Can You Retire On $100K? | Financial Reality Check
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- เผยแพร่เมื่อ 14 มิ.ย. 2024
- 00:00 Intro
01:27 Typical Savings
01:49 Retiring at 62 (Early Retirement)
03:12 Full Retirement Age
04:39 Retiring at 70 (Delayed Retirement)
05:40 What's Common
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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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I over planned my retirement. Retired at 64. Claimed SS at just over 66. I was at the point where FRA and 66 and 1 month difference was under $100 a month. My military pension covers all my expences. Teacher pension, SS, and IRAs are icing on the cake. In hindsight I could have retired a couple of years at 62 (but held off on filing for SS). Big difference for me is no mortgage, no car payments, and no debt. Keep up the good work.
It sounds like with all your income streams, you may not even need a formal portfolio. Military, Teacher Pension AND SS? Now THAT is a triple play. AND you reduced your expenses TOO. Go on a trip. You deserve it.
Thanks. After 30 years in the Marines I thought teaching was easy. Teaching got difficult only during COVID (remote). @@buyerclub2
Instead of going on a trip, try staycation.
Go on a journey of a trip . Your always on a stay vacation 😊
This is what drives me to walk away next year at 55. It is the soonest I can walk away from my job with retiree medical. Get out ASAP!
I'm 56 and have been scrimping and saving ever since I turned 30. It never seemed like enough, but I have to say that I feel a bit better about it now. People retire with much, much less money than I will have by then.
Save until it hurts. Every payday every year. If you do, then one day you'll be able to walk away. Be willing to do today what others won't so that you can live tomorrow like others can't.
💯
Spot on brotha👍
I did it a little different. My investment was in a skill that would allow me to retire at 45 and if I had to return to work I could without losing earning power. For me that was software engineer. But there are other ways. I've funded retirement by slow flipping homes. I enjoy designing and fixing up houses and the whole real estate market thing.
That gave me 2 skills I could use to earn if I had to. But I never did have to return to work. Now 67, getting house #4 ready to sell and I'll be moving to SE Asia. I started with $100k....but blew $75k of that on mortgage payments until I realized I could sell and but for cash in Phoenix. Last 15 years my average total spend has been $600/mo. Very happy. Could get a bit over $3000/mo from SS...but no need, so I'm waiting.
It's not actually the money amount. It's the person. If keeping up with the Jones is important or spending is your entertainment (was mine for many years) then I'm not sure there ever could be a pile high enough.
Sometimes people say to enjoy the moment. Tomorrow is never guaranteed. While getting old isn't guaranteed, it's typical. So it's wreckless to end up old unprepared.
@@budgetingstrategies6240 Agreed. You should live a little. I decided to ease off the gas when we reached seven figures. Now the growth is greater than our income and our future is secure. We have learned along the way to take time to smell the roses and those are wonderful memories. Memories don't have to be expensive or at the expense of your future. Our best times were being together not necessarily spending money.
For me, waiting until 70 is the best choice, retire at around 65. This is driven by my wife being 20 years younger, so she'll hopefully outlive me significantly. Good luck to all, and keep saving!
Good video. But I'd like to see you discuss what happens when one person in a retired couple becomes single---either due to divorce or death of a spouse. That Social Security income drops, sometimes drastically, and that can change the whole picture. When planning, everyone needs to consider that.
Planning to claim at 70, while retiring early. Reason is that I want to use it to counterbalance the risk of outliving my investments. A higher payout later means that if I run out of money, I'll still be ok-ish.
It's just a question of taking SS at 67 or 70, as any earlier isn't a good option for someone in good health and / or with a good nest egg.
I think you would do better taking that money at 67 putting it in some safe stocks and letting it compound for 3 years.
If you have a much younger spouse(say 7 to10 years) and are the higher earner, then the math tends to show delaying is better for you as a couple over expected lifespans. Of course this is absent any other known health issues.@@kirklandphil
@@kirklandphilWhat are "safe stocks?" You don't think the market could have negative returns over a 3-year period? Or even positive returns well below the guaranteed 8% returns on SS between 67 and 70?
Same here. In worst case, I would run out of money in my ninetys, and would still have SS and a paid for house to live in.
Great video, Erin. I love all the different scenarios and stats you provided so people can make an informed decision.
One additional thing to consider: If you have the ability and adventurous spirit to retire outside of the United States, there are many parts of the world that are far less expensive to live, and they often have medical care that is on par with the U.S. in terms of quality and availability. I went to Tbilisi, Georgia a few months ago and fell in love with the place! Great people, great food, fascinating culture and history, low cost of living, and due to the many Georgian-American medical partnerships, the quality of care is quite high and costs a fraction of what it does in the States. Georgia's just one example; there are many parts of the world that are similar.
Nice to see you address the reality many face in retirement. Whether by the choices they made. the situations they faced, or some combination of the two. My wife and I probably over-save and over-worry, but it works for us. Peace - John
I've learned via other TH-cam videos that waiting for max retirement age doesn't always make the most sense if you plan to invest your social security income, because you could potentially grow it more by investing yourself rather than maxxing out your monthly payout. Of course this would only apply if people don't need the payout for current expenses.
Erin this is one of your best videos. Financial advisors love to overestimate and be ultra conservative well let me say that a quite but of retirees don't need a 60k a year income, some are fine with 45k and the average retiree today has a savings around 150k with many leaving the workplace with less. You don't need a million dollars or even half a million to be comfortable. My Dad retired at age 57 he is 73 now and he definitely didn't have 100k in savings... I plan to work until age 60 and then work part time until I can file at age 62..
