Why Retirees Don't Spend Down Their Retirement Accounts
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- Опубликовано: 22 фев 2024
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Great video, Another factor to add is Do they spend a lot of time planning their financial future? The majority of people do not engage in planing for their future
True, It has never been harder to understand how to build your money after retirement than it is right now with the inflation. The impacts of the U.S. dollar's gain or fall on investments, in my opinion are complex
Opting for an investment advisor is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a while, and my portfolio has surged by 45% since Q2.
Thanks for replying, You seem to know much, How did you go about it and can you recommend an advisor like yours?
Sharon Ann Meny is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
My Dad recently passed. He had a small social security check each month. His house was paid for. He never, not once, touched his 401k. He complained about the cost of even the smallest purchases when he had plenty of money to splurge if he wanted to. This stat is accurate...
And I know several retirees that do not fit this mold. I truly find this study hard to believe.
My mom was the same way. Never did anything, but had lots of resources. She would shop at Goodwill and complain about anything that cost more than $10. She was in a memory care facility in the end and she drove herself even more crazy worrying about her stuff and money. At that point she didn’t know the difference between $1 and $1M. She still obsessed over money. Drove me crazy too. I could only stand short visits. She made the staff crazy too, accusing them of stealing stuff and her money. Sad!
@@myvenusheelerI don’t find it hard to believe. Signed, a recent retiree.
@@dforrest4503 I just don't get the worry. I have been retired six years this coming Wednesday and I definitely spend my money and I am certainly no millionaire. Of course, when things get rough like they did in 2022 I rely on my Spia I bought in 2019 instead of pulling money from my retirement account. All in all though I do notice people that were super savers never let go and never seem to enjoy retirement due to trying to keep the pile intact that won't matter one bit twenty years in the future, or even less for some. As Josh has stated in the past..."Don't fly coach so your heirs can fly first class".
@@stephenpalfy8226 my dad did the same thing in the nursing home and so glad medicare/medicaid paid for it bc he was broke as a joke
sleeping well at night can not be overrated.
I know someone who is worth well over $20 million and he was doing his own yard work till 85 when his knees finally gave out on him. The last time I saw him he was still using restaurant coupons. I know a couple of others who still work their family farm and she drives an 18 wheeler at 80 and he's 84 or so. Another is still doing majority of his own yard work at 89. His son does the larger tree limbs and other bigger stuff. When I was a teenager I knew a couple of farmers that were millionaires in the 1970s and they spent their weekends looking for deals at the flea market in California. These stats don't surprise me as many folks live simple lives and they are content. I hope I can say the same in 20 years when I'm in my 80s.
who inherited the old guy's 20 million bucks?
@@cutehumor He's still alive and he has 3 kids to get the stuff.
Now you know why he has $
@@diytwoincollege7079 lol
He was probably well aware that gardening and yard work was enjoyable as well as good excercise.
People simply don’t adjust well from being prodigious savers to being spenders with no set future income expectations. Increasingly, seniors don’t have pensions and need to focus their income expectations on S.S., IRA’s and 401K’s. The problem with “Long Term Care” is that it’s not clearly defined. It can be anything from someone coming into your home to check your vitals, make sure you’re eating, taking meds, etc. to being in a nursing home full time. Seniors automatically think that it means you’re in a nursing home. Few people spend all that much time residing in one, but nobody clearly explains that.
My father did not spend all his money.
Even in his 80s he would fly coach because 1st class was a waste of money.
I think most who lived thru the depression and WWII are not big spenders.
I lived frugal my whole adult life! I retired 3 years ago, and I could afford to spend more, but it’s what I’m used to doing. And I think old habits are hard to shake. And I’d bet your dad is similar. I enjoy my life, though I’m sure a lot of people would consider it suffering, thinking they are suffering if not traveling 6 months of the year. Or to exotic locations. I’m happy with my small cabin in the forest.
And week long cheap trips.
Your personality doesn't change just because you retire. If you were profligate and enjoyed spending money flying first class while working, you will still (if you can afford it) fly first class during retirement. If you could afford to fly first class while working but chose to fly economy (for some reason spending 5x more on the ticket doesn't get your seat to arrive at the destination any faster) as (to you) the utility wasn't there, unless the company was paying for it, then you are going to continue to fly economy during retirement (generally).
I have noticed this my grandma hated spending money, she wouldn't waste an ice cube. She grew up on the Depression.
