How Much Does It Take to Retire Comfortably on a $5k, $10k, or $15k/mo Budget?

Рет қаралды 257,163

Күн бұрын

Have you ever been told that you need to have at least a million dollars for you to retire comfortably? Many people have been frustrated by the idea that there's an arbitrary magic number they need to reach to retire. The truth is, retirement planning isn't one-size-fits-all, and the amount you need depends on many factors.
James breaks down the process of determining your retirement savings by exploring different income levels and scenarios.
Meet Elon and Elona Dusk, our fictional couple who are both 65 years old. They're considering retirement and want to determine how much they need to comfortably retire with different monthly income goals.
👉 $5,000 per Month: If they aim for a monthly retirement income of $5,000, they have Social Security benefits that would provide a combined $4,443 per month at age 65. This leaves a shortfall of $557 per month or $6,700 per year.
Assuming a 5% withdrawal rate, they would need a portfolio of approximately $134,000 to make up this difference. However, if they waited until their full retirement age, they could rely entirely on Social Security, eliminating the need for a portfolio.
👉 $10,000 per Month: If they want to spend $10,000 per month in retirement, their Social Security benefits at age 65 would be $4,065 after taxes, leaving a shortfall of $5,935 per month or $71,220 per year.
With a 5% withdrawal rate, they would need a portfolio of approximately $1,583,000 to bridge the gap. Waiting until retirement age would decrease the required portfolio size to around $1,447,000.
👉 $15,000 per Month: Lastly, if Elon and Elona want a monthly income of $15,000, their Social Security benefits at age 65 would provide $3,877 after taxes. This leaves a shortfall of $11,123 per month or $133,476 per year.
With a 5% withdrawal rate and a 15% effective tax rate, they would need a portfolio of approximately $3,140,000 to cover their expenses. At full retirement age, this portfolio requirement would decrease to about $3,000,000.
The key takeaway here is that your retirement savings target can vary significantly based on factors such as your Social Security benefits, age of retirement, and desired income level. Small adjustments in your claiming strategy can result in significantly higher benefits, reducing the burden on your portfolio.
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⏱Timestamps:⏱
0:00 Intro
1:16 Different perspective
1:57 Elon and Elona
2:42 5k per month
7:45 10k per month
13:40 15k per month
18:44 Inconsistent expenses
19:41 Understanding important factors
20:21 Outro
Make sure to connect with us on all socials below → beacons.ai/rootfinancialpartners
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Пікірлер: 279

@vividpsychosis8222 4 ай бұрын

The fact that they tax our social security benefits is absolutely bonkers.

@linh0810 4 ай бұрын

Well, you didn't pay income tax for your SS "contribution"

@larryeaton4263 3 ай бұрын

Why would you be taxed on FICA? The government gets to borrow it for decades for free before they have to provide the promised services.

@DIAPERJOE 2 ай бұрын

@@linh0810But you pay it for everything else. You never actually own a home. Even if you think it’s paid off you rent it from the government in the form of taxes. If you don’t pay they take it.

@lohphat 2 ай бұрын

Taxes pay for civilization. How do you think the roads you use get build and maintained? Police and fire services? The military? The FAA, USDA, FDA, etc. The court system. Storm and sewage management. Public schools. And on and on and on. You have an impact on the world around you and use these shared services as soon as you leave your paid off home or are retired. You're still using services as long as you alive. Those services need to be paid.

@dr.michaellittle5611 2 ай бұрын

Thank Reagan for taxing social security. He signed that legislation in 1983.

@JohnJohn-wr1jo 8 ай бұрын

Retirement is no different than pre retirement. Its not your income but your spending habits that determine your lifestyle. I have family members that died below the poverty level owing more than their net worth. Made good money their entire careers but lived in debt and above their means so were always in trouble financially. Others made much less but lived debt free and ultimately had a better retirement because of it.

@CheckThisOut77 8 ай бұрын

Advice: Upon retirement, do NOT be afraid to spend money. Not stupidly, of course. But your health-ability to spend on what you want will go down as you age. EG: I am renting two motorhomes next summer for a family trip. Total cost: $10k+, and worth every penny. As Carson (from Downton Abby) says, “In the end, memories are all we have.”