No, you don’t need $1M. It’s all about your expenses!!
I appreciate your manner & presentation. Thank you for helping make us more knowledgeable!
I never had savings or an emergency fund when I was working. I made six figures the last ten years of my career and put what I could in my 401k for 30 years. I always knew, I would finally have money when I retired. A divorce and 17 years of child support didn't make things easier. But, I retired at 56 and still not taking S.S. at 63+. I can live comfortably on my portfolio or strictly from S.S. It's a life-long process. Don't delay saving or make excuses that you can't do it. Don't be a disappointment to the old you.
You never had a savings account or emergency fund but contributed into a 401K for 30 years? Did you divorce at 46 or younger? Thanks!
What did you make the 20 years before you retired?
@ShawnPatton-rm2hv I always made good money, divorced in my 30's. I preferred 401k contributions to emergency funds for the tax advantage. I had a very stable job that wasn't affected by recessions, etc. The only emergency that concerned me was job loss. If that ever happened, the 401K was there. I never needed it. Emergency funds are supposed to be liquid, so that's a loss of sorts as well.
I’m 53 and want to retire in 6 months. I have a $40K annuity, plus a 401k depleted to $200K of money that I’m not sure what I can do with at this point. My retirement plans seem to be out the window. Is it a good idea toget professional help?5
With everything going on, consider financial planning, … that is okay. You can get your money to work for you. but I would say delay retirement a little
I have heard how they can make u make the best decisions and to be honest I don’t want to lose anymore money or I will have to work till I die.
It’s good to look for a fiduciary who has legal obligation to work in your best interest, I and my spouse work with a retirement planner, Monica Mary strigle, I met her in NY and I have made up to 74% in the past few months
I think it would be best to keep working. Most people at age 54 have a net worth of 3-4 million and still could not afford to retire at that age. I think even retiring at age 60 is a stretch.
you are right, the lady mentioned here who I am on a pilot period with told me same thing to keep working but build a passive income stream which can prepare me for retirement and if we get lucky we might see a boost in the speculative assets we have bought into. The approach w/her to the markets is unique and I am loving so far. Thanks anyway
Great video, love the realistic numbers.
Glad you enjoyed it!
Great show, thanks. Regrettably, many grow old and realize the budget just won't reach, and have been fed a lie that any work in retirement is a fail. Shout out to my 70-year-olds that run a cash register 2/3 days a week to make an awesome retirement. You guys rock.
Thank you Erin, great topic.
Thanks 🙏
This makes me feel not so bad for just now reaching $100,000 in my 401k at age 40. The market has not been kind to it the past couple years, though it has improved in recent months! I'm looking to bump up my contributions this year, and I still have lots of time to save and grow it.
40 years is so far from MRA. That $100k still has time to do a lot of growth. If you didn't add to it, even inflation adjusted with historical market returns, it's value at 62 would be more due to growth than your contribution.
That does NOT mean you should coast. Sounds like you have worked hard to get to your spot now. Not sure, but the way you wrote, seems like you don't have high interest debts, maybe still have a mortgage and a car note. Be proud of where you got to, but keep putting in that same work cause it will pay off.
The market did great last year! The before was bad, but a great “extra buy” year
At 40, you are still very young. If you retired at 60 or 65, you're still 20 or 25 years away from that point. That's lots of time to work, live fiscally responsibly, and save for your future. Over those 20 or 25 years, the markets will go up and down. Look at those down periods (like 2022) as excellent buying opportunities. Never forget the golden rule of investing: BUY LOW, SELL HIGH. When you buy low and the market later does well, you'll be very grateful for having made those investments. Good luck!
I'm in my 40's and watched my father pass away at 74. I've been investing the max in 401k, HSA, Roth, Mutual Funds, ETF's etc for over 20 years. The house will be paid off by Sept 2024. I'm coming to realize that life is short, and when I retire at 62, what I have is what I have.
I'm in a very similar situation. My dad was 73. I'm hoping to retire closer to 57, if I can pull it off. I don't need much to be happy.
If you've been maxing out for 20+ years, you should be retiring in your 50's! I had no problem on a single income and took out 8% for the first 4-1/2 years.
You'll be surprised at how fast some people's health can decline. I remember the older workers starting to hit their early 60's and always complaining about some type of health issue. I punched out at 57 and sure enough you do start to feel age effects in your 60's.
The biggest factor in all this is cutting your life expenses down. I lived like I was retired back when I was working. Making good money so I packed away a lot of money I've got actually more money than I need now that I'm retired at 62.
I am retiring next Friday at 55 1/2!
Congrats! How did you achieve it?
Many years of putting money in my 401(k)! I also started a Roth IRA for my wife and I 10 years ago or so. We plan on traveling full-time.
Is there going to be cake?
I hope there will be cake!
@CraigandMandy1 That is very inspiring! I hope to be in the same situation within the next 5 years. I’ll soon be 55, and before I’m 60 I want to have the option to be fully retired.
A year ago I began transitioning by working less than 33 hours a week. In fact, some weeks I work less than 28 hours. This reduction in work hours has made a big difference in my life, and has motivated me to retire sooner than later.
