The Earliest (& Safest) Time to Stop Saving for Retirement

Рет қаралды 125,685

Күн бұрын

Investing for the future is a commendable and necessary goal for financial security, especially in retirement. However, there comes a point when continuing to save may have diminishing returns, sacrificing current experiences for a future that might be overly secured. In this blog post, we'll delve into a real client case study and explore the principles of compounding and opportunity cost that led to a surprising recommendation: to stop saving for retirement.
Tommy and Linda:
Tommy and Linda, a couple in their early to mid-fifties, approached us for financial planning. They were diligent savers, with a net worth approaching two and a half million dollars, a result of consistent saving, wise investments, and even the liquidation of significant stock options.
Their retirement portfolio included 401(k)s, Roth IRAs, a joint trust account, and valuable real estate assets. With a projected portfolio growth rate of 8%, they were on track to accumulate a substantial retirement nest egg by the time they reached their late sixties.
Goals and Dilemmas:
Tommy loved his job and planned to work until age 67, while Linda, a stay-at-home mom, wanted to focus on family. Their financial goals included $6,000 per month for basic living expenses, $15,000 annually for travel, and accounting for healthcare costs.
However, the couple expressed a desire for more family time and lamented the lack of available funds for meaningful experiences due to their aggressive retirement savings strategy, which included maxing out the 401(k) and contributing to Roth IRAs.
We applied two crucial principles in financial planning to assess Tommy and Linda's situation: compounding and opportunity cost.
Compounding:
Compounding works over time. In the early years, contributions played a significant role in portfolio growth, but as the portfolio size increased, the market's impact became more substantial. This illustrated that, over time, the portfolio could potentially grow on its own without the need for aggressive contributions.
Opportunity Cost:
By persistently saving for a future that might be over-secured, they risked missing out on valuable experiences with their children, especially during these critical teenage years.
The Decision to Pause Retirement Savings:
In a surprising turn, we recommended that Tommy and Linda pause their additional retirement savings. While we advised them to continue receiving the employer match in the 401(k), we suggested redirecting the surplus funds toward creating immediate and memorable family experiences.
The Impact:
Rerunning the projections with reduced retirement contributions showed a $4 million decrease in the projected portfolio at age 90. However, the couple still had a comfortable margin to meet all their retirement needs, including basic living expenses, travel, and healthcare.
Tommy and Linda's case serves as a compelling example of when it might make sense to pause retirement savings. The principles of compounding and opportunity cost, when carefully considered, can guide individuals and couples towards a more balanced financial plan-one that not only secures the future but also allows for the enjoyment of life's precious moments today. Don't let retirement be the sole consuming goal; instead, strive for a more aligned life that blends prudent planning with the joy of the present.
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⏱Timestamps:⏱
0:00 Too prepared for retirement?
1:03 A case study
3:46 Consider your values
5:51 Project out
7:59 Cashflow summary
11:06 Projection and reevaluation
13:06 Years you can’t get back
15:46 Two principles
18:53 Questions to ask yourself
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Пікірлер: 207

@jameschaves5723 4 ай бұрын

Great video. When I hit 50 I cut my hours back and consequently started saving less. My mother is 89 y/o and I’m spending all that extra time with her. We now go out to breakfast, I mow her lawn and she loves making me lunch. No money is worth these experiences. She doesn’t have long and I can’t put a price tag on that!!

@videosabia 3 ай бұрын

Thanks for sharing your story. It resonates so much with me. My mom is 79 and needs elderly care. I am in the process of doing the same.

@patienceisalpha 6 ай бұрын

You only get one shot at spending time with your loved ones. Learning from people that have these regrets is better than come up to the same conclusion at 95

@ss-tx-rx2860 4 ай бұрын

This has to be one of the most informative financial/retirement planning videos on the Internet. This is my first time viewing your channel, so admittedly my sample size is 1. That said, I appreciate the data driven matter-of-fact approach which does not sensationalize very serious matters. I appreciate the advice of Dave Ramsey, I appreciate the Money Guys, I appreciate Graham, and I appreciate Caleb Hammer, but they all seem to focus at least as much on showmanship as they do finances. The distinct lack of showmanship here is refreshing to me. One of the easiest Subscribe clicks I've ever done, you earned it.

@RootFP 4 ай бұрын

Thank you for that great feedback!

@sajnate52644 2 ай бұрын

@@RootFP I am just finding your channel. Please consider doing some of these calculations for single and head of household savers.

