
Social Security benefit is calculated based on the average of highest 35 years of salaries. If you have already worked 35 years you should be good but if you did not the IRS will average place a zero salary for the years not worked to make up 35 year average.
My understanding is - If you collect SS before your FRA and work (which is what you are proposing), you can earn up to a certain amount each year without being penalized. For 2022, I believe it's around $22,000/year. So, if your part time job earns you under this amount, your SS check will not be reduced.
I've seen a lot of friends die before retirement. Time is one thing you cant get back. My health care before retirement cost $1850 per month for my wife and I. Medicare costs us $740 per month.
@P C -- that's what makes all this planning so difficult. We're not guaranteed another day on this earth, so there's a tension between planning for the future and enjoying the present.
More than half of those who retire say they retired sooner than they expected. Everyone in their late 50s need to start thinking about the what ifs retirement came this year, unbidden or not! Making catch-up contributions to max out retirement savings and keeping a cash cushion of 1 to 3 years in cash will help. I know. I was Retired one month before turning 59. Now I've survived to age 65 in my DIY retirement that came sooner than I expected.
I agree with most of your theory, except for your acceptance of what I consider low percentage of success numbers. I feel that anything under 90% is worrying and troublesome. I am currently 63 and 5 month old...I retired 5 years ago at age 58 and 5 months old. I have not filed for SS yet. My monte carlo sims have all been 98-99% (depending on which model I run). I feel good with that number, but would definitely be a little worried at less than 95%,and full blown worried at sub 90%. Extended periods of high inflation, or low interest rates, or bad markets, or any combination of those scenarios could jeopardize my retirement. I do plan on filing at age 65, just based on my break even point from there vs age 67 or even 70. I would rather have more money to enjoy before my late 70s when I am still able to travel and get around with minimal medical issues. Just my $.02 worth.
I am no expert though I am a scientist and ran monte carlo simulations when planning my retirement. I ran into the same worries you did when the percentages came back below 90%. However, I also noticed that even massively increasing (doubling) portfolio size only made small increases to the probability of overall success. In fact, to get to 95% I had to increase my portfolio several fold. Just my 2c here as well, but since the simulations include worst case scenarios it is very difficult (impossible?) to avoid failure 100%. But even in those failure cases, the models showed money running out between years 26-30. What this means is that even in failure cases, you have plenty of advance warning to make changes to your lifestyle and porfolio to avoid disaster. In other words, an 80% result doesn't mean you'll be bankrupt 20% of the time. It simply means there is only a 20% chance you may have to make minor adjustments in those cases to extend your portfolio by a couple of years or so.....At least that is my take from the data. Perhaps Patrick can clarify for us.
I intended to retire in 1Q2022 but with the markets dropping and staffing shortages I agreed to stay on part time for another year. The part time lifestyle is quite nice and it is comforting to not need to dip into our retirement savings when they are down.
Doreen -- what a great way to ease into it! I really do like the idea of slowing down first, but it really makes sense in a time like we're seeing now. Hopefully, you were able to keep your health insurance too! Thanks for the great comment! 🙌
Nice one David.Not quite long I started investing. I'm very curious and need help on how to enhance and increase my returns. Any good investment tips would be appreciated
We are delaying a year, simply to reduce the possible impact of the sequence of returns risk. Delaying also beefs up the small pension just a little. Mainly, we like the security of a steady paycheck in uncertain times.
Thanks for the video. Age 67, I'm working at least another year if I still have a job and my health holds out. If I am fortunate enough to work until Age 70, my net income will be very close to what I am currently making since I no longer have to pay the 6.2% Fica, 1.45% Medicare, and I won't have to pay taxes on 15% of my Social Security. I feel we have enough to take care of us in retirement, but my objective is to keep the majority of our savings and continue to let it grow and pass it on for generational wealth. Trying to train my child to not use more than the principal so that some of it will be left for my grandchildren. That my hope.