A 4% withdrawal on a $100,000 account would yield simply $4,000/year or $333/month. That's virtually nothing today. This is why personal finance should be taught in all high schools, colleges, and beyond. There are consequences for living beyond one's means. It's better to learn and understand what those consequences are while there is time to get one's life in order (fiscally). Thanks for this video, Erin!
Hi Erin. Love this video and this topic. Thanks for your hard work on figuring out these numbers according to the different age groups on the best time to retire. It makes it soo much easier watching on video the way you figure out all the different options of the age groups. Your awesome! Hope you have a blessed weekend 😊
P.S. has Jameson meet Peanut yet?
How much you want to live on in retirement is up to you.
Saving now and amassing a large investment portfolio is possible for almost everyone.
Work, save, invest.
We are ordinary, everyday people. We worked, raised a family, lived below our means, saved and invested.
We retired early. It can be done. It is entirely up to the investor.
Don't plan to rely on social security unless you want to live in poverty in your golden years.
You can rely on some Social security. It will never go away. Voting people get older...
Even if nothing changed, the payout would be 80% of current rates.
Most likely they will change the contribution amount or pool (e.g. remove the income limit), or increase the retirement age.
I plan to delay my social security until 70, so even if nothing changes, the expected payout is at least the current social security at full retirement age.
This and my paid of house, is my fallback if i run out of saved money at age 95 or so...
@thomasgoldschmidt298 I agree you will get some money from ss. Living only on ss would not be a fun way to live.
I think this post sounds entitled much. Not everyone can amass large amounts, people have families and sometimes life and health gets in the way. Some seniors rely solely on their Social Security. Finances is not a one size fits all sort of thing.
@@jayocean4724 entitled to work, earn, save, invest.
SS will always be there. Believe that. A nice little nest egg on the side could help too.
How’s your baby doing??
I have around $300k and there’s no way I could retire on it. Need to little more than double that. I can’t fathom waiting until my mid to late 60’s to retire. I’m already tired and burned out at 50ish.
Looking forward to your next video.
We're in our 50's too, and after a holiday season spent with lots of folks in the same age group, I'd say the majority of them are pretty tired of work. Let that be a warning bell for those younger folks soft saving and planning to work to their 70's and beyond. Uhm, you might want to give your future self options...
@@dstevens518 yep - so many people are like "oh I'll never stop working..." yeah ? we'll see... that may not even be your decision to make...
@@dstevens518 Sounds rough.. As a third alternative to what you’re doing now vs full retirement, consider switching to a job or company that pays less, but has a lighter work load, less stress, and maybe more flexibility in work hours. Think of it as a “partial retirement,” where your income is just enough to pay your bills, so maybe you’re not adding to your retirement savings, but you’re nest egg is untouched and growing, and ideally you still have health insurance. By doing this, you gradually move your mortgage closer to being paid off, your nest egg is growing, and you’re able to delay taking Social Security until the monthly payments are larger. Obviously, there are a lot of numbers that change in this scenario, so you’d want to do some careful calculations. But if this path gives you peace of mind, a little better lifestyle, and maybe better health going into full retirement down the road, it’s worth it!
Love your videos and information .Glad I found this channel. At 41 I’ve aggressively started investing and saving. I have military retirement / VA I’ll have a fully vested pension at my current employer in 3 yrs . Putting 25% in my 401k and Roth . Plus a 50k dividend portfolio. Thinking ahead .
3:08 It may be good to look at a partial retirement in that case. Working a flex schedule of 10 to 20 hours at even $15 / hour could add $7,500 to $15,000 (gross) allowing for 2 weeks off each year. The right job may also have health insurance perks or allow a person to continue contributing.
Good video, even with assumptions I don't agree with (5%) and a few details unmentioned. I love that the comments section identifies all the issues/concerns folks have with this scenario (modest retirement savings). Sometimes you gotta go this route with your videos, imo, laying out real numbers for real situations so some can see hope if they're living that life, and others can see they should aim for more wiggle room. As for the poster that said $100,000 savings is embarassing, you don't know the circumstances involved. It is embarrassing for a doctor making tons, but might be impressive for someone with limited earning potential and circumstances more dire.
5% is reasonable for someone retiring at 65 or older. When you think about it, 5% should last 20 years if the growth rate only matches inflation. If you live until 100 then congratulations. The average lifespan is around the mid 80s. Healthcare and paying someone to do stuff for you will consume most of your money.
You also have to factor in the retirement smile. You won't spend a consistent amount each year in retirement. The first years will be the most active, and the last years will be just taking it easy and watching the young people do their thing.
@@TheFirstRealChewyMost wouldn't need much assistance if they took care of themselves. You may also find that you spend as much or more in your later years as you financially assist kids and grandkids.
Only $100k at retirement is embarrassing for people under 50… I say that because there is too much opportunity for learning about money and much more access to easy investments like index funds. So everyone under 50 should have well over $100k by the time they retire, please don’t bring up an extreme case that very few people have… I already know there are exceptions (my dad for example) I’m talking about generally for 90%+ of people.
@@Zombiebeast1995 Agree in today's world of easy information access and investing avenues, anyone under 40 has plenty of time and almost zero excuses to accumulate way more than $100k by the time they retire. Don't screw your older self with excuses and delusions that you'll have every opportunity to save like crazy at the end. Something like 40% of retirees are forced into an earlier retirement than they planned...
