Many of you have asked what software I'm using in these projections. The software is only available through licensed advisors, but you can get lifetime access to it in my Retirement Planning Academy here → retirement-planning-academy.mykajabi.com/rpa
Looks interesting. How much of the content is different and more specific that your RUclips videos? I’ve watched them all😊 Will it walk us through how to input into this software?
The information in this video is exactly what i've been looking for! So just to confirm, simply by joining the Retirement Planning Academy, i'll have full access to the software tool you used in this video? even without being a client of your firm?
I retired seven years ago. When I retired I owned my own home on a five acre parcel and my truck was paid off. After utilities, insurance, taxes, food and just about everything else, my monthly cost is around $1100. Instead of focusing on how much money I need to save, I focused instead on how well can I prepare and what makes me happy. I get immense amount of joy working the land and it keeps me in shape. I have great neighbors in a community that is unbelievably good. In fact, when I dream about going on my dream vacation I think of right here where I live. If you focus on being happy and preparing sensibly, then everything else becomes trivial.
You’re doing exactly what I dream of. I’m retiring in about 12 years. I’m investing almost 25% of my salary. I’m going to own a little house in the country side and grow a garden. Have the family over and just enjoy life.
I also have a large estate (6 acres), that has a current value of around $2.5 - $3m.. it’s fully paid off and we love the land but I’ve thought about selling once we retire (sometime in the next 3-5yrs)…. My thought is, would I be better off renting in retirement so I don’t get hit with major repairs or expenses on a home??? New HVAC can run 15-20k.. a new roof 20-30k… those would be brutal expenses in retirement…
This was great. I appreciate your soft calm voice and the absence of annoying sponsors and pushing for subscribers and likes. Generally classy. Thank you!
The most impactful thing I've heard is that planning is very important, and it is 100% guaranteed that your plan will be wrong, but by doing the planning you learn what levers to pull to effect things so you can adjust your life to fit the circumstances.
The right time to retire is when you no longer wish to work for a living AND you ARE POSITIVE that you can afford it. But remember, if you leave your job without sufficient resources, you are not retired, you are unemployed.
James, I’m 57 and I have been watching videos about retirement on RUclips endlessly. This was by far the most informative and helpful. At least it will help me to initiate conversation with the financial advisor and ask about different scenarios.
James does by far the best case scenarios for retirement. No one else on youtube comes close. Both realistic examples and very clear and easy to understand.
Well done video, nice work. I retired at 57, earlier than I thought I would, but the best decision I ever made. I was making insane money, but it wasn't worth it. My time and freedom is priceless. I didn't need a 25 minute video to know John/Jane could retire today if they want to with $2m in their retirement accounts and their house paid off. Like most people that work hard, and save, they are on track to die with lots of money in the bank, and they are likely not factoring in the real possibility of dying a *lot* sooner than they think. Crap happens. I live a simple life with all the toys I'll ever need, zero stress, total freedom! Also, I strongly suggest everyone begin taking SSN at age 62; don't trust the govt, its likely they will dramatically scale back SS in our lifetime, so grab that money while you can. Waiting to "full retirement age" is exactly what the govt wants you to do, they want you to die before taking anything out. Last, for early retirees, look at Obamacare for medical coverage until you reach medicare age, with subsidies its insanely inexpensive, especially if you are relatively healthy.
You don't need a 2 million dollar portfolio. You can live well on $30,000 per year as long as your house is paid off and you have good medical insurance. You may *want* a 2 million dollar portfolio but you don't *need* one. With 2 million, they can quite reasonably live on $100,000 per year the rest of their lives. Even at 2% returns (and you can get 4.8% today). $100,000 in *spending* money is equivalent to having a $150,000 salary. And when you consider the cost of working*, it's more like having a salary of $175,000. * Extra car wear requiring a new car twice to thrice as often, fuel, extra wear on more expensive clothing, dry cleaning, lunch out...and likely buying prepared food for dinner *and* breakfast often because you are too tired from working. Seriously, retired on much less, vacation 4 weeks a year (skiing which isn't cheap), still eat out 15 times a month, someplace really nice once a month, buy $600 worth of new clothes per year, etc. I'm now retired 12 years. I still have enough assets to last the rest of my life tho the recent burst of inflation *did* hurt a bit (I'd say it cut my fun money by 10% per year).
I'm 23, fairly finance savvy, and about to graduate college w an engineering degree. I found this very helpful to better understand how I'll need to think about retirement👍
Great presentation. We have for 48 years been savers. We are retired and did a similar analysis two years ago and and repeated it over and over and over again. Couldn’t believe the results. It showed that we weren’t spending enough to meet our goals and still have a fair amount to leave to the next generation. Now we are thoughtful spenders. We always thought of ourselves as middle class but it turns out we are rich 😂😂😂😂. Who would have figured. 😊
@@TuBui2I regret not traveling more with our three kids (now adults). At one point, we were investing $1000/month in their 529 plans and fully funded their college educations. You can’t predict your future income level when in your 20’s. You also can’t predict how far you’ll advance in your career, i.e. working your way into management. We never imagined our salaries would be as high as they eventually were.
Excellent presentation. There are two areas of concern I'd like you to address. 1) Run the scenario using the median percentage drop of investment portfolio value that had occurred in the mortgage crisis, and time it to occur in the 4th year of retirement, then project things forward. 2) Factor in say 5 years of long term nursing home memory care using a national average cost. Both of the aforementioned concerns are not rare, and can have a major impact on sustainability. There are, of course, many other rare factors that could be considered, but if all of these additional items were planned for, retirement would no longer be sustainable. Maybe add an increase in taxes (as were running national deficits), and means testing for social security benefits. Keep up the good work.
