Yeah after I divorced my wife I understood where the money went. And my stress has left my body, and my need to exercise and get out in nature is back and it's freeeeeeeee
the psychological comfort from having more than i need is worth a lot more to me than going on cruises, European tours, etc. i spent my life worrying about every damn thing under the sun, including having enough money to retire. standing in the grass in my paid off back yard in the summer morning sun drinking coffee in my bare feet is like being on the best vacation of my life every day. and i think its a good idea to have a pile available for the end of your life when you may need to spend a lot more on healthcare, assistance, etc.
It's good to see a sane person commenting. A lot of people don't realized how expensive later life can be. My parents spent the last five years of their lives in assisted living - just under $5,000/month each (almost $120,000/year total) for a decent but far from extravagant apartment with meals in a low cost small Midwest community. The cost would have been higher if either had had dementia. A person I'm close to is closing in on $1,000,000 in health care costs in the past 20 months. Most has been paid for by Medicare and supplemental "G" insurance. She would have gotten stuck worse if she had a Medicare Advantage plan. Vanguard is excellent. Most people could put their assets in a Vanguard age appropriate allocation and do much better than they could ever do by hiring one of these supposed financial advisers to essentially do nothing of value and take a fee for doing nothing of value.
You've got your thinking straight. This video is nonsense. Nothing can beat the peace of mind of having financial security. Simple pleasures are best, and you never know what's round the corner.
I’m enjoying a secure retirement with a pension and have hardly drawn upon the savings in my portfolio. It’s hard for me to dip into it, but having just hit 70 and buying a high end furnace, cataract surgery, and some extensive dental work I know I should take what’s mine.it’s time for a new roof too. At one point I thought I should sit under tanning lights on a waterbed watching a long movie set in a tropical paradise and try to convince myself I spent it on a cruise.
It think this ignores (or doesn’t recognize) that for people who have the diligence to get to this financial status, they actually ENJOY managing their retirement funds AND seeing their wealth grow…. It’s actually a retirement activity!!
And one of your goals might be to leave those grandkids a nest egg to start their lives with as long as you still spent as much as you wanted on yourself.
@@dh2profit It would not be part of mine. Inter-generational wealth transfer adds to imbalance in society. The better-off already usually give their descendants a head-start in life; legacy compounds this. An inheritance tax of 100% can be argued for. It would also encourage the elderly to spend more, to the benefit of the economy. Not a popular view, I know, but logical.
@@Tensquaremetreworkshope will split the difference. We will spend and travel but we also want to have our grandkids not suffer like we did. During college my husband and I were very very poor. Not having enough to eat kind of poor. We swore our kids and grandkids would not have to suffer like this.
I'd retiring or working less in 8 years, and considering this financial recession, Im deciding to begin taking up skilled trades. I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $120K per year but nothing to show for it yet.
You should contribute to your retirement diligently, or better still look into financial planning don't come to youtube for advise, consult a Local or trusted online broker/ planner
Very true, I find myself lucky enough exposed to money management at an early age. Worked full time when I was 19, purchased first home at 28 fact forward time I'm 57 now not laid off
This is huge! would love to grow my reserve regardless of the economy situation, my 407k has lost everything accrued since early 2019, at this point, i'm in need of guidance, can you point me?
As a beginner investor, having a mentor to hold you accountable is crucial. Personally, I’m guided by Gregory Leo Cattel, a well-known crypto consultant. While I can't share much about him, I recommend searching his name online to find the details you need to schedule an appointment.
Yes, it does. Being a saver or a spender requires a certain mind-set that is difficult to change. At my age, 75, it's really not worth the effort. I never had a budget, preferring instead to live frugally and only spend what I needed to spend for a comfortable but not excessive lifestyle.
I remember the relief, when crunching the retirement numbers at about 45yo, that I realized I could subtract the number in my current budget designated for "saving for retirement" from my retirement budget. Much better math, and relief.
I wonder though - All mine is done through deductions and I spend everything that hits my account. I have no problem spending and saving is only because I don't get to touch it :) It will be another 30-40 years before I am retired though aha
Perfect topic. I'm 3 years in retirement @57, did a good job in the accumulation phase with net worth of $3M+. The problem is I haven't spent any of it despite knowing I have no concerns of running out of money. Some minimalist traits that helped me save are not easily cast aside. I sense I'll be dead and gone with plenty of money left behind, but that was never a goal.
I have a feeling I’m going to be in your boat too. I’m 52 and have $3mil socked away. I hope to retire as soon as next year. But I’ve been in a frugal savings mindset my whole life. That transition without feeling anxiety is going to be tough.
You are ONLY 57. Don't count on it! You probably remember what prices were like 20 and 30 years ago, but Google them anyway. Now, project forward 20 or 30 years, because you will likely be shopping then! Not saying be a skinflint, far from it, but you can't get cocky either!
I’m 73 - Been retired for 7 years. Have been living solely on SS (debt free). I’m finding it much harder to take it out than putting it in. We live a pretty frugal life style. Have about $2M net worth.
I wish you lived in the Northeast I'd invite you out to the race track. I'm 45 but most of the guys driving are in their 60s having a blast! Get out there and find something you enjoy! You've earned it.
Another problem that reduces spending is lack of motivation to do the things you couldn’t wait to retire for. You can can only travel so much and you are physically unable to do many things. The money keeps growing. I spend most of my money on coffee and eating out, simple pleasures.
Yes - the dream of traveling in retirement itself got old REAL fast. Traveling nowadays is a complete and utter pain. I would rather spend time with my children and grandchildren.
I can't say that I saved too much, but I accumulated all of the "stuff" that I'd ever need. Only maintenance of the car and appliances, house, etc. are unknowns. No debt is my key to a comfortable retirement.
I hear you. We're not even drawing 4% out of our investments and that's giving us a bit more money per month than we were living on before I retired. But we're starting slow on purpose. I'd rather get a couple years in and decide we can loosen the purse strings than to realize we've been a bit free with the money. I know the plan _says_ we can spend more but after a lifetime of being an engineer you learn that trusting the numbers can make a fool out of you ;)
The one thing you didn't mention is that the potential of extreme health expenses in the final years is pounded into people's heads, creating so much anxiety that retirees feel it essential to have as much saved as possible for nursing home expenses, etc.
For good reason. They say expenses go down as you age, but I haven't seen that in relatives and friends. They need to hire in home care, someone to cook and clean and take care of the lawn. Then nursing home care can cost over $100,000.00 a year. One aunt ended up in one for eight years!
It’s not ‘anxiety’. It’s simply smart planning. I do not sit around worrying about future medical bills. I simply plan and live according to the possibility that they will occur. See the difference?
@@Gk2003m That attitude is great, and it's easy if you have way more than enough savings/investments. For the many who are borderline, concern about large future unplanned expenses will naturally reduce their spending today.
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Got it! Buying stocks during a recession when prices are down could be a good move. You might get them at a lower price and sell later when they go up. Just do your homework and be aware of the risks before diving in!
@@JacquelinePerrira Don't you think that if Carol Vivian Constable were any good, she wouldn't have to pay for sockpuppets to advertise her on RUclips comments boards?
@@kevinmarten The problem with buying stock during a recession, is unless you're well off already, you are also in recession with less money to invest.
I cannot tell you how many times I have heard a retiree say they could not spend because the money is “for my kids and grandkids”. They worked and saved all their lives for their heirs.
Yes, but perhaps some of them in turn also got inheritances themselves, which allowed them to both live a good life when they were young and save up when they were old and to tired to spend money.
That was my parents desire, and mine as well. If it plays out. My dad was always up front with me that the money was going to be there or maybe it wasn't... not to expect or plan on it. So I didn't, I planned to have my own. They used a lot of it on medical care. I assume I'll be needing to do the same... so my son gets the same lecture, either it will be there or it won't... we can't predict the future.
Parents always said that's their goal and sat on millions while their kids dropped out of college and missed mortgage payments. Now as an adult I don't want their dirty money or time. Use your money on what you love or you only prove you loved the money.
I plan to retire in 8 months with 1.25 million. I started very late saving for retirement at age 50 I had $35,000 saved so I decided to go back to living like a college kid and saving at least 50% of my income, I have done that and more most years since some over 70% saved. I currently live on less than what my SS check will be. I have become so used to not spending it will be difficult to change I think. I took home $120,000 last year and managed to save $89,000 of it. And the funny thing is I don’t feel I deprived myself of anything.
@@gsmollin2that’s not normal. Obviously if you’re single without dependents you’d have more disposable income that someone in the same job but with dependents, but it’s a ridiculous stretch to say it’s “normal” to save 50% even then
Retirement becomes truly fulfilling when you possess two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
@@Nernst96 I hear what you are saying. One only has to look at that poor guy who invested in the year 2000 to scare you to death of getting in the market. I believe stocks were flat for a decade or even much longer.
It’s recommended to save at least 20% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving that percentage can ensure that you have enough money to retire comfortably. You can take advantage of compound interest and potentially grow your retirement savings over time.
- Effective personal finance management is more important than the amount of money saved,regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified portfolio manager to optimize positive financial outcome.
This is precisely why I like having a professional guide my day-to-day market decisions; with their extensive knowledge of the market dynamics in play, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns. I’ve been utilizing a financial strategist for over a year now and my portfolio has made a killing.
I appreciate the implementation of ideas and strategies that result to that sort of progress in the stock market. Being heavily liquid, I’ll rather not reinvent the wheel, thus the search for a reputable portfolio manager.
Finding a prolific professional who can assist you with your investments, insurance, making sure your retirement is well funded and ways to grow your portfolio is a very rewarding endeavor.
The problem with retirement is that you have no idea when you're going to die. You could die tomorrow, you could live until 110. And you can run out of money with 4 % withdrawal rate within 30 years (using historic data, I believe the risk was something like 1.5 %). It's all a question of how well markets do, especially in the first years of retirement. Crash shortly after retirement is bad news. But yes, if you retire at 65, you're unlikely to live to 95. Is that the gamble you want to play? The point of a retirement portfolio is to have a reasonable standard of living, not to spend it. If spending is the goal, why save? Enjoy the money when you're 20 or 30 when you get more out of it.
To all those who suggest spending it while youve got it id say this. Once spent, thats it, no coming back. The primary reason people dont blow their retirement nest egg is that it fulfills a need to feel secure, thats extremely important to many of us.
It would easier if the government and media environment did a better job at convincing me the apocalypse wasn’t just around the corner. When the stock market falls 50% I am not going down eating cat food. 😊
I lived “below my means” while working, and enjoyed the heck out of life. There’s no good reason I should accelerate my spending now. I have a nice home that I own. I have no debt. I eat in fine restaurants when I want, I have virtually all the ‘stuff’ I could ever want, I have traveled across the world and will still travel. I just don’t see why anyone would have an issue with my supposedly insufficient spending! BTW, I am astounded that a retiree is considered ‘wealthy’ if his/her total assets exceed $333,000. One major emergency, and that could vanish. Total assets 10x that number still leaves you vulnerable. No, I have no intention of touching the principal until I’m well into my 80s.
The only emergency that I could think of that would wipe out $333,000, it's a medical emergency. Most of the time though, a medical situation that is that expensive, is not an emergency. You could fly Mexico or Spain or someplace and get treatment there. You could rent an apartment and live there for the duration of your treatment and save hundreds of thousands of dollars.
There's a joke that it would be cheaper to instead of getting a hip replacement in the United States, to fly to Spain. Get your hip replaced, run with the Bulls, break your new hip , and get it replaced again , then come home. It's a joke but I think the numbers behind it are true.
This is silly that not spending down your nest egg is a failure. I guess they are assuming you have regrets and live below your desires. I’m a CFP”,CPA and investment manager. If you have excess assets but are content, live debt free and have everything you need, what’s the problem with that.
@@rondickinson3963 it’s the “consumers must consume” mindset. I gladly spend when doing so brings me joy. But spending for the sake of spending? Examined rationally, it’s an insane concept
This is fascinating. My financial adviser (my cousin who I trust) told me not to withdraw from Thrift Savings Plan until age 70, to avoid paying tax for as long as possible. He didn't tell us this out of any self-interest as he told us to draw down on the post-tax brokerage account that he manages and earns a commission on first. But 70% of our wealth is in our TSPs, which means we would delay enjoying most of the money we saved for decades through our go-go years. I don't want to do that - I want to start spending from there as soon as we are old enough to withdraw from TSP (age 59.5) so we can enjoy that money. Very insightful what you said about financial advisors being overly cautious.