Your behavior may not change if you are used to saving and living below your means. Five years in and it really hasn't for us.
Flying first class is for folks with money to burn.
I plan on the armored truck full of cash following the hearse to the grave yard. Wait... it doesn't go with me??
The undertakers will live up to their name and reputations.
I think many are afraid of high end-of-life costs.
The silly thing is that no amount of end of life spending will actually keep you alive in the end.
@@ordinaryhuman5645 True. But you may still have to spend it, before your life ends, so your point is off topic.
@@jeffcharles9344 Right, but the worst way to do it is hoarding it for end of life care. It's easily the least effective way to spend money and with any forethought no one would choose to do it.
You could easily spend a year or two of work income on a week of end of life care... but it would be far better to not work at all during those 1-2 years and enjoy them instead (given that they're the youngest and probably healthiest years you have left) rather than working to pay for some end of life care that won't actually change the end result.
Sitting on a bunch of wealth because you might have another decade of life is one thing, but accumulating and sitting on it to pay for expensive hospital treatments to prolong your death for a week or a month is silly.
@@jeffcharles9344 With any planning at all, you'd be better off spending it on anything else before it gets to that point.
But it doesn't even matter, because the government pays most of the bills anyway, and that last month of care is likely a mid-5-figure sum at worst. So there's no point hoarding a six figure sum worrying about it. Extra cushy palliative care for a month or two, or covering a few years of college tuition for the grandkids?
Why worry about end off life cost. You won’t have to pay it. The hospitals will write it off
My Dad helped me with retirement 401k accounts. I will be able to help my children.
God is good. Wealth can be generational.
Our IRA has gained $30,000 in the last year! We haven’t touched any of it! With maximum soc security and two small pensions, we don’t need it! Will have to buy something!
go out to breakfast , order something totally unexpected and out of budget for you. Splurge..
If we dont get Biden out of office we will all be spent down to nothing
What goes up must come down.
it didnt gain it just got back to where it was with trump biden cost me 150k in value
@@paulbunyun-xi9by exactly with the inflation and previous lossed in the market this run up has along way to go
I think part of it is habit of living. I'm retired, I don't want an expensive car, don't want to travel, I'm very happy working around the house and hiking 3 miles in the hills every day. I do plan on putting in new floors, that will certainly spend some down. 5% interest, dividends and SS covers most if not all of my expenses which includes a fair amount of discretionary spending.
I for one totally understand this & the findings. Finding #3; It's me ! we live quite comfortably on our SS + a very small withdrawal from my IRA's. We RV & go where we want; when we want. Not big on eating out; but we can & do when we want. We've always been financially conservative & its afforded us a non stress retirement.
Guilty as charged. I've been retired 16 years now and haven't spent any of my 401k, Roth IRA, or brokerage cash account. My SS and pension is so far adequate to meet my expenses. I don't want for anything, anyway. My kids will get my swag.
Spend some now when you and they will appreciate it! For example a family trip to remember!
@@dforrest4503 Been there, done that several times. Yellowstone Park, Silver Dollar City, Road trips to Space Museum and Zoos with grand daughters. All financed wo IRA or Roth distributions. I can save $31K/year only from pensions. I'm too sick now anyway.
My wife and I don’t plan to touch our investment accounts. We both have a state teachers pension. We plan to use our investment accounts as long term care insurance. We are both 60 years old.
The investment you choose isn't right or wrong, just depends on the kind of business person you are or simply the kind of person you are. However, the end game is investing money long term creates wealth every time. Just pick what you like and understand, invest and it will pay off. A lifetime of investing for 5 mil is not hard to accrue.
Regrets are something that humans should not have in life because everything happens due to lack of information and that is why I am posting this here so that whoever sees it does not fall into the trap of regrets in the future. It is more advisable, as an employee, you should cultivate yourself by working and making investments as supporting income, so that you can stand on your own, but no employer will let you know so that you can be under them forever. People like Warren never worked for anyone that long to make him who he is today, instead they invested more in companies to manage their activities and earn a profitable return on investment.