Either buy long term care insurance, or, plan to use your home as collateral for long term care, since you will likely move to an assisted living facility and won't need your house anyway. I plan to die young in a spectacular ball of fire, so won't need long term care 🙂
This is great. We are retiring this summer and just went through all this with our financial planner. We have a bit more assets but this scenario is close. You confirm everything we have been told. Thank you. Love your channel and your content, James.
( UK resident). Along very similar lines - I built a "Retirement Planning" spreadsheet in Excel. It includes all the features you mention (income from pensions, other sources such as dividends from shares or property ,tax,inflation etc) but I also added an extra expenditure sheet to allow for "one off" items on an annual basis. Examples...2024 World Cruise = £xxxx or New Car in 2025 of £yyyy or " pay for wedding in 2027 or University costs for n years for Johnny" These expenses reduce the overall savings balance and allow me to say " hey, I've always wanted to do xyz but it's expensive....what difference does it make if I do it?". I have the basic costs of running the household ( utilities, repairs, food etc with inflation), annual spend allowance for "whatever I want" and then we have the expense from the "one off" sheet. You could add in a "one off " sheet quite easily. Fortunately in the UK we don't need medicare ( although private healthcare might be a worthwhile consideration). If anything serious medical issues then it is covered. I retired at 51 eleven years ago.
This is super helpful. My in-laws have zero retirement planning beyond the value in their home and their small business. This will really help me get through the pre-planning stage so that they are ready to have a productive conversation with a professional.
This is the only channel I came across on YT with actual retirement case study examples, this is Gold. I will recommend your channel to friends and may even use your services if you are fee only financial planner. THANK YOU
This was an AWESOME video - my wife and I planned goal is to retire comfortably by age 60 (we are both mid-40's). This video definitely helped set realistic expectations on that endeavor!
James: you do an excellent job with these videos, and this was one of the best. I very much like the general principles you apply: start with your non-financial goals, create a base case, tweak to answer "what if" questions, display the output graphically. I also like that you base this on real people, and show the appropriate level of detail. One thing I would change is your assumption that RMDs are necessarily outgoings; in my own model I calculate RMDs so that my tax calculations are correct but treat the excess of any RMD over what's actually needed in that year as a simple transfer from the IRA to other investments.
To answer you question, yes! This video was sooo helpful and I appreciate you walking through each input and explaining how each affects the projection. You are the type of person I would like to sit across from to assist me on my path to retirement. I am a visual and audio learner and by you explaining as you show graphs, it helped me a lot. I also found the pace of your video, perfect. Thank you!
Really informative. Great review and how to plan to spend thru the years. I’m on that edge to retire but fret the medical costs and ability to enjoy life too. I’ll be 63, wife is 59.
Great, great video. This has a lot of similarities to our current situation. I love the way you threw in the car purchases. I had not thought of that because we typically run keep them for well over 10 years.
It’s great to have so many good options, like this couple. I’m sure they have sacrificed for years to get themselves to this point. Also glad they have an advisor that shows them the ways to they could improve their own lives with the money, as well as how they can help the kids/grandkids. I hope my children (now adults) can be in this same situation later in life. Trying to coach them to that end. Thanks for going through this scenario.
Great video! Your approach to covering all the bases in retirement and being able to run multiple scenarios is extremely helpful. I am currently 53 and retirement is on my mind constantly. I am reviewing your planning academy and feel like it could help me see some of the missing pieces of the retirement puzzle. Thanks for putting out high quality content. By the way I have just started following your podcast!!!
This detail is fantastic! Liked and subscribed. Thank you fir sharing. About to turn 54 and really starting to think about retirement and have been learning and planning. Hopefully ready in 8-10 years.
They have plenty of post-tax funds to manage their 1040 income to low enough levels to qualify for a very nice ACA credit, effectively eliminating their pre-age 65 (Medicare) health insurance cost. Their post-tax funds allow them to retire earlier without concerns about health insurance cost.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 3 years.
James this is very helpful. I just retired in December at age 61+ and my financial planner did a similar scenario for me. I too wanted to plan for travel and other personal needs in the future. I am lucky that my employer has a retirement medical plan so the cost is more than when I was working, but much less than COBRA and is a great plan until I qualify for Medicare.
Thanks James for another useful video. I think basic videos like this are very helpful to illustrate how a certain portfolio could be used in retirement. In your video, you talk about stress testing it and I think that would be an excellent follow up. Additionally, tax management is very difficult in retirement and that could be the third video that you could make, using the same clients. A multi-part video with the same clients/portfolio isn't something I've seen other people demonstrate, but I think it would be very helpful to illustrate the numerous facets involved in creating and implementing a retirement plan.
Very helpful video. You walk through your structured thinking clearly and stepwise. It’s great when you call out what the major drivers are in your analysis
it's good to show how the sausage is made. so yes, it does help going over the numbers. you touch on a lot of key caveats that shouldn't be overlooked.- well done..... I am in retirement and i especially enjoy you pointing out its not about the money, it's about the life we need to have
This is very helpful! One thing that seems very related and that I never seem to see on this or similar channels though, is a model for what the withdrawals themselves might look like. I know it's going to be highly dependent on what an individual/couple is invested in specifically of course...but in very general terms, how might harvesting that 3.8% in the first year look like for John and Jane Sample? Where would the money likely come from -- Who's IRA? Or the join account? etc? And would they sell/withdraw monthly? Or at the beginning of the year? As needed? Weekly? What general guidelines should they use to determine what to sell if it is coming directly out of investments and not liquid cash? Riskier/speculative investments first? Or more conservative ones first? If there are stocks and bonds in the mix -- should it be one or the other first?