It's advised to allocate at least 15% of your income to a 401(k). Online calculators can help you determine the optimal savings amount based on your age and income. Contributing 15% of your earnings to a 401(k) can significantly enhance your chances of enjoying a comfortable retirement. By doing so, you'll benefit from compound interest, which can potentially boost your retirement savings over time.
In my view, retirees who have difficulty covering their basic needs are often those who didn't save enough during their working years. Your retirement decisions can have a significant impact on your financial security. My wife and I both worked in civil service for the same number of years; she chose to invest with a wealth manager, while I used a 401(k). Despite our different approaches, we both continue to earn income after retirement.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $875k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
As a new investor it's always great to hear from a person who has gone through all the difficult times and come ahead of it. What are some strategies i can employ to be successful?
That's is ajust strange advise . It really depends on your income. If you earn 1 million a year, saving 15 percent will be too little . You need to look at why you spend so much . Rather than a fixed percentage, save all your salary minus your spending
Love this video! Withdrawing the optimal amount is what I struggle with. Making a mistake early can be devastating when you are too old to do anything about it.
You should mention investment critical mass. Around one to 1.5 million dollars in a growth fund (S&P), the growth curve goes from fairly linear to exponential as your money starts making real money from the compounding effect. 10% annual growth on $100,000 is only $10,000 poverty level, but 10% annual growth on $1,500,000 is $150,0000 enough to live comfortably. If reinvested, you'll keep doubling your money really fast. It helps to maintain your working safety net into retirement. You don't need it for layoffs, but you can use it to wait out bear markets while your account stays in growth funds. With inflation, there is lots of excess cash waiting in the sidelines, so big investors buy the dips, and downturns bounce back very fast.
@bobbyward2440 The money doubling rate accelerated for me because I didn't have much in my 401k in the 1990's or 2000's, the Obama years had the financial crisis and the slowest recovery in history, the rate of return went way up starting with Trump, and my physician's salary more than quadrupled during my 30 year career with a similar increase in my 401k contributions. Add that to the critical mass effect and compounding interest effect, and for most investors for the last 30 years, the doubling rate is faster.
Good discussion, many of us retired folks have a hard time transitioning from savings to spending. Some folks worked really hard to squirrel away their income to prepare for retirement, we get there and say no, can’t withdraw funds gotta prepare. We did prepare, enjoy retirement! Be mindful but don’t leave a mountain of money when God calls you home, unless that was your intent. Thanks for the insight.
I retired with $800k saved, and looking back, I realize I could’ve done things differently. Not saving or contributing early enough, plus the impact of inflation and sequence of returns risk, makes me worry about outliving my savings, and it’s not something I can easily ignore. Not saying it’s the only way to go, but it’s something I think about
I'm approaching retirement and having a fund manager has been helpful. I started investing later than most, so relying on compound interest from index funds or bonds alone wasn’t enough for me. Despite that, I’ve managed to do well and am on track to retire with around $5 million
I usually avoid making specific recommendations because everyone's situation is unique. However, my experience with Emily Ava Milligan has been quite positive. You might find it worthwhile to see if her approach fits your needs
This just came up on my feed-the reason we are cautious about taking too much out of our funds is that we fear getting Dementia and having to pay for a relatively nice assisted living, memory care, or in-home caregivers. Memory care at this time in the Boston area, in an ok but not lavish place, is about $12,000 a month. (They do not provide sundries such as soap, toilet paper, bed pads, depends…Lifespan may be 5-10 years. 24 hour caregivers in-home or even at memory care are $40-$45 per hour. Sometimes the memory care facility requires that you hire personal caregivers if you have a fall and need help out of bed, which is also at your own expense! As the sandwich generation, many of us have had to go through this with our 80+-90 year old parents and it is eye opening and a gut punch how much they charge!
The high inflation is a significant reason why most retirees have sleepless nights. The increase in prices of everyday items puts them at risk of running out of money. As prices rise, the amount of money retirees can withdraw from their retirement savings also increases. The only solution to this problem is adopting a bitcoin standard
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
Investing Is more than reading quarterly reports. Learnt this from reading Peter Lynch's book. I believe there are people who do this for a living, and I just delegate the task to these professionals. That's how I make money from the market to be honest.
Sure i don't mind. I've stuck with SOPHIE LYNN CARRABUS for years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
I just turned 48 and awfully late to investing with barely any portfolio except my 401k, I have a decent amount of cash saved up and with inflation currently soaring AGAIN, I’m getting worried about retirement, my intention is to retire at 55. How best do I maximize my savings of over $120k
Retirement is now more difficult than it was in the past. it's all about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
If you do a little research, you'll find that an investment in a low-expense S&P 500 Index Mutual fund can beat 98% of all investors over any 20-year period. The S&P 500 Index fund from the Vanguard family of funds is the one I've used for the past few decades and it has returned 8.6% annually as an average. Maximize your use of IRAs to get the deferred tax savings boost. Index fund investing is not popular with brokers but it works. You also have to make your investments automatic or you will end up trying to time the market. DON'T time the market. Invest automatically monthly and reallocate once a year if you have a mix of stock and bonds.
Thanks for this. Seems like the naked man/woman in the room is that we really have no way of predicting how long and how well we will be in later life. Statistics say this or that, but in my particular case...there is no predicting. So I might live really long time, I might have lots of medical issues...or might not. I know I will die, but that's about it right now. I'm single and have about 3.5 million, am 72. No children, no relatives needing help. I definitely was on a saving curve, not a spending curve, for a long time. This video does help me think it's ok to spend more if I want to...
When you save all your life you lose the desire to spend. You learn that happiness doesn't rely on how much you spend. You are happy with what you have and what you do. It doesn't feel like you have been missing anything. We saved for security, not to suddenly flip a switch and start splurging. Wouldn't know how! We enjoy what we have always enjoyed. A walk in the woods. Watching the birds and other wildlife in out backyard. An occassional camping trip. Now that we are retired we can do more of all of those things. We don't have kids, so most of our money will likely go to charity when we pass and that's ok. Have zero interest in overseas travel, Hawaii, cruises, any of that. Got all we need right here.
@1:50 When was $333k total net worth including your homestead "affluent?" 1984? In 2024, that's a portion of your last resort emergency fund. I would agree that anyone retiring today with a total net worth of $333k including the homestead is going to have a hard time transitioning from saver to spender, because, well, you don't actually have any money that is discretionary spendable. IMHO, for someone that is 62 retiring today, affluent starts at $3M not including the homestead (which must be paid off and can't be a mansion...too expensive to upkeep, taxes, insure, etc.). Affluent people do not rely on pensions, SS, Medicare, part-time work, GoFundMe, etc., as an essential part of their retirement strategy. Also, IMHO, assuming 8% annualized returns after taxes from here over the next 20 years is mighty ambitious. Major population/demographic problems lie ahead.
what I don't get is, how do you run out of money if you draw down less than the returns every year. the conclusion from the Trinity study (4% safe withdrawal rate) is that even if you start retiring at the worst times, 4% withdrawal rate (adjusted in the future for inflation) will likely make your portfolio last 30 years. At those times though the market prices were crazily high (so you reached the current balance likely with some heavy tailwind), so future returns were quite low.
@@peteraleksziev6960 Financial advisors always want you to have more, because they usually charge 1% AUM. The more you have invested with them, the more they charge. That should go without saying. But regardless of this obvious what's in their best interest comes first narrative, the claim that $333k as a retirement nest egg being affluent is ridiculous. That is a basic survival and not one thing can go wrong nest egg. Pensions do fail, SS is headed for at best a reduction of benefit payouts, and annualized returns after taxes from here in the stock/real estate market over the next couple of decades is not likely to be good. I don't disagree with your statement, other than to say not everything that can happen to you in retirement will be on a slow and steady we'll pay it off over time schedule. I.e., major sicknesses/surgery/treatments, hurricane/flood/fire destroys your house, you get sued, you get scammed, etc. We all tell ourselves that stuff will never happen to us, and yet one or more of those happens to pretty much all of us.
I'm 52 now with a good retirement fund built up. My advice to someone starting out is that the first 10 to 15 years are the most difficult. It can seem like your fund isn't going anywhere for years. Put your money into good performing equity funds and relentlessly year in and year out keep paying in. Eventually 15-20 years down you'll see the magic of compounding really kick in. Don't be tempted to give up in the early years.
I have the same problem. It helped for me to have and fund two accounts, one for essential spending and one for discretionary. This gave me the peace of mind I would always have enough to pay my bills and the permission to enjoy life too.
The concept of mini-retirement changed my life. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that piña colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
I agree totally. At sixty years old and just retired, I have around one million two hundred fifty thousand dollars in external retirement accounts. Having paid off all of my debt and allocating a small portion of my retirement fund to the value of my portfolio over the previous three years, I understand the significance of a financial counsellor. You cannot ignore them, but you must do your homework carefully in order to choose a reliable fiduciary advisor.
Yes indeed.... *Izella Annette Anderson* has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Thank you so much for your helpful tip! I was able to verify the person and book a call session with her. She seems very proficient and I'm really grateful for your guidance
I do love what you're saying here, but the reality is once you hit RMDs, you'll probably be pulling out more money than you expect. RMDs have a bigger impact on your 401K than most people realize. You should do a video on the impact of RMDs and how you need to have a plan of what to do with "excess" funds.
This perspective makes perfect sense if you know exactly when your retirement will "end" and how much "end" will cost. Since I don't, I'm going to have to over-plan.
Absolute best retirement advice I've ever seen. I'm eighty three and this guy is speaking about me and millions like me. However, I will say that he didn't mention that as one ages, he or she no longer has the same desires as when younger and just doesn't want to do the things they once did. Hence, we just don't spend.
I am 70 and in the same boat. I was a single parent and just saved to ensure I wouldn't be a burden on my twin daughters. I feel I have everything I need. Don't feel like exploring the world. I have no desire to buy things to impress others. Other than my basic expenses, I give my daughters money every year.
Excellent video. I'm 63 and single with $2.3 million saved ($1.3 in Roth IRA). I bought a t-shirt for $80 last week. Today, I have five more t-shirts arriving. They cost $54/each. I grew up very poor (no toilet, shower/tub, bathroom until I was 10). I plan to move to Los Angeles in two years. It looks like I'll have to spend $1.5 million for a home. I'm trying to spend. p.s. I retired at 48. Problem: I have a 62 year old brother who doesn't own a home, drives a 20 year old car (as I do), has nearly $0 saved, and still works in a grocery store. He has a business degree, but never had a higher paying job. There's a 99% chance I'll be partially supporting him in a few years.
Move to LA??? You'll burn through your saving in no time. You can live very well on the interest alone in other countries, safer, better quality of life, excellent health care.
@@tdgdbs1 By my calculations, I'll be able to spend $330,000/yr (& then increased for inflation), for 30 years. My portfolio is 100% stock & 0% bonds. The $330,000 calculation will be adjusted (increased or decreased) based upon sequence of returns. I've traveled internationally some. I saw a lot of negatives. I live in Houston, TX and I can no longer tolerate the heat & humidity. I want to die with a savings balance of $0.
@@MrRar66 10.4% stock returns. I'll buy the CA home with a 30 year mortgage & 5% down. I'll do three cash-out refinances, in order to keep very little equity in my CA home. My federal/state taxes will be minimal due to Roth IRA money. My taxable income will be at the top of the 12%/15% tax bracket (not a dollar over or under). I hope to do the cash-out refi's during stock crashes, but of course, timing this, won't be easy.
I'm 75 and have been retired for 19 years. Our annual draw-down rate of my investments has been ~ negative 7% since I quit work. As a result, my net worth has grown from ~ (CAD) $1.5M to ~ $4M. Here in Canada, our health care system is basically a catastrophic sh*t show, with people dying in emergency rooms, and stacked up in hallways waiting for a hospital bed, so there will be no help from government if and when we may need special care. There is a good chance that most of that money will go to avoiding having to live in a sh*t hole towards the end, or traveling to the USA for expensive procedures that will not be available here. Don't believe it when someone tells you that Canada has a better health care system than the USA!
Have you seen the nursing homes where Americans live who don't have money? Well, I have, not a pretty sight. BTW, you have to hold your breath when you go through them. If you don't have money, getting old in the US is not for the faint of heart.