@CaptainBenjamins 4 ай бұрын

Fantastic video, main reason I invest so much is so that I can retire in my 50s. No way am I going to max out my 401k for 20+ years just so I can retire at 67 years old like Tommy. I don’t care how fulfilling my job is. I’ll find something else that is fulfilling, like exercising, artwork, helping out my kids/grandkids, volunteering. As soon as I see I’ll have 5 million in my horizon, I am hanging up my hat.

@ggpp6252 2 ай бұрын

More power to you. Don't let other people talk you out of your plan. Best.

@joycewright5386 6 ай бұрын

I made this same error. Always lived beneath my means. Now retired 6 years and still haven’t even touched my savings. I just can’t bring myself to spend money. I don’t even have children to leave it to.

@stevenharris6626 6 ай бұрын

I'll help you spend and have some fun!! lol

@tomj528 6 ай бұрын

Same here...the problem is that we really like our frugal lifestyle and it's extremely difficult to find ways that increased spending can meaningfully improve our lives.

$@fractalelf7760$

@fractalelf7760 6 ай бұрын

If you would like some children to leave it to let me know😅

@pcash4088 6 ай бұрын

I felt the same way. Retired 5 years now. To try spending more I tried “saving”each month to a separated savings account kind of like when I was working. When is reached $800 I bought a piano keyboard to learn an instrument I always wanted to but never had the time. Start small. Give it a try. 😀

@joesmith9980 6 ай бұрын

If you need someone to help you spend your money, please let me know. I can help you out.

@angeline_marie 4 ай бұрын

I’m literally 26 with a toddler and this brought tears to my eyes. I’m working so hard to get to this point with my husband for my family. Cannot wait to see what the next 25 years will bring. Our projection for social security will be a lot lower considering our age and what we project social security will be (or not be) by the time we retire. Thanks for this video, it’s even beneficial for those who are the beginning of their retirement savings journey in seeing the light the at the end of the tunnel through these stories.

@O8Zen 4 ай бұрын

Don't forget to enjoy the journey!

@TheLiberty1999 2 ай бұрын

The fact that you are already thinking in this direction and watching videos about it, tells me you'll be fine. As long as you and the spouse stay on the same page, you'll most likely have a few million when you are old enough for the senior citizens discounts!

@MichaelQPowell 6 ай бұрын

I really appreciate your approach in the last couple of videos stressing the importance of looking at the "big picture" of our lives and not merely on accumulating the maximum possible amount in a retirement account. I am one of those people who has followed the traditional approach of saving, living frugally, and sacrificing the present for the future. I have a military pension, a small government pension, and next year will start collecting Social Security (at age 70). I've contributed to an IRA since 1983 and maxed out my contributions to the government Thrift Savings Plan during my 15 years in the government--both have balances in excess of $1 million each. I actually stopped contributing to my retirement accounts 10 years ago when I retired from the government and they have continued to grow thanks to compounding, as well as the personal feeling that what I had was "enough." I came back to my government organization and worked three days a week (Tues/Wed/Thurs) as a contractor for seven years. That relaxed work schedule allowed me to develop and pursue some of my own interests and achieve a work/life balance that had eluded me my entire career.

@simplylille64 4 ай бұрын

Wow! What an eye opener! Thank you 🙏

@kaylachristenson9664 4 ай бұрын

Literally crying remembering about the balance- great video! We are young but my husband is a good earner and we have been saving well for retirement. This is a good reminder!

@rickdunn3883 6 ай бұрын

Why use linear projections? Why not Monte Carlo ? Software that reflects sequence of return risk/variation and variation in inflation rates for expenses and for medical expenses?

@desiv1170 6 ай бұрын

Does anyone else watch these knowing that you are going to be nowhere near that level in retirement themselves, but you like "retiring vicariously" thru these examples? ;-)

@pcash4088 6 ай бұрын

Excellent video James. You should show a Monte Carlo also on this case study to see probability of success. That would help make it more realistic since as you mention it’s not a linear 8% growth rate.

@kencarp57 6 ай бұрын

What an EXCELLENT video, James! As I am approaching retirement in a few months after a 45-year career, and my wife is planning to retire at the end of May 2025, we have been asking ourselves these kinds of questions... WHAT do we want our retirement to be? WHAT do we want to do in retirement? WHAT is important to us? For me, those are really TOUGH questions. I have been wrestling with the idea of retiring for several years now, because my work is really no longer fulfilling and it is frankly just a grind - but the drive to save and save for retirement has kept me with my nose to a grindstone that I have come to despise. Even now, with our substantial savings and my maxed out SS benefits when I retire, it still feels like I'm standing on a precipice and preparing to take the MAD JUMP into retirement without a parachute. That may sound silly, but to me it's a real thing. Maybe that's just, as you said, the conditioning of my generation to be responsible and save save save, so we don't run out of money in retirement. Like this couple, we have been saving diligently for decades to prepare for retirement, and our finances are in the same ballpark as them, except our kids are older and are all living their own lives with their own families now. We want to travel around the US in our retirement - seeing all of the things one or both of us have never seen, and doing one or two cruises a year that we both enjoy. Frankly, just having my days free to do whatever I want is the biggest thing I look forward to!