I'd like to see these tools more broadly available for everyone to model and change over time. This is an Awesome video - while I was aware of this - THANK YOU for providing this information to everyone!
I like these examples that take some different amount, either a bit tight or pretty generous, amount and run through realistic spend rates in retirement. You really get a feel for what sort of spend rate may be ballpark for you by comparing the rates of different portfolio values.
James. I signed up for your retirement planning academy and as I have now entered in my details, this particular video is extremely helpful in seeing how to use the software to analyze my own retirement. I find the software is missing some (for me) important capabilities, but I know you license it so are not in control of its features, and also, I may find what I am looking for later. Thank you for all the great content.
I like the scenarios you show James, so great job. A couple of things I noticed in this scenario is that an assumed $18,000 for 3 trips a year is way low, particularly if you want to travel international. I would double or triple that budget for international travel which we enjoy doing. Also, their projected cost to buy a new car every 5 years seemed low as well. The canundrum for deciding when to retire is difficult because it isn't easy to precisely predict expenses. It's critical to really think thru how much money one wants or needs to spend before deciding to retire since having to go back to work due to underestimating expenses would not be pleasant and could really impact one's life negatively. Love your videos and enjoy your thoughtful approach to planning for retirement! Thanks!
Agreed on the vacation comment. Many people budget it "light vacations" in their normal monthly expenses. Then we we add in a vacation budget it's actually an "extra vacation" budget that's on top of what could normally be funded from monthly cash flow. That's what we were doing here.
I agree that predicting expenses 10-20 years out on just applying an inflation percentage is really difficult. My homeowners and car insurances have gone up 25-35% in 1-2 years so how you you accurately project those and others like it? Plus a car for 35k 10-15 years down the road will be a used car! Listen I think he is great and his presentations skills are awesome but there is no cookie cutter software unless you really pad your future expenses to compensate for the unexpected!!
We are evidently related to the “samples” and have a similar financial setup in this, our first year of retirement. The car budget made me laugh…the low amount allocated wouldn’t even buy a decent bottom tier new car, much less a good, reliable car. The excess travel budget is also too small for even moderate budget level overseas trips unless they plan to spend that $18k for a bang-up one week trip abroad, a one month modest trip abroad, or a 2-3 month backpacker budget type trip abroad. Travel prices have gone through the roof post-virus. Overseas airfare 3x higher than what it was in 2021. We had to up our retirement travel budget to an extra $30k per year for our first 5 retirement years (I have health issue and a VERY short lived family so we are greatly compressing our travel window). We are budget travelers by choice and are shocked at how little we are getting for the money. We live near Orlando. Just flying our 3 grandkids down (they live 1 state away, not cross country) for 5 days spring break and staying at a modest hotel with them, eating modest meals and going to only 1 theme park for 1 day is going to cost us about $5000! We also rent a cabin in a rural mountain community with them for a week of summer vacation and outdoor fun. The cabin has DOUBLED in price in the past 3 years. we have prioritized making memories with them while I am still here, but boy is it a budget buster. We are fortunate that we love where we live and have a fulfilling daily life in our home, community, and the surrounding natural bounty Florida offers us from coast to coast. That keeps our everyday recreational budget closed to zero.
Their healthcare is going to be more than 7.5 percent of their agi, and could be deductible. They also have 500k in saving that only pay capital gains, so $3k in taxes is fairly reasonable.
Hi James, have you projected the elderly care costs when they turn to 83 years old? Assume the couple want to go to assisted living or a nursing home after turning 83, what their financial outcome will be? Thank you!
I agree. That would be good to include. In my mind, medical care and assisted living cost the biggest unknown and I would think probably be the biggest impact on the 'stress test'
Built a real estate portfolio that generates about $240K per year. Portfolio income of $65/yr from dividends. Both of us like to sell options for an additional $40K or so per year. Some SS that I never thought was going to be around at 62. Total outflows about 50% of our income. No debt.
Very helpful content including the level of detail. Will look thru your content, but seeing something about how a potential client(s) should prepare to meet with an advisor would be helpful...as would information about how the advisory relationship would work...(e.g., is there an up front cost, then an annual fee, etc.)
This video helped me, and it tells me I already have a good plan setup myself in my spreadsheets. It gives me more confidence that if/when I do consult a planner (finding one who isn't selling something is hard), I'll already have most if not all the answers they would be telling me. My assumptions are similar, I don't have Monte Carlo access for a stress test, but I take the opposite approach, where I withdraw from my portfolio with the goal of hitting $0 by the time I'm 93...I end up withdrawing far more than I need. I also don't have a good tax assumption...I use a fixed percentage every year. Thanks for giving me confidence that I'm already on the right track!
You know what they handily leave out of the Monte Carlo analysis: the scenario in which you die. Happens quite often between the age of 60-75, the period people plan to 'enjoy' their savings.
Thanks, James, I love your clear presentations, and your mindset with regards to retirement planning. I do have a concern for folks when their financial plan timeline ends at 90 years of age. I am a physical therapist who has specialized in geriatrics during my career. I have been lucky enough to work with many patients well into their 90’s, and I can’t remember one who didn’t express surprise that they’d lived that long. I think an interesting adjustment for a couple like this would have been to extend their lifespan, and make sure that the various scenarios would still be successful. (My own plan assumes my wife, who is blessed with great genes, lives until 101…)
Great point on longevity. But the real financial kicker is: what will your monthly expenses be if you have to move from your home into a LTC facility? (Yes, the home equity could pay for a lot of that, but imagine if you had to pay for care from age 85 to 95.)