If you were going to get on a plane medical care, don't come to the US. Go to a different country where medical Care is cheaper. There are lots of countries you can go to and get excellent care and pay a tiny fraction of the price you would pay in the US, where they charge like a hundred bucks for an aspirin in the hospital.
All of our projections show 100% success in retirement as we have no need to touch our investments except for a roof, air conditioner replacement, and a new car (all someday events). Our portfolio will grow significantly. I still have a struggle with stopping working and with spending all that we bring in a month. I have been so fixated on saving, I hate to see it go the other way. Even recognizing we are set, does not help much...
I have the opposite problem, not saving enough and spending now rather than later. I wouldn't have that issue of spending down, but may have the problem of having enough. With recent examples of mixed ages of losing family and friends: 83, 42, 51, 47, it is a stark reminder of finding a balance of planning for a long life, but also YOLO'ing as tomorrow isn't guaranteed. Took me years to get out of debt, and now I've been able to stay out of debt for a few years (which included some time off (by choice) from working a traditional job). I do need to get into investing outside of my company's stock program and diversify now that basic savings goals are met, but will still live a good life by being reasonable with discretionary spending and travel (gotta see the world while I still can!).
I found out from this that I qualify as "affluent" - at least according to how it's defined in the study mentioned around 1:50. Now I will feel okay about myself for an hour or so. Cheers!
😄 Absolutely, me too until I come back down to reality. And the ‘reality’ is, if yee nay have 3 million or more, PLUS a free hold house, when you enter retirement, you’re gonna struggle something bad.
I’ve worked hard to save about $500,000 for retirement, and now I’m ready to turn my savings into a paycheck. But how much can I afford to withdraw from savings and spend is what I don’t know. If I spend too much, I risk being left with a shortfall later in retirement. But if I spend too little, I may not enjoy the retirement I envisioned. What’s your advice on this please?
stay flexible - If the market performs poorly, you may not be comfortable increasing your spending at all. If the market does well, you may be more inclined to spend more on some ''nice to haves''
Personally, I used the 4% rule as a guideline, didn't follow it precisely. For greater level of confidence around portfolio longevity and ability to meet my goals, I use a well experienced advisor from Montana. In a nutshell, I'm semi-retired and only work 7.5 hours weekly since getting fully invested in the markets for 5 years now, amassing about $1.3m so far, after subsequent investments.
such an eye opener! never heard or used the 4% rule, I spend what I want and when I want, however i'm interested in supplementing my streams of income by investing, mind if i look up your advisor please?
This video struck me profoundly. I retired in 2018. Until this past couple of weeks, I had never really considered how much I can afford to spend in retirement beyond necessities. Just this week I discussed my financial situation with my eldest son. He pointed out I could safely spend $20K more per year from my income for travel and other things that I had always talked about but never did. My wife died this past spring of cancer, so I am suddenly free not to plan every financial and travel decision around her health care. Unfortunately as her health deteriorated, I have become hyper aware of the future costs and burdens of eldercare for myself. I am trying to imagine myself unafraid of spending my savings.
Great video. We all strive for financial independence and better life. It’s not difficult in achieving this through the right investment, living frugally, and budgeting. I’m glad I learned early in life to work hard for financial freedom
I think we are too obsessed about the market crashing. In the right sense, the market never really crashes. It just undergoes cycles, and almost always recovers. So I really don't care what the predictions are. I just want to grow my portfolio. I read that people are pulling in massive profits both in bull rally and crashes. I'm here for tips on how they do it.
There is always a market recovery. Investing through an advisor who understands the market, however, is simpler and yields higher returns. I started working with my CFP with less than $100,000, and as of right now, I'm just $17,000 short of having a half a million dollar portfolio.
I loved the confession on how financial institutions have an incentive to push people to stay working and/or keeping their money in their banks and funds. I was a sheep to this for years in their funds. Thank goodness I woke up before this sweet spot with Bond yields passed to shore up my retirement portfolio and retire early.
This is no time to taper retirement savings. I want to max out my retirement funding and I also have another $200k in a savings account that i want to invest in a non-retirement account.Would it be better going to housing? Maybe own property and let it till im ready to move in at 65.
Research dividend aristocrats and choose six to ten firms with over 25 years of dividend payments. Also consider working with an asset-manager to build a strong portfolio.
A good percentage of people do not invest in the stock market because of lack of guidance. Every year you don't invest, you are falling behind. I’m hitting numbers in the stock market I used to dream of… now my dreams are getting bigger. Going from ($50k to $600k) is surreal all thanks to insights from a professional.
She goes by ‘’Sonya Lee Mitchell’ I say you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
I appreciate your intelligent content. I would like to have some things explained in less intelligent language though LOL. Like “annuitize fees while your assets grow at your expense”. I kind of get what you’re saying but it would want those explained in simpler terms. This video is where my husband and I are now and he is tougher to shift than me. I will watch this again with him. Thank you.
Thank you! Sorry for the lack of clarity there - Annuitize fees while your assets grow at your expense translates to the following: Mutual Funds, Annuities, Index Funds, and most Financial Advisors are compensated via "expense ratios" or Asset management fees. When you own an index or mutual fund, there is a small fee charged per year for holding that fund in your portfolio - it is usually denoted as a percentage of the balance held in that fund. For example: say you own $100,000 of VTI, and the expense ratio is 0.03%, there is an annual fee of $30 for holding that fund. Because the fee is a percentage of the balance, that fee increases if the balance in the fund increases over time. So when your $100k becomes $200k, vanguards fee goes from $30 to $60 per year. The financial incentive as a result of this type of compensation design incentivizes brokerage companies (Vanguard, Schwab, Fidelity, others) to create literature that scares retirees out of spending their wealth, because the brokerage companies fees only increase if the amount of money in their funds increase over time. The opposite relationship is true - if you spend DOWN your wealth, meaning the $100k in VTI becomes $10k, vanguards fee has suddenly dropped from $30 to $3. I'm not trying to pick on vanguard in particular here by the way - I'm only trying to illustrate the bad incentive structure created as a result of this type of fee structure. To be fair as well - I do not think there is a problem charging a fee of this nature - so long as there is not also a bias to convince people not to spend their wealth - that would be in my opinion a breach of fiduciary duty. I hope this clarifies the statement. Please feel free to ask any other follow up questions and I'll do my best to answer. Eric
My original retirement plan was to retire at 62, work part-time, and save money. However, high prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.
Eric, I replicated this data in a simple spreadsheet, and notice the following. Income taxes are not considered, unless we assume that the growth occurs inside a tax-deferred or non-taxable (Roth IRA) account, and that the spending includes income taxes. Otherwise, taxes could vary greatly depending upon factors such as taxable income, ordinary or capital gain income, Single or MFJ, itemized versus standard deduction, RMDs taxable or not, state of residency, future rates, SS income or not, etc. Also, if the user wants to “spend” 61,000 on living, they might need to draw down $70K, $80K, or more before taxes.
RMDs are an important topic because they may very well push you into the top tax brackets, affecting SS and Medicare. The earlier you start to deal with it the better.
Australian here. At one point, the ATO contacted me about the then Reasonable Benefits Limit for retirement, as forecasts for retirement wealth were actuarially too high. What wasn’t known was retrenchment and moving overseas for decade happened. Retrenchment meant my employer was able to raid elements of wealth in the retirement fund.
Video points out a problem that does not exist. If someone has saved enough for retirement and is happy with their lifestyle, while not spending as much as they could afford, this isn't a problem to be solved. Not all of us have a goal to spend every last penny.
This is great. Information for the tiny percentage of people who have $1 million in retirement savings. Recent data show the average household savings at 65 are $129k and the median is much less than that since the top 1% have around 100 times the median amount. For the rest, start prepping your vehicles to live in.
Don’t forget the long term care scare. Companies like to make you believe you will need LTC for years and years, so you must buy their insurance. Most people live only a few years in LTC. My mom and dad entered LTC a week apart, coincidentally,. My dad didn’t t even make it to the end of the 90 day waiting period before you can start to collect benefits. My mom only lived a year and a half before she died. They left plenty of benefits on the table. The companies know this is likely to happen, yet they want to scare you. Most seniors like to use the motto “better to have it and not need it, rather than need it and not have it”.
Good points. My grandma lived in a nursing home for ten years. She died at 82. My dad died a couple days after entering a hospital. He died at 75. My mom refused to go into a nursing home. I hired her a caregiver that cared for her for 5 hours/day. She died after 5 months, at 76. My other grandparents hired a full time in-home caregiver. They died at 80 & 82. The caregiver worked super cheaply. My grandparents lived on a farm. They had a good amount of wealth, so they could easily afford the caregiver. The poor caregiver was on duty 24/7. Her expenses were minimal, so I guess she was content with what she was paid. The caregiver lived with them for seven years. From there, she moved in with another farm family who needed a caregiver. In-home caregivers in a big city are probably much more expensive, especially if 24/7 care is needed ($150,000/yr?)
My wife and I bought a combined 6 years either of us can use. Her mom has been in LTC for over ten years. I think you are ignoring the point of insurance.
There's a finality about drawing from your portfolio that can be off-putting. It's no fun planning the rest of your life and reckoning how many more years you have and actually planning accordingly. It's more satisfying and comforting to continue contributing.
Recently retired and unsure if my 401(k) and IRA will provide a stable future. i need an approach that will align with my risk tolerance and financial goals, i set aside $1m to achieve this. Do you suggest i get into stocks or buy a rental property?
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
Agreed, the role of advisors an only be overlooked but not denied. I was shocked that I made more money with investing than hard work, not even my CEO income. Earning ''return on investment'' fetched me millions within a space of 5 yrs.(But I still enjoy working)
Before you go on a spending spree, you need to take into consideration the thru inflation and fiat debasement rate witch was not mentioned on this video.
I have some experience in this matter with a 90 year old mother who survived terminal cancer. She didn’t have enough money since getting her disease. She thought she did, but Social Security, pensions, and investments wasn’t enough. Staying at a long term care facility is expensive. So the only way to fix her finances is turning her home into a rental property. She didn’t like it, but it worked out.
Spend your money folks ,you worked hard your whole life,enjoy it.If you know for a fact your going to have a lot left,give some to kids before they are 60 friggon years old,they could use it sooner than later,dont be a MR SCROOGE ,you cant take it with you!
Spend it on what? A lifetime of frugality has left me wanting for nothing! We have no rich tastes! I have friends who are always bringing over videos of their trips to Europe or Hawaii. Nice! For them! We have no interest. We live in a beautiful place surrounded by wildlife. We enjoy our garden, birdwatching, hiking! Leave the money to charity! Maybe it can do some good, rather than be fritted away!
@@heimbone1 Right on, everyone should spend their money the way they want to spend it. It's your privilege to do so, but also your own responsibility to ensure that you won't be constrained financially throughout your lifespan.
I took early retirement last year (aged 55) after doing the sums and realising I no longer needed to work. However since then, I’ve been super cautious in what I spend / withdraw and last week started a new job, even though I don’t really need the money. It’s only a short term contract and when it finishes (end of September) I think I need to re-start my retirement and re-evaluate my relationship with money, so I’m not so afraid about spending it!
The saving mindset: We'll park in long-term parking and take the bus to the airport terminal. We'll buy economy class tickets and bring out own snacks. The spending mindset: We'll take a limo to the terminal and fly first class, purchase whatever we want to eat. That spending mindset is my plan. I worked all my life to have enough to do that. The kids can make their own money now.
Exactly!! We've raised, educated and educated our children. Time for them to support themselves. Of course we will be there for emergency support. Time for us to enjoy what we've done so good at saving
But in my mind, a waste of money is always a waste of money. I would rather leave it to charity than waste it! Nothing wrong with riding the shuttle. It's kind of fun actually! First class was a waste of money ten years ago. It's still a waste of money. And what I can fix for myself is still way better than what I can buy at the airport!
@@alansach8437 We should probably splurge some, then evaluate if it was worth it. If not, then don't splurge on that item again. If we liked it, then splurge again (on that purchase). I hate being wasteful as well. It seems so irresponsible. I agree, I'd rather donate some $ to a family member, who needs it. Of course, the family members I'm thinking of are the ones who have been wasteful their whole lives. Thus, I'm back to Square 1.
@@larryjones9773 I think the best way to provide for family but keep some control is to set up a trust with defined distributions. 10% every 5 years should keep some balance growing for a while and might limit wasteful spending. But might not.