People get scared of the risks in investment but also forget there are risks also in investing in a car, the honest truth is that investment is the quickest path to financial freedom, the rich stay rich by spending like the poor yet investing! While the poor stay poor by spending like the rich yet not investing. it is a good thing to start your Financial freedom this year with a good investment idea
Investment is the quickest path to financial freedom, the rich stays rich by spending like the poor yet investing! While the poor stays poor by spending like the rich yet not investing. it is good thing to start your Financial freedom this year with good investment idea
That correct, but beginners it is advisable you invest through an expert trader who would serve as a mentor and a guardian to ensure you make profits and increase your accuracy when you make trades, in that way you get to make money with low risk of losing your hard earned money.
Speak for yourself! Not everyone is like you. If you are the "kind of person" to play a game, that does not mean other people are, people with different circumstances, intelligence levels, and emotional makeup.
As a retired person I agree with this mindset. I do not want to spend down assets and am happy at the end of a year that assets have grown a little bit.
I agree with you. In fact, the game of spending wisely is one of thevthings keeping me alive. Fun. Challenging. Keep it growing unless needed. Someday I might need it in a retirement home. OK, then I would pay for it. No burden on family.
They had a prudent and responsible financial mindset that allowed them to accumulate their nest egg. They will only be extra cautious when they stop drawing a paycheck.
Great Video Josh! Thanks
Great stuff brother.
After I swim a half mile and bike 25-30 miles I’m too tired to spend money. Only spending tiny bit of pension and haven’t touched SS or investments.
I’m 78 and been retired twenty years, still in excellent health, still hiking, cycling, skiing, driving, travelling, eating in restaurants, spending money, just ordered a gopro camera.
Your retirement does not need to be your father’s retirement. Don’t plan on the assumption you will be dead or as good as by the age of seventy.
That's Awesome!!
good luck with your hip replacement! i like how you included driving and eating in restaurants...very dangerous for people over 77 years old.
@@brentlorrilliere6057 My comment was questioning the wisdom of "retirees spending down their savings accounts".
When I retired twenty years ago I did not anticipate that I would still be enjoying the same things and spending the same amount of money, or more, at age 78. That includes many quite costly activities including driving a nice car and eating at good restaurants without considering the cost.
If I had run down my savings I would have a much worse life. But a lot of retirement videos on youtube talk about "go go, slow go and no go " ages as though they were set in stone. I believe that you have a lot of control over them.
@@glennet9613I agree. If you had to sum it up as to how, what’s your recommendations?
@@Tom-tk3du Interesting question. I think adventure and exercise, get out of your comfort zone.
When we retired we did a lot of cycle touring in Europe and eventually moved to France then Switzerland so we can hike, cycle or ski in the mountains just about every day. It is important to exercise hard, the young guys go at least twice as fast but we are working just as hard.
Also diet, we only buy good quality single ingredient foods, fruit, vegetables, meat, strictly no ultra processed foods.
Mental exercise is important, learning French and all the other stuff associated with moving countries keeps us sharp and we are both into computers, mainly 3D graphics but currently video editing. Again getting out of your comfort zone, grappling with things you don’t understand, is important.
Hope that helps.
Great article I live on social security and pension, at 65 I just enjoy watching my net worth grow
Same here. If you can make it work with that… why not.
I’d rather add to it than take from it.
You just never know how things will turn out.
I retired 3 years ago at 60 with pension. I’ve taken over 100k out of the 401 and now the 401 is a little more than when I retired. I also have a 6 figure brokerage account outside the 401 which is more than I retired with. I have 6 months expenses in my checking account. I drive a well kept 12 year old vehicle but still have a mortgage. I began my SS at 62. I know it would had been better to wait on the SS but I chose to withdraw at 62 Instead. I invest it mostly and live off dividends and SS. My plan for next year is to convert 150k into a Roth. Pay the taxes out of the brokerage and set the Roth up for dividend income. Then make smaller conversions yearly until RMDS kick in. The plan is to avoid Irrma and higher taxes when it comes to RMD time. They will get me one year on Irma but that’s it if I stick to the plan.
@@JD-ir2sb I heard someone said the first 100k is the hardest, then compounding takes over and it grows.. when the stock market dropped in 2022 I took advantage of that by buying mutual funds with my social security income, because I knew it would grow. I now have 45 k invested with 6000 profit.
Great video! It gives comfort to know most people will not only be all right, but prosper in retirement. At 56 and being semi-retired, I definitely understand the hesitation to spend assets, but I think I’m going to use this info to help remind me to be more free with spending to an extent. Not stupid, but also not stingy to the point of never buying/doing something just because I don’t want to touch assets.