@@TheFirstRealChewy th-cam.com/video/B2hwTnOqE58/w-d-xo.html
I like the way you speak ❤❤
People need to remember that Social Security is insurance with no death benefit. There is no guarantee you're living until 70+. I took mine at 62 and worked part-time. That way I had the benefit of income from the payments I made my whole work life, and my benefits increased each year because I was still working and paying into the system. I got to travel a lot, and had a much better quality of life with a little less money.
💯
I'm 58, single, divorced, retired, relying on $4,000/mo rental income + $1,000/mo dividend from 100k investment in QYLD. My total passive income in $5,000/mo. At 62, I will collect $2,300/mo in Social Security.
Retire in the Philippines. Live like a king on $2,000/mo budget.
Don't forget to factor in additional end of life costs (increased medical costs, nursing home, do you want to prepay or save for funeral costs, etc). That stuff is not cheap and nobody wants to be stuck in a nursing home with severely underpaid, overworked staff because they didn't plan to need it and can't afford the good option.
A person with such low savings cannot afford to delay taking social security to age 70.
If anything, if they are not employed at their full retirement age will likely take it early.
The earliest for me will be 65 but hope to hang on til 67
All kidding aside, I think the answer lies in how the rules change for the Millennials and Gen Z. I’m already collecting, so it doesn’t bother me, but I think that what will happen is not so much of a change in benefits, but the age at which you can start collecting them. The minimum age will not stay at 62 over next 30 years and beyond and you need to plan for that alone with inflation (30 years worth).
I think the biggest thing that needs to change about SS is the rule that punishes you (reduces your benefit) for earning outside income while drawing from the program prior to your FRA! Not sure what the logic was to this aspect of the program when our dear bureaucrats set it up………🙄
I chose 62. I have money saved, $200,000. Also a small pension. I drive a paid for Toyota Camry. I’m good, though I’m not looking forward to Medicare. If it was free, no problem, but it is not.
Folks, don’t wait too long to retire. Remember the “Slow Go” and “No Go” years! Enjoy it now. I retired at 55. 🙏🏾❤️
Hi Erin, Well, this is my final year. I turn 70 in December and that is when I will stop my side gig, I will start SS and simply retire. I will get about $4400/mo from SS. My wife brings home about $6.5K/mo so just from that we are good. I have about $750,000 invested and we shouldn't need to touch that for many years.
The only issue I have with this video is that from my research and what I have seen with others is that these numbers work until your health starts to deteriorate. Simple things like knee replacements is not a big deal, Medicare works fine for that. But needing long term care or hospice will kill small amounts like this. If you are married expect to either die quickly, get a divorce or be prepared to have your remaining spouse be homeless. Not a pretty view of the future. Have a happy new year. 😉
A box of shells or pills only cost $10. Why drag out a miserable existence? Meantime, stay active and eat healthy. Happy New Year!!!
Great point! Erin, I’d love to see a video about what expenses actually look like as health deteriorates in old age. What research has been done on that? No doubt it’s an unpleasant topic, but I’d rather have an accurate forecasting spreadsheet and be prepared. Especially when you have a spouse who might outlive you, you don’t want to face a difficult choice between good medical care for yourself vs. leaving your spouse in poverty 😬
Hospice or long term care average 1yr or less and most people will not be in these if at all. Of course there are exceptions.....just saying.
@@bruced.370 Long term care typically is 1 year or less but at $5K to $10K a month and to have the state take care of it means all your resources are used first leaving your spouse penniless. Better to divorce and save their lives. My wife's grandmothers, both of them, lived to 100+ and spent the last 10 years or so under 24 hour care. One developed Alzheimer's and spent the last few years incapable of taking care of herself.
My maternal grandfather spent the last 5 years in a hospice facility waiting to die in essentially a fetal position. These are exceptions but the prospect needs to be at least considered. I know it concerns my wife a lot.
you could move to Oregon and take a couple of pills@@bryanwhitton1784
We get 53 K in S.S. . We add in the 4.5% we get on our Annuities except for 22 K we let grow in case rates go down when they mature (Laddered) and are doing fine on 92 K with home and truck paid off also..
Honestly, this is SUPER CLOSE to the realities my parents are going to have to face in a couple of years. Unfortunately I think they'll need me to continue to subsidize housing for them.
I have over a 1/4 century to get there. Stacking it until then so I won't need it.
Keyword is can which is all about non-discretionary expenses. Since we are talking about non-discretionary expenses, that is about the median take home.
My plan is to take Social Security at 70 to get the largest monthly benefit possible. I view it as a way to deal with longevity risk. I plan to retire long before age 70 and live off of my various retirement accounts and my pension until then.
hey, brandon: Don't know if you will get this: Consider doing it in reverse: Take your SS now: Invest in safety of 5% (or so bonds). Let it grow. Keep your growth funds working hard in the 401K, ira etc until RMD kicks in (if it ever does with law changes coming soon) Best/
Yikes, Both my wife and I are 65, and I now know how lucky I was to have the "Put Money Away For Retirement Bug Starting Early" Great eye-opening video Erin. I will assume the numbers from SS you gave are less Medicare as they take that payment right from your SS check.
Running the numbers for me it looks like taking my SS at 66 is a little better than 66.8 as I would get 3019.00 a month at 66 and around 3180.00 at 66.8. It equals out around age 85.