@@RootFP I always project my Portfolio til my 110th birthday. Yes people are living longer, No I don't expect to make it 110 but what if? Also, like most, I'd like to leave a legacy so approaching it this way, allows my money to outlive me. Dying with Zero is nice, I suppose, but I'd rather die knowing my family is secure.
This is really helpful as it verifies that my own personal planning process is right on the money. Instead of using software I made detailed spreadsheets for our specific and unique circumstances. It's interesting the effects of spending and how they either work against you or for you.
this is incredibly helpful! I am in my 50s, and had to start managing my mother's money for her this year. Seeing what Mom and Dad did right and where they made mistakes, and making sure her rate of withdrawals is sustainable, has been great practice for my own future retirement.
This is a wonderful video James! Thank you for making it. I'm 49, want to retire at 62, net worth today of 3 million, $2 million liquid. I'm terrified of 3 things, inflation from continued reckless government spending, social security longevity, & healthcare costs. I'm afraid we won't ever have enough since I don't have a pension.
I am not sure if your house is paid off or not, but I am 58 and have retired in similar position. Healthcare cost is the white elephant for everyone that retires prior to reaching medicare age. The rule of 55 for your 401K should enable you to retire at 55. I did this at 57, and will live off of 401K draw downs while I wait for my IRA to become available at age 60.
This is awesome. I think my wide and I are on a pretty good trajectory. We are 37 and have about $700k liquid $700k in home equity. Do you have videos on retiring at 55? Thats our goal...
this was a wonderful video, i really really learned a ton. i am 29 but i love looking at the analytics and statistics involved in saving and retirement. my goal is to retire by 45
And suicide by 55? As someone who was involuntarily (medically) retired at 38 from my career with no viable plan B career, don't be in a hurry to retire. Task and purpose really matter. So many of my buddies who are now retiring 'normally' at 45 are falling apart fast and some have already quit life. Retirement is not something to rush towards, I don't have many answers but I know that from my own experience and that of my peers going through it now.
Bone up on excel and track your expenses by categories every month. Do this a couple of years in advance of retirement. You’ll be surprised on how much you spend and where.
Great information James. Their net worth numbers are surprising close to our position. I do think we will be spending more however. It would be interesting to see, "what if scenarios" if one person were to depart earlier than expected. And how that would impact the model. I know that is the question my wife brings up as a concern. Mike
Many of you have asked what software I'm using in these projections. The software is only available through licensed advisors, but you can get lifetime access to it in my Retirement Planning Academy here → retirement-planning-academy.mykajabi.com/rpa
Looks interesting. How much of the content is different and more specific that your RUclips videos? I’ve watched them all😊 Will it walk us through how to input into this software?
So, for a one-time fee of $195, I get lifetime access to the Retirement planning tool used in your case study videos? Please confirm.
correct@@pglover19
Similar concepts, but the videos are different than my RUclips videos@@karenmcgovern3452
The information in this video is exactly what i've been looking for! So just to confirm, simply by joining the Retirement Planning Academy, i'll have full access to the software tool you used in this video? even without being a client of your firm?
I retired seven years ago. When I retired I owned my own home on a five acre parcel and my truck was paid off. After utilities, insurance, taxes, food and just about everything else, my monthly cost is around $1100. Instead of focusing on how much money I need to save, I focused instead on how well can I prepare and what makes me happy. I get immense amount of joy working the land and it keeps me in shape. I have great neighbors in a community that is unbelievably good. In fact, when I dream about going on my dream vacation I think of right here where I live. If you focus on being happy and preparing sensibly, then everything else becomes trivial.
So agree!
If I had $4000/month in SS, I’d think I was in heaven!
I live on a lot less!
You’re doing exactly what I dream of. I’m retiring in about 12 years. I’m investing almost 25% of my salary. I’m going to own a little house in the country side and grow a garden. Have the family over and just enjoy life.
That is awesome to hear you have such great community in retirement!
I also have a large estate (6 acres), that has a current value of around $2.5 - $3m.. it’s fully paid off and we love the land but I’ve thought about selling once we retire (sometime in the next 3-5yrs)…. My thought is, would I be better off renting in retirement so I don’t get hit with major repairs or expenses on a home??? New HVAC can run 15-20k.. a new roof 20-30k… those would be brutal expenses in retirement…
Love it!
This was great. I appreciate your soft calm voice and the absence of annoying sponsors and pushing for subscribers and likes. Generally classy. Thank you!
I appreciate that! Thanks for watching.
My thoughts exactly
The most impactful thing I've heard is that planning is very important, and it is 100% guaranteed that your plan will be wrong, but by doing the planning you learn what levers to pull to effect things so you can adjust your life to fit the circumstances.
The right time to retire is when you no longer wish to work for a living AND you ARE POSITIVE that you can afford it.
But remember, if you leave your job without sufficient resources, you are not retired, you are unemployed.
James, I’m 57 and I have been watching videos about retirement on RUclips endlessly. This was by far the most informative and helpful. At least it will help me to initiate conversation with the financial advisor and ask about different scenarios.
James does by far the best case scenarios for retirement. No one else on youtube comes close. Both realistic examples and very clear and easy to understand.