I’m 68, retired and live off my pension and SS. Starting next year I plan to take a small portion of the income kicked off by my portfolio. If I need to purchase a large ticket item like a car, I still won’t touch my principal. I will just get a loan and have my investment income make the payment. This will keep my principal working for me in the market.
Interesting - Not sure paying interest on a rapidly depreciating item is good planning.
Yes and avoid CG tax etc
After reading forum comments and talking to dozens of retirees, I would say that nearly ALL of them have more today than they did when they retired, and that is after withdraws and such. Also, I would estimate that 90% of them all say they spend less than they had originally planned. This gives me a little confidence going forward instead of panicking that "I will run out of money"
I'm new at this retirement gig, but so far, I'm finding that I'm doing ok on my pension and SS (survivors).
I hit the road immediately after retiring, and have another 3 month trip coming up. But they're not extravagant, and within my budget. And both much needed in helping to reduce the crazy level of stress I was under at work.
I'll probably tap it for home maintenance and some extravagances down the road, but I just can't see spending it on something new just to have a newer version or more stuff just to have more stuff. Unless it's fabric. There's always room for more fabric.
Traveling can be a lot of work , were thinking like land lines and board games….toys too can be a head ache . Except Harleys 😎
Tools and lumber in my case. There is always room for more tools and lumber.
@@voodoodrug Harleys are good. Makes traveling easy. Maybe Sturgis this summer?
@@KB-ff9wx always room for more... always.
I am 61, single, no kids and good health and plan to retire later this year at 62. I have $980,000 in retirement savings and ZERO debt with projected monthly income in retirement needing to be about $3800. I think I should be ok. Still undecided as to when to take SS though.
The transition from pensions to 401(k)s was not great - everyone feels they have to save for living to 100 when almost no gets there.
We are the same and retired before 50. After our old pup goes, we plan to travel but will be tough to 'break even'.
Every evening you toast the sundown with wine, you broke even.
Interesting video
If you are frugal and thrifty before you retire you will spend your retirement that way. It is just who and what you are. I have more than some, less than others. At almost 67 I have a little side hustle that pays better than SS. Spouse is collecting her's and that is what we live on.
I am not going to move and we have a nice dry house, plenty of food and all the toilet paper we need. Why do I need to spend more to buy "stuff". When I turn 70 we are buying our last vehicle. It will be for my wife and brand new. Paid for in cash. I have a "best if used by date" of 83 and wife 93. We are set.
We’re still living off of taxable accounts in retirement. We only touch IRAs to do Roth conversions. We live comfortably and don’t need to sacrifice anything. We just don’t spend frivolously. Dividends, interest, social security and a small fixed pension keep us going. We’re trying to set things up for generational wealth by investing in strong companies that grow their dividends each year. So far dividends have grown faster than inflation.
Is that wealth inflation adjusted? So can we allow ourselves to buy non "storebranded" cherrios and go for the real thing even though it costs so much more?
House is paid for, have more enough car to last the next 15 years, not having to commute to work or go eat out with coworkers, grow a garden for food and exercise , have enough clothes to last years, sell off part of private collections (guns, gold, sports gear, comic books ect. Consume stockpiled food resources, dont have to invest in retirement funds anymore, rental properties are paid off and most of rental monies are positive net income. And they may have invested more and/or smarter than most "investment analyst" expected them to.
I hear you about the clothes. I have a closet full of work clothes - nice shirts and pants - that are never worn anymore. Time to donate a bunch to the local charity.
I don't find this surprising at all. The idea of trying to systematically exhaust your assets during your remaining lifespan by withdrawing some fixed percentage annually seems very strange to me -- something that financial planners have tried to foist on the public. People want to feel secure, and the more assets they have the more secure they feel. In addition, many people may know someone who ran through all their assets and had to apply for Medicaid to pay for a nursing home or rely on family support. Unexpected medical issues can cause that to happen. My mother was living in her paid-for home and doing pretty well in maintaining her assets until she fell and broke her hip and had to go into an assisted living facility where she spent the last 7 years of her life. She ran through all of her savings and cash from the sale of her house (some $400,000 total) plus another $100,000 in Social Security payments. Family members ended up shouldering the financial burden of keeping her in a decent situation after her money ran out.
Why couldn't she live with you with some in home care? Wouldn't that have been less expensive?