@S62r 4 ай бұрын

Whether you can afford it or not there is no need for expensive taste. You can have just as much fun with fam without tenting motorhomes and give the excess money to the poor where it could be life changing

@BeerWagoon 4 ай бұрын

@@S62r Yeah....because what the poor desperately need are more handouts. No. They have worked all their life to benefit themselves and their family AND has been paying taxes their whole life to fund the welfare programs for the poor. The money if for THEM to enjoy, keep your dirty hands off it.

@Cullen_Bohannon 4 ай бұрын

@@S62r your comment is an exemplary reason why we have to have social security, which should be gotten rid of by the way. People with your thought process and values would starve.

@L3x4Pr0ne 4 ай бұрын

@@S62ror they could spend the money the earned on the things and experience they want. Don’t get me wrong, help those less fortunate but enjoy your own life how you want too.

@unikornkontroller 4 ай бұрын

My parents were afraid to retire when they clearly had plenty to retire on. They're open with their finances and they've told me SS pretty much takes care of 90% of their living expenses. They barely touch their investments. They've slowly begun spending more freely as they've realized they'll likely never run out of money.

@MetHerInBaghdad 13 күн бұрын

You put out exceptional videos! They open my eyes to a lot of things I never considered before.

@franciscirillo836 8 ай бұрын

fully retired and living off of my dividends. I started investing in 1958 in growth and transitioned 15 yrs ago into dividend aristocrats paying stocks. No regrets and financially free. Life is good while helping the less fortunate.

@stewdogg42 5 ай бұрын

Dividends are lame.

@shsal110 4 ай бұрын

Haha read it as retired since 1958... Good stuff!

@shsal110 4 ай бұрын

Haha read it as retired since 1958... Good stuff!

@shsal110 4 ай бұрын

Haha read it as retired since 1958... Good stuff!

@AEVMU 4 ай бұрын

Staying in broad stock ETFs would most likely have produced greater available spending limits. The aversion to volatility, despite what is probably a very low chance of outliving your money, is understandable.

@eiketrauernicht 3 ай бұрын

Insurance broker from Germany here. I just want to say i love your video's aesthetics. I can't comment much on american social security and Roth IRAs etc but the delivery is absolutely on point. Big inspiration. Thank you

@davidfolts5893 8 ай бұрын

Thanks, James; your videos are always a special treat of well-constructed financial thinking.

@johngill2853 8 ай бұрын

Great job 👍 This actually basically shows the whole concept of retirement planning

@Elephantine999 4 ай бұрын

This was a good, clear explanation of some stuff that's hard to explain clearly. Good job! :)

@slowmads 8 ай бұрын

My husband was laid off at age 62 and took his SS as finding a new job in his career would have been difficult, if not impossible. I waited until I was 70. Our combined SS income of $70K annually is enough for us to live a good life. And before we settle into that good life, we are enjoying a GREAT life of full-time traveling and spending an additional $40K a year from our investments to do so for as long as we’re physically able. Waiting was the best thing for ME (since I’m likely to outlive him) and for US.

@edhcb9359 7 ай бұрын

If I had a dollar for every time my mother-in-law said she was going to outlive my father-in-law I could retire off of just that money. She’s been gone 8 years now and he’s happily re-married. 😂

@fzigunov 4 ай бұрын

@@edhcb9359😂

@CheckThisOut77 8 ай бұрын

This is one of the BEST KZfaqs on financial retirement. My Simple Plan: I retired at age 72 but started taking SS at FRT (67). My income dropped by 60% upon retirement, but we have NO debt and we were living below our means for many years. I worked until we both could be on Medicare (wife is younger) and I saved/invested 35% for the last ten years. By living below our means, we transitioned successfully into retirement. I simply monitor our bank accounts each month. They have still been going up slightly. I haven’t been “fun spending” as much, but all is well. I am using QCD’s to cover my RMD’s (to Teen Challenge Ministry). James’ advice is solid.

@ladylove34 5 ай бұрын

What are QCDs?

@mharrell4954 3 ай бұрын

Qualified Charitable Donations@@ladylove34

@lionmangolf 7 ай бұрын

Biggest hurdle retiring at 55 is health insurance.

@user-pn8dq6vt4s 4 ай бұрын

I’m retiring at 46, and health insurance (and property taxes) is the reason we won’t be staying the US - combined its $40k per year without even getting out of bed.

@mcassity 4 ай бұрын

where you headed?@@user-pn8dq6vt4s

@unikornkontroller 4 ай бұрын

@@user-pn8dq6vt4s Yeah, this isn't a bad option and I'm sure we'll see more people do this as the cost of living here continually increases.