Well done video, nice work. I retired at 57, earlier than I thought I would, but the best decision I ever made. I was making insane money, but it wasn't worth it. My time and freedom is priceless. I didn't need a 25 minute video to know John/Jane could retire today if they want to with $2m in their retirement accounts and their house paid off. Like most people that work hard, and save, they are on track to die with lots of money in the bank, and they are likely not factoring in the real possibility of dying a *lot* sooner than they think. Crap happens. I live a simple life with all the toys I'll ever need, zero stress, total freedom! Also, I strongly suggest everyone begin taking SSN at age 62; don't trust the govt, its likely they will dramatically scale back SS in our lifetime, so grab that money while you can. Waiting to "full retirement age" is exactly what the govt wants you to do, they want you to die before taking anything out. Last, for early retirees, look at Obamacare for medical coverage until you reach medicare age, with subsidies its insanely inexpensive, especially if you are relatively healthy.
yep, you got it all figured out.
Yes, case studies such as this are very useful. Keep ‘em coming!
Will do, thank you.
You don't need a 2 million dollar portfolio. You can live well on $30,000 per year as long as your house is paid off and you have good medical insurance.
You may *want* a 2 million dollar portfolio but you don't *need* one.
With 2 million, they can quite reasonably live on $100,000 per year the rest of their lives. Even at 2% returns (and you can get 4.8% today). $100,000 in *spending* money is equivalent to having a $150,000 salary. And when you consider the cost of working*, it's more like having a salary of $175,000.
* Extra car wear requiring a new car twice to thrice as often, fuel, extra wear on more expensive clothing, dry cleaning, lunch out...and likely buying prepared food for dinner *and* breakfast often because you are too tired from working.
Seriously, retired on much less, vacation 4 weeks a year (skiing which isn't cheap), still eat out 15 times a month, someplace really nice once a month, buy $600 worth of new clothes per year, etc. I'm now retired 12 years. I still have enough assets to last the rest of my life tho the recent burst of inflation *did* hurt a bit (I'd say it cut my fun money by 10% per year).
30k per year is actually a decent amount of money if your house is paid off.
I'm 23, fairly finance savvy, and about to graduate college w an engineering degree. I found this very helpful to better understand how I'll need to think about retirement👍
Great presentation. We have for 48 years been savers. We are retired and did a similar analysis two years ago and and repeated it over and over and over again. Couldn’t believe the results. It showed that we weren’t spending enough to meet our goals and still have a fair amount to leave to the next generation. Now we are thoughtful spenders. We always thought of ourselves as middle class but it turns out we are rich 😂😂😂😂. Who would have figured. 😊
That’s awesome. What’s your approximate net worth?
On your way to retirement did you ever feel like you had any regrets of not spending more?
@@TuBui2I regret not traveling more with our three kids (now adults). At one point, we were investing $1000/month in their 529 plans and fully funded their college educations. You can’t predict your future income level when in your 20’s. You also can’t predict how far you’ll advance in your career, i.e. working your way into management. We never imagined our salaries would be as high as they eventually were.
I absolutely love real life scenarios and how you take us step by step through the analysis. Very informative and helpful as always!
Excellent presentation. There are two areas of concern I'd like you to address. 1) Run the scenario using the median percentage drop of investment portfolio value that had occurred in the mortgage crisis, and time it to occur in the 4th year of retirement, then project things forward. 2) Factor in say 5 years of long term nursing home memory care using a national average cost. Both of the aforementioned concerns are not rare, and can have a major impact on sustainability. There are, of course, many other rare factors that could be considered, but if all of these additional items were planned for, retirement would no longer be sustainable. Maybe add an increase in taxes (as were running national deficits), and means testing for social security benefits. Keep up the good work.
I think this is the best retirement analysis I've ever seen. Incredibly helpful. Thank you!
The case study does not include long-term care expenses or additional medical expenses, which are huge outflows in the future.
Exactly. If someone needs a caregiver or assisted living or memory care we are talking up to $8k per month in expenses.
Either buy long term care insurance, or, plan to use your home as collateral for long term care, since you will likely move to an assisted living facility and won't need your house anyway. I plan to die young in a spectacular ball of fire, so won't need long term care 🙂
@@repomannv😂
This is great. We are retiring this summer and just went through all this with our financial planner. We have a bit more assets but this scenario is close. You confirm everything we have been told. Thank you. Love your channel and your content, James.
Wonderful!
( UK resident). Along very similar lines - I built a "Retirement Planning" spreadsheet in Excel. It includes all the features you mention (income from pensions, other sources such as dividends from shares or property ,tax,inflation etc) but I also added an extra expenditure sheet to allow for "one off" items on an annual basis. Examples...2024 World Cruise = £xxxx or New Car in 2025 of £yyyy or " pay for wedding in 2027 or University costs for n years for Johnny" These expenses reduce the overall savings balance and allow me to say " hey, I've always wanted to do xyz but it's expensive....what difference does it make if I do it?". I have the basic costs of running the household ( utilities, repairs, food etc with inflation), annual spend allowance for "whatever I want" and then we have the expense from the "one off" sheet. You could add in a "one off " sheet quite easily.
Fortunately in the UK we don't need medicare ( although private healthcare might be a worthwhile consideration). If anything serious medical issues then it is covered.
I retired at 51 eleven years ago.
After a lifetime of being cautious, it is difficult to spend it!
This is super helpful. My in-laws have zero retirement planning beyond the value in their home and their small business. This will really help me get through the pre-planning stage so that they are ready to have a productive conversation with a professional.