@@Bonnie-yu3kj After my mother broke her hip and had surgery, she needed help with all aspects of daily life including dressing, bathing, toileting, getting in and out of bed, etc. I live in a second floor apartment with no elevator so she could not get up the stairs. In fact, for the last few years I couldn't even manage to transfer her from her wheelchair to the front passenger seat of my car because she could no longer stand up unaided. I am a single man who does not cook either. I'm also active in the community and am out of the apartment for long periods. Assisted living was the only practical answer.
my mother in law is 87 with assets over 1 million,i have been telling my wife for years to get her mom to spend her money and enjoy herself ,my wife and her brother will be left with a lot of money,we dont need it,so i guess we will give it to our kids,it is sad that she wont spend anything,i already told my kids i am spending our money,so they better save!
Well, technically percentages are also numbers, no? :-)
Oops! Replied to a wrong comment...
my mother in law plans to skip me and give to the grandkids instead. lolol
Thanks Josh, I wrote this paper when I worked at BlackRock.
Hey hey! Got any new stuff?
This is true Josh, my dad has not touched his 401k in the 9 years of ritement, just ss and military pension, plus wife's ss and her small pension
I’m planning on spending mine down. I didn’t work my entire life to coast through retirement. We’re going to travel and enjoy our retirement.
Actually still have the accounts, just actually spent it on another Harley, peace.
A retired co worker of mine told me he has more money today than when he retired in 2006. He owns his 100 acre farm, trucks and all vehicles. He said his pension and him and his wife's social security keep them from ever having to touch their investments in their 401K's and etc. They both are 87 years old now and plan to leave the money to their 2 kids and 5 grandchildren.
I want to keep building my wealth in retirement while I do enjoy my time doing whatever. I don't see why people find that strange. Its true I won't need a huge amount just hanging about and daily living (everything is paid off) but I can travel and buy things as well and still grow my retirement nest egg. If I do need long term care I will have the money. While still growing my retirement nest egg. When I die the kid and grand kids get a nice windfall. Skott had a great life. Did a lot of fun things. Loved. Traveled. Bought some nice toys (truck and car). Lived in a big house and owned some acreage and he left a nice financial boost to the next gen of his family. To me its all a big win win. Its not a bad thing. Luckily I planned well. Others can do it too if they do it right and keep at it.
Here's to a fellow GMU grad!.
I retired 2 years ago at age 60 (thanks to your guidance). Despite all my calculations showing an increased net worth at age 90 ($4 million, including my home), I suppress my expenses. To accentuate this phobia, I'll add that I'm single, with no children to pass an inheritance to (except my future 25-year old wife😁).
If it helps your followers or adds to an understanding, I plan to adjust what I think I can spend every few years as the clouds dissipate. I suspect it's the best I can do absent God giving me my date of death.
The future is uncertain, and our lifestyles are set. Personally, assets continue to accumulate, after 5 years of retirement, yet have everything we desire. Dont want new cars, eat terrible food at restaurants, or attend revolting pop culture "entertainment" venues. My favorite pastimes; such as learning guitar, cost practically nothing.
This video and the study are spot on. Interesting post, Thanks!
What am I going to spend more money on? A gold plated coffee mug coaster, maybe a jewel encrusted oil filter wrench for when I change my own oils on my 15 yr old truck or 22 year old Z turn mower? Now my wife certainly gives Amazon a few bucks a month for cricut craft supplies. We did have some medical expenses the last few years but we only had to pull 10k from principal to cover what we didn't have on hand in the daily bank account. There is a comfort in frugality that can't be equalled. We are still down from 2022 but not because we are spending down.
Sometimes it is heart breaking. MIL just retired at 69 due to stage four cancer. Prognosis so five years to live. Can’t convince her to order delivery food because that is a waste of money. Sigh.
So sorry to hear of your MIL prognosis, but If I can offer my two cents. I’m hearing they are making great strides regarding treatment of breast cancer such as a vaccine so something may come up in a few years to further expand your MIL life.
After 20 months in retirement I have found that I have to force myself to spend money. You are right Josh. I will have more money when I start my SSI in April than I did when I retired in July of 22.
Dang, that report is reading my mail! Five years into retirement with inflation adjusted income with forecasts to have more value at year 26.