Pretty much all the different payout schemes (take at 62, FRA, or Delay) end up having Total Cumulative SS Benefits being about equal in your early to mid-80's. The average increase in Social Security from delaying is basically 8% a year (basically guaranteed) and the stock market is a little over 10% per year but with potentially wild fluctuations. Having Social Security as a core stable bedrock of retirement makes a lot of sense. Just view it as a "fixed income" investment with a fixed rate of return, and really no chance of having to take a loss.
@@petestandley2690 You are right, I only calculated doing it at 66, 66.8, and 70. taking it at 66 I would end up with the same amount at age 80 as if I took it at 66.8, (I would have 8K more when I hit 83 by taking it at 66.8) It would be slightly more waiting till 70. Fun with numbers! Take care.
@@petestandley2690 Erin, this would be a great video topic? Could be useful for people who know they have better or worse health than average.
Great Video Erin. This video should be playing in every Highschool in the USA
My plan is to delay taking SS until age 70, a little less than six years from now. When I hit my FRA of 66 years and 10 months, I will reassess my situation and decide if I want/can cut back to 30 hours per week and then do that until age 70. At age 70, according to the SS website, I should be getting a bit over $3200/month. That, coupled with my savings and investments, should yield about $4200/month, which will fit with my frugality quite nicely. Am I going to be able to afford a lot of travel? Probably not, but a few car-camping trips a year will suffice.
Of course, we all know how plans go, exemplified by the expression: Man makes plans, God laughs.
Very good video and great visuals to go with the numbers. Our goal is to have enough in our retirement and pension accounts, outside of SS, to get by without it. The main reason for this is the threat of reduced payments starting about 10 years from now, when the surplus in SS runs out and they are telling us they'll only be able to pay out around 78% of the promised benefits.
for average people, you should claim until you have to (or at age 70), because it is the security for not sleeping on the street, and it is not the benefit to get wealth.
I see Millennials and Gen Zers living like rock stars in their 20's and 30's. I predict a generation of destitute seniors is on the horizon.
Can you please talk about the spouse claiming social security at 62. The main earner continues to work until full retirement age. Thanks. Keep up the great work.
Until some serious adjustments are made to the social security plan I have a hard time believing it won’t run out of money by 2035-40 range. That being said we aren’t completely counting on it for our retirement. So save and invest all ya can friends
They aren't running out of money they are running out of the buffer. So they will be limited to about 76% of the current payout level. There are many levers to pull to correct this so while I agree that you shouldn't depend on SS only it isn't going away this century.
The decision to take SS early or not requires just a bit of research and then making an informed decision. At the age of 63 I made a spreadsheet comparing early to full on a month by month basis. This allows you to see where your "break-even point" is. For me that break-even age was 76. My mother died at 55 and my dad at 67 so I decided to take the money early and run. I'm 77 now so you could say that I'm now losing money compared to waiting to take SS at full retirement age. BUT... We've had 13 years to make use of that money and here's what we did. We used the extra money to pay off a car loan, then a second mortgage and then the original mortgage. When we were debt free we put all those payments into the stock market. We now have two retirement incomes (TX Teachers and 50% City of Austin), two Social Security, two 401k accounts and a healthy stock portfolio. We didn't really start planning this until 13 years ago. We were the typical "make it and spend it" family. Making a plan and sticking to it works even starting in your early sixties.
Great story! Congrats.
Gosh it's so difficult for people to manage waiting until 70 for SS, but if they can it's super useful because SS gets adjusted for inflation, one of the few "investments" we can still make that guarantees this.
For the single income household, are you taking into account spousal benefits?
Keyword is can which is all about non-discretionary expenses. Since we are talking about non-discretionary expenses, that is about the median take home. So, a person with a median income will actually bring in a little more than 30% of their take home and need a nest egg of about
67 FRA, so my survivor and or spousal top off is not reduced. Thanks for analyzing with a single beneficiary. Even if you start out as a couple, it is important to look at benefits/income if become single/survivor.
Great video. This shows that you don't need a million dollars to have a nice retirement. This also makes me feel better because I'm in my thirties and on track to have about 100 to 300k saved at retirement. Social security is a very important asset because it's adjusted for inflation and has tax benefits. Delaying ss a few years can make a impact on the success of your retirement plan.
What are the tax benefits? Thanks!
@@marianrosin6486not all of your social security benefits are taxed. Only up to 85 percent is taxed. It depends on your income.
Probably beyond the scope of your videos but if you opt to retire with a meager retirement plan there are subsidies such as SNAP, Obama Care, subsidized senior housing etc. Not going to live large but it is a path to retirement I've seen many take.
👋 my wife and i gross income is 128k combined. 37and38 yrs old have 2kids. We have around 12k savings. I work with local government. have a 457b account but my job dont match any of my contributions. Have around 19k there and started contributing 200biweekly. No debt but my wife still have around 15k debt and 197k mortgage. We just start attacking our mortgage with 800 extra principle and the income tax we getting will be put on my wife debt. Now have a questions about my 457b, should i keep the 457b and open a roth ira or should i roll over my 457b to a roth ira? Once we paid my wife debt we will be contributing 15% on our 457 and 401k for her. Ty for any suggestions
Erin, Thank you so much for doing examples like this! Most finance channels start w $1 Million dollar portfolio and couple w $3000 SS checks? Those don't help us at all? People like that don't get advice from Utube! U are using realistic numbers that we can related to! In fact the numbers of 2nd group were very close to me! I am single but my Pension act like 2nd income and my savings is larger than that. I am thinking of $60K I come so this is Spot On and shows I am on target! I kove your channel!