Very, very well done! There are many CFP/CPAs who present this, and you are one of the better presenters!!
Thanks James! Going through these real-world scenarios from your professional viewpoint is very helpful.
This is the only channel I came across on YT with actual retirement case study examples, this is Gold. I will recommend your channel to friends and may even use your services if you are fee only financial planner. THANK YOU
This was an AWESOME video - my wife and I planned goal is to retire comfortably by age 60 (we are both mid-40's). This video definitely helped set realistic expectations on that endeavor!
James: you do an excellent job with these videos, and this was one of the best. I very much like the general principles you apply: start with your non-financial goals, create a base case, tweak to answer "what if" questions, display the output graphically. I also like that you base this on real people, and show the appropriate level of detail. One thing I would change is your assumption that RMDs are necessarily outgoings; in my own model I calculate RMDs so that my tax calculations are correct but treat the excess of any RMD over what's actually needed in that year as a simple transfer from the IRA to other investments.
To answer you question, yes! This video was sooo helpful and I appreciate you walking through each input and explaining how each affects the projection. You are the type of person I would like to sit across from to assist me on my path to retirement. I am a visual and audio learner and by you explaining as you show graphs, it helped me a lot. I also found the pace of your video, perfect. Thank you!
I’m 68 planning to work till 70 - this has been very informative and d eye opening - you have integrated all variables in a concise manner. Thank you!
I’m 77 and retiring this year. This was very helpful!
Joe Biden?
77 is 17 years to late
James, this might be one of your best videos yet.
Great example. My wife and I are getting close to retirement, and this gives us great insight
Really informative. Great review and how to plan to spend thru the years. I’m on that edge to retire but fret the medical costs and ability to enjoy life too. I’ll be 63, wife is 59.
Great, great video. This has a lot of similarities to our current situation. I love the way you threw in the car purchases. I had not thought of that because we typically run keep them for well over 10 years.
It’s great to have so many good options, like this couple. I’m sure they have sacrificed for years to get themselves to this point. Also glad they have an advisor that shows them the ways to they could improve their own lives with the money, as well as how they can help the kids/grandkids. I hope my children (now adults) can be in this same situation later in life. Trying to coach them to that end. Thanks for going through this scenario.
John and Jane Sample are killing it!
Great video! Your approach to covering all the bases in retirement and being able to run multiple scenarios is extremely helpful. I am currently 53 and retirement is on my mind constantly. I am reviewing your planning academy and feel like it could help me see some of the missing pieces of the retirement puzzle. Thanks for putting out high quality content. By the way I have just started following your podcast!!!
As usual, well done. “How do we get the most life out of our money?” Excellent!
Thank you!
This detail is fantastic! Liked and subscribed. Thank you fir sharing. About to turn 54 and really starting to think about retirement and have been learning and planning. Hopefully ready in 8-10 years.
They have plenty of post-tax funds to manage their 1040 income to low enough levels to qualify for a very nice ACA credit, effectively eliminating their pre-age 65 (Medicare) health insurance cost. Their post-tax funds allow them to retire earlier without concerns about health insurance cost.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 3 years.
Oh yes, this is super helpful! 🎉I feel lucky to have the ins and outs of a long range plan. Thanks for sharing.
James this is very helpful. I just retired in December at age 61+ and my financial planner did a similar scenario for me. I too wanted to plan for travel and other personal needs in the future. I am lucky that my employer has a retirement medical plan so the cost is more than when I was working, but much less than COBRA and is a great plan until I qualify for Medicare.
Congratulations on your retirement
Thanks James for another useful video. I think basic videos like this are very helpful to illustrate how a certain portfolio could be used in retirement. In your video, you talk about stress testing it and I think that would be an excellent follow up. Additionally, tax management is very difficult in retirement and that could be the third video that you could make, using the same clients. A multi-part video with the same clients/portfolio isn't something I've seen other people demonstrate, but I think it would be very helpful to illustrate the numerous facets involved in creating and implementing a retirement plan.
Good point. I'll look to do a follow up that shows how we stress test this.
Very helpful video. You walk through your structured thinking clearly and stepwise. It’s great when you call out what the major drivers are in your analysis
loved this! im on the back half of my 30s now and im alway crunching these numbers. loved to see such a detailed real world example
We had a meeting about retirement planning with a financial advisor in July and discovered we were okay. M
I think the detail in this video is great. You have modeled almost exactly my situation to almost the last $. Loved seeing it.
Glad you enjoyed it!
it's good to show how the sausage is made. so yes, it does help going over the numbers. you touch on a lot of key caveats that shouldn't be overlooked.- well done..... I am in retirement and i especially enjoy you pointing out its not about the money, it's about the life we need to have
Thanks for watching!
This is very helpful! One thing that seems very related and that I never seem to see on this or similar channels though, is a model for what the withdrawals themselves might look like. I know it's going to be highly dependent on what an individual/couple is invested in specifically of course...but in very general terms, how might harvesting that 3.8% in the first year look like for John and Jane Sample? Where would the money likely come from -- Who's IRA? Or the join account? etc? And would they sell/withdraw monthly? Or at the beginning of the year? As needed? Weekly? What general guidelines should they use to determine what to sell if it is coming directly out of investments and not liquid cash? Riskier/speculative investments first? Or more conservative ones first? If there are stocks and bonds in the mix -- should it be one or the other first?
100% helpful. Really enjoying the in depth analysis.
So helpful! This is the first time I've seen such a detailed analysis that also includes real example numbers. Thank you for going through it all!