Josh regarding black rock. Do all we need to do is avoid black rock funds
Does this mean that if you have a certain amount in the bank and have a certain income passively, you can just live off passive income as long as it is something that supports your lifestyle fully? So, if you wanted, you could retire very early?
Yes
Im planning for my earnings vs gains to sustain my payouts until rmd or old folks care.
My VGT and SOXX continue to make me more money than I can spend in retirement. No need to spend any principle.
No need to spend down our retirement accounts Josh, Inflation is doing a dam good job at it without our help.
i don't spend it down because there is a chunk of it that is my "money factory" which generates the money i live on
That’s a good thing.
$500K in 20 years definitely won't buy the same as $500K now. Inflation will spend it for them.
Anne Scheiber is a perfect example of this. She was an IRS auditor for 23 years and never brought home more than $4K a year. She retired at 51 in 1944 with only $5K in savings. BUT....she had amassed a portfolio of over $20M when she died at 101 years old.
Extreme frugality and steady investing.
who got the 20 million when she died?
She donated it to the Yeshiva University for scholarships for women. She always felt she was overlooked for promotion during her career for being a woman, which is very likely.
@@Mahan1914 the 20 million at death of 101 years old shows the magic of compound interest. Fidelity said I would have 11 million at age 90, but with your story I'm starting to believe Fidelity numbers. I'm only 46 years old
So what was the point of accumulating all of that wealth if she never enjoyed it? She had plenty of FU money to leave her job earlier, especially if she felt she wasn’t going to be promoted.
It's because Sarasota Time says we won't live past 73. Not long enough to spend it all.
And work a full time side hussle making youtube videos😜
Guess I need to find a friend to live in their driveway like ST!😊
Yes create a real estate hack. NO FRIENDS. 20 years ago my wife and I found ladies online , disabled but functional. Never late never leaving , sleep and watch tv in there rooms all day, and pay are bills and do the chores.
I think his heart is in the right place, but I disagree with his philosophy
Interesting study, i tend to be more conservative than my wife in regards to spending down the nest egg, although she grew up in a home with plenty, where as even though i was blessed growing up in a good neighborhood it was feast or famine at times (due to my fathers line of work) I learned young if i wanted anything i had to work for it, and nobody was paying for me to go to college!
WOW, we lived the same life!
The only time I touch my retirement fund is when I have a major expense - such as a new furnace or new roof. Otherwise, I live completely on my Social Security. Diane.
shoot, I hate spending money now! I work 77.5 hours a week. I just spent 16k on a subzero fridge. our old subzero needed a 4700 dollar repair so we junked it. Pray this new subzero lasts 100 years!!
Who spends 16K on a fridge??
@@crimsonpearl4686 my home came with custom cabinets for subzero fridges. If we didn't buy a subzero, we would had to pay to modify or get new 25k cabinets. we were stuck with subzero.
That’s scary, we have a 17 year old subzero (working fine) with custom cabinets. I better start saving… $16k😮
@@Steve-yf7kb I got the classic side by side 48 inch stainless steel steel. $14,379 for fridge, $450 for install, $250 to remove and to haul away, and $1086.53 for tn sales tax. It was painful but I couldn’t stomach paying $4700 in repairs with 90 days labor warranty on 23 year old fridge
Big issue for me with me will be federal taxes. Told my wife I have to quit at ge 54.5 or the taxes will be huge. I would hate retirement if I'm paying over 25 percent in federal taxes!
Unless you're incredibly well off, it's unlikely that you'd be near 25% in effective federal income taxes while retired and married. Maybe while working due to FICA if self employed, but tax brackets and deductions are a thing.
Even with FICA taxes, it looks like you'd need to be pulling in half a million as an employee to have a 25% effective rate while married. If you're anywhere near that point, it was probably time to retire years ago.
Live on SSN, buy things for cash now, house paid off 300,000. IRA 7 digits
Josh,
It's about peace of mine. I would rather leave my kids a pile of money then run out of money even though I drought my kids will need the money. I also recognized that I got more joy buying my first car for $550 when I was 16 then I did buy a new high-end car when I was 56.
Josh not us spend down die close to zero on family experiences starting in 2 years 62 y/o. Actually we started spending down early we remodeled our kitchen & will attend a wedding in Dominican Republic.