"Those people" may not take advice from You Tube, plenty of them watch.
it's interesting how the median and average savings amount by age don't mirror what finance channels recommend and there are over 70million people collecting social security...how ever are they surviving? So, let's take a reality check on how much people actually need.
If you can get a house paid off before you retire, you can live on very little. Of course that depends on where you live and what kind of house you have because there's also property taxes to consider and maybe HOA fees.
Agreed. Absolutely imperative that you have no debt and have a paid off home when you retire to make it.
Yep a lower property tax state is worth looking at or a lower cost housing state with higher property tax might work too., as it stand now my property taxes have gone up about 40% in 8 years , so they'll essentially double every 14/18 years.. If you're on a fixed income that's a tough nut to crack .
I have discovered your channel enjoyed it so far. Question I've watched your video about 100K being the magic number. What is the bare minimum I need to save to get to 100k in 5 years a month regardless of the stock market so just cash I've saved from my job?
$1,667/mo for 5 years assuming no interest or market return
I want to see a video of a conservative investment (say 5-6% rate of return, maybe 3% inflation) to see how it works out taking SS early versus waiting. If you end up passing away or loose your ability to function well before 85 (many do....) then you won't get as many dollars from the gov't. You also won't be able to invest that money and you may have to take money out of your nest egg that's still making money. The SS is also a fixed income, so there is 0 variability, so it provides some stability.
Trick is bekng able to continue working till 70.
For health reasons or the fact many employers dont like aged workers many cant work till their 70 years of age.
I planned to retire at 70yrs old
You might want to do a video on the actual impact of pensions. I have been in 2 different pension systems. One had us pay Social Security along with pension payment and the other did not. A lot of pensioners will not be able to get anything or very much from Social Security.
This is true because of the Government Pension Offset and the Windfall Elimination Provision. Both of these need to be changed. They mean that if you have not paid into Social Security but instead into a government pension plan, your Social Security may be reduced. This can be a terrible shock.
considering you didn't pay into soc sec to get one of your pensions that increased your pay and pension, it makes sense you wouldn't be getting soc sec that you didn't pay into.
@@hanwagu9967 agree. She did figure social security into a pensioner’s income here, so the scenario where the pensioner doesn’t have SS would be interesting. FTR, I personally have paid into SS for 23 years, so I will be getting a modified amount of SS. Those of who are in this scenario pay for our pension - about 9-12%.
For a married couple, with two earners fairer close (maybe with 75/25 or closer), its typically wise to have the lower earner claim as soon as they can (assuming your budget allows) and the higher wait until 70. You maximize time in the one and value in the other, especially with regards to survivorship. Statistically one spouse will outlive the other.
This would be a great video topic-exploring some scenarios like this
4:16 What APR are you using before / after retirement for these figures?
Working until I die crew, checking in.
😢
I retired six years ago at 55 with $200K and still full speed ahead. No Roth, no IRA, no 401K. Just all $200K safe in the bank.
It’s all about your expenses!!
The real question we should be asking is will there be social security to pull from when you retire?
For sure the full retirement age will be 70+ once Millenials start retiring. Oh well, I don't plan my retirement around SS.
It will be around in some shape or form. Retirees are voting too!
My savings plan is to pretend that SS won’t be there for me in 20 years.
Yes, yes there will.
Haha, I said the same thing 20 years ago. And now within one more year, I will be 66.8 and it looks like I will get it...WoooHooo! @@somehandle215
5% withdrawal rate is fine for someone around 70. Too agressive at 62; Money likely to run outl better to plan at 4% and if younger, go even less than 4%
Agreed. A 5% rate for a mid 60’s retirement runs a significant risk of the person running out of money before they die.
Things can always be adjusted. I retired at 56, took 8% the first 4-1/2 years paying off debt. Now taking 3 - 4% because that's all I need. 7 years into retirement, no S.S. and my portfolio has only grown. Sequence of returns could be a big factor, but 5% should be fine in most cases.
5.5% is good to live out your money. Less than half of people won't live to be 85. Live your life. You won't run out SS is always gonna be there anyways.
I enjoy your videos, but would like to see some that address folks who don't have a retirement income need of $60,000.
Wife and I are 59. We retired at ages 56 and 53 respectively and currently live on ~45% of our combined not-adjusted-for-inflation (crap) yearly pensions. Our net worth is ~ $2 mil and we're both in good health; so we plan to wait until age 70 to claim SS unless major health or other financial issues occur. Should we reconsider waiting until age 70 to claim SS and, if yes, why? Thank you.
Take it at 62 and invest it.
My husband was waiting until 70 to claim SS because he's older than I am and thought it would increase my survivor benefits. It doesn't. Survivor benefits are based on full retirement age which for him was 66. We did not realize this until he turned 70 and claimed benefits.
really? i thought the same. bummer
You are confusing the surviver and spousal benefit
The spousal benefit is capped at 50% of your husband,s FRA benefit.
There is no cap or reduction on the surviver benefit,as long as you wait till your FRA to claim the benefit.
@@sergiosantana4658 We were told that
@@sergiosantana4658 We were told by SSA that my survivor benefit is limited to what he would have received at FRA of 66. That is about 32 % less than he got by waiting until 70 to receive benefits. The extra 8% per year doesn't go to the survivor.