@davidpaulson7111 6 ай бұрын

That is exactly how I feel! It's a huge jump into retirement but my math keeps telling I have more than enough money. Now I keep thinking of catastrophic events. Weird that we want something so much, we keep saving for retirement, then find reasons and excuses to avoid doing it.

@michaelalberts4699 6 ай бұрын

It boils down to what means the most to us. You do an excellent job James of illustrating what was most important to this couple and how they could handily re-direct their resources to better serve their family.

@hckicker94 6 ай бұрын

James...thank you for sharing this!! My wife and I are in the same situation that you present with your "sample couple." I'm 52, she is 53 and retired 4 years ago. I think 2024 will be my last year at work and we want to have more of the experiences that you are describing. It is just so hard to get out of the frugal living and saving mindset.

@ggpp6252 2 ай бұрын

Start small doing what you both love to do

@neilcook1652 6 ай бұрын

Thought provoking and helpful, thank you James.

@janethunt4037 6 ай бұрын

Preach it, James!!!! We're just back from a trip to London with our son and his wife, and that time with them was a dream come true for me. We told them, "Merry Christmas, and Happy Birthday!"

@harveyquinton6303 6 ай бұрын

Hi James, been forever since we talked. Want to let you know that after 17 years in private practice and 20 years teaching full time, I will be “graduating” with the class of ‘24. LOL Going to two days a week starting in May just to stay active in the school and still contribute. I will be 72 in June which makes me very late to the retirement party, but till young enough to travel, keep scuba diving and visit friends. I am done with trading time for dollars. I have been a crazy saver for decades. Time to enjoy the rewards.

@DanKohan 6 ай бұрын

The story of Tommy and Linda made me think about finding that sweet spot between saving for the future and enjoying today. Awesome video

@realdrtommurray 6 ай бұрын

I'm a sex and marriage therapist with two decades of experience. I began an MBA program in Jan 2023, considering transitioning into Financial Therapy and pursuing the CFP. Having trained hundreds of therapists over the year, you're approach and style reflect the qualities of an exceptional therapist/counselor. I've enjoyed your content.

@jr.6199 4 ай бұрын

Therapizing finance may work for an underhanded sales strategy (like if you do high commission fees instead of flat rate planning) but what people need is the practical mechanics of finance, saving and investing without returns being eroded by fees. I rely on facts from planners and as soon as I feel the therapy or relationship sales approach... I uncover their fees and walk.

@Beadgcfb 3 ай бұрын

Family vacations. I only laugh because later when you ask them, the kids mostly remember the hotel pool and the cat.

@rambo-rb 5 ай бұрын

Thanks for the video @James. It is easy to intellectually absorb the advice but putting it into practice is very difficult.

@BadPhD777 6 ай бұрын

Another awesome video James! I sure hope the couple takes your advice and starts making some family memories now. You never know when you're time is up - some of us won't make it to our intended retirement age - enjoy it now if you can!

@ericmorrison6996 6 ай бұрын

Great video! I just adjusted my contributions levels due to the fact that I have been saving enough to my retirement accounts and to spend more $ in the here and now. Your free monthly budget excel sheet and your online retirement calculations helped to convince me that I would be ok to lower my contribution levels. I could hit my retirement threshold at or near 59 years old. That is only about 11 years from now. Thanks for the free calculators and you tube content.

@richdewitt760 6 ай бұрын

James you are spot on as usual . Thank you. I too am in my 50s and offer up my generation has lived as working Adults thru 9/11 crash, wars and terrorism fears, the financial crisis of 2008 with the Housing crisis, most recently Cov 19 for few years, add in a period of money printing press high inflation. Vey expected the first sense is to over save and even over insure, worse still to avoid risks and get below average returns. That said Sir your videos do remind us why we go to work is not to run up the numbers--it is a means to an end-to live an intentional life. We work so we may live-we do not live just to work. Thank you Sir!

@arutility 2 ай бұрын

Loving your videos! You hit some very important points.

@MatthewBennettFPV 6 ай бұрын

I know this, but I need to hear it and be reminded of it again and again. Now is the time to let up and enjoy some experiences with the money. At the same time, make sure my kid understands we are able to enjoy the experiences because of the hard work and discipline in savings we did early on.