I lost so much in my 401k from Vanguard doing their investing with it I changed to safety and manage my own. I don’t trust them and have lost out on gains - I know they say stay the course but when you watch your money drop like that and it takes me so much time and such a struggle to invest vs pay off my house ( which will be paid off in two years) so I can retire quicker, I can’t bring myself to let anyone invest it. I know it’s dumb. I just can’t stand watching the little bit I have go away. I have four years left to work. I get a 5% match from employer, and I invest 8%. I wish I could make a good chunk in the next four years. I still have a car to pay off as well but no credit card debt. In retirement I plan to use social security and pensions but only take a small withdrawal each month from my 401k.
I converted everything to Wellington.
Did Blackrock bother to adjust these numbers for inflation?
My parents now in their 80s have just as much net worth as the did when they retired over 25 years ago.
My guess is there is a distorted view of how much one needs for retirement. A lot of people have other income streams, pensions, social security, and modify their ways. That being said, my husband and I are super savers and we want to spend as little as we need to because we want to pass our wealth to our two kids.
Josh, it's interesting that people that buy an annuity forget that principle is being spent down and will go to zero. I understand that they are comforted by the fact that the income stream will continue after the principle is gone. I would love to see a video on using IRR to calculate the yield of an annuity based on the actuarial tables. Of course if a person outlives the actuarial term of the annuity the yield would start to go up. The yield curve would probably look like a V. Dropping initially and going up for each year the recipient outlives the actuarial table.
What if we get ill with a long term chronic illness like Cancer/dementia. That terrifies us.
does that run in your family, Daisy?
@@HeritageWealthPlanning yes, both if my husbands parents were ill with dementia and Alzheimer’s for years.
I retired in Feb 2022, just when the stock market tanked and inflation got hot. Instead of drawing out the 4% i planned for, we drew out only what we needed to live. And we learned that we have been quite content with that. Yes, our retirement accounts are way up since then, probably 20%.
Send some to me then!
Wow, only 20% of their savings over 20 years?? They must have a lot of money to draw on and a huge SS monthly check. Hard to believe this paper. I must be an outlier because I do spend my money.
I can see both. When I worked I needed 5k a month to live on. Retired and found a 1000 ways to lower that close to zero. Now 4k a year and 12k for fun🤓
They have assets that build or carry a return yearly or over time. That's the only way they can have more after 20 years.
In November I did a rollover to Roth. Took out all this money for taxes…boo hoo! When I looked at the end of the year my accounts had covered all the taxes through Capital Gain distributions, interest, dividends, plus some extra. Will that happen every year?
First off, the money you saved is there for you to spend and that's ok. I'm willing to bet that many that have not touched their savings live frugal lives and enjoy doing so. Add in a couple of small pensions and medium sized Social Security and you could be in the $8000 month/$72,000 annual range which is plenty for many of us to live on. Savings just gets to accumulate or spent on a vacation ever so often.
@@keithhendrickson4389for many, yes. But I was surprised that so many with under $200k had not spent down.
If you have kids, you want to leave something behind.
We have to work at spending our money. Income from SS and pensions is plenty. We have decided a good, interesting vacation with our grands yearly is the ticket. We gave a bit to their education. We live simply. Volunteer at various charities. Need no more cr*p. I don’t see us ever spending the principle. Maybe if one of us dies leaving another without the second pension and SS…
I'm trying to preserve all of what I have saved plus the value in my paid-for house to pass on to my child who has nothing for retirement and never will; their Social Security will be very little. I live on about $30,000 a year from Social Security and earnings on my investment portfolio and that's enough. I draw extra when needed; I expect to have to do that more the older I get due to the obscene cost of health care. As my savings are modest I do worry about outliving my money; so far (4 years at age 75) I have managed to generally keep my amount the same as I draw down 3.5% annually.
This just means that we are not making retirees pay enough of their share of the overall healthcare burden. Hip replacements for senior citizens engaging in extreme sports like "walking to the mailbox" are very expensive.
More time to be frugal
Blame it on the success of the 3% rule!
If your investments continue to have strong returns, it's actually difficult to spend it all - savers continue to be savers.
I still love to watch the portfolio grow each year and take a special joy in my DRIP stocks accruing each quarter.
We save and save and worry and worry and we worry when things go bad and worry when things are going too good. When l die , l want to spend my last six hundred dollars on tipping my pall bearers , have a beer on me.
Well said!
I wonder how this works for early retirees.