Per AARP:
A widow or widower whose spouse waited until 70 to file for Social Security is entitled to the full amount the deceased was getting - including the delayed retirement credits - so long as the surviving spouse has reached full retirement age.
Great video again. Since you seem to have the ability to find data, this video brings up a question. When you talk about the "aversge benefit" for someone taking SS at 62, or the "average" at FRA, do those numbers include people who took their benefit years ago? If so, I wonder if there's data that shows what rhe average benefit at 62 was for 2022, or 2023? That might give people a better idea of what current retirees might get. My Dad just turned 99, retired at 57, and claimed SS at 62. Knowing what he made when he retired, and what rhe same job pays today, his benefit today would be vsstly higher than his payment, even with COLA increases for all these years. If his number is in that average, it would definately bring that number down. Thanks again for a great, "real life" video!
Based on how the Social Security administration words it, the average at full retirement age, is the average presented for those who claim at full retirement age. So my assumption is, it wouldn’t include those who claimed earlier, dragging that average down.
What I really would be curious about is what is the median benefit, but that doesn’t seem so readily available
@@ErinTalksMoney - You can be sure that the median is not all that much higher, because of how SS payouts are designed to benefit those who earned less during their working career, more than those who were high earners. Something that really needs to be addressed is the cap on how much income is taxed for Social Security. When this program was created, nobody could have envisioned a world where so many people make far more than the maximum amount that is taxable for SS.
I actually want to do a video on that, but I feel like nobody would want to watch it. Looking at the history of Social Security, and why there is a on the Social Security tax. I was reading about it a couple weeks ago, and I found it absolutely fascinating. Problem is, I don’t think everyone finds the same things fascinating. 🤓
@@ErinTalksMoney Actually, that could be a great topic for people, as a lot of people don't know how it even works. You'd be surprised how many people have no clue how their SS benefit is calculated, or that rheir eatnings are adjusted based on Average Wage Indexing. So many people I talk to just rhink you take your best 35 years, and that's the average. They've never heard of AWI!
Then maybe that video will make an appearance….
I hate Paying into social security. if i had my money now I could put it into an IRA, im 24 with 100k in dividend stocks. dumbest government program ever invented SMH
Wow! It’s AMAZING how you can MULTIPLY by TWO!!!!! HOW do you DO it????!!!????
0:44 You would receive 70%of your full retirement amount..... If someone does this they get docked 30% from their FRA amount, but when 2034 comes around, do thy lose another 20% or are SS recipients going to continue on at the rate they are receiving? For many this could make it worth it to take their SS early.
That's why I started investing erly
It is my understanding that after Full retirement age you can still work and not have social security reduce your benefits. Check with your advisor....
SS is taxed, and taxed more when you’re earning more. So that will play into the calculations.
Inflation left the chat.
My goal is to retire with $180,000 in income per year. I do not anticipate the need for so much as I am frugal by nature. Without a mortgage of children to support I could probably live on half of the amount easily.
These are scary numbers. 5% is an aggressive withdrawal rate and these examples are barely making it to their goal.
As a 24 yo right now. I doubt I’ll see a dime of the social security I paid for. I’ve run numbers and I’d need 1.1 million to live with the frugal lifestyle I have right now. That 100k investment is getting built before I turn 30 since SSA is not reliable for my generation
Love to see young people looking down the road, and love even more that you're smart enough to realize these modest numbers, while possible to retire on, aren't anything to aspire to. Had dinner during the holidays with one couple that's obviously concerned they're running out of time to build their nest egg, and they said straight faced to me they don't feel they're overspending, while showing us the European vacation the whole family took, and mentioning the new SUV they just bought...lol. So you have a better grip on reality than those 30 years older than you, which will serve you well in life.
I would keep thinking and planning for not receiving SS when you retire. I also thought the same thing.
In fact, my father pulled me aside and said that I would not get anything from the SS when I first start working in my early 20s. He explained my SS will fund his and my mom's retirement and I needed to save and invest to self-fund my retirement. So, I always planned my savings and spending such that I had enough investments to fund my retirement. And now I am retirement age and have those 40 + years of savings and investments. And my SS will be extra money.
5% is fine and so is your S.S. Your going to have a stroke before you're 62, take a deep breath.... everything will be fine.
How does tax affect social security income?
I believe that the more money you get from other investments chances the amount that your social security income is taxed at. Can’t it be taxed up to some crazy amount like 90%?
Up to 85% of your SS benefit may be taxed. The tax rate is based on your total earnings.
I want to take SS day it is available to me . I feel there is no way the changes are not coming to SS . It will always be here , just different. But unfortunately my tax plan will probably have me waiting til 65 to do as much Roth conversion as possible.
I am planning to just live off my pension and investments. Social security will be my fun money.
I retired at 44 from the USN, 6 days before my 45th birthday. My wife is a public school teacher and can retire in approximately 4 years. I hope to fund myself out of social security and not collect it, or wait until I’m well past 70 years old before I do.
Not collect it?? 🤔
Some people are criticizing the 5% withdraw rate. I'm just curious what calculations are being done to reach a conclusion that it's too aggressive. Let's imagine a 2% interest rate in your money market or savings account (with no risk to your principle), a 5% withdraw will last 25 years right? That's 87 for someone retiring at 62 and 95 for someon at 70. What's the end age people are using for their calculations?
Azel: The withdrawal rate is based on the planning time horizon, the asset mix and expected inflation. In your scenario, you are ignoring inflation. Over 25 years, you expenses are likely to double. Also, when looking at a portfolio with stocks, given that they are near all time highs and at historically high P/E rations, future returns are likely to be below the historic averages.