I turn 60 at the end of July 2022. $20k Roth/ $4k 403b. Also holding TWO MONTHS Vacation Leave as a semi-inflation proof CASH buffer. At Age 62 between CalPers & Social Security, assuming very modest 2% COLAs in the next three years, I'm looking at $4813 monthly. Every Quarter after that, I gain roughly another $100 monthly for life... At 65, when I plan to retire [still assuming 2% COLAs], I'm looking at $5935 Monthly.... But if I hold out 9 months more that pushes me up to $6238 and moving during the Spring instead of "High Summer". Now, occasionally there is a State Budget Collapse & COLAs are eliminated or deferred for a year or two.
This is not realistic most people might make $35,000 a year or less and have to pay bills for groceries utilities and car....get real.....this video is in twilight zone🥁
Assuming that we spend the same amount year after year in retirement is faulty reasoning. If all debts are paid off at retirement, that is the true measurement of whether one is ready to retire. If the mortgage is gone or just about gone, then expenses will drop due to that fact alone. Expenses is the main factor to consider. As we age, generally, we have our mortgage paid off and we travel less and less and those 2 expenses should be taken into serious consideration.
Sorry sir,you aren’t speaking to the average Joe,nor are you addressing single people..but it’s great that anyone can have 1 or 2 million in liquid funds
I retired at age 57 at the start of " Great Recession". It was not fun, but the stress test on my plan went well, and now I have great confidence in my finances. I am not worried about todays market at all..... Of course retirement is a personal choice and you do want to feel comfortable. It is not fun to be checking your portfolio hourly... Check your plan and live your life, though I would personally want to be at 90% or higher...
@V p -- you got it! Have a plan and stick with it. There will always be ups-and-downs. If you're seeing plan probabilities over 90%, I'm not worried about you!
I went bold during the recession. I stopped looking at my statements. And while the market was down prices for stocks were lower. Therefore my company used my money to by more stock/unit shares. I also took a dive and bought Starbuck shares at $9.50 a share and Microsoft at $11.00 a share(both have split and doubled my shares) Well the stock market came roaring back. And I got some pretty nice returns. As long as you have income to live on and time for your portfolio to recover... Woo Hoo! If not then you might switch to a conservative or fixed return investment if you are close to retirement and the market looks shakey... My opinion anyway.
Great info Patrick! I originally was going to retire at 62 but like you said the cost of healthcare was too expensive for us. Decided to go to 65 to get medicare so 2 more years. If we had the 2.1 million that was stated, I'd rethink my strategy... we don't! 🤣 Besides saving the extra we'd have to pay for healthcare, like you said more going into 401K and the added benefit of raising SS a little by getting rid of lower salary amounts from years past. I keep crunching the numbers and 65 gives me a good feeling about success. The plan is to draw down from savings until we each hit FRA which will be a year apart. All I can do is estimate and it doesn't seem we will withdraw a lot compared to what we have saved, maybe 10 to 15% of the total. I wish I could retire now but it is what it is. I know I'm lucky with my job right now so if it stays like this it can be OK. If it was a bear to work, I'd probably leave!
@Vinny G -- good to hear from you again! To me, having done this for a long time, I kind of see age 65 as being the sweet spot as far as a retirement age. Going straight to Medicare ends up saving you a LOT.
@@HowToRetire I know you use professional aoftware but are you aware of any online type Monty Carlo simulations a non professional can try? I have crunched the numbers in various ways and the last time I did it by year 4 in retirement we don't need to withdraw anything. We can just live on SS at FRA, my pension and dividends from investing. I included 8% COLA for 2023, then 2% after that, I did not include inflation but I have included it in the past (I think 4%). I do use an online stock tracker for simulation purposes based on past performance and have a spreadsheet where I track realtime and assume various future scenarios. Something online would be much easier! Any info is appreciated!
Vinny -- that's actually a great question. I've had several folks ask me about an "at-home" Monte Carlo option. Let me dig and see what I can find. I know there are a few out there that may be a little too simplistic to factor in pensions, changing inflation assumptions, and the like. Give me a little while to see what I can find...