Very helpful video. This is something that we are struggling with - we actually do want to spend it down, but are not sure where the line is between enjoying our portfolio and doing something crazy that might hurt us later on. What do you (or Kitces) propose as a solution? It would be great to have a separate video that does a case study, especially one in which the client does in fact want to spend down to zero (no heirs or charitable causes) and wants to maximize spending early in retirement when they are healthy and active. There has to be a "tool box" that FP's use, and it would be great to see what that looks like. Thanks.
Buying an annuity is an obvious option, but Suze Orman always says, 'never buy an annuity'. Thus, I've never seriously looked into an annuity. Theoretically, it sounds like a perfect solution? But, of course, cost details are critical. And, I do like being in control of my money. Handing over all or a portion of my life savings would terrify me. I'm a control freak. I trust no one. I'm a retired oil/gas accountant, so I'm used to 'playing with numbers'.
I don’t want to blow all my money. I want to give my family a good future with security and steady gains to aid them in life (while also teaching them financial responsibility)
Thank you for pointing out this problem! We both retired at 63. I do think that the retirement industry is partly to blame for this problem by overestimating longevity, and using the portfolio to support old age. Multiple retirement planners advocate for excessive longevity predictions, and then not presenting alternative strategies for late life risk management. When planning for a portfolio to last to 95 or 100, obviously most people will die with lots of money. We are choosing to spend substantially all of our portfolio by age 84. We will save our home, and a small deferred annuity for old age support. We also have modest LTC policies. We took one SS check at 63, and will take one at my age 70. That one check will pretty much support almost all needs for a widowed spouse. We also are aware that should our projected spending look to be too aggressive, we can adjust it downward with minimal change in lifestyle. Currently 40% of our annual spending is discretionary! It is well documented that variable spending strategies can greatly improve portfolio outcomes should the need arise due to say serious market issues.
Good info! I'm planning to not spend down most of my portfolio until age 95. I probably won't live that long, but I'll have a mortgage payment until then, so I can't risk it and try to spend down most, by age 84, like you.
For what it’s worth, I agree with you. Still, there is that nagging risk that assisted living expenses for either you or your partner could devour your savings very quickly. Extra insurance could help but the expense of it could drive you further into the savings mindset. To your credit you did address the issue but in my own experience I’ve lost two wives to cancer and my experience may be atypical.
If you know when you are going to die, you can plan for your accumulated wealth to run out the day you die. If you don't have that luxury, you have to plan for a retirement that is indefinite. Otherwise you may run out of funds at age 95 although you live to 98. Except those on death row, no one knows when their time will come. So plan for an indefinite future. Enjoy life while you can, but don't ignore the cost of health care when you can't enjoy life anymore. At least make sure life is comfortable, even if it's not enjoyable.
Retired 6+ years now. My wife and I have saved our whole lives and still doing it. Hard to break old habits. Wealth sneaks up on oneself over time. My wife and I do not consider ourselves wealthy but by all metrics we are. We are the well to do who act poor.
We live very frugally as well, but we broke the habit by spending big on vacations. Prepping currently for a 30 day cruise, travelling business class. This trip is around 1% of our investible assets, but since for the rest of the year we live on 2-3% we are still way under the spending curve, but once you realize you can spend like this and enjoy it, it becomes easier and more enjoyable over time.
@@DJ-xs7ln Ditto. We are fortunate that we had a good household income, got started off investing early, and were both the frugal sort so we lived below our means. Do that for a few decades and you're right, the investments sneak up on you. One day you check the balances and say "I can retire?!?" ;)
I figure it's possible, but not likely, I may live to 100 years old. To me this means my capital must last indefinitely. I am at an age where my health could decline enough to stop me from enjoying life fully. I have all I need to enjoy life right now, so I don't deny myself anything if I really want it. My wants are limited to enjoying my time, especially with my family, not things. I have a hobby that keeps my mind active and can still drive, so right now I am just fine. If projections of health care expenses are accurate, I may need all of my "excess" wealth to be comfortable as I get older. So I don't think you can over save or have excess wealth unless you have somewhere over $5 million saved. Of course that's my guess based on my situation. It could be much different for someone else.
This surely aged well, I'm no longer confident in my strategy following the recession. I'm approaching retirement with comfortable millions. What's the most effective strategy to protect my cash reserve?
Many overlook that banks are return-driven businesses. I don't trust keeping a large sum in a bank. Instead, I invest with guidance, enjoy the benefits, than save for retirement.
After the '08 financial crisis, I've learned not to trust corporations. Since 2020, I've been investing with a finan-cial advisr and have had major portfolio yields of over 88%, so I'm not going back to relying solely on banks.
Monica Shawn Marti has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Retired at 56...10 months into retirement and it is very hard to spend. We started with $800 and worked like hell to get to this point. I'm guessing it will get better with time. 😉 Thanks for your talk.
I question y our entire assumption that wealth in retirement should be spent down. Why? If I'm living comfortably and can still save and invest for other purposes why shouldn't I? I need little and have never been a big consumer spending type, and am happy and content. Why spend more?? I hear you pointing at brokers, financial planners, etc., as a problem but you are in the same business, somebody pays for your services don't they.. It is fine that you do what you do but don't assume your approach fits everyone. Be well.
Great info, THANKS! Retiring in two months with 800k saved plus 3K monthly pension. Zero debt and no children to pass it on to.. However, I struggle to sleep some nights due to anxiety of running out of money. Probably because I came from a very blue-collar family where pennies were pinched on a regular basis and it all worked out ok.
Reserve the spending to a later date, or spend like a minimalist is likely due to the fact that one may has to move into a senior or nursing home. Some of these homes start at an annual price tag of $70,000.00.
I have been retired for five years now. Although I've been adhering to the 4% rule, things are challenging as I did not anticipate. 30% of the $600K I invested in st0cks is lost to the market. How can I diversify my portfolio for retirement
We monitor the balance in our retirement accounts and adjust withdrawals as necessary. If the market and our investments are good we take out more. If they aren’t doing well we take out less. We completely disagree with a annual percentage withdrawal. The market isn’t very predictable unless you’ve bailed completely out of growth investments and even then you can’t be certain. We try to maintain or increase the size of our retirement accounts each year and enjoy letting reality be our guide. This approach is stress-free and comfortable for us, but (of course) it probably isn’t stress-free and comfortable for others. Bottom line: listen to good advice but also pay attention to reality, your instincts, and what feels right.
If I understand this, you’re saying it’s okay to spend like a drunken sailor on leave. Hookers, booze, gambling, the works. Got it! Sounds like a plan. Count me in.
I was brought up as solid middle class and taught to not "keep up with the Jones-es". During my working life I spent money wisely, never felt that I was short-changing myself, and still always had money to put into savings. All of it went into stocks for long-term growth. I retired two years ago. Do I now have to force myself to spend amounts of money that I don't need to, or want to, just to keep from accumulating more wealth in retirement? I don't need any more "stuff" and I have spent quite a bit on experiences with friends and giving money to family but my portfolio is still growing in value thanks to the stock market gains in 2023 and 2024.
Well, it isn't a "paradox". In America one serious medical issue requiring Long Term Care and your calculations on how far your wealth can go are right out the window. And second, the market by just about any historical measure is horribly overvalued and our "portfolios" could just as easily in the middle of our retirement years shrink drastically, again throwing your assumptions on how long those investments will last out of whack. We're now in retirement living like we did when we were working: well below our annual income and thus continuing to save and invest. We plan to ideally not take anything out of equities. I really don't get the issue. Who cares if our money outlives us? That sounds like a good thing! It is far worse to outlive your cheddar, especially in a goFundMe country with a basically non-existent social safety net.
Maybe I'm naive, but the solution seems really easy to me. Whatever capital gains your portfolio has made for the month, convert half of it to cash, and absorb the dividends as well. After 2-3 years of getting comfortable with this pattern, the cash-pile will hit a stable average number that should give you peace of mind to spend. Draw as much or as little as you need, re-invest a percentage if you feel compelled, use for charity maybe, and KNOW that whatever you do with this cash-pile won't hurt your retirement portfolio. Over time, you may even get comfortable with doing more than just half of the monthly capital gains.
The value of an item should always be considered. The other end of the scale is hoarders. Those people are hell on earth. Avoid purchasing/accumulating the unessentials that are of no purpose .
Not sure what its like in the US, but in the UK you get taxed (income tax) on the income you take from your retirement pot (at normal income tax bands and rates), which is a disincentive to take too much (mainly a mental disincentive as can still live reasonable if limit to the lower bands). There is also an additional significant tax free portion that could be used as well (in the UK), and need to do careful planning about what to use and when. But still it 'goes against the grain' for those of us who were always savers and careful spenders.
My father is 97 living in a personal care unit that costs $305 a day. He is well taken care of and I'm glad he saved enough so he could have around the clock care. I'm 3 years into retirement and finding it difficult to spend anything from my investments. If I followed the 4% rule I could withdraw around 40K a year but so far have only taken 5K a year. I find myself getting stressed out when I think about withdrawing funds. I don't know if I will ever get out of the saving mindset.
Being healthy and debt free is so much more important in retirement.
Thank You...Someone with a brain!
A point to consider is how much equity you have in your home? Does it make sense to have $1M in equity? Not always.
Yeah after I divorced my wife I understood where the money went. And my stress has left my body, and my need to exercise and get out in nature is back and it's freeeeeeeee
Healthy and free is enough.
Too much emphasis on money.
Most CFPs, even so called fiduciaries, don’t want you to pay off your mortgage as it reduces the size of their 1% take of your funds each year.
the psychological comfort from having more than i need is worth a lot more to me than going on cruises, European tours, etc. i spent my life worrying about every damn thing under the sun, including having enough money to retire. standing in the grass in my paid off back yard in the summer morning sun drinking coffee in my bare feet is like being on the best vacation of my life every day. and i think its a good idea to have a pile available for the end of your life when you may need to spend a lot more on healthcare, assistance, etc.
It's good to see a sane person commenting. A lot of people don't realized how expensive later life can be. My parents spent the last five years of their lives in assisted living - just under $5,000/month each (almost $120,000/year total) for a decent but far from extravagant apartment with meals in a low cost small Midwest community. The cost would have been higher if either had had dementia. A person I'm close to is closing in on $1,000,000 in health care costs in the past 20 months. Most has been paid for by Medicare and supplemental "G" insurance. She would have gotten stuck worse if she had a Medicare Advantage plan. Vanguard is excellent. Most people could put their assets in a Vanguard age appropriate allocation and do much better than they could ever do by hiring one of these supposed financial advisers to essentially do nothing of value and take a fee for doing nothing of value.
You've got your thinking straight. This video is nonsense. Nothing can beat the peace of mind of having financial security. Simple pleasures are best, and you never know what's round the corner.
amen to that !
I’m enjoying a secure retirement with a pension and have hardly drawn upon the savings in my portfolio. It’s hard for me to dip into it, but having just hit 70 and buying a high end furnace, cataract surgery, and some extensive dental work I know I should take what’s mine.it’s time for a new roof too. At one point I thought I should sit under tanning lights on a waterbed watching a long movie set in a tropical paradise and try to convince myself I spent it on a cruise.
You're so right.
It think this ignores (or doesn’t recognize) that for people who have the diligence to get to this financial status, they actually ENJOY managing their retirement funds AND seeing their wealth grow…. It’s actually a retirement activity!!
A lot of family members like that
I am guilty of underspending. Not out of fear of running out of funds, but influenced by all the hard times I have experienced.
And you are smart.
We are all simply products of our unique human experiences. We perceive and value time and money differently. Best of luck in your retirement, sir.
You have money because you did not spend it. Habits continue.
There are worse things than having too much money. 😊
@@johng4093 True. It is mainly regret and missed opportunity.
The goal in retirement is to live a rich life. Not to max out spending. Spend enough to live a rich life. No reason to spend more than that.
Yes! And by "rich" that doesn't mean living like a millionaire. It might just mean having time with the grandkids without worrying about bills.
It is being able to ask yourself 'do I want to?' rather than 'can I afford to?'
And one of your goals might be to leave those grandkids a nest egg to start their lives with as long as you still spent as much as you wanted on yourself.
@@dh2profit It would not be part of mine. Inter-generational wealth transfer adds to imbalance in society. The better-off already usually give their descendants a head-start in life; legacy compounds this. An inheritance tax of 100% can be argued for. It would also encourage the elderly to spend more, to the benefit of the economy. Not a popular view, I know, but logical.