Do i have to work Full Time to be able to claim full benefits or can I scale down to 15-20 hours a month to get full access?
You become eligible for SS benefits by earning 40 "credits." You can earn up to 4 credits per year. In 2023, one credit was equal to $1,640 in earnings. So, depending on how much you make for those 15-20 hours per month, you could still receive benefits if you reach 40 credits total over your working life. SSA.gov has plenty of information about how you become eligible and how your benefit is calculated.
SS amount is based on $$ earned in your highest 35(?) years of work. Not on your hours worked.
Wow this is actually SUPER INTERESTING to look at a "common" retirement for people unable to save a lot and need to depend on SS. At least with the numbers here, unless you're absolutely destroyed by health costs, it isn't completely doom and gloom?!?!
Yes, nice to see. It makes most sense for people nearing retirement, since SS might not be around for the rest of us.
Erin: I think it is dangerous to recommend taking a 5% withdrawal rate from savings without describing the type of portfolio that money will come from. Also, I wouldn't call 5% "conservative" for someone retiring at 62.
Wondered how fast that would come up. The old it is only safe at 4%, Dave Ramsey & Erin are wrong, wrong, wrong. Four % was always the FIRST year in the original suggestion anyway (50/50). 5 is not out of the realm of safe even at 50/50
I didn't take it as a recommendation but as an example. YMMV kind of thing. The reality is that even if you took 2% it is likely you would need to take more to cover unexpected expenses that come up. When you are at this income level so much comes up that is not going to be covered with your normal income.
@@greggpurviance7252@RetirementTalk43
A quick google search will reveal information about the 4% rule. Erin’s EXAMPLE of 5% isn’t out of line from current industry standard. Considering the industry standard is the Bengen rule, when Mr. Bengen himself says that 5% would work, then this might just be the future direction of industry standard advice.
Highlights from Google searches:
William P. Bengen is a retired financial adviser who first articulated the 4% withdrawal rate ("Four percent rule") as a rule of thumb for withdrawal rates from retirement savings; it is eponymously known as the "Bengen rule".
In fact, Bengen himself suggested raising the target rate to 4.5% or even 5% when he saw that many retirees were dying before spending down their savings. “Having a surplus at the end of life is not a bad thing,” says Birr. “Just make sure it's something you want.”
@@SteveG1337 Bengen revised his safemax to 4.7%, assuming that small cap stocks are added to the portfolio. Again, the portfolio makeup is a key factor in determining withdrawal rates. Also, given historic highs in stock prices and P/E ratios, it is highly likely that stocks will not meet their historic average returns. In 2020, Wade Pfau took down his suggested safe withdrawal rate to 2.4%. Ben Felix, I think, was at 2.7%.
@@greggpurviance7252 The author of the study revised it to about 5% and that's a 60/40 mix. Remember the majority of people will die before 20yrs anyways.....
Pensions such as teachers and law enforcement/fire reduce SS payout due to the Windfall Elimination Provision and spousal SS death benefits are eliminated if the surviving spouse has a pension due to Government Pension Offset.
Not in all pension cases. Military is exempt.
Dave Ramsey would say, you’ll be fine!
WHAT?
Get busy saving Bud!
you didn't include break even points, which negates waiting to take social security for most people based on life expectancy.
I actually have an entire video on SS Breakeven points: th-cam.com/video/mQgBqy79au0/w-d-xo.html
My Pension and SS WILL Provide well over $1 Million over 20 yr so I don't have that before I retire
You can control how long you live. Get to a certain point and decide to go out in style!
Lol
That was my retirement plan originally ... then I started saving for retirement, now I've changed my retirement plan to live in style.
What does full retirement age even mean? It seems like there’s a continuum from 62 to 70 and nothing special about the number 67.
Full retirement age is determined by the Social Security administration. Looking from the outside, it could be considered, rather vague. Ultimately choose the age that works best for you.
Mooff: You are correct, in practice it is an arbitrary number. It is an anchor off of which your benefit is calculated for the other years.
The full retirement age itself is arbitrary to the whims of Congress; however, full retirement age, regardless of the age Congress changes it to, simply means the age where you get 100% of your retirement benefit. Currently, 62yo is the entry gate age to get retirement benefit, but at the reduced 70% retirement benefit. the precentage increases from 62yo to 67yo between 70%-100%. Most people just talk about you can start claiming at 62yo but at 70% benefit and then jump to 67yo to claim 100%, but your benefit percentage does increase every month between those years, basically adding up to 5% increase every year. 62yo+1mo is 70.4% and 63yo is 75% etc. The same applies between 67 and 70yo but the % increase is higher increaseing 8% every year from 67-70yo. So, you do get a higher percentage if you retire anytime between 62yo-70yo.
If only we know how much time we have left on this planet, we all will know what to do, don't we 😅
If you're lucky, your S.S. will show those percentages from the chart (0:39) because no one at S.S. will be able to correct it for you. They claim their is some 3rd party that does the calculations. I was just at their office today. Money is fairly accurate through age 67, my FRA. But at 68 it shows only 103%, 69 shows 111% a d finally at age 70 it is accurate at 124%. I can do the math. My only fear is if I claim at 68 or 69, they will not give me the correct amount. But, I hope to wait to 70, which will more than cover all my expenses.