I'm 64. mentally, I'm ready to retire tomorrow, but the plan was to wait until 65 next year. with current market conditions, I'm considering working until 66 which would be mid-2024 or even early 2025 to hit FRA. By then two elections will have occurred and there should be less uncertainty and hopefully my investments will have recovered to close to where they were at the beginning of this year. I know you cant retire on hope, but my decision will be driven by work conditions over the next 18 months.
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Let me know if you're considering delaying retirement a year...
I am 70 and I will keep working until I can't for some reason
Retiring early at 57.. No delaying for me!
I am a bit taken back by how much people think they will need to spend per month in the formulas you discuss on the channel. Just saying I own my property and all cars etc outright for many years now and only have electric cable and a prop tax bill. We have Pretty much have all we need at age 60 (still working - put 401k and Roth to very conservative at begin of 22). Our spending is pretty sane compared to 6 or 8 k per month.. On what would you be spending that much money on? I have no idea. Unless they have mortgages and car notes etc.. Anyway my wife has not had to go to work for 30 years so looks like I'm still hauling the backpack for a couple more years but I don't feel like waiting till 65.. . I was talking to a friend who is turning 70 and HAS to retire.. but I'm just turned 60.. To me, other than an extra $100 bucks per month it seems not worth it.. IDK. as the children say.. I will probably keep working for a little while but I have other things I'd rather do.. Just starting to look into this 'retirement' SS thing.. so please excuse if I am not up to speed. BTW my Uncle and Father still living waited till 70 and seem to have enough.. but both are broken and barely able to walk at 70 years.. I'd at least want a good 6 years before I have to sit in a chair all day.. Just saying..
@@DMAX_DIY Agreed. San Diego here, and even living in my $2M home (appreciation value, not what I paid) with a new car, my annual spend was only about $5500/mo. I assume people want to reduce expenses as part of their retirement plan. For me that meant downsizing and paying off my home. My retirement burn rate is only $3400/mo including HMO premiums. There is so much less stress not having to have saved so much for retirement and not bringing any debts into retirement.
@@BSGSV I'm from huntington beach.. moved out a long time ago.. no debts.. so the 401 and such means a bit more I guess.. My burn rate is water bill, Cable and elect.. finally. that's it.
I, my family, all the workers at the company where I work, every one I know - are from a different world. People at the plant where I work are smiling when they accumulate 20k in their 401k account if they have one. However, most never use it or even collect social security because they're dead before or shortly after they retire. This is the segment of society that politicians do not know exists - those not making big money but neither a ward of the state. Your numbers are just astronomical to us.
My husband has had a "physical" job since 1987. He just had knee replacement and I was SO grateful to have him here because while he has worked all these years, I have taken care of our disabled son since 2001, 15 surgeries, multiple handicapped, epilepsy, blind, deaf, brain surgeries, while raising our 2 other sons while working. The point is, it was EASIER for me to take care of TWO special needs people ( my husband and son), then hear all the texts and demands of his job that he get's EVERY Day, especially when he has to return to work. Currently he has about 3 years left until 62 god help us. At least while I was physically and mentally helping my son and husband, he was home and could mentally support me with our special needs son. He wanted to work longer than 62. Are you kidding me! Try our life!
What does retirement success or failure even mean? Let's take "failure." Does that mean, at some point in time you will not have enough financial resources to live comfortably? Does it mean that you will not be able to afford to pay the electric bill, buy groceries or put gas in your car? How does retirement failure look like? Or, does it simply mean that if you were planning to spend $7000/month in retirement, there may come a time when you can only spend $5000/month in retirement?
Will be 64 in October. Looking to work at least until April 2023. 401k is down $150k. Would like to see that come back up but may need to wait for the next election in November 2024 which will make me 65 years old. Semi retired now - just living on the small check - no debt, low expenses, making it work with out dipping into the 401k or SS.
Why are you using 64 retiring. Use the the tradicional 66 and 67 which is the FRA for just about all folks that haven't retired.