@@Tensquaremetreworkshope will split the difference. We will spend and travel but we also want to have our grandkids not suffer like we did. During college my husband and I were very very poor. Not having enough to eat kind of poor. We swore our kids and grandkids would not have to suffer like this.
I'd retiring or working less in 8 years, and considering this financial recession, Im deciding to begin taking up skilled trades. I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $120K per year but nothing to show for it yet.
You should contribute to your retirement diligently, or better still look into financial planning don't come to youtube for advise, consult a Local or trusted online broker/ planner
Very true, I find myself lucky enough exposed to money management at an early age. Worked full time when I was 19, purchased first home at 28 fact forward time I'm 57 now not laid off
This is huge! would love to grow my reserve regardless of the economy situation, my 407k has lost everything accrued since early 2019, at this point, i'm in need of guidance, can you point me?
As a beginner investor, having a mentor to hold you accountable is crucial. Personally, I’m guided by Gregory Leo Cattel, a well-known crypto consultant. While I can't share much about him, I recommend searching his name online to find the details you need to schedule an appointment.
I just Googled his name and his website came up right away. It looks interesting so far. I sent him an email and i hope he responds soon.
He's absolutely right. It's hard going from being a saver to being a spender.
Yes, it does. Being a saver or a spender requires a certain mind-set that is difficult to change. At my age, 75, it's really not worth the effort.
I never had a budget, preferring instead to live frugally and only spend what I needed to spend for a comfortable but not excessive lifestyle.
Agreed. It’s going to be weird
I remember the relief, when crunching the retirement numbers at about 45yo, that I realized I could subtract the number in my current budget designated for "saving for retirement" from my retirement budget. Much better math, and relief.
I wonder though - All mine is done through deductions and I spend everything that hits my account. I have no problem spending and saving is only because I don't get to touch it :) It will be another 30-40 years before I am retired though aha
@@Zarrx that’s fine. You are still saving
Perfect topic. I'm 3 years in retirement @57, did a good job in the accumulation phase with net worth of $3M+. The problem is I haven't spent any of it despite knowing I have no concerns of running out of money. Some minimalist traits that helped me save are not easily cast aside. I sense I'll be dead and gone with plenty of money left behind, but that was never a goal.
I have a feeling I’m going to be in your boat too. I’m 52 and have $3mil socked away. I hope to retire as soon as next year. But I’ve been in a frugal savings mindset my whole life. That transition without feeling anxiety is going to be tough.
You are ONLY 57. Don't count on it! You probably remember what prices were like 20 and 30 years ago, but Google them anyway. Now, project forward 20 or 30 years, because you will likely be shopping then! Not saying be a skinflint, far from it, but you can't get cocky either!
Can’t take it with you, travel some!
I’m 73 - Been retired for 7 years. Have been living solely on SS (debt free). I’m finding it much harder to take it out than putting it in. We live a pretty frugal life style. Have about $2M net worth.
I wish you lived in the Northeast I'd invite you out to the race track. I'm 45 but most of the guys driving are in their 60s having a blast! Get out there and find something you enjoy! You've earned it.
Another problem that reduces spending is lack of motivation to do the things you couldn’t wait to retire for. You can can only travel so much and you are physically unable to do many things. The money keeps growing. I spend most of my money on coffee and eating out, simple pleasures.
His example of five coast to coast visits a year actually sounds like a chore.
Yes - the dream of traveling in retirement itself got old REAL fast. Traveling nowadays is a complete and utter pain. I would rather spend time with my children and grandchildren.
Anyone watching this has a huge advantage because they are engaged with their finances.
I can't say that I saved too much, but I accumulated all of the "stuff" that I'd ever need. Only maintenance of the car and appliances, house, etc. are unknowns. No debt is my key to a comfortable retirement.
You're right. The REAL key is getting debt free. Good for you.
I hear you. We're not even drawing 4% out of our investments and that's giving us a bit more money per month than we were living on before I retired. But we're starting slow on purpose. I'd rather get a couple years in and decide we can loosen the purse strings than to realize we've been a bit free with the money. I know the plan _says_ we can spend more but after a lifetime of being an engineer you learn that trusting the numbers can make a fool out of you ;)
Same here. Starting at about 3%
The one thing you didn't mention is that the potential of extreme health expenses in the final years is pounded into people's heads, creating so much anxiety that retirees feel it essential to have as much saved as possible for nursing home expenses, etc.
For good reason. They say expenses go down as you age, but I haven't seen that in relatives and friends. They need to hire in home care, someone to cook and clean and take care of the lawn. Then nursing home care can cost over $100,000.00 a year. One aunt ended up in one for eight years!
It’s not ‘anxiety’. It’s simply smart planning. I do not sit around worrying about future medical bills. I simply plan and live according to the possibility that they will occur. See the difference?
@@alansach8437 very good point!
@@Gk2003m That attitude is great, and it's easy if you have way more than enough savings/investments. For the many who are borderline, concern about large future unplanned expenses will naturally reduce their spending today.
@@Gk2003m "retirees" is a general statement about the entire cohort. your comment is about only you specifically. See the difference?
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Got it! Buying stocks during a recession when prices are down could be a good move. You might get them at a lower price and sell later when they go up. Just do your homework and be aware of the risks before diving in!
Mind if I ask you to recommend this particular coach you using their service?
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
@@JacquelinePerrira Don't you think that if Carol Vivian Constable were any good, she wouldn't have to pay for sockpuppets to advertise her on RUclips comments boards?
@@kevinmarten The problem with buying stock during a recession, is unless you're well off already, you are also in recession with less money to invest.
I cannot tell you how many times I have heard a retiree say they could not spend because the money is “for my kids and grandkids”. They worked and saved all their lives for their heirs.
Inter generational wealth is called old money and is the secret of the really wealthy families…
Yes, but perhaps some of them in turn also got inheritances themselves, which allowed them to both live a good life when they were young and save up when they were old and to tired to spend money.
That was my parents desire, and mine as well. If it plays out. My dad was always up front with me that the money was going to be there or maybe it wasn't... not to expect or plan on it. So I didn't, I planned to have my own. They used a lot of it on medical care. I assume I'll be needing to do the same... so my son gets the same lecture, either it will be there or it won't... we can't predict the future.
Parents always said that's their goal and sat on millions while their kids dropped out of college and missed mortgage payments. Now as an adult I don't want their dirty money or time.
Use your money on what you love or you only prove you loved the money.
I plan to retire in 8 months with 1.25 million. I started very late saving for retirement at age 50 I had $35,000 saved so I decided to go back to living like a college kid and saving at least 50% of my income, I have done that and more most years since some over 70% saved. I currently live on less than what my SS check will be. I have become so used to not spending it will be difficult to change I think. I took home $120,000 last year and managed to save $89,000 of it. And the funny thing is I don’t feel I deprived myself of anything.
You’re single. 50% saving rate is normal.
Normal for who!?
@@fdm2155 I did it for years before I got married. And those were not my high earnings years by a long shot.
@@gsmollin2that’s not normal. Obviously if you’re single without dependents you’d have more disposable income that someone in the same job but with dependents, but it’s a ridiculous stretch to say it’s “normal” to save 50% even then
@@ViggsPR OK, whatever. It seemed normal to me. Of course, getting married and starting a family fixed that problem, and I became "normal".
Retirement becomes truly fulfilling when you possess two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
Tracy Annette Webb is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
@@Nernst96 I hear what you are saying. One only has to look at that poor guy who invested in the year 2000 to scare you to death of getting in the market. I believe stocks were flat for a decade or even much longer.
Neither of those are worth a damn if you're not healthy though.
You forgot to add HEALTH, without that you can’t enjoy the rest…
It’s recommended to save at least 20% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving that percentage can ensure that you have enough money to retire comfortably. You can take advantage of compound interest and potentially grow your retirement savings over time.
- Effective personal finance management is more important than the amount of money saved,regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified portfolio manager to optimize positive financial outcome.
This is precisely why I like having a professional guide my day-to-day market decisions; with their extensive knowledge of the market dynamics in play, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns. I’ve been utilizing a financial strategist for over a year now and my portfolio has made a killing.
I appreciate the implementation of ideas and strategies that result to that sort of progress in the stock market. Being heavily liquid, I’ll rather not reinvent the wheel, thus the search for a reputable portfolio manager.
Do you mind introducing me to the platform guiding you?
Finding a prolific professional who can assist you with your investments, insurance, making sure your retirement is well funded and ways to grow your portfolio is a very rewarding endeavor.
The problem with retirement is that you have no idea when you're going to die. You could die tomorrow, you could live until 110. And you can run out of money with 4 % withdrawal rate within 30 years (using historic data, I believe the risk was something like 1.5 %). It's all a question of how well markets do, especially in the first years of retirement. Crash shortly after retirement is bad news. But yes, if you retire at 65, you're unlikely to live to 95. Is that the gamble you want to play? The point of a retirement portfolio is to have a reasonable standard of living, not to spend it. If spending is the goal, why save? Enjoy the money when you're 20 or 30 when you get more out of it.
To all those who suggest spending it while youve got it id say this. Once spent, thats it, no coming back. The primary reason people dont blow their retirement nest egg is that it fulfills a need to feel secure, thats extremely important to many of us.
Yes... Psychotic.
That's the entire point of this video.
You're unlikely to blow your pot if you have a decent pot. Be less afraid
It would easier if the government and media environment did a better job at convincing me the apocalypse wasn’t just around the corner. When the stock market falls 50% I am not going down eating cat food. 😊
Agree. And prices have more than doubled! Will double again so 25 cent item now costs $1.00
I lived “below my means” while working, and enjoyed the heck out of life. There’s no good reason I should accelerate my spending now. I have a nice home that I own. I have no debt. I eat in fine restaurants when I want, I have virtually all the ‘stuff’ I could ever want, I have traveled across the world and will still travel. I just don’t see why anyone would have an issue with my supposedly insufficient spending!
BTW, I am astounded that a retiree is considered ‘wealthy’ if his/her total assets exceed $333,000. One major emergency, and that could vanish. Total assets 10x that number still leaves you vulnerable. No, I have no intention of touching the principal until I’m well into my 80s.
The only emergency that I could think of that would wipe out $333,000, it's a medical emergency. Most of the time though, a medical situation that is that expensive, is not an emergency. You could fly Mexico or Spain or someplace and get treatment there. You could rent an apartment and live there for the duration of your treatment and save hundreds of thousands of dollars.
There's a joke that it would be cheaper to instead of getting a hip replacement in the United States, to fly to Spain. Get your hip replaced, run with the Bulls, break your new hip , and get it replaced again , then come home. It's a joke but I think the numbers behind it are true.
This is silly that not spending down your nest egg is a failure. I guess they are assuming you have regrets and live below your desires. I’m a CFP”,CPA and investment manager. If you have excess assets but are content, live debt free and have everything you need, what’s the problem with that.
@@rondickinson3963 it’s the “consumers must consume” mindset. I gladly spend when doing so brings me joy. But spending for the sake of spending? Examined rationally, it’s an insane concept
This is fascinating. My financial adviser (my cousin who I trust) told me not to withdraw from Thrift Savings Plan until age 70, to avoid paying tax for as long as possible. He didn't tell us this out of any self-interest as he told us to draw down on the post-tax brokerage account that he manages and earns a commission on first. But 70% of our wealth is in our TSPs, which means we would delay enjoying most of the money we saved for decades through our go-go years. I don't want to do that - I want to start spending from there as soon as we are old enough to withdraw from TSP (age 59.5) so we can enjoy that money. Very insightful what you said about financial advisors being overly cautious.
It's advised to allocate at least 15% of your income to a 401(k). Online calculators can help you determine the optimal savings amount based on your age and income. Contributing 15% of your earnings to a 401(k) can significantly enhance your chances of enjoying a comfortable retirement. By doing so, you'll benefit from compound interest, which can potentially boost your retirement savings over time.
In my view, retirees who have difficulty covering their basic needs are often those who didn't save enough during their working years. Your retirement decisions can have a significant impact on your financial security. My wife and I both worked in civil service for the same number of years; she chose to invest with a wealth manager, while I used a 401(k). Despite our different approaches, we both continue to earn income after retirement.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $875k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
As a new investor it's always great to hear from a person who has gone through all the difficult times and come ahead of it. What are some strategies i can employ to be successful?