@FincaBelleVue 4 ай бұрын

Agreed. We want retire at 53 & 55. We can live well of a budget of 4K/month if we leave the USA for 6-8 months/year. We would also need to get an international Healthcare plan.That is our plan for now. 😀

@angstfree2008 3 ай бұрын

@@user-pn8dq6vt4swhat’s your health insurance percentage? How many people?

@randyland1000 8 ай бұрын

I always feel better after watching you. Thank you.!

@utfarley7563 8 ай бұрын

Awesome!! Thank you!! Very clear and concise!

@Dogmom3 8 ай бұрын

Great video James. Love the actual illustrations.

@CharlotteCarMoments 7 ай бұрын

Thank you for going through the math step by step. This video is great!

@cebamy 8 ай бұрын

Another informative episode! Thank you so much!

@DK-pr9ny 8 ай бұрын

Great examples thanks James.

@tompointer2675 8 ай бұрын

Very informative, good job!

@community1854 7 ай бұрын

Definitely consider this service! Plain amazing service o see the passion put into this program. Unbelievable education value!

@LamNguyen-qb4ic 8 ай бұрын

Thank you so much James. It’s very helpful to understand all of those things. As always hit the Like button and once again Thank You.

@RootFP 8 ай бұрын

Thank you for supporting the channel 🙏🏼

@JulioVillavicencio-ru2sn 3 күн бұрын

Thank you. Very informative.

@watchin-stoof988 4 ай бұрын

Have you done a video where people just ignore social security? Then do a range from 45 55 and 65 retirement age

@vulpixelful 4 ай бұрын

I wish he would. This used to be an early retirement channel but turned into mentioning SS and pensions 😂

@mariviberrios 8 ай бұрын

Amazing video. Thank you for sharing.

@RootFP 8 ай бұрын

Glad you enjoyed it!

@gregwessels7205 7 ай бұрын

Another great video James. Have you done a video on determining one's budget while in retirement? Sure, $10k/mo sounds good but will I really NEED that much.

@thefinancialneurologist 4 ай бұрын

Excellent video man, really helps visualize all the income sources in retirement.

@jdenino6022 8 ай бұрын

The government also takes Part B Medicare premiums out of your social security check, for 2024 that comes to $175 a month and you have to pay Part B premiums. Then you need a Medigap policy and a drug plan....That's another $200 a month.

@M22Research 8 ай бұрын

Very nicely done video, showing, at a high level, the way social security decisions interact with portfolio needs… without getting caught in the weeds. One set of “weeds” - particularly for folks focusing on that first $5K/mo scenario since it has minimal portfolio needs - don’t forget to factor in onetime expenses like replacing the roof on your home or replacing a car. No portfolio means you must have a larger emergency fund to cover these needs.

@RootFP 8 ай бұрын

Good point. Can’t forget to account for those other large expenses.

@MrKlawUK 4 ай бұрын

also in the first scenario I’d consider if they want to retire at 65, don’t fuss the complexity of a constnatly monitored portfolio caused by lower SS. Instead, fund the 1.8 years directly - about $100k - and then flip to full SS at 66.8

@Vlasov45 2 ай бұрын

Excellent videos and format. Very clarifying and helpful. I wonder if you've done any videos looking at moving to lower cost of living countries with lower tax rates. The tax benefits alone would offset millions in portfolio savings, and the lower cost of living can increase lifestyle.

@TheFirstRealChewy 8 ай бұрын

I live in a state where social security benefits is taxed. If you have the option of waiting a few years more before retiring, and that will greatly improve your situation, then do it. Waiting is not always possible and its harder to go back to work in your retirement years.

@kwilliams2239 8 ай бұрын

That hurts. I live in a state that has no tax on any retirement income (SS, pension, or 401K) up to some big number. Any income on top of that is taxed as if there was no retirement. That is, income starts at zero and all deductions are taken off the income, not the retirement. It makes a huge difference.

@DavidJohnson-zv5ir 8 ай бұрын

Great video!

@jerrylabat550 8 ай бұрын

Excellent video, it might have been interesting to have contrasted the amounts needed at 4% and 6% return as well, just to show how big of a difference rate of return assumptions can make.

@stella_vine 8 ай бұрын

I love how "just wait to collect Social Security and keep working" makes it sound like everyone has a choice. Ageism is real, companies love to lay off older workers and hire new college grads. If you can wait, and stay employed, you are very lucky. If you cannot delay, take it earlier and cut expenses where you can. Rarely in these types of videos does anyone talk about how Social Security is taxable income.