I will be retiring from full-time work at age 65 (October 2024). My FRA is 66 and 10 months. When I do retire I won't start collecting social security until January, 2025 because, as you know, those first 3 checks (Oct - Dec 2024) will be reduced because of the income I incurred from Jan - Sept. With that said, I will rely on part time work and my retirement portfolio (bumping up the monthly distribution just for these first 3 months) for the last three months of 2024. Starting in January 2025 I'll have social security, a (fun) part time job, and my retirement portfolio (reducing the amount from what I pulled down the first 3 months of retirement)...Phew!! Looking very much forward to retirement!
How about posting something that fits the typical American. The average retirement savings seems to be around 426k and the median is less than half of that. If you can’t make it on 1.6 million dollars you are doing something wrong, or living in a very expensive location.
I'll plan to work one more year if given the choice. According to multiple studies, the average retiree has far less invested than the numbers shown in this video. During the Recession of 2008-2012 the savings of many were wiped out forcing them to start over, and pay down debt incurred during the recession before restarting investment contributions. The stock market has done well since then, however these people had little or no money available to invest in stocks during that time. It might be more helpful to more of us if you can explain the best options and show the results if they have less money to work with, instead of 2 million which is out of reach for the average retiree. These videos are very helpful, thank you. Can you bring the numbers down a little closer to reality? Your advice will be more important and help more people. A person with 2 million in the bank would be watching different videos, in my opinion.
They’d have their own personal financial advisors. Hopefully not cheating them.
Not quite long I started investing. I'm very curious and need help on how to enhance and increase my returns. Any good investment tips would be appreciated💜
@@eadad4371 Alright so generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with (REGINA LOUISE COLLARO) an investment advisor who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance. She is quite popular for her services so you might have heard of her.
She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy...So I’ll advise you do get a good Investment advisor for yourself.
@@davidforesto That’s great , your investment advisor must be really good,I have seen testimonies of people using the help of investment advisors in making them more financial stable. Do you mind sharing more info on this person?
@@eadad4371 I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot . This was of so much help to me .
@@eadad4371 look her up on the internet and leave her a message she's quite popular for her services as she was recently featured on cnn. She can work with anyone irrespective of where their located
These amounts of money figures your throwing out there is not the average person
1 mill saved and 40k retirement on top of my ss … don’t know if I’ll make it but I can’t work another year at this place… it’s killing me!!!!
Oh no! Is there a way you can "soft retire" part time somewhere else?
@@HowToRetire not where I am… I’m 62 in December… I can hold off on SS for two more years… wife still working full time. I do intend on getting a part time job… ANYWHERE BUT WHERE IM WORKING!!!
I'd advise you leave as soon as possible. I left my job at 53. Every Sunday evening I feel such relief and relaxation now compared to the build up of stress I used to have anticipating Monday morning. I've seen lots of low stress (but low paid) jobs I would like to try, but right now I really can't be bothered, I'm just enjoying a relaxed lovely summer.
Nice video already out at 60, at their $8000 monthly what inflation rate and COLA where used?
I’m not waiting any longer
I am planning to retire from the va after I buy back my time from military service. 5 yrs an I will be vested, then go on the road as a travel nurse if my body holds out. otherwise I stay at the va until age 70, then retire va an start ssi. then go to a school district as a part time fill in nurse until age 75 then 100pct be a stay at home retiree. (actually a bucket list 4 months out of the year person).
You may be too old to really enjoy the fruits of your labor(e.g. money) if you work until 70 yrs old....no one knows the time of our depart from this earth and we can't take that money with us.
How is someone expected to live on $8,000 a month? That would be a great video for you to put out.
@Bluedogs -- that's actually a great idea for a video. I'll put it on the list!
Let's rock through those numbers for a second. I thought I needed more to live than I really do. Here are my top 5 uses of cash (not all expenses) today and what they will be at retirement:
Expenses Current Mo. Projected Mo.