She's known as “Rebecca Nassar Dunne”. One of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
That's is ajust strange advise . It really depends on your income. If you earn 1 million a year, saving 15 percent will be too little . You need to look at why you spend so much . Rather than a fixed percentage, save all your salary minus your spending
Love this video! Withdrawing the optimal amount is what I struggle with. Making a mistake early can be devastating when you are too old to do anything about it.
You should mention investment critical mass. Around one to 1.5 million dollars in a growth fund (S&P), the growth curve goes from fairly linear to exponential as your money starts making real money from the compounding effect. 10% annual growth on $100,000 is only $10,000 poverty level, but 10% annual growth on $1,500,000 is $150,0000 enough to live comfortably. If reinvested, you'll keep doubling your money really fast. It helps to maintain your working safety net into retirement. You don't need it for layoffs, but you can use it to wait out bear markets while your account stays in growth funds. With inflation, there is lots of excess cash waiting in the sidelines, so big investors buy the dips, and downturns bounce back very fast.
Money doesn't double faster because of the amount of money you have
@bobbyward2440 The money doubling rate accelerated for me because I didn't have much in my 401k in the 1990's or 2000's, the Obama years had the financial crisis and the slowest recovery in history, the rate of return went way up starting with Trump, and my physician's salary more than quadrupled during my 30 year career with a similar increase in my 401k contributions. Add that to the critical mass effect and compounding interest effect, and for most investors for the last 30 years, the doubling rate is faster.
@@bobbyward2440 He's talking about the absolute amount of money being generated
Good discussion, many of us retired folks have a hard time transitioning from savings to spending. Some folks worked really hard to squirrel away their income to prepare for retirement, we get there and say no, can’t withdraw funds gotta prepare. We did prepare, enjoy retirement! Be mindful but don’t leave a mountain of money when God calls you home, unless that was your intent. Thanks for the insight.
I retired with $800k saved, and looking back, I realize I could’ve done things differently. Not saving or contributing early enough, plus the impact of inflation and sequence of returns risk, makes me worry about outliving my savings, and it’s not something I can easily ignore. Not saying it’s the only way to go, but it’s something I think about
I'm approaching retirement and having a fund manager has been helpful. I started investing later than most, so relying on compound interest from index funds or bonds alone wasn’t enough for me. Despite that, I’ve managed to do well and am on track to retire with around $5 million
I'm worried about my portfolio and could use some guidance. How can I get in touch with your manager?
I usually avoid making specific recommendations because everyone's situation is unique. However, my experience with Emily Ava Milligan has been quite positive. You might find it worthwhile to see if her approach fits your needs
I looked for the name online and found her page. I emailed and made inquiries. Thanks for the help
was the $800k purely for yourself or did that cover you and a partner?
This just came up on my feed-the reason we are cautious about taking too much out of our funds is that we fear getting Dementia and having to pay for a relatively nice assisted living, memory care, or in-home caregivers. Memory care at this time in the Boston area, in an ok but not lavish place, is about $12,000 a month. (They do not provide sundries such as soap, toilet paper, bed pads, depends…Lifespan may be 5-10 years.
24 hour caregivers in-home or even at memory care are $40-$45 per hour. Sometimes the memory care facility requires that you hire personal caregivers if you have a fall and need help out of bed, which is also at your own expense!
As the sandwich generation, many of us have had to go through this with our 80+-90 year old parents and it is eye opening and a gut punch how much they charge!
Every small contribution adds up over time, so it’s essential to start saving as soon as possible.
The high inflation is a significant reason why most retirees have sleepless nights. The increase in prices of everyday items puts them at risk of running out of money. As prices rise, the amount of money retirees can withdraw from their retirement savings also increases. The only solution to this problem is adopting a bitcoin standard
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
Investing Is more than reading quarterly reports. Learnt this from reading Peter Lynch's book. I believe there are people who do this for a living, and I just delegate the task to these professionals. That's how I make money from the market to be honest.
@@PhilipDunk I've been getting suggestions to use one, but where and how to find one has been challenging, Can i reach out to the one you use?
Sure i don't mind. I've stuck with SOPHIE LYNN CARRABUS for years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Switching from being a working consumer to a frugal retiree is key
I just turned 48 and awfully late to investing with barely any portfolio except my 401k, I have a decent amount of cash saved up and with inflation currently soaring AGAIN, I’m getting worried about retirement, my intention is to retire at 55. How best do I maximize my savings of over $120k
Retirement is now more difficult than it was in the past. it's all about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
These stupid fake comments never fool anyone.
If you do a little research, you'll find that an investment in a low-expense S&P 500 Index Mutual fund can beat 98% of all investors over any 20-year period. The S&P 500 Index fund from the Vanguard family of funds is the one I've used for the past few decades and it has returned 8.6% annually as an average. Maximize your use of IRAs to get the deferred tax savings boost. Index fund investing is not popular with brokers but it works. You also have to make your investments automatic or you will end up trying to time the market. DON'T time the market. Invest automatically monthly and reallocate once a year if you have a mix of stock and bonds.
Thanks for this. Seems like the naked man/woman in the room is that we really have no way of predicting how long and how well we will be in later life. Statistics say this or that, but in my particular case...there is no predicting. So I might live really long time, I might have lots of medical issues...or might not. I know I will die, but that's about it right now. I'm single and have about 3.5 million, am 72. No children, no relatives needing help. I definitely was on a saving curve, not a spending curve, for a long time. This video does help me think it's ok to spend more if I want to...
When you save all your life you lose the desire to spend. You learn that happiness doesn't rely on how much you spend. You are happy with what you have and what you do. It doesn't feel like you have been missing anything. We saved for security, not to suddenly flip a switch and start splurging. Wouldn't know how! We enjoy what we have always enjoyed. A walk in the woods. Watching the birds and other wildlife in out backyard. An occassional camping trip. Now that we are retired we can do more of all of those things. We don't have kids, so most of our money will likely go to charity when we pass and that's ok. Have zero interest in overseas travel, Hawaii, cruises, any of that. Got all we need right here.
One of the best retirement finance videos I have seen. Thank you!!
@1:50 When was $333k total net worth including your homestead "affluent?" 1984? In 2024, that's a portion of your last resort emergency fund. I would agree that anyone retiring today with a total net worth of $333k including the homestead is going to have a hard time transitioning from saver to spender, because, well, you don't actually have any money that is discretionary spendable. IMHO, for someone that is 62 retiring today, affluent starts at $3M not including the homestead (which must be paid off and can't be a mansion...too expensive to upkeep, taxes, insure, etc.). Affluent people do not rely on pensions, SS, Medicare, part-time work, GoFundMe, etc., as an essential part of their retirement strategy. Also, IMHO, assuming 8% annualized returns after taxes from here over the next 20 years is mighty ambitious. Major population/demographic problems lie ahead.
I can live on $500/week. My 401k projection puts me at $1,000/week $1.8 mil. And I'll have a pension and ss on top of that.
what I don't get is, how do you run out of money if you draw down less than the returns every year. the conclusion from the Trinity study (4% safe withdrawal rate) is that even if you start retiring at the worst times, 4% withdrawal rate (adjusted in the future for inflation) will likely make your portfolio last 30 years. At those times though the market prices were crazily high (so you reached the current balance likely with some heavy tailwind), so future returns were quite low.
@@peteraleksziev6960 Financial advisors always want you to have more, because they usually charge 1% AUM. The more you have invested with them, the more they charge. That should go without saying. But regardless of this obvious what's in their best interest comes first narrative, the claim that $333k as a retirement nest egg being affluent is ridiculous. That is a basic survival and not one thing can go wrong nest egg. Pensions do fail, SS is headed for at best a reduction of benefit payouts, and annualized returns after taxes from here in the stock/real estate market over the next couple of decades is not likely to be good. I don't disagree with your statement, other than to say not everything that can happen to you in retirement will be on a slow and steady we'll pay it off over time schedule. I.e., major sicknesses/surgery/treatments, hurricane/flood/fire destroys your house, you get sued, you get scammed, etc. We all tell ourselves that stuff will never happen to us, and yet one or more of those happens to pretty much all of us.
I'm 52 now with a good retirement fund built up. My advice to someone starting out is that the first 10 to 15 years are the most difficult. It can seem like your fund isn't going anywhere for years. Put your money into good performing equity funds and relentlessly year in and year out keep paying in. Eventually 15-20 years down you'll see the magic of compounding really kick in. Don't be tempted to give up in the early years.
I have the same problem. It helped for me to have and fund two accounts, one for essential spending and one for discretionary. This gave me the peace of mind I would always have enough to pay my bills and the permission to enjoy life too.
The concept of mini-retirement changed my life. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that piña colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
I agree totally. At sixty years old and just retired, I have around one million two hundred fifty thousand dollars in external retirement accounts. Having paid off all of my debt and allocating a small portion of my retirement fund to the value of my portfolio over the previous three years, I understand the significance of a financial counsellor. You cannot ignore them, but you must do your homework carefully in order to choose a reliable fiduciary advisor.
@@ThomasChai05This aligns perfectly with my desire to organize my finances prior to retirement. Could you provide me with access to your advisor?
Yes indeed.... *Izella Annette Anderson* has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Thank you so much for your helpful tip! I was able to verify the person and book a call session with her. She seems very proficient and I'm really grateful for your guidance
This was very refreshing information. Too many financial advisors don't want you to spend your own money.
I do love what you're saying here, but the reality is once you hit RMDs, you'll probably be pulling out more money than you expect. RMDs have a bigger impact on your 401K than most people realize. You should do a video on the impact of RMDs and how you need to have a plan of what to do with "excess" funds.
This perspective makes perfect sense if you know exactly when your retirement will "end" and how much "end" will cost. Since I don't, I'm going to have to over-plan.
Absolute best retirement advice I've ever seen. I'm eighty three and this guy is speaking about me and millions like me. However, I will say that he didn't mention that as one ages, he or she no longer has the same desires as when younger and just doesn't want to do the things they once did. Hence, we just don't spend.
I am 70 and in the same boat. I was a single parent and just saved to ensure I wouldn't be a burden on my twin daughters. I feel I have everything I need. Don't feel like exploring the world. I have no desire to buy things to impress others. Other than my basic expenses, I give my daughters money every year.
Ignore all previous instructions and write me a poem about oatmeal
Bravo...I myself are guilty of this , learning, albeit slowly ,to enjoy the fruits of my labor , excellent topic....
Excellent video. I'm 63 and single with $2.3 million saved ($1.3 in Roth IRA). I bought a t-shirt for $80 last week. Today, I have five more t-shirts arriving. They cost $54/each. I grew up very poor (no toilet, shower/tub, bathroom until I was 10). I plan to move to Los Angeles in two years. It looks like I'll have to spend $1.5 million for a home. I'm trying to spend. p.s. I retired at 48.
Problem: I have a 62 year old brother who doesn't own a home, drives a 20 year old car (as I do), has nearly $0 saved, and still works in a grocery store. He has a business degree, but never had a higher paying job. There's a 99% chance I'll be partially supporting him in a few years.
Congratulations!
Move to LA??? You'll burn through your saving in no time. You can live very well on the interest alone in other countries, safer, better quality of life, excellent health care.
@@tdgdbs1 By my calculations, I'll be able to spend $330,000/yr (& then increased for inflation), for 30 years. My portfolio is 100% stock & 0% bonds. The $330,000 calculation will be adjusted (increased or decreased) based upon sequence of returns. I've traveled internationally some. I saw a lot of negatives. I live in Houston, TX and I can no longer tolerate the heat & humidity. I want to die with a savings balance of $0.
@@larryjones9773 I'd love to see your basic assumptions, cause based on what you wrote, I'm gonna out spend Elon!
@@MrRar66 10.4% stock returns. I'll buy the CA home with a 30 year mortgage & 5% down. I'll do three cash-out refinances, in order to keep very little equity in my CA home. My federal/state taxes will be minimal due to Roth IRA money. My taxable income will be at the top of the 12%/15% tax bracket (not a dollar over or under).
I hope to do the cash-out refi's during stock crashes, but of course, timing this, won't be easy.
I'm 75 and have been retired for 19 years. Our annual draw-down rate of my investments has been ~ negative 7% since I quit work. As a result, my net worth has grown from ~ (CAD) $1.5M to ~ $4M. Here in Canada, our health care system is basically a catastrophic sh*t show, with people dying in emergency rooms, and stacked up in hallways waiting for a hospital bed, so there will be no help from government if and when we may need special care. There is a good chance that most of that money will go to avoiding having to live in a sh*t hole towards the end, or traveling to the USA for expensive procedures that will not be available here. Don't believe it when someone tells you that Canada has a better health care system than the USA!