@Hawk89gt 7 ай бұрын

Not to mention, no way most people want to work until they are 66! this so greatly oversimplifies retirement planning it's ludicrous.

@ExtraordinaryLiving 6 ай бұрын

Also, not to mention whether S.S.A. will still have the funding to sustain the payout ... don't they keep saying that S.S. Reserve Fund is going to run out by 2037 (or some years even sooner--everyone quotes a different number)?!?!? Or even if not as bad, I heard that there will be a 25% reduction of benefits in a few years ............ 🤔

@timsans1170 Күн бұрын

@ExtraordinaryLiving It's "Scare language" they'll find the money. They're not going to take away SS!

@blacksunshine489 7 ай бұрын

Excellent video.

@DWilliam1 4 ай бұрын

Enjoy your videos. I’m lucky, I’m retiring next year at 59 with 2 pensions that will pay me $9500 a month, 850K in savings/401K/403B and a paid for Condo. I’ll collect SS early and collect $2800 a month. My health benefits are picked up by the union and all I’ll pay is copayments until 65. I’ll also pay no state or city taxes on my pensions.

@TM-li7bl 8 ай бұрын

I think flow of income ( pension) is primarily important. Of course, you need retirement investments After tax savings and investments are needed too for lump sum expenditures that rarely happens

@richkestrel7416 4 ай бұрын

Your videos both scare the 💩 out of me, and give me hope through the excellent information and "example scenarios". Thanks 👍

@user-rc2nj7ps1u 4 күн бұрын

Your videos are so incredibly helpful. My understanding for retirement has been illuminated. I enjoy your calm friendly voice and how you share your knowledge in an easy to understand way. I’m implementing retirement strategies right away. Thank you so very much! Another perk of these videos is you have a pleasant face. I think a light green or blue shirt would make your eyes pop. Just saying…😊

@Andrew-zh6jl 8 ай бұрын

James, I have much respect and admiration for your fine work and I look forward to your videos each week. This is another well prepared, educational and thorough video. You have built a reputation and brand based on competence, care and custom client solutions. You’re obviously an accomplished professional and you pride yourself on getting the details perfect - right down to the your meticulous appearance, color coordinated set and presentation. With that said, I must admit that I’m relieved to know, after seeing your handwriting, that you’re human after all. Nice work!

@RootFP 8 ай бұрын

Ha! Thank you for watching.

@Sylvan_dB 8 ай бұрын

Basically, take your annual expenditures, subtract income sources like social security, multiply by 30x and that is what you need in your portfolio. That's reasonably conservative. Multiple by 20x is aggressive. The "4% rule" is 25x.

@TheFirstRealChewy 8 ай бұрын

I say divide by the number of years you anticipate living in retirement, or 30, whichever is smaller. Just redo the calculation each year. The most likely situation for those following 4% or lower percentage is that they'll die and have more money than when they started. That's fine if you have beneficiaries.

@timsans1170 Күн бұрын

@TheFirstRealChewy It's also fine if you want to play it safe! How would you like to be a 90'something and live through the past three years of run away Inflation? Better to die with money in the bank. If not Beneficiaries then at least, Charity....

@AnielaGorska 8 ай бұрын

I'm scared but also excited to add to my positions as the market drops. Looking forward to 10 years from now with the hope of retiring early.

@kwilliams2239 8 ай бұрын

I hear you. The market crashed a month after I retired. I've taken money out of my retirement account for only one month. I don't want to sell low. I've been living off my emergency fund instead.

@ap1873 4 ай бұрын

great video. what about health care cost if you retire at 60 or 62 and have to pay for that til 65? live off portfolio for 3-5 yrs, not claiming SS til 65 or 67..

@chuck_in_socal 3 ай бұрын

If you live in California the energy and tax bills are very high.

@Monas99 6 ай бұрын

thank you James for all the knowledge you share on this channel. i really appreciate it. would you please consider do more examples of SINGLE people instead of couples? I know there are a lot more people that are not married and will not be married in their retirement for sure in the upcoming years. thank you.

@watchingu83 Ай бұрын

Very informative exercise! Assuming one were to retire at 55 instead of 65, how would this affect the equation assuming 5% annually would need to be withdrawn from the portfolio? This would obviously add 10 additional years of withdrawals without being able to collect social security benefits. Appreciate the insight and info!