Mortgage P+I 3655 0 - will downsize house and have zero mortgage
Mortgage T+I 950 950 - taxes and insurance aren't going away, though the number might be lower
IRA / 529 3000 750 - will still be helping the child through college
Income Tax (Fed/St)2000 1250 - income tax should drop dramatically
Health Insurance 1300 400- replace health insurance with medicare
10905 3350
Annualized 130860 40200
So we see that my uses of cash in my top categories drop dramatically. Unless I'm traveling the world, there is no chance I'll need $8k a month. In fact, we might get by on just a little more than Social Security. I'm still planning to work to age 66 at this point (I'm 57)(and my child will hopefully graduate college when I'm 67 or 68, ending that other $750/month).
Let your kid pay their own way through college!
The "average" retiree has 1.6 to 2 million dollars in retirement assets. I shouldn't be cynical, most don't.
Am I misunderstanding something though? If for instance all my savings is in a Roth, and I retire at 60, won’t my income tax be pretty much nothing? Then I can get very cheap health insurance on the exchange. Thanks in advance
If you have everything in Roth assets, you'll absolutely have a tax advantage. For this video, I tried to hold as many variables constant as possible to show what kinds of differences in outcomes result from delaying retirement a year or two. I did a Roth vs. Traditional video a few months ago, I think...
Hey I’ve got a better idea, live outside of the USA and retire 15 years earlier
WHAT is your definition of "SUCCESS" ? You never say.
Thanks for the great content you provide!
Glad you enjoyed it, David! 🙏
Mathematically, it sounds great but is difficult to leave life mathematically. You can’t predict how long you are going to live.
Yes, it would be great to live until 90 but how about if you only live until 80 or less. You would be leaving all that money for the Goverment.
The money does not go to the government, it goes to people who live past 80. Since you cant predict how long you will live, that money may be going to you.
I agree that it's basically a guessing game. If a person have saved a couple 100 thousands dollars and get a pension plus can live the simple life....I think most people will be fine until the start of Social security benefits.
Great video. This is also a great illustration of the concept of reducing risk in retirement by giving yourself an additional safety margin. I would like to point out that since we are talking about planning ahead (and so assume we have time before retirement) one additional risk mitigation move would be to reduce the amount of money one intends to spend in retirement. Steve and Suzie could cut that $8000/mo significantly if they had made it a priority to eliminate their mortgage/rent costs in retirement either through paying off their exisiting home, downsizing and paying off a smaller home perhaps somewhere less expensive, or perhaps by renting at a much lower rate than their current mortgage. Doing that would massively reduce that $8000/mo spend, reduce the amount of portfolio they need, and reduce the time they need to work before retiring.
sounds like Steve and Suzie needs to change their investments and cut back on their expenses. Who really spends 8000 dollars per month . I barely spend 2500 dollars.
John, lowering those expenses is the biggest lever we all have to improve those odds!
Right?!?
Under current ACA(Obama Care) rules, ACA insurance is CHEAPER than Medicare if you manage your “earned income” properly. However my wife turns 65 next month and must go on Medicare resulting in a doubling of our monthly health insurance premiums.
If I had 1.6 million I would retire
In your estimate, how are you taking into account Social Security? Are you assuming they take it immediately when they retire or do they wait until 70 to take SS?
Great question, Chris. In these scenarios, I assume they both take Social Security the year they retire. That may not be the optimal solution in either case, but I wanted to make it as much of an apples-to-apples comparison as possible.
Last year, I made a property sale and had over a million dollars in proceeds. I allocated $400k to index annuities and put the rest in the trending algorithmic trading. So far I've more than doubled the annuity premium from the stock market. However I won't discredit annuities in any way, they buy you peace of mind but then, if you need growth, try other stuffs. Concepts like algo trading and diversification of assets can be of great help for growth oriented individuals.
I was wondering if investing in a cumulative ETF during this next decade is a sound investment. Or is it better to invest in a distributing ETF (even considering taxes)?