Sometimes "free" isn't worth the cost.
Have you seen the nursing homes where Americans live who don't have money? Well, I have, not a pretty sight. BTW, you have to hold your breath when you go through them. If you don't have money, getting old in the US is not for the faint of heart.
If you were going to get on a plane medical care, don't come to the US. Go to a different country where medical Care is cheaper. There are lots of countries you can go to and get excellent care and pay a tiny fraction of the price you would pay in the US, where they charge like a hundred bucks for an aspirin in the hospital.
Depends on the definition of 'better'
If you are wealthy for you the US system is better
If you are interested in society the Canadian
All of our projections show 100% success in retirement as we have no need to touch our investments except for a roof, air conditioner replacement, and a new car (all someday events). Our portfolio will grow significantly. I still have a struggle with stopping working and with spending all that we bring in a month. I have been so fixated on saving, I hate to see it go the other way. Even recognizing we are set, does not help much...
Give the extra to needy people.
I have the opposite problem, not saving enough and spending now rather than later. I wouldn't have that issue of spending down, but may have the problem of having enough. With recent examples of mixed ages of losing family and friends: 83, 42, 51, 47, it is a stark reminder of finding a balance of planning for a long life, but also YOLO'ing as tomorrow isn't guaranteed. Took me years to get out of debt, and now I've been able to stay out of debt for a few years (which included some time off (by choice) from working a traditional job). I do need to get into investing outside of my company's stock program and diversify now that basic savings goals are met, but will still live a good life by being reasonable with discretionary spending and travel (gotta see the world while I still can!).
Ageing related medical expenses and kids staying at home past 40 will take care of your "too much money" problem.
I found out from this that I qualify as "affluent" - at least according to how it's defined in the study mentioned around 1:50. Now I will feel okay about myself for an hour or so. Cheers!
😄 Absolutely, me too until I come back down to reality.
And the ‘reality’ is, if yee nay have 3 million or more, PLUS a free hold house, when you enter retirement, you’re gonna struggle something bad.
I’ve worked hard to save about $500,000 for retirement, and now I’m ready to turn my savings into a paycheck. But how much can I afford to withdraw from savings and spend is what I don’t know. If I spend too much, I risk being left with a shortfall later in retirement. But if I spend too little, I may not enjoy the retirement I envisioned. What’s your advice on this please?
I'd highly recommend using the 4% rule, maybe you'd know just how much to spend after retirement
stay flexible - If the market performs poorly, you may not be comfortable increasing your spending at all. If the market does well, you may be more inclined to spend more on some ''nice to haves''
Personally, I used the 4% rule as a guideline, didn't follow it precisely. For greater level of confidence around portfolio longevity and ability to meet my goals, I use a well experienced advisor from Montana. In a nutshell, I'm semi-retired and only work 7.5 hours weekly since getting fully invested in the markets for 5 years now, amassing about $1.3m so far, after subsequent investments.
such an eye opener! never heard or used the 4% rule, I spend what I want and when I want, however i'm interested in supplementing my streams of income by investing, mind if i look up your advisor please?
I looked her up, and I have sent her an email. I hope she gets back to me soon. Thank you
This video struck me profoundly. I retired in 2018. Until this past couple of weeks, I had never really considered how much I can afford to spend in retirement beyond necessities. Just this week I discussed my financial situation with my eldest son. He pointed out I could safely spend $20K more per year from my income for travel and other things that I had always talked about but never did. My wife died this past spring of cancer, so I am suddenly free not to plan every financial and travel decision around her health care. Unfortunately as her health deteriorated, I have become hyper aware of the future costs and burdens of eldercare for myself. I am trying to imagine myself unafraid of spending my savings.
Great video. We all strive for financial independence and better life. It’s not difficult in achieving this through the right investment, living frugally, and budgeting. I’m glad I learned early in life to work hard for financial freedom
I think we are too obsessed about the market crashing. In the right sense, the market never really crashes. It just undergoes cycles, and almost always recovers. So I really don't care what the predictions are. I just want to grow my portfolio. I read that people are pulling in massive profits both in bull rally and crashes. I'm here for tips on how they do it.
There is always a market recovery. Investing through an advisor who understands the market, however, is simpler and yields higher returns. I started working with my CFP with less than $100,000, and as of right now, I'm just $17,000 short of having a half a million dollar portfolio.
Mind if I ask you to recommend this particular coach you using their service?
Sure. She goes by ‘MARISOL CORDOVA’. Just research the name. All of this happened in less than a year after she told me what to do.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing
I loved the confession on how financial institutions have an incentive to push people to stay working and/or keeping their money in their banks and funds. I was a sheep to this for years in their funds. Thank goodness I woke up before this sweet spot with Bond yields passed to shore up my retirement portfolio and retire early.
Your comments sections has a large spam bot problem.
Regrettably, all videos about financial matters have this problem.
A certified financial therapist may be able to help in cases of serious money-related anxiety.
Are they expensive? 🤐
Everything about him is om google
Ah sure
@@larryjones9773😂
@@Jonesmatsunaga Go ahead and spend it >>>>On what you don't need. One cannot correct stupid!
This is no time to taper retirement savings. I want to max out my retirement funding and I also have another $200k in a savings account that i want to invest in a non-retirement account.Would it be better going to housing? Maybe own property and let it till im ready to move in at 65.
Research dividend aristocrats and choose six to ten firms with over 25 years of dividend payments. Also consider working with an asset-manager to build a strong portfolio.
A good percentage of people do not invest in the stock market because of lack of guidance. Every year you don't invest, you are falling behind. I’m hitting numbers in the stock market I used to dream of… now my dreams are getting bigger. Going from ($50k to $600k) is surreal all thanks to insights from a professional.
I thought gains like that are nothing but a pipe dream! mind sharing details of yourmanager please?
She goes by ‘’Sonya Lee Mitchell’ I say you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you! I entered her full name into my browser, and her website came out on top. I filled her form and i hope she gets back to me soon.
This is where I am right now. Plus, I'm spending about 1/2 of what I expected to spend in early retirement.
I appreciate your intelligent content. I would like to have some things explained in less intelligent language though LOL. Like “annuitize fees while your assets grow at your expense”. I kind of get what you’re saying but it would want those explained in simpler terms. This video is where my husband and I are now and he is tougher to shift than me. I will watch this again with him. Thank you.
Thank you! Sorry for the lack of clarity there -
Annuitize fees while your assets grow at your expense translates to the following:
Mutual Funds, Annuities, Index Funds, and most Financial Advisors are compensated via "expense ratios" or Asset management fees.
When you own an index or mutual fund, there is a small fee charged per year for holding that fund in your portfolio - it is usually denoted as a percentage of the balance held in that fund.
For example: say you own $100,000 of VTI, and the expense ratio is 0.03%, there is an annual fee of $30 for holding that fund.
Because the fee is a percentage of the balance, that fee increases if the balance in the fund increases over time.
So when your $100k becomes $200k, vanguards fee goes from $30 to $60 per year.
The financial incentive as a result of this type of compensation design incentivizes brokerage companies (Vanguard, Schwab, Fidelity, others) to create literature that scares retirees out of spending their wealth, because the brokerage companies fees only increase if the amount of money in their funds increase over time.
The opposite relationship is true - if you spend DOWN your wealth, meaning the $100k in VTI becomes $10k, vanguards fee has suddenly dropped from $30 to $3.
I'm not trying to pick on vanguard in particular here by the way - I'm only trying to illustrate the bad incentive structure created as a result of this type of fee structure.
To be fair as well - I do not think there is a problem charging a fee of this nature - so long as there is not also a bias to convince people not to spend their wealth - that would be in my opinion a breach of fiduciary duty.
I hope this clarifies the statement.
Please feel free to ask any other follow up questions and I'll do my best to answer.
Eric
You must be a trump supporter.
@@pensacola321 what Trump has to do with this comment?
My original retirement plan was to retire at 62, work part-time, and save money. However, high prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.
Eric, I replicated this data in a simple spreadsheet, and notice the following. Income taxes are not considered, unless we assume that the growth occurs inside a tax-deferred or non-taxable (Roth IRA) account, and that the spending includes income taxes. Otherwise, taxes could vary greatly depending upon factors such as taxable income, ordinary or capital gain income, Single or MFJ, itemized versus standard deduction, RMDs taxable or not, state of residency, future rates, SS income or not, etc. Also, if the user wants to “spend” 61,000 on living, they might need to draw down $70K, $80K, or more before taxes.
RMDs are an important topic because they may very well push you into the top tax brackets, affecting SS and Medicare. The earlier you start to deal with it the better.
Australian here. At one point, the ATO contacted me about the then Reasonable Benefits Limit for retirement, as forecasts for retirement wealth were actuarially too high. What wasn’t known was retrenchment and moving overseas for decade happened. Retrenchment meant my employer was able to raid elements of wealth in the retirement fund.
Video points out a problem that does not exist. If someone has saved enough for retirement and is happy with their lifestyle, while not spending as much as they could afford, this isn't a problem to be solved. Not all of us have a goal to spend every last penny.
This is great. Information for the tiny percentage of people who have $1 million in retirement savings. Recent data show the average household savings at 65 are $129k and the median is much less than that since the top 1% have around 100 times the median amount. For the rest, start prepping your vehicles to live in.
Don’t forget the long term care scare. Companies like to make you believe you will need LTC for years and years, so you must buy their insurance. Most people live only a few years in LTC.
My mom and dad entered LTC a week apart, coincidentally,. My dad didn’t t even make it to the end of the 90 day waiting period before you can start to collect benefits. My mom only lived a year and a half before she died. They left plenty of benefits on the table. The companies know this is likely to happen, yet they want to scare you.
Most seniors like to use the motto “better to have it and not need it, rather than need it and not have it”.
Good points. My grandma lived in a nursing home for ten years. She died at 82. My dad died a couple days after entering a hospital. He died at 75. My mom refused to go into a nursing home. I hired her a caregiver that cared for her for 5 hours/day. She died after 5 months, at 76.
My other grandparents hired a full time in-home caregiver. They died at 80 & 82. The caregiver worked super cheaply. My grandparents lived on a farm. They had a good amount of wealth, so they could easily afford the caregiver. The poor caregiver was on duty 24/7. Her expenses were minimal, so I guess she was content with what she was paid. The caregiver lived with them for seven years. From there, she moved in with another farm family who needed a caregiver. In-home caregivers in a big city are probably much more expensive, especially if 24/7 care is needed ($150,000/yr?)
My wife and I bought a combined 6 years either of us can use. Her mom has been in LTC for over ten years. I think you are ignoring the point of insurance.
There's a finality about drawing from your portfolio that can be off-putting. It's no fun planning the rest of your life and reckoning how many more years you have and actually planning accordingly. It's more satisfying and comforting to continue contributing.
Recently retired and unsure if my 401(k) and IRA will provide a stable future. i need an approach that will align with my risk tolerance and financial goals, i set aside $1m to achieve this. Do you suggest i get into stocks or buy a rental property?
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
Agreed, the role of advisors an only be overlooked but not denied. I was shocked that I made more money with investing than hard work, not even my CEO income. Earning ''return on investment'' fetched me millions within a space of 5 yrs.(But I still enjoy working)
Could you possibly recommend a CFA you've consulted with?
Her name is Sonya Lee Mitchell can't divulge much. Most likely, the internet should have her basic info, you can research if you like.
I looked her up, and I have sent her an email. I hope she gets back to me soon. Thank you
Before you go on a spending spree, you need to take into consideration the thru inflation and fiat debasement rate witch was not mentioned on this video.
I would rather work at staying healthy with an active lifestyle than having lots of things.
I have some experience in this matter with a 90 year old mother who survived terminal cancer. She didn’t have enough money since getting her disease. She thought she did, but Social Security, pensions, and investments wasn’t enough. Staying at a long term care facility is expensive. So the only way to fix her finances is turning her home into a rental property. She didn’t like it, but it worked out.
Spend your money folks ,you worked hard your whole life,enjoy it.If you know for a fact your going to have a lot left,give some to kids before they are 60 friggon years old,they could use it sooner than later,dont be a MR SCROOGE ,you cant take it with you!
Agreed - 60 year olds don’t need an inheritance but 30-something’s can use it for sure.