@DE-Burrows 6 күн бұрын

I am living in San Jose, CA. All single family homes in San Jose are over $1M, but they all are very old. Will spend a lot of $ for repair. If I don’t have $1M cash, I never want to think about buying a house. I hate debt.

@dipaknadkarni62 8 ай бұрын

Great video. I retired from the Navy in 2021 with nearly 30 years on active duty. My wife died on active duty in 2014. Last year (2022) at age 62 I started to take survivor benefits until I turn 70 when I would take my Social Security. This limits me to about 20K in earnings before SS is adversely affected. I have a pension and have money saved through TSP, etc.

@wlanman99 4 ай бұрын

Sorry to hear about your wife :( 21 year retired vet myself but no TSP was offered back then. Got out, got a good job in healthcare (IT), just retired from the company with a 2nd pension. It's too bad pensions have gone the way of the dinosaur.

@carolinecollins2441 2 ай бұрын

Something to keep in mind for couples who are planning on living on their combined social security payments without other investments- when one of you dies, the other will only get the larger check. So, in the example mentioned in this video, the smaller $2000 benefit would go away and the survivor would only have $3000 to live on. That would be a big adjustment if there weren't other assets to make up the difference.

@Ludachris610 8 күн бұрын

Excellent Point.

@georgejetson4378 7 ай бұрын

I always like these KZfaq videos of some very youthful person explaining the intricacy’s of retirement planning and spending. I guess we just need to trust his vast experience and knowledge on the subject!😢

@gbski43 5 ай бұрын

Yes, he studied the topics, trained on the topics, then does hundreds of plans for individuals and talks to hundreds of retirees regularly. Also using the same software as other planners. Is passionate about the topics and runs a successful CFP form. I'd say he is qualified despite his age.

@buyerclub2 8 ай бұрын

Let me start, that I do think your videos are quite clear. However I think you might have missed that people's portfolios could be of several types. First, they could have money that has already been taxed. This could be cash. Or mutual funds that have done annual capital gains. Second, they could have money in Roths. Again this is likely not going to be taxed. Only the third, traditional 401K or IRA are going to be taxed on withdrawal. So, you're how large a portfolio you need will change depending on its source.

@snooter28 4 ай бұрын

How are you videoing writing on that paper? It looks like legitimate photos of the paper but like it can't be right?

@stuartclubb4302 2 ай бұрын

Good examples that show with decent Social Security you may not be destitute and on the street, but with time and persistent investing to put together a few million in retirement, your future can indeed by "comfortable". Though, when you example above-average Social Security incomes like $3000 and $2000 at FRA, you need to work backwards from PIA to AIME to understand the income downgrade (or upgrade) that is being proposed. Back fitting AIME for those payouts $3000 => ~$7400, $2000 => ~$4100. A combined AIME of over $11,500. ~$140K/year "Averaged Indexed Annual Income" during their earning years. Going from $140K/year average gross to $60K net is going to be quite brutal. Especially as most people tend to have proportionally higher incomes in their later years. Concerns regarding end of life healthcare or assisted living for a few years would be significant. Never mind the loss of the lower earner social security income when one partner passes and the other still has to live for a decade or more. More is better!

@denniss3980 8 ай бұрын

I can meet all my living expenses on 2K a month, at 5K I would need a few more hobbies

@KayKay0314 8 ай бұрын

Can you explain how you do this? My home is paid off and I am spending no less than $2,500 in expenses per month. This includes health insurance costs. It does not include the additional cost of wanting to have some kind of life. For that, I would add no less than $500 per month, which really isn't very much.

@TheFirstRealChewy 8 ай бұрын

That's amazing. I can't without making some major changes like relocating, having a paid off home and getting a roommate. Just the cost of healthcare would take a huge chunk out of that $2K, much less housing, food, transportation and communication. If I don't have a choice then I'd have to find a way.

@jhasemi 8 ай бұрын

Where do you live?

@kristinb5121 8 ай бұрын

You must live in a low property tax state.

@M22Research 8 ай бұрын

‘Guessing if you’re living comfortably on $2K/month, you’re also not likely a good candidate in the first place for a quality Financial Planner relationship.

@ronisueclement1432 8 ай бұрын

Excellent video! Very straightforward to get baseline information on how to convert monthly income versus portfolio needed.

@RootFP 8 ай бұрын

Thank you!

