How to Know When You Should Stop Saving for Retirement (and What to Do Next)
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- Опубликовано: 19 май 2024
- Drew, a burnt-out, financially responsible 40-something father of two, hopes he can scale back from his stressful job and still be okay when it’s time to retire. James offers a practical and philosophical take as he tackles Drew’s question. He demonstrates how to determine when Drew and his wife will be in a good position to fully retire. He also challenges listeners to assess their spending and saving habits and to strike a balance between planning for an unknown future while still finding fulfillment, freedom, and purpose today.
Questions answered:
How can I determine if I can stop saving for retirement?
What introspective questions should I ask now to help me live well pre- and post-retirement?
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⏱Timestamps:⏱
0:00 - Drew’s question
2:07 - Two mindsets
6:08 - Assess current and future needs
7:33 - Projection exercise
11:28 - Working backwards
14:50 - Working 10 more years
18:21 - Back to the initial question
19:47 - Considering growth rate
21:38 - A philosophical question
23:52 - 3 Levers
26:07 - Check spending/saving habits
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I did this back in 2020. Left engineering after 20 years for a new career with a 50% pay cut. -- NO REGRETS and more time for my family. Our Tech investments kept on growing like crazy! Ironically my wife saw how happier I was and started searching for an "less demanding" job as well last year. She got a job with the Federal government and actually got a 40% raise. Crazy how things work in life if I am being honest.
“Prepare for the future but live well today.” Exactly.
James is an excellent counselor.
I wasn't sure there was any place for reasonable, sensible, everything-in-moderation-type financial advice on RUclips. Thanks for proving me wrong. I would wish you much success, but I think it's clear that isn't going to be a problem for you. I'll just continue to enjoy your content.
There is another option for the person that asked the question.
He may be able to reduce the job stress without quitting his job.
I attended a class for upper management. Many upper management put needless stress upon theirselves.
The class helped me to improve my time management. The class taught me to evaluate myself and to improve on my life balances.
By learning from this class, I learned to reduce my stresses and still remain on the job. I learned to delegate more and to rely more on my direct reports.
Any job can induce its own stresses, independent of what the job pays. A low paying job can be stressful as well. Without evaluating one's self, I suspect that this stressful person will carry their issues to the new job.
I highly recommend that the person look for a class to help them evaluate their life ballances.
Jeff Johnson and Ray Stuchley of LMI teach a great class on personal time management, group interactions, and life balances that reduce stress in a job.
James, you are wise beyond your age. I enjoy watching your video even though sometimes it gets a little deep. lol. I like you advise your audience to think more on the meaning of retirement and what it means and find purpose of retirement. This is far better than just talking all numbers.
I think the best advantage of having an advisor is now having the permission to spend and enjoy. Signed, a habitual goalpost shifter.
Thanks James, the information you provided was very informative!
This is my goal when I enter my 40s. Have enough invested while keeping my overhead costs low and be able to get a less stressful job or work considerably less hours in that job. It will be difficult nonetheless
Good discussion. As in the video, we used the “4% Withdrawal Rule” simply to evaluate whether we had saved enough retirement funds.
In retirement we use more of a “guard rails” + “bucket” strategy. We “harvest” profits from our portfolio when the market is up, filling our near term expense spending (cash/near cash) “bucket”. Depending on your risk tolerance, that near term spending bucket might be funded with 2-5 years of spending. Then when the market is down, spend from that cash bucket… until the market returns to gains… at which point you can refill the cash bucket. We might withdraw more than 4% in a given year, but we are careful to relate what we withdraw to market performance.
We of course still maintain a separate emergency/onetime big expense fund.
Very insightful points. Thank you.
Love these videos! Every thought about making one for very early retiring ? Like 30-35?
Hi James, I have been watching your channel since I found out last year. I have one question which I couldn’t find out the answer. Is investment brokerage account can be step up cost? Do I need a living trust to do it? I don’t have real property. Thank you in advance.
Looks like you got a bit too much sun at the beach! Flights are cheap, considering flying out there to talk to you; do you have a checklist of stuff I should have ready for a consultation? i have that depression mindset as both my parents suffered during that time. Feels like all the stories are about people dreading work. What about for those of us who like work just fine and its not a burden? Nothing I can't do that I want to and I have lots of vacation. Why not keep working? Topic suggestion if you haven't covered - how do you pick pre-tax vs. post tax on 401k (if you company offers both) I feel like i have enough, so should I favor after-tax for the last few years?
How do you count VA disability benefits? This is tax free benefits for the remainder of my life. As a pension?
Sure, As long as it can never go away
We are both 32 y/o and we plan as if we will be getting zero social security. Curious what your thoughts would be on this?
We’re 58 and 59 and conventional wisdom when I was your age was also to plan as if we would not have social security. I don’t regret it and now it looks like we’ve planned well for our future + have the SS “bonus”. We’re in a good place.
There is a often overlooked problem with this scenario. He lists their assets and then says "my" net worth. Is his net worth2.2 million or is THEIR net worth 2.2 million? It makes a huge difference. If you get divorced will you still have 2.2 million? If not, you don't have that for a net worth. For those who tally their net worth by adding both partners together , I would say this: take your total combined net worth and both of you go out separately and spend the total amount. See how it works out. You'll quickly see that both of you do not have the net worth of your combined assets.
@11:00 taxes on income are higher than you're quoting.
Realistically, depending upon where you live, total taxes incl income, sales, property, tolls, utilities, etc. approach 60-70% of gross income.
No they don’t. You need to learn the difference between marginal and effective tax rates.
No, they don’t. And utilities aren’t taxes.
Strictly speaking yes but, sales, toll and utility taxes would be accounted for in the expense category for the purpose of planning as it’s not on all income and is activity dependent.
Also the % of gross income will vary based on proportions of expenses, income and taxes.
First!