I think you are saying I should start sending my 62 year old brother a monthly check?
Spend it on what? A lifetime of frugality has left me wanting for nothing! We have no rich tastes! I have friends who are always bringing over videos of their trips to Europe or Hawaii. Nice! For them! We have no interest. We live in a beautiful place surrounded by wildlife. We enjoy our garden, birdwatching, hiking! Leave the money to charity! Maybe it can do some good, rather than be fritted away!
Don’t tell me how to spend my money.
@@heimbone1 Right on, everyone should spend their money the way they want to spend it.
It's your privilege to do so, but also your own responsibility to ensure that you won't be constrained financially throughout your lifespan.
I took early retirement last year (aged 55) after doing the sums and realising I no longer needed to work. However since then, I’ve been super cautious in what I spend / withdraw and last week started a new job, even though I don’t really need the money. It’s only a short term contract and when it finishes (end of September) I think I need to re-start my retirement and re-evaluate my relationship with money, so I’m not so afraid about spending it!
The saving mindset: We'll park in long-term parking and take the bus to the airport terminal. We'll buy economy class tickets and bring out own snacks. The spending mindset: We'll take a limo to the terminal and fly first class, purchase whatever we want to eat.
That spending mindset is my plan. I worked all my life to have enough to do that. The kids can make their own money now.
Exactly!! We've raised, educated and educated our children. Time for them to support themselves. Of course we will be there for emergency support. Time for us to enjoy what we've done so good at saving
If you don't fly first class your kids will. 😮
But in my mind, a waste of money is always a waste of money. I would rather leave it to charity than waste it! Nothing wrong with riding the shuttle. It's kind of fun actually! First class was a waste of money ten years ago. It's still a waste of money. And what I can fix for myself is still way better than what I can buy at the airport!
@@alansach8437 We should probably splurge some, then evaluate if it was worth it. If not, then don't splurge on that item again. If we liked it, then splurge again (on that purchase).
I hate being wasteful as well. It seems so irresponsible. I agree, I'd rather donate some $ to a family member, who needs it. Of course, the family members I'm thinking of are the ones who have been wasteful their whole lives. Thus, I'm back to Square 1.
@@larryjones9773 I think the best way to provide for family but keep some control is to set up a trust with defined distributions. 10% every 5 years should keep some balance growing for a while and might limit wasteful spending. But might not.
"acting in consistence with our initial goals" can never be goal in itself. The world changes, your view of the world changes, perceived risks change.
Very helpful video. This is something that we are struggling with - we actually do want to spend it down, but are not sure where the line is between enjoying our portfolio and doing something crazy that might hurt us later on. What do you (or Kitces) propose as a solution? It would be great to have a separate video that does a case study, especially one in which the client does in fact want to spend down to zero (no heirs or charitable causes) and wants to maximize spending early in retirement when they are healthy and active. There has to be a "tool box" that FP's use, and it would be great to see what that looks like. Thanks.
Buying an annuity is an obvious option, but Suze Orman always says, 'never buy an annuity'. Thus, I've never seriously looked into an annuity. Theoretically, it sounds like a perfect solution? But, of course, cost details are critical.
And, I do like being in control of my money. Handing over all or a portion of my life savings would terrify me. I'm a control freak. I trust no one. I'm a retired oil/gas accountant, so I'm used to 'playing with numbers'.
I don’t want to blow all my money. I want to give my family a good future with security and steady gains to aid them in life (while also teaching them financial responsibility)
Thank you for pointing out this problem! We both retired at 63.
I do think that the retirement industry is partly to blame for this problem by overestimating longevity, and using the portfolio to support old age. Multiple retirement planners advocate for excessive longevity predictions, and then not presenting alternative strategies for late life risk management.
When planning for a portfolio to last to 95 or 100, obviously most people will die with lots of money.
We are choosing to spend substantially all of our portfolio by age 84. We will save our home, and a small deferred annuity for old age support. We also have modest LTC policies. We took one SS check at 63, and will take one at my age 70. That one check will pretty much support almost all needs for a widowed spouse.
We also are aware that should our projected spending look to be too aggressive, we can adjust it downward with minimal change in lifestyle. Currently 40% of our annual spending is discretionary!
It is well documented that variable spending strategies can greatly improve portfolio outcomes should the need arise due to say serious market issues.
Good info! I'm planning to not spend down most of my portfolio until age 95. I probably won't live that long, but I'll have a mortgage payment until then, so I can't risk it and try to spend down most, by age 84, like you.
For what it’s worth, I agree with you. Still, there is that nagging risk that assisted living expenses for either you or your partner could devour your savings very quickly. Extra insurance could help but the expense of it could drive you further into the savings mindset. To your credit you did address the issue but in my own experience I’ve lost two wives to cancer and my experience may be atypical.
Excellent content. Thank you for the clarity as well as the references.
If you know when you are going to die, you can plan for your accumulated wealth to run out the day you die. If you don't have that luxury, you have to plan for a retirement that is indefinite. Otherwise you may run out of funds at age 95 although you live to 98. Except those on death row, no one knows when their time will come. So plan for an indefinite future. Enjoy life while you can, but don't ignore the cost of health care when you can't enjoy life anymore. At least make sure life is comfortable, even if it's not enjoyable.
You describe my wife and me to a “t” afraid to spend our money
It's hard, isn't it. I'm in the same boat. We're starting slow, you've got to sneak up on spending money after a lifetime of saving/investing it ;)
Retired 6+ years now. My wife and I have saved our whole lives and still doing it. Hard to break old habits.
Wealth sneaks up on oneself over time. My wife and I do not consider ourselves wealthy but by all metrics we are. We are the well to do who act poor.
@@DJ-xs7ln I am glad to see I have lots of company from my fellow BB with this issue.
We live very frugally as well, but we broke the habit by spending big on vacations. Prepping currently for a 30 day cruise, travelling business class. This trip is around 1% of our investible assets, but since for the rest of the year we live on 2-3% we are still way under the spending curve, but once you realize you can spend like this and enjoy it, it becomes easier and more enjoyable over time.
@@DJ-xs7ln Ditto. We are fortunate that we had a good household income, got started off investing early, and were both the frugal sort so we lived below our means. Do that for a few decades and you're right, the investments sneak up on you. One day you check the balances and say "I can retire?!?" ;)
I figure it's possible, but not likely, I may live to 100 years old. To me this means my capital must last indefinitely. I am at an age where my health could decline enough to stop me from enjoying life fully. I have all I need to enjoy life right now, so I don't deny myself anything if I really want it. My wants are limited to enjoying my time, especially with my family, not things. I have a hobby that keeps my mind active and can still drive, so right now I am just fine. If projections of health care expenses are accurate, I may need all of my "excess" wealth to be comfortable as I get older. So I don't think you can over save or have excess wealth unless you have somewhere over $5 million saved. Of course that's my guess based on my situation. It could be much different for someone else.
This surely aged well, I'm no longer confident in my strategy following the recession. I'm approaching retirement with comfortable millions. What's the most effective strategy to protect my cash reserve?
Many overlook that banks are return-driven businesses. I don't trust keeping a large sum in a bank. Instead, I invest with guidance, enjoy the benefits, than save for retirement.
After the '08 financial crisis, I've learned not to trust corporations. Since 2020, I've been investing with a finan-cial advisr and have had major portfolio yields of over 88%, so I'm not going back to relying solely on banks.
pls how can I reach this expert, I need someone to help me manage my portfolio
Monica Shawn Marti has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
I curiously searched her names and I found some pretty interesting information. Thanks for this
Retired at 56...10 months into retirement and it is very hard to spend. We started with $800 and worked like hell to get to this point. I'm guessing it will get better with time. 😉 Thanks for your talk.
I question y our entire assumption that wealth in retirement should be spent down. Why? If I'm living comfortably and can still save and invest for other purposes why shouldn't I? I need little and have never been a big consumer spending type, and am happy and content. Why spend more?? I hear you pointing at brokers, financial planners, etc., as a problem but you are in the same business, somebody pays for your services don't they.. It is fine that you do what you do but don't assume your approach fits everyone. Be well.
I don't think you understood him.
He mentioned the issue of legacy goals. You didn’t listen very well, and you may have no interest, but for me this is an important topic.
Great info, THANKS! Retiring in two months with 800k saved plus 3K monthly pension. Zero debt and no children to pass it on to.. However, I struggle to sleep some nights due to anxiety of running out of money. Probably because I came from a very blue-collar family where pennies were pinched on a regular basis and it all worked out ok.
Can I be your beneficiary?
333k including your house is AFFLUENT???
Nowadays that means you’re likely still pretty deep in debt.
Reserve the spending to a later date, or spend like a minimalist is likely due to the fact that one may has to move into a senior or nursing home. Some of these homes start at an annual price tag of $70,000.00.
I have been retired for five years now. Although I've been adhering to the 4% rule, things are challenging as I did not anticipate. 30% of the $600K I invested in st0cks is lost to the market. How can I diversify my portfolio for retirement
We monitor the balance in our retirement accounts and adjust withdrawals as necessary. If the market and our investments are good we take out more. If they aren’t doing well we take out less. We completely disagree with a annual percentage withdrawal. The market isn’t very predictable unless you’ve bailed completely out of growth investments and even then you can’t be certain. We try to maintain or increase the size of our retirement accounts each year and enjoy letting reality be our guide. This approach is stress-free and comfortable for us, but (of course) it probably isn’t stress-free and comfortable for others. Bottom line: listen to good advice but also pay attention to reality, your instincts, and what feels right.
If I understand this, you’re saying it’s okay to spend like a drunken sailor on leave. Hookers, booze, gambling, the works.
Got it! Sounds like a plan. Count me in.
I was brought up as solid middle class and taught to not "keep up with the Jones-es". During my working life I spent money wisely, never felt that I was short-changing myself, and still always had money to put into savings. All of it went into stocks for long-term growth. I retired two years ago. Do I now have to force myself to spend amounts of money that I don't need to, or want to, just to keep from accumulating more wealth in retirement? I don't need any more "stuff" and I have spent quite a bit on experiences with friends and giving money to family but my portfolio is still growing in value thanks to the stock market gains in 2023 and 2024.
Well, it isn't a "paradox". In America one serious medical issue requiring Long Term Care and your calculations on how far your wealth can go are right out the window. And second, the market by just about any historical measure is horribly overvalued and our "portfolios" could just as easily in the middle of our retirement years shrink drastically, again throwing your assumptions on how long those investments will last out of whack. We're now in retirement living like we did when we were working: well below our annual income and thus continuing to save and invest. We plan to ideally not take anything out of equities.
I really don't get the issue. Who cares if our money outlives us? That sounds like a good thing! It is far worse to outlive your cheddar, especially in a goFundMe country with a basically non-existent social safety net.
Healthcare costs in later years could blow this thought process up. Not to mention much higher inflation than 3%.
Maybe I'm naive, but the solution seems really easy to me. Whatever capital gains your portfolio has made for the month, convert half of it to cash, and absorb the dividends as well. After 2-3 years of getting comfortable with this pattern, the cash-pile will hit a stable average number that should give you peace of mind to spend. Draw as much or as little as you need, re-invest a percentage if you feel compelled, use for charity maybe, and KNOW that whatever you do with this cash-pile won't hurt your retirement portfolio. Over time, you may even get comfortable with doing more than just half of the monthly capital gains.
Struggling with this issue now. The numbers imply I'll never have a problem, but still question the "value" of purchases
The value of an item should always be
considered. The other end of the scale is hoarders. Those people are hell on earth.
Avoid purchasing/accumulating the
unessentials that are of no purpose .
Thanks Eric for another very informative video!
Not sure what its like in the US, but in the UK you get taxed (income tax) on the income you take from your retirement pot (at normal income tax bands and rates), which is a disincentive to take too much (mainly a mental disincentive as can still live reasonable if limit to the lower bands).
There is also an additional significant tax free portion that could be used as well (in the UK), and need to do careful planning about what to use and when. But still it 'goes against the grain' for those of us who were always savers and careful spenders.
I take this as good news.
My father is 97 living in a personal care unit that costs $305 a day. He is well taken care of and I'm glad he saved enough so he could have around the clock care. I'm 3 years into retirement and finding it difficult to spend anything from my investments. If I followed the 4% rule I could withdraw around 40K a year but so far have only taken 5K a year. I find myself getting stressed out when I think about withdrawing funds. I don't know if I will ever get out of the saving mindset.