@normanrubenzer 7 ай бұрын

excellent video, could you please break down a video on someone who wants to retire at 62,has pension,401k and roth ira. the wife is on disability for lewy body dementia, ssdisabity the home is paid for, could you do a video on this situation? general terms we spend about 4500 expenses. parkinson is not cheap and finding good insurance.

@user-uk3vb3wm5k 6 ай бұрын

I have seen many of your videos on how you calculate retirement scenarios, but I have a pension and was wondering how you calculate the value of ongoing pension payments and whether you have enough to retire.

@richardb9419 4 ай бұрын

Basically add pension after social security (with similar tax considerations…and adjust the tax rate used upwards to factor in the higher total income). Then subtract the monthly after tax amount for BOTH SS and pension from your monthly need. Finally do the same calculation as shown in the video to calculate the monthly and annual gap with a 5% withdrawal rate.

@michaelmunin5819 4 ай бұрын

Love this specificity. What about inflation on these numbers?

@DanKohan 8 ай бұрын

You need to figure out how to manage your money now so you can have a good life when you're older. Nice video!

@RootFP 8 ай бұрын

Thanks, Dan!

@brianlane9534 8 ай бұрын

People also need to figure irmaa into their expenditures. That is medicare cost adjustments.

@RootFP 8 ай бұрын

Yes

@Ann-bl1do 8 ай бұрын

What about a retirement plan that takes into account when one spouse passes away and then social security payments are slashed into half or almost half? The widow’s penalty as some refer to the phenomenon.

@TheFirstRealChewy 8 ай бұрын

Yes, you should account for that. In this example she would get whatever is benefits is, plus pulling the same amount from their portfolio would result in a tax hike. So she will want to reduce her expenses to offset the taxes and loss of income if possible.

@jdenino6022 8 ай бұрын

My mom got my stepdad's s.s. when he passed away earlier this year so she is getting about $2,075 a month now. She used to get half of what he got, she now doesn't get that half anymore. She gets $ from a small annuity he took out, about $600 a month. She also has a small pension from NYC and she has health benefits from NYC which are very good benefits. She also gets another $300 from another annuity she had taken out some years ago.

@douglaswhite9777 8 ай бұрын

Thank you for talking about something other than most the people talk about million dollar people and $500,000 people now you’re getting to the point where average working people have to survive on a fixed income. This is the kind of program I like to hear because I’m a working class person I will never see $1 million on a high income to be able to retire on Manufac. I still have to work I’m 78 years old. Luckily my house is in good shape and I intend to keep going as long as possible, but we are the average people the 5000 $15,000 people that don’t have squat as it is and what am I able to put anything aside because of all the cost of trying to raise children pay for a house and cars no 9 yards. Thank you very much for sending this across. Keep up your programming keep up your programming because we like listening to your program. When you’re talk down to common sense people are with them average income type well done take care of young man.

@albedo0point39 8 ай бұрын

First example… seems that the drop of social security by taking it early isn’t worth it. They would only need $108k of money to spend in the 1.8 years before social security starts, and they’d be on $5k/month throughout. Much cheaper than accepting that large a SS deduction.

@rondejean7668 7 ай бұрын

I like the way you looked at that. Well done.

@hiddenname9809 4 ай бұрын

Yo, my husband and I are both working making good money. We don't even spend $5,000 a month even though we dine out every Friday and buy groceries about twice a week. What are you spending all that money? Biggest spending we have every year is overseas travel. Home and cars are fully paid, no debts.

@TeresaBrickle 8 ай бұрын

I would aiming be retire early or work less in 9 years, and I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $160K per year but nothing solid to show for it yet.

@DerekEskens Ай бұрын

A video covering the numbers for early retirement would be great. What if someone wants to retire at age 55?

@Davek111 8 ай бұрын

Well done!

@MrThaiBxr 2 ай бұрын

Is there an easy way to calculate or assume the effective tax rate on retirement income?

@Jonesmatsunaga 8 ай бұрын

my case, I've been targeting $10k a month for retirement. I'm investing wisely to reach that goal.

@fr9714 4 ай бұрын

You don't want to be 90 with $9mn in the bank account having never lived or taken a vacation. But you want to burn your $9m before 70 either. So you really need to draw down while having money and enough to even leave for your kids. So you have to plan. After retirement I think most costs will be property taxes on home (say $15k-$20k/year, $1500/month) + food/groceries ($750/month) + health costs ($1000/month) + entertainment ($1500/month) , so about $5k/month on a decent life style or $10k/month on a much nicer lifestyle . Medicare hopefully covers most health cost, social security covers food/groceries. So basically you need to pull from interest on portfolio. If you have a nice $5m portfolio at 65, you can get easily 8%-10% ROI on avg for about $400k-$500k/year income from it which should allow you to nicely live and have the $5m grow to suit your life for 30y before it all ends

@stewlarsen709 8 ай бұрын

Mistake around the 16 minute mark - $157k/year, not month. Great video.