Glad it was helpful!
I'd like to see these tools more broadly available for everyone to model and change over time. This is an Awesome video - while I was aware of this - THANK YOU for providing this information to everyone!
Check out New Retirement software. Extremely powerful and inexpensive
Yes! It’s helpful, and not only that but you’re breaking these concepts down in a clear way that is easy for me to understand.
I like these examples that take some different amount, either a bit tight or pretty generous, amount and run through realistic spend rates in retirement. You really get a feel for what sort of spend rate may be ballpark for you by comparing the rates of different portfolio values.
This is fantastic. Thank you for the level-headed analysis, with different options for different personal priorities.
James. I signed up for your retirement planning academy and as I have now entered in my details, this particular video is extremely helpful in seeing how to use the software to analyze my own retirement. I find the software is missing some (for me) important capabilities, but I know you license it so are not in control of its features, and also, I may find what I am looking for later. Thank you for all the great content.
James so helpful would benefit from a video like this that models an earlier retirement like at 55.
I like the scenarios you show James, so great job. A couple of things I noticed in this scenario is that an assumed $18,000 for 3 trips a year is way low, particularly if you want to travel international. I would double or triple that budget for international travel which we enjoy doing. Also, their projected cost to buy a new car every 5 years seemed low as well. The canundrum for deciding when to retire is difficult because it isn't easy to precisely predict expenses. It's critical to really think thru how much money one wants or needs to spend before deciding to retire since having to go back to work due to underestimating expenses would not be pleasant and could really impact one's life negatively. Love your videos and enjoy your thoughtful approach to planning for retirement! Thanks!
Agreed on the vacation comment. Many people budget it "light vacations" in their normal monthly expenses. Then we we add in a vacation budget it's actually an "extra vacation" budget that's on top of what could normally be funded from monthly cash flow. That's what we were doing here.
I agree that predicting expenses 10-20 years out on just applying an inflation percentage is really difficult. My homeowners and car insurances have gone up 25-35% in 1-2 years so how you you accurately project those and others like it? Plus a car for 35k 10-15 years down the road will be a used car! Listen I think he is great and his presentations skills are awesome but there is no cookie cutter software unless you really pad your future expenses to compensate for the unexpected!!
We are evidently related to the “samples” and have a similar financial setup in this, our first year of retirement.
The car budget made me laugh…the low amount allocated wouldn’t even buy a decent bottom tier new car, much less a good, reliable car.
The excess travel budget is also too small for even moderate budget level overseas trips unless they plan to spend that $18k for a bang-up one week trip abroad, a one month modest trip abroad, or a 2-3 month backpacker budget type trip abroad. Travel prices have gone through the roof post-virus. Overseas airfare 3x higher than what it was in 2021.
We had to up our retirement travel budget to an extra $30k per year for our first 5 retirement years (I have health issue and a VERY short lived family so we are greatly compressing our travel window). We are budget travelers by choice and are shocked at how little we are getting for the money.
We live near Orlando. Just flying our 3 grandkids down (they live 1 state away, not cross country) for 5 days spring break and staying at a modest hotel with them, eating modest meals and going to only 1 theme park for 1 day is going to cost us about $5000!
We also rent a cabin in a rural mountain community with them for a week of summer vacation and outdoor fun. The cabin has DOUBLED in price in the past 3 years.
we have prioritized making memories with them while I am still here, but boy is it a budget buster.
We are fortunate that we love where we live and have a fulfilling daily life in our home, community, and the surrounding natural bounty Florida offers us from coast to coast. That keeps our everyday recreational budget closed to zero.
This is a great explanation and allows me to think of additional questions. Thank you
Very insightful, could you explain a little more how you tie the financial plan with a monte carlo analysis in a video?
These details are helpful to see. I definitely would recommend they contribute to Roth IRAs/401ks instead of traditional if that’s possible.
Super helpful Thank You, not sure how their taxes are so low $3000 a year, with the majority of their retirement in taxable IRA’S
Their healthcare is going to be more than 7.5 percent of their agi, and could be deductible. They also have 500k in saving that only pay capital gains, so $3k in taxes is fairly reasonable.
I listen to your podcasts all the time, and this is a great example and very useful to me...Thanks!
Your case analysis is very helpful! But how to achieve a growth rate of 6.5% for a retirement portfolio at age 77? This is my main concern. Thank you!
Thanks for the suggestion. I'll add that as a potential future video topic.
James, love the detail of your videos, but I think it would be easy to cut the length in half. Still get your point across and save everyone time.
This was very helpful. I appreciate the pace of your presentation.
Love the scenario posts. Perfect length.
Yes, the case study is great. I appreciate seeing your analysis.
great presentation James. Really clear and really logical.
We are approaching retirement and this is the single best analysis I've seen in how to plan for our financial strategy. Thank you!
I am like John. Not sure if I have enough, in spite of the math telling me that I have enough. Fear of unknown is real and goal post keeps on moving.
Very real indeed
This is a great video. I appreciate how clearly you articulated the different options available to them.
To answer your question - very helpful! Thank you so much for all of your videos - they are very well done!
This was my favorite of all of your videos.
Yes James, very helpful going through this detailed example. Well done.
Hi James, have you projected the elderly care costs when they turn to 83 years old? Assume the couple want to go to assisted living or a nursing home after turning 83, what their financial outcome will be? Thank you!
I agree. That would be good to include. In my mind, medical care and assisted living cost the biggest unknown and I would think probably be the biggest impact on the 'stress test'
@@MikeSuding- People who need assisted living, live there, on average, 2 years. If you have 2 million in the bank and a house, that should cover it.