@ChapstickChunx 4 ай бұрын

I really needed this video. Thanks.

@wvnole0962 4 ай бұрын

Great video. I made my biggest career decision based on this concept. After 10 years of maxing out my 401k and Roth IRA, my projected retirement nest egg would allow me to “get-by” in retirement, even if I never contributed again. I left my job at age 34 to spend a few years traveling the world while I still had my youth, health, and energy. Four years later I rejoined the work force with my retirement savings having increased by ~50% during my time off.

@nathanielcameron8006 4 ай бұрын

actually love this. thanks.

@mariviberrios 6 ай бұрын

Amazing video. Thanks!

@cablaze1 6 ай бұрын

That was good info James. Thanks👍👍👍

@stevenharris6626 6 ай бұрын

Great video!! I am one of those big savers, and this video really helped me do some thinking! I need to start spending a bit more and save a bit less. Still I am cautious about saving enough because nobody can predict the future!! Thanks again!!

@ImaAHol 6 ай бұрын

Great message; know the numbers and enjoy life!

@videosabia 3 ай бұрын

This is such an important topic to bear in mind. I can relate to this case study!

@willlsmith8063 6 ай бұрын

well done on 60k subs .........love your content

@ozkancab 4 ай бұрын

Fantastic angle of view.

@eastwestpicayune8200 6 ай бұрын

Great info. I wished i knew about this.

@lidarman2 Ай бұрын

We are in this boat but I can say we have maximized our experiences while working. Now we are both going half time to have even more grand experiences and still have a connection to work before we hit 60.

@ebelen1 5 ай бұрын

I didn’t do a full blown analysis like the video but came to some similar conclusions about reducing savings and spending now. Like others that have commented, my wife and I are very good with low spending but spent last year getting back into an expensive habit we had when we were much younger - sneakers. It taught me that it’s fun to spend as I don’t want to get to retirement and not be comfortable spending. I would highly recommend learning how to spend if you have forgotten or never learned before it’s too late.

@TheAutomedon 4 ай бұрын

phenomenal video

@NavigationTraining 4 ай бұрын

great video, great presentation

@princessleiathemaltese5571 3 ай бұрын

Great job on this video 😊

@JWEATHERSBY 6 ай бұрын

This video, and another one you posted (that made me subscribe), really get at a growing concern that I have: Am I saving too much? I'm still relatively young as it pertains to the world of retirement planning (37 y/o), but I've already put a decent amount away and have projected out a great deal (factoring in a lot of the things you mentioned in this video). The scenario in this video is actually pretty applicable in terms of HOW I'm approaching my savings and have been for years. However, my fear is the unknown aspect. Even though I'm projected to have a great deal of money leftover for a single individual (if you consider some normal market years) -- what about unanticipated shocks? Medical costs. Drawn out recessions. Natural disasters (I know that's extreme, but it does cross my mind as far as planning for retirement the best I can). I understand that I'm sacrificing things now for the future, but some part of me really does worry that the future may be freakishly bad or different. Especially when you consider I'm not even 40 yet. Hopefully, I have a lot of time left for the world to change & Murphy's Law is scary when given time. Anyway, great video and definitely just more to consider.

@veronicavids 3 ай бұрын

I really appreciated this video. I'm quitting my job soon to get my masters abroad! I'm really grateful I found a great program and I've been so nervous about the two years without contributions. But I know I'm already ahead for my age bracket and I only have a few years left to be childless so might as well experience this while I'm still young ❤️

@YY569zyzz 6 ай бұрын

Thanks for the video. A big portion of expense before their retirement in this case study could also be their two kids’ college spending if the parents will support them.

@erickarnell 6 ай бұрын

Thanks for showing the specific example. Mine is a lot different, but the process is what's important. In the initial analysis discussion, what is the value of the steady investment increase vs. a Monte Carlo analysis?

@rubengramon 4 ай бұрын

Excellent video.

@glennaa11 6 ай бұрын

I've long said that financial planners are mainly psychologists. I'm in a somewhat similar boat to this case. I've been working with my planner for many years and it's been clear for quite a while that I am on a pretty good track and have decided to retire fairly early in two years. Having a federal government employee pension will help quite a lot. He's always encouraging me to spend more, but my frugal nature typically wins out. It's difficult to switch gears in this way as it definitely requires a change of mindset.

@rambo-rb 5 ай бұрын

re>> my frugal nature typically wins out. It's difficult to switch gears in this way as it definitely requires a change of mindset. SO TRUE!!!