@steveo601 3 ай бұрын

That portfolio needs to be invested. 1m makes 90-100k per year. 1m/with a minor portfolio burn would be pretty easy to reach that including SS.

@kb1759 8 ай бұрын

James would you run the same scenario but have them retiring at 55 and living soley on investments?

@TheFirstRealChewy 8 ай бұрын

The simpliest way is to split your portfolio into two. One split takes your from 55 to the age you collect social security, ex 65. The next split takes you from 65 to EOL. You'll want to go with a lower rate of return unless your investments are returning much more than 4% over inflation.

@andrewpadyk67 4 ай бұрын

You didn't consider Medicare premiums deducted from SS benefits, or taking the standard deduction for a married couple filing jointly. Those factors would skew your numbers. But generally you are in the ballpark.

@Jupe367 9 күн бұрын

Will the ss stop increasing if you loose your job at any age before retirement? Will it resume again once you have a job? For instance, if I stop working at 56 for a year and the assume amount to receive at 67 is. $1000. Will it decrease because I stop working for a year?

@andymacmac9151 8 ай бұрын

The figures seemed to be based on no capital drawdown during retirement…. Surely you can budget for a gradual draw down of the capital…. After all you cant take it with you…. Thus you would need a lot less than the figures your quoting… perhaps base your lifespan on living 10/15 years longer than what your predicted lifespan is…

@babszollak2512 8 ай бұрын

It would be nice to see an analysis of filing early say at 63 or 64 and then suspending at 67 (full retirement age) and then restarting at 69 or 70. I haven't seen anyone talk about this as an option to take SS for a few years and then suspend and restart. Please consider it.

@RootFP 8 ай бұрын

Excluding outside income considerations, what would be the benefit of starting them suspending?

@babszollak2512 8 ай бұрын

@@RootFP My understanding that by suspending, SS grows again at 8% until you take the benefit again at 69 or 70. So you could use the SS for a few years, suspend at full retirement age, then grow the money again and restart at a higher benefit amount. You would have to have other means during the suspend period. Someone told me about this and I read about it on SS website. Is this a strategy worth considering?

@nikesoccer275 3 ай бұрын

Question, when we talk about retirement income in these scenarios, are they future dollars or present dollars? It's never clear to me whether I should be adjusting for inflation or not. Thanks for the informative video!

@DrSchor 2 ай бұрын

Question, when we write a sentence with a question mark at the end, why do we label it a question?

@YG-fo5rl 8 ай бұрын

Assumption here is that ssn is still available when you retire.

@vinyl1Earthlink 8 ай бұрын

There are a lot of personal circumstances that would modify these numbers. What if you are single instead of married? What if you are collecting qualified dividends from a brokerage account instead of withdrawing money from an IRA? What if you own a building or two? What if you want to continue saving substantial amounts while in retirement? Everyone has to run the numbers for their circumstances.

@RootFP 8 ай бұрын

Agreed. No single example will fit for everybody’s circumstances

@M22Research 8 ай бұрын

Kind of misses the point of the video - as stated over and over - your situation might vary. The point I took away? The general way different social security and spending needs interact with portfolio needs. This video did that very nicely without getting caught in the weeds.

@suespony 8 ай бұрын

Wife and I are close, next year, done, have it figured out we will have 7 k per month without touching savings,

@MWS1960 8 ай бұрын

I have plenty of money in my portfolio to provide my monthly income, but I always take into account life span. For that reason I’m taking my money from the feds at 65…..once either my wife dies or I die, it takes $1500 a month away from our income or 33%. I want to get my money from the feds

@JohnJohn-wr1jo 5 ай бұрын

MWS, interesting. Your scenario is similar to mine but we came to different decisions. Since we didn't need the SS income at retirement to pay the bills we decided to wait til 70. It made more sense to us also because of the SS survivor benefit which would be higher when it's needed more if I died first. We look at it as an insurance benefit when we need it. I'm quite disciplined when it comes to spending, saving, and investing and considered drawing at 62 and investing it. We ran the numbers with our accountant and he told us that if anyone can do it we could. But in the thirty years he's been advising people in retirement he's never seen a single client who pulled it off successfully and was able to do better long term by drawing at 62. With the exception of those who died before 70. Both wife and I have longevity, which is no guarantee, so that ultimately helped with our decision.