I use Josephine Guevara Laporte's popular program. She's a chartered financial analyst. Look her up and maybe schedule a call. Might be the best bet for you. Consistency and smart diversification skills were the clincher for me with Josephine. My portfolio has gone around 23% up from the last two quarters.
Hi, I'm planning for retirement and have like $600k in a CD account with a very low interest. I only need $20k for liquidity purposes(emergency fund) and plan on growing the bulk. I found Josephine Laporte's official website after I looked up her name. She's got some impressive stats and qualifications. Just dropped her a message. What's the fee structure though?
@@mattgallagher9940 Josephine takes ten percent of the profit she makes. And since it's an algorithmic based model, it's very much transparent. You can actually see what assets you have and how much growth your portfolio achieves over time.
@@theexpendables3152 Ok one more thing. Any idea if her services are available outside the United States? Thanks a lot.
If I have learned anything it is these 2 things. One is to be debt free. I have no bills, still working and turning 64 in October. Now I have lost 25% of my IRA Money as of June 30th. I do have over a years salary in my checking account. My plan is simple. I will start drawing social security in December but keep working. With the COLA I will be getting over $2,300 a month starting in January. All those checks will go in the bank. The following year 2024 I will work the months I do not get a check because of the overage penalty. Once the checks resume I will retire. I will not need to touch my IRA Accounts until the RMD age kicks in. Right now that is 72. The second thing I learned is you have to have a plan by starting to save as young as possible. In my case I was 21. I wasn't going to join the companies new 401k plan basically because I had no clue how it worked. My manger sat me down and explained it to me on my level. At 63 the first thing I do every morning when I wake up is thank him.
Yes. I also remember having a similar conversation with my boss. He said, Louis sign up, the company will match the first 6%, is free money! don't pass it up.
While the market's bear is...less than pleasant, I have the benefit of a couple (yup, as in "two") pensions and now, mere days away from FRA, full Social Security on top of meaningful IRA/401k balances (even eroded) so no delay for me! I do plan to delay taking IRA withdrawals for a few years, though hoping for market improvement and am fortunate to be in a position to do that.
Awesome, @13noman1 ! Wow -- having those income streams lined up has to take a ton of stress off your mind!
I am only 57 so I have a few years to make a decision about when to retire but my boss (owner) said that when the time comes, I can work part time from home or wherever I choose to go. I know I'd still be making a comfortable income doing that and my husband should be able to cover insurance. By working part time for a few years (say at 61-65), this will not effect the amount I eventually get from Social Security, will it?
affect, and yes it will
Social Security benefit is calculated based on the average of highest 35 years of salaries. If you have already worked 35 years you should be good but if you did not the IRS will average place a zero salary for the years not worked to make up 35 year average.
My understanding is - If you collect SS before your FRA and work (which is what you are proposing), you can earn up to a certain amount each year without being penalized. For 2022, I believe it's around $22,000/year. So, if your part time job earns you under this amount, your SS check will not be reduced.
@@barbara5495 SS check will be reduced because she will be collecting early.the reduction is 8 percent for each early year. The reduction is for LIFE!
I've seen a lot of friends die before retirement. Time is one thing you cant get back. My health care before retirement cost $1850 per month for my wife and I. Medicare costs us $740 per month.
@P C -- that's what makes all this planning so difficult. We're not guaranteed another day on this earth, so there's a tension between planning for the future and enjoying the present.
More than half of those who retire say they retired sooner than they expected. Everyone in their late 50s need to start thinking about the what ifs retirement came this year, unbidden or not! Making catch-up contributions to max out retirement savings and keeping a cash cushion of 1 to 3 years in cash will help. I know. I was Retired one month before turning 59. Now I've survived to age 65 in my DIY retirement that came sooner than I expected.
Fantastic advice! Maybe I should do a video about "surprise retirements"!