@jonathandaniels9910 3 ай бұрын

I too will have the pension AND health care if i wait 10 years....could retire in 7 but the FEHB is just too valuable i think particularly given wife is 8 years younger and would be on the ACA for like 20 years...

@markrrynolds 6 ай бұрын

Great analysis. Very helpful to see how this plays out over their lifetime. What would be the offset in income tax payed by not saving the $37,000 in pretax 401k contributions? Doesn’t change the purpose but was curious what net difference is in the end. Thanks

@lenoraB1 6 ай бұрын

Good content as always. I’ve been listening to you since the beginning of your podcast and I’ve learned a lot along the way and the day is finally here! I’m retiring at 60 at the end of this month (December) I have been investing money for 9 months and I have made more money than ever before and i have definitely moved to the top of my list for assets

@fialee8ca132 6 ай бұрын

Mid 50s is not young. Most of your life is over at that point, and your health has peaked. Retiring at 67 is wasting your life for fiat currency you'll never spend. You aren't going to enjoy that $200,000 funeral much... since you are dead.

@The.Harsh.Truths 5 ай бұрын

Correct. This couple is trapped in their rat race mentality.

@tylerh1648 4 ай бұрын

50s still got life left if you keep in good health. Hell you can see 70 year olds still running marathons. Health is wealth.

@autohelix 4 ай бұрын

50 is not young at all.

@angstfree2008 2 ай бұрын

@@tylerh1648this is not the average population.

@spdog3344 4 ай бұрын

Wow, great perspective! If my wife and I went down to only match until 60 y/o projected a little over 5M in 401K vs if we kept doing what we do now we’d be around 6.5M. I think we want to keep aggressive at least until we are in our 40s (31 and 32 y/o now). Those projections are for not getting any more raises and we definitely will. At a certain point would be nice to let off the gas and be able to help our kids and church/community more!

@sstrongman1667 5 ай бұрын

I need to send this to my 80 yr old grandmother. Her and my grandfather both have teachers retirement, my grandfather has SS, and they have well over $1million in IRAs. She was telling me the other day, "I don't know how we are going to make it. We can barely live off of our retirement and RMD. Our balance in the IRA went down last year and that's just not good, I don't like having less money than I did last year." She has pinched pennies her whole life and can't understand that now is the time to spend and quit saving.

@kchal0 4 ай бұрын

I’m in this boat but scared to ease off the gas of saving. I’m 30 though, and with 2 boys the worst case scenario is I just leave it all to them.

@lordabhikingfisher8087 5 ай бұрын

Me and my wife have double of tommy and Linda has and my expense is same. I should fly business class vs economy next time.

@tomj528 6 ай бұрын

We're in our own unique situation, basically retired and around the same age as the example couple but we're going to keep saving until FRA for the tax savings alone. I've got 4 more years to make good sized tax free Roth conversions before the Secure Act 2.0 ruins the form 8880 retirement savers credit in 2027 and my river of Roth conversions becomes a trickle. That's going to be 11 years total I'll have into my tax plan and likely I won't be able to convert everything now but whatever is left at FRA I can bleed off tax free in the next several years and put into our taxable investments. This couple is ahead of us in net worth and by a lot in income but they're going to get nailed with taxes including the dreaded "Tax Torpedo" and the "Widow's Tax Trap" while we're completely tax free. Everyone's different and there's a way forward for all of us. Cheers!

@kennitz8155 6 ай бұрын

Love your videos! For me I would continue the Roth, but drop down the contribution to the matching percent like you did. It will help with RMDs

@grizzlybear73 4 ай бұрын

Right? Don’t throw away tax-free growth especially when you can withdraw the provincial principal penalty-free is you need it.

@bryan_witha_whyy 4 ай бұрын

Man. Putting in 50,000 and your portfolio is making 500,000. I’d like to think I’d back way off to just the match once I was consistently seeing growth higher than my annual living expenses. There might be some major psychological barriers for folks when it comes to OVER saving. Counseling is a great way to sift through that.

@fennugreek-gs5zb 3 ай бұрын

Spending some of what would have been put in our 'Trust account' on three family vacations while our kids were in high school was some of the best money we've ever spent. We're so glad we had that time with the kids, in contrast to sitting in a slightly safer position in later years and grumbling that our kids never visit.

@FroisonControl 4 ай бұрын

im 30 and just started saving for retirement and do a lot of stock market trading. now i hate spending money and just knowing about compounding growth keeps me from doing it sometimes. i do want to retire by 40 or 45 (ambitious, i know). thanks for sharing. gives me a lot to think about moving forward.