@c7042 4 ай бұрын

I'm very comfortable at $31K/year and I don't spend half of it. I've been frugal all my life and it's a difficult habit to change. I just don't want to buy anything. I guess it makes my heirs happy. My NW is $500K and rising.

@SeboltLawnLandscape 9 күн бұрын

If you have access to an HSA the best thing you can do is max that baby OUT! It’s triple tax advantaged and will help carry you through retirement because most folks largest bill in retirement are those medical bills! Not financial advice, but I believe most advisors would agree.

@TorqueKMA 4 ай бұрын

My advisor told us that based on our current incomes we would need $11000/month to retire comfortably... i really don't understand these numbers. I can see where healthcare would be a problem, but today we have $ left over at 5k/month. By the time im 60 i cant fathom what id want to purchase that would amount to an extra 6k/month being necessary. Are yall retiring on diesel powered yacths?

@daxmickelson6884 8 ай бұрын

I know your examples are simplified but since retirement might be multiple decades I really think you should account for inflation.

@jdenino6022 8 ай бұрын

And don't forget increasing healthcare costs as you get older.

@jessymadsen2699 5 ай бұрын

And the fact that there will probably be lesser to no social security by the time a lot of us retire. Depending on social security is risky….

@user-ht6lu1eg1r 4 ай бұрын

One thing I would add. Anyone that expects to receive 10K or 15K per month most likely has some of their investments in after tax accounts that will not be taxed when withdrawn.

@PickleballMike509 8 ай бұрын

what is the age you are basing these numbers off of? 30 years so age 95, or?

@jdev232 8 ай бұрын

In your scenarios, how long are the "dusks" living?

@joecocklin8596 4 ай бұрын

So when you say you need 3 million for 15k per month, how is it invested? Or is it even invested?

@gator701 Ай бұрын

In the couples - Social security example - you say there is not federal tax on that $5000. Why?

@MKF1205 7 ай бұрын

However, you will need to work or have $ to start SS at 70. Can’t retire at 65.

@jamescraven8071 8 ай бұрын

Depending solely on 2 Social Securities is risky & not realistic. My husband just passed away this year at 65. The average age of widows in the US is 59yrs old. 😔

@chessmaster1115 4 ай бұрын

What if there SS benefit at full age goes down 25 percent becuase they run out in 2036 do they still take the full benefit at 70 or 67?

@MrKlawUK 4 ай бұрын

today I learned the US - the famous no safety net country - has a pretty decent retirement setup

@marksatterfield 8 ай бұрын

Taking 5 percent out per year is a high number. Where do you get that

@bruced.370 4 ай бұрын

Actually not at all. 5.5% is what I'm planning on and adjust accordingly each year. I want to deplete to zero not keep it.😊

@runnerup15 4 ай бұрын

Out of curiosity, what is the likelihood of social security existing in 30 years? I don't feel confident that I'd be able to count on it with regards to my own retirement plans

@philscherer1605 4 ай бұрын

100% When people say Social Security is going to "run out" they don't mean it will go away, they mean it will shift to a PAYG (pay as you go) system. That means people on Social Security will see a 10-15% drop in benefits.

@joecocklin8596 4 ай бұрын

Depends how many people are retired vs how many people are working at that time? Current workers pay for current retirees. It's not a pot of money.

@MStar10 4 ай бұрын

Instead of taking out or selling 5% why not use divs or distributions of high yield funds???

@mikeskaggs3763 8 ай бұрын

Good video but isn't 5% SWR a bit high for a future of possible reduced investment returns?

@TheFirstRealChewy 8 ай бұрын

How long do you need the money to last. If 20-25 years, then 5% should be fine. Even if your investments grow only to match inflation, it should last 20 years at 5%. The earlier you retire, the lower you want that percent to be since your retirement years is likely to be longer. If retiring at 70, then 20 years of retirement puts you at 90 before the money runs out (technically you'd still have social security benefits).

@livingtheslolife 8 ай бұрын

James, a 5% withdrawal rate seems a little aggressive based on the Trinity study advocating 4%. But is that b/c this fictitious couple is so close to being able to collect Social Security that there is very little risk of their exhausting their portfolio?