Good scenario based information for retirement planning.
Thank you!
Built a real estate portfolio that generates about $240K per year. Portfolio income of $65/yr from dividends. Both of us like to sell options for an additional $40K or so per year. Some SS that I never thought was going to be around at 62. Total outflows about 50% of our income. No debt.
This was fantastic analysis honestly. Very insightful.
Great video. The detailed scenario that you show on screen is perfect. Clearly I need to give you a call.😊
Very helpful content including the level of detail. Will look thru your content, but seeing something about how a potential client(s) should prepare to meet with an advisor would be helpful...as would information about how the advisory relationship would work...(e.g., is there an up front cost, then an annual fee, etc.)
This IS very helpful when you do a case example. Really well done. Thank you.
This is very high quality. Well done 🎉
This video helped me, and it tells me I already have a good plan setup myself in my spreadsheets. It gives me more confidence that if/when I do consult a planner (finding one who isn't selling something is hard), I'll already have most if not all the answers they would be telling me. My assumptions are similar, I don't have Monte Carlo access for a stress test, but I take the opposite approach, where I withdraw from my portfolio with the goal of hitting $0 by the time I'm 93...I end up withdrawing far more than I need. I also don't have a good tax assumption...I use a fixed percentage every year. Thanks for giving me confidence that I'm already on the right track!
You know what they handily leave out of the Monte Carlo analysis: the scenario in which you die. Happens quite often between the age of 60-75, the period people plan to 'enjoy' their savings.
Thanks, James, I love your clear presentations, and your mindset with regards to retirement planning. I do have a concern for folks when their financial plan timeline ends at 90 years of age. I am a physical therapist who has specialized in geriatrics during my career. I have been lucky enough to work with many patients well into their 90’s, and I can’t remember one who didn’t express surprise that they’d lived that long. I think an interesting adjustment for a couple like this would have been to extend their lifespan, and make sure that the various scenarios would still be successful. (My own plan assumes my wife, who is blessed with great genes, lives until 101…)
Yes good point. For many people 90 is not a long enough horizon to plan for. Thanks for the comment
Great point on longevity.
But the real financial kicker is: what will your monthly expenses be if you have to move from your home into a LTC facility?
(Yes, the home equity could pay for a lot of that, but imagine if you had to pay for care from age 85 to 95.)
@@RootFP
I always project my Portfolio til my 110th birthday.
Yes people are living longer,
No I don't expect to make it 110 but what if?
Also, like most, I'd like to leave a legacy so approaching it this way, allows my money to outlive me.
Dying with Zero is nice, I suppose, but I'd rather die knowing my family is secure.
After seeing my mom still living at 94 and my father in-law living at 96, I'm thinking I will increase our plan from 90 to 95 and 100
Obviously there are no guarantees, but this modeling and these videos are very reassuring.
This is really helpful as it verifies that my own personal planning process is right on the money. Instead of using software I made detailed spreadsheets for our specific and unique circumstances. It's interesting the effects of spending and how they either work against you or for you.
This is definitely useful, thank you for sharing and making these videos.
this is incredibly helpful! I am in my 50s, and had to start managing my mother's money for her this year. Seeing what Mom and Dad did right and where they made mistakes, and making sure her rate of withdrawals is sustainable, has been great practice for my own future retirement.
Glad it was helpful!
Amazing James. You are very detailed on how it works. Thank you.
This is a wonderful video James! Thank you for making it. I'm 49, want to retire at 62, net worth today of 3 million, $2 million liquid. I'm terrified of 3 things, inflation from continued reckless government spending, social security longevity, & healthcare costs. I'm afraid we won't ever have enough since I don't have a pension.
I am not sure if your house is paid off or not, but I am 58 and have retired in similar position. Healthcare cost is the white elephant for everyone that retires prior to reaching medicare age. The rule of 55 for your 401K should enable you to retire at 55. I did this at 57, and will live off of 401K draw downs while I wait for my IRA to become available at age 60.
This is awesome. I think my wide and I are on a pretty good trajectory. We are 37 and have about $700k liquid $700k in home equity. Do you have videos on retiring at 55? Thats our goal...
Great explanation and tool with high confidence level.
This is my first time seeing your content, and I want to say you are a phenomenal presenter of information.
Very helpful! Thanks for the clear explanation and graphics.
yes, I find these helpful, better when using single person.
I love this amount of detail. Great work.
this was a wonderful video, i really really learned a ton. i am 29 but i love looking at the analytics and statistics involved in saving and retirement. my goal is to retire by 45
And suicide by 55? As someone who was involuntarily (medically) retired at 38 from my career with no viable plan B career, don't be in a hurry to retire. Task and purpose really matter.
So many of my buddies who are now retiring 'normally' at 45 are falling apart fast and some have already quit life. Retirement is not something to rush towards, I don't have many answers but I know that from my own experience and that of my peers going through it now.
Bone up on excel and track your expenses by categories every month. Do this a couple of years in advance of retirement. You’ll be surprised on how much you spend and where.
Thank you. We hold about this in i/o mortgages so interesting to compare.
These detailed examples are very helpful. Thanks, James!
Glad you like them!
Great information James. Their net worth numbers are surprising close to our position. I do think we will be spending more however. It would be interesting to see, "what if scenarios" if one person were to depart earlier than expected. And how that would impact the model. I know that is the question my wife brings up as a concern.
Mike
Great explanation of the analysis. It has made me think of options.
Glad to hear it!