@jonathanfoster2263 6 ай бұрын

I plan on retirement at the end of 2024 at 60 years old, last year i realized my cash reserves are not as high as I would like, I have a lot in 401k and some in Roth but if the market has a downturn I would rather pull from cash reserves that are also not taxed. the lower tax rate will allow for a lower ACA premium in the first years of early retirement, this will help me get to 65 in 5 years after retirement and medicare kicks in while not tapping into my portfolio as much. I stopped throwing all my my extra into the 401K but put it into a hysa enstead

@xmochix604 4 ай бұрын

This is true. We are in our late 30s and I projected ours to be about the same amount in our 401k at old age, not including the other liquid assets we have. I’m really trying to figure out a good balance and everything.

@Speedospearo 6 ай бұрын

The monthly budget used is way too low.

@CaedenV 4 ай бұрын

Absolutely! When we are kids we aren't responsible, and the adults around us are all in one way or another encouraging and training us to be more responsible. We tend to think then that being responsible means more work, more saving, less fun, etc. But there is a point where "being responsible" means doing less work, avoiding burnout, enjoying a hobby or creative pursuit. It is irresponsible to work yourself into an early grave. It is irresponsible to ignore your family and prioritize work above all else. Responsibility is balance. That said, after decades of debt and struggles I'm absolutely in over-saver mode right now. Too much life has happened to me to reasonably think that my future will be predictable enough to be able to count on steady employment and savings between now and retirement lol. So I figured out my retirement savings goals and then worked backwards with 3 charts. 1) what is the minimum I need to save every year to meet goal. I need to at least manage that much to be on the responsible route. 2) What is the lump sum balance needed each year to grow to my retirement goal without any additional contributions? If I approach this number then I need to slow down and reallocate more to real-time wants and needs instead of future wants and needs. 3) this is more of a worksheet where I can play with my savings rate and see what I am saving now, and can compare with my minimum, and see at what point I intersect with the lump sum figure. So right now I am saving 50% of my income. Not all of it is in retirement, but retirement is the largest chunk by far. If I keep this up, then we should hit the lump sum number in 10-12ish years. So we are absolutely saving too much right now. But in knowing how off the rails my life can get sometimes, the goal is to keep pushing towards that lump sum number until the minimum we can/should invest (get the full 401k match, and max out our HSA) matches the minimum we should be saving in the first column. So we are keeping the agressive saving for another 3-4 years, and then we will cut back on retirement savings dramatically. The obvious critique here is that it isn't tax efficient, and that the more consistent 401k contributions over a career will be a better allocation of funds. To this I say... What if I don't want to work at a place with a 401k the rest of my life? What if my wife or I get sick and can't hold down a full time job the next 25 years? Both of us have already had times in life where we haven't been able to work before... And we aren't going to get younger and healthier over time lol. So having the option to work part time, or freelance where I may not make enough to pay myself a retirement plan later... Those are very real possibilities. So yeah, don't go over the lump sum number... But get at least a bit ahead of the minimum. In our case we feel the need to get well ahead, but we have a history that pushes us towards that. But everyone should plan to get at least a little ahead so that a transition in employment, or medical/mental derailment doesn't screw up your retirement plans. And if nothing bad happens, awesome! You get to stop saving for retirement early, or retire a little early, or have too much money in retirement. Boo hoo, what a horrible problem lol. But being at the minimum goal and getting derailed for a few years at a critical time can really mess you up. So get ahead.. Just not obscenely ahead.

@pattylovesneal 2 ай бұрын

One important thing I could add is college tuitions. Private colleges in the North East are around 70k per yr. multiply this x4 and you get almost 300k per child if they choose to go to a college like this.

@JNHEscapes 4 ай бұрын

I am 47. Save 70% of my income. Pouring money into investments about 15k a month. I have liquid investments of 1.8 million and my net worth is just below 2.1 million. My house is paid for and I refuse to stop saving and one thing that is never talked about is the fact that just about every 10 years or so the portfolio will probably be cut in half with a correction. I am trying hard to be at 10 million by the time i’m 70, but it will take everything i’ve got to get there and survive corrections. I will never believe in the idea that you just stop saving…and where are the dividends in your analysis? All of my accounts are taxable brokerage and i’m already making nearly 50k a year in dividends with simple broad market etf’s. I never wanted true retirement accounts because i never wanted to be told what i can and cannot do (without penalty) with my own money. Everything i have is after tax.

@Paul-GrnHil 6 ай бұрын

Am I missing something? Where’s the college savings for 3 kids? If they are “all about family” it seems something is missing in their financial planning.