I suppose newer retirees can find more ways to spend money, but it's funny, the longer I'm retired the more I'm content to stay at home. Take walks, go to lunch or dinner w/ friends, harrass Josh...
After 10 years of retirement I have about 30% more than I had at the start. Dividends and SS cover my needs and occasionally a few shares of stock.
I’m afraid that will be me. Retired fairly early 48. Still makin money 🤑 guess I will die with a smile ? Oh well could be worse
What’s all the words about spending , Spending never gives me any juice , I guess if it make you feel good spend they should spend
Over 30% had more. Or...almost 70% had less money.
It's OK to have deep pockets and short arms.
Wow. Most commentators agree it’s common and believe it’s a good thing to have your net worth continues to grow in retirement.
I’ve just started retirement. And yes, I am also spending way less than my return on investment. I’m not having an unhappy life. But I do feel That what I’m doing is not good.
What’s the point of having my net worth increasing every year? I can’t take it with me.
I believe I really have to spend some quality time to think all this through and come up with a system or plan to increase my expenses by at least 100%. Even then, my net worth will still be growing. By 200%? Hmmmm. I don’t think I could do that.
YA steak and lobster every day,im also a costco addict ,i should have no problem spending my cash!!!
Scrambled eggs with anything that is in the fridge
My real estate hack includes all my food but pick up a couple things every month just to get out of the house
You should include your dog in more videos
Maybe they like doing physical activities and want to leave money to their kids. I certainly do. I'm 75 years old and still work. I like to make money. I'll probably live to 95 (my parents did). So I'll have years to do nothing. Long live inter generational wealth!
Josh, it appears from the study you cited and your comments that the numbers were not adjusted for inflation. Those that have the "same" assets 20 years into retirement are looking at maybe half their original buying power. Those that spend only the after-tax interest/investment earnings each year fall further behind in real dollars by multiple percentage points each year on average. It would take shrewd investing and a significant amount of luck to truly "stay the same" throughout their retirement years. "Just sayin'."
By all means read tbr study and post again
With that said show me ANY evidence that retirees increase spending with inflation.
You think I’m new at this? Let’s see what you got
Josh, per your suggestion, I read and reread the BlackRock article. There was no mention of inflation and my original comment remains valid. While most retirees may “still have 80% of their pre-retirement savings remaining after almost two decades of retirement”, there is no indication that inflation was taken into account. According to the U.S. Bureau of Labor Statistics, a dollar in 2004 is worth 60 cents in 2024. Any wealth manager that doesn’t factor inflation in their advice does so at their clients’ peril.
@@johndorrell1 did they not say a “constant spending “? I believe they did. Constant spending means adjusting for inflation.
Still waiting for ANY evidence that retirees increase spending with inflation.
Bring it to me - been waiting on thet data point for years
No Josh, "constant spending" does not appear on any of the 16 pages of the article. If you don't understand that retirees and all of us are spending more and more each year on food, housing, transportation, health care, entertainment, as every other aspect of living, you are seriously out of touch. Retirees can eat fewer calories and drive fewer miles and travel less often, and not refill some of their prescriptions, but thrift has its limits. I am not "new at this" either - saving, investing, supporting a family, and planning for my financial future. I have a couple of decades on you. My mention of inflation was not an insult to your intelligence or your analytical skills. Inflation is a factor that each and every one of us must plan around and deal with in some manner. I merely pointed out that the article appears not to take it into consideration. I don't see an argument here. Let's move on.
I’ll be retiring in a month, we’ll have over 3 million in the bank and a military retirement our home paid for. We’re going to pay off our 54 foot boat and start traveling
This video isn’t for you or well me neither. Literally 98 percent+ of this country would kill to have 500k excluding their house saved. For most the house is the majority of their net worth. Americans don’t save, just run up debt until they suddenly wake up at 3am, at 55, in a cold sweat panic.
@steveo601 it wasn’t ab only people with 500k
LOL Does this support Dave Ramsay's 8% withdrawl rate? 😮
Vinnie!
Handsome face ❤. Never let the truth get in the way of good story.
That's why I hate reporting in percentages. Give me numbers too or they mean nothing. They manipulate percentages to scare you. Always look at the numbers as well
My goal is to earn enough in my IRA that I can take out what I need each year and still have the net amount grow.
Great video as usual. I have a question. How much do you charge for a general overview for financial planning? I think I'm on the right track financially but I wanted to possibly discuss my options.