I agree with most of your theory, except for your acceptance of what I consider low percentage of success numbers. I feel that anything under 90% is worrying and troublesome. I am currently 63 and 5 month old...I retired 5 years ago at age 58 and 5 months old. I have not filed for SS yet. My monte carlo sims have all been 98-99% (depending on which model I run). I feel good with that number, but would definitely be a little worried at less than 95%,and full blown worried at sub 90%. Extended periods of high inflation, or low interest rates, or bad markets, or any combination of those scenarios could jeopardize my retirement.
I do plan on filing at age 65, just based on my break even point from there vs age 67 or even 70. I would rather have more money to enjoy before my late 70s when I am still able to travel and get around with minimal medical issues.
Just my $.02 worth.
I am no expert though I am a scientist and ran monte carlo simulations when planning my retirement. I ran into the same worries you did when the percentages came back below 90%. However, I also noticed that even massively increasing (doubling) portfolio size only made small increases to the probability of overall success. In fact, to get to 95% I had to increase my portfolio several fold. Just my 2c here as well, but since the simulations include worst case scenarios it is very difficult (impossible?) to avoid failure 100%. But even in those failure cases, the models showed money running out between years 26-30. What this means is that even in failure cases, you have plenty of advance warning to make changes to your lifestyle and porfolio to avoid disaster. In other words, an 80% result doesn't mean you'll be bankrupt 20% of the time. It simply means there is only a 20% chance you may have to make minor adjustments in those cases to extend your portfolio by a couple of years or so.....At least that is my take from the data. Perhaps Patrick can clarify for us.
@@BSGSV I ran all my simulations till the age of 93.. Not sure what the percentages would drop to if I extended that age.
I intended to retire in 1Q2022 but with the markets dropping and staffing shortages I agreed to stay on part time for another year. The part time lifestyle is quite nice and it is comforting to not need to dip into our retirement savings when they are down.
Doreen -- what a great way to ease into it! I really do like the idea of slowing down first, but it really makes sense in a time like we're seeing now. Hopefully, you were able to keep your health insurance too! Thanks for the great comment! 🙌
Nice one David.Not quite long I started investing. I'm very curious and need help on how to enhance and increase my returns. Any good investment tips would be appreciated
I only have rental houses. I am requesting videos on being 58 and having rentals only. Thanks. Love your videos.
We are delaying a year, simply to reduce the possible impact of the sequence of returns risk. Delaying also beefs up the small pension just a little. Mainly, we like the security of a steady paycheck in uncertain times.
Delaying certainly won't hurt things, Denise! Unless you're just *DONE* with work or it's a toxic environment, why not? 🙌
Thanks for the video. Age 67, I'm working at least another year if I still have a job and my health holds out. If I am fortunate enough to work until Age 70, my net income will be very close to what I am currently making since I no longer have to pay the 6.2% Fica, 1.45% Medicare, and I won't have to pay taxes on 15% of my Social Security.
I feel we have enough to take care of us in retirement, but my objective is to keep the majority of our savings and continue to let it grow and pass it on for generational wealth. Trying to train my child to not use more than the principal so that some of it will be left for my grandchildren. That my hope.
I turn 60 at the end of July 2022. $20k Roth/ $4k 403b. Also holding TWO MONTHS Vacation Leave as a semi-inflation proof CASH buffer. At Age 62 between CalPers & Social Security, assuming very modest 2% COLAs in the next three years, I'm looking at $4813 monthly. Every Quarter after that, I gain roughly another $100 monthly for life... At 65, when I plan to retire [still assuming 2% COLAs], I'm looking at $5935 Monthly.... But if I hold out 9 months more that pushes me up to $6238 and moving during the Spring instead of "High Summer". Now, occasionally there is a State Budget Collapse & COLAs are eliminated or deferred for a year or two.
This is not realistic most people might make $35,000 a year or less and have to pay bills for groceries utilities and car....get real.....this video is in twilight zone🥁
Assuming that we spend the same amount year after year in retirement is faulty reasoning. If all debts are paid off at retirement, that is the true measurement of whether one is ready to retire. If the mortgage is gone or just about gone, then expenses will drop due to that fact alone. Expenses is the main factor to consider. As we age, generally, we have our mortgage paid off and we travel less and less and those 2 expenses should be taken into serious consideration.