@karinstucchio 6 ай бұрын

I was wondering the same thing.

@denisebruckner3204 5 ай бұрын

There retiring,, there kids are full grown ass adults with there own jobs , raising there own kids

@kruemelkevin 4 ай бұрын

@@denisebruckner3204 My dude, use the word "their" instead

@d_all_in 4 ай бұрын

They don't want communist children

@ThisIsTheInternet 4 ай бұрын

@@denisebruckner3204 What? They're in their 50s and have a 10 year old kid. Did you even watch the video?

@andrewstorm8240 4 ай бұрын

Great background, maybe add some counter colour - green?

@Jack51971 4 ай бұрын

Many Americans have left the USA for Colombia, Mexico, Thailand etc etc...Colombia is cheap with dollars now....Portugal is popular. Just another thought....

@prkeene 6 ай бұрын

Just discovered your channel and very appreciative of your content. A similar question has been on my mind but different life scenario as I'm in my late 30s and also saving aggressively, ~30% of gross income going to retirement investments and savings, inclusive of employer match. However, all finacial planning advice I've received both professionally and through self-directed modeling in tools like New Retirement have focsued on plan and portfolio success rate driven by Monte Carlo analysis. Is the $21M/$17M portfolio balance you presented based on a 50%-percentile median result? What would be a 10th or 25th precentile outcome and would the clients have been just as comfortable reducing their retirmeent savings to a minimum if the were advised they had a 10% or 25% chance of exhausting their savings or having to significantly alter their plan? This does not seem to be a relevant detail or modeling methodology you present to this client at least as presented in this video.

@EdA-bz3bu 6 ай бұрын

This is not the best example. How about a retirement account of $1.2m and retiring at 55 with $7k a month spending with no debt.

@BusterDarcy 4 ай бұрын

The opportunity cost I care most about is my time. Retiring as early as possible so I can truly make use of my time on my terms is what drives my saving and investment strategy more than anything.

@weightelk 4 ай бұрын

So much more respectful, wise, and personally-tailored than Ramit Sethi and his abrasive, arrogant, and "salesman-y" content.

@RootFP 4 ай бұрын

Thank you

@briancolw 6 ай бұрын

I love your videos and you are one of the best on the internet. However, it seems you often don't account for passive investment income when you go through these scenarios. I would love to see you explore the impact of passive income streams on the potential for early retirement. Curious what your thoughts are on it. But overall, you have some great advice and I'll keep on watching!

@CessnaPilot99 6 ай бұрын

Agreed. There was that rental property mentioned in the beginning, that income was never taken into account. I imagine it just complicates things and most people don't have passive income so it doesn't apply to most watching

@xlerb2286 3 ай бұрын

We're at a point where we could stop saving for retirement but I'm thinking I'm going to call it quits this spring, a couple years earlier than we'd planned. In going through our plan, not that I think it's too likely that social security won't be there at all, we totally excluded social security. We also assumed a low investment rate of returns, and high inflation. And the plan works. Throw in a more average market rate of return and some social security income and it looks even a bit better. And we've got a little income coming from land rental that we didn't include as well.

@tscoff 5 ай бұрын

I’m saving between 30% and 31% of my income for retirement. But I’m living a very comfortable lifestyle.

@Alexander-wj5wr 2 ай бұрын

What software are you using in the video with all the numbers and projections?

@clbcl5 6 ай бұрын

This plan shows the absurdity of that 8% idea from Dave.

@clint3868 4 ай бұрын

Seriously, 8% is a huge assumption, especially without taking into account sequence of returns risk

@jburchel 4 ай бұрын

You mentioned that 401k disbursements are taxable as normal income (either in this video or another one I watched from you), but isn't that only true for the PRE-tax contribution percentage of your portfolio? If one makes AFTER-tax contributions to 401k instead, my understanding is the portion of your 401k that comes from those contributions, while taxed before being contributed, is withdrawn tax free at the end. Also, if that's true, then is it also true that if your after tax contributions are allocated to investments that grow more than your pre-tax or match contributions, the percentage that is tax free will also grow? Or is the percentage that gets taxed fixed based on the original percentage that was contributed after tax?

@due51outdoors 4 ай бұрын

At 58, I’m formulating a retirement plan, and watching these kinds of videos are part of my formulation. But it’s hard to glean much from this one when you’re highlighting multimillionaires. What % of 50-somethings have $2.5M net worth? I realize there’s a message/lesson in there, but “normal” people (perhaps the majority of your viewers) can’t stop saving for retirement.