Sorry sir,you aren’t speaking to the average Joe,nor are you addressing single people..but it’s great that anyone can have 1 or 2 million in liquid funds
I retired at age 57 at the start of " Great Recession". It was not fun, but the stress test on my plan went well, and now I have great confidence in my finances. I am not worried about todays market at all..... Of course retirement is a personal choice and you do want to feel comfortable. It is not fun to be checking your portfolio hourly... Check your plan and live your life, though I would personally want to be at 90% or higher...
@V p -- you got it! Have a plan and stick with it. There will always be ups-and-downs. If you're seeing plan probabilities over 90%, I'm not worried about you!
I went bold during the recession. I stopped looking at my statements. And while the market was down prices for stocks were lower. Therefore my company used my money to by more stock/unit shares. I also took a dive and bought Starbuck shares at $9.50 a share and Microsoft at $11.00 a share(both have split and doubled my shares) Well the stock market came roaring back. And I got some pretty nice returns. As long as you have income to live on and time for your portfolio to recover... Woo Hoo! If not then you might switch to a conservative or fixed return investment if you are close to retirement and the market looks shakey... My opinion anyway.
Bit self serving by not presenting other options by outsourcing their life to another country
Spain?
Great info Patrick!
I originally was going to retire at 62 but like you said the cost of healthcare was too expensive for us. Decided to go to 65 to get medicare so 2 more years. If we had the 2.1 million that was stated, I'd rethink my strategy... we don't! 🤣 Besides saving the extra we'd have to pay for healthcare, like you said more going into 401K and the added benefit of raising SS a little by getting rid of lower salary amounts from years past.
I keep crunching the numbers and 65 gives me a good feeling about success. The plan is to draw down from savings until we each hit FRA which will be a year apart. All I can do is estimate and it doesn't seem we will withdraw a lot compared to what we have saved, maybe 10 to 15% of the total.
I wish I could retire now but it is what it is. I know I'm lucky with my job right now so if it stays like this it can be OK. If it was a bear to work, I'd probably leave!
@Vinny G -- good to hear from you again! To me, having done this for a long time, I kind of see age 65 as being the sweet spot as far as a retirement age. Going straight to Medicare ends up saving you a LOT.
Sounds like y'all have a great plan in place. So long as work isn't completely unbearable, keep rolling with it! 🙌
@@HowToRetire I know you use professional aoftware but are you aware of any online type Monty Carlo simulations a non professional can try?
I have crunched the numbers in various ways and the last time I did it by year 4 in retirement we don't need to withdraw anything. We can just live on SS at FRA, my pension and dividends from investing. I included 8% COLA for 2023, then 2% after that, I did not include inflation but I have included it in the past (I think 4%). I do use an online stock tracker for simulation purposes based on past performance and have a spreadsheet where I track realtime and assume various future scenarios. Something online would be much easier!
Any info is appreciated!
Vinny -- that's actually a great question. I've had several folks ask me about an "at-home" Monte Carlo option. Let me dig and see what I can find. I know there are a few out there that may be a little too simplistic to factor in pensions, changing inflation assumptions, and the like. Give me a little while to see what I can find...
@@HowToRetire thank you!
I'm 64. mentally, I'm ready to retire tomorrow, but the plan was to wait until 65 next year. with current market conditions, I'm considering working until 66 which would be mid-2024 or even early 2025 to hit FRA. By then two elections will have occurred and there should be less uncertainty and hopefully my investments will have recovered to close to where they were at the beginning of this year. I know you cant retire on hope, but my decision will be driven by work conditions over the next 18 months.
solid thinking
My 401k lost 29%. I'll delay retirement for 2-5 years.
My accountant said the current FI number is $2M per person due to inflation.
This video is ridiculous not in the real world for the average people
What if prices increase during that year you waited and you saved nothing extra?
You’ve wasted a precious year of your youth for nothing!
saving nothing is a wasted precious year at any age
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