@Shy-807 Ай бұрын

My husband is 57. He would like to retire in two years for valid reasons. I am 52 and will probably support him until I could retire. I am not sure if I could afford 😢it. Our house has one year left off the mortgage. Our condo is fully paid off with a tenant continuously. We have another one that is almost finished but only 50% paid. However, these units are in another country. We have one student but has a 529 account. We don’t have any savings. Our combined retirement accounts with traditional IRA is about 2m and a house worth 820k. We are expecting a refund of 24 k, but planning on using half of it to celebrate our 25th on a trip. We realized that we could save the money, but eventually we would not be able to travel with them because they will have their families and work schedule. Any advise?

@vernshird711 5 ай бұрын

I'll be doing early retirement at the end of 2025 and will get a pension. I'm currently in year 2 of the special 457b 3-year catch up provision ($46K for 2024). I also contribute to a 401k ($14K in 2023), but will decrease the contribution amount for 2024 and put the difference into my savings account as cash. Since my pension will start in 2026, I may stop contributing to the 401k altogether in 2025 to boost up my cash savings prior to retirement.

@mikesumma4533 4 ай бұрын

This is why people should prioritize investing in a brokerage account you’re still investing in the market, but can use that money at any point with no penalty.

@alexduncan4126 4 ай бұрын

What software is this? I like the look of it better than eMoney

@penelopepoppers 4 ай бұрын

Wait, what is this software you’re using? Is that available without having a relationship with one of your FAs?

@user-fv1576 6 ай бұрын

Please can you run the same with lower income and partner with little savings

@ashleyspianoprogress1341 4 ай бұрын

Is this software built in house? Looks incredible. Are you hiring software engineers?

@baileytran4013 4 ай бұрын

How can we always have growth? Won't the economy stagnate at some point due to limited resources?

@mucusofwanderhome6945 6 ай бұрын

Why is it that these “scenarios” always include a trust or a pension. Hmm 🤔

@jjodod 4 ай бұрын

I am interested in where you came up with the expected average annual return 0f 8%. What is the portfolio balance? Our 60/40 professionally managed portfolio has only returned 5.4% over the past 9 years.

@autohelix 4 ай бұрын

That is a garbage return. You are geting ripped. SPY had a 22% return over the last year. My 401k has a 19% return last year..

@jonathandaniels9910 3 ай бұрын

they said over the past 9 years....in a 60/40 portfolio so I do not think your examples are germane

@jackester6742 4 ай бұрын

Currently it costs about 6k to save a life through bed net charities. They could save a small town worth of people from a painful death. I think they should keep saving.

@shawnbrennan7526 6 ай бұрын

Minor comment: shouldn’t she take her SS at 62 since she is going to switch to spousal benefit later? More important: I think they are under/budgeting their retirement expenses. And I didn’t see 529 accounts or saving in there.

@PatrickHatcherT 6 ай бұрын

Maybe they plan to use the 900k trust account?

@pregan66 6 ай бұрын

If she takes it at 62, she won't get the full spousal benefit at 67. Better for her to wait, she is in same boat as my wife.

@catprog 4 ай бұрын

Would it even be worth considering not going for the employee match and spending the money now.

@Hawking1969 4 ай бұрын

They have achieved their Escape Velocity. Retirement but still getting richer.

@M22Research 6 ай бұрын

Handy walk thru even tho $190K income is truly a life problem - can’t fully live life on $150K income *after* aggressive retirement savings? ;-). One thing that makes their retirement numbers sing? Half their money appears to be after tax, eliminating the pain of RMD’s at age 75 since they already plan to spend that much. If that $900K had been inside their 401K, RMD’s (and the tax impact) could be an issue.

@ProfChris 6 ай бұрын

Did you say she gets HER SS benefit AND a spousal benefit? I thought you only get one and you should choose the larger of the two. Do you mean she will take hers for a few years then switch to the higher one at FRA?

@EB-nz1qv 5 ай бұрын

Yeah that stumped me for a minute and I thought I was going to point out a glaring error😊. The way SS is calculated in that scenario is you take her benefit and then add spousal benefit to come up with a total amount that equals half of his benefit.

@bhitz 4 ай бұрын

Look at those 💪

@NavarroOne 2 ай бұрын

Makes good sense BUT your assumption of an average 8% annual return is too aggressive for my liking. How would it look at a more safe 4% PA?

@donh8833 4 ай бұрын

I would argue somewhat against this. As the last 2 years have shown us, stocks and inflation are unpredictable as of late. Save it till 65, then feel okay spending the extra. I was 20% ahead of my target before inflation. Now I'm looking at